I.

SUBJECT MATTER JURISDICTION (SMJ)

SMJ refers to the power of the court to hear a particular type of case. Grounded in Article III of the U.S. Constitution. The Law State courts are courts of general jurisdiction and federal courts are courts of limited jurisdiction State Courts can hear cases based on either state or federal law, unless the federal claim is one which has been preempted (Congress passes a law that cases of think kind can only be heard by the federal system) Most federal laws can be heard in either state or federal court Federal preemption is the exception not the rule Presume that state courts have jurisdiction over a case and then look only for exceptions Federal courts have judicial power over nine types of cases, as listed in U.S. Constitution, Article III, Section 2 If a case is not concerned with one of these nine topics, it cannot be heard in federal court Presume the federal court cannot hear the case unless it fits into 1 of the 9 categories of section 2 The Constitution is the outer limits, the absolute max of power and Congress has chosen to limit this power After establishing the C grants fed courts the power to hear the claim, then ask if Congress has actually conveyed jurisdiction over this type of case in a federal statute. There must always be both a Constitutional basis and statutory basis for federal jurisdiction. The plaintiff must alleged the basis for federal court jurisdiction in the Complaint (Rule 8 of FRCP) otherwise there is grounds to dismiss under Rule 12(b)(1) A challenge to SMJ can be made at any time and cannot be waived because the parties cannot give the Court the power to hear a case is does not have

Federal Question Jurisdiction

Louisville and Nashville R.R. Company v. Mottley (1908) Mr. and Mrs. Mottley (residents of Kentucky) brought suit in equity in federal court to compel specific performance of a contract between the Mottleys and the railroad which required the railroad to issue free passes to the Mottleys for the rest of their lives for an agreement that the Mottleys release the railroad from all damages or claims for damages for injuries they received during a collision of trains. The Mottleys received free passes for a while. Then the railroad stopped renewing the passes because of a bill Congress passed in 1906 which forbade the giving of free passes or free transportation (the reasoning was to stop bribing federal officials). The Mottleys sued saying the law was never intended to apply to their situation, and if it does apply, then it is unconstitutional to deprive them of property without due process. The case goes up to the US SC and although neither party questioned the jurisdiction, it is the duty of the court to see to it that the jurisdiction of the Circuit Court is not exceeded. The court did not consider either of the questions raised in the demur to the bill because it held the Circuit Court was without jurisdiction of the cause. This case does not arise under federal law. In a well pleaded complaint, look what has to be there and look where

the federal issue is. This is a contract case and it doesnt need to mention the federal law in the complaint. Adding facts about federal law into the complaint does not change the claim. The only way the federal law issue comes in is as a defense. It is not needed for a well pleaded complaint. The plaintiff cannot just allege some anticipated defense to his cause of action. Although the allegations show it is very likely that a question under the Constitution would arise, it does not show that the suit (the Ps original cause of action) arises under the Constitution. So while there is absolutely no question that the legality of the federal law is all that matters, the SC says it doesnt arise under federal law because it is not essential to the claim. Rule: (Well pleaded complaint rule) Arising under does not mean about. A claim must contain an essential federal element that appears in the plaintiffs well-pleaded complaint. Would the P have raised the federal issue in a complaint that includes only the elements needed to prove the claim? Federal defense claims or claims raised by the defendant are insufficient to serve as the basis for federal question jurisdiction. More than about a federal law. Note Case: American Well Works Company v. Layne and Bowler Company (1916) P alleges D slandered him by informing Ps client of patent infringement. The case was removed to federal court premised on exclusive federal jurisdiction over cases arising under federal patent law. The court held this was really a tort case, and because the suit arises under the law that creates the cause of action (tort law), this is not a federal question of patent law. Holmes test: A suit arises under the law that creates the cause of action There is jurisdiction under 1331 if the source of the Ps enforceable legal right against the D is federal law Weston says this is consistent with Mottley Glannon: If the right to relief is based on a state law claim then it is not arising under (in this Holmes test) even if to recover on the state law claim the P will have to prove a proposition of federal law Note Case: Smith v. Kansas City Title and Trust Company (1920) A shareholder sued the bank in federal court to stop the bank from buying tax exempt farm loan bonds issued by Federal Land Banks under the authority of a federal statute because Ps believed Congress lacked the power to issue the bonds. This case would not satisfy Holmes test but the P could not prove the state law claim without establishing a proposition of federal law (that the fed law under which the bonds were issued was unconstitutional). The majority held it was clear the controversy concerned the validity of an act of Congress which is directly drawn into question. The decision depends upon the determination of this issue. Weston says here, the court thought it was important to know the answer to this question. There seems to be times if there is a very substantial federal question, then it is arising under federal jurisdiction. The court upheld the federal Farm Loan Program. The majority held there was jurisdiction. This creates an exception to the Holmes test for situations of federal issue embedded in a state claim essential elements test if the essence of Ps claim turns on federal law, then its an essential element and is a federal question The dissent by Holmes: This case does not arise under Federal Law. It is under state law of corporate control (the manager of the bank is not properly managing its responsibilities). Like Merrell Dow (alleged a state cause of action of negligence but that would be proven by showing a violation of the standard governing warnings in the federal statute), in that

P brought a state claim to enjoin the corporation from investing in bonds, but had to establish that those bonds were issued under an unconstitutional federal statute. However, here there is jurisdiction, but there is not jurisdiction in MD. Weston says this is consistent with Mottley Note Case: Moore v. Chesapeake & Ohio Railway Co. (1934) A man sued his employer when he was injured by a defective coupling lever while working on an intrastate RR. It does not follow that a suit brought under the state statute which defines liability to employees who are injured while engaged in intrastate commerce and brings within the purview of the statute a breach of the duty imposed by the federal statute, should be regarded as a suit arising under the laws of the United States and cognizable in the federal court in the absence of diversity of citizenship. Rule: Using federal law for a breach of duty of federal standards which didnt provide for a cause of action is not sufficient for jurisdiction. Need federal cause of action. Like Merrell Dow Note Case: Shoshone Mining Company v. Rutter A suit to enforce a right which takes its origin in the laws of the United States is not necessarily one arising under the Constitution or laws of the United States within the meaning of the jurisdiction clauses. The recognition by Congress of local customs and statutory provisions as at time controlling the right of possession does not incorporate them into the body of Federal law A statute authorizing an action to establish a right is very different from one which creates a right to be established Like Merrell Dow Weston say this is really federal, but they are choosing to limit jurisdiction to avoid a flood of litigation Merrell Dow Pharmaceuticals Inc. v. Thompson (1986) The Thompsons (Canada) and MacTavishes (Scotland) filed identical complaints in Ohio against petitioner, a corporation that manufactures and distributes the drug Benedectin, alleging their children were born with multiple deformities as a result of the mothers ingestion of the drug during pregnancy. They asserted claims based on negligence, breach of warranty, and SL (all state tort law). One of the negligence theories was that MD did not give adequate warnings of the risks of Benedectin because the warning did not meet the labeling requirements of the FDCA. (This is a state cause of action of negligence, but that would be proven by showing a violation of the standard governing warnings in the federal statute.) This was originally filed in state court. (Procedurally, if a case could have been in federal court in the first case, not preemption (this is very rare), then the defendant can move the case to the federal court if they want.) The issue here is a federal issue in a state cause of action. This is different from a federal law creating a cause of action that allows for general federal-question jurisdiction like in Mottley. Factors for evaluating whether a federal cause of action applies from Ash, in case you dont have a jurisdictional statute: The plaintiffs are not part of the class for whose special benefit the statute was passed The indicia of legislative intent reveal no congressional purpose to provide a private cause of action Federal cause of action would not further the underlying purposes of the

legislative scheme The respondents cause of action is a subject traditionally relegated to state law These show Congress did not intend a private federal remedy for violations of the statute it enacted. (Distinguishing feature of this case is that it was clear Congress did not intend to authorize parties who claimed injury from failure to comply with the FDCA to sue for damages. The court did not want to create a federal court remedy where Congress decided not to do so.) Weston is not sure the same result would apply if this was the only cause of action there were lots of other theories they could prevail perhaps this is why it was not an essential element of the claim. This is a private action because it is by an individual and not the government. There is no section of the law that provides for a private cause of action (had the FDCA included language giving private persons the right to sue, like 1331 does, then this would not be an issue). Silence, in this case, is congressional intent NOT to create a private right of action. This is not an arising under case. The Holmes test: a suit arises under the law that creates the cause of action. The Holmes test says you need to id what kind of case that creates the cause of action (the law that recognizes that you have a right to recover). In this case, the majority is saying that there is nothing in the misbranding law that creates a cause of action. This is mainly a tort case and tort cases belong in the state court system because they have broad general jurisdiction. This test is not explicitly adopted. The court concludes that a complaint alleging a violation of a federal statute as an element of a state cause of action, when Congress has determined that there should be no private, federal cause of action for the violation, does not state a claim arising under the Constitution, laws, or treaties of the US. This does not overrule Smiths federal-issue embedded in a state claim exception to the Holmes test There is no uniform standard for determining whether a federal interest is sufficiently substantial. In practice, you would refer to the law of the circuit to see how this law has been interpreted and applied As a plaintiff, you should either have statutory rule saying you can sue in Federal Court, or you can take your chances with the substantial part of the cause of action. The best is to have a statute because then it is clear. This is done, Weston says, because fed courts want to be able to limit what/how much they have to hear. Rule: An essential federal element exists where the cause of action: -Is created by federal law -Where the plaintiffs right to relief on a state-based cause of action depends on the application or interpretation of federal law, provided a substantial federal interest is at stake. Dissent Brennan: No private cause of action b/c they assume you will go to the agency, which would be heard in federal court. To read intent not to be in federal court, it ignores the structure. Also, why assume silence means no? Constitutional right to use the federal courts if in Article III, look at purpose of 1331. Also, the federal courts can better apply this law and make sure it is applied uniformly. The fear of flooded litigation is not sufficient Congress made the statute this broad! The Holmes Group v. Vornado Air Circulation Systems; US SC (2002) A claim was filed and the complainant did not allege a claim arising under federal patent law, but the answer contained a patent-law counterclaim (1338). The court uses the same test to determine whether a case arises under 1338(a) as under

