Gilles Bissonnette

Professor Goldberg
Spring 2005
Civil Procedure Outline

Personal Jurisdiction

1.
: PJ involves the ability of a court having subject matter jurisdiction to exercise power over a particular
defendant or item of property. The court must have both statutory and constitutional authority over the D to have PJ. There are two types of jurisdiction:

1. General Jurisdiction:

Where the cause of action does not arise from the companys in-state activities, greater contacts between the D and the forum
state are required. Thus, the in-state activities must be systematic and continuous for general jurisdiction to be asserted. Helicopteros The Supreme Court has
expressed doubts that general jurisdiction can be extended to individuals who are not domiciled in the forum state. Usually it can only extends to corporations. (TALK
ABOUT PURPOSEFUL AVAILMENT)
i. Helicopteros Nacionales de Colombia v. Hall (1984) no jurisdiction
1.
D is a South American corporation that supplies helicopter transportation in South America for oil companies. D has no
contacts with Texas except: 1) a negotiation there with client, 2) the purchase by D of 80% of its helicopter fleet from a
Texas supplier, 3) the sending of pilots and maintenance people to Texas for training, 4) the receipt out-of-state of two
checks written in Texas by the client. D is sued in TX by the Ps (TX residents) when Ps decedents are killed in helicopter
crash.
2.
Held: Ps cannot sue in TX. Because claims did not arise out of Ds actions in TX, those activities in TX had to be
systematic and continuous. Contacts were too sparse for that.
3.
Rule: A states assertion of in personem jurisdiction over a foreign corporation violates the 14 th Amendments due
process clause if the corporations only contact with the state is through regular purchases and training and the
cause of action was not related to the corporation's purchases with the state. Regular purchases and training are
not continuous and systematic to warrant jurisdiction.
4.
Dissent (Brennan): Contacts are sufficient, and sufficiently related to the c/a. The test should be whether the claim is
related to the contacts, not whether the claim arises out of the contacts; The vast expansion of our national economy
during the past several decades has provided the primary rationale for expanding the permissible reach of a States
jurisdiction under the due process clause.
ii. Parent Companies and Subsidiaries: Supreme Court has held that jurisdiction over a parent company does not, standing alone,
establish jurisdiction over a subsidiary company, and jurisdiction over the subsidiary is not equivalent to jurisdiction over a parent,
unless the parent so controls and dominates the subsidiary to disregards the latters independent existence.
iii. Noncorporate Defendants: Does the concept of general jurisdiction, which is customarily invoked in the context of registered
corporations, apply to natural individuals and unincorporated entities? New York says yes so long as the nonresident has continuous
and substantial activities within the state even though the cause of action does not arise out of New York
iv. Should an individual be subject to general jurisdiction? Courts have frequently ruled against this. Some groups, however, like it.
1.
Argument against: very burdensome to individual
2.
Why do plaintiffs want to assert general jurisdiction over D:
a.
No link required between cause of action and contacts within the state so there are chances for forum shopping
b.
To inconvenience the D
3.
Why do states want to assert general jurisdiction over an individual?
a.
To benefit an in-stater against an out-of-stater costs are off-loaded to outsiders
b.
State may want to create litigation industry.

2. Specific Jurisdiction: for specific jurisdiction to exist over a nonresident, the plaintiffs claim must arise from the defendants contacts with the state.
B.

C.

D.

In Assessing Specific Jurisdiction, there are Two Questions to Ask in Jurisdiction Cases where a long-arm is involved
a.
1 -- Is there a statutory basis?; that is, can the state actually assert jurisdiction using its long-arm statute? (A state may grant its courts jurisdiction
up to the constitutional limit, but doesnt have to.)
b.
2 -- Is it constitutional? Statutes (and LASs) must not exceed limits of 14th A DP: ask how PJ is authd by LAS determine meaning of LAS, and
then ask if it is consistent with DP of Const, by applying Intl Shoe.
Long-Arm Statutes Statutory
a.
A long-arm statute is a statute which permits the court of a state to obtain jurisdiction over persons not physically present in the state at the time
of service.
b.
Long-arm statutes are a substitute means of service, since personal service is not possible.
c.
Types
i. CA Type allowing jurisdiction up to and including constitutional limits
ii. More common: laundry list statutes granting jurisdiction over certain things, such as
1.
Entering a contract in the forum state
2.
Transacting business in the forum state
3.
Owning property in the forum state, etc.
Two elements for in personam and quasi in rem jurisdiction (for quasi-in-rem, see Shaffer v. Heitner)
a.
Minimum Contacts Test Constitutional Basis
i. If a jurisdiction in the case is in personam or quasi in rem, the court may not exercise that jurisdiction unless the defendant has
minimum contacts with the state in which the court sits. The requirement for minimum contacts essentially means that the
defendant has to take actions directed at forum state.
ii. Test is established by International Shoe Co. v. Washington
1.
Rule: Forum state may exercise jurisdiction over defendant so long as the defendant has minimum contacts within the
forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice
iii. Factors for Minimum Contacts Established by International Shoe
1.
Received the benefits and protection of the laws of the state;
2.
Their contacts with the state were systematic and continuous;
3.
The state claim arises out of in-state activities; and
4.
The balance of convenience favors the home state.

b.

c.

5.
Forseeability Asahi;
6.
Purposeful availment
7.
Unilateral activity
Reasonableness Requirement
i. Even if D has the requisite minimum contacts with the forum state, the court will not exercise jurisdiction if considerations of fair
play and substantial justice would require making D defend in the forum state so unreasonable as to constitute a due process
violation. In most cases, if minimum contacts exist, jurisdiction is reasonable.
ii. What criteria are used for fair play and substantial justice?
1.
AMOUNT OF STATES INTEREST protect state residents through better compensation measures; redress to citizens
2.
BURDENS ON P/BUDENS ON D marginal inconvenience Convenience for Defendant; if a defendant has contacts
with the state, then defending a claim in that state should not be a huge burden
3.
AMOUT OF RECIPROSITY/BENEFITS AND PROTECTIONS OF STATE company/D enjoyed laws of the states
(you have enjoyed so much in benefits of the state that you owe the state something extra with regard to reciprocity)
4.
ABILITY TO PLAN ability for defendant to be on notice, given its sufficient contacts within the state
iii. Reasonableness Requirement was added in Asahi

Statement of Overall Rule (after statutory analysis)

i.

E.
F.

For a state to obtain specific jurisdiction against a defendant in accordance with the due process clause, the defendant must have
minimum contacts with the forum state. International Shoe. The contacts must be of such a quality and nature that assertion of
jurisdiction does not violate fair play and substantial justice. A single act directed toward the forum state or continuous but limited
contacts with the forum state will be sufficient for specific jurisdiction. McGee. However, even if the defendant has the requisite
minimum contacts with the forum state, the court will not exercise jurisdiction if considerations of fair play and substantial justice
would require making the defendant defend in the forum state so unreasonable as to constitute a due process violation.
Notice & Adequate Service
Three Approaches to Due Process
a.
Originalism: what due process means is what the framers thought it meant at the time of ratification; task of the court is to ascertain what that
understanding was; originalists also do not trust the courts.
i. Scalia
b.
Evolutionism: due process is going to change over time and that it is up to the Court to shift the meaning of due process in accordance with those
changes.
i. Justice Stone who wrote IS was an evolutionism
ii. William Brennan
c.
Deferentialism: view that, except in the most egregious instances, the courts job is to defer to the states and their understanding of due process
because the states are democratically established governments that are better in understanding what due process means; many thought that the US
Supreme Court was not to be trusted

extent of
contacts:

none . . . . . . . . . . casual/isolated . . . . . . . single (McGee) . .continuous but limited (Burger). substantial (Hel)

jurisdictional
consequence:

G
no jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . specific jurisdiction . . . . . . . . . . general jurisdiction
decreasing contacts

G.

H.

I.

increasing contacts

Normative Stuff: Ryan

a.
Recognizes commercial realities of the present
b.
Reciprocity if a company is benefiting from state, they should be sued
c.
Inefficiency very fact specific; difficult to preduct
d.
Does not help put D in most efficient forum
e.
More fair to P because he has a wider choice of forum
f.
Forces companies ot change the way to do business
g.
Gives more powers to Plaintiffs & State
Three Types of Jurisdiction (one of these must be present for case to go forward)
a.
In personam: In personam jurisdiction or jurisdiction over the defendants person gives the court power to issue a judgment against her
personally. Thus, all of the persons assets may be seized to satisfy the judgment, and the judgment can be sued upon in other states as well
b.
In rem: In rem jurisdiction, or jurisdiction over a thing, gives the court power to adjudicate a claim made about a piece of property or about a
status (i.e. an action to quiet title real estate)
c.
Quasi in rem: In quasi in rem jurisdiction, the action is begun be seizing property owned by (attachment), or a debt owed to the defendant, within
the forum state. The thing seized is a pretext for the court to decide the case without having jurisdiction over the defendants person. Any
judgment only affects property seized.

Specific Jurisdiction: The Early Cases:

a.

Pennoyer v. Neff (1877) No jurisdiction because no personal service

i. Mitchell represented Neff as an attorney in Neffs attempt to get a patent for land through Oregons donation law. Neff received the
land and then left the state and settled in California. Mitchell commenced an action against to recover legal fees in the state of
Oregon. Oregon statute said that if D, after due diligence, could not be found within the state, he could be served by local publication.
Neff did not appear and Mitchell was awarded a default judgment (Mitchell v. Neff). Neff received formal title to property in 1866
after judgment against him was issued. Mitchell attached (seized) land to get judgment out of Neffs assets. Mitchell bought Neffs
property at sheriffs auction and then assigned it to Pennoyer who used the land for 8 years and paid taxes on it. Neff came back and
filed an action for eviction against Pennoyer.
ii. Held: Oregon did not have jurisdiction over Neff (effectuating notice is like an arrest this was limited by International Shoe).

iii.

b.

c.

J.

Rule: Party must be brought within a states jurisdiction by service of process within the state, or by his voluntary
appearance; Personal service required for in personam jurisdiction inside the state.
iv. Efficiency
1.
Efficient because you know exactly when jurisdiction exists; inefficient because you encourage people who do business
with the state to leave the state while continuing doing business, so they cannot be served.
v. Fairness
1.
Concern at the time that personal service was the fairest form of service
Hess v. Palowski (1877) jurisdiction exists because of implied consent (Expansion of Pennoyer)
i. Plaintiff in error (Hess), a non-resident of Massachusetts & resident of Pennsylvania, sought review of a judgment that held him liable
for personal injuries sustained by defendant in error (Pawloski) because of plaintiffs negligent operation of a motor vehicle on a
public highway in Massachusetts. MA statute conditions use of public roads by nonresidents upon implied consent of appt. of MA
registrar as agent for service of process if they were involved in an accident while using those roads. Plaintiff asserted the complaint
should have been dismissed on the ground that the service of process pursuant to Mass. Gen. Laws ch. 431, 2 (1923), if sustained,
would have deprived him of his property without due process of law in violation of U.S. Const. amend. XIV. D received notice and
filed a special appearance to contest jurisdiction.
ii. Special Appearance made in this case, which takes place in federal court
1.
Rule 12(b) Defenses -- objection to jurisdiction can be made in pleading/answer or can be in a motion (it is OK to
combine)
2.
Rule 12 (g) if you make a motion and omit a defense from 12(b) you may not make another motion so long as what
(h)(2) allows.
iii. Rule: A state may declare that all non-resident motorists using the states highways have impliedly consented to the states
jurisdiction for all actions arising out of the highway usage. No violation of 14th A rights b/c express consent is already allowed
so fiction of implied consent is ok since Ds get actual notice. States have rights to regulate use of hwys even by nonresidents but Ds
still need to be sent actual notice.
iv. Rule II: A state law declaring that the use of a highway by a non-resident was the equivalent of the appointment of the
registrar as agent on whom process may be served is sufficient service under the due process clause of the 14 th Amendment
and, therefore, the state may claim jurisdiction over the nonresident. The law is acceptable under the 14th Amendment because if
a state has the power to exclude nonresident drivers, then it has the power to declare that the use of a highway by a nonresident can
create service. (there is implied consent in part of driver)
International Shoe Co. v. Washington (1945)
i. Rule: Forum state may exercise jurisdiction over defendant so long as the defendant has minimum contacts within the forum state
such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice
ii. Factors for Minimum Contacts Established by International Shoe
1.
Received the benefits and protection of the laws of the state;
2.
Their contacts with the state were systematic and continuous;
3.
The state claim arises out of activity of in-state activities; and
4.
The balance of convenience favors the home state.
iii. Limits Pennoyer because personal service no longer required for jurisdiction
iv. FAIRNESS
1.
It recognizes commercial realities by affording new protections to people out of state; this could be less efficient in that
there are new obligations on corporations
2.
Reciprocity if company is benefiting form state, then the state should have jurisdiction
3.
In general, this case benefits consumers to the detriment of corporations
v. EFFICIENCY
1.
This rule creates more litigation, because it looks at each case individually (it is very fact sensitive and the cases are
difficult to predict)
2.
IS does not necessarily help with placing the case in the most efficient forum, though it could. IS is maybe likely to place a
case where more of the evidence is present and where the body of law is more applicable. This is because of the systematic
test and the relationship between the cause of action and the contacts within the state. (the case made marginal
improvements but did not always place case in the efficient forum)
vi. LEGITIMACY
1.
States get increased power to assert jurisdiction
2.
United States Supreme Court gets more power because now they have to decide case by case what is fair and what is not

Jurisdiction Over Individuals

a.

b.

Criteria states use (minimum contacts are still required)

i. Presence within the forum state (Burnham)
ii. Domicile or residence within the forum state
iii. Consent to be sued within the forum state
iv. Driving a car within the forum state (Hess)
v. Committing a tortuous act within the state or committing an out of state act with in-state tortuous consequences (out-of-state; Gray)
vi. Ownership of property within the forum state
vii. Conducting business in the forum state (Int. Shoe)
viii. Being married or living while in, the forum state
Presence (Transient Service/Tagging)
i. Jurisdiction may be exercised over an individual by virtue of his presence within the forum state. That is, even if the individual is an
out-of-state resident who comes into the forum state only briefly, personal jurisdiction over him may be made so long as service is
made while he is in the forum state
ii. Burnham v. Superior Court (1990) jurisdiction exists
1.
Facts: D and his wife, P, separate while residing in New Jersey. P moves to CA with her children. D visits in business and
stops briefly to visit children. While D is visiting, P serves him with process in a CA suit for divorce.
2.
Held: CA can constitutionally assert personal jurisdiction over D based on his presence in the state at the time of service,
even though presence was brief.
3.
Majority (Scalia; Originalism): Presence is enough under Pennoyer A state can exercise jurisdiction over anyone
within its borders regardless of whether litigation stems from contacts within the state because such jurisdiction does not
violate traditional notions of fair play and substantial justice. Such traditional notions have not been offended because this

4.

approach is widespread, adopted by everyone, and it was within the purpose of the 14th Amendment writers. There is also
some deferentialism. He argues that Brennan creates a subjective test where litigation would be inconsistent and
unpredictable. Below are some critiques of this reasoning:
a.
Scalia also uses the traditional test under IS, which is strange because IS actually broke with tradition. Under
Pennoyer, IS would have been decided the other way.
b.
If tradition is all that counts, then you cannot explain Schaffer and IS
c.
If presence of property is not sufficient in Schaffer, one would think that presence of a person is not sufficient.
Concurrence (Brennan; Evolutionist): There were contacts within the state and it would be reasonable for CA to exercise
jurisdiction.
a.
Uses reasonableness and minimum contacts analysis.
b.
Brennans problem with Burnham/Best argument for jurisdiction: visiting your kids should not subject you to
jurisdiction because it provides a negative incentive to visit. This may not work , however, because there is an
affiliated circumstance because they agreed that she would move to CA. Also, they had an agreement but he
broke it. The agreement said that CA would be state where litigation would take place
c.
Brennan says that D received benefits of the state very low threshold this is such a low threshold for
purposeful availment that it is deferential to the state
d.
Equates presence with fairness

c.

K.

Domicile
i. Jurisdiction may be exercised over a person who is domiciled within the forum state, even if the person is temporarily absent from the
state. A person is considered to be domiciled in the place where he has his current dwelling place, if he also has the intention to
remain in that place for an indefinite period
d.
Residence
i. Some states allow jurisdiction to be exercised on the basis of the Ds residence in the forum state, even though he us absent from the
state. A person may have several residences simultaneously. (the Supreme Court has not examined whether this is valid under the due
process)
e.
Consent
i. Jurisdiction over a party can be exercised by virtue of her consent, even if she has no contacts whatsoever in the forum state.
1.
i.e. P brings suit against D in Ohio. P has no contacts with Ohio. D counter-claims in Ohio. Even if P dismisses his case,
he is bound by Ohio courts on counter-claim because he consented to jurisdiction by bringing suit
f.
Non-resident Motorist
i. Most states have statutes allowing the courts to exercise jurisdiction over non-resident motorists who have been involved in
accidents in the state
1.
Most non-resident motorist statutes provide for service of process on a designated state official (i.e. DMV official) and for
registered mail service
g.
In-State Tortiousness
i. Many states have statutes allowing their courts jurisdiction over persons committing tortuous acts within the state.
h.
Owners of In-state Property
i. Many states exercise jurisdiction over owners of in-state property in causes of action arising from that property.
i.
Domestic Relations
i. Courts sometimes try to take personal jurisdiction over a non-resident party to domestic relations case. However, requirement of
minimum contacts applies here, and that requirement may bar the state from taking jurisdiction
1.
Kulko v. Superior Court (1978) no jurisdiction
a.
A father resides in New York, and permits his minor daughter to go to CA to live there with her mother.
b.
Held: the father does not have sufficient minimum contacts with CA to allow the mother to bring an in
personam suit in CA against father for increased child support
Jurisdiction Over Corporations
a.
Domestic Corporations
i. Any action may be brought against a domestic corporation (i.e. one which is incorporated in the forum state)
b.
Minimum Contacts
i. Forum state may exercise jurisdiction if corporation has minimum contacts such that maintenance of suit does not offend traditional
notions of fair play and substantial justice
ii. Established by International Shoe (1945)
iii. Factors for Minimum Contacts Established by International Shoe
1.
Received the benefits and protection of the laws of the state;
2.
Their contacts with the state were systematic and continuous;
3.
The state claim arises out of activity of in-state activities; and
4.
The balance of convenience favors the home state.
c.

Stream of Commerce: Out-of-State with Consequences in Forum State (Stream of Commerce)

i.
ii.

Some in-state tortuous act long-arm clauses have been interpreted to include acts done outside of the state which produce tortious
consequences within the state. (STREAM OF COMMERCE)
i.e. a vendor sells a product that he knows will be used in the state may constitutionally be required to defend in that state, if the
product causes injury in that state (even though tortuous act of selling it was done out-of-state)
1.
Gray v. American Radiator Corp. (1961) jurisdiction exists
2.
Titan (OH company) makes valves which it sells to another company, which incorporates them into a boiler which it sells
to P. The boiler explodes in IL, injuring P who sues Titan in IL. IL long-arm statute allows suit in IL based on tortuous
act within the state. Held: a tortuous act is committed where the damage occurs. Therefore, IL has jurisdiction.
3.
Held: The 14th Amendments due process requirement of minimal contacts can be satisfied by one single act of selling an
item within the forum state (even if this selling is not established practice and done through a middleman) and therefore the
state can assert jurisdiction.

iii.
d.

Purposeful Availment: usually, a corporation will be found to have the requisite minimum contacts with the forum state only if the
corporation has somehow voluntarily sought to do business in, or with residents of, the forum state.
i. International Shoe (1945) Minimum Contacts Found

1.

ii.

iii.

e.

D has no activities in WA except for the activities of its salesmen, who live in the state and work from their homes. All
orders are sent by the salesmen to the home office, and approved at the home office. Salesmen earn a total of $31,000 per
year in commissions
2.
Held: company has minimum contacts sufficient for jurisdiction
McGee v. International Life Insurance Co. (1957) Minimum Contacts found (maintenance of one item previously sold in
forum state is sufficient; D knew it was transacting with our of state resident)
1.
D is a Texas insurance company. It does not solicit business in CA. However, it takes over, from a previous insurance
company, a policy written on the like of X, a CA resident. D sends X a new policy; X send premiums from his CA home to
Ds out-of-state office. X dies. P beneficiary is a CA resident and sued D in CA for payment under the policy
2.
Held: D has minimum contacts and jurisdiction exists
Hanson v. Denckla (1958) No minimum contacts found (D must purposefully avail himself of FL law)
1.
D is a DE bank, which acts as trustee of a certain trust. S, the settler of the trust, is a PA resident at the time she sets up the
trust. Years later, she moved to FL. Later, her two children, also FL residents, want to sue D in FL for a judgment that they
are entitled to the remaining trust assets. D has no other contacts in FL.
2.
D has no contacts in FL and there was no purposeful availment

Use of an Agent
i.

f.

g.

Sometimes an out-of-state company does not itself conduct activities within the forum state, but uses another company as an agent
(i.e. subsidiary) in the state. Even though all business within the state is done by the agent, the principle foreign/out-of-state
corporation can be sued there, if the agent does a significant amount of business on foreign companys behalf.
Operation of Internet Website
i. Targeting In-state residents
1.
There can be jurisdiction over the website operator if the operator intended to target residents of the forum state. If yes,
then minimum contacts.
ii. Passive site that just has information
1.
If a out-of-state website just passively posts info on the web, and does not especially want to reach in-staters or conduct
transactions with them, then there are no minimum contacts, even if in-state residents use the site
iii. Active site that tries to transact with ins-taters
1.
If D runs a website that actively tries to get in-staters to buy stuff, than that probably will be enough to establish minimum
contacts.
2.
If transactions are systematic and continuous with in-staters, then these contacts will be enough for jurisdiction in the state
on claims not relating to the in-state activities.

Products Liability Cases

i.

Effort to Market in forum state/purposeful availment

1.
The mere fact that a product manufactured or sold by D outside of the forum state finds its way into the forum state ad
causes injury there is not enough to subject D to personal jurisdiction there. Instead, D can be sued in the forum state only
if he made some effort to market in the forum state, either directly or indirectly.
2.

World-Wide Volkswagen v. Woodson (1980) no jurisdiction (no minimal contact; Ps

unilateral

activity; despite stream of commerce, no purposeful availment)

a.

ii.

Ps are injured in OK in an accident involving an allegedly defective car. They had purchased the car in NY
while they were NY residents. The Ps sue in OK. D1 is the distributor of the car, who distributed only on the
East coast. D2 is the dealer, whose showroom was in NY. Neither D1 or D2 sold cars in OK or did business
there
b.
Held: Neither D may be sued in OK. They did not make an effort to serve the OK market; no purposeful
availment. Product contact with OK was isolated occurrence due to unilateral activity.
c.
Brennan Dissent: (Evolutionist) Like McGee, Ds are putting cars out in a global market place where they can
be driven everywhere. If a plaintiff can show that his chosen forum state has a sufficient interest in the
litigation (or sufficient contacts within the defendant), then the defendant who cannot show some real injury to a
constitutionally protected interest should have no constitutional excuse not to appear. state has an interest to
protect OK citizens from defective cars.
Knowledge of In-state sales is enough to create minimal contacts/Stream of commerce not enough to establish jurisdiction
(reasonableness can defeat minimal contacts)
1.
If the our-of-state manufacturer makes or sells a product that it knows will be eventually sold in the forum state, this fact
by itself is probably enough to establish minimum contacts. However, if this is the only contact that exists, it may be
nonetheless unreasonable to establish jurisdiction
2.
Asahi Metal Industry Co. v. Superior Court (1987) No jurisdiction (though minimum contacts through stream of
commerce, jurisdiction is unreasonable)
a.
P is injured while riding a motorcycle in CA. He brings a products liability suit in CA against D, the Taiwanese
manufacturer who made the cycles rear innertube. D impleads X, the Japanese manufacturer of the tubes
valve assembly, claiming that X must pay D any amount that D has to pay to P. X has no contacts with CA
except that X knew that 1) tires made by D from Xs components were sold in the US, and 2) 20% of the US
sales were in CA.
b.
Held: X had minimum contacts with CA, because it put goods into stream of commerce and knew products
would reach the state. Despite contacts, jurisdiction would be unreasonable and unfair. X would have a big
burden in defending in CA. Also, this would create a foreign relations problem.
c.
Asahi rejects this stream of commerce as a basis for jurisdiction; it is not sufficient to prove availing self
of state laws. Jurisdiction must be reasonable.
d.
Five factors in Asahi:
i. burden on the defendant
ii. interests of the forum state
iii. plaintiffs interest in obtaining relief
iv. interstate judicial systems interest in obtaining the most efficient resolution of controversies
v. shared interest of the several states in furthering substantive social policies
e.
Scalia REJECTS reasonableness test

h.

Contract Cases
i.

ii.

iii.

i.

Class Action Plaintiffs

i.
ii.

iii.

j.

Contractual Relationship Involving the State

1.
Where a contract itself somehow ties the parties business activities into the forum state, this will be an important factor
tending to show the existence of minimum contacts. For instance, if one party is to make payments to the other, and the
latter will be receiving the payments in the forum state, this stream of payments coming into the state is likely to establish
minimum contacts and thus to permit the suit against the payor
2.
Burger King Corp. v. Rudzewicz (1985) Jurisdiction exists (minimal contacts existed)
a.
D runs a fast food restaurant in Michigan under franchise from P, which has its headquarters in FL. The
contract required D to make royalty payments in FL. P negotiated with FL office, purchased items from FL
office, and went to FL as part of training program.
b.
Held: P may sue D in FL. Payment stream to FL was an important factor in establishing jurisdiction, but not
dispositive. Minimum contacts because D was constantly interacting with forum state.
Choice of Law Clauses
1.
Where there is a contract between the parties to a suit, the fact that the contract contains a choice of law clause requiring
use of forum states law will also be a factor in determining jurisdiction (though not dispositive, choice of law clause will
tend to establish minimum contacts)
Choice of Forum Clauses
1.
Uncertainty in whether minimum contacts/reasonableness is satisfied creates incentive for companies to add choice of
forum clauses to their contracts.
An absent plaintiff in a class action that takes place in the forum state may be bound by the decision in the case, even if the plaintiff
did not have minimum contacts with the forum state.
Minimum contacts not necessary for Plaintiffs: In personam jurisdiction over non-resident class action plaintiffs does not violate the
14th amendments due process clause despite a lack of minimum contacts because there are different burdens between class action
plaintiffs and defendants and class action plaintiffs do require such thorough due process protections. For class action plaintiffs, due
process at a minimum requires that an absent plaintiff be provided with an opportunity to remove himself from the suit (this was done
here OK through mail).
Phillips Petroleum Co. v. Shutts jurisdiction exists
1.
Plaintiff class was composed of all persons owning a royalty interest in certain oil and gas leases being exploited by the
defendant, Phillips Petroleum. The claim was for interest alleged to be owed by Phillips to the class members on account
of late royalty payments. Of the 28,000 members of the class, fewer than 1,000 lived in Kansas, in whose state courts the
suit was brought. Only of 1% of the oil and gas leases involved in the suit where in KS land.

Libel & Slander Cases Forseeability knew they would be read in the state/direct at
forum
i.
ii.

iii.

No more extensive contacts between D and the forum state must be shown in defamation suits than any other type of case.
Keeton v. Hustler Magazine jurisdiction existed
1.
NY resident sued Hustler in NH because it was the sole state where the suit would not have been barred by the statute of
limitations. P had no contacts with NH, except or the fact that Ps reputation in the state was allegedly libeled.
Nonetheless, Supreme Court held that residence in the forum state is not a separate requirement, and lack of residence will
not defeat jurisdiction established on the basis of Defendants contact.
Calder v. Jones jurisdiction existed
1.
P, a professional entertainer, brought suit in California Superior Court claiming that she had been libeled in an article
written and edited by National Enquirer in Florida. The Supreme Court held that it was proper for a court in California to
exercise jurisdiction over two Florida newspapermen in a libel action arising out of their intentional conduct in Florida
which was allegedly calculated to cause injuries to plaintiff in California.

Property Based Jurisdiction

A.

B.

In rem v. quasi in-rem

a.
In rem actions are ones which do not seek to impose liability on anyone, but instead seek to affect the interests of persons in a specific thing.
i. Shaffer has no effect on in rem actions because the land is directly related to the suit and minimum contacts are satisfied
b.
Quasi in rem actions are actins that would have been in personam if jurisdiction over Ds person had been attainable. Instead, property or
intangibles are seized not as the object of the litigation, but merely as means of satisfying a possible judgment against D
i. Quasi in rem judgments have no res judicata value (i.e. if P wins against D in a quasi in rem action in CT, he cannot in a later suit
against D in CA claim that the matter has been decided for all time. Instead, he must go through another trial on the merits if he
wishes to subject D to further liability)
1.
EXCEPTION: Some courts hold that of D makes a limited appearance (an appearance that does not confer jurisdiction) and
fully litigates certain issues, he will not be allowed to relitigate those issues in a subsequent trial. Other courts hold that
even here, the first suit will not prevent D from re-litigating the same issues later on.
Requirements of Minimum Contacts (Schaffer v. Heitner)
a.
Rule: Quasi in rem jurisdiction over D cannot be exercised unless D had such contacts minimum contacts with the forum state that in personam
jurisdiction could be exercised over him.
b.
Schaffer v. Heitner (1977) no jurisdiction (no contacts existed)
i. Facts: P brings a shareholders derivative suit in DE on behalf of XYZ corp. against 28 of XYZs non-resident directors and officers.
None of the activities complained of took place in DE, nor did any D have any other contact with DE. P takes advantage of DE statute
providing that any stock in a DE corporation is deemed to be present in DE, allowing that stock to be attached to provide quasi-in-rem
jurisdiction against the D owners. Thus, P is able to tie up each Ds XYZ stockholdings even though there is no connection to DE
ii. Held: this quasi in-rem jurisdiction violates due process. No D may be subjected to quasi-in-rem jurisdiction unless minimum
contacts exist.
1.
Where jurisdiction is asserted by state on basis of property alone rather than contacts and a) that the claim is unrelated to
the property and b) the property is intangible and c) there is no provision for a limited appearance and d) there is no state
statute asserting a special interest in the dispute, personal jurisdiction does not exist under International Shoe.
c.
Schaffer basically abolished the utility of quasi in rem jurisdiction since quasi in rem is only used when there is no personal jurisdiction, and
since the same minimum contacts needed for quasi in rem will suffice for personal jurisdiction, quasi in rem will rarely be advantageous.

d.

C.

D.

Limited appearance issue in Schaffer: a limited appearance allows someone whose property has been seized for an unrelated claim to come to
forum state and defend on merits and thereby render herself vulnerable only up to the amount of property seized (not consenting to in personam
jurisdiction). This is standard but DL did not allow it.
i. With no choices to contest jurisdiction, what were Ds choices:
1.
Default and lose 1.2 million in stocks
2.
Can show up and become subject to entire claim (more than $1.2 million) in in personam jurisdiction
a.
This looks like DL is forcing corporations to accept jurisdiction
Jurisdiction Based on Debt, Insurance, or Obligation
a.
One big effect of Schaffer is that the attachment of a third partys debt to the defendant, or attachment of an insurance companys obligation to
defend and pay a claim, are largely wiped out as bases for jurisdiction.
i. i.e. Harris v. Balk
1.
Harris, of NC owes $180 to Balk of NC. Balk owes Epstein of MD $300. While Harris was visiting MD, Epstein attaches
Harris debt to Balk by serving Harris with process in a MD suit.
2.
Under pre-Schaffer law, this established quasi in rem jurisdiction over the $180 debt, on the theory that the debt goes
wherever the debtor goes. If Epstein won, he could require Harris to pay the $180 to him rather than Balk.
3.
After Schaffer, the fact that Balks debtor happened to be in NC and available for personal service was irrelevant. Since
Balk himself did not have minimum contacts with MD, and thus could not be sued there personally, Schaffer means that a
quasi in rem suit based on Harris debt to him may also not be heard in MD.
Limited Appearance v. Special Appearance
a.
Limited Appearance
i. Under a limited appearance, D appears in an in rem or quasi in rem suit, contests the case on its merits, but is subjected to liability
only to the extent of the property attached or debt garnished by the court
b.
Special Appearance
i. D appears and challenges in personam jurisdiction without contesting merits of the claim

Internet
1. Whether the website is passive or active. If the website is active, then courts generally believe that the website has more substantive contact with the plaintiff's
choice of forum.
2. What market is the website owner aiming to serve. If the website aims to target the plaintiff's forum state, the a court will generally consider that there was
purposeful availment (as in Denckla). This test is stated in Calder. Purposeful availment will be even stronger if the website mentions the forum state.
Reasonableness can come into play, for example, in situations where the company operating the website is no longer in business. The jurisdiction may be unreasonable
in thes cases. Also, if the internet site is an auction company, it may be unreasonable to assert jurisidction because their contact with the forum state is accidental.

Federal Jurisdiction over the Parties

A.

B.

C.

Personal Jurisdiction in Federal Cases

a.
State long-arm: As a general rule, in both diversity actions and federal question cases, whether a district court has jurisdiction over a defendant
depends on the long-arm statute of the state where the district court sits. Rule 4(k)(1)
i. Once you determine a state long-arm statute applies, then you see if the application of this state-long arm statute violates the 5 th
Amendments due process clause.
b.
Unless Jurisdiction is specified by federal law: Jurisdiction using state long-arm statute is unnecessary if the case is one dealing with a federal
question and the law at issue specifically grants exclusive jurisdiction to federal courts.
c.
Omni Capital Intl v. Rudolf Wolff & Co. no jurisdiction
i. Facts: Omni (NY Corp.) marketed investment program on London Metals Exchange. Rudolf (GB; third party D) was employed as a
broker to handle trades on that Exchange. Gourlay (GB; third party D) acted a Rudolfs representative in soliciting this business.
Investors sued Omni for poor performance. Omni impleaded corporation Rudolf and Gourlay alleging fraudulent inducement to
participate in an investment program, in violation of the Commodity Exchange Act (CEA).
ii. Holding: Under the 5th Amendments due process clause, a federal district court cannot exercise jurisdiction over a foreign defendant
after nationwide service of process when there is no statute or rule making them amenable to service (long-arm statute does not reach
them & federal law does not authorize federal court jurisdiction) because then there is no notice.
iii. Rule 4(k)(2): This case created 4(k)(2). Under 4(k)(2), there would be jurisdiction in Omni. On a fairness basis, this may not be
Constitutional. Reasonableness may not matter, only convenience because if there is a federal question, substantive law and
procedures are the same. Only thing that matters is what district court you are in.
Minimum Contacts with the United States: Rule 4(k)(2) conferred on all district courts world-wide jurisdiction over defendants in federal question cases
if the defendant is not otherwise subject to jurisdiction in any state. In effect, this applies only to foreign country defendants P must show that D can be
haled into any state court over the particular issue.
a.
This statute puts P in position of having to argue against jurisdiction in order to defeat 4(k)(2). P has to argue that there is state jurisdiction to
defeat this claim.
Territory for Service/Four ways Service of Process may be Made
a.
1 -- General rule (FRCP 4(k)(1)(A) (serviceable pursuant to state long-arm statute):
i. As a general rule, in both diversity actions and federal question cases, service if process may be made only:
1.
(1) within the territorial limits of the state in which the District Court sits; or
2.
(2) anywhere else permitted by the state law of the state where the District Court sits (state long-arm)
ii. Element 1 Example: P sues D in northern district of Ohio. Service will be territorially valid if D is served with process anywhere
within the state of Ohio since that is where the district court sits. This is true even if service takes place in southern District of Ohio
iii. Element 2 Example: Under NJ long-arm statute, if a non-resident is involved in a motor vehicle accident in NJ with a NJ resident, NJ
resident may serve non-resident outside NJ, and the NJ courts may then exercise jurisdiction. P, a NJ resident, and D, a CA resident,
have an accident in NJ. P may sue in diversity in federal district court of NJ. P may serve D with process in CA, because the longarm of the state where the district court sits would allow such service.
b.
2 -- 100-Mile Bulge (FRCP 4(k)(1)(B) Only applies to Rule 14 & 19 parties
i. A special 100-mile bulge provision allows for out-of-state service sometimes, even if local law does not permit it. When the provision
applies, it allows service anywhere (even across a state boundary) within a 100-mile radius of the federal courthouse where suit is

c.
d.

pending. Bulge provision only applies where out-of-staters will be brought in as additional parties to an already pending action . . .
(see C-11 of Emanuel)
3 -- Nationwide Service of Process
i. In several kinds of cases, Congress has provided for nationwide service of process. Suits against federal officials and agencies, and
suits based on statutory interpleader, are examples of nationwide service.
4 -- Foreign Defendant Not Servable in Any State (FRCP 4(k)(2))
i. This rule allows a federal question suit to be brought against any person or organization who cannot be sued in any state court
(almost always because they are a foreigner)
1.
i.e. D, a French company, without setting foot in the US, solicits business by phone and mail from a large number of states.
D does not solicit enough from the residents of any one state to satisfy the states long-arm. Therefore, D could be sued in
any state court for a claim concerning its activities. P, a NY investor, brings a suit based on federal securities laws against
D in the federal district court for the Southern District of NY. Assuming that D had minimum contacts with US as a whole,
the NY federal court will have personal jurisdiction over D because D is not subject to jurisdiction of any state.

Defenses to Claims of Jurisdiction

A.

B.

Special Appearance: In a special appearance, D appears in the action with the express purpose of making a jurisdictional objection. By making a special
appearance, D has not consented to the exercise of jurisdiction.
a.
Most courts allow a defendant who has unsuccessfully made a special appearance to then defend on the merits, without losing his right to appeal
the jurisdictional issue.
b.
Federal Rule: Federal courts have abolished special appearance. Instead, a motion to dismiss for lack of jurisdiction exists; making this motion
does not subject D to jurisdiction. FRCP 12(B)(2)
i. Waiver: The right to make a motion to dismiss or lack of jurisdiction is waived in the federal system if
1.
(1) D makes a motion raising any defenses listed in Rule 12, and the personal jurisdiction defense is not included; or
2.
(2) D neither makes a Rule 12 motion nor raises the defense in his answer
Collateral Attack
a.
A judgment entered in one jurisdiction may generally be enforced in another
b.
However, if D defaults in an action in State 1, she may collateral attack the default judgment when it is sued upon in State 2. Most commonly, D
collaterally attacks the earlier judgment on the grounds that State 1 did not have personal jurisdiction over her, or did not have valid subject
matter jurisdiction.
c.
Waiver
i. A D who appeared in the original action without objecting to jurisdiction, or one who unsuccessfully litigated he jurisdictional issue
in the first action, may not collaterally attack the judgment. Instead, D can appeal to Appeals Court in first state.

Choice of Law Standards (which state law should apply?)

See Choice of Law in Transfer section
A.

B.

C.

History
a.

Old View: Choice of law were very clear. For torts, the law was where injury took place was the law that was applied. This denied people forum
shopping for advantageous law, but you get better procedures. With expansion of personal jurisdiction, states were applying a lot of other states
laws.
b.
New View: In 1960s, there were changes in choice of law. Evolutionists changed notions of due process. They believed that old rules regularly
required that courts were frequently applying laws of other states. They did not always get it right.
i. This revolution created new opportunities for forum shopping (this is coinciding with new opportunities for jurisdictional forum
shopping).
ii. This revolution makes things more efficient because in forum shopping for jurisdiction you can predict what law they will apply (see
Kazoway p. 220).
New Rule: A court can apply a states substantive law under the 14th amendment only if that state whose law is being used has significant contact,
significant aggregation of contacts of parties, or a transaction giving rise to litigation, thereby creating state interests, such that choice of law is
neither arbitrary nor fundamentally unfair. This law tries to prevent states from adjudicating disputes where they have no interest.
a.
Allstate Insurance v. Hague jurisdiction existed because of contacts and choice of MI law was OK
i. Facts: Decedent, a Wisconsin resident, died from injuries suffered in an automobile accident in Wisconsin involving another
Wisconsin resident. Decedent's wife, sought to collect uninsured motorist coverage on all three of decedent's vehicles. Minnesota law
allowed stacking of the three uninsured motorist coverages, while Wisconsin law did not. Wife sued petitioner in Minnesota, which
chose to use its own substantive law. Husband worked in MN. He commuted to MN. Allstate did have a presence in MN. Wife lived
in MN prior to commencement of lawsuit. Accident in WI; he was not driving to MN at the time; cars parked in WI.
ii. Issue: Does application of MI choice of law violate the Ds rights under the due process clause? YES
iii. Holding: A court can apply a states law under the 14th amendment and full-faith and credit clause if an involved party worked in that
state, commuted to that state regularly, and the defendant did business in that state.
Klaxon: Court held that, under Erie, federal courts must apply the forum states choice of law rules as well as its substantive law (this includes
statute of limitations, as in Ferens). (POLICY: this can create forum shopping because, instead of going from state to state, people can sue from
district to district; perhaps we should let federal judges decide)
a.
If P moves for transfer: The law of the transferor forum will apply even it is the plaintiff, not the defendant, who moves for the transfer.
i. Ferens v. John Deere Co.
1.
Facts: P (PA resident) brings a diversity action against D in Mississippi federal court. The court grants Ds motion to have
the case moved to PA District Court. Mississippi federal court would have applied MS state law choice of law rules
(which is substantive) MS choice of law rules was using PA law and MS statute of limitations. Therefore, PA District
Court must apply MSs statute of limitations. statute of limitations considered substantive law.
2.
Held: Regardless of who initiates the transfer to another federal district court, the transferee court must always follow the
choice of law rules including statute of limitations -- that prevailed in the transferor court. this is strange because it
would not have been brought in PA

D.

Choice of law is concerned with relationship between nature of claim and forum state
a.
This adds nature of the claim and looks at it from the point of view of the states connection, not the defendants connection with the state
b.
Its a one-step test that does not look at convenience; convenience does not matter because it has been taken care of under jurisdictional analysis.
c.
Due process does not apply much of a limitation in choice of law cases

E.

Class Actions:

F.

Statute of Limitations

If there is a conflict of law, a court can apply a states law under the 14th amendment only if that state has significant contact or
significant aggregation of contacts with all plaintiff class members, creating state interests, such that choice of law is neither arbitrary nor fundamentally
unfair; General jurisdiction not sufficient for state to use its own choice of law.
a.
Phillips Petroleum Co. v. Shutts jurisdiction existed, but choice of law violated 14th Amendment (choice of law rules applying a certain law)
i. Facts: Plaintiff class was composed of all persons owning a royalty interest in certain oil and gas leases being exploited by the
defendant, Phillips Petroleum. The claim was for interest alleged to be owed by Phillips to the class members on account of late
royalty payments. Of the 28,000 members of the class, fewer than 1,000 lived in Kansas, in whose state courts the suit was brought.
Only of 1% of the oil and gas leases involved in the suit where in KS land.
ii. Issue: Assuming that there is a conflict between KS law and OK/TX law, does KSs usage of KS law in governing a class action suit
where most plaintiffs do not reside on KS and the leases were not in KS violate the 14th amendments due process clause and the fullfaith and credit clause? YES
iii. Holding: Kansas did not have significant contact with each of the non resident class members.
1.
If there is a conflict of laws, a court cannot apply a states law under the 14th amendment if there is no common fund in
Kansas, the vast majority of the leases do not take place in KS, and the vast majority of the people do not live in KS
(despite fact that a legitimate state interest may exist).
b.
For class actions, there is a more rigid test for choice of law than jurisdiction.
a.
b.

c.

Procedural, not Substantive: A state applies its own choice of law rules and its own procedures. A state that has jurisdiction but is applying
another states choice of law can use its own statute of limitations without violating the full faith and credit clause because statute of limitations is
a procedural device.
Sun Oil Co. (D) v. Wortman (P) (SCALIA) same case, sent down to apply TX law; KS wanted to apply own procedural law. While KS
cannot apply own substantive law, it can apply own procedural law. statute if limitations is porcedural
i. Facts: Sun Oil oil field lessee sought review of the decision that it was liable to Wortman et. al. oil field lessors for interest on gas
royalties. Interest was sought for a period during which Sun Oil charged increased gas prices but did not raise royalties to respondents.
ii. Dissent: BRENNAN does not like procedural/substantive distinction. We have to look at fairness issues in applying longer statute in
KS, versus shorter statute in OK and TX. You want to give people an opportunity to put some event behind them and the procedural
interest of litigating a case while it is fresh. Brennan says that there is enough of a procedural interest here to make this fair.
Why should states have control over procedural rules?:
i. They should determine their workload, because a lot of litigation costs $
ii. With substantive law, costs are the same
iii. Also, there is a value in having uniform rules among the state; this creates more efficient and better litigation
iv. Forum shopping: This decision opens up form forum shopping because statute of limitations is procedural and therefore when you get
jurisdiction, you get beneficial statute of limitations.

Notice
A.

Due Process: The 14th Amendments Due Process Clause requires that notice be "reasonably calculated, under all circumstances" to apprise interested parties
of the pendency of the action and afford them an opportunity to present their objections." Mullane To determine whether notice does or does not violate the
due process clause, you must examine the interests of the plaintiff, defendant, and the state. The notice that would be adequate is method that you would
expect to use to reach an individual.
a.
Interests Analysis:
i. State Interests
1.
interest in efficient filing of common trust funds
2.
State has a greater interest in notifying those who are known and such notice is inexpensive.
3.
State has less of an interest in notifying those who are unknown.
ii. Interests of Plaintiffs (beneficiaries)
1.
interest in being adequately notified and have ability to protect their claims
iii. State Burdens
1.
Giving notice to those who they know, is not burdensome
2.
Notice to those they do not know is burdensome
iv. Mitigating factors for beneficiaries
1.
Beneficiaries need to go through NY newspapers
2.
When fund was created, known beneficiaries were told that this notice was going to take place
3.
Also, guardians exist, but this may not be an effective mitigating factor because guardians have less incentives because
they get a flat fee
4.
In-state residents interests are protected and will be enforcing their rights. This enforcement will also protect those out-ofstate. In-state resident will look out for out-of-state interests
5.
If we create an expensive notice system, then beneficiaries will suffer because they share an interest in state of keeping the
cost down of creating trusts
b.
Notice Sufficient: Notice does not have to be provided inside the state according to International Shoe, but notice within the boundaries of the
state is not sufficient for the state to assert jurisdiction. See Mullane
c.
Mullane v. Central Hanover Bank (1950) Publication insufficient to establish notice for those known parties
i. Facts: Hanover Bank administered numerous small trust funds. The bank wished to settle the years account for the funds, which it
had pooled together for investment purposes. Bank brought proceedings to certify the settlement of the accounts, pursuant to NY state
law. Court appointed Mullane to represent all those who had an interest in the trust funds. The only notice to the beneficiaries was
through a newspaper announcement. The Bank had available to it names and addresses of the beneficiaries, but claimed it would be
too costly to notify them. Mullane objected to courts jurisdiction, claiming that requirement of reasonable notice was not met.
ii. Held: The means of notice employed must be such as one desirous of actually informing the absentee might reasonably adopt to
accomplish it. This may be limited by reasonable considerations of the economy. Publication was insufficient notice to those
beneficiaries whose names and addresses were known to the bank. It was sufficient for those who were not known.

d.

e.

2.

Service (Rule 4)
B.

D.

E.

3.

Majority Opinion of Mullane

i. If company is already communicating with beneficiaries, then they can give individual notice (FOR KNOWN BENEFICIARIES,
NOTICE INSUFICCIENT)
ii. Regular mail is sufficient; enough people will get notice by mail and their interests will be enough in common with those who do not
get it because they are out of state, that their interests will be adequately served. (FOR UNKNOWN BENEFICIARIES, NOTICE
SUFFICIENT)
iii. Dignitary interests: Look at fact whether this type pf notice is actually effective and represents a form of communication that people
would normally use to contact someone this would satisfy dignitary interests.
Normative Concerns:
i. Efficiency If we create difficult notice laws, then we may lose benefits and efficiency of trust; good cases may be screened out
ii. Fairness will people be left with a feeling that did not have an opportunity to voice their concerns during the dispute?
iii. Legitimacy Should NY have the final world through its common trust find law on what constitutes due process? Concern is that
NY is benefiting and will set up a system that damages beneficiaries out of state.
iv. Distribution NY beneficiaries being benefited while out-of-staters are not

Rule: Even if the court has authority to judge the dispute between the parties or over the property before it, the court may not proceed unless D received
adequate notice of the case against him.
a.
Reasonableness Test: In order for D to have received adequate notice, it is not necessary that he actually have learned about the suit. Rather, the
procedures used to alert him must have been reasonably likely to inform him, even if they failed to do so.
b.
Substitute Service: Two forms of service: a) personal service and b) substitute service. Personal service handing the papers to D himself will
always suffice as adequate notice. But all states, and the federal system, allow substitute service in most instances. This is service other than
handing over the papers.
i. Leave at Dwelling: FRCP 4(e)(2) allows the papers to be left with a person of suitable age and discretion residing in the dwelling
place in question.
ii. Mail: Some states, and the federal system allow service to be made by first class mail. This is usually only allowable if D returns an
acknowledgment or waiver form to Ps lawyer. If form not returned, some other method must be used. See FRCP 4(e)(1)
c.
Service on Out-of-Staters
i. Mail Notice
ii. Public Official: Sometimes, service may be made by serving a state official, plus giving notice by mail to D.
iii. Newspaper Publications: If Ds identity or residence are unknown, some states allow notice by publication. But this may only be used
where D truly cannot be found by reasonable effort.
d.
Foreign Defendants: Rule 4(f)
e.
Corporations
i. Corporate Officer: Many states require that a corporation must designate a corporate official to receive process for suits against the
company
ii. Federal Rule FRCP 4(h)(1): The rule is more liberal in that it allows service on any person associated with the corporation who is
sufficiently high placement. Service may be made by giving papers to an officer, a managing or general agent, or to any other agent
authorized by appointment or by law to receive service if process.
f.
Waiver: Rule 4(d) says that you can send summons and complaint and suggest that D waive compliance of normal service standards.
i. D has choice to waive ordinary formalities; D may not waive it, and insists conformance to standards
ii. If D does no waive it, then D has to pay for costs of service (this is a shifting of cost)
Manner of Service
a.
Individual: Service can be made under Rule 4(e) in several ways:
i. Personal by serving personally
ii. Substitute by handing the summons and complaint to a person of ion residing in Ds residence
iii. Agent by serving agent appointed or designated by law to receive process (DMV in some states)
iv. Local state law by serving D in the manner provided by either: 1) the law of the state where the District court sits, if that state has
such a provision, or 2) the law of the state where the person is being served.
b.
Corporation: Service on a Corporation may be made by leaving the papers with an officer, a managing or general agent, or any other agent
authorized by appointment or by law to receive process for the corporation. (Rule 4(h)(1))
i. Local State Law as with individuals, service on a corporation may also be made in the manner provided by local law of (i) the state
where the action is pending or (ii) the state where service is made
c.
Waiver of Service: Rule 4(d) allows plaintiff to in effect serve the summons and complaint by mail, provided that the defendant cooperates. P
mails to D a request for waver of service; if D agrees, no actual in-person service is needed.
i. Incentive D is free to reuse to grant the waiver, by which P must serve the summons in-person. But if D refuses, the court will
impose costs subsequently incurred by P in effecting service on D unless good cause can be shown for Ds refusal. Rule 4(d)(2)
d.
Summons & Complaint must be delivered Rule 4(c)(1)
e.
Service Cannot be made by a party to the suit 4(c)(2)
Amenability to Suit: If D was served in an appropriate territory, and in an appropriate manner, you still have to determine whether D is closely enough linked
to the state where the federal district court sits to make him amenable to suit in that court.
a.
Federal Question: In a federal question case, most courts hold that D is amenable to suit in their court if jurisdiction could constitutionally be
exercised over him in the state courts of the state where the federal court is sitting, even if the state court itself would not (because of a limited
long-arm statute) have jurisdiction.
b.
Diversity: In diversity cases, the federal courts exercise only the jurisdiction that is allowed by the statutory law of the state in which they sit. So
if the state statutory law does not go to the limits of due process, the federal court will follow suit.

Venue ( 1391)
A.

Definition: Venue refers to the place within a sovereign jurisdiction in which a given action is to be brought. It matters if jurisdiction over the parties has
been established. Since venue is based on where defendant is located, venue reduces the range of plaintiffs choice of forum.
a.
For example, jurisdiction tells you that CA has jurisdiction. Venue rules tells you where within CA a lawsuit is to go forward.

10

b.

B.

4.

Rule 4(k) restricts jurisdiction based on state long-arm statutes. Typically what happens in federal system is that state long arm statutes limit the
number of federal districts where a suit can be brought. Venue rules will limit that range of federal districts even further. Venue adds another
layer.
Federal Actions: Question is which federal district court shall try the action?
a.
Still Need Personal Jurisdiction: When you consider a venue problem, remember that venue is not a substitute for personal jurisdiction.
b.
Three Ways of getting Venue in a Particular Jurisdiction:
i. (1) If any defendant resides in that district, and all defendants reside in the state containing the district;
ii. (2) if a substantial part of the events . . . giving rise to the claim occurred, or a substantial part of property that is subject of the action
is situated, I the district; and
iii. (3) if at least one defendant is reachable in the district, and no other district qualifies.
c.
1) Defendants Residence Venue: For both diversity and federal question cases, venue lies in any district where any defendant resides, so long
as, if there is more than one defendant, all the defendants reside in the state containing that district. 1391(a)(1) & 1391(b)(1) (if one live in
southern and more of them in northern, then venue can be in southern district) focus is on district boundaries, not state boundaries
d.
2) Place of Events or Property Venue: For both diversity and federal question cases, venue lies in any district in which substantial part of the
events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated . . . 1391(a)(2)
& 1391(b)(2)
i. Multiple Districts: There can be multiple districts qualifying for place of events venue, as long as each district was the locus for a
substantial part of events relating to the claim.
e.
3) Escape Hatch provision: For both diversity and federal question cases, there is an escape hatch, by which venue may be founded in a
district with which some or all defendants have close ties, if there is no district in which the action may otherwise be brought. This is used when
events mainly happened abroad.
i. Diversity Cases: In a diversity case, the escape hatch gives venue in any judicial district in which any defendant is subject to
personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.
1391(a)(3) any district where any one defendant has contacts can assert jurisdiction
ii. Federal Question Cases: In federal question cases, the escape hatch provision gives venue in any judicial district in which any
defendant may be found, if there is no district in which the action may otherwise be brought. 1391(b)(3) A defendant is probably
found in a district if he can be subject to personal jurisdiction in that district. any district where any defendant be found
f.
No Plaintiffs Residence Venue: There is no venue based on plaintiffs residence.
g.
Corporation expansive definition: The residence of a corporation for venue purposes matters only if the corporation is a defendant. A
corporation is deemed to be a resident of any district as to which the corporation would have minimum contacts necessary to support personal
jurisdiction if that district were a separate state. Thus, a corporation is a resident of at least the district where is has its principle place of
business, any district where it has substantial operations. SEE 1391(c) which defines corporate residence for 1391(a)(1) and 1391(b)(1)
i. Expansive definition of residence subjects a corporation to suit in more federal districts.
h.
Individuals limited definition: Venue over claims against individuals is more limited. Individuals are deemed to reside in place of habitual
dwelling
i.
1391. Venue generally
i. (a) (DIVERSITY CASES) A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise
provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a
judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property
that is the subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time
the action is commenced, if there is no district in which the action may otherwise be brought.
ii. (b) (FEDERAL QUESTION CASES) A civil action wherein jurisdiction is not founded solely on diversity of citizenship may, except
as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same
State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part
of property that is the subject of the action is situated, or (3) a judicial district in which any defendant may be found, if there is no
district in which the action may otherwise be brought. . . .

Forum Non Conveniens

A.

B.

C.

D.

E.

Definition: Forum nonconvenience attempts to direct the litigation to a convenient, if not the most convenient, forum even though jurisdiction may be
authorized in the prior forum. Discretionary doctrine developed by the courts to enable them to decline to hear a case that was within their jurisdiction.
They are legally empowered to hear the case but they can say they don't want it. It has been codified in some states (CA), but even where this has happened,
what this tends to do is to recite the standard established by the courts. It allows the court to examine the alternative forum and oversee the process of the
case going to other forum. It can dismiss on forum non gourds, but it can stay the action pending the plaintiff refiling in another forum and, potentially, the
Ds waiving certain jurisdictional objections.
Attempts to direct the litigation to a convenient, if not the most convenient, forum even though jurisdiction may be authorized in the prior forum.
Discretionary doctrine developed by the courts to enable them to decline to hear a case that was within their jurisdiction. They are legally empowered to
hear the case but they can say they don't want it. It has been codified in some states (CA), but even where this has happened, what this tends to do is to
recite the standard established by the courts.
State Doctrine: Under this doctrine, the state may use its discretion not to hear the case in a county where there is statutory venue. Sometimes this involves
shifting the case to a different place within the state. At other times, it involves the state not having the case take place in the state at all. Usually, it is the D
who moves to have the case dismissed or transferred from forum non conveniens. STATE TO STATE OR STATE TO COUNTRY
a.
Factors: Burden on D
i. Whether P is a state resident (if so, he has a strong case for case to be heard in his home state)
1.
whether P assents to jurisdiction in new forum
ii. Whether witnesses and sources of proof are more available in a different state or county; and
iii. Whether the forums own state laws will govern the action (transfer is more likely if state law controls)
iv. What are the interests of the current forum in hearing the litigation versus the interest of the forum that the D is proposing
Federal Doctrine: In the federal system, when a defendant successfully moves for forum non convenience, the original court transfers the case to another
district, rather than dismissing it. Under 1404(a), for the convenience of parties and witnesses . . .a district court may transfer any civil action to any other
district or division where it might have been brought.
a.
Defendants motion: usually, it is the defendant who moves for forum non conveniens. When this happens, the case may be transferred only to a
district where P would have had the right, independent of the wishes of D, to bring the action.
b.
Choice of Law: When federal forum nonconvenience is granted, the state law of the transferor court is to be applied by the transferee court.
Guideline for Forum Nonconvenience

11

a.

F.

G.

5.