1331. The well-pleaded-complaint rule governs whether a case arises under federal law for purposes of 1331. Adapting this rule to 1338, the well-pleaded-complaint rule provides that whether a case arises under patent law must be determined from what necessarily appears in the plaintiffs statement of his own claim. Ps well pleaded complaint needs to establish either the federal patent law creates the cause of action or that the plaintiffs right to relief necessarily depends on the resolution of a substantial question of federal patent law. In this case, the complaint did not assert any claim arising under federal patent law so there is no federal court jurisdiction. Rule: A counterclaim cannot serve as the basis for arising under jurisdiction. Policy reasons: -Original P is the master of the complaint and the well-pleaded complaint rule allows him to word the complaint to be heard in state court -Allowing a counterclaim to be a basis for arising under jurisdiction would really expand the class of removable cases -It would also undermine the clarity and ease of administration of the wellpleaded-complaint doctrine (which is a quick rule of thumb for resolving jurisdictional conflicts). Grable Sons v. Darue (2005) IRS seized property that belonged to Grable to satisfy a tax debt he had and it was resold to Darue after giving Grable notice by certified mail of the seizure and sale. Later, Grable challenged the seizure saying he was not given proper notice because it was not personally served, which is what he believed the statute required. Darue removed the case to federal court presenting a federal question because the claim of title depended on the interpretation of the notice statute in the federal tax law. Rule: The question to ask is: does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities (will not open the floodgates) This case warrants federal jurisdiction because the only issue contested in this case is the question of whether Grable was given notice within the meaning of the federal statute and the meaning of the federal tax provision is an important issue of federal law that belongs in federal court. The government has a direct interest in the availability of a federal forum to vindicate its own administrative actions. This is a rare case that will not open flood gates. The court finds this case similar to Smith where the court recognized federal question jurisdiction because the principal issue in the case was the federal constitutionality of the bond issue. It held a state-law claim could give rise to federal question jurisdiction so long as it appears from the complaint that the right to relief depends upon the construction or application of federal law. This has been further confined to those state law claims that really and substantially involve a dispute or controversy respecting the validity, construction or effect of federal law. Remember, always consider this in light of the importance of the federal issue and the danger of opening the federal courts to an excessive number of claims The court clarifies Merrell Dow: MD should be read in its entirety as treating the absence of a federal private right of action as evidence relevant to, but not dispositive of, the sensitive judgments about congressional intent that 1331 requires. MD was not stating a bright line rule. This did not overrule Smith. This was a sensitive application of a longstanding exception to the Holmes test. Although in this case (Grable), Congress did not provide a private right of action to Grable, jurisdiction over actions like this would not materially affect, or threaten to

affect, the normal currents of litigation (as it did in MD). This is a rare type of case. Weston thinks this is showing that federal court takes cases of substantial question of how the government conducts its business. This clarifies Merrell Dow under MD, we wouldnt have allowed it because dealing with state law we did not mean that you have to point to a statute that talks about jurisdiction policy reasons under Smith say that if the issue is significant enough, it will be under Federal law Cant decide this case without deciding this issue of interpretation This is constitutional law about what kind of notice is needed Two possible theories under Federal Question: -Find evidence in a federal congressional enactment that talks about jurisdiction -Show the essential federal ingredient factor tests and important/substantial federal matter test Remember: no matter what test you are using always must be based on the well pleaded complaint rule (Mottley)

Diversity
In these cases, SMJ of fed courts is defined by who the parties to the suit are, not the SM of the underlying dispute. The place of the underlying events in the suit and the place where P brings the action are irrelevant to the determination of diversity. Complete Diversity Rule (Strawbridge v. Curtis): all of the parties on one side of the v must be citizens of different states or countries than all parties on the other side of the v (if any P and any D are citizens of the same state, there is no diversity within the meaning of the statute). It doesnt matter if any of the Ps are from the same state. This means different things depending on whether the parties are individuals, corporations, or non-corporate associations. Rationale: To ensure each party has fair litigation (worried people of one state wont be treated fairly in the courts of the other parties state). Individuals: determined by ascertaining their citizenship (physical presence and intention) Bair v. Peck (1990) P brings a med mal action asserting the court has SMJ on the basis of diversity of citizenship. He was from Kansas, but got a drivers license for CO (lied and used someone elses address) so he could get in state tuition; all of his belongings were moved to CO; he eventually got a job in CO and his own apartment; he put his parents address as his permanent address (KS). After injuring his knee, he went to a physician in KS b/c he operated on his sister the year before; he then moved to Missouri. Defendants move to dismiss for lack of SMJ alleging P, a college age student, was a citizen of Kansas and not CO. Court held P was a citizen of CO at the time the complaint was filed and so there was SMJ based on diversity. The determination for diversity jurisdiction is generally made from the complaint. Domicile is assessed as of the date the complaint is filed. The party asserting the diversity jurisdiction has the burden of proving it by a preponderance of the evidence. It doesnt matter if diversity is lost after, however courts will look to facts after the filing to help determine where P intended to have residency. There is a presumption to favor an established domicile over a

newly acquired one. Domicile test/citizenship (fact specific): (comes from federal law, not state law) Residency physical presence (no minimum period of resident is required) Intent to remain (state of mind) -This does not need to be an intent to permanently remain. There can be a floating intention to stay indefinitely and also have the general desire to return to the former domicile at some undetermined point of time. It is not sufficient to have the existing intention to leave to move elsewhere upon the happening of a reasonable foreseeable event. You have only ONE domicile/citizenship -The class of citizens that this is a problem for is relatively small; state of mind is tricky in these situations When P has recently changed residence, the courts look at objective factors such as place of employment, drivers license, tax payments, voting practices, bank accounts, auto registration, location of personal property VERY fact specific! Students attending an out of state university: general presumption they intend to return home. But here, he had worked and clearly not intended to go back for school only. He went back to KS due to an un pre-determined occurrence which was not reasonably foreseeable. He also had employment, drivers license, personal property, voter registration, and state taxes in CO. When a young adult takes steps which objectively show a commitment for an indefinite period of time to become a member of the community in which he or she resides, the courts should not be reluctant to infer a domicile. Angela Ochoa v. PV Holding (2007) Ochoa was injured while riding in a Ford Explorer that was rear-ended by Paul Gulley, who was driving a Budget rental car. The accident happened on Feb 2, 2006 in New Orleans. Ochoa (Louisiana citizen) sued Paul Gulley (displaced after Katrina), Budget Rental (NOT a citizen of Louisiana), and PV Holding (the title holder of the Budget rental cars NOT a citizen of Louisiana) in state court on October 5, 2006. Ds attempted to remove the suit to federal court on Nov 30, 2006 because of diversity jurisdiction. Ds had the burden to show diversity and the court held he did not establish this. Gulleys recent employment in Texas and his subjective statement that he does not presently intend to live in New Orleans falls short of establishing that his domicile several months ago was Texas. They focused on the lack of evidence (but D lost everything in Katrina) and used subsequent events to the filing of the complaint to help determine state of mind. He didnt show enough facts to show by a preponderance of the evidence. Did he give up his citizenship in Louisiana? No. He lives in Texas, and has been there for a while no intention to go back to Louisiana b/c his home is destroyed but Weston says he didnt want to move to TX, he was forced Weston is bothered because in the first case, there was a middle class person, and here we have a homeless person he at least has an address in TX and had a temporary job Diversity jurisdiction requires complete diversity b/w the Ps and all properly joined Ds Court should look to all evidence shedding light on the litigants intention to establish domicile Actual fact of residence and the real intention of remaining there, as disclosed by the persons entire course of conduct, are the controlling factors Other factors where exercises civil and political rights, pay taxes,

owns real and personal property, has his drivers license and other licenses, maintains bank accounts, belongs to clubs and churches, has places of business or employment, and maintains a home for his family In ascertaining domicile, the court is not limited to the pleadings; rather, it can look at record evidence, affidavits, and testimony concerning fact underling the citizenship of the parties A statement of intent is entitled to little weight if it conflicts with objective facts Corporations: can hold dual citizenship Hertz v. Friend (2010) Friend, et al. sued Hertz for violations of CA wage and hour laws. Hertz filed for removal to federal court; Friend, et al. claimed that Hertz was a CA resident as well. Two citizens and a corporation (artificial person). Corporations are citizens of any state by which it has been incorporated and of the state where it has its principal place of business. (TWO places where it can be a citizen). Most corporations are incorporated in Delaware originally it was NY, but changed its laws; Delaware had the same laws as NY but never changed them corporate friendly law and experienced judiciary Adopt the nerve center test. The phrase principal place of business refers to the place where the corporations high level officers direct, control, and coordinate the corporations activities. The nerve center will typically be found at a corporations headquarters. -Needs to be one single place within a state (not looking at the state itself) -This test does not require courts to weigh corporate functions, assets or revenues -Needs to be the place of actual direction, control, and coordination so do not allow attempts at jurisdictional manipulation (by placing headquarters at a drop box, bare office, etc) Three sets of considerations support this: -The statutes language place being singular = have to pick out the leading/prominent place; follows State where, so must be within a state -Administrative simplicity need something straight forward to stop wasting time and resources -Statutes legislative history turned down a numbers test Hertzs center of direction, control, and coordination, its nerve center, and its corporate headquarters are one and the same, and they are located in New Jersey, not in California. Non-individual, non-corporate parties (associations, LLCs, partnerships): use citizenship of each member Belleville Catering Co. v. Champaign Market Place (2003) Ps attorney (citizen of Missouri), Ds attorney (all citizens of Missouri), and magistrate judge messed up and did not catch the mistake that P did not state the incorporation of their own client. The complaint should not have been filed in federal court. Removed to federal court based on where incorporated IL Unincorporated enterprises are analogized to partnerships and take the citizenship of every general and limited partner Limited liability companies are citizens of every state of which any member is a citizen; do not look at principal place of business Sua sponte issue arises for the first time on appeal Cant waive subject matter jurisdiction Additional takeaways from Weston: -This is local

-Court takes this very seriously -Everyone should have shared responsibility Carden v. Arkoma Associates; US SC (1990) Respondent Arkoma Associates (Arkoma), a limited partnership organized under the laws of Arizona, brought suit on a contract dispute in the United States District Court for the Eastern District of Louisiana, relying upon diversity of citizenship. The defendants, C. Tom Carden and Leonard L. Limes, citizens of Louisiana, moved to dismiss, contending that one of Arkoma's limited partners was also a citizen of Louisiana. Magee Drilling Company intervened in the suit and, together with the original defendants, counterclaimed against Arkoma under Texas law. Court of Appeals found complete diversity, reasoning that Arkoma's citizenship should be determined by reference to the citizenship of the general, but not the limited, partners. Was there diversity jurisdiction? Yes; diversity jurisdiction in a suit by or against the entity depends on the citizenship of "all the members," "the several persons composing such association," "each of its members," Although policy and fairness might support a different result, changes need to come from the legislator. Amount in Controversy Requirement: the matter in controversy exceeds the sum or value of $75,000 This requirement in 1332 is not present in Article 3 section 2 of the Constitution. Congress changes this amount. This requirement limits diverse parties to be heard in federal court to claims over a certain amount. Because it is hard to ascertain the amount of the Ps claim in many cases, a Ps good faith claim for more than the amount required controls unless it appears to a legal certainty that the claim is really for less (only if the judge can decide to a legal certainty that P could only be awarded less then the amount in controversy requirement will P not meet the requirement). Probably can use punitive damages to get to this amount. Single Plaintiff: One defendant If the lawsuit contains multiple claims against the D, the requirement is satisfied if all of the claimed amounts are added together even if none of them alone would satisfy the threshold amount. (can aggregate claims that are not related as long as they are against the same D) (cannot aggregate claim for the same damages based on different theories) Multiple defendants the $75,000 threshold must be satisfied against each D Multiple plaintiffs: So long as one plaintiff has a claim which satisfies the jurisdictional threshold, a second plaintiff with a claim for a lesser amount may be a party to the suit if she satisfied the requirements of a different jurisdictional statute (28 USC 1367) But only for a single D. Congress has the power to cut back or even eliminate diversity jurisdiction A P invoking federal jurisdiction must always be prepared to show that his case is not only within constitutional bounds of Article III section 2, but also has been granted to the federal district courts by Congress in a statute. Sheldon v. Still upholding a statute limiting diversity jurisdiction the statutory grant of diversity jurisdiction has historically been narrower than the constitutional grant of jurisdiction

Removal Jurisdiction
Removal refers to the power of a D to relocate a case initially filed in a state court to a federal court (but only the federal district court for the district and division embracing the place where such action is pending in the state court). Removal is not meant to expand federal jurisdiction but merely make it available to the D.

***Removal applies to cases, not claims so if there is both fed and state claims and it is removed on the fed claim, state claim goes with it to fed court.

Breuer v. Jims Concrete (2003) P sued D, his former employer, in state court of FL for unpaid wages, etc. D removed the case to fed court . P wanted the case remanded back to state court arguing removal was improper because of the Fair Labor Standards Acts provision says that an action may be maintained in any federal or state court. P says this is an express exception to the federal authorization of removal under 1441(a). The court disagrees and says it was properly removed. FLSA is a Federal Action only question is how to interpret this specific FL statute! The question the court is dealing with is whether maintain an action means the case should be held in the court that the action was filed (like retained) v. a synonym for brought. P argues maintain means it cant be removed because he has the right to have it heard in state court. The court decides that because P could have begun his action in District Court (there was original jurisdiction), removal is only prohibited under 1441(a) if Congress expressly prohibits the action. Nothing in the act looks like an express prohibition of removal. The court says in other law/acts/statutes the express exception requirement is always seen in indisputable prohibitions of removal and this did not happen here. Here it is not clear so it doesnt mean it cant be removed. If an ambiguous term like maintain qualified as an express provision for purposes of 1441(a), then the requirement of an express provision would call for nothing more than a provision pure and simple. When Congress wants to give Ps an absolute choice of forum, it clearly does so. (Congress must give an express exception to prohibit removal) Removal does not defeat the right to maintain the action. Breuer emphasizes a sense of maintain as implying continuation of an action to final judgment, so as to give a plaintiff who began an action the statutory right to see it through (in state court). Right to

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maintain an action may be a fight to the finish, but removal does nothing to defeat that right, removal just transfers the right from one forum to another. If the phrase meant the plaintiff could insist on keeping an FLSA case wherever he filed it in the first place, any case brought in federal district court could not be transferred to a different one over the plaintiffs objection, which would clash with change of venue provisions. Change of Venue: 1404(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. Ramifications of ruling on an ambiguous term present in many other statutes. Breuer cannot have a removal exception for the FLSA without entailing exceptions for other statutory actions, to the point that it becomes just too hard to believe that a right to maintain an action was ever meant to displace the right to remove. City of Chicago v. International College of Surgeons (1997) Ps buildings were labeled historical landmarks and P wanted to just keep the front of the building but make it into high-rise condos. They had to apply for these permits and it is denied. They filed actions for judicial review in the circuit court pursuant to ILL Admin Review Law and the defendant had it removed to fed court and P wanted it remanded back to state court because they say it is a deferential review so the state has to hear the case. The court holds that because neither the jurisdictional statutes nor prior decisions suggest that fed jurisdiction is lacking when a case contains claims that local admin action violates fed law but also contains state law claims for on the record review of the admin findings, it is within the jurisdiction of fed district courts. The court says the complaint contained claims arising under Federal Equal Protection law and the Ill state law (federal constitutional claims). The SC applied reasoning from Smith saying Ps constitutional claims turn exclusively on federal law. P is not the master of a complaint such that P can choose to have the claim heard in state court. By raising claims which arise under fed law, P subjected itself to the possibility that the City would remove the case to fed courts. Article: An Empirical Study of Forum Choice Every removal situation is based on two choices: -Where the P files -Where the D removes it to This article does not say what jury selection IS, it is what lawyers THINK. Lawyers make choices based on what they THINK Cost and Convenience Factors: Generally speaking they have nothing to do with bias whatsoever What is good for the lawyer? What is bad for the other side? Refers to familiarity with the court and procedure in that court Knowing the rules of procedures is a huge disadvantage to the lawyers (i.e. knowing local rules etc) Local Familiarity: local practice, things that are not written down but common knowledge to the local residents/society. Inconvenience : you can throw someone off their game by making them be out of town, not on their own turf, and it can be prohibitive cost-wise bc federal court can be more expensive than state court. Summary Judgment rule in the WI statutes is not all that different so it costs $1000s less to file in state versus Federal court.

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In the real world, there is nothing like home court advantage and everybody knows . Plaintiffs Lawyers feel better in their home communities, tort cases, state court IS it FAIR to move a case when the object of the case is to make the other party nervous or spend more money? Gamesmanship: Just because it stinks doesnt mean its unethical because your job as a lawyer is to zealously promote your clients best interests It is not unreasonable to expect that the party with more money has certain advantages Issue is getting more concerning Discovery Rules have changed to pick the low-cost option method of discovery Forum Characteristics: What are the differences between state and federal jurisdictions? Jury trials in state and federal court Pools are different Jury numbers in the trial Voir Dire much more judicial control than in federal court than in state court In state court, the lawyers conduct voir dire. In federal court the judges question the jurors. This is important because lawyers in performing voir dire try to establish a connection with a jury. Lose a lot of the face time with jurors if you cannot discuss with the jury Closing arguments are much more tightly controlled in Federal Court than in State Court. Quality of the Judiciary: Plaintiffs preferred state court judges bc they felt that Federal Judges were more arrogant and removed Want state court to get face time with jury during voir dire. Also, state court is less controlling so the personality can be more influential in state court on a jury. Usually more influenced by attorney convenience and costs (representing individuals) Defense attorneys prefer federal judges bc they are seen as being more competent Usually defense attorneys are representing corporations/companies so cost not as determinitive Perceive fed laws as more favorable to them. Judges have more control in fed then in state. Summary: P cares more about attorney convenience than anything else; prefer state court Comfort and home court advantage Prefer juries as well D cares more about outcome determinative factors such as jury, experience of judges, bias (both sides identify that businesses have an uphill battle) Also, forum characteristics Judgments Experience of the judges/how smart they think they are Also, they prefer federal law b/c of SJ We have to consider whether it is in violation of the FedRCivP to file to harm opponent not supposed to harass Plaintiffs and Defendants lawyers in these categories of the cases have different perceptions about the nature of the judiciary Summary Judgment is a tool used more in Federal Court if you are an experienced litigator and representing the defendant you will remove.

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Is this true as compared to Dane County? No but in terms of the entire country, it is true Appellate Judiciary is considered to be of a higher quality in general if you think a case will get resolved on appeal, defense lawyers prefer Federal Court Federal Judiciary may have a greater affinity with the defendant, corporate livelihood States were more biased against BIG CORPORATIONS and Insurance Company ** Especially if you are out of town. ALWAYS remove cases to federal court: Geographic location is the least, idea of local bias, that moves them.

Supplemental Jurisdiction
Supplemental Jurisdiction is taking a claim for which there is no SMJ and nevertheless allowing the claim to be heard in federal court.