Exercise of Discretion: Forum non conveniens is an exercise of discretion? Appellate court can only reverse if there is abuse of discretion. Test:
Is there a rational basis for trial courts decision.
b.
Defendants burden: Defendant has burden of establishing that this is not a convenient forum and the case should be sent somewhere else.
c.
Presumption for Place of Business: Presumption of convenience in defendants place of incorporation or principal place of business (and
therefore case should not be transferred)
i. If you applied this to all cases, in some cases most of the evidence would be elsewhere in the cases of defective products
ii. In Stangvik and Piper, this presumption did not exist.
d.
Ps choice of forum is presumed to be convenient: Should presumption exist in favor of Ps forum choice?
i. Yes justification is that, since P usually has burden on the merits of the case, we should give P some discretion on where to
discharge that burden
ii. Does a presumption exist?
1.
If P is a forum resident YES
2.
If P is US non-forum resident generally YES
a.
Foreign policy considerations do not apply here
3.
P is a non US citizen, let alone not a forum citizen NO/LESS DEFERENCE (see Piper and Stangvik)
iii. Presumption applies with less force when P is foreign: In cases where the doctrine of forum non conveniens is invoked by the
defendant and the plaintiff is a foreigner, the presumption in favor of the plaintiffs choice of forum applies with less force. Moreover,
the presumption that Ds place of business is a convenient forum is less when P is foreign.
1.
Piper Aircraft Co. v. Reyno case transferred based on forum non convenience
2.
Stangvik v. Shiley (CA) case transferred based on forum nonconveniens
e.
Possibility of Unfavorable ruling does not bar transfer: Under the doctrine of forum non conveniens, the possibility of an unfavorable change in
the law that would adversely affect the plaintiff should not, by itself, bar dismissal. Plaintiffs may not defeat a motion to dismiss on the ground of
forum non conveniens merely by showing that the substantive law that would be applied in the alternative forum is less favorable to the plaintiffs
than that of the chosen forum. Possibility of no recourse, however, may bar transfer.
i. Piper Aircraft Co. v. Reyno case transferred based on forum non convenience
1.
Facts: Ps decedents died in an aircraft in the Scottish highlands. All the decedents were Scottish residents, as were their
heirs. As the decedents' personal representative, P filed suit against petitioner in the United States because D manufactured
the aircraft in PA and because the law was more favorable there. D wanted to litigate the tort action in Scotland, and filed to
dismiss the action in Pennsylvania. One of the D was a PA company
2.
Holding: District court did not abuse its discretion in dismissing the case on nonconveniens grounds. That the plaintiffs
might benefit by the application of California law was not a factor to be considered.
ii. Stangvik v. Shiley (CA) case dismissed based on forum nonconvenience
1.
Facts: Plaintiffs, Swedish and Norwegian survivors of heart valve recipients, filed suits against defendants, California heart
valve manufacturer and Delaware parent corporation, alleging that the heart valves were defective. Defendants' motion to
dismiss or stay the actions on the ground of forum non conveniens was granted by the trial court
2.
Holding: Trial courts ruling was not an abuse of discretion.
f.
Would P have remedy in new forum?: Transfer will not be granted where plaintiff lacks an effective remedy in the transferee forum.
i. This is not determinative
ii. Some remedy has to be available, but it does not have to be as good (See Piper)
g.
Considering Public v. Private Interests
i. Public: Court congestion; Protecting interests of jurors; Weighing competing interests of state and alternative jurisdiction
ii. Private: Costs of obtaining witnesses; Enforceability of ensuing judgment
Why does forum nonconvenience exist?
a.
Allows courts to provide an efficient forum
b.
Limit congestion in courts
c.
Protects states from having to rule on cases that have nothing to do with its citizens
d.
Law of specific jurisdiction does not provide us with a refined set of categories allowing us to provide the most efficient jurisdiction
e.
This creates a more refined system that does not exist in jurisdiction
f.
P has burden with respect to jurisdiction; D has burden with respect to forum non conveniens
Borchers we should have convenience imputed

Transfer Within the Federal System ( 1404)

A.

B.

Transfer (28 USC s1404(a)) In the federal system, a defendant can seek a transfer to a more convenient district court. Under 28 USC s1404(a), for the
convenience of parties and witnesses . . . a district court may transfer any civil action to any other district or division where it might have been brought.
When P & D moves it can only be done to a district where the D could have initially been served with process (personal jurisdiction). Look for alternative
venues.
a.
1404. Change of venue
i. (a) For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other
district or division where it might have been brought.
ii. (b) Upon motion, consent or stipulation of all parties, any action, suit or proceeding of a civil nature or any motion or hearing thereof,
may be transferred, in the discretion of the court, from the division in which pending to any other division in the same district.
Transfer of proceedings in rem brought by or on behalf of the United States may be transferred under this section without the consent
of the United States where all other parties request transfer.
iii. (c) A district court may order any civil action to be tried at any place within the division in which it is pending.
Interpretation: The phrase where it might have been brought has been interpreted so as to sharply limit the districts to which an action may be transferred.
a.
By Ps Motion: Transfer on the motion of the plaintiff may be made only to a district where the defendant could initially have been served with
process (pursuant to long-arm statute.) Also, the district to which the action is transferred must be one in which venue would have originally been
proper.
b.
By Ds motion: Transfer on the motion of defendant may be made only to those districts where plaintiff would have had the right,
independent of the wishes of the defendant, to bring the action. Thus, consent by the defendant will not permit transfer to a forum where the
action could not have originally been commenced. Hoffman v. Blaski

12

i.

C.

So if a suit in a particular district would not have been possible, as an initial matter, because one or more defendants could not be
personally served there, or because venue would not have been proper there, even the consent by all defendants would not authorize
the action to be transferred to that district.

Choice of Law:
a.
b.

c.

State Law Applies: When a federal transfer is granted, the state law of the transferor court is to be applied by the transferee court. Van Dusen v.
Barrack
If P moves for transfer: The law of the transferor forum will apply even it is the plaintiff, not the defendant, who moves for the transfer.
i. Ferens v. John Deere Co.
1.
Facts: P (PA resident) brings a diversity action against D in Mississippi federal court. The court grants Ds motion to have
the case moved to PA District Court. Mississippi federal court would have applied MS state law choice of law rules
(which is substantive) MS choice of law rules was using PA law and MS statute of limitations. Therefore, PA District
Court must apply MSs statute of limitations. statute of limitations considered substantive law.
2.
Held: Regardless of who initiates the transfer to another federal district court, the transferee court must always follow the
choice of law rules including statute of limitations -- that prevailed in the transferor court. this is strange because it
would not have been brought in PA
Reasons for Applying law of transferor forum:
i. We do not want law to change and see a different result just because it was filed in federal court; does not want state v. federal choice
to be one that involves forum shopping.
ii. we do not want to create more opportunities for forum shopping
1.
If choice of law changed after a transfer, it would give greater opportunities for forum shopping for D; instead, just the
forum changes
iii. Decisions to transfer should be considered with justice, not prejudices resulting from change of law
1.
Courts would be reluctant to grant transfers because it could prejudice the claim of the plaintiff
iv. Congress intent to merely to put cases in a more convenient place convenience is the only thing that should be taken into account,
not whether the law changes
v. If law did change upon a transfer, then P loses the benefit of selecting the forum (if P chooses permissible forum, then we should give
the D the right to forum shop after the jurisdiction has been established)

6. Subject Matter Jurisdiction

A.

Introduction
a.

B.

Two basic kinds of controversies over which the federal judiciary has subject matter jurisdiction: (1) suits between citizens of different states; and
(2) suits involving federal question.
b.
Amount in Controversy: In federal suits based on diversity, an amount in excess of $75,000 must be in dispute for there to be jurisdiction.
i. In federal question cases, there is no amount in controversy requirement.
c.
Burden: The party seeking to invoke the jurisdiction of a federal court must make an affirmative showing that the case is within the courts
subject matter jurisdiction.
d.
Dismissal at Any Time: No matter when a deficiency in the subject matter jurisdiction of a federal court is noticed, the suit must be stopped, and
dismissed for lack of jurisdiction. See Rule 12(h)(3)
Personal Jurisdiction v. Subject Matter Jurisdiction
a.
Differences
i. Personal jurisdiction: power over a particular defendant
ii. Subject Matter Jurisdiction: power of categories or classes of cases; sometimes categories of cases is defined by parties usually in
relation with one another (i.e. citizenship)
b.
You can have personal jurisdiction without subject matter jurisdiction:
i. i.e. CA plaintiff gets into accident with NY resident while in NY. P sues in NY state court and seeks to remove into NY federal court.
Claim is for over $100,000. No subject matter jurisdiction in federal court (yes in state) because of FRCP 1441(b) because D is a
citizen of NY.
c.
You can have subject matter jurisdiction without personal jurisdiction
i. i.e. CA plaintiff gets into accident with NY resident while in NY. P wants to sue in CA. Claim is for over $100,000. (no personal
jurisdiction because P cannot sue in CA state court, but there may be diversity jurisdiction)
d.
Personal jurisdiction is much easier to waive as an objection
i. Rule 12(b) if personal jurisdiction is not raised as a defense in a motion that you make raising other 12(b) defenses, you lose ability
to contest personal jurisdiction
ii. Subject Matter is hard to waive because anybody can contest subject matter jurisdiction (it can be allowed on appeal)
iii. Why is this? Personal jurisdiction is less of a concern regarding avoiding civil war and more concerned with fairness. Subject Matter
Jurisdiction deals with federalism and is more often a problem in federal courts because federal courts have limited jurisdiction.
1.
Subject-Matter boundaries defined by Article III 2 of Constitution
2.
Smaller set of restrictions established by 1331, 1332.
e.
Why we have system where federal courts and states can hear same cases
i. There was discussion at founding on whether there should be federal courts. People were worried about whether people would lose
loyalties to states. In admiralty, federal courts were considered a good thing. Founders reached a compromise. Article III judicial
power shall exist in federal government trial courts if Congress decides. Supreme Court has jurisdiction as an appellate tribunal in
federal question cases. Initially, 1789 judiciary act did not give federal courts original jurisdiction to hear federal question cases.
Why? There was not a lot of federal law at that time. This changed after 14th Amendment.
f.
Would it be a bad thing to eliminate federal trial courts?
i. There may be aggregate contacts with the US, but not enough in individual states, so no state court will take the case because personal
jurisdiction will not exist
ii. 50 different interpretations of federal law (US Supreme Court could not manage caseload)
iii. In diversity cases, states may be biased towards its own citizens (state judges are more subject to political pressures)
iv. Federal courts try to avoid one state from offloading costs on another state; i.e. when one state policy would lead to undesirable
national results
v. If you do not have a dual system, people cannot file habeas corpus petitions
g.
Subject Matter Jurisdiction requires two steps:
i. finding congressional authorization of jurisdiction

13

ii.
C.

finding such jurisdiction is within Article III grant of judicial power

Diversity Jurisdiction ( 1332)

a.

b.

c.

Definition: The Constitution (Article III, section 2) gives the federal courts jurisdiction over controversies . . . between the citizens of different
states . . .
i. Date of Determination: The existence of diversity is determined as of the commencement of the action. If diversity existed between
the parties o that date, it is not defeated because one of the parties later moved to a different state.
ii. Pleadings not Dispositive: In order to determine whether diversity exists, the pleadings do not settle the question of who are the
adverse parties. Instead the court looks beyond the pleadings and arranges the parties according to the real interests in the litigation.
Complete Diversity Requirement: Complete diversity is required for the federal courts to assert jurisdiction. That is, it must be the case that no
plaintiff is a citizen of the same state as any defendant. Strawbridge v. Curtiss
i. Congress can only give the federal judiciary powers specified in Article III of the Constitution. Strawbridge has interpreted section
1332 to mean complete diversity. Since Article III has the same language, then Article III means that there is a complete diversity
requirement. Unless Strawbridge was overruled, the Constitution would need to be amended for Congress to eliminate complete
diversity requirement.
1.
New Class Action Law: But Congress has authorized federal jurisdiction where there is no complete diversity. i.e. the new
class action legislation. The law says that a case can be removed to federal court so long as there is minimal diversity.
2.
What is justification of new law: Congress could claim that Strawbridge leaves some wiggle room because 1332 deals with
civil actions and the Constitution deals with controversy. This shows that Congress did not want to let ALL cases to
enter into the federal court. Therefore, Congress has additional power under Article III to invoke their rights (via policy
concerns) to extend judicial power. Therefore, Congress has actually more flexibility even if there is minimal diversity.

Determination of Citizenship:
i.

d.

e.

Commencement of the Action: citizenship is determined at commencement of the lawsuit. Subsequent events that take place after
the commencement of the lawsuit are irrelevant.
1.
Exception: However, there is an exception: later dismissal of parties can cure problems with diversity. For example, if
parties were nominal and dismissed, diversity will be determined on basis of remaining parties.
ii. Domicile for Individuals: What controls for citizenship for individuals is domicile, not residence. A persons domicile is where she
has her true, fixed and permanent home. Person must have intent to form permanent residence. (If an American is domiciled in
France, he is not a state residence)
1.
Resident Alien: A resident alien is deemed a citizen of the state where he is domiciled.
2.
Presence of a Foreigner: In a suit between citizens of different sates, the fact that a foreign citizen (or foreign country) is a
party does not destroy diversity.
iii. Citizenship for Corporations: For diversity purposes, a corporation is deemed a citizen of any state where it is incorporated AND the
state where it has a principal place of business. 1332(c)
1.
Principal Place of Business: Courts have many definitions on what this term means.
a.
Home Office/Nerve Center Test: Some courts hold that the corporations principal place of business is
ordinarily the state in which its corporate headquarters or home office is located.
b.
Place of Activity: Other courts hold that the principal place of business is the place in which the corporation
carries on its main production or service activities. This is the most commonly used standard.
c.
Total activity Test: case by case analysis that looks at factors such as corporate structure, nature of various
activities conducted in various locations, and importance accorded to the activity by company itself, number of
employees in a given location, and degree if corporate involvement in community, etc.
iv. Unincorporated associations do not fall under definition of corporate citizenship: Unincorporated associations, such as partnerships
and labor unions, do not fall under the definition of corporate citizenship given in 1332(c). Instead of determining the partnerships
place of business, the citizenship of each member must be considered must be considered.
1.
Carden v. Arkoma Associates
a.
Facts: Diversity suit where one of the parties is a limited partnership.
b.
Held: Every member of the partnership, even limited parties who have no say in how the partnership is run)
must be diverse with the opposing party.
c.
Dissent: citizenship should be based on actual partners.
Alienage Jurisdiction: Alienage jurisdiction exists where there is a suit between citizens of a state, on one side, and foreign states or citizens
thereof, on the other. Resident alien takes on state citizenship. If a US resident of CA is domiciled in France, he is not subject to diversity
i. Suits Between two foreign citizens: no alienage jurisdiction exists
ii. Suits Between Individual in State X and Resident Alien who lives in State X: no alienage jurisdiction
iii. Resident Alien v. Non-resident Alien: Courts are split on whether there is jurisdiction.
iv. Aliens and U.S. citizens on the same side: Jurisdiction is not destroyed by the fact that one or more non-resident foreigners and one or
more U.S. citizens are each present on each side of the litigation. Here jurisdiction is examined as if the foreigners were not present:
1.
Example: P1, citizen of Ohio, and P2, a citizen of Canada (living in Canada), sue D1, a citizen of NJ, and D2, a citizen of
Canada (living in Canada). Ignore all the foreigners. Diversity jurisdiction exists.

Fraudulent Party and Nominal Party Doctrine:

i.

Fraudulent Joiner Doctrine P has added some D as a party and P has no claim (it does not actually have to be fraudulent (you do
not have a claim against real defendants) Rose seems like more of a fraudulent joiner case because court is looking to see if there is
an actual claim against real defendants.
1.
Fraudulent Joinder: P is a PA conservation organization that makes agreement with Delaware non-profit. P will help D
solicit funds so that it can acquire land for conservation purposes. P sues D because they say that D diverted some of the
funds that were raised to the executive director of D who in turn used the funds for his personal use. P wants to be in PA
state court, not in federal court. P joins as co-D two of the directors who happen to be from PA. Allegation is not that two
directors actively assisted in diverting the funds to the executive director. Allegation is that they were neglectful in failing
to stop it. D says you can't add the PA directors to defeat diversity, because it's fraudulent joinder. Court says you're right.
There's no contractual violation on parts of PA directors, because the contract is with the non-profit, not with the individual
directors. There's no tort action, because under the substantive law, the obligation of the directors is to the D, not the third
parties. If it's just neglect, there's no obligation to P, therefore there is no claim against them, and their citizenship is
disregarded.
2.
No fraudulent joinder: Tenant in high-rise in MD, claims to be injured by noxious fumes that are allowed to get into the
building through ventilation. Suit is brought against Mgt company for building (VA company). P wants to be in MD state

14

f.

g.

h.

D.

court. P adds as co-D supervisor of mgt. company. D company says they have an indemnification agmt. With supervisor
to defend him against all judgments., therefore he has no stake in his lawsuit (like WWVW). Because he has no exposure
in this lawsuit, that his presence should be disregarded (nominal party with no stake). Court says it doesn't care. D2 stays
in the picture, because under underlying tort law, D2 is alleged to have engaged in actively wrongful conduct, he is jointly
and severally liable to the T.
ii. Nominal Party Doctrine A party who, having some interest in the subject matter of a lawsuit, will not be affected by any judgment
but is nonetheless joined in the lawsuit to avoid procedural defects. (there is a real claim, but you do not have the right person)
1.
Rose v. Giamatti
a.
Facts: P Pete Rose (OH resident) asserts lack of complete diversity so case should be sent back to OH
state courts; D Giamatti (NY citizen) who asserts that he was fraudulently joined and therefore there is
complete diversity; D MLB (OH citizen); D Cincinnati Reds (OH Limited Partnership)
b.
Held: There was diversity because MLB and Reds were nominal parties and therefore, the trial court was right
in removing the case to federal court.
i. Rule: A federal court, in determining whether there is diversity of citizenship between parties,
must disregard nominal or formal parties to the action and determine jurisdiction based only
on the citizenship of the real parties to the controversy.
iii. Why these Doctrines are Peculiar: Federal judge determines whether these doctrines apply. Appellate judges usually remand the case,
but do not actually strike the parties. In deciding to remand, federal court is actually making a decision based on the merits and this
decision will have a binding effect when it goes back to state court. This is a curious doctrine because, in the guise of subject mater
jurisdiction, a federal court can rule on the merits to determine whether it should hear the case.
Rationales for Creation of Diversity Jurisdiction:
i. local bias
1.
Problems with this rationale
a.
Old statutory arrangements like diversity are no longer followed
b.
Less of a local bias exists today
c.
A home state P can sue in diversity in home state with same jury pool
d.
Retention of diversity may be a luxury that an overburdened federal court system can no longer afford.
e.
Two out of staters can sue in a district court that is foreign to both of them
ii. Diversity creates a system of justice with procedures as to which the entire nation has some input. If states are the only system, then
out of staters will be affected and they did not have input in these procedures.
iii. Representational Reinforcement people cannot vote in a certain state, but every is represented in United States
iv. Creates better lawyers forced to master state and federal system
v. Judges are more worldly because they must adjudicate state and federal law claims
Rationale for Opposing Diversity Jurisdiction:
i. Efficiency & Legitimacy concerns
1.
Federal government should be interpreting state law
2.
Federal courts spending a lot of time
3.
Precedent for future cases is not being generated
4.
Congestion of federal courts
a.
State courts should get this burden so they can internalize costs. States courts are better handled
b.
Federal court system is something everybody pays for and would be stealing resources from taxpayers in less
litigious states.
ii. We should keep federal system small and elite
iii. Diversity jurisdiction is over-inclusive as it is currently constituted
1.
CA Plaintiff v NY Corp Defendant
a.
D Place of business in NJ
b.
D has major facility in Iowa
c.
P sued in Iowa state court
d.
D can remove to Iowa federal court
e.
Here we are not worried about bias, because diversity is overinclusive)
Narrower proposals for diversity:
i. Ensure that cases with only a lot at stake are heard
ii. Courts should only hear complex cases
iii. Limit punitive damages to reach Amount in controversy requirement
iv. Raise amount in controversy requirement
v. Make requirements for amount in controversy more stringent
vi. No federal diversity jurisdiction when the case is transferred into Ps home state THIS IS A BIG BONE OF CONTENTION

Amount in Controversy 1332(b)

a.
b.

c.

Diversity Only: In diversity cases, but not in federal question cases, plaintiff must satisfy an amount in controversy requirement. In all
diversity cases, the amount in controversy must exceed $75,000. Lower amount in controversy to less than $75,000 to defeat removal to federal
court.
Standards of Proof: The party seeking to invoke federal diversity jurisdiction does not have to prove that the amount in controversy exceeds
$75,000. All she has to show is that there is some possibility that that must is in question.
i. Legal Certainty: The claim cannot be dismissed for failing to meet the $75,000 requirement unless it appears to a legal certainty that
the claim is really for less than the jurisdictional amount.
ii. Eventual Recovery Irrelevant: The fact that P eventually recovers far less than the jurisdictional amount does not by itself render the
verdict subject to reversal and dismissal on appeal for lack of jurisdiction.
1.
Discretion to Deny Costs: But the federal court has discretion to deny costs to P, and even impose costs on him, if he
recovers less than $75,000. 28 U.S.C. 1332(b).

Aggregation
i.

Aggregation by a Single Plaintiff: If a single plaintiff has a claim in excess of $75,000, he may add to it any other claim of his against
the same defendant, even though these other claims are for less than the jurisdictional amount. This is done by supplemental
jurisdiction.

15

1.

ii.

No Claim Exceeds $75,000 Against Single Defendant: Even if a plaintiff does not have any single claim worth more than
$75,000, he may add together all his claims against a single defendant. So long as these claims against a single defendant
total more than $75,000, the amount in controversy is required.
2.
Additional Defendants: But a plaintiff who has aggregated his claim against a particular defendant, usually may not join
claims against other defendants for less than the jurisdictional amount.
a.
Example: P has two claims against D1, each for $40,000. This meets amount requirement. P cannot bring D2
into the suit if he has an amount in controversy of $40,000. P claims against D2 are not greater than $75,000.
Aggregation by Multiple Plaintiffs:
1.
At least one plaintiff meets the amount: If one plaintiff meets the jurisdictional amount, its not completely clear whether
the other plaintiffs may join their related claims against the same defendant. Supplemental jurisdiction may be used.
2.
3.

No single claim meets the amount: If no single plaintiff has a claim or claims meeting the jurisdictional amount,
aggregation by multiple plaintiffs is not allowed.
a.
Joint Interest: If there is a join interest, you may be able to aggregate.
Class Actions: In class actions, every member of the class had to satisfy the jurisdictional amount. This has essentially
made class actions in diversity cases difficult.
a.
Zahn v. International Paper Co. amount not satisfied
b.
Facts: Four owners of Vermont lakefront property brought diversity action seeking damages from New York
corporation for allegedly having permitted discharge from corporation's New York pulp and paper-making plant
to flow into creek and to be carried by that stream into lake, thereby polluting waters of lake and damaging
value and utility of surrounding property. The United States District Court for the District of Vermont refused to
permit suit to proceed as class action since only the main plaintiffs met $10,000 jurisdictional-amount
requirement, and interlocutory appeal was taken.
c.
Holding: The class action dismissal was affirmed because every member of the class has to meet the
jurisdictional amount.
i. Ps arguments for why amount is met:

1.

Aggregation: you add all plaintiffs claims together and it is over $10,000 rejected by
court

2.

Ancillary jurisdiction/Supplemental Jurisdiction: if part of the lawsuit satisfies amount in

controversy requirement and there is a good reason to join the rest of the lawsuit with it,
then amount of controversy rule should be flexible enough to join part that does not
satisfy with part hat does not. rejected by court

iii.

c.

F.

Counterclaims:
1.
Courts adopt theory of ancillary (supplemental) jurisdiction, and allows the counterclaim to ride on the coattails of the
related claims.
2.
If P sues in federal court for less than the jurisdictional amount, and D counterclaims for an amount which (either by itself
or added to Ps claim) exceeds the jurisdictional amount, probably the amount in controversy requirement is not met.
iv. Attorneys fees: these fees may be included in amount in controversy only when they are provided for by contract or state statute.
Why Amount in Controversy Exists:
i. Maintain prestige of federal court by limiting the number of cases that enter the courts (attract best judges)
ii. Efficiency: limit caseload of federal courts and maintain quality of judiciary; s
1.
When a small amount is at stake, you do not want the process of litigation to be expensive
iii. Fairness: Diversity exists for fairness purposes; if amount in controversy is small, concern for fairness is less
iv. Legitimacy: do not want to usurp the states

Federal Question Jurisdiction 28 U.S.C. 1331

a.
b.
c.

Generally: the Constitution gives the federal courts authority to hear federal question cases. Under 28 U.S.C. 1331, the federal courts have
jurisdiction over all civil actions arising under the Constitution, laws, or treaties of the United States
1331 does not Reach full Limits of Article III of the Constitution which only refers to cases or controversy, not civil actions.
Federal Claim: Federal question jurisdiction usually exists because federal law is the source of the plaintiffs claim.
i. Interpretation of Federal Law not Enough: It is not enough that P is asserting a state-created claim which requires interpretation of
federal law.
ii. Claim based on the merits: If Ps claim clearly arises under federal law, it qualifies for federal question jurisdiction even if the claim
is invalid on the merits, Here, the federal court must dismiss under 12(b)(6).
iii. Anticipation of Defense/Well-Pleaded Complaint Requirement: The federal question must be integral to Ps cause of action, as
revealed by Ps complaint. It DOES NOT suffice for federal question jurisdiction that P anticipates a defense based on a federal
statute, or even Ds answer does in fact raise a federal question. Thus the federal question must be part of a well-pleaded
complaint.
1.
Louisville & Nashville RR v. Mottley no federal arising under jurisdiction
2.
Facts: P claims that D Railroad has breached its agreement to give P free railroad passes. A recently-passed federal statute
prohibits the giving of such passes. In Ps complaint, he anticipates the railroads federal statutory defense, claiming that
the statute violates the 5th Amendment.
3.
Held: Since Ps claim was merely a breach of contract claim, and the federal statute was not essential to that claim, there
was no federal question the fact that federal law was an integral part of Ds anticipated defense is irrelevant.
iv. Filing a Declaratory Judgment is insufficient to satisfy well-pleaded complaint requirement for federal arising under jurisdiction:
1.
Declaratory judgment: person being harmed by uncertainty of a right, initiates proceedings in anticipation of a lawsuit to
get uncertainty remedied. (i.e. person A threatens person B with patent infringement claim and, in uncertainty of whether
the patent was infringed, B can seek a declaratory judgment) would-be defendant turns into plaintiff and gets forum
selection advantage.
2.
Supreme Court for purposes of federal jurisdiction, the declaratory judgment having a federal claim is not enough to get
federal jurisdiction. The Court will only look at case it would have naturally happened (that is, you switch the parties)
3.
CRITICISM: The Supreme Courts rationale does not seem to make sense, because the first pleading of the case brings up
a federal question so there is certainty.

16

d.

e.

E.

If a federal question will likely predominate, then should not the case go into federal court? Maybe not
i. There is no certainty that the Ds will bring this affirmative defense.
ii. Worry about manipulation by plaintiffs attorneys who can introduce federal material for the mere sake of getting the court into federal
court
iii. Solutions:
1.
Instead of just looking at Ps original complaint, you should be able to remove after an affirmative defense is raised with a
federal issue
2.
Since s1331 and s1332 do not represent the full scope of Congress authority under Article III, Congress can enact new
laws that expand federal jurisdiction in diversity cases (i.e. Interpleader; new class action law in limited circumstances
diversity need not be complete) proposed federal defense rule would fall into this rule
Rationale for why Federal trial courts should hear cases arising under federal law:
i. Supreme court cannot hear all state court cases where federal issues come up because of caseload
ii. State courts may interpret federal law more favorably to their states. States may have different policies than policies of federal
government. One state may not enforce a federal law as efficiently and those state courts would affirm those state policies
iii. One body of federal law should not be interpreted by 50 different states with different procedures
iv. State procedures can limit hearings of federal questions and create a lack of uniformity. States do not have an incentive to enforce
certain federal laws.
v. Uniformity one federal law can be interpreted in 50 states. This violated fairness because if you are one state, the law could be read
one way, an in another state, a different way.
vi. Federal courts have developed an expertise on federal law

Supplemental Jurisdiction/Joinder 28 U.S.C. 1367

a.