***28 U.S.C. 1367 merges pendent (federal court retains a state law claim when it is sufficiently related to a claim for which federal jurisdiction is present) and ancillary jurisdiction (relaxed requirement over third parties in particular situations) into this federal statute. This provides a statutory basis for supplemental jurisdiction in the federal courts ***PRE 1367 CASES!!!*** United Mine Workers of America v. Gibbs (1966) common law exercise of pendent jurisdiction b4 the federal statute Rivalry between UMW and Southern Labor Union over representation of union workers in the Appalachian coal fields. Tennessee Consolidated Coal Company laid off 100 miners of UMWs Local 5881 in 1960. Later a subsidiary of Consolidated hired Gibbs as mine superintendent to attempt to open a new mine and also haul the mines coal to RR loading point. Gibbs lost his job and then began losing others and claimed these effects to be from a concerted union plan against him. He sought recovery against the international union and brought suit in federal court with jurisdiction premised on allegations of secondary boycotts under 303. (Violation of Federal Labor Management Relations Act - 303 Prohibits secondary boycotts (when unions are going after employers)). There were also state law claims under the law of Tennessee (state tort) with jurisdiction based on pendent jurisdiction. There was a trial. He receives awards for UMWs violation of 303 and state law. Post trial motion and haulage contract awards were set aside because the damage was unproved. Then the court held this was really UMW putting pressure of Grundy mine and so Gibbs is nothing but the manager and he lost his employment as an agent with respect to the workers. He was hurt because he was manager of the mine so the court vacates the jury verdict based on federal law but sustains an award based on state law. There is a question whether the federal court properly entertained jurisdiction of the claim based on Tenn law. The US SC says it can exercise proper jurisdiction of the claim based on state law because the state and federal claims arose from the same nucleus of operative fact and reflected alternative remedies. The broad idea of case meant fed courts could hear more then just a fed claim. It could hear related claims that didnt arise under fed law if they were so closely related as to be one case. A state claim lacking an independent basis for federal jurisdiction may be heard in federal court on the basis of supplemental jurisdiction where it is part of the same case or controversy as a claim in the case that has a basis for federal jurisdiction. Pendent jurisdiction exists whenever there is a claim arising under the Constitution, the laws of the US, and Treaties made under the Authority and the relationship between that

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claim and the state claim permit the conclusion that the entire action before the court comprises by one constitutional case. The state and fed claims must derive from a common nucleus of operative fact. If a Ps claim are such that he would ordinarily be expected to try them all in one judicial proceeding, then assuming substantiality of the fed issues, there is power in the fed courts to hear the whole If there is not a common nucleus of operative fact between the federal and state claim, there is still a right to the claim but the party will have two lawsuits in two separate courts. The power of the court to hear these additional state based claims is an exercise in discretion (can hear the case, doesnt mean it should exercise the power). Justification lies in consideration of judicial economy, convenience and fairness to litigants. Factors: -Needless decisions of state law should be avoided (if the federal claims are dismissed before trial, the state claims should be dismissed as well) -If the state issues substantially predominate, the state claims may be dismissed without prejudice and left for state courts -If the state claim is so closely tied to questions of federal policy, the fed court should exercise jurisdiction -Be aware of the likelihood of jury confusion that would justify separating state and federal claims -Pendent jurisdiction remains open throughout trial and it can be re-evaluated. -Pendent is related claims (one party asserts a jurisdictionally proper claim against a nondiverse party and adds a related state law claim) -Ancillary is related parties (the related claims are asserted by D or additional parties after the initial complaint like counterclaims, compulsory cross-claims, third party claims) -Weston says Mottley would NOT allow this!!! Aldinger v. Howard (1976) P dismissed from her county job and brought suit against Howard and other individual Ds under a fed statute. She also asserted a state law claim against the County. The court held that although the claim against Howard was proper, since Aldinger asserted a fed claim, the claim against the county was not jurisdictionally proper because even though the claim could be viewed as part of a single constitutional case under the first part of Gibbs, allowing a state law claim against the county would be inconsistent with the apparent intent of Congress to bar fed civil rights claims against counties. So there was no jurisdictional grant. When the case came up, the SC had decided cases to make it impossible to sue a county under fed rights claims. The case wanted to add the county under pendant party jurisdiction, the court says adding another claim is very different then adding another party. This would be a back door way of bringing a county into a lawsuit. There shouldnt be pendent jurisdiction if there is fed intent to be found elsewhere that congress doesnt want this kind of case to be heard by the fed courts. Owen Equipment & Erection v. Kroger (1978) The Ps husband was electrocuted on the job and she brought a diversity lawsuit against Omaha PP, which maintained the power lines which killed her husband and OPP impleaded Owen equipment into the case. Owen is not diverse from either original party. Then P asserted a direct claim against Owen. OPP moves and wins SJ and now the case is between P and Owen. Owen is from the same state as P so now this is a tort claim and no complete diversity between the parties. The court was not okay with this because they were worried about opening the floodgates. If the original lawsuit would have been P v Opp and Owen, or

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just P v Owen it couldnt have been in fed court. The court worried that if they allowed this, this could be away around fed court jurisdiction limitations. It does not permit addition of state law claims that will destroy complete diversity. Finley v. United States (1989) A plane crashes because it strikes some power line. Lawsuit filed under Federal Tort claims act against the entity in charge of the airfield. P decides to join claims against the city and the utility company maintaining the power lines. Court talks about intent again. Although the pendant party claims arose from the same nucleus of facts as the jurisdictionally proper original claim, the court reiterated that jurisdiction must be granted not only by Art III but also by statute. There was no indication that the federal sued under in the original action meant to convey jurisdiction over any claims other than those against the US (original D). SO there was no jurisdiction. This was a weird decision but the goods news was that the SC said we know things are ambiguous and we invite congress to pass a statute. And congress does pass the supplemental jurisdiction statute. Have to check your facts against (b) and (c) ***AFTER THIS CASE IS WHEN 1367 IS PASSED!!!!*** Aldinger, Kroger, Finley showed that it was not enough that the court had constitutional power to hear the related case (case or controversy), there needed to be statutory authority to exercise that jurisdiction as well. (1367 provides the necessary statutory authority to hear the related claims now today the improper exercises of pendent party jurisdiction in Finley and Aldinger would be proper under 1367) *****POST 1367 CASES******* 1367(d): allowing 30 days in which to re-file in State Court is Constitutional. Jinks v. Richland County, South Carolina (2003) Jinks was arrested and jailed for failure to pay child support. 4 days later he died of complications associated with alcohol withdrawal while in detention. The widower filed federal and state supplemental claims against the jail in federal court. The judge dismissed the 1883 claim and declined to exercise jurisdiction over the remaining state law claims. The petitioner then filed in state court and got a jury verdict; the respondent appealed arguing that the SOL had run; the state SC reversed saying although the claims were not time barred under 1367(d), the state supreme court held (d) was unconstitutional as applied to claims brought in state court against a States political subdivisions. It claimed it interfered with the States sovereign authority to establish the extent to which its political subdivisions are subject to suit. The US SC does not believe the SOL falls within procedure immune from congressional regulation. The tolling is on the substantive side. The US SC confirms that 1367(d) is constitutional. IMPORTANT without (d), the SOL would have run!!! NOT beyond the powers of Congress - The Constitution gives Congress the authority to make all Laws which shall be necessary and proper for carrying into Execution Powers and all other Powers vested by this Constitution in the Gov of the United States. An act of Congress does not need to be absolutely necessary to the exercise of an enumerated power it is enough the (d) is conducive to the due administration of justice in fed court, and is plainly adapted to that end In this case, the statute gives judges a fair option in dismissing the case. Promotes fair and efficient operation of the federal courts and is therefore conducive to the administration of justice Also, eliminates a serious impediment to access to the federal courts on the part of Ps pursuing federal and state law claims that derive from a common nucleus of operative facts

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Because Congress passed this not as a pretext or to undermine the enumeration of powers, it is so adapted States are not constitutionally protected from suit and, as was the case here, Congress has overridden their power must yield to acts of Congress this is not a state, but a political subdivision within a state 1367 (c): Circumstances when District Courts should decline Supplemental Jurisdiction City of Chicago v. International College of Surgeons (1997) (This is a continuation of this case discussed above under removal jurisdiction) This case was removed, the District Court had original jurisdiction over ICSs claims arising under fed law and so could exercise supplemental jurisdiction over the accompanying state law claims so long as those claims constitute other claims that form part of the same case of controversy and the US SC says they do. Point of supplemental jurisdiction is to exercise jurisdiction where it would otherwise be lacking original Doesnt matter if its discretionary review or review de novo Besides, federal courts hear deferential review cases when they have original jurisdiction here, its the same thing only with supplemental jurisdiction The court determined it could exercise supplemental jurisdiction over state law claims, including the claims for on-the-record administrative review (although it was not obligated to) LOOK AT judicial economy, convenience, fairness, and comity In addition to discretion of the courts under 1367(c), District Courts may be obligated not to decide state law claims where one of the abstention doctrines applies (even if the jurisdictional prerequisites are satisfied): Denying federal forum would serve an important countervailing interest. Examples: (we didnt really talk about this so dont worry about it) -Abstention is warranted by considerations of proper constitutional adjudication -Regard for federal state relations -Wise judicial administration In this case, the D.C. decided that these interests would be best served by exercising jurisdiction over ICSs state law claims Carlsbad v. HIF Bio; US SC (2009) Patent dispute, filed in state court alleging federal and state law claims; removed by D to federal court; federal case dismissed for failure to meet elements in the statute; remanded the state law claim to state court. P appealed to the Appellate court stating the DC should keep supplemental jurisdiction, but they denied the case stating they didnt have jurisdiction since the DC dismissed for lack of jurisdiction. Can a federal court of appeals have jurisdiction to review a district court's order that remands a case to state court after declining to exercise supplemental jurisdiction over state-law claims under 28 U.S.C. 1367(c)? Yes they can: This is not a remand based on a lack of subject matter jurisdiction; they have discretion and CAN maintain jurisdiction they are just choosing not to Supplemental jurisdiction clearly existed here stemmed from the same nucleus of facts as the federal claim that was dismissed 1367(b): exercise of supp jurisdiction over additional Ps whose claims do not satisfy the min amount in controversy Exxon Mobile v. Allapattah Services Inc. (2005) (This opinion combined Exxon case and Starkist