Doctrine: Doctrine addresses situations where one part of a lawsuit fits federal subject matter jurisdiction requirements and other parts
do not. If new parties or new claims are sought to be added to a basic controversy that by itself satisfies federal subject-matter jurisdictional
requirements, under the doctrine of supplemental jurisdiction, the new parties and new claims may not have to independently satisfy subjectmatter jurisdiction they can be tacked on to the core controversy.
OLD LAW
b.
Old Common Nucleus Test Gibbs (1966): For a federal action to bring a state action into federal court through supplemental jurisdiction, the
state and federal claims must derive from a common nucleus of operative fact, and must be so closely related that usually a plaintiff would
be expected to try them all in one judicial proceeding.
i. United Mine Workers of America v. Gibbs (1966) supplemental jurisdiction exists
1.
Facts: -- P v. D Claim 1 Section 303 of Labor Management Relations Act (Federal Law); P v. D Claim 2 Common
Law of Tennessee (state claim)
2.
Holding: The state claim could be brought in to federal court because it had a common nucleus of operative fact with the
federal claim. Justification: Court can hear ENTIRE cases under Article III.
3.
This is a generous test and gives federal court discretion.
4.
Why Gibbs would not permit Volkswagen state claim into federal court: Even though Gibbs acknowledges that there is
space that includes all parts of a case or controversy, the occupation of this space will not be allowed on Gibbs rationale
unless there is there is a clear intention from Congress that they wanted to extend s1331 and s1332 further to the limits
of Article III (i.e. that they wanted the federal judiciary to hear the cases) There must be a clear risk of bias so when you
have citizens from the same states on different sides of the case, there is an elimination of bias. Congress intention was to
eliminate bias. Since bias is eliminated by putting people from same state on opposite sides of the case, then Congress has
not intended for these cases to be admitted. There is an intention to protect the integrity of the state courts.
c.
Three Alternatives in these cases:
i. (1) State Courts hear both cases
1.
Is this efficient for federal courts to hear these state cases?
a.
Problems with state courts hearing the case
i. state courts ruling differently in federal questions
ii. Bring cases into state court may not be fair to Ds or there may be lack of legitimacy because states
are interpreting Constitution in their favor
ii. (2) Federal courts hear both cases
1.
Problems: federal courts hearing state claims where they are not making definitive law
2.
Could be efficient because you would not have to bring two separate claims in two separate courts
3.
Could be less efficient, because you could achieve efficiency if you bring both in state courts.
iii. (3) Split the Cases
1.
Less efficient
d.
Counterclaims Old Logical Relationship Test: A federal court can assert supplemental jurisdiction over a counterclaim when the original suit
filed by the plaintiff was dismissed so long as the counterclaim arises out of the transaction which is the subject matter of the original suit. The
counterclaim and the original suit need not be precisely identical, yet there must be a logical relationship between the original claim and the
counterclaim.
i. Moore v. New York Cotton Exchange (1926) jurisdiction over counter-claim
1.
Facts: P seeks cancellation of Ds Western Union contract and a decree restraining D from refusing to sell quotations to P.
P sues under federal law. D seeks interlocutory injunction on its counterclaim based on state law to prevent appellant from
illegally obtaining the quotations. Claim 1 P v. D. federal claim; Claim 2 D counterclaimed based on state law;
Claim 1 dismissed.
2.
Holding: Since counterclaim was logically related to the original suit, the counterclaim can be heard by federal court.
e.
Third Party Defendants: Supplemental jurisdiction has been restricted to claims asserted by litigants in a defensive posture, who would
otherwise lose forever their right to assert the claim or be burdened by starting a new case. A plaintiff is not allowed to use supplemental
jurisdiction to assert a claim against a third-party defendant, even if the third-party has already been brought into the action.
i. Owen Equipment & Erection Co. v. Kroger (1978) no supplemental jurisdiction over claim against third party
1.
Facts: Iowa citizen P sued Nebraska electric utility (D1) to recover for alleged wrongful death of her husband, who was
electrocuted when boom of a steel crane next to which he was walking came too close to utility's high-tension power line.
Diversity existed. D1 filed third-party complaint against corporation which owned and operated the crane (D2). Plaintiff
subsequently amended her complaint to name crane owner, Nebraska corporation, as an additional defendant (D2).
a.
P v. D1 (diversity)

17

2.
3.

b.
D1 files third party complaint against D2
c.
P names D2 to original suit (no diversity)
Issue: Does the fact that there was diversity over initial component of lawsuit allow you to sweep jurisdiction in additional
claim by P against third-party defendant? NO
Holding: Because of the complete diversity requirement, supplemental federal jurisdiction does not exist where the
plaintiff files a complaint against a third-party defendant from the same state as the plaintiff even if a common nucleus of
operative facts exists between third party complaint and original complaint. Therefore, for jurisdiction to exist, the thirdparty complaint by the P requires an independent basis of federal jurisdiction.
a.
Court is worried about plaintiffs leaving off important parties to achieve diversity on the assumption that the
original defendant will them implead an in-state third-party and then P can sue third-party and still maintain
diversity because of common nucleus of fact

NEW LAW
f.
1367(a) Generally:
i. States that in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental
jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the
same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that
involve the joinder or intervention of additional parties.
g.

Federal Question Cases:

h.

Diversity Cases:

Where the original claim comes within the courts federal question jurisdiction, 1367 allows the court to
hear any state-law claims that are related to the same case or controversy.
i. Possible Definitions of Same case or Controversy
1.
1Common nucleus of Common Fact (Gibbs)
2.
2 Logical Relationship (Moore)
3.
3 Restatement 24 same time, space, motivation, same trial unit
ii. Broader Test than Gibbs: 1367 does not adopt same test as Gibbs, which is common nucleus of operative fact. So related . . . to
same case or controversy is broader.
iii. State Claims with No New Parties: Supplemental applies when a related claim involves the same parties as the federal question claim.
iv. Additional Parties to state-law claim: 1367 also allows additional parties to the state-law claim to be brought into the case.
1.
This doctrine overrules Finley v. United States. Finley triggered 1367.
a.
Facts: The plaintiff had two claims. Claim 1 was a state claim, where the P sued D1. Ps Claim 2 against D2
was a claim where there was exclusive federal jurisdiction under the Federal Tort claims Act. The issue was
whether claim 2 could be used to bring claim 1 into federal court. P had two choices: 1) bring both in federal
court or 2) separate claims in federal and state court. P could not bring both claims in state court.
i. P v. D1 (state claim)
ii. P v. D2 (exclusive federal jurisdiction)
b.
Holding: Federal courts cannot assert supplemental jurisdiction over defendants in state claims where the
federal courts have exclusive original jurisdiction over the federal claims, but the state question defendants are
not otherwise subject to federal jurisdiction.
c.
1367(a) overrules the result in Finley
Supplemental jurisdiction can exist where the anchor claim is based solely on diversity. The supplemental claim still
must be related to the same case or controversy as the anchor claim. There are, however, some important exclusions to the parties right to add
additional claims and parties to a diversity claim.
i. Exceptions for Diversity Cases: 1367(b)
1.
In any civil action of which the district courts have original jurisdiction founded solely on section 1332 of this title
[diversity] , the district courts shall not have supplemental jurisdiction under subsection (a) over claims by plaintiffs
against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure, or over claims by
persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24
of such rules, when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional
requirements of section 1332 [diversity requirements].
ii. Claims Covered: Here are the principal diversity-only situations in which supplemental jurisdiction applies:
1.
Rule 13(a) compulsory counterclaims (claims by a D against the P)
2.
Rule 13(h) joinder of additional parties to compulsory counterclaims
3.
Rule 13(g) cross-claims (claims made by a defendant against another)
4.
Rule 14 impleader of third-party defendants, for claims by and against third-party plaintiffs, and claims by third-party
defendants, but not claims by the original plaintiff against third-party defendants.
a.
P v. D1; D1 impleads D2 this impleading can be brought in
iii. Claims not Covered: Where the core claim is based on diversity, some important types of claims do not get the benefit of
supplemental jurisdiction.
1.
NO JURISDICTION OVER CLAIMS BY PLAINTIFFS AGAINST PERSONS MADE UNDER
a.
Claims Against Third Party Defendants (IMPLEADER) -- Rule 14(a): Claims by P against third-party
defendants are excluded.
i. P v. D1 in diversity; D1 impleads D2 Ps suit against D2 cannot be brought in
b.
Compulsory Joinder -- Rule 19(a): When a person is joined by P under Rule 19(a) as a person to be joined is
feasible neither a claim against such a person, nor a claim by that person, come within supplemental
jurisdiction. Rule 19 authorizes a court to order the joinder of any party needed for a just adjudication.
i. P v. D1 in diversity; D2 is brought in as an indispensable party Ps suit against D2 cannot be
brought in
c.
Permissive Joinder under Rule 20: When a plaintiff sues multiple defendants in the same action on common
law and facts, supplemental jurisdiction does not apply. Under Rule 20, parties may be joined as plaintiffs or
defendants as long as the claims by or against the joined parties have some loose connection the claims must
concern the same transaction or series of transactions and must share a common question of law or fact. P
chooses who to sue.
i. P v. D1in diversity; P v. D2 without diversity Ps claim against D2 cannot be brought in
d.
Intervention under Rule 24: Claims by prospective plaintiffs who try to intervene in a suit under Rule 24 do
not get the benefit of supplemental jurisdiction.
i. P v. D1; D2 seeks to intervene Ps claim against D2 cannot be brought in

18

2.

NO JURISDICTION OVER CLAIMS BY PERSONS PROPOSED TO BE JOINED AS PLAINTIFFS UNDER

a.
Compulsory Joinder under Rule 19:
i. P1 v. D in diversity; P2 was compulsorily joined P2 cannot bring suit against D
b.
Intervention under Rule 24:
i. P1 v. D; P2 seeks to intervene P2s claim against D cannot be brought in
c.
There is no Rule 20 Permissive Joinder exception
i. Thus, P1 v. D1 in diversity; P2 v. D without diversity P2s claim against D can be brought in
ii. Legislative history suggests that this was not intended.
d. There is no Rule 23 Class Action Exception
i. Thus, Zahn appears to be overturned. In Zahn, the court held that all plaintiff had to meet the
jurisdictional amount in a federal class action suit. Theoretically, based on 1367s language, in an
anchor claim where one plaintiff in a class action meets the diversity, other plaintiffs that do not
meet the jurisdictional requirements can be brought in.
ii. Legislative intent suggests that law did not intend to overturn Zahn.

iv.

i.

F.

Defensive Posture: Basically, additional claims asserted by defendants fall within the courts supplemental jurisdiction, but additional
claim (or the addition of new parties) by plaintiffs are generally not included. Supplemental jurisdiction usually exists when the
claimant who is trying to benefit from it is in a defensive posture.
v. Double-standard: There is not jurisdiction when P adds a defendant, but there is jurisdiction when D adds a plaintiff. It appears that
legislative intent did not intend for this to happen. All these claims were to be prohibited.
1.
In case P1(CA) v. P2(NY) v. D(NY) and P2 is joined voluntarily, then this is OK under 1367 despite lack of complete
diversity. There is no Rule 20 exception for plaintiffs.
2.
However, P(CA) v. D1(NY) v. D2(CA) [D2 joined permissively] is not allowed under Rule 20
vi. Class Action Problem: Drafters of 1367 did not intend the law to have any affect on Zahn and therefore amount in controversy would
apply to unnamed plaintiffs. Therefore, in Zahn, there still would be no federal jurisdiction based on 1332. However, there is no Rule
23 exception in 1367. Therefore, supplemental jurisdiction could be warranted.
Judicial Discretion in Exercising Supplemental Jurisdiction 1367(c)
i. The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if
1.
the claim raises a novel or complex issue of State law,
2.
the claim substantially predominates over the claim or claims over which the district court has original jurisdiction,
3.
the district court has dismissed all claims over which it has original jurisdiction, or
4.
in exceptional circumstances, there are other compelling reasons for declining jurisdiction.

Removal 1441
a.
b.
c.
d.
e.

f.
g.

Generally: Generally, any action brought in state court that the plaintiff could have brought in federal court may be removed by the defendant to
federal district court. A case removed from state to federal court passes to the district court of the U.S. for the district and division embracing
the place where such action is pending 1441(a)
Diversity limitation: In diversity cases, the action may be removed ONLY if no defendant is a citizen of the state in which the action is
pending.
No Plaintiff Removal: Only a defendant can remove.
Look at Ps Complaint: Right of removal is decided from complaint.
Removal of Multiple Claims: Situation is difficult where P asserts against D in state court two claims, one of which can be removed if sued upon
alone, and other of which could not.\
i. Diversity cases: If the claim for which there is federal jurisdiction is a diversity claim, the second state claim defeats removal and the
two cases stay in federal court.
ii. Federal Question cases: If the claim where there is federal jurisdiction is a federal question claim, and there is another independent
claim, D may remove the whole case, so long as the other claim is part of the same case of controversy. 1441(c)
Mechanics of Removal
i. Time: D must file for removal within 30 days of the time he receives service of the state-court complaint.
ii. All defendants joined: All defendants must join in the notice of removal.
Time Limit on Removal: 1446 establishes an outer limit on the time or removal in diversity cases one year after commencement of the action.

7. Applicable Law in Diversity Cases

A.

Rules:
a.

b.

After Erie, the rule is that when the Rules of Decision Act says that the federal courts must apply the law of the several states, except where the
Constitution . . . acts of Congress otherwise . . ., this language applies to state common as well as statute statutory law. Thus, the federal courts
in diversity cases must apply state judge-made law on any substantive issue. However, the big issue that Erie created was whether to require
federal courts to follow state law on clearly procedural issues in diversity cases.
Is there a conflict?: In answering this problem, first we must determine if there is a conflict between a state law and either federal judge-made
law, a federal rule, a federal statute, or the United States Constitution. The conflict must be procedural in nature. That is, if the state law at issue
is substantive, then the federal courts must apply that state law. Generally, a conflict exists when the federal provision nullifies the state law.
However, courts have been reluctant to determine whether a conflict, in fact, exists. In Gasperini, the Court concluded after going through the
Guaranty Trust/Byrd analysis, that a conflict did not exist and that a state law should be applied even though the law appeared to conflict with a
federal policy.
i. Does state law conflict with United States Constitution? Constitution prevails because the state statute is unconstitutional. Article
VI says the Constitution is the law of the land.
ii. Does state law conflicts with United States Statute? So long as the United States statute is constitutional, the federal statute will
trump the state provision via the Supremacy Clause.
iii. Does state law conflicts with a Federal Rule? (Hannah Track)
1.
Part 1: Does the Rule Apply: The mere fact that a Federal Rule seems to have something to do with the issue at hand does
not mean that the Rule applies the Rules are construed narrowly, to cover just those situations that Congress intended
them to cover. Some courts will construe Rules narrowly so as to avoid a conflict with state law. Thus, in this narrow
view, since the federal rule is silent, the state law usually applies.
2.
Part 2: Is the Rule Valid/Violate Substantive Rights?: The Rules Enabling Act provides that to be valid, a Rule must not
abridge, enlarge [or] modify the substantive rights of any litigant. But as long as the Rule is rationally capable of

19

iv.

classification as procedural, it will found to satisfy this test. No Federal Rule has been found to violate the no
abridgment, enlargement or modification of substantive rights test of the Rules Enabling Act.
Does state law conflict with federal judge made law? (Guaranty Trust/Byrd Track)
1.
If there is a conflict, we first determine whether the federal judge made law is outcome determinative under the Guaranty
Trust/Byrd analysis. That is, would a plaintiff change his out-of-court behavior at the time of the filing of the suit based on
this conflict. If this conflict is not outcome determinative, then the federal procedure is followed. Second, if the conflict is
deemed to be outcome determinative, then we must balance state and federal policies against each other as specified by the
Byrd Court to determine which procedure should be followed. Where the state interest in having its policy followed is
fairly weak, and the federal interest is strong, the court is likely to hold that the federal procedural policy should be
followed. Just because a state procedure is outcome determinative does not automatically create a sufficient state interest
that would compel the federal courts to apply the state procedure.

--------------------------------B.

C.

D.

E.

F.

Generally: Should federal law or state law be applied in cases brought in federal court.
a.
Forum Shopping: The federal courts desire to discourage forum shopping. If a particular case could be brought in either state or federal court,
and the state courts would apply rules different from those that would be applied by the federal court, and the plaintiff will have an incentive to
choose the court favorable to her case. To prevent forum shopping between state and federal courts, the Courts generally apply state law to
diversity cases.
b.
Rule of Decision Act 28 U.S.C 1652: This statute determines when the federal court should apply federal law, and when it should apply
state law.
i. 1652 States: The laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress
otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where
they apply.
ii. When Conflict Arises, Federal Law Applies: According to the RDA, the federal Constitution, treatises, and constitutional statutes
enacted by Congress always take precedence, where relevant, over all state provisions.
iii. In Absence of Conflict, State Law Applies: According to the RDA, in the absence of a federal constitutional or statutory provision on
point, the federal courts must follow state constitutions or statutes.
iv. RDA is Silent on Issues of Federal Common Law: What law should the federal court follow where what is at issue is state common
or judge-made law.
Before Swift: Prior to Swift v. Tyson, when state common law was at issue, a federal judge could ignore state common law in diversity cases allowing
non-citizens to discriminate against citizens of the state where the federal court sat. (All D had to do was sue P, a resident of state X, in the District Court of
State X, and federal common law would apply)
a.
Swift v. Tyson state court decisions need not apply
i. Facts: Defendant (Tyson) and third party drew up a bill of exchange. The third party endorsed and tendered it to plaintiff (Swift) for
payment of a debt. The third-party did not own the land it sold to Tyson. Tyson refused to pay Swift as a result of the problem with
this property. Swift sues in diversity.
ii. Issue: Was federal court bound to NY state courts meaning of bona-fide purchaser? NO
iii. Holding: The laws of the several states language in the RDA does not include state common law. Therefore, a judge could apply
federal common law to the problem and ignore the state common law.
Erie v. Tompkins: Case holds that when the Rules of Decision Act says that the federal courts must apply the law of the several states, except where the
Constitution . . . acts of Congress otherwise . . ., this language applies to state common as well as statute statutory law. Thus, the federal courts in diversity
cases must apply state judge-made law on any substantive issue.
a.
Erie Railroad v. Tompkins state court decision must be applied according to new interpretation of RDA (Brandeis sought to limit courts
power because he did not like Lochner)
i. Facts: P sues D in a diversity action arising out of an automobile accident that took place in Kansas. The Kansas courts apply
common-law contributory negligence. Issue is whether the federal judge hearing the case apply Kansas common-law contributory
negligence, or is the court free to make its own determination that comprehensive negligence is a sounder principle.
ii. Held: Swift misinterpreted 1652; laws includes state decisions. In cases tried in federal court where state law applies, common law
decisions by state tribunals do constitute laws under section 34 of the judiciary act (and s1652), and therefore federal courts must
use state tribunal decisions when assessing state law.
b.
Reasons for Erie:
i. Issues of Fairness: Erie was trying to address this fundamental problem the unfairness of subjecting a person involved in litigation
with a citizen of a different state to a body of law different from that which applies when his next door neighbor is involved in similar
litigation with a co-citizen. When D is sued in home state on diversity grounds, D cannot remove, so they cannot get the benefit of
their own state law.
ii. Lack of Notice: Since the case will be brought into federal court only if there is diversity, a defendant will not know which law to
abide by (federal law or state law). D cannot control which body of law is going to be applied.
1.
Federal common law developed by courts in Swift would not preempt state law if federal government created a higher
standard of care. (but common law in admiralty is preemptive)
iii. Forum shopping: Worried About forum shopping between state and federal courts.
iv. Jurisprudential Change: shift from natural law to legal positivism (acknowledges that all legal rules represent political choices by
lawmakers, judges, etc.)
v. Plain Meaning of 1652
vi. Original Intent: some have found some original intent that law in 1652 meant also common law
vii. Constitutional Concerns: If we interpret 1652 to allow federal lawmaking then we will be running afoul of a Constitutional
prohibition.
Problems With Erie
a.
Ascertaining State Law: It is difficult for the federal courts to determine how the states highest court would determine the issue if the case arose
before it today.
i. Intermediate-court decisions: if there is no holding by the states highest court, the federal court must follow intermediate court
decisions, unless there are reasons why the states highest court would not follow them.
ii. Where no state court has spoken: If no court in the state has ever considered the issue in question, then the federal court must look to
other sources. One important source is decisions in prior federal diversity cases which have attempted to predict and apply the law of
the same state. The court may also look to other state authorities.
Conflict of Laws & Burden of Proof

20

a.

Federal court must apply state conflict of laws and burden of proof rules

-------------------------------------------------G.

Procedure/Substance Distinction: Erie states that state common law controls in substantive matters. But federal rules and policies control on matters that
are essentially procedural.
a.
Track 1 Federal Rules Take Precedence: Erie is only applicable where there is no controlling federal statute; i.e. there is no conflict. Since
the Federal Rules of Civil Procedure are adopted pursuant to a congressional statute (the Rules Enabling Act), the FRCP, when applicable, take
precedence over state policy. If Federal Rule may apply to a situation, two questions must be asked: (1) Does the rule apply; (2) Is the Rule valid
under the Rules Enabling Act. If the answers are yes, then the Federal Rule takes precedence over a state procedure.
Rules Enabling Act 28 U.S.C. 2072
(a) The Supreme Court shall have the power to prescribe general rules of practice and procedure and rules of evidence for
cases in the United States district courts (including proceedings before magistrate judges thereof) and courts of appeals.
(b) Such rules shall not abridge, enlarge or modify any substantive right. All laws in conflict with such rules shall be of no
further force or effect after such rules have taken effect. (supersession clause)
i. Part 1: Does the Rule Apply: The mere fact that a Federal Rule seems to have something to do with the issue at hand does not mean
that the Rule applies the Rules are construed narrowly, to cover just those situations that Congress intended them to cover.
ii. Part 2: Is the Rule Valid/Violate Substantive Rights?: The Rules Enabling Act provides that to be valid, a Rule must not abridge,
enlarge [or] modify the substantive rights of any litigant. But as long as the Rule is arguably procedural, it will found to satisfy this
test. No Federal Rule has been found to violate the no abridgment, enlargement or modification of substantive rights test of the
Rules Enabling Act.
iii. Illustration: Hanna v. Plumer
1.
Facts: P sues D in diversity is MA federal court. D is the executor of an estate. P causes process to be served on Ds wife
by leaving copies of the summons and complaint with her at Ds dwelling place. Federal Rule 4(d)(1) (now Rule 4(e)(2))
allows service on a defendant by leaving copies of the summons and complaint at the defendants place with a person of
suitable age and discretion, a standard met here. But MA statute sets special standards for service on an executor of an
estate which was not complied with here.
2.
Holding: First, Rule is in harmony with Enabling Act because it is procedural. Second, the Rule clearly applies to this
case. Therefore, the Rule takes priority over any contrary state policy or statute, even if applying the Rule might create a
different outcome. Other points of the case:
a.
Erie doctrine is not controlling when a valid Federal Rule is in conflict with a state common-law policy.
Holding otherwise would render rules unworkable.
b.
Even absence of Federal Rule applicable to the question before it, state policy on service still might not control.
Outcome determination test cannot be examined without reference to other aims of Erie: 1) discouragement of
forum shopping (no forum shopping here) and 2) avoidance of inequitable administration of law (no
discrimination here).
3.
Harlan Concurrence: Federal Rule should not be automatically deferred to. Harlan is upset that, as long as the Court
called something procedural, the Court could apply its Federal Procedure no matter if it affects citizens of the states.
Majority takes it too far.
a.
His test: Would inquire if the choice of the rule would substantially affect those primary decisions
respecting human conduct which our constitutional system leaves to state regulation. (If it would, then
state law should be applied, even if there is a Federal Rule). Even if rule is rationally procedure, then courts
should still not choose the federal rule if it substantially affect those primary decisions respecting human
conduct which our constitution leaves to state regulation.
b.
Track 2 Case not Covered by Federal Rule; Conflict Between Federal Judge Made Rule and State Statute: If the issue ay hand is not
covered by anything in the FRCP, but is nonetheless arguably procedural, the situation is more complicated.
i. Two Part Analysis:
1.
Outcome determinative (Guaranty Trust Analysis) does it affect out of courte behavior
a.
If not outcome determinative, then you follow the federal procedure
b.
If outcome determinative, you go through the balancing test
2.
Balancing Test (Byrd Analysis)
ii. Former Outcome Determination Test: A conflict is outcome determinative if the choice involved is likely to influence who won
the lawsuit, then the litigants substantive rights would be affected by the choice, and the state policy must be followed. This is
determined by making an assessment whether the conflict will affect out of court behavior and create opportunities for forum
shopping.
1.
Guaranty Trust Co. v. York state policy must be followed (statute of limitations) because it is outcome determinative
a.
Facts: Beneficiaries wanted their money, so they did not want stock from the Bank. People who took stock
sued. The plaintiffs claimed that the New York statute of limitations did not apply under Erie because their
claim was in equity rather than in law.
b.
Holding: The court concluded that the federal diversity courts were required to apply state law to determine
the outcome of litigation, regardless of whether the remedy was in law or in equity.
i. The court rejected the procedural/substantive distinction for an ex ante criterion. Question court
asks is: will it affect primary behavior at time of lawsuit?; that is, will change of law, alter
where P decides to file suit.
iii. Rejection of Outcome Determination Test: Outcome Determination test was abandoned in Byrd. v. Blue Ridge. Today, the federal
court balances the state and federal policies against each other. Where the state interest in having its policy followed is fairly
weak, and the federal interest is string, the court is likely to hold that the federal procedural policy should be followed. State
decisions that are basically procedural (though they may affect substantive rights) are not necessarily controlling even if they
are outcome determinative. See Byrd v. Blue Ridge
1.
Judge/Jury Allocation: Where the question is, Who decides a certain factual issue, judge or jury?, federal policies are to
be followed because the federal policy on judge-jury allocation is string, the state policy is not tightly bound up with the
rights of the parties, and the choice is not very outcome determinative.
a.
Byrd v. Blue Ridge federal principle of a jury trial applies
i. Facts: Plaintiff Byrd sued defendant Blue Ridge for negligence in a federal court in South Carolina.
The defense argued that the plaintiff was a statutory employee of the defendant, rather than an
independent contractor, and that therefore workmens compensation benefits were his sole remedy.

21

ii.

iv.

Issue: Is a plaintiff entitled to a jury trial under federal principles, even though under state law
petitioner would not receive a jury trial? (YES)
iii. Holding: Whether P was an employee rather than an independent contractor is to be determined by
following the federal policy of having factual matters determined by a jury, not the state policy of
having factual matters determined by a judge.
iv. Even if applying federal law is outcome determinative, the court needs to balance other
government concerns. There may be a strong countervailing governmental interest in how the
federal government conducts procedure, especially if this procedure is enshrined in the
Constitution. Court may also look at state interests in having judges make decisions. If federal
concerns predominate, then federal rules will be used.
2.
Statute of Limitations: A state statute of limitations must be followed in a diversity case. Here, the states interest is
heavily outcome-determinative, and deeply bound up with the rights of the parties. The federal interest is relatively weak,
and there is little to be gained from district-to-district uniformity.
a.
Guaranty Trust Co. v. York state statute of limitations should be followed
i. Facts: Beneficiaries wanted their money, so they did not want stock from the Bank. People who
took stock sued. The plaintiffs claimed that the New York statute of limitations did not apply under
Erie because their claim was in equity rather than in law.
How Do we Know If There is a Conflict between a State Law and a Federal Procedure? see Gasperini, where court said that there
was no conflict
1.
Excessive Jury Verdicts: A state law attempting to limit excessive jury awards is a substantive objective, thereby
forcing federal courts to apply the law in diversity cases when New York law applies.
a.
Gasperini v. Center for Humanities, Inc. limiting jury awards is a substantive right (case on non-Hanna
track)
i. Facts: P brings a suit against D and receives a large jury verdict. Principle issue on appeal is the
standard the federal courts should use in deciding whether a verdict is excessive. NY passed a law
that an appellate court should be deemed excessive if it deviates materially from what would be
reasonable compensation. It changed the shock the conscience standard which was a much
higher threshold. D asserts that federal court should apply the deviates materially standard, not
shock the conscience standard.
ii. Issue: Is a state law attempting to limit excessive jury awards a substantive objective, thereby
forcing federal courts to apply the law in diversity cases when New York law applies? (YES)
iii. If so, does applying the NY law, which warrants trial or appellate scrutiny of a jury verdict, by the
federal courts violate the 7th Amendment? NO
iv. Holding: The statute was designed to curtail unduly large verdicts, just like a statutory cap on
damages would have done. Thus, the states objective was substantive. If federal courts impose a
different standard, then this will encourage forum shopping.
v. Goldberg Notes: In Gasperini, the Court found that there was no conflict between a Federal Rule of
Civil Procedure (Rule 59) and New York law. But it did find a difference between the existing
standard of review that a federal court would apply ("shocks the conscience") and the standard
prescribed by NY law ("deviates materially"). Thus it proceeded to determine whether the federal
court was required to follow state law and change its standard. As you'll see on page 529, the Court
equates the assessment of whether the NY standard is "substantive" or "procedural" with application
of the Guaranty Trust/Byrd test. So it treated the situation as one where there was a conflict.
vi. Dissent: Under Byrd analysis, the federal interest was greater than the state interest and therefore,
the federal courts should not be subject to this standard. Having state standards prescribe how
federal judges review jury verdicts might well destroy the uniformity of federal practice and the
integrity of the federal court system. They also though that letting an appellate court overturn a jury
verdict was a violation of the 7th Amendments right to a jury trial.
vii. Scalia: thinks we should be on Hannah track and should be paying attention to original
understanding of 7th Amendment. Scalia sees a conflict.

8. Pleadings (Rule 11, 8, 12 & 15)

Role pleadings play in the litigation process:
a.
It would be difficult for parties to prepare their case without knowing position of opponents. (pleadings today only have general standards that
notify the defendant)
i. What does D want to know in a Ps claim, even though current system has other procedural devices?:
1.
Law being relied on
2.
Facts stipulated
3.
Damages
b.
Without pleadings, every case would have to go to trial to determine legal sufficiency of a partys position
i. Protecting people against harassing use of legal system.
ii. Some minimum threshold is required to protect people fro frivolous claims
iii. Rule 11
c.
Parties would waste time proving uncontested facts at trial
i. In pleadings, a defendant can admit a fact so plaintiff does not have to waste time amassing evidence proving it.
ii. Pleadings set the stage for what facts have to be proven.
iii. Current pleadings do not help with what facts should be denied because pleadings are broad.
iv. Pleadings are not relied to sort out contested and uncontested facts; Discovery is used for this.
v. P may want to put more specific facts in pleading to force D to deny or concede them.
d.
Court would have no way to determine whether evidence sought in discovery or offered as proof at trial was relevant.
i. Pleadings set out permissible scope of discovery. Only the pleadings can define relevant body of law, so we can know what
constitutes permissible discovery. (Rule 26(b)(1) Discovery scope and limits)
e.
It would be difficult to determine the scope of a judgment for preclusion purposes without knowing what the parties attempted to establish.
i. Laws prevent subsequent lawsuits that may overlap with first suit you brought.
ii. You would not know if there is over overlapping, if pleadings did not establish scope of the case.

22

f.

Key Reasons
i. Notice: Notice to the defendant so they can frame a response (Notice pleading)
ii. Discovery: Frames discovery and sets foundation to discovery requests
iii. Screening: Helps screen some cases; screening can have a significant distributive effect
1.
If pleading screens you out of litigation system, you will get to a point where people who do not have information are
powerless and will have less access.
2.
If you do not do enough screening, you will have many lawsuits going forward where a plaintiff can place enormous
burdens on the defendant.
Operation of Pleadings
B.
Three Things are Needed to Survive a Rule 12(b)(6) motion:
a.
1. Was a Legally sufficient basis for recovery identified
i. Who has the burden of pleading? For example, P asserts a claim for adverse possession. Does P have the burden of pleading the
affirmative defense that he did not have an easement? If you cannot tell where the burden is for certain defenses by statute or rule,
you can check the following things (if it is not described in Rule 8(c). If it is a close issue, then courts generally say that it should be
included as an affirmative defense
1.
Probability if easements rarely take place, then burden is on D
2.
Burden should be allocated based on who has access to information. Party who is mot likely to know about a particular set
of facts, should have burden to prove those set of facts.

ii.

iii.

a. Contributory negligence P would have more info (Rule 8 gives D the burden)
3.
Policy decisions: Usually burden is on D to make certain defenses when policy makers want to encourage the Ps claim.
To avoid this uncertainty, P may overplead. This could be bad
1.
P may assume this burden of proof at trial.
2.
Broadens scope of discovery
3.
Rule 11 sanctions you may not have facts to back it up
4.
P may reveal things about case that he may not want to disclose
What if D fails to put in an affirmative defense? Does D forfeit? No under Rule 15(b)
1.
See Rule 15(b) amendments to the pleadings to conform to the evidence; If P gets evidence to easement at trial, pleadings
could be amended if presence of action would be served. Pleadings will be amended unless a party is prejudiced
2.
.Why is Rule 15 generous to the defendant?
a.
b.

b.

c.

C.

Because it is difficult to determine whether this should have been put in the answer as an affirmative defense or
presented as a denial.
2. How much of the legally sufficient basis must be in the complaint versus the answer?
i. Legal Theory Not Required: Plaintiff needs to state only facts, not the legal theory she is relying upon.
ii. As long as P gives enough facts to put D on reasonable notice about what is being alleged, its irrelevant that the P has failed to allege
some matters that he will ultimately have to prove in order to recover.
3. How specific do you have to be?
i. Specificity: P must make a short and plain statement of the claim showing that she is entitled to relief. The level of factual detail is not
high gaps in the facts are usually remedied through discovery.

Rule 11 Attorney must make a reasonable inquiry

a.

D.

You do not want cases decided on technical failures, but merits of the case

Attorney Must Sign: The pleaders lawyer must sign the pleadings. This is true for both the complaint and the answer. By signing, the lawyer
indicates that to the best of her belief, formed after reasonable inquiry, the pleading is not interposed for an improper purpose (e.g. harassing or
causing unnecessary delays), the claims and defenses are warranted by existing law or a nonfrivilous argument for changing existing law, and (in
general) the allegations or denials have evidentiary support.
i. Sanctions: If Rule 11 is violated because the lawyer knows the complaint is not well grounded in fact or not supported by any
plausible legal argument, the court must impose sanctions on either the signing lawyer, the client, or both. The most common sanction
is fees to the court. Rule 11(c)(2)
ii. Garr v. U.S. Healthcare violation of reasonable inquiry standard of Rule 11 (Under todays Rule 11(b)(3), the evidentiary
standard is much looser)
1.
Facts: Two attorneys, relying on the opinion of another attorney that a case had evidentiary support, filed a lawsuit.
2.
Holding: An attorney cannot under old Rule 11 merely rely on another attorneys reasonable inquiry and complaint in
filing his own suit. The attorney must make his own reasonable inquiry personally. Even if complaint is well-founded,
an attorney can be sanctioned because he did not perform reasonable inquiry.
3.
Concern is with lawyers getting lazy and free-riding. Lawyers should do this investigation themselves and not rely on
others.
4.
Dissent: If the attorneys complaint has merit, the fact that he did not make a reasonable inquiry does not warrant Rule 11
sanctions.
iii. Safe Harbor: A party against whom a Rule 11 motion is made has a 21-day safe-harbor period in which she can withdraw or modify
the challenged pleading and thereby avoid any sanction. Rule 11(c)(1)(a)

COMPLAINT:
a.

b.

c.

Complaint is the initial pleading in the lawsuit, and is filed by the plaintiff; it commences the lawsuit.
Elements of a Complaint: Rule 8(a)
i. Jurisdiction: A short and plain statement of the grounds upon which the courts jurisdiction depends;
ii. Statement of the claim: A short and plain statement of the claim showing that the pleader is entitled to relief; and
iii. Relief: A demand for judgment for the relief which the pleader seeks
Specificity: P must make a short and plain statement of the claim showing that she is entitled to relief. The level of factual detail is not high
gaps in the facts are usually remedied through discovery.
i. Legal Theory Not Required: Plaintiff needs to state only facts, not the legal theory she is relying upon.
ii. As long as P gives enough facts to put D on reasonable notice about what is being alleged, its irrelevant that the P has failed to allege
some matters that he will ultimately have to prove in order to recover.
Rule 11(b)(3) loose standard and flagging: the allegations and other factual contentions have evidentiary support or, if specifically so
identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery
i. P has more room when he does not have the facts; this is looser standard than Garr Rule 11. Prior to this language, P had to do
investigation to get some factual certainty ahead of time; New language says that if you have hints that there is some evidence, then P
can allege it but D must be shown that that the allegation is likely to have evidentiary support. This evidence must be flagged.

23

ii.

d.
e.
f.
g.

E.

Motions Against the Complaint

a.

b.

c.
d.
e.
f.

g.

h.
F.

G.

If evidence does not exist at the time of the pleadings, P may have to specify that his allegations are likely to have evidentiary support
after a reasonable opportunity for further investigation or discovery. Rule 11(b)(3) this could, however, show to the other side that
you do not have much.
Pleading in the Alternative: The pleader, whether plaintiff or defendant, may plead in the alternative. A party may set forth two or more
statements of a claim or defense alternately or hypothetically. Party cannot plead in the alternative unless party has a basis to question his
knowledge. See last sentence of Rule 8(e)(3) which states that all statements are subject to Rule 11 Rule 8(e)
Certain Special Matters Require More Specific Pleading (Rule 9): The special matters listed in Rule 9 include among others, circumstances
giving rise to any allegation of fraud or mistake, etc.
What if P is Uncertain About the Law: If you are uncertain about the law and want to file a claim, you may be able to file under Rule 11(b)(2).
This permits a party to state claims for the extension [or] modification . . . of existing law or the establishment of new law.
i. To see if you are making a reasonable extension, do research (law review articles; legislative history)
What if P is seeking a Reversal in the Law: If a party seeks to reverse the law, the party may file claims under Rule 11(b)(2). This permits a
party to make claims for the reversal of existing law.
i. Party will need to find some indication that precedent is vulnerable
ii. Law review articles
iii. Decisions were law is questioned
iv. Show evidence that proves the new interpretation of the law
Either in the answer, or by separate motion, defendant may attack the validity of the complaint in a number of respects. Rule 12(b) lists the
following such defenses.
i. 12(b)(1) Lack of jurisdiction over subject matter
ii. * (2) Lack of jurisdiction over the person destroy litigation
iii. * (3) Improper Venue destroy litigation
iv. * (4) Insufficiency of Process adequacy of summons itself
v. * (5) Insufficiency of Service of Process manner in which delivered
vi. (6) Failure to state a claim upon which relief may be granted; and
vii. (7) Failure to join a necessary party under Rule 19 (i.e. failure to join an indispensable party)
Failure to State a Claim 12(b)(6): This motion asserts that on the facts as pleaded by P, no recovery is possible under any legal theory. (i.e. P
is barred by statute of limitations).
i. Judgment on the Pleadings (Rule 12(c)): A 12(b)(6) motion is generally filed before D files his answer. After D has filed an answer,
and the pleadings are complete, D can accomplish the same result by making a Rule 12(c) motion for a judgment on the pleadings.
Consolidation of Defenses in a Motion/Motion Under Rule 12(g): If the defendant object to personal jurisdiction, venue, the form of process, or
the method of service of process, she MUST raise those defenses in the pre-answer motion or the answer (which ever is the initial response). If
she fails to raise any one of these four defenses in initial response, then she has omitted the defense.
Then Available: 12(g) requires a Defendant to make all pre-answer motions then available to him. D cannot make one pre-answer motion after
another. D must file an answer then to assert these defenses. (subject matter is the exception according to 12(h)(3) which states that it can be
raised at any time.
12(e) Motion for a More Redefinite Statement 12(e): It must be made before any responsive pleading. It must be made in first pre-answer
motion.
Amendment: If the complaint is dismissed in response to Ds dismissal motion, P will almost always have the opportunity to amend the
complaint. 15(a)
i. Amendment as of a right: If D makes a motion against the complaint before filing his answer, and the court grants the dismissal, P
may automatically amend Rule 15(a) allows amendment without leave of the court any time before a responsive pleading is served,
and motions made under 12(b) are not deemed to be responsive pleadings.
ii. Amendment by leave of the Court: If D serves his answer before making the Rule 12(b) motion, and is then successful with the
motion, P may amend only by getting leave of the court. The Court will not always grant this permission.
Vague and Ambiguous/Motion for a More Definite Statement: If the complaint is so vague and ambiguous that the defendant cannot reasonably
be required to frame a responsive pleading, then D may move for a more definite statement under Rule 12(e). Rarely invoked because
pleading standards are so lacks must be in initial pleading
Redundant and Immaterial/Motion to Strike: If P has included redundant, immaterial, impertinent or scandalous material in the complaint, D
may move to have this material stricken from the pleading by Rule 12(f).

ANSWER: Ds response to plaintiffs complaint.

In his answer, D states in short and plain terms his defenses to each claim asserted, and admits or
denies each count of plaintiffs complaint. Rule 8(b).
a.
Alternative Pleading: Defenses, like claims, may be pleaded in the alternative.
b.
Signed by Attorney: The answer must be signed by the defendants lawyer. As with the complaint, the attorneys signature constitutes a
certificate that the signer has read the pleading, believes it is well founded, and that it is not interposed for delay. Rule 11.
c.
Denials: The D may make various kinds of denials of the truth of Ps allegations.
i. Admitted where not Denies: Averments in a complaint, other than those concerning the amount in damages, are admitted when not
denied in [an answer. Rule 8(d)
ii. Kinds of Denials: 5 Kinds of Denials
1.
General Denial: D may make a general denial, by which he denies each and every allegation in Ps complaint. (But D
must then contest all of Ps allegations or face sanctions)
2.
Specific Denial: D may make a specific denial, which denies all of the allegations of a particular paragraph or count of the
complaint.
3.
Qualified Denial: D may make a qualified denial, i.e. a denial of a particular portion of a particular allegation.
4.
Denial of Knowledge or Information (DKI): D may make a denial of knowledge or information, by which he says that he
does not have enough knowledge or information sufficient to form a belief as to the truth of Ps complaint (but D must do
this in good faith)
5.
Denial Based on Information and Belief: D may deny based on information and belief. D effectively states: I do not know
this for sure, but I reasonably believe that Ps allegation is false. (used often by corporate defendants)
d.
Affirmative Defenses: Certain defenses must be explicitly pleaded in the answer, if D is to raise them at trial. These are affirmative defenses.
i. Listing: Rule 8(c) lists 19 specific affirmative defenses, of which the most important area contributory negligence, fraud, res judicata,
statute of limitations, and illegality.
Time Restraints (Rule 12(a))

24

a.
b.

H.

I.
J.

Complaint: Filing of the complaint usually occurs before it is served. Service must then occur within 120 days (Rule 4(m))
Answer: The answer must be served within 20 days after service of the complaint, except that
i. D served using state long-arm: If P has served D out of state, by using state long-arm statute, the time to answer allowed under the
state rule (typically longer) controls. Rule 4(k)(1)(A)
ii. Ds Failed 12(b)(6) Motion: If D makes a Rule 12 motion against the complaint and loses, D has 10 days after the court denies the
motion to answer.
iii. Waiver of Formal Service: If D waives formal service pursuant to 4(d), then he gets 60 days to answer running from the date the
request for waiver was sent by P. Rule 12(a)(1)(B).
c.
Reply to Counterclaim: If the answer contains a counterclaim, P must serve his reply within 20 days after service of the answer.
Amendment of Pleadings (Rule 15)
a.
Amendment as of Right: A pleading may be amended once as a matter of right without leave of the court as follows:
i. Complaint: The complaint may be amended one at anytime before the answer is served. The fact that the D has made a motion
against the complaint does not preclude the P from amending the complaint.
ii. Answer: The answer may be amended once within 20 days after D has served it. If the answer contains a counterclaim, the answer
may be amended up until the time P has served her reply.
b.
Amendment by Leave of Court: If these requirements are not met, the pleading may be amended only by leave of court, or by consent of the
other side. Leave of the court to amend shall be given freely when justice so requires. Normally, the court will deny leave to amend only if
amendment would cause actual prejudice to the other party.
c.
Relate Back (same conduct test): When a pleading has been amended, the amendment will relate back to the date of the original pleading if the
claim or defense arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading Rule 15(a)
statute of limitations purposes.
i. If what is amended is simply Ps claim or theory, he court will typically find that the same conduct test is satisfied
ii. But where the underlying facts needed to sustain the new pleading are materially different from those alleged in the original
complaint, the court is likely to find that the same conduct test is not met,
d.
When Action is Commenced: Action is commenced when it is filed. In a diversity case, it is the date that state law regards as the date of
commencement which controls.
e.
Change of Party: Where an amendment to a pleading changes the party against whom the claim is asserted, the amendment relates back only if
three requirements are met Rule 15(c)(3):
i. 1 -- The amendment covers the same transaction of occurrence as the original pleading
ii. 2 -- The party to be brought in by amendment received actual notice of the action before the end of the 120 days following original
service; and
iii. 3 -- Before the end of that 120 day period, the new party knew or should have known that but for a mistake concerning the identity of
the proper party, the action would have been brought against the [new] party.
Variance from Pleadings
a.
Variance from pleadings is allowed at trial so long as such variance does not prejudice the other side.
Attorneys Fees
a.
Attorneys fees are usually not included when a judgment is rendered against a party. Only fees are costs of litigation.
b.
Exceptions
i. Where Congress has enacted special legislation allowing attorneys fees (Congress does this to encourage litigation)
ii. In CA, there is a doctrine that allows legal fees when you have been successful in litigation that created a special public interest
iii. Attorneys fees could be granted when P creates a fund for non-named plaintiffs (shareholders derivative action)
iv. Fees can be received if litigation is conducted in bad faith

9. Discovery
INTRODUCTION
A. Purposes of Discovery:
a.
Eliminates Surprise
i. Surprise at trial could bring inaccurate results; wide could have responded effectively had it known
ii. This would be more efficient because you would have accurate results
iii. Legitimacy better results because things were more equal
b.
Provided a more effective screening process
i. Basing case on facts you actually have, rather than arguing about pleadings (also more efficient)
c.
Promotes settlement seeing how a witness responds to questions
d.
Rectify imbalances of power (distributive factor)
B. Scope of Discovery: Rule 26(b), which applies to all forms of discovery, provides that parties may obtain discovery regarding any matter, not
privileged, that is related to the claim or defense of any party. So the principle requirements for discoverability of material are that it is (1) not
privileged; and (2) relevant to some claim or defense in the suit.
C. Relevant but Inadmissible: To be discoverable, it is not required that the information necessarily be admissible. Inadmissible material may be relevant, and
thus discoverable, if it (1) is reasonably calculated to lead to admissible evidence; or (2) relates to the identity or whereabouts of any witness who is
thought to have discoverable information. Rule 26(b)(1)
D. Limitations Rule 26(b)(2): Discovery may be limited if the Court finds that:
a.
Cumulative & Duplicative: the discovery sought is unreasonably cumulative or duplicative
b.
Ample Opportunity: seeking party had ample opportunity to obtain information sought
c.
High Burden: The burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, amount in
controversy, etc.
E.

Automatic/Initial Disclosures See Rule 26(a)(1).

A party must, even without a request from the other side, automatically disclose
certain things early in litigation. Items disclosed must be items that the party would use to support its claims or defenses. It does not have to provide
information that would help the other side. 26(a)(1)(A). The most important are:
a.
All witness with Discoverable Information: First, each party must disclose the name, address and phone number of each individual likely to have
discoverable information that the party plans to use in this case.
b.
Documents: Second, a party must furnish a copy, or else a description by category and location, of all documents and tangible things in that
partys possession, that the party plans to use in this case.
c.
Computation of Damages

25

F.
G.
H.

Statements Previously Made by Witnesses: A person who makes a statement to a party of the partys lawyer may obtain a copy of that statement without any
special showing. This is true whether the person making the statement is a party of a non-party. Rule 26(b)(3).
Duty to Supplement Rule 26(e): A party who makes a disclosure during discovery now normally has a duty to supplement that response if the party then
learns that the disclosed information is incomplete or incorrect.

Discovery Plan Rule 26(f):

Parties shall, as soon as practicable and in any event at least 14 days before a scheduling conference is held, meet to
discuss the nature of their claims and arrange disclosures in accordance to Rule 26(a)(1).

FORMS OF DISCOVERY
A.

B.

C.

D.

Depositions Rule 30
a.
Usable against a Non-Party: Not only parties, by any non-party with relevant information may be deposed.
b.
Subpoena: If a non-party is to be deposed, then the discovering party can only force the deponent to attend by issuing a subpoena. This subpoena
must require the deposition to be held no more than 100 miles from the place where the deponent resides, is employed, or regularly transacts
business. Rule 45(c)(3)(A)(ii)
i. No subpoena needed for a party to the case. Noncompliance can be followed with a Rule 37 motion to compel.
c.
Limits to Ten: Each side is limited to a total of 10 depositions, unless the adversary agrees to more or the court issues an order allowing more.
Rule 30(a)(2)(A).
Interrogatories Rule 33
a.
An interrogatory is a set of written questions to be answered in writing by the person to whom they are addressed. Interrogatories may be
addressed only to a party. Rule 33(a).
b.
25 Limit: Each party is limited to 25interrogatory questions directed to any other party, unless the parties stipulate otherwise or the court orders
otherwise. Rule 33(a).
Requests to Produce Documents or Inspect Land Rule 34: A party may require any other party to produce documents and things. Thus, any papers,
photos or objects relevant to the subject matter of the case may be obtained from any other party, but not from a non-party
a.
Only to Parties: A request to produce can only be addressed to parties. If documents in the possession of a non-party are desired, a subpoena is
needed.
b.
Parties Control: A party may be required to produce only those documents or other objects which are in her possession, custody or control
Rule 34(a).
Physical and Mental Examination Rule 35: When the mental or physical condition of a party is in controversy, the court may order the party to submit
to a physical or mental examination by a suitably licensed or certified examiner.
a.
Motion or Good Cause: Unlike all other forms of discovery, Rule 35 operates only by court order. The discovering party must make a motion
upon notice to the party to be examined, and must show good cause why the examination is needed.
b.
Controversy: The physical or mental condition of the party must be in controversy. It is not enough that the condition is somehow relevant.
c.
Reports from Examiner: The actual medical report produced through a Rule 35 examination is discoverable (in contrast to the usual nondiscoverability of experts reports)

i.

Who may Receive: A person examined may request, from the party causing the exam to be made, a copy of the examiners written
report.

ii.

*** Other Examinations: Once the examined party asks for and receives this report, then the other party is entitled to reports of any
other examinations made at the request of the examinee for the same condition.
E. Request for Admission Rule 36: One party may serve upon another party a written request for the admission, for the purposes of the pending action
only, of the truth of any discoverable matters.
a.
Coverage: The statements whose genuineness may be requested include statements or opinions in fact, the application of law to fact, and the
genuineness of any documents
b.
Expenses for Failure to admit: If a party fails to admit the truth of any matter requested under 36(a), and the party making the request proves the
truth of the matter at trial, the court may then require the party who refused to admit to pay reasonable expenses sustained by the movant in
proving the matter. Rule 37(a)
c.
Conclusive at Trial: If a party makes an admission under Rule 36, the matter is normally conclusively established at trial. However, court could
grant motion to withdraw.
Depositions (Rule 30) Interrogatories (Rule 33)
Production of
Examination (Rule
Request for
Documents (Rule 34)
35)
Admission
(Rule 36)
(used for
things that
are difficult
to contest)
Towards Whom?
Party or Witness
Parties Only
Party
Party
Party
may have to get a
To Party
Cannot get
examination from
May need Rule 45
Rule 45 subpoena
employee of
for witness; cannot
subpoena for
employer is named.
force a witness to
witnesses
This can affect who
travel more than
a P names as a
100 miles
party.
How Requested?

Non-party
deponents you
may need a
subpoena of they
are not agreeable to
being deposed
Party deponents
direct request to the
party.

Leave of Court not

required to seek
interrogatories if less
than 25 interrogatories
requested per party.
Leave required if more
than 25 requested. See
33(a) (parties can agree
in pre-discovery
meeting to allow 50

Request to Party.
You need a subpoena
for a non-party under
Rule 45.

26

Courts
permission is
required

This is
due to extreme
intrusiveness

N
o Leave
of Court
required

Any Limits?

Court permission
required if greater
than 10 depositions,
second time for
deponent, or out-ofsequence (see Rule 30
(a)(2)) designed to
limits discovery
abuses

Who Responds?

Party or witness

questions each)
If more than 25
interrogatories per party
sought, then leave of the
Court required.
Must be consistent with
26(b) which was
designed to eliminate
wasteful discovery.
This sacrifices court
time. Judges do not like
to resolve disputes under
26(b).

Attorney

Documents must be
kept in usual order
Rule 26(b) is only
limit
Must be done in
sequence (see Rule
26(d))
SELF-REGULATING

Attorney guide parties

Seeking party
must demonstrate
good cause to get
examination
ordered by the
Court
Party needs a
specific reason to
believe that
condition sought
to be examined
caused the
incident
Teeth of section
2072(b) has been
taken out
Party who gets
examined

Sequence

Attorney
(party can
face
sanctions by
denying
issue when
you should
have
admitted it
party who
should have
admitted it
may have to
pay court
costs under
Rule 37(c)
(2))

ORDERS & SANCTIONS

A.
B.

C.

D.

E.

F.

There are two main ways Discovery is regulated by the Courts: sanctions & orders. The court may order abuse of discovery stopped (a protective order) or
may order a recalcitrant party to furnish discovery (order compelling discovery). Sanctions can be awarded for failing to handle discovery properly.
Objection: A party may object to a discovery request the same way a question at trial may be objected to. Typical grounds are that the matter sought is not
within the scope of discovery (i.e. no relevant or is privileged)
a.
The form of objection depends on type of discovery.
i. An objection to an interrogatory question is written down as part of the set of answers.
ii. An objection to a request to admit is made in writing
iii. An objection to a deposition question is raised as an oral objection by the lawyer representing deponent the deposition then continues
and objections are dealt with a later time.
Protective Order Rule 26(c): Where more than a few questions are at stake, the party opposing discovery may seek a protective order. Rule 26(c)
allows the judge to make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or
expense . . .
a.
Prohibition on Public Disclosure: one common type of protective order allows trade secrets or other information to be discovered, but then bars
the public disclosure of the information by discovering the litigant.
b.
Movant must have made good-faith effort: Movant must have in good faith conferred or attempted to confer with the party to resolve issue.
c.
If motion denied: sanctions applied to moving party, usually reasonable expenses.
Motion to Compel Rule 37(a): If one party fails to cooperate in the others discovery attempts, the aggrieved party may seek an order compelling
discovery under Rule 37(a).
a.
Good-Faith: The motion must include a certification that the movant has in good faith conferred or attempted to confer with the party not making
the disclosure in an effort to secure the disclosure without court action.
b.
Sanctions apply here.
Sanctions for Failing to Furnish Discovery: The court may order a number of sanctions against parties who behave unreasonably during discovery.
Principally, these sanctions are used against a party who fails to cooperate in the other partys discovery efforts.
a.
Financial Sanctions: If a discovering party seeks an order compelling discovery, and the court grants the order, the court may require the
discoveree to pay the reasonable expenses the other party incurred in obtaining the order. These may include attorneys fees.
b.
If Court does not Grant motion to Compel, Moving Party Pays: then moving party has to pay reasonable expenses of party defending against the
motion. Rule 37(a)(4)(B)
c.
Other Serious Sanctions: Once one party obtains an order compelling the other to submit to discovery, and the latter persists in her refusal to
grant discovery, then the court may impose additional sanctions. Rule 37(b)
i. Facts Established: The court may order that matters involved in the discovery be taken to be established.
ii. Claims or Defenses Barred: The court may prevent the disobedient party from making certain claims or defenses, or introducing
matter into evidence
iii. Entry of Judgment: Court may also dismiss the action, or enter a default judgment.
iv. Contempt: The court nay hold the disobedient party in contempt.
Sanctions for not showing up at Deposition; Failure to Respond to Interrogatories, etc. Rule 37(d):
a.
If there is a failure by the non-moving party (1) to not appear at a deposition; (2) to not answer interrogatories submitted, or (3) to not serve a
written response to a request for inspection submitted under Rule 34, then moving party is justified in filing a motion under 37(d).

27

b.

G.

I.

The court shall require the party failing to act or the attorney advising that party or both to pay the reasonable expenses, including attorney's
fees, caused by the failure unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses
unjust.
i. Movant must have made good-faith effort: Movant must have in good faith conferred or attempted to confer with the party failing to
answer or respond in an effort to obtain such answer or response without court action.
Sanctions as a result of Signing of Disclosures, Discovery Requests, Responses, and Objections Rule 26(g) Document Related.
a.
Every disclosure must be signed by at least one attorney.
b.
If without substantial justification a certification is made in violation of the rule, the court, upon motion or upon its own initiative, shall impose
upon the person who made the certification . . . an appropriate sanction which will usually include attroneys fees.

Privilege (Rule 26(b)(5)): Only material which is not privileged may be discovered.

In diversity cases, how privilege is defined is determined by state

law that is applied to the case. If a party is declining to furnish documents or information or information because of a claim of privilege or work-product
immunity, the party must make the claim expressly, and must describe the nature of the documents or communications.
a.
Waiver of Privilege:
i. Unintentional Production of Documents
ii. Disclosure to Third Parties
iii. Implied Waiver (using a particular defense can create an implied waiver)
b.

Attorney-Client Privilege:

For attorney-client privilege, only discussions with the client are protected. Determining who the client
is can be tough to determine in a corporate context. Rule 26(b)(3) the court shall protect against disclosure of the mental impressions,
opinions, or legal theories of an attorney or other representative of a party concerning the litigation.
i. Current Factors for Determining Whether Something is Privileged:
1.
How bad Party needs it
2.
What alternatives are available to requesting party (i.e. can they get comparable effort through reasonable effort)
3.
How difficult would it be to obtain information
ii. Why do we need this privilege?
1.
Clients will not tell attorney certain things (client will put both attorney and client in the dark)
2.
Protects client if client is under the apprehension that a certain fact is bad legally, but the fact is needed for the attorney
to better represent him. With the privilege, client will be more truthful and attorney can dispel any misapprehensions that
would prevent client from becoming more forthcoming. Lawyer can counsel attorney how telling the truth will improve
the situation.
iii. Control Group Test Privilege and Corporations:
1.
Companies could insulate documents from discovery by funneling it through an attorney.
2.
Pre-existing view was that privilege would only extend to those individuals in the corporation who were in a position to act
on the legal advice that attorney gave. (control group test) Upjohn Court stated that this test was too narrow.
3.
Why control group test does not apply to lower employees: Lower level employee will be more concerned about
implications for job so having a privilege will not necessarily create an incentive for them to disclose.
iv.

Control Group Test Rejected for New Test:

v.

Work Product Rule:

Communications are usually privileged if they are done with

an eye toward trial. If communication is necessary to enhance quality of legal representation, than the communication is
privileged. It is not enough that the information was needed for representation, but that the information itself was flagged for
the purpose of representation. (the information in Upjohn was flagged for the use in future litigation)
1.
Upjohn v. United States material privileged
a.
Facts: D, a corporation, conducts an investigation whether any of its officials have made illegal bribes to
foreign officials. Ds legal department conducts interviews with company officials, and the lawyers take notes;
the lawyers also write memos about the case. In a tax proceeding, the government seeks discovery of the notes
and memos. D argues that disclosure should not be required because (apart from the attorney-client privilege)
the materials reveal the attorneys mental processes.
b.
Holding: Material is privileged
i. For purpose of law compliance activity, this communication was necessary.
ii. For the purpose of litigation, this communication may not have been necessary to respond to a
lawsuit even though such communications were flagged because they were not yet parties to a case.
Under this rule, certain immunity from discovery is given to the materials prepared by counsel
for trial purposes, and to the opinions of experts that counsel has consulted in trial preparation. If there is a substantial need
of the materials and an opposing party cannot obtain the equivalent by other means, then the materials may not be deemed
privileged.
1.
Protection of Mental Impressions: Rule 26(b)(3) provides that even where a party has substantial need for materials, the
court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney of
other representative of a party concerning the litigation
2.
Hickman v. Taylor information protected
a.
Facts: Tug Sinks. Tug boat owners and underwriters, employed a law firm to defend them against potential
suits resulting from the sinking of a tug in which their crew members drowned. Attorney interviewed and took
written statements from the survivor employees with an eye toward litigation. Petitioner filed interrogatories
directed to respondents, some of which requested copies of written statements taken from the crew members,
detailed reports of oral statements, records, or other memoranda made concerning the tug's sinking.
Respondents, through counsel, did not provide the requested materials and were found in contempt of court.
b.
Holding: Information was privileged because it constituted attorney work-product.
i. Copies of written statements taken from interviewees, detailed reports of oral statements, records, or
other memoranda constitute attorney work product so as to make the materials privileged.
1.
This information is not protected by attorney-client privilege because the survivors were
not his clients.
2.
Control-group test would not apply here because survivors were not clients and not in a
position to use information or the benefit of the company.
3.
Normative Concerns of Work-Product Rule:
a.
Efficiency:

28

i.
ii.
iii.
b.

c.
d.