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case) Exon Mobile is the class action case where gas stations allege anti-trust violations and all the people have varying amounts of damages, with some but not all meeting the minimum amount in controversy. Starkist is a classic rule 20 case. The child was hurt very severely and her amounts meet $75,00 but her parents join her claims to theirs and they dont meet the amount by themselves. Rule: where the other elements of jurisdiction are present and at least one named P in the action satisfies the amount in controversy requirement, 1367 does authorize supplemental jurisdiction over the claims of other plaintiffs in the same Article III case or controversy, even if those claims are for less than the jurisdictional amount specified in the statute setting forth the requirements for diversity jurisdiction. (This holding applies to both rule 23 class actions suits or rule 20 suits with multiple parties. However, there is now a class action rule that has been passed so the rule for class actions is different.) The court first discusses the history of supplemental jurisdiction Summary of the law before 1980 Diversity requirement in 1332(a) required complete diversity. Without complete diversity, the district court lacked original jurisdiction over all the claims in the action. If the district court had original jurisdiction over at least one claim, the jurisdictional statutes implicitly authorized supplemental jurisdiction over all other claims between the same parties arising out of the same Article III case or controversy Even when the district court had original jurisdiction over one or more claims between particular parties, the jurisdictional statutes did not authorize supplemental jurisdiction over additional claims involving other parties Congress then passed 1367 in 1990 in response to and overturning Finley The court then needs to examine the statutes text in light of context, structure, and related statutory provisions. Part (b) is the part in controversy. It lists which rule the courts will not have supp jurisdiction on. Rule 23 doesnt appear and rule 20 is only mentioned in regards to defendants, not plaintiffs (as the parents in starkist are being added). Since the plaintiffs doesnt apply to this exception specifically, they are not barred by (b) and there is supplemental jurisdiction. The defendants put forth various arguments, which are all rejected Indivisibility Theory: All claims in the complaint must stand or fall as a single, indivisible civil action as a matter of definitional necessity SC Inconsistent with the entire notion of supplemental jurisdiction Gibbs would never have had a civil action under 1331 Further, DC is able to cure jurisdictional defects by dismissing the offending parties rather than the entire action. Contamination Theory: The inclusion of a claim or party falling outside the district courts original jurisdiction somehow contaminates every other claim in the complaint SC- makes some sense in the special context of the Diversity Requirement. The presence of a single non-diverse party may eliminate the fear of bias with respect to all claims, but the presence of a claim that falls short of the minimum amount in controversy does nothing to reduce the importance of claims that do not meet this requirement (therefore contamination theory is not germane) And other arguments are rejected Then the court looks to legislative history The SC says the text is not ambiguous so they dont need to look to history/intent The defendants argue intent/history by looking at the house report and law profs

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The SC says even if looking to intent/history, their position would not change Criticism of Legislative History: Legislative History is itself, murky, ambiguous, and contradictory Judicial reliance on legislative materials like committee reports, which are not themselves requirements of Article I, may give committee members, unelected staffers and lobbyists, the power and the incentive to attempt strategic manipulations of legislative history to secure results they were unable to achieve through the statutory text. These were under two separate theories under 1367 One under federal question One under diversity Rule 14 One party adding another Rule 19 Necessary parties; bring them in because you have to Rule 24 Intervention Rule 20 Joinder 1367(a): If there is no original jurisdiction, state claims are no longer discretionary Williams v. Aztar Indiana Gaming Corp (2003) P was a gambler and lost money, sued the casino under Federal RICO (mail fraud) and state law claims. DC dismissed the federal RICO claims (because they were a total stretch and totally ridiculous) but exercised supplemental jurisdiction over remaining state law claims. Because the DC dismissed the RICO claim which was the sole basis for invoking federal jurisdiction, there is no basis for federal jurisdiction and therefore supplemental jurisdiction is not possible (need original jurisdiction to get supplemental jurisdiction) They only went under RICO b/c no tort claim would allow recovery; clearly no RICO claim though Rule: If the reason for dismissing the fed claim is because there is no SMJ, then you have to dismiss the state claims, it is not a discretionary decision. Weston says this is consistent with Carlsbad look at the complain, must be well pleaded and have original juris.

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II. PERSONAL JURISDICTION (PJ)

SMJ = power PJ = fairness General Jurisdiction lead you to conclude that the D can be sued for ANYTHING in this particular forum; dont have to look at how the actions of the D are tied to the claim or the forum; there also exists specific jurisdiction obviously IE They are a resident of this state IE A corporation where its principal place of business is located and where its incorporated Specific Jurisdiction Minimum contacts must exist + purposeful availment; or effects test for intl torts; or putting it into the market PJ examines the relationship between the court and the parties, especially the D. It is grounded in the due process clause in the 5th and 14th Amendments to the U.S. Constitution. Unlike SMJ, PJ can be waived because it flows through the right of the parties. PJ revolves around individual liberties not the powers of fed v state. PJ is all about fairness (SMJ is about power and authority). Is it appropriate for the court to hear this case because of who the parties are (not because of the subject matter? Traditional Basis for the Exercise of PJ Pennoyer v. Neff (1877) This is a case to recover the possession of land in Oregon. P asserts title by a patent issued to him in 1866 under the Donation Law of Oregon. D claims to have acquired the land under a sheriffs deed, made upon a sale of the property to recover judgment against P in one of the circuit courts of the state. The case turned on the validity of the judgment. The judgment is in favor of an attorney who P owes legal fees to. P wasnt around and was never served. P is later issued papers for some land to become officially his. The attorney finds out about this land, wants it, and gets the sheriff to do a sheriffs sale. The sheriff sells the land to D so the attorney can get paid. P then returns to Oregon and finds out his land is claimed by someone else so sues D to get it back. The court has to decide who has title to the land. The SC says due process was violated because P was never originally served when he land was seized. The state overstepped its bound in adjudicating the case of a person not within the state. Because the person was never served, no power over D. If D could have been served in the state, then jurisdiction continues no matter where D went. The court could only have issued process and expected to enter judgment against someone who is a resident or is physically present in the state or if the person has property (then this would be in rem and the court exercise authority over the property to induce the Ds presence) States have jurisdiction over people in their territory but the state laws cannot operate outside the state. States can deal with cases involving people who are citizens of the state or involving issues in the state. In this case, D was not in the state and the land was not Ps at the time of the judgment for the attorney. This land could not have been attached because the statute said you could only attach land that was owned by the D at the time of the original lawsuit. Because P didnt have possession of the land at the time of the judgment for the attorney, the land can not be used to satisfy the judgment. This is about fairness (the direction of the modern law) In this case there was non-compliance with the statute. His land was taken under a statute that provided right to take only if he owned the land and in this case, Neff didnt own the land at this time (at the time of filing). The question in this case is where the land is at the time of

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the judgment. Generally states have jurisdiction over state residents, people present in the state, those who voluntarily appear in court or people who own property in the state at time of commencement. The Modern Test and Uncertainty International Shoe Co. v. State of Wisconsin (1945) ***Birth of Minimum Contacts Shoe is a wholesaler. Shoe, incorporated in Del. and PPB in St. Louis Missouri, had salesmen who sold for the wholesaler (Shoe). Orders were sent to St. Louis to be accepted and sent out from St. Louis. The company did not have stores or offices in Washington. The state levies a payroll tax on payroll being paid to state residents for workers who are employed within the state. State of WA decides to sue Shoe for not withholding unemployment from the wages of the workers working in Washington and sent the paperwork to Missouri and to one of the salespeople in Washington. Shoe said WA had no jurisdiction because Shoe says it is a Delaware and Missouri company who has no offices or stores there and the only property are single shoes so Shoe is a wholesaler. Shoe argues under Pennoyer they do no business in WA and have no presence there. In this case, Shoe is not a person so to determine the presence of a corporation, look to the activities carried on, on its behalf by those who have the authority to act for the corporation Only looking at the defendant because Plaintiff chooses where to sue so the D is the one being summoned against their choosing. The question is is it fair. The state court could compel Shoe to be a D in this case because the company enjoyed the states protection of law and commerce. They received the benefits from the state so it is only FAIR that they are under the States jurisdiction. Shoes activities in WA were systematic and continuous throughout the years. Focus on FAIRNESS What is the connection b/w the defendant and the forum state; are they sufficient to satisfy fairplay? Rule: Minimum Contacts Test for In Personam Jurisdiction: In order to subject a defendant to judgment in personam, he must have certain minimum contacts with it (forum state) such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice (i.e. Due Process) Whether due process is satisfied must depend on the quality and nature of the activity in relation to the fair and orderly administration of the laws that it was the purpose of the due process clause to insure. Continuous and systematic To the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of the state. The exercise of that privilege may give rise to obligations if the obligations arise out of or are connected with the activities within the state, a procedure that requires the corporation to respond to a suit brought to enforce them cannot then be said to be undue. Look at the connection of the D to the forum state in context with the litigation and maybe the general connection. Sometimes a single connection is strong enough to get PJ as long as the lawsuit has to do with that single connection. In this case, court considered: Positive facts: Number of sales people; sales activities; amount paid for commission/pay; value of sales; residence of salespeople Negative facts: absence of offices; no sales made in WA; no inventory; no intra-state delivery Dissent by Black: He agreed with the case but did not like the broad definition of