10.
A.
B.

C.

D.

E.

If work product rule did not exist, then the system would be less efficient because by not making this
information privileged, attorneys will not write this down.
If work product rule did not exist, lawyers may have less incentive to work hard because they could
merely obtain information from the other party (free-rider problem); Other side may also not seek
information, ultimately leading to inefficient results.
If rule did not exist, system would be inefficient if attorneys get called in as impeachment witnesses.
This could cause attorney with withdraw.

Fairness:
i. If rule did not exist, it would be unfair for an individual to not be able to capture full benefit of their
effort.
ii. Privacy concerns; it is essential that lawyer work with a certain degree of privacy.
Legitimacy:
i. Cause of justice would be poorly served if lawyers work product was not protected. If efficiency
and fairness concerns are not addressed, than legitimacy of system is damaged.
Distribution:
i. Though making such information privileged and therefore preventing some parties from obtaining
sensitive information, this rule would effect both plaintiffs and defendants equally.

Trial by Jury

Seventh Amendment: The Seventh Amendment to the Constitution states that in suits at common law . . . the right of a trial by jury shall be preserved . . .
This amendment applies to federal trials, but does not apply to state trials.
Looking Back in Time: 7th Amendment preserves right to trial by jury at common law. Therefore, it looks back in time. Since, at common law, there was no
right to a jury trial in equitable actions, a court must look at the cause of action and determine if it would be considered an equitable action or an action at
law at common law.
a.
Rule 1 applies to all suits of a civil nature. This has caused problems in determining whether there is a right to a jury trial. The general rule is
that if you have claims that are legal combined with claims that equitable and have same facts, the right to a trial by jury takes
precedence
b.
What do you do with types of claims that did not exist in 1791? Courts have attempted to determine how people in 1791 would have examined
the claims. They also look at the type of relief that is sought.
c.
Two Part Test if Action Did not Exist at common law:
i. 1) The Court must compare the statutory action to the actions available in the courts of England in 1791. If the most similar action
available was legal, thats a factor in favor of the modern actions being considered legal.
ii. 2) The Court examined the remedy sought, and determines whether it would be considered legal or equitable in nature in 1791.
Jury Selection: Process by which jury is selected is called voir dire.
a.
Dismissal for Cause: Any juror who is shown to e biased or connected to the case must be dismissed upon motion by a party (dismissal for
cause). There is no limit for the number of juror who can be dismissed for cause.
b.
Challenged Without Cause: In addition to the jurors dismissed for cause, each party may dismiss a certain number of other prospective jurors
without showing cause fir their dismissal (peremptory challenged)
i. Three Peremptory challenges in federal suits
c.
Balanced pool required: 7th Amendment requires that jury pool is representative of overall community.
Ways for Courts to Regulate Juries:
a.
Directed Verdict (a.k.a. Judgment as a Matter of Law) (Rule 50(a)): A party can move for a directed verdict. Such a verdict takes the case away
from the jury, and determined the outcome as a matter of law. Standard is that a court should grant a motion for a directed verdict if it is such that
reasonable people could not differ as to the result.
b.
Judgment Not Withstanding the Verdict (Rule 50(c)): Judgment NOV allows the judge to set aside the jurys verdict, and enter a judgment for the
verdict-loser.
i. Why Judgment NOV is better than Directed Verdict
1.
Reason 1 -- If judge is reversed on appeal, a new trial is not necessary because a jury verdict exists.
2.
Reason 2 If judge rules correctly, there is need for judicial involvement.
ii. A party must make a Rule 50(a) motion for Judgment as a Matter of Law (Directed Verdict) before the case went to the jury in order
to preserve its right to make a Rule 50(b) motion for Judgment NOV.
c.
Specific Verdict:
i. The Judge can ask the jury to give specific verdict i.e. decide specific findings of fact that would be central to the case. This allows
judge to see if there is inconsistency. This is not normally done.
Why Have Jury Trials?
a.
Benefits of Jury Trials
i. There are inevitably going to be biases in a fact-finder, so judgments should be collective, rather than individual (decreases
centralization of power)
ii. Cases are less susceptible to political pressure if cases decided by jury than by judge
iii. More legitimacy (if people are deciding, parties will feel that decision is more justified)
iv. More efficient There would be fewer appeals because standard of review for jury decisions is harder. More room for appellate
review if case decided by a judge
1.
Standard for reviewing findings of fact for a judge clearly erroneous
2.
Standard for reviewing findings of fact for a jury no supporting evidence from which a rational juror could find from
prevailing
b.
Costs of Jury Trials
i. Inefficient
1.
Unpredictable
2.
More litigation will be created
3.
Decisions may not be based on law
ii. Juries are more vulnerable to claims of sympathy
iii. Jury Nullification
iv. Juries do not have to give reasons
v. System moves slowly

29

vi.
vii.
viii.

11.
A.

Costly
Burdens for those how participate
Structure so that juries cannot do effective job (jury instructions; cannot take notes; etc.)

Summary Judgment (Rule 56)

Test: Summary Judgment denies access to a jury trial for a party when, after discovery, there is not enough admissible evidence to demonstrate an issue of
material fact. If one party can show that there is no genuine issue of material fact in the lawsuit, and that he is entitled to judgment as a matter of law, he
can win the case without going to trial.
a.
Court goes Beyond Pleadings: In deciding a motion for summary judgment, the court will go beyond the pleadings. Even if it appears from the
pleadings that the parties are in dispute on some material fact, summary judgment may be granted if the movant can show that the disputed
factual issues are illusory.
b.
How to Show Lack of Issue of Material Facts:
i. Affidavits: Affidavits must only recite matters as to which the affiant has personal knowledge, must state only matters which would
be admissible at trial, and must show affirmatively that the affiant is competent to testify matters stated therein. Rule 56(e)
ii. Discovery Materials
c.
Showing by Movant (usually D): Regardless of who will have the burden of persuasion at trial, the movant (D) bears the initial burden of
production on that issue. However, the movant will not necessarily have to come up with affidavits, depositions, or other evidentiary
materials admissible at trial that dispute Ps claims. Instead, he may be entitled to summary judgment merely by showing that the
existing record contains no admissible evidence that the other side (which will bear the burden of persuasion at trial) will be able to prove
an essential element of its case. Celotex Corp. v. Catrett
i. Celotex Corp. v. Catrett moving party must show absence of material fact

1.

Facts: P claimed to have been injured by exposure to asbestos manufactured by D. After discover, D moved for summary
judgment on the grounds that there was no evidence in the record that ay of Ds products caused the injury, an issue that O
would have the burden of persuasion at trial. D did not produce affidavits, depositions, or other discovery materials to
support its proposition that its products were not the ones that caused Ps injury it simply pointed out to the court that P
had no evidence implicating Ds products.

2.

d.

e.
f.
g.
h.

Holding: The Supreme Court held that in this situation, summary judgment could properly be given for D. We find no
express or implied requirement in Rule 56 that the moving party support its motion with affidavits or other similar
materials negating the opponents claim.
ii. Old Rule: At time of Celotext, leading precedent case stated that a D (movant) had to produce evidence to negate inadmissible
evidence presented by P. (Adickes v. S.H. Kress). Movant has a higher burden and has to prove a negative. D had to present a
statement from police officer saying that he was not at store. D had a burden to demonstrate that he has evidence that repels every
potential basis for finding a conspiracy. VERY DIFFICULT to Discharge their BURDEN OF PRODUCTION.
1.
Movant had burden of production (i.e. to show the absence of evidence) and persuasion (that all facts lead to one
conclusion)
iii. New Rule in CELOTEX: Moving party (D) had burden of persuasion, but Non-moving party has burden of production (i.e. to
prevent evidence showing that there is an issue of material fact). Court stated that nonmovant does not have to present any
evidence, because movant has failed to discharge his burden. If moving party (D) does discharge the burden by showing that no
evidence exists, then it is up to P in response with admissible evidence to show that there is a dispute.
1.
Celotex focuses on whether the D has come forward with any admissible evidence; D only has the burden of pointing out
that the P has not produced admissible evidence supporting its claim. (D does not have to dispute this by producing
evidence)
iv. Celotex can be hard of Plaintiffs: If P cannot extract evidence through discovery, then you may not get ability to cross-examine Ds
witnesses because P cannot produce enough evidence to get past summary judgment. P WILL LOSE HIS DAY IN COURT
v. California Law: Summary judgment may be denied by judicial discretion where the only proof of material fact in support of motion is
an affidavit of a sole witness, or where a material fact is an individual state of mind. This exception exists so P can get ability to get
ability to cross-examine the witness in order to determine if this witness is credible. Here, summary judgment may be prevented, even
though on the record there is no issue of material fact, but Court may try to permit a material fact to emerge at trial.
1.
Here, there is a greater burden for the moving party (not only do they have to show that there is no genuine issue of
material fact, but also that this is not a situation where there is a sole witness or individual state of mind.
Opposing a Summary Judgment motion: The party opposing the summary judgement motion may also submit affidavits, depositions, and other
materials which meet the same standards as those proscribed for materials by the movant. Rule 56(e)
i. Opponent Cannot Rest on Pleadings: Opponent may not rest upon the mere allegations or denials of the adverse partys pleading.
Rule 56(e)
Construing Facts in Favor of Non-movant: The party opposing summary judgment is not required to make evidentiary showing unless the
movant clearly demonstrates the lack of triable issue of fact. In any event, the non-movant receives the benefit of the doubt.
Payment of Costs: If affidavits presented for or against a summary judgment motion were made in bad faith or for purpose of delay, court can
order the party who submitted the affidavits to pay other sides court costs and attorneys fees. Rule 56(g)
Partial Summary Judgment: This occurs when summary judgment is granted with respect to certain claims, but not all claims.
NORMATIVE CONCERNS
i. Efficiency: Summary judgment may screen out good cases because information may be on one side and P is prevented from ability to
cross-examine because all D (movant) has to show is that no evidence exists.
ii. Distribution: when information is in the possession of the side (D), there may be concerns that summary judgment is used to prevent
Ps day in court.
iii. Legitimacy: People may feel that judge preventing the case form going to jury will be illegitimate.
iv. Fairness: Summary judgment may be unfair to non-moving party (P) who will be unable to cross-examine Ds witness because D
successfully gets past summary judgment due to lack of evidence proffered by P.

12. Claim Preclusion 1738 full faith and credit

A.

Claim Preclusion: Forfeiture mechanism that precludes any claim that was or should have been litigated in first proceeding. It requires that the parties in the
subsequent proceeding be the same as the parties in the initial proceeding or parties in privity. There is no claim preclusion if another party is involved in
the second lawsuit. Claim preclusion is usually limited to same transaction or cause of action. Claim Preclusion provides an incentive to conserve resources

30

B.

C.

D.

E.

of the judiciary by consolidating claims. Claims can be forfeited even they are sound on the merits. Claim preclusion is a rule of compulsory joinder of
claims at risk of forfeiture. You can lose a case that never got litigated in the first place.
Full Faith and Credit Clause (section 1738) court deciding lawsuit 2 (either state or federal court) is required to follow the preclusion law of the state
court in Lawsuit 1. That rule is dictated by 28 U.S.C. 1738, the Full Faith and Credit statute.
a.
1: P v. D in state court
b.
2: P v. D in federal or state court
c.
The federal court deciding Lawsuit 2 is required to follow the preclusion law of the state court in Lawsuit 1. That rule is dictated by 28 U.S.C.
1738, the Full Faith and Credit statute. The same result would follow if Lawsuit 2 were in a different state court.
Supremacy Clause of the Constitution if lawsuit 1 is in federal court and based on federal question, and lawsuit 2 is in state court, the state court in
lawsuit 2 must apply federal preclusion law as required by the Supremacy Clause.
a.
1. P v. D in federal court, based on federal question jurisdiction
b.
2. P v. D in state court
Semtek Problem: In the situation below, the Court determined that federal common law can be applied under Guaranty Trust/Byrd analysis because there
were strong federal interests involved in preserving federal judgments. However, federal common law rules should incorporate laws of the state.
a.
1. P v. D in federal court, based on diversity
b.
2. P v. D in state court in a different state
c.
If a Federal Rule of Civil Procedure governs the question of preclusive effect, then its pretty clear under Hanna and the Supremacy Clause that
the state court deciding Lawsuit 2 must apply the Federal Rule. But in Semtek, the Court decided that Rule 41(b) is not a rule of preclusion.
Rather, it only governs the refilling of a lawsuit in the very same federal district court. This ruling shook up the prevailing wisdom about Rule
41(b), which assumed that the use of the phrase on the merits in that Rule indicated that the Rule was to address preclusion. But once the Court
provided the narrower interpretation of Rule 41(b), the question remained whether the Guaranty Trust/Byrd line of cases dictated that the law
of the state in which Lawsuit 1 was filed should determine the preclusive effect of the original diversity action.
d.
Holding: Justice Scalias analysis led him to conclude that overriding federal interests in the impact of federal judgments warranted the
application of federal common law to determine the preclusive effect of such federal judgments, even in diversity cases. But the Court also held
that in most cases, the federal common law rule of preclusion should incorporate the law of the state in which Lawsuit 1 was filed, in order to
avoid forum shopping and unfair application of the law in Lawsuit 1. Federal common law should decline to incorporate state law only where
state law would undermine important federal policies.
Generally: For a claim to be precluded based on claim preclusion, the first judgment usually must be:
a.
b.

(1) Final
(2) On the merits Rule 41
i.

ii.
iii.
iv.

c.

A dismissal under Rule 41 operates as an adjudication on the merits, unless the case was dismissed for lack of jurisdiction, improper
venue, or for failure to join a party. Rule 41(b)
1.
Dismissal for failure to file affidavits is Jurisdictional: A courts dismissal of a case because a party failed to file affidavits
is a dismissal for lack of jurisdiction, and therefore not a dismissal on the merits under Rule 41(b). Thus, claim two can
proceed.
a.
Costello v. United States (1961) no claim preclusion because case was not decided on the merits
i. Facts:
1. P v. D suit dismissed because affidavit of good cause no filed with complaint; District
court declined to enter an order of dismissal without prejudice. U.S. did not appeal but
brought new suit
2. P v. D D argues that suit is barred because case 1 was decided on the merits; District
court did not say that case was dismisses without prejudice.
With Prejudice Does not Guarantee Prelcusiveness: Semtek a designation with prejudice does not automatically mean that a
dismissal in federal court will receive claim preclusive effect in a future lawsuit. A dismissal with prejudice under Rule 41(b) merely
bars the renewing or refilling of the claims in the same federal court from which the case has just been dismissed.
12(b)(6) Dismissal is a Judgment on the Merits Restatement of Judgments s19. If a person cannot amend to state a compensable
claim on a second and third try, it is presumably because she has not right to relief as a matter of law. If judge says without
prejudice, then it is notpreclusive.
Rule 41(b) Only when suits 1 and 2 were in federal court: 41(b) is only controlling when lawsuit 1 and 2 are in federal court. If
lawsuit 2 is in state court and lawsuit 1 is in federal court, we cannot say that Rule 41(b) was intended to examine what would happen
to lawsuit 2 in state court. The purpose of 41(b) is not to prevent a state court from hearing a case. In some cases, D could remove
into federal court and state preclusion rules would apply

(3) The claims must be the same in the first and second suits (below are some factors)
i.

A) Same Transactional Occurance Restatement of Judgment s 24: A claim is precluded from being further adjudicated if it is
part of the transaction, or series of connected transactions, out of which the [first] transaction arose . . . The determination of
whether the second claim is part of the same transaction or series is to be determined pragmatically, giving weight to such
considerations as whether the facts are related in time, space, origin, or motivation, or whether they form a convenient trial unit,
and whether their treatment as a unit conforms to the parties expectations . . .
1.
Motivation: means that events that resulted in claim 1 motivated claim 2
2.
Normative Goals of Restatement:
a.
Efficiency if facts are related in time and space, court will ask if there is an efficiency gain because you will
have much overlapping evidence
b.
Individual Fairness Drafters are trying to determine what one would normally expect to be tried together; are
these cases, based on common experience, thought of as belonging together.
3.
Is this a Good Standard:
a.
Efficiency Losses: It could force a lot of cases together and create efficiency lossess because plaintiffs are
forced to bring in cases that they would not have brought.
i. You could also force P to bring 2 claims, one of which may be harmful. But you have Rule 42 for
separate trials. Under Restatement you could argue that there should not be prelusion because
combining cases together would not be an effective trial unit)
b.
Predictability: Because it is a factor test, cases are unpredictable.
i. In hard cases, judges will likely air on the side of not-precluding the case because it would force
lawyers to include cases obsessively and forfeiture is a harsh remedy.

31

ii.

iii.
iv.
v.
d.

F.

B) Same Cause of Action (Tort): Where a person suffers both personal injuries and property damage as a result of the same
wrongful act, only a single cause of action arises, the different injuries occasioned thereby being separate items of damage from such
act.
1.
Rush (P) v. City of Maple Heights (D) (1958) claim precluded
a.
Facts: P v. D (municipal court) for damages to motorcycle for defect in street; P wins damages of $100
P v. D (superior court) personal injury ???
b.
Holding: Claim precluded because they arose out of the same cause of action
2.
Herendeen (P; appellant) v. Champion International Corp. (D; appellee) (2d Cir. 1975) claim not precluded
a.
Facts:
i. Lawsuit 1: P v. Ds for fraudulent inducement in state court P alleged fraudulent inducement; Ds
wins on failure to state a claim (tort) PAST BENEFITS
ii. Lawsuit 2: P v. Ds for failure to pay pension benefits that are owed under retirement plan in federal
court (breach of contract) federal court must determine what NY state law would do.
iii. Federal court on claim 2 must determine whether state court that adjudicated claim 1 would
determine claim precluded due to full faith and credit clause.
b.
Holding: Claim no Precluded
C) Same Wrong done by Defendant/Same Invasion of Plaintiffs Right Rush
D) Impairment of first judgment by second Herendeen: Court says that claim 2 does not hurt claim 1. If claim 1 only dealt with
new benefits and claim 2 only dealt with old pension benefits, then the answer is no. But if benefits are the same, then the answer is
yes.
E) Was same evidence necessary for both claims (must all facts be the same or some facts? NO under Herendeen): Herendeen
Court says there is a lot of overlapping evidence, but there were some evidentiary differences.

(4) The parties in the second action must be the same as those in the first (or have been
represented by a party to the prior action)

Failure to Bring a Counterclaim: A suit by a plaintiff that should have been brought as a counterclaim in a prior suit may be precluded based on the
totality of the following factors. Mitchell v. Federal Intermediate Credit Bank (1932) Ps claim precluded
a.
Facts:
Suit 1: P (bank) v. D (farmer) to recover on two notes in federal court in favor of P (P did not, by counterclaim, as for affirmative relief)
Suit 2: D (farmer) v. P (bank) action of accounting in state court (D argued that federal action precluding Ps action from continuing)
i. Same Transaction: Arising our of same transaction or same set of facts
ii. Same Cause of Action: Same cause of action
iii. Facts Used in Second Claim Were Raised a Defense in First Claim: Partys cannot split affirmative defense & affirmative claim If
a defense is raised in prior suit, but there is no claim of relief based on same set of facts as the second suit, then there is a problem and
claim preclusion may take hold. However, if the defense was not raised, then counterclaim could be brought in second suit. Kirvin
1.
Reason: P has much more at stake when D raises the affirmative defense. Courts are concerned about giving P the
opportunity to answer an opportunity to answer all defenses at once. This reason does not really apply in Mitchell because
P bank was on notice that second suit was pending until first case was decided.
iv. Nullify First Judgment: Should not be able to bring a claim if it would impair the first judgment
1.
i.e. Dr brings a claim for service rendered against patient and wins. Patient sues for malpractice. A verdict for patient
would nullify the first judgment.
b.
Rule 13(a) Counterclaim is compulsory is the counterclaim is part of the same transaction as the initial claim
i. Fairness Concerns: If we define transaction and occurence broadly, then we force Ds to bring their claims in a forum and time of
the other partys choosing. This may be UNFAIR. As a result, when we are in doubt, transaction and occurrence is defined
narrowly so that the Ds claim is not precluded in additional suits.
c.
Supplemental Jurisdiction & Claim Preclusion
i. Supplemental Jurisdiction Broad definition of transaction and occurance so claims can be brought into federal court
ii. Claim Preclusion Narrow definition of transaction for compulsory counterclaim rules (so there is less claim preclusion.

13. Issue Preclusion 1738 Full Faith and Credit

G.

H.
I.

J.

Issue Preclusion: Often termed as collateral estoppel, issue preclusion forbids relitigation of specific determinations made in a prior proceeding (i.e. the D
was negligent). Issue preclusion may be asserted on behalf of a litigant who did not participate in initial proceeding (non-mutuality principle). Also issue
preclusion can be invoked even though the issue in the second case arises in an entirely different transactional setting (unlike claim preclusion). If there was
not a full and fair opportunity to litigate in first case, then usually there is no issue preclusion.
Full Faith and Credit Clause (section 1738) court deciding lawsuit 2 (either state or federal court) is required to follow the preclusion law of the state
court in Lawsuit 1. That rule is dictated by 28 U.S.C. 1738, the Full Faith and Credit statute.
Normative Concerns:
a.
Efficiency By encouraging parties to a suit to litigate their issues in the initial suit, efficiency is encouraged.
b.
Fairness: The doctrine of issue preclusion presupposes that one party had a adequate opportunity to litigate the claim on first suit. Otherwise, this
would be unfair.
c.
Legitimacy Issue preclusion prevents inconsistency. If cases were not precluded, then a party could relitigate and get a different result. This
would foster illegitimacy by discrediting the initial judgment.
Three Concerns for Issue Preclusion:
a.

1 Is the issue the same from the first lawsuit

i.
ii.

For re-litigation of an issue to be precluded, that issue must be identical to an issue litigated in the earlier trial.
Kaufman v. Eli Lilly & Co. claim precluded
1.
1. P1 (Bichler) v. D Negligence; causation; concerted action Jury verdict for P
2.
2. P2 (Kaufman) v. D Ds liability was necessary for first lawsuit and issue was decided; thus, negligence issue was
precluded (there are some differences in the facts; timing; drug taken later) Drug company wanted to challenge liability
(court rejected this)

32

3.
4.
b.

2 Was the Issue Actually Fully and Fairly Litigated?

i.
ii.
iii.

iv.

c.

Lily Argues: Lily argued that the case did not present identical issues. Lily claimed that there were differences in fact,
different P, time difference in injuries, and some research could have been done between the injuries that would have
justified Ps actions for the second lawsuit.
Held: The issues were the same. The Court focuses only on Lilys conduct (i.e. marketing) and concludes that it was the
same in each case.

The issue must have been actually litigated and decided at the first trial.
Default Judgment: Determinations made in default judgment will not result in issue preclusion because this does not count as being
fully and fairly litigated.
1.
Little legitimacy concerns because the court did not make a determination on factual merits of the case
Ds admission by failure to deny: if D answers a complaint, but does not deny a particular factual allegation in Ps complaint, the fact
is admitted. If this is used in lawsuit 1, the fact would not be precluded from being relitigated in lawsuit 2.
1.
Not preclusive, because court is not actually making a factual determination.
2.
D may make a strategic admission to not deny a fact, so that if there are less sympathetic Ps, D will not be issue precluded
in lawsuit 2 from contesting liability.
Restatement 29: The Restatement has several criteria in assessing whether or not there was full and fair opportunity to litigate the
issue in the first action:
1.
(1) Treating the issue as conclusively determined would be incompatible with an applicable scheme of administering the
remedies in the actions involved;
2.
Different Procedural Opportunities: (2) The forum in the second action affords the party against whom preclusion is
asserted procedural opportunities in the presentation and determination of the issue that were not available in the first
action and could likely result in the issue being differently determined
a.
Parklane Hosiery Co. (Petitioner) v. Shore (Respondent) D is precluded from defending
b.
1. P1 (SEC) v. D (Parkland et al.) judgment for P1 with no jury
c.
2. P2 (Shore) v. D (Parkland) precluded even though first case had no jury and a jury could have been
granted in second case.
d.
Held: Court in Parkland says that it should not be a big deal; if fact-finder does their job and they are looking at
the same issue, then there should not be a difference.
3.
Person Seeking Preclusion Should Have Joined: (3) The person seeking to invoke favorable preclusion, or to avoid
unfavorable preclusion, could have effected joinder in the first action between himself and his present adversary
a.
Heavy Burden: It should be a heavy burden to join
4.
Previous Lawsuit Ruling was Inconsistent: (4) The determination relied on as preclusive was itself inconsistent with
another determination of the SAME issue;
a.
Kaufman v. Eli Lilly & Co. claim precluded
i. Facts: Lily argued that the determination relied on as preclusive was inconsistent with other rulings
that went in Lilys favor.
ii. Held: The cases that Lily proffered did not address the SAME issue. Court says that in prior cases
where Lily won, the theory of negligence was different. Also, in the one case where Bichler issue
was litigated, P was not a party. With a different company, there is different conduct.
5.
Relationships or Jury Compromise: (5) The prior determination may have been affected by relationships among the parties
to the first action that are not present in the subsequent action, or apparently was based on a compromise verdict or finding;
a.
Kaufman v. Eli Lilly & Co. claim precluded
i. Facts: Lily argues that first result was the result of a jury compromise. They argued that the jury did
not rule on the merits because, since it determined three issues, it did not determine each issue
conclusively. Thus, issue preclusion would not give D an opportunity to obtain a full and fair
adjudication. Evidence of jury compromise is when there is a verdict against D, but only for 10%
damages.
ii. Held: Though there may have been evidence of jury compromise, it is not enough to permit
relitigation. You do not want to send Ds lawyer on a fishing expedition to see if there was a
compromise. There is a spirit behind respect for juries. By disputing juries, you undermine the
theory of issue preclusion.
b.
Relationships Example:
i. P v. D1 (retired school teacher); D1 wins because he reasonably relied on notice
ii. P v. D2 (realtor); should D2 be able to use D1 victory issue of reliance may have been determined
by trier of fact using relationship of parties.
6.
Precluding an issue was make subsequent actions difficult to adjudicate: (6) Treating the issue as conclusively determined
may complicate determination of issues in the subsequent action or prejudice the interests of another party thereto;
7.
Losing Party is Prevented from Appealing: (7) The issue is one of law and treating it as conclusively determined would
inappropriately foreclose opportunity for obtaining reconsideration of the legal rule upon which it was based;
8.
Other Circumstances: (8) Other compelling circumstances make it appropriate that the party be permitted to relitigate the
issue.

3 The first courts decision on this issue must have been necessary to the outcome of the
first suit: Not only must the issue have been litigated and decided in the first action, but the finding on that issue must have been necessary
and essential to the judgment. If the issue was necessary for the decision in lawsuit 1, then the issue is precluded from lawsuit 2.
i. Little v. Blue Goose Motor Coach Co. (1931) second case precluded because of issue preclusion (negligence was already
decided)
1.
1. P v. D; sought damages for bus; defense of contributory negligence; general verdict for P (there must have been a
finding that D was negligent)
2.
2. D v. P; for personal injuries suffered by the collision
a.
Bus company raises defense that Little was contributory negligent. Case precluded because Ds negligence was
already decided.

d.

Exceptions: Even if a determination was necessary to judgment 1, it still may not be excluded in certain circumstances: Restatement 28
Exceptions:

33

1.

2.

3.

4.
5.

6.

7.

8.
9.

1 Not Appealable: Relitigation is not precluded if the party against whom preclusion is sought could not, as a matter of
law, have obtained review of the judgment in the initial action
a.
1. P v. D property damage; Judgment for D on Special verdict that P and D were both negligent.
2. P v. D for personal injury Precluded
Lawsuit 2 is precluded because P could have appealed lawsuit 1.
b.
1. P v. D property damage; Judgment for D on Special verdict that P and D were both negligent.
2. D v. P for personal injury Not Precluded
Under traditional rule, lawsuit 2 should be precluded, but it is not precluded because P could not have appealed
lawsuit 2.
2 Substantially Unrelated: the two actions involve claims that are substantially unrelated, though the issue is the same
a.
1. P v. D municipality for property damage; D is a municipality; judgment for D general verdict on sovereign
immunity defense (must be a finding that D was not negligent or P was contributorily negligent)
b.
2. P v. D municipality for different cause action: should sovereign immunity finding be issue preclusive in
lawsuit 2? SAME ISSUE COMING UP IN DIFFERENT LEGAL CONTEXTS. No preclusion here.
interest is trying to prevent the law from becoming ossified (too rigid)
3 Inequitable Administration of the Laws: Issue can be relitigated if a new determination is warranted to take account of
an intervening change in the applicable legal context or otherwise to avoid inequitable administration of the laws
a.
1: P (non-profit) v. D (tax commissioner) suit is for a tax refund based on charitable status; judgment for D
based on narrow reading of charitable tax exception; shortly thereafter a higher court takes a broader view in a
similar case and rules for the charity.
b.
2: P (non-profit) v. D (tax commissioner); P seeks refund. Is P precluded? No preclusion because there is an
inequitable administration of the laws and there has been a change in the legal context
4 Extensiveness of Procedures: Relitigation is not precluded when there are differences in quality or extensiveness of the
procedures followed in the two suits. (i.e. if a party did not have discovery in first case; if case 1 was an arbitration and
case 2 was not, then no claim preclusion)
5 Jurisdictional Factors: Factors dealing with the allocation of jurisdiction may also permit relitigation.
a.
1. P (patent holder) v. D (manufacturer); in state court, breach if licensing agreement; Defense of D is invalid
patent; D wins on this defense
b.
2. P v. D; in federal court for patent infringement
i. Not precluded because Congress has exclusive jurisdiction in patent infringement. State court
decision is not binding.
6 Different Allocation of Burden: Relitigation may not be precluded if the party against whom preclusion is sought had a
significantly higher burden of persuasion with respect to the issue in the initial action than in the subsequent action. That
is, if the burden is on a different party in the second case than in the first, then the second issue will not be precluded. Also,
if the burden is higher in the first case, the second case will not be precluded.
a.
1. P (has burden of proving that he was not contributorily negligent) v. D; judgment for D because failure of P
to sustain burden
b.
2. D (has burden to show P is negligent) v. P; question of Ps negligence
i. No preclusion because D cannot use his victory against P in second suit because P had the burden.
Burden shifting cancels out issue preclusion.
c.
1. State v. D: criminal case and D is acquitted
d.
2. P v. D: civil claim not issue precluded because different burden
7. Public Interest: An issue may be relitigated if preclusion will potentially have an adverse impact on public interest or the
interests of persons not themselves parties in the initial action.
a.
Example: Class action case where P approves of representative yet an issue is being adjudicated that Ps are not
aware of. These issues are not precluded.
8 Future Litigation Not Forseeable: It it was not sufficiently foreseeable at the time of the initial action that the issue
would arise in the context of subsequent litigation, than relitigation will not be precluded.
9 No opportunity or incentive to litigate first issue: If a court concludes that a party did not have an adequate opportunity
or incentive to obtain full and fair adjudication in the initial action, relitigation will not be precluded.
a.
Example: If there is a change of law and the fact litigated now becomes relevant under the new law, this factual
issue will not be precluded no foreseeability

ii.

K.

Fairness v. Legitimacy: These exceptions preserve opportunity to litigate for the sake of fairness for the litigant that would otherwise
be precluded. These exceptions reflect an unease about issue preclusion. When in doubt, litigation will be allowed. This preserves
full and fair opportunity to relitigate, though it may sacrifice legitimacy.
Parties Bound and Advantages
a.

b.

Privity: Someone who is very closely related to a party in the first action can also be bound by the first judgment.

Such privies include

successors in interest to real property, beneficiaries of trusts, and indemnitors.
i. General Foods Corp. v. Massachusetts Dept. of Public Health claims is precluded with respect to two plaintiffs
1.
1. P1 (Grocery Man of Am. & AFFI) v. D (Mass.); judgment for D on the merits; constitutionality of labeling
2.
2. P2 (General Foods; Rich; Rich SeaPak) v. D (Mass.); P seeking declaratory judgment and injunctive relief against
constitutionality of Mass. Food Label; federal court; adding some constitutional arguments
3.
Held: General Foods and Rich were in privity with Grocer Man. So they were precluded from bringing suit. Rich SeaPak
was not in privity because they have never been a member of these organizations and contributed no money, though Rich
SeaPak is controlled by a company that is a member and did give money.
4.
Representing all Members of Group: Trade organization represented all members of affected group, including plaintiffs.
Court inferred that P2, by not suing on its own, believed that trade organization was doing an adequate job representing its
interests.
ii. Factors of Privity (interests have been represented under the due process clause even though you were not a party):
1.
Representation
2.
Control
3.
Derivative rights
Strangers to First Action: A true stranger to the first action cannot be collaterally estopped by the former judgment

34

c.

Mutuality Principle: Originally it was held that a party not bound by an earlier judgment (because they were not a party to it) could
not use that judgment to bind his adversary who was a party to the first action. This rule, prohibiting a strangers use of collateral estoppel was
known as the doctrine of mutuality. (See examples in preclusion sheet). Essentially, neither party can use a prior judgment as an estoppel against
other unless both parties are bound by the judgment. This rule was in place until Bernhard.Nearly all courts have abandoned the general principle
of mutuality. see derivative liability exception.

d.

Non-mutual Defensive Issue Preclusion:

Where a defendant in a second action seeks to use another partys victory to

assert estoppel against the plaintiff as a defense. That is, estoppel is being used a shield rather than as a sword.
i. Normative Concerns:
1.
Efficiency Encourages Ps to Join: Since no advantage to sue separately, it encourages joinder of parties. But it may not
always be efficient if bringing all defendants would be complicated. Under this approach, the plaintiff has every incentive
to adopt a "wait and see" attitude, in the hope that the first action by another plaintiff will result in a favorable judgment.
Thus offensive use of collateral estoppel will likely increase rather than decrease the total amount of litigation, since
potential plaintiffs will have everything to gain and nothing to lose by not intervening in the first action.
2.
Fairness: P has already had day in court, so it is fair to him.
ii. Usually looks like thus:
1.
P v. D1 D1 wins
2.
P v. D2 claim precluded because P had day in court
iii. Bernhard v. Bank of America Natl Trust & Savings Assoc. issue precluded
1.
P v. D1 P wins; D loses
2.
D1 v. Bank of America claim precluded

e.

Under mutuality; no preclusion because Bank of America is not a party to the original lawsuit.
Preclusion may exist under mutuality exception. If B of A lost, then they could sue P because maybe there is a
derivative relationship

Non-mutual Offensive Issue Preclusion:

Offensive: plaintiff seeks to take advantage of another partys victory against a

defendant to preclude defendant from contesting the issue of liability. Generally, courts are more hesitant to grant preclusion.
i. Normative Concerns:
1.
Efficiency: This discourages joinder because P2 can wait to see to assess whether it wants to invest resources in a lawsuit.
If plaintiffs are successful, then there is less of an incentive for Ps to join multiple Ps which would impede efficiency.
2.
Unfairness: It can also be unfair for a number of reasons.
a.
(A) No incentive to litigate: If P sued D in a case with nominal damages and D does not litigate it intensely and
if future suits are not foreseeable and D is found liable, others then can sue based on that judgment.
b.
(B) P chooses forum: In defensive issue preclusion, P chooses the forum and P is precluded if D1 wins; but in
offensive issue preclusion, P2 chooses the forum and D is precluded from defending..
c.
(C) Inconsistency of Judgment: Allowing offensive collateral estoppel may also be unfair to a defendant if the
judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in
favor of the defendant.
d.
(D) Different Procedures: Still another situation where it might be unfair to apply offensive estoppel is where
the second action affords the defendant procedural opportunities unavailable in the first action that could readily
cause a different result.
ii. Usually looks like this:
1.
P1 v. D P1 wins
2.
P2 v. D Ds defense precluded because D already had day in court
iii. Parklane Hosiery Co. (Petitioner) v. Shore (Respondent) issue is precluded
1.
1. P1 (SEC) v. D (Parkland et al.) judgment for P1; no jury; injunctive relief
2.
2. P2 (Shore) v. D (Parkland) Parkland cannot litigate this case (damages; right to jury trial?); P2 could not have joined
first lawsuit
iv. Factors Court will Take into Account in Granting Offensive Issue Prelcusion ( Restatement 29 see above for greater examination of
factors):
1.
(1) Treating the issue as conclusively determined would be incompatible with an applicable scheme of administering the
remedies in the actions involved;
2.
Different Procedural Opportunities:
a.
Parklane Hosiery Co. (Petitioner) v. Shore (Respondent) D is precluded from defending
3.
Person Seeking Preclusion Should Have Joined
4.
Previous Lawsuit Ruling was Inconsistent
5.
Relationships or Jury Compromise
6.
Precluding an issue was make subsequent actions difficult to adjudicate
7.
Losing Party is Prevented from Appealing
8.
Other Circumstances

14. Joinder
L.

Counterclaims Rule 13: A counterclaim is a claim by a defendant against a plaintiff.

The Federal Rules provide for both permissive and

compulsory counterclaims.
a.
Rule 13
i. Compulsory Counterclaim: If a claim does arise out of the transaction or occurrence that is the subject matter of the opposing
partys claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction
it is a compulsory counterclaim. Rule 13(a)
1.
Grumman Systems Support Corp. (P) v. Data General Corp. (D) claim was compulsory

35

a.

b.

c.

d.

e.
f.

g.

h.

i.

M.

Lawsuit 1: Data General (D) sued Grumman (P) in MA district court; copyright infringement Ps motion to
dismiss denied
b.
Lawsuit 2: Grumman (P) sued Data General (D) & AMI CA state court for violation of CA anti-trust law; D
seeks removal; D asserted that Ps action was a compulsory counterclaim; Grumman added two other plaintiffs;
ADEX and other claims P initiate two more lawsuits. Other Ps v. DG in federal court of CA; Lawyers for
Grumman are trying to generate a center of gravity for case in CA so lawsuit will not be transferred.
ii. Permissive Counterclaim: Any defendant may bring against any plaintiff any claim . . . not arising out of the transaction or
occurrence that is the subject matter of the opposing partys claim. Rule 13(b) This is a permissive counterclaim. This means that
no claim is too far removed from the subject of Ps claim to be allowed as a counterclaim. (ANYTHING GOES)
iii. Omitted Counterclaim: When a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or
when justice requires, the pleader may by leave of court set up the counterclaim by amendment. only applies if suit is not
complete. Rule 13(f).
Why Would I?
i. Induce settlement by putting pressure on settlement
ii. Bringing a counterclaim instead of a separate suit may give you access to federal court. If you sued at another time, then you may be
in state court
iii. Prejudice the plaintiff to the jury
Why would you not?
i. It is on Ps turf
ii. The adjudication of your counterclaim may adversely affect your defense. The case could get too complicated and you may want to
bring claim in a separate suit.
May I? Supplemental Jurisdiction
i. With respect to counterclaims that are unrelated, then there are no limits.
ii. For supplemental jurisdiction, we look at 1367 does not mention rule 13
1.
FEDERAL CLAIM P v. D; P sues on federal question and D counterclaims on state law; for the claim to be brought in
we look at Gibbs same transaction and occurrence
2.
DIVERSITY CLAIM P (state law; $100,000 claim) v. D (state law claim; $20,000) there is jurisdiction over the
counterclaim
a.
Compulsory Counterclaim: If it a compulsory counterclaim under 13(a) there is supplemental jurisdiction
because to be compulsory the counterclaim must be of same transaction. tests may not be the same, though
similar
b.
Is it possible that some counterclaims that do not fall under 13(a) may be allowed under supplemental
jurisdiction under 1367? YES
i. supplemental jurisdiction may be broader because it exists for efficiency. ???
ii. 1367 is narrower because it presents default ???
c.
Permissive Counterclaims: A permissive counterclaim is probably not within the courts supplemental
jurisdiction, and therefore must independently satisfy federal subject matter jurisdiction requirements. This is
because they usually do not arise out of the same transaction as required by 1367(a)
Must I?
i. Rule 13(a) which respect to those counterclaims that related, they are compulsory. If they are part of the same transaction, then you
must bring them.
Policy:
i. There are no limits to permissive counterclaims because, since the deck is stacked against the defendant, the defendant will get the
opportunity to choose when to bring a counterclaim that is unrelated.
ii. efficiency
iii. avoiding duplication
iv. allowing the parties to choose time and place of litigation
Logical Relationship Test for Compulsory Counterclaims: As long as there us a logical relationship between core facts, then the counterclaim will
nonetheless be compulsory. Additional claims in second suit will not matter.
i. Grumman Systems Support Corp. (P) v. Data General Corp. (D) claim was compulsory
1.
Lawsuit 1: Data General (D) sued Grumman (P) in MA district court; copyright infringement Ps motion to dismiss
denied
2.
Lawsuit 2: Grumman (P) sued Data General (D) & AMI CA state court for violation of CA anti-trust law; D seeks
removal; D asserted that Ps action was a compulsory counterclaim; Grumman added two other plaintiffs; ADEX and other
claims P initiate two more lawsuits. Other Ps v. DG in federal court of CA; Lawyers for Grumman are trying to
generate a center of gravity for case in CA so lawsuit will not be transferred.

Same Set of Facts Trend /Counter argument:

You could argue that there was not a logical relationship between copyright
infringement and anti-trust violations. However, Grumman Court says that cause of action does not have to be the same; rather, the claims must
require same set of facts at trial. This is the trend in the rule.
i. Policy: Court is worried that there will be strategic behavior in having a D wait to bring a counterclaim in a separate forum,
If D Defaults, can D sue P in a future suit? Yes. D can bring lawsuit 2 because D never submitted a pleading in lawsuit 1. D never litigated any
of these issues see a pleading shall state language in 13(a).

Cross-Claims Rule 13(g): A claim by a party against a co-party is called a cross-claim.

A cross-claim is made only against a party who

is on the same side of an already existing claim. It is never compulsory. They are also within subject matter jurisdiction of the court, so no independent
jurisdictional grounds are needed. It must meet two requirements:
a.
1 Transactional Requirement: It must have arisen out of the transaction or occurrence that is the subject of the original action or the subject
of the counterclaim.
b.
2 Actual relief: The cross-claim must ask for actual relief from the co-party against whom it is directed.
c.
Why would I?
i. convenience
d.
May I? 13(g)
i. A cross-claim must be transitionally related to Ps original claim or to a counter claim
ii. 13(i)- courts have power to invoke 42(b) and order separate trials

36

N.

Joinder of Claims Rule 18

a.

b.

c.
d.
e.
f.

O.

Generally: Once a party has made a claim against someone other party, he may then make any other claim he wishes against that party. Rule
18(a)
i. Never Required: Joinder of claims is never required, but is left at the claimants option. However, claim preclusion could prevent you
from bringing a claim in the future if it is not brought up during the initial lawsuit.
Why would I?
i. Efficiency
ii. You may want to bring claims together (i.e. a federal claim) because it will allow you to get into federal court supplemental
jurisdiction
iii. One claim may open up discovery
iv. Bring together to increase amount of controversy (aggregation)
v. Creating opportunities for trade-offs induce settlement
vi. Create sympathy
Why Wouldnt I?
i. Jury Confusion
ii. Do not want to bring in weaker claims
May I?
i. No limits in FRCP. Rule 18(a)
ii. Supplemental jurisdiction is a limit. Under 1367(a) it must be a part of same case or controversy if anchor claim is in diversity.
Must I?
i. No, but remember that Rules of preclusion may force you to join claims at risk of forfeiting them later.
Typical Setup
i. P v. D claim 1
ii. P v. D claim 2

Permissive Joinder of Parties Rule 20 (tougher standards than Rule 18)

a.

General: Joinder under Rule 20, done at the discretion of the plaintiffs, is called permissive joinder. Rule 20 allows two types of permissive
joinder of parties: 1) the right of multiple plaintiffs to join together; and 2) a plaintiffs right to make several parties co-defendants to her claim.
i. Joinder of Plaintiffs and Defendants: Multiple plaintiffs may voluntarily join together in an action, or multiple defendants may be
joined if they satisfy two tests:
1.
1 Single Transaction and Occurrence: Their claims for relief must arise from a single transaction, occurrence, or series
of occurrences, and
2.
2 Common Questions: There must be a question of law or fact common to all plaintiffs (or defendants) which will arise
in the action
a.
All Common Question of Fact Not Required: This rule does not require that every question of law or fact be
common among the parties; rather, there must be at least one common question of fact.
i. Geudry v. Marino
1.
Facts:
a.
7 Ps terminated Police Officer (Guedry)
b.
D Police Chief
c.
D wanted severance, alleging that joinder was improper
d.
6 of 7 claims were free speech claims
e.
4 of 7 claims dealt with race discrimination
f.
1 of 7 claims was retaliation for workers comp claim + race and/or sex
discrimination. (court let this plaintiff in because of race discrimination claim
that overlapped with 4 of 7) court does this from a judicial economy
perspective because her race discrimination claim is going to be litigated
when 4 people adjudicate
2.
Held: all claims can be properly brought together
ii. Motion for Severance under Rule 20/42: D can test Ps joinder by filing a motion for severance.
1.
Guedry v. Marino no severance under Rule 20; no separate trials under 42
a.
Held: Trials may not be separated under Rule 42 if the separation would cause needless delay and prejudice.

b.

Why Would I?
i. Makes case stronger because you so many claims against D
ii. Spread out litigation costs among plaintiffs
iii. Increase likelihood of settlement
iv. Defeat diversity if you want to be in state court so long as they are not nominal
v. Join Sympathetic parties
vi. Aggregation maybe this is allowed if there is a joint interest
vii. Supplemental jurisdiction adding a party may allow you to get a claim into federal court
Why Wouldnt You
i. You lose control, because another lawyer may have control
ii. Confusion can work to disadvantage
iii. Unsympathetic co-plaintiff can hurt
iv. Adding defendants can create more problems for you because they are shooting at P
Strategy of Joining Defendants
i. Plaintiff usually do this because defendants blame each other
ii. Possibility that you may have more parties that could share the cost of a judgment
iii. Add a less sympathetic defendant to cancel out a more sympathetic defendant
iv. So you can get discovery information
May I? Rule 20
i. When are you allowed to join Ps? see Guedry
ii. Example 1:

c.

d.

e.

37

iii.
iv.
v.

f.

P.

P1 (CA driver) damages are $100,000 v. D (NY) (in diversity)

P2 (NY passenger) damages are $20,000
P2 is bringing a claim under Rule 20, not against whom one is brought; it has been argued that this is allowable because 1367(b)
satisfied; under 1367(b), it is not excluded. This argument is generally not made because it goes up against Strawbridge.
vi. Example 2:
vii. P1 (CA driver) damages are $50,000 v. D (NY) (in diversity)
viii. P2 (CA passenger) damages are $50,000
1.
This would not work because there is no anchor claim
2.
Under permissive joinder situation, no aggregation
3.
However, if they have joint interests, then aggregation can take place (i.e. joint creditors; co-owners of property); because
of joint interests, they will be compulsorily joined.
Must I Join Parties? See Compulsory Joinder Rule 19
i. Rule 19 is a concern about fairness to those who are already in the lawsuit (normally D) and also fairness to the one who was not
included (the absentee). Why worry about absentee? Though they are not precluded unless there is privity, they can still be harmed.
ii. Fairness to Defendant: Courts have concern that D may be subject to multiple obligations, if certain absentees are not forced to join.
(like UC regents who may be subject to Navajo and Hopi)
iii. Fairness for Absentee: Tribe absentee below may be harmed as a practical matter. Tribe cannot be bound by judgment, but the suit
could delay the action the tribe is trying to advance or stare decisis could hurt them.
iv. Fairness for Plaintiff: If party that must be joined because of compulsory joinder doctrine is missing, then P may not be able to sue at
all in cases where the party would destroy diversity and P could not get personal jurisdiction in any other state. Should the P be told
that they cannot sue at all? Sometimes it is not that P cannot sue at all, just that P cannot sue in forum of her choice due to lack of
personal jurisdiction.
1.
Way to avoid this problem: In federal court, if problem with absentee is lack of personal jurisdiction, then P can go 100
miles past the courthouse to draw in absentee party 100 mile bulge rule Rule 4(k)(1)(B)
2.
Subject Matter Jurisdiction: P (NY) v. D1 (CA) federal court in NY; D2 absentee (NY) no relief for P under 1367
3.
Subject Matter Jurisdiction: P1(NY) v. D(CA) federal court in NY; P2 absentee (CA) no relief for P1 under 1367
4.
Law less concerned about subject matter problems because P has remedy in state court
v. Trustee Relief also mitigates the problems with compulsory joinder. Court could shape the relief the following way.
1.
P1 (NY) v. D (CA)
a.
P2 (CA) absentee
b.
P3(CA) absentee
2.
May be able to let lawsuit proceed but whatever recovery P1 gets P1 should hold as a trustee for P2 and P2. This is so
compulsory joinder does not destroy diversity. See p. 876 joint oblige. P2 and P3 are precluded if P1 wins. If D wins, P2
and P3 are not precluded.
vi. Examples:
1.
Tribal Members v. Department of Interior tribal members trying to invalidate some action. Tribe itself is an absent party
that would be affected result. Tribe wants lease because they get benefits. Tribe may want to be a defendant.
2.
Hopi v. UC Regents demanding return of remains. Absent party is the Navajo Indians that say that the remains are theirs.
Regents may be worried about Navajo suing them after Hopi suit is resolved. Navajo cannot be joined without consent.

Compulsory Joinder Rule 19: There are certain situations in which additional parties must be included through compulsory joinder.
There are two categories of parties that must be joinded wherever possible:
a.
Necessary Parties: This less vital group consists of parties: (1) who must be joined if this can be done; but (2) in whose absence because of
jurisdictional problems the action will nonetheless be permitted to go forward. Rule 19(a)
i. Definition: A party is necessary and must be joined if jurisdictionally possible if the party is not indispensable and either of the
two following tests is met:
1. 1 Incomplete Relief: In the persons absence, complete relief cannot be accorded among those already parties; or
a.
In Boussard, court worries about 19(a)(1), that in the persons absence complete relief cannot be accorded
among those already parties but it does not appear that this is the case
2. 2 Impaired Interest: The absentee has an interest relating to the action, and trying the case without the absentee with either
(i) impair the absentees interest or (ii) leave one of the people already parties subject to multiple or inconsistent
obligations [i.e. double damages].
b.
Indispensable Parties: This vital group consists of parties who are so vital that if their joinder is impossible for jurisdictional reasons, the whole
action must be dropped. Rule 19(b)
i. Definition: If a party meets the test for necessary given in paragraph given above, but the joinder is impossible because of
jurisdictional problems, the court has to decide whether the party is indispensable. If the party is indispensable then the action must
be dismissed in that partys absence
ii. Factors: When the court decides whether a party is indispensable, the factors are: Rule 19(b)
1.
(1) the extent of prejudice to the absentee, or to those already parties;
a.
3Are interests of absentee damaged; can look at issue preclusion problems (if absentee is in privity)
b.
Would any party be exposed to a fresh action?
2.
(2) the possibility of framing the judgment so as to mitigate such prejudice (TRUSTEE RELIEF EXAMPLE ABOVE);
3.
(3) the adequacy of a remedy that can be granted in the partys absence; and
a.
i.e. the ability of the federal district court to finalize the litigation or to effectively adjudicate the rights of all
concerned parties
b.
Judicial Economy: In Boussard, Court was worried about this. Absentee could still sue if D wins. If P1 wins,
then D will sue P2 or P2 will sue D court is worried about another lawsuit
4.
(4) whether the plaintiff will have an adequate remedy if the action is dismissed.
a.
i.e. if dismissed, is there an alternate forum like state court; if so, the court is more likely to determine that the
party is indispensable; also will the 100-mile-buldge rule apply
b.
i.e. does the state have a stronger interest in the lawsuit.
c.
See Broussard below
c.
Jurisdiction Relaxed 100 mile-bulge rule applies: Though supplemental jurisdiction prevents a plaintiff who was compulsorily joined form
suing a defendant and a plaintiff from suing a defendant that was compulsorily joined when the diversity requirements are not met, the 100 mile
bulge rule can be used so that the federal court can assert jurisdiction.

38

d.

Q.

Consolidation/Separate Trials Rule 42

a.
b.

R.

(a) Consolidation. When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial
of any or all the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders concerning proceedings
therein as may tend to avoid unnecessary costs or delay.
(b) Separate Trials. The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition
and economy, may order a separate trial of any claim, cross-claim, counterclaim, or third-party claim, or of any separate issue or of any number
of claims, cross-claims, counterclaims, third-party claims, or issues, always preserving inviolate the right of trial by jury as declared by the
Seventh Amendment to the Constitution or as given by a statute of the United States.

Impleader (Third Party Practice) Rule 14:

a.

b.

c.
d.
e.

f.
g.
h.

i.

j.
S.

Broussard v. Columbia Gulf Transmission Co. P2 is indispensable

i. Facts:
1.
Ps (LA) v. D (TX) diversity
2.
P2 (TX) absentee (Mrs. Herbert)
3.
Ps brought an action against D seeking an injunction requiring the removal of pipelines on the theory that D had failed to
adequately describe the easement and had failed to establish a dominant estate to which benefit might accrue. It became
apparent that one P, Mrs. Herbert, was a resident of Texas, like D, thus defeating diversity of citizenship. The non-diverse
appellant, Mrs. Herbert, filed a motion to be dismissed as a party, which was initially granted. On a motion by D, the
district court mandated joinder of Mrs. Herbert and dismissed the case for lack of (subject-matter) jurisdiction.
ii. Held: Mrs. Herbert is indispensable, and therefore the case must be dropped for lack of subject matter jurisdiction.

Impleader Right Generally: A defendant who believes that a third person is liable to him for all or part of the plaintiffs claim against [the
defendant may implead such a person as a third party defendant Rule 14(a). Impleader makes it possible for someone to bring another party
in a lawsuit to argue that if I am responsible, then you are liable to me.
i. Examples: See Asahi & Owen where injured party sues D1 which impleads D2
ii. Cross Claim v. Impleader: Cross-claim is usually one D against another D. Impleader is against an outside party.
Claim Must be Derivative: For a third-party claim to be valid, the third party plaintiff may not claim that the third party defendant is the only
one liable to the plaintiff, and that he himself is not liable at all. This is because if D1 loses and is held liable, then D2 would not be liable to D1.
Impleader is not an either/or proposition. The TPD must only be liable if the TPP is liable.
i. Alternative pleading: TPP is not precluded from claiming in an alternative pleading that neither she nor the TBD is liable.
Leave of Court: Leave of court is not necessary for impleader, as long as the TPP serves a summons and complaint on a TPD within 10 days after
the time the TPP served his answer to Ps claim. FRCP 14(a). After 10 days, permission is necessary.
Impleader by P: P can implead against a counterclaim
Jurisdictional requirements relaxed: both personal and subject-matter jurisdictional requirements are relaxed with respect to the third-party claim.
i. 100-mile-bulge: service of the third party complaint may be made anywhere within the 100 mile bulge.
ii. Supplemental Jurisdiction: A third-party claim falls within the courts supplemental jurisdiction. This the TPDs citizenship is
unimportant, and no AIC requirement need be satisfied.
iii. Venue: if venue is improper within the parties, it remains valid regardless of the residence of TPD.
Parties that are impleaded can assert claims against the Plaintiff See Rule 14(a) this is not a counterclaim because the P is not an opposing
party to the third-party D
Why Would I?
i. Spares D1 from doing another lawsuit efficiency gain
ii. Also in the interest of the courts
iii. If D1 has to bring a second lawsuit, D1 could lose
1.
D1 could wind up losing to P; D2 is not bound by first suit
2.
D1 does not want an inconsistent result
3.
D2 may have good team that may go after P
May I?
i. Rule 14
ii. If D1 argues that he should not be a defendant altogether, this is not a situation for an impleader because D2 would not be liable to
you.
iii. If D1 argues that he was not the only one liable, then impleader is a good remedy.
iv. Rule 4(k)(1)(b) 100 mil advantage if there is a personal jurisdiction problem regarding a third party D
v. What if an impleaded party destroys diversity, the case is not destroyed under 1367.
Must I?
i. Not required to do this

Intervention Rule 24: By the doctrine of intervention, certain persons who are not initially part of a lawsuit may enter the suit on theor
own initiative
a.
Two Forms of Intervention:
i. 1 Intervention of Right (Rule 24(a))
ii. 2 Permissive Intervention (Rule 24(b))
b.
1 -- Intervention of Right Rule 24(a): a stranger may intervene of right if she meets all of the three following elements:
i. 1 Interest in Subject Matter: She must claim an interest relating to the property or transaction which is the subject matter of the
action;
ii. 2 Impaired Interest: She must be so situated that the disposition of the action may as a practical matter impair or impede [her]
ability to protect that interest; and
iii. 3 Inadequate Representation: She must show that her interests are not adequately represented by the parties
c.
2 -- Permissive Intervention Rule 24(b): For a person to seek permissive intervention, she merely has to have a claim or defense that
involves a question of law or fact in common with the pending action. In exercising its discretion the court shall consider whether the
intervention will unduly delay or prejudice the adjudication of the rights of the original parties.
i. Discretion: Where an outsider seeks permissive intervention, it is up to the trial courts discretion whether to allow the intervention.
d.
Supplemental Jurisdiction: Independent subject-matter jurisdictional grounds are required for intervention of right in a diversity case. In other
words, such intervention does not fall within the courts supplemental jurisdiction.
i. In diversity: Plaintiff cant make a claim against a defendant who intervenes

39

e.

f.

ii. In diversity: no SMJ over plaintiffs seeking to intervene

Why Would I?
i. Party may want to intervene because. if they are in privity, they would be precluded in future suits.
ii. Worry about adverse legal precedent. You could submit an amicus brief, but this does not give you rights of appeal or discovery.
iii. Could be a non-profit group or think that the lawyers are doing a shitty job
May I? see rules above
i.
Rule: May intervene when:
Allowed by statute

i.
ii.
g.

Must I?
i.
ii.

Unless interest is "adequately represented by interested parties". Factual inquiry

Can still ask court for a discretion exercise to let you in: common Q of law or fact, but you don't have a right. Court will consider
whether intervention will unduly delay or prejudice rights of original parties. Can intervene as D too and take into account same
thing.
Can't take advantage of supp jur. Cus under B, "if it's against somebody, or trying to intervene as a P it's disallowed under Rule 24."
You're butting in, and that sucks.
No. But you can be denied certain benefits if you don't intervene.
Section Restatement 29
P1 v. D

iii.
iv.

T.

Claims an interst relating to property or transaction which is subject(like 19a)

P2-P4 (they hope that P1 wins and can use offensive issue preclusion against D)

Number 3: Can't take advantage of offensive issue preclusion

Under Rule 19, they could let it go on without you: You either give up your personal freedom of forum choice unless you join the
lawsuit. You decide btw/ your due process right not to be sued in this forum and the practical right that would befall you if you don't
intervene
Generally, unless you are someone who is a rule 19a party, and you have a right to intervene, the courts monitor it pretty carefully.
They want to take into account interests of P1 in controlling his own lawsuit, but balance that with the interests of the intervenor.