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fairness. This is inviting a principle that requires fact specific analysis with very little info knowing in advance as which facts are important and needed. Saying that this broad definition is going to bite the court in the ass. Shaffer v. Heitner (1977) Greyhound bus company bought out regional bus companies (including Mt. Hood). Government looked into anti-trust issues and Greyhound broke anti-competitive processes. Over a number of years there were substantial penalties leveled against Greyhound. Shareholders file a derivative action. Derivative action is a statutorily created action that allows a shareholder to bring a lawsuit on behalf of the corporation against officers and directors whose actions have hurt the corporation and then the court decides who is a Defendant. There needs to be PJ over each defendant. They need to find a place to have PJ over every person they are trying to sue. In this case, the Board members live all over the country and just fly in for meetings. Greyhound moved its headquarters, but Heitner is suing the individual people, and they dont live in the same place as each other so the question is where is there PJ? In Delaware, the statute says that for all purposes if you own a share of stock in a Delaware corporation, that share of stock is by law considered to be physically present in the state of Delaware (shades of Pennoyer). Delaware has PJ over property physically present in Delaware. To get PJ, someone can bring a lawsuit to sequester the property and as long as you are properly served you can enter an appearance in that lawsuit and then the court has jurisdiction over you, or you can forfeit your property Definitions In personam courts jurisdiction is based on its authority over the Ds person then can impose a personal obligation on D in favor of P In rem or quasi in rem jurisdiction is based on the courts power over property within its territory the effect of a judgment is limited to the property that supports jurisdiction and does not impose a personal liability on the property owner since he is not before the court Quasi in rem affects the interests of particular people in designated property In rem affects the interests of all persons in designated property This opinion is about is it okay to be using in rem law in this case Rule: all assertions (in rem and in personam) of state court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny. (No longer use Pennoyer) Need to have contacts, ties, relations between the D and the state minimum contacts In this case, there is no PJ. It says you cannot rely on sequestration. Times have changed, the presence of property and holding it to have jurisdiction over the property is not okay anymore. The Delaware statute is unconstitutional as applied to these people. Delaware does not have jurisdiction over the appellant. The state statute fails to give appropriate notice and subjects all owners of the stock to be subject to suit in the state. Dissent by Brennan: He believes the majority Opinion is an Advisory Opinion: Court in Part IV reaches the minimum contacts question and finds such contacts lacking as applied to the appellants. Once having decided that the quasi in rem statute that Delaware admits having enacted is invalid, the Court then proceeds to find that a minimum contacts law that Delaware expressly denies having enacted also could not constitutionally apply in this case State Court Jurisdiction needs:

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Notice State authorizing the exercise of the States judicial power along constitutionally permissible grounds (which means the Minimum Contacts test). This was a factual inquiry and the court made a very decisive decision without enough facts Delaware could assert jurisdiction over appellants based on the Minimum Contacts test State chartering Corporation has an unusually powerful interest in insuring the availability of convenient forum for litigating claims involving a possible multiplicity of defendant fiduciaries There are at least three interrelated public policies that are furthered by asserting jurisdiction State has interest in providing restitution for local corporations State courts have legitimately read their jurisdiction expansively when a cause of action centers on an area in which the forum state possesses a manifest regulatory interest State has an interest in affording a convenient forum for supervising and overseeing the affairs of an entity that is purely a creation of that States law. Court does not adequately assert the unfairness of subjecting defendant to jurisdiction in Delaware Interpretation of the Minimum Contacts Test Crucial fact is that the appellants voluntarily associated themselves with the State Invoked the benefits and protection of the State laws by entering into a long term and fragile relationship with one of its domestic corporations No significant countervailing interests issues such as judicial efficiency Concerned solely with minimum and not best contacts Armstrong v. Pomerance (SC of Delaware 1980) ***PJ b/c of Consent! Factually, a lot like Shaffer. Shareholder derivative actions; difference is the DA Statute. This is a Delaware business that does all of its business in Idaho. Nothing is done in Delaware, above what is needed to maintain its status as a Del. Corp. This is a shareholder derivative action and is decided after Shaffer. There is a Delaware statute that when appointed as directors of the corporation, those directors are submitting to jurisdiction of this state. The state put the statute in terms of an embodiment of minimum contacts. Court does not agree that merely being appointed/elected is not minimum contacts must look at the quality and nature of the contacts. They were aware of this statute prior to becoming directors; they purposefully availed themselves to DA laws. Statute gave plenty of notice for current directors. Why pass the statute? After Shaffer, give jurisdiction to people; legislatures liked Brennans dissent General jurisdiction is where the D is so tied to the state that he can clearly be brought before the court citizen of the state for example so affiliated with the state that there is no way you cant be brought before the court The minimum contact is the Delaware corporation. This has nothing to do with property (stock or land). It says you are assuming responsibility for managing a Delaware corporation so it is reasonable to say by managing there is a significant and continuous relationship with/in Delaware. This Delaware SC writes the statutes from Brennans dissenting opinion in Shaffer

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but with Shoe in mind. They also make explicit statutory notice. Notice requirement: we are all presumed to know the law. They use the date of the passage of the law. There are some directors appointed subsequent to the date of starting this statute, so they are fine. Some accepted before the statute made it clear that this was enough of a contact to hold them in, so Delaware didnt have personal jurisdiction over them because the statute doesnt apply retroactively. There was jurisdiction over those directors who started after the statute was made. Jurisdiction is given up by giving consent based on the state statute. There is PJ because D had explicit statutory notice and purposefully availed themselves of the privilege of being directors and accepted the significant benefits and protections under the laws of this State. Implied consent is not unreasonable so long as the consent requirement serves legitimate state interest. YES! Significant and substantial interest to actively oversee the conduct of those who owe fiduciary duties to shareholders of DA corporations far outweighs any burden. The jurisdictional question must be answered by reference to the quality and nature of the contacts. The analysis cannot be simply mechanical or quantitative. Inquiry should focus on the defendant, the forum and the litigation (Shaffer) The fact that many corporations are incorporated in DA is significant DA must be able to control this sort of conduct. Without this statute, there may be no recourse for Ps. DAs concern with providing a sure forum for shareholders outweighs mere inconvenience. The only difference between Shaffer and this case was the existence of 3114 as the basis for jurisdiction. This is the same test as in Shaffer but it is applied is different. Here, the court looks at the interest of P and of the state. In Shaffer, Ps were trying to assert jurisdiction based on shares of a corporation, not jurisdiction such that exists in this case. Also, here, they have accepted jurisdiction by accepting the position of director whereas in Shaffer it was merely the buying of stocks. World-Wide Volkswagen v. Woodson (1980) ***Minimum contacts + foreseeability (purposeful availment) = PJ A family, driving an audi bought in NY, was driving through OK to AZ when they were struck by another car, the Audi exploded, the mom and kids were severely injured. Audi manufacturer car is made here, sent via Volkswagon Volkswagon importer brings the car into the US, given to Worldwide Worldwide distributor has ownership interest and is responsible for the car and selling it in a three state area by NY, given to Seaway Seaway car store/retailer P bought the car from here Only two Ds moved to dismiss b/c Audi and Volkswagon build and distribute cars all over the US general jurisdiction for this sort of case Worldwide and Seaway are arguing they are not connected to OK When you have multiple defendants and a challenge to personal jurisdiction, must analyze EVERY defendanteven if, in the case here, they have not filed a motion to dismiss This is a products liability case so everyone in the chain of the car has minimum contacts. Suit is filed in OK. WW and Seaway say they cant be sued in OK. SC of OK said PJ was proper because petitioners derive substantial revenue from goods used or consumed in OK. US SC reversed, saying no jurisdiction. Analysis of PJ must be independently performed with respect to each D. The issue is what is the relationship between D, the forum, and litigation. The question is can these people be sued in the jurisdiction P chose, OK. Car is in OK b/c P chose to drive it there nothing the D did to make it go there. A state court can exercise PJ over a nonresident D only so long as there exist min. contacts between the D and the forum state. (Shoe) This protects the D against the burdens of litigating in a distant or inconvenient forum and ensures that the States

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do no reach out beyond the limits imposed on them by their status as coequal sovereigns in a fed system. Maintenance of the suits must not offend notions of fair play and substantial justice (Shoe) Due to changes in commerce and economic development and mobility, evaluation is not rigid evaluation but more flexible analysis. Must keep in mind our federal system of govt. EVEN IF, D would suffering no minimal contacts/inconvenience, and the forum state has strong interest in applying its law, and the forum state is the most convenient forum, Due Process may divest the state of its power of jurisdiction. Foreseeability that is critical in a due process analysis is the defendants conduct and connection with the forum state that would show that they reasonably anticipate being haled into court there. Foreseeability is about FAIRNESS. Choose by their conduct to avoid/accept a forum. When a corporation purposefully avails itself of the privilege of conducting activities within the forum state it has clear notice that it is subject to suit there; can alleviate the risk by procuring insurance and pass expected cost onto customers, or sever connection with the state. If the sale of a product of a manufacturer or distributor is not simply an isolated occurrence, but arises from efforts of the manufacturer or distributor to serve the market, it is not unreasonable to subject it to suit in one of those States. In this case, there is no purposeful availment because there were no activities directed at the market [no contact, ties, or relations]. It is foreseeable that some automobiles sold might cross state lines; however, unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact within the state forum. Dissent by Brennan: If a P can show that his chosen forum state has a sufficient interest in the litigation (or sufficient contacts with the D), then the D who cannot show some real injury to a constitutionally protected interest, should have no constitutional excuse not to appear Determining whether traditional notions of fair play and substantial justice are offended is not a mechanical test; too little weight to the strength of the forum states interest in the case and fail to explore whether there would be any actual inconvenience The existence of min contacts was just one way of giving content to the determination of fairness and reasonableness. Contacts necessary would diminish if other considerations helped establish that jurisdiction are fair and reasonable What are the actual burdens on defendant? Lesser burdens reduce unfairness Constitutional burdens that are relevant: mobility of defense (witnesses, evidence, immobility of defendant, time away from home or work etc) Interests of Forum State are very strong in this case (accident happened in OK, plaintiffs were hospitalized, evidence) Nature of the Automobile, and its entrance its purposeful entrance into stream of commerce, and thus will be predictably used in distant forum statesdefendants have contacts with state Commercial reality sheds light on reasonableness/fairness of jurisdiction Here, forum state has an interest (accident there, witnesses there, hospitalized there, want to enforce traffic laws there), litigation is connected to the forum, the D is linked to the forum, and the burden of defending is not unreasonable They injected their cars into the stream of commerce Defendants receive value from maintenance of highways by states, including OK (large part of value derived from this) The nature of commerce today is different than in Intl Shoe we must recognize that products flow more easily into the stream of commerce