Interpleader Rule 22/s1335: Interpleader allows a party who owes something to one of two or more other persons, but is not sure whom,
to force the other parties to argue out their claims among themselves. The technique is designed to allow the stakeholder to avoid being made to pay the
same claim twice. NATIONWIDE SERVICE OF PROCESS PERMITTED
a.
Example: X and Y both claim a bank account at Bank. Y demands the money from the bank. If Bank had ot litigate against Y, and then possibly
defend a second suit brought by X, bank might have to pay twice the amount of the account twice.
b.
Why would I?
i. avoid the possibility of owing the same thing to two parties
c.
May I? Rule 22 and 1335
i. Rule 22: stakeholder says either im not liabler to either one of you or one of you is entitled and im not liable to both
ii. SMJ: SEE 1335
iii. Personal Jurisdiction for Interpleader Rule 4(K)(1)(C) allows the federal court to assert jurisdiction in Interpleader cases without
regard to the limits on the state courts jurisdiction. Analysis is under 5th amendment (its being brough in federal court) and under
this, fed court can have PJ over a D with someone with contacts with the US as a whole

15. Class Action Rule 23

U.
V.

W.

: The class action is a procedure whereby a single person or small group of co-parties

may represent a larger group, or class, of persons sharing a common interest. The results of a class action are generally binding in the absent
members. Therefore, all kinds of procedural rules exist to make sure that these absentees receive due process (i.e. that they receive notice of the action,
and notice of any proposed settlement.
Old Rule: Before the class action rule in 1966 was put in place, this was such a dilemma, that it only provided for only 1 binding effect. If the P bringing the
class action won it would bind the class. If P bringing the claim lost it wouldn't bind the class.
Prerequisites: There are four prerequisites which must be met before any federal class action is allowed. Rule 23(a)
a.
1 Size: The class must be so large that joinder of all members is impractical. Nearly all class actions involve a class o at least 25 members, and
most involve substantially more. The more geographically dispersed the claimants are, the fewer are needed to satisfy the size requirement.
b.
2 Common Questions: There must be questions of law or fact common to the class.
c.
3 Typical Claims: The claims or defenses of the representative must be typical of those of the class.
d.
4 Fair Representation: The representative must show that they can fairly and adequately protect the interests of the class. Thus the
representatives must not have any conflict of interest with absent class members, and they must furnish competent legal counsel to fight the suit.
Three Categories of Class Actions
a.
Rule 23(b)(1) Actions: This applies to situations similar to the circumstances required for joinder of necessary parties under Rule 19.
i. Test: A class action is allowed under 23(b)(1) if individual actions by or against members of the class would create a risk of either: (a)
inconsistent decisions forcing an opponent of the class to observe incompatible standards of conduct or (b) the impairment of the
interests of the members of the class who are not actually parties to the individual actions.
ii. No Opting Out: Members of 23(b)(1) class may not opt of the class. Any absentee will therefore ne necessarily bound by the decision
in the suit.
iii. Mass Tort Claims: Courts are increasingly allowing 23(b)(1) class actions in mass tort cases where there are so many claims against D
that D may be insolvent before later claimants can collect.
b.
Rule 23(b)(2) Actions: Allows use of a class action if the party opposing the class has acted or refused to act on grounds generally applicable to
the class, thereby making appropriate final injunctive relief or . . . declaratory relief with respect to the class as a whole. In other words, if the
suit is for an injunction or declaration that would affect all class members, (b)(2) is the right category.
i. Civil Rights Cases: 23(b)(2) is used in civil rights cases, where the class says that it has been discriminated against and seeks an
injunction prohibiting further discimrination.
ii. No Opt Out: Members of a 23(b)(2) class may not opt out of the class. Rule 23(c)(3)

40

c.

X.

Rule 23(b)(3) Actions: This is the most common type

i. Two Requirements: the court must make two findings in a (b)(3) action:
1.
1 - Common questions: The court must find that the questions of law or fact common to members of the class
predominate over any questions affecting only individual members . . .; and
2.
2 Superior Method: The court must also find that a class action is superior to other available methods for deciding the
controversy. In deciding superiority, the court will consider four factors in 23(b)(3), including:
a.
1 the interest of class members individually controlling their separate actions
b.
2 the presence of any suits that have already been commenced involving class members;
c.
3 the desirability of concentrating the litigation of the claims in a particular forum; and
d.
4 any difficulties likely to be encountered in the management of a class action
ii. Mass Tort Cases: some courts allow 23(b)(3) actions in tort cases, but most do not because individual issues usually predominate.
Notice: Absent class members must almost always be given notice of the fact that the suit is pending.
a.
When required: The Rules explicitly require notice only in (b)(3) actions. The notice must be the best notice practicable under the
circumstances. Rule 23(c)(2). But courts generally hold that notice must be given in (b)(1) and (b)(2) actions as well.
i. Individual Notice for Known Plaintiffs: Individual notice, almost always by mail, must be given to all those class members whose
names and addresses can be obtained with reasonable effort. This is true even if there are millions of class members, each with only
small amounts at stake.
ii. Publication Sufficient for Unknown plaintiffs: For those class members whose names and addresses cannot be obtained with
reasonable effort, publication notice is usually sufficient. See Mullane v. Central Hanover Bank
iii. Opt Out: Notice must tell the claimant that he may opt out of the class if he wishes (in a (b)(3) action, but not a (b)(1) or (b)(2)
action); and that the judgment will affect him, favorably or unfavorably if he does not opt out.
iv. Cost: The cost of identifying and notifying each class member must normally be borne by the representative plaintiffs. If the side will
not bear this cost, the case is dismissed.

Y.

Why Would I?
a.
Is a class action going to strengthen my case or not? Do other members have better or weaker cases?
b.
Is there a wide variation in nature of harm suffered
c.
My recovery in relation to other members recovery
d.
Could case exist on its own.
e.
There may be moral force of class and could create greater damages
f.
HYPO: You are an inmate at San Quenton and dentists are using same gloves.
i. Good class action case because this would change the system.
ii. Injunctive relief cases coukld in theory be brought alone, but litigants like to bring them as class actions because it shows more
systemic nature of the problem and courts are more likely to grant relief.
g.
HYPO: P is one of 1,500 co-owners of a piece of property that is being harmed by sewage that is being spilled adjacent property. Some of the
1,500 workers work in the factory that is producing the spillage. P is one who does not want to work in the factory.
i. This may be a compulsory joinder situation, but bringing al 1,500 people together maybe difficult. Class action may be only way you
could sue.
Z. May I?:
a.
Due Process Question
i. Hansberry v. Lee Due process is violated when a party is bound by the effects of a previous lawsuit, in which that partys interests
are not adequately represented.
1.
Race covenants in Chicago. Court says that class action in case 1 did not bind all class members b/c they had different
interests. Therefore, P could bring second suit. IL case. Notice requirement did not exist in Illinois practice. There were
no procedures for members to opt out and protect themselves from being binding. This was a violation of due process.
This case is powerful because there is clear evidence that there is divergence of view within the class.
b.
Personal Jurisdiction
i. Phillips Petroleum Co. v. Shutts
1.
Minimum contacts not necessary for Plaintiffs: In personam jurisdiction over non-resident class action plaintiffs does not
violate the 14th amendments due process clause despite a lack of minimum contacts because there are different burdens
between class action plaintiffs and defendants and class action plaintiffs do require such thorough due process protections.
For class action plaintiffs, due process at a minimum requires that an absent plaintiff be provided with an opportunity to
remove himself from the suit (this was done here OK through mail).
c.
Subject Matter Jurisdiction
i. Class rep is diverse & other members are not diverse, does it matter? NO because we have Supeme Tribe (p. 378). Citizenship of
class representative is all that counts. There is supplemental jurisdiction over all unnamed class members.
ii. May not aggregate
iii. Under Zahn, all members must have Amount in controversy, in order for the federal court to assert jurisdiction. 1367 B does not have
an exception for class actions, thus permitting members to be joined when only one plaintiff meets the diversity requirements. Those
who drafted 1367 believed that they were not overturning Zahn. But section appears that it may overturn Zahn because there is no
rule 23 exception.
d.
FRCP 23
AA. Must I?: No Must I (only would arise if all of the people were subject to compulsory joinder)
a.
Not really
b.
Closest thing is if all of your class members are subject to compulsory joinder and you can't otherwise join them cus

there's a huge number of them

BB. Normative Issues
a.
Development: Before 1966, if P brought class action won, it would bind the class; If P brought it and lost, class not binded; now, class is binded
no matter who wins
b.
Fairness -- The law was changed in 1966. Now that it is binding both ways, we are concerned about fairness to those who are not named class
members.
c.
Efficiency Gains are likely if all the members of the class would otherwise bring their own separate lawsuits with overlapping issues; If
polluter is able to cause damages spread out over a vast area so that each person who is harmed has little financial incentive to sue. Class actions
make it possible for these people to pool their resources and bring a lawsuit against polluter. This creates a social efficiency gain because
company is forced to internalize these costs.

41

d.

e.
f.

Inefficiencies Added Costs of Class Actions: complexities if maintaining class actions; administering mechanism for assessing each class
members loss.
i. Solutions: a) creating of a fund; b) future price reduction but there is not an exact overlap between those benefiting and those who
were harmed in the past.
Legitimacy are courts becoming legislative agencies or as legislative bodies
Distribution Making possible redress of past harms that would otherwise go unredressed.

Critiques/Policy
CC.

American System of Civil Law

a.

DD.

John H. Langbein, The German Advantage in Civil Procedure

i. Thesis: By assigning judges rather than lawyers to investigate the facts, the Germans avoid the most troublesome aspects of our
practice
ii. Overview of the German System
1.
Court rather than the parties take the main responsibility for gathering evidence, although have a watchful eye over the
courts work
2.
Judge requests for relevant public records
3.
Judge serves as examiner-in-chief; attorneys are not prominent examiners
iii. Efficiency
1.
Witness is usually only examined once, unlike American system
2.
Court investigates the dispute in the fashion most likely to narrow the inquiry
iv. Theatrics
1.
German system lessens theatrics and better encourages settlement
2.
German system is more like business meeting and attorneys are not asked to perform.
v. Cross-Examination
1.
In American System, cross-examination is often ineffective and can not defeat the effects of skillful coaching
2.
In German system, lawyer will almost never have out-of-court contacts with a witness coaching usually does not occur
vi. Non-adversarial nature
1.
German system is less adversarial
vii. Inequity/Distribution/Fairness
1.
German system helps eliminate inequality between parties.
2.
Poor lawyering has minimal effect on clients case, unlike the American system
3.
In equality in resources (i.e. unable to gather facts) is also not an issue in Germany.
viii. Judicial Incentives
1.
In Germany, since judge is so prominent, the danger arises that job may not be done well.
2.
This is alleviated by the career judiciary approach
a.
In America, judges are not chosen based on merit, but based on political persuasion
ix. Normative concerns
1.
Efficiency: Reduce litigation costs; reduce frivolous litigation
2.
Fairness: more objective party
3.
Distribution: could protect weak plaintiffs; allocation of benefits and harms would be better reflected in settlement
4.
Legitimacy: more legitimate because govt is guided system without rich having better legal protection

Personal Jurisdiction
a.

b.

c.

Patrick Borchers:
i. Deferentialist viewpoint; Seeks to defer to the states
ii. Does not approve to originalist strain of Scalias; he says that Pennoyer was hallucinating when it tried to turn jurisdiction into matter
of due process
iii. For 22 years, Supreme Court did not follow indication in Pennoyer.
iv. Even if you are an originalist, you then can not take into account tradition since IS
v. He criticizes Brennan because it muddied the waters and created uncertainty in establishing the reasonableness prong of personal
jurisdiction
vi. Brennan minimum contacts standard is too broad; purposeful availment is too broad
vii. Wants to remove due process as a restraint on personal jurisdiction
viii. Leave it to the states, because states will come up with something that is a lot clearer (this is a pretty bold assumption)
1.
States must still follow certain constitutional limits like equal protection clause and privileges and immunities clause
2.
Also, personal jurisdiction may be so damaging to defendant that he will be denied his day in court. This will be only a
few cases.
Martin Redish:
i. Precedent rejects Pennoyer rule
ii. Fairness trumps clarity and predictability
iii. Majoritarianism is not a proper Constitutional argument
iv. Due process clause is a license to judge to evaluate what states are doing
v. Would criticize Brennan by saying that equating presence with fairness is inadequate.
vi. Wants a straightforward engagement by courts on issue of fairness
vii. Scalia never addressed normative concerns
Are there any better alternatives for jurisdiction:
i. Could Congress pass laws giving clear rules for jurisdiction? Maybe it would be unconstitutional because it is not enumerated. But
Article IV, Section 1s full faith and credit clause could permit Congress to pass such laws. Amendment IV, Section 5 could also help.
ii. If Congress can do it, what rules would Russell Weintraub state:
1.
Test based on fairness
2.
He is worried about 1) strange choice of law rules that would be impossible to anticipate and 2) extreme inconvenience to
defendant
3.
Burden shifts to defendant to prove that there is a strange choice of law and inconvenience

42

d.

e.

EE.

4.
These two concerns are the only two concerns courts should have
5.
Currently, burden is on P to prove that minimum contacts and reasonableness
Brussels Convention
i. Transient: no tagging/transient jurisdiction
ii. Quasi in rem: not allowed (Schaffer comes out same way in intangible property; but with real property you get different outcome)
iii. General jurisdiction is OK but only in place of domicile, incorporation, or principal place of business Brussels is not as generous
because in the US you can get jurisdiction for a manufacturing plant. (Brussels is more restrictive)
iv. Contracts you can get jurisdiction wherever the contract was to be performed; US is stricter and Brussels is being more generous.
If you buy pajamas from catalogue in Maine, Maine may not still be able to assert jurisdiction
v. Product Liability/Tort/Stream of Commerce Permits jurisdiction in matters relating to the tort in the courts for where the harmful
event occurred. This means where the damage occurred. This is consistent with Gray and accepts stream of commerce.
vi.
Domestic Relations jurisdiction where the maintenance creditor (person who owes) is domiciled or habitually resident
1.
Two views
a.
Wife can only sue where husband lives
b.
Wife can only sue where husbands employer lives
2.
Different in US; Burnham would have come out differently and there would have been jurisdiction in New Jersey)
Brussels reaches broader because you could read it that the creditor is one who owes money to the one who owes support
(this would deny wife due process)
vii. Libel: jurisdiction in place of publication/place of plaintiffs residence, but only for local damages (Brussels is stricter because in US
you can sue for damages everyone in one location)
Adopt Brussels Convention?
i. Maybe it is too rigid, but Brussels also creates certainty
ii. Brussels creates bright line rules that extends specific jurisdiction (do bright line rules justify expansion of rules that may damage
fairness and not protect interstate expectations)
iii. Bright line rules may be better because it is fair in the sense that rules do not change on you.
iv. Brussels is different than US because Brussels is not focused on characteristics of defendant, but characteristics of the claim (US is
more concerned with characteristics of the defendant) see Brussels for no tag jurisdiction/no quasi-in-rem
v. One negative: it is a European system where laws are different and there is no federalist government. If there is a connection with the
claim, this signifies a greater relationship with the actual place (this is why they ditch tag and quasi in rem)
vi. Brussels allows stream of commerce because they are allowing jurisdiction in place of injury. Old choice of law rules said that you
apply law in place in injury. This is more structured.

Diversity
a.

b.

c.

Henry J. Friendly, Diversity Jurisdiction against diversity

i. Thesis: Diversity is overused and is a bad thing
ii. Arguments:
1.
diversity diverts judge power urgently needed for tasks which only federal courts can handle or which, because of their
expertise they can handle significantly better than a state
2.
Diversity cases do not establish precedent and organize a body of law.
3.
Supports ALI proposal to eliminate anomaly of in-state P being able to assert federal jurisdiction over D outof-stater
iii. Criticizes the following arguments:
1.
diversity is needed to give lawyers an exposure to the federal procedural system and thus enable them to take pollen back
to the states
2.
Response: today, attorneys have wide access to the federal exposure so such so this necessity does not exist
3.
Stats are well aware of federal rules and attorneys do not need to be granted access to federal courts for this knowledge to
seep into the states
4.
State courts ate not good enough to handle these claims (this is not true)
5.
Prejudice (no true, same jury pool, etc.)
John P. Frank, For Maintaining Diversity supports diversity
i. Thesis: Diversity is a good thing
ii. Arguments:
1.
Diversity was embedded in the Constitution and 1789 Judiciary Act
2.
System has worked well
3.
Success of the federal system has led to widespread emulation in the states. The present practice encourages the federal
system to borrow state improvements and vice versa (encourages interaction between state and federal courts)
4.
Federal courts are speedier, better able, impartial, and more convenient if both sides want federal system, then it should
not matter
iii. Criticizes the following arguments:
1.
State cases belong in state courts
a.
Response: What is exactly a state case?
2.
Diversity clogs federal courts
a.
Response: just get more judges to handle expansion just like the federal government does with other programs
3.
Requiring federal judges to be mouthpieces for state law will depreciate the quality both of justice and of those willing to
participate in declaring it.
a.
This is not true
Larry Kramer, Diversity Jurisdiction
i. Thesis: Diversity should be severely limited
ii. Critiques Arguments For Diversity:
1.
There since history
2.
It keeps judges from being narrow federal law technicians
3.
Value in having state and federal judges interact. Each can experiment and the other can learn form it.
4.
Abolishing diversity merely shifts caseload from federal government to states
a.
Response: this not true: statistics show that abolishing diversity would significantly eliminate the federal burden
while only increasing the state burden by a small percentage.
5.
Federal courts provide a superior quality of service
a.
Response: this is not sufficient: state courts should just improve.

43

6.

d.

FF.

Ascertaining Applicable Law

a.

b.

c.

GG.

Problem of bias
a.
Little evidence supporting this. Other types of bias are more clear today.
iii. His Arguments Against Diversity:
1.
Federal courts should decide federal claims and state courts should decide state claims
a.
Diversity squanders federal resources
2.
Diversity is a source of friction between state and federal courts because federal courts are adjudicating state law
3.
State substantive law can be complex and difficult for federal judges to examine
4.
Diversity reduces incentive to improve state system
5.
Original justifications for diversity no longer exist (in 1789, diversity was helpful because federal courts were not busy
because there was not a lot of federal law)
6.
Eliminating diversity would diminish forum shopping
iv. Recommendations:
1.
Stricter alien/citizenship laws that would force these cases into state court
2.
Make stricter the jurisdictional amount in controversy (limit punitive damages form this)
3.
Prohibit in-state Ps from invoking diversity jurisdiction
4.
Make corporations citizens of every state in which they are licensed to do business.
Charles L. Brieant Diversity Jurisdiction
i. Thesis: diversity jurisdiction is a good thing
ii. Arguments:
1.
Prejudice exists and diversity protects against it
2.
Good to have interaction between state and federal courts
3.
Moving federal congestion, would only congest states
iii. Solutions to problems caused by diversity:
1.
$200,000 amount on controversy requirement without regard to citizenship
John Hart Ely, The Irrepressible Myth of Erie
i. The indiscriminate admixture of all questions respecting choices between federal and state law in diversity cases, under the singe
rubric of the Erie Doctrine is overly simplistic.
ii. If the Court is going to make a procedural/substantive distinction, as it appears to be doing through the Rules Enabling Act, then
procedural should be defined as any rule designed to make the process of litigation a fair and efficient mechanism for the resolution of
disputes. The best way to define a substantive rule or right as the statute declares is as a right granted for one or more
nonprocedural reasons, for some purpose not having to do with the fairness or efficiency of the litigation.
iii. Statutes of limitation are both substantive and procedural this it will not get passed the second line of the Enabling Act.
iv. Courts are not restrained by the Constitution in displacing state substantive law given the Courts loose interpretation of the Enabling
Acts substantive rights clause.
Paul J. Mishkin, Some Further Last Words on Erie The Thread
i. Constitution limits not merely Congress power to displace state law, but the Supreme Courts power as well.
ii. Enabling Acts Substantive clause reinforces the constitutional perception that courts are an inappropriate maker of laws intruding
on states view of policy.
Patrick J. Borchers, The Origins of Diversity Jurisdiction, the Rise of Legal Positivism
i. Thesis: Erie was wrong
ii. A careful investigation of the legislative History of the Rules of Decision Act and Constitution reveals evidence that the firs Congress
did not believe itself to having required application of state law in diversity cases.
iii. Type of prejudice founder were trying to eliminate was not prejudice of state law, but prejudice from trier-of-fact.
iv. Laws of the Several States could not have meant the law of any individual state, but must have been a generic reference to
American, as opposed to British, common law. Fact that Senate contemplated a multi-state federal district court shows that lower
courts were not to adhere to any local law.
v. ARGUES: Federal courts sitting in diversity should be able to apply a choice of law approach that examines the rules of the states
having a reasonable connection with the dispute and chooses the rule that will reach the result most closely according with modern
standards of justice; advocates a return to Swift, but acknowledges that Erie cannot be ignored.
vi. Erie was the result of the emergence of legal positivism the idea that laws must emanate from some identifiable sovereign entity.
They were concerned that out-of-state plaintiffs could sue a person in diversity and benefit from different substantive laws that would
otherwise have been applied had the case been tried in state court.
vii. Erie Normative concerns:
1.
Unfairness: Erie encourages interstate forum shopping, which is a greater harm than intrastate forum shopping (state court
vs. federal court). D has almost no protection against interstate forum shopping. As long as P succeeds in filing in a court
with personal jurisdiction, the only protection available is the uncertain device of forum non convenience.
2.
Political Independence: Federal judges are in an excellent position to determine what laws comports with modern
standards of justice. Federal judges are politically independent actors that do not have to cater to local constituencies.
3.
Efficiency: In a period where cases have multiple parties, multiple state laws can apply. Reinstating Swift would allow the
federal courts to apply one standard and would result in efficiency in the litigation process and improve judicial economy.
Federal government may not be good at interpreting state laws (and their interpretations are not binding)
4.
Uniformity: there will be greater uniformity in federal decision making, while local uniformity is preserved. Predictability
at federal court level.

Law & Economics Analysis (Bone)

The Tools of Positive Economics (13-17)

Adding more judges to the court system should reduce litigation delays, but this depends on a number of factors

o
o

By shortening litigation time, it encourages people to file suits

Also, damages must be paid sooner, so the defendant incurs a loss sooner. The stakes are higher for both parties. This encourages each side to
spend more in litigating the lawsuit (more money into discovery, etc.)
The ideas above were part of a model. Two types of modeling are formal (empirical studies) and informal (personal experiences)

The Tools of Normative Economics (113-124)

44

Procedures are comparable to the Learned Hand formula, but procedures reduce the risk of error as opposed to risk of an accident.
"Welfare economics" is the general approach to problems of social choice, which requires:
a.
A definition of individual welfare
i.
Measured in different ways: pleasure/happiness, preference satisfaction
b.
A method for aggregating the welfare of different individuals into a measure of social welfare
i.
Utilitarian social welfare function: Adds up everyone's utility
ii.
Cost benefit approach: Measured in terms of what an individual is willing to pay.
Cost-Benefit Analyses of Economic Efficiency

a.
b.

a.
b.
c.
d.
e.
f.

g.

h.

Kaldor-Hicks: It is good if those who are better off can compensate those who are worse off. Compensation need not take place; it must only be a
possibility.
Pareto Efficiency: There are some social choices that make at least one person better off without making anyone else worse off. A proposal is
pareto superior if it makes John better off without harming Mary (and they are the only two members of society). It is pareto efficient if all
superior changes have been made and there are no more superior choices to be made. This has strong intuitive appeal. It also only asks whether
a person is better or worse off according to himself. So it makes intrapersonal comparisons, not interpersonal. It is not used often though,
because it isn't practical in a complex world where someone will always be harmed.

Law and Economics: Bone is addressing the normative questions: What makes a good system? Bone is only looking at efficiency (i.e.
minimization of total social costs)
Positive law and Economics: descriptive and predictive (making assumptions about peoples rational behavior) (making assumption of rational
behavior, what will be the consequences)
Normative Law and Economics: which rules will produce most efficient outcomes.
Purpose of Procedure for Economists: Purpose of procedure is to 1) minimize errors in the application of substantive law and 2) to minimize
errors in the cost of achieving an accurate application of substantive law. This analysis is carried out in the backdrop of Positive Law and
Economic. (minimize sum of error and process costs)
Bone is focusing on Predictive Economics (i.e. when you get cases to settle and when you go to trial); assumes rational actors.
Case 1
Potential Recovery = $100,000
Ps and Ds estimate of recovery = 60%
Costs of Litigation to each party = $10,000
Value of Case to P = $50,000 ($100,000 x 0.6 - $10,000 (costs)) (you subtract because they will get it back)
Cost of case to D = $70,000 ($100,000 x 0.6 + $10,000(costs))
Ps value < Ds costs
SETTLEMENT BETWEEN $50,000 AND $70,000
Case 2
Potential Recovery = $100,000
Ps estimate of recovery = 75%
Ds estimate of recovery = 25%
Costs of Litigation to each party = $10,000
Value of Case to P = $65,000 ($100,000 x 0.75 - $10,000)
Cost of Case to D = $35,000 ($100,000 x 0.25 + 10,000)
Ps value > Ds costs
NO SETTLEMENT
Discovery can alter costs of parties and create such string financial differences between the parties that settlement will not happen.

HH. Pleadings Economic Analysis (Bone)

Notice pleading v. Strict Pleading
A. Notice Pleading
a.
Accuracy costs wind up litigating frivolous cases
B. Strict Pleading (requirement that you have a lot more detail to support allegations)
a.
Accuracy Costs some meritorious suits will not get filed because they cannot get information held by certain parties because they cannot get
past the pleadings stage; you have to look at the suits that are not filed because of lack of incentive
C. Recommendation:
a.
Strict Pleading should be selective; it should only be applied when P is ill-informed on merits and could obtain that information with little costs.
Thus, Ps investment will be efficient. If you use strict pleading in other situations, you will get too must discouragement of bring suits.
b.
To conduct this analysis, you must look at the impact of the accuracy costs of each rule, then look at the process costs. Looking at these factors
together, you can decide when it is best to use notice or strict pleading.
D. Notice pleading requires very little by way of allegation.
a.
Purpose is to give D notice
b.
Lets in frivolous suits, but also allows meritorious ones (reduces false positives; increases false negatives)
E. Strict pleading imposes a much heavier burden. P must allege a substantial amount of factual detail.
a.
Purpose is to give D notice; and
b.
Screen frivolous suits because filing costs of P ate high
c.
Screens frivolous suits, but limits meritorious ones (reduces false negatives; but increases false positives)
F. False Negatives v. False positives
a.
False negative: frivolous suit that is not dismissed at pleadings stage
i. They undermine deterrent of substantive law, waste litigation costs, lead to inefficient and unjustified settlements, and limit socially
useful activity.
ii. For this to happen, you need 1) case to be frivolous and 2) for it to be let in (probabilities for this are multiplied)
b.
False positive: meritorious suit that is dismissed at pleading state and or not filed for fear of dismissal
i. Undermine deterrent effect if substantive law, distort other valuable social incentives, and impair laws long-term growth by
eliminating opportunities for the creation of new precedent

45

G.

H.
I.
J.

II.

ii. For this to happen, you need 1) case to be meritorious and 2) it is thrown out.
Expected Error Cost
a.
Probability of an error multiplied by the social cost pf the error if it materializes
b.
i.e. If 80% of the frivolous suits and all meritorious suits are let in, all you need to know is how many frivolous or meritorious suits there are.
i. If 20% of all suits are frivolous, then 80% of this 20% get by the pleading stage. Probability of false negative is 0.2 times 0.8. Which
equals 0.16 or 16%.
Notice pleading is superior when error costs are equal (i.e. false positives and false negatives occur at same rate)
a.
But determining whether strict pleading or notice pleadings are better depend when error costs change (i.e. if false positive are more frequent than
false negatives, or vice versa)
Strict pleading deters meritorious filings before they are filed.
Process costs (administrative and litigation costs): strict pleadings increase the average cost of filing a suit and litigating a dismissal motion. Putting
together the complaint is costly. Dealing with a motion to dismiss is more costly because parties have more to argue about. strict pleading could
reduce filings of motions to dismiss.

Discovery Economic Analysis (Bone)

a.
b.

c.

Are accuracy gains greater than the process costs? Bone sets up two competing possibility: no discovery vs. discovery.
No Discovery
i. Some incentives exists to share information
ii. There will certainly be an incentive to share favorable information (this can aid the settlement process, but P will not necessarily credit
information maybe not so that will cause a lack of settlement.)
iii. Incentives to share bad info if you do not share bad info, then the other side will think your case is worse off. But this will not
always work because the incentive to share bad info is less when that party knows the opposition will get it later. If party knows that
bad information will never be obtained, then there is no incentive to disclose.
iv. Settlement could be less likely with possibility of discovery. In formal discovery where there is no concern that bad evidence will be
disclosed, one party (D) may become more optimistic on a case (say 40%) and another party (P) may remain more optimistic at 80%
no settlement here.
Discovery
i. If prospect of Discovery produces settlement, and one side is more in the dark than the other, then you could wind up with some
inaccurate settlements.
ii. Consider costs of conducting discovery and costs that discovery saves up by facilitating settlement and minimizing trial.
iii. Problem with discovery is a lack of externalizing of costs.
1.
Bone suggests that we should only allow discovery when the increased value of accuracy at trial plus any deterrent
is at least equal to the total costs on both sides of actually carrying out the discovery.
2.
Discovery conducted for impositional value, not for its substantive value on case.
3.
Parties may both engage in discovery abuses to their advantage. PRISONERS DILLEMA most rational choice is to
not cooperate.
iv. Problem with mandatory disclosure
1.
over-disclosure (not targeted)
2.
people not being forthright
3.
Increase costs

46