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As long as there is proper notice and an opportunity to defend, Due Process is not offended merely b/c the D has to board a plane to get to the trial Dissent by Marshall: Majority took too narrow a view of defendants forum related conduct with forum state Jurisdiction here is premised on the deliberate and purposeful actions of the defendants themselves in choosing to become part of a nationwide network for marketing/servicing automobiles Fact that automobile may end up in forum state is normal in the course of the operation of vehicles for their intended purpose; in the normal course of the operation of the vehicles for their intended purpose, a reasonable businessman would know that a defect in the product might manifest itself in OK Must recognize that the quality and nature of commercial activity is different than actions which have no economic advantage Dissent by Blackmun: critical factor was nature of instrumentality automobile is intended to travel long distances ARTICLE Clearly, they could have sued in NY and there would be no question of jurisdiction; so, why here??? They wanted it in OK b/c complete diversity for the tort cause of action they were citizens of NY so there would not have been complete diversity; this county was pro-plaintiff; whole case was really about forum shopping/selection Insurance Corp. Of Ireland v. Compagnie Des Bauxites de Guinee (1982) This is a note case and we didnt talk about. Some people were confused with Whites talk of federalism in his opinion in WW so he responded This case does not alter the min contact requirement between non-resident D and the forum state. It just shows that min contacts can be established when a D fails to comply with court-ordered discovery. The restriction on state sovereign power in WW must be seen as a function of the individual liberty interest preserved by the Due Process Clause Keeton v. Hustler Magazine (1984) ***Birth of Effects Test! Petitioner is a resident of NY and her only connection with New Hampshire was the circulation of the magazine which she assists in producing (Penthouse is the magazine that she worked for). Respondent Hustler Magazine was an Ohio corporation w/ principle business in CA. Hustler sold 15,000 copies in New Hampshire. Petitioner claims to have been libeled in five separate issues of respondents magazine published between Sept 1975 and May 1976. Ds contacts are the focus for PJ. It is Ps choice where to litigate. There are times when Ps minimum contacts are discussed because it helps establish Ds contacts in the state. But there is not a separate requirement for Ps residence in the forum state. This is using the single publication rule (As to any single publication (a) one action for damages can be maintained; (b) all damages suffered in all jurisdictions can be recovered in the one action; and (c) a judgment for or against the plaintiff upon the merits of any action for damages bars any other action for damages between the parties in all jurisdictions) Effects test The combination of NHs interest in redressing injuries (both to its residents that read the falseshoods and the person that the falsehood is about) that occur within the State and its interest in cooperating with other States in the application of the single publication rule demonstrates the appropriateness of requiring respondent to answer to a multistate libel action in NH Just b/c NH has the longest statute of limitations doesnt mean its unfair to litigate there that is a choice of law question that can only be answered after jurisdiction is established this is just P

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strategy and as long as there is jurisdiction, thats fine Respondents regular circulation of magazines in the forum state is sufficient to support an assertion of jurisdiction in a libel action based on the contents of the magazine. Minimum contacts doesnt mean the best contact, dont have to choose among available forums to find the one with the best contacts. You just have to meet the minimum contacts threshold. ALSO, P doesnt have to have any contacts in the state if they want to make themselves answerable, thats their choice; where P lives only matters when considering how the activities of the D affect the P may enhance Ds minimum contacts Calder v. Jones (1984) ***Effects test! ONLY FOR INTENTIONAL TORT Shirley Jones brought suit against National Enquirer (gossip magazine). The NE is in Florida and it publishes an unflattering story about Jones and her spouse. Results in litigation. Defendants are the President and reporter. Minimum contacts for one D are not necessarily minimum contacts for another D. The NE had a weekly circulation of 5 mil and in CA of 600,000. In contrast to Keeton where the harm was in an area with people who didnt know her, here Jones lived, worked and socialized with the people who read the article. But that is Jones contacts. The court finds PJ in CA for both Ds. CA is the focal point both of the story and of the harm suffered. Jurisdiction over petitioners is therefore proper in CA based on the effects of their FL conduct in CA. The Ds intentional and tortuous actions were expressly aimed at CA. Therefore, D must reasonably anticipate being haled into court there to answer for the truth of the statements in the article. Glannon: D may have sufficient contacts with a state to support minimum contacts jurisdiction there even though she did not act within the state. If a D commits an act outside the sate that she knows will cause harmful effects within the state, she will be subject to minimum contacts jurisdiction there for claims arising out of the act. Look at the effects on the P if D knew the harm would be felt in the forum (purposeful). Satisfaction of the effects test will constitute minimum contacts because awareness of affecting someone in the state means you are intentionally reaching out into the state. (Note: the effects test is only used for intentional torts) Suggests a new way to find minimum contacts in both this case and in Keeton: the effects test Helicopteros Nacionales De Colombia v. Hall (1984) ***Purchases in a state must relate to the cause of action (Weston thinks this was decided wrong and thinks the court was more concerned with protecting business.) This is a good example of how to go through minimum contacts on the exam! Helicopter crash in Peru and their decedents are suing Helicol, who supplied the helicopters in Peru. The people who died were hired in TX by Consorcio, an alter ego of WSH (headquartered in Houston), to work on a pipeline project in Peru. Sued Helicol, Consorcio and WSH with its headquarters in TX and also sued Bell Helicoptur Co. Consorcio/WSH and Bell were granted directed verdicts. US company with US employees created a legal fiction to allow Peru to carry out its job. Ps argue basis for jurisdiction is TX Long-Arm statute. Want to file in TX b/c inconvenient in Peru AND in Peru you dont know the system probably wouldnt be able to represent them law probably more favorable (especially tort law) than in Peru. They argue general jurisdiction, perhaps this is their mistake Weston says. Due Process clause of the 14th amendment operates to limit the power of a State to assert in personam jurisdiction over a nonresident defendant (Pennoyer)

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Due process requirements are satisfied when in personam jurisdiction is asserted over a nonresident corporate defendant that has certain minimum contacts with the forum, such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice Due process is not offended by a States subjecting the corporation to its in personam jurisdiction when there are sufficient contacts between the States and the foreign corporation Because the claim against Helicol did not arise out of and was not related to Helicols activities within TX, need to analyze the contact to see if they were continuous and systematic. Listing lack of contacts: No place of business in TX, not licensed to do business in the state, Chief Exec Officer only in TX once, never performed helicopter operations in TX, doesnt solicit business in TX, never signed a contract in TX, employees are not based in TX, employees are not recruited from TX, doesnt own property in TX, doesnt maintain records in TX, has no shareholders in TX. Contacts that did exist: Pilots trained in TX, Money from Houston bank, Helicopter from TX, Pilots. The court does not find minimum contacts to satisfy PJ. Helico never applied for a license to do business in TX so there is no authority or contact specifying a suit there. There is no established place of business. Mere purchases, even if at regular intervals, in a state are not enough to warrant jurisdiction when the purchases did not relate to cause of action. The event occurred in Peru, not TX. They do not do the effects test because this is negligence not an intentional tort. The court limits its discussion in this case to an assertion of general jurisdiction over a foreign defendant because specific jurisdiction could not be established because the court said the claim did not arise out of and was not related to Ds activities within T. Brennan dissents (Weston thinks this is compelling): While it is true he lacked all of the contacts listed by the majority, this is a wrongful death claim so there are two potential theories, pilot error (these pilots were trained in TX) and Bell helicopter error which was made it TX. Therefore, the key evidence is in TX and there is a link with TX. So it doesnt matter where the crash occurred. Brennan thinks it is fair to assert both general and specific jurisdiction over Helicol. Perkins company owned and operated in Philippines, had to shut down during WWII, had an office in the US for this period of time presence in the US was its home, so there was jurisdiction (this is pretty uncommon) Burger King Corp. v. Rudzewicz (1985) ***min. contacts + purposeful availment+ injury arises out of or relates to the activity of purposeful availment continuous relationship; then look at fairness factors! This is Brennans opinion. It is very clean and focused. Brennan has now prevailed in his broad view of what constitutes min contacts. He HAD been in the dissent. This is a contract case for a business relationship for 20 years. Two men join together as business partners to make a franchise contract with Burger King, who is based in FL. The franchise reached out and purposefully availed itself to Burger King, who is based in Fl and they knew this. The franchise fails and eventually BK sues for breach of franchise obligations when they failed to make the required payments to Ps in FL. The SC needs to decide if the exercise of Long Arm jurisdiction offended traditional conceptions of fair play and substantial justice embodied in the Due Process Clause of the 14th Amendment. Focus here was on the structure of Burger King as a franchise they basically controlled everything out of FL. When a forum seeks to assert specific jurisdiction over an out of state defendant who has not consented to suit there, the fair warning requirement in the Due Process clause is satisfied if:

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The defendant has purposefully directed his activities at residents of the forum Keeton v. Hustler; and The litigation results from alleged injuries that arise out of or relate to those activities Helicopteros Parties who reach out beyond one state and create continuing relationships and obligations with citizens of another state are subject to regulation and sanctions in the other State for the consequences of those activities Need to determine whether D purposefully established min contacts in the forum state The foreseeability that is critical to due process analysis is that the Ds conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there. There must be some act by which D purposefully avails itself on the privilege of conducting activities within the forum state and thus invoking the benefits and protections of its laws. Jurisdiction is proper where the contacts proximately result from actions of the defendant himself that create a substantial connection with the forum state. The absence of physical contacts do not defeat PJ as long as the commercial actors effort were purposefully directed towards residents of another state. Once establish D purposefully established min contacts within the forum state, must consider these in light of other factors to determine whether the assertion of PJ would comport with fair play and substantial justice (from WW case) Burden on D The forum states interest in adjudicating the dispute Ps interest in obtaining convenient and effective relief Interstate judicial systems interest in obtaining the most efficient resolution of controversies Shared interest of the several states in further fundamental substantive social policies These considerations may serve to establish reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required. Likewise, defendant may present a compelling case that the presence of some other consideration would render jurisdiction unreasonable. In this case, P established a substantial and continuing relationship so PJ over Ds in FL did not offend due process. The court said these guys are smart businessmen and the men purposefully/ deliberately made correspondence and contacts with the Miami office that they had notice that Miami office is the head office. Dissent by Stevens and White: they are worried about what this decision will do to the little guys in business. Disparity of bargaining power. Weston says she doesn't like the dissent, because she doesn't think it was a question of bargaining power. Asahi Metal Industry v Superior Court of CA ( 1987) (OConnor) ***Min. Contacts +!!! Also, possible stream of commerce Components parts case K exists b/w Cheng Shin and Asahi, would there be indemnification? Dont reach this question b/c of jurisdiction P sued Cheng Shin, a Taiwanese manufacturer of the tube of the motorcycle the P was riding. Cheng filed a cross complaint seeking indemnification from its codefendants and from petitioner Asahi, the Japanese manufacturer of the tubes valve assembly. Petitioners claims against Cheng and the other Ds were eventually settled and dismissed, leaving only Chengs indemnity action against Asahi. Asahi argues there is no PJ. Holding is unanimous (no PJ) but Part II A is a plurality Part II A (Establishing Minimum Contacts ) (This is not adopted) Whether an exercise of PJ comports with due process is whether D purposefully

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established min contacts in the forum state. The min contacts must have a basis in some act by which the D purposefully avails itself of the privilege of conducting activities within the forum state, this invoking the benefits and protections of its law. Contacts must result from actions by D himself that create a substantial connection with the forum state. A consumers unilateral act of bringing the Ds product into the forum state was not sufficient constitutional basis for PJ over D in WW The forum state does not exceed its powers under the Due Process Clause if it asserts PJ over a corp that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum state. (foreseeability) Interpretations of WW (using purposeful availment) There are two interpretations from courts after WW Due Process Clause allows an exercise of PJ to be based on no more than the Ds act of placing the product in the stream of commerce Due Process Clause requires the action of D to be more purposefully directed at the forum State than the mere act of placing a product in the stream of commerce This is the view adopted in this case (Asashi) Purposeful Availment Rule The substantial connection between D and the forum state necessary for a finding of min contacts must come about by an action of the D purposefully directed toward the forum state. The placement of a product into the stream of commerce, without more, is not an act of the D purposefully directed toward the forum state. Ds awareness that the stream of commerce may or will sweep the product into the forum state does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum state. Additional conduct of D to indicate an intent or purpose to serve the market in the forum state: designing the product for the market in the forum sate, advertising in the forum state, establishing channels for providing regular advice to customers in the forum state, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum state. Holding for Part II A: Asahi did not purposefully avail itself to the CA market, even though it may have been aware that some of the valves would be put in motorcycles used in CA Part II B (Assessing Traditional Notions of Fair Play and Substantial Justice) (This is adopted) Minimum contacts + never enough for just minimum contacts, must be fair and not offend traditional notions Cannot exercise PJ over a D under circumstances that would offend traditional notions of fair play and substantial justice Factors to consider in determining reasonableness of jurisdiction The burden on the D Interests of the forum state Ps interests in obtaining relief The interstate judicial systems interest in obtain the most efficient resolution of controversies Shared interest of the several states in furthering fundamental substantive social policies When minimum contact have been established, often the interest of P and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the

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alien D. (But this is not true for Asahi) For Asahi, it is unreasonable to assert jurisdiction over Asahi (apart from the question of the placement of goods in the stream of commerce). Considering the international context, the heavy burden on the alien defendant, and the slight interests of the plaintiff and the forum state, the exercise of PJ by a CA court over Asahi would be unreasonable and unfair in this situation. Not fair for the Japanese firm and Taiwan firm to enter a K under their law and then ask CA to interpret this! We learn from this case that the reason we use min contacts is to ask whether or not it is fair but you may satisfy min contacts and it still wont be fair but this is truly a rare and exceptional case Dissent (5 dissenting judges disagreed with part II-A but they did agree with Part II-B) Brennans written portion: As long as a participant in this process is aware that the final product is being marketed in the forum state, the possibility of a lawsuit there cannot come as a surprise. Nor will the litigation present a burden for which there is no corresponding benefit. In this case, the facts found by the CA SC support its finding of minimum contacts. Stevens written portion: No examination of min contacts is not always necessary to determine whether a state courts assertion of PJ is constitutional. Two Federal District Courts Dealing with Asahi split opinion: Boit v. Gar-Tec Products Inc. (1st Circuit Fed Court of Appeals 1992) This court adopts purposeful availment Brookstone (Retailer) has a catalogue business and Gar-Tec (Indiana - Wholesaler) made a deal with Brookstone for a hot-air gun to strip paint from houses. A contractor (Maine) used one of the guns that he bought from Brookstone to strip paint from a house, the heat from the gun got too hot, it ignited materials inside the home and caused a serious fire. The Boits (Ps) file a product liability complaint against Gar-Tec. Gar-Tec moved to dismiss for lack of PJ. The record provides an evidentiary basis for the Boits assertion that the contractor bought the hot air gun through the mail from Brookstone. The record is insufficient to satisfy the requirement of a prima facie showing of PJ over Gar-Tec (even if the Boits could show Gar-Tec knew or should have known that the hot air fun could be sold to a customer in Maine) The test is not knowledge of the ultimate destination of the product, but whether the manufacturer has purposefully engaged in forum activities so it can reasonably expect to be haled into court there. Mere awareness that a product may end up in the forum state, does not constitute purposeful availment for purposes of exercising personal jurisdiction Court adopted OConnors Purposeful establishment of minimum contacts test from Asahi. Most courts today have adopted OConnors plurality view Dehmlow v. Austin Fireworks (7th Cir COA 1992) P (Illinois) worked for Bartolottas, a fireworks company and was injured by Austins Fireworks (Kansas). Product was sold to a fireworks company in Wisconsin. Filed in Cook County and the Defendant removed the case to Federal Court and filed a motion to dismiss for lack of personal jurisdiction. Transaction is b/w a Kansas Corporation and a Wisconsin Corporation. In order to determine the scope of a federal district courts personal jurisdiction in a diversity case, the Court examines state law governing personal jurisdiction.

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When resolving the question of state court jurisdiction over a D, a court must make 2 inquiries: Whether a state statue grants PJ over D; and Easily satisfied here Whether such jurisdiction is within Constitutional bounds. Court begins with analysis of fair play and substantial justice standard. Several factors inform the fairness of a state courts exercise of jurisdiction over D Burden to the Defendant Interest of the State Ps interest in obtaining relief Interstate Judicial interest in resolving the case efficiently In this case, slight burden on defendant and significant interests by the state means that PJ over D in Ill conforms with general notions of fairness Then, need to determine whether D purposefully established minimum contracts in the forum state (Burger King). To meet this, D must purposefully avail himself of the provide of conducting activities within the forum states 7th Circuit has adopted the more permissive stream of commerce theory mere awareness (most courts DO NOT follow this) In this case, D directed its conduct towards serving the states market so it may be haled into court there; knew that it would go into Illinois, and thats enough (Brennans view) Weston thinks there is another reason for this decision strict liability b/c ultra hazardous Old Principles, New Technology Cybersell, Inc. an AZ corp v. Cybersell, Inc., a FL Corp. (US Court of Appeals 9th Cir. 1997) ***Websites require ACTIVE homepage for Min. Contacts to exist Cybersell AZ advertises for commercial services over the Internet and sues Cybersell FL in AZ for trademark infringement, unfair competition, and fraud. Before the suit, after C. AZ contacted C. FL, C. FL. changed the name on the website but didnt completely get rid of the C. name. C. AZ alleges that the infringing use of a service mark in a home page on the WWW suffices for PJ in the state where the holder of the mark has it PPB because cyberspace is without borders and a web site that advertises is necessarily intended for use on a world-wide basis. C. FL may be subject to PJ in AZ so long as doing so comports with due process. C. AZ concedes no general jurisdiction so the only issue is specific jurisdiction. The court uses a three part test to determine if there can be specific jurisdiction over a nonresident defendant. Non-resident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections The claim must arise out of or result from the defendants forum-related activities Exercise of jurisdiction must be reasonable. Courts analysis of Purposeful availment

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There must be some act by which the D purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws In order to have purposeful availment, D must either take deliberate action within the forum or create continuing obligations to forum residents. D does not need to be physically present or have physical contacts as long as the efforts are purposefully directed toward forum residents To analyze PJ that can be exercised in the context of cyberspace, the court analyzes the degree of interactivity of the website this was PASSIVE homepage Look to the level of interactivity and commercial nature of the exchange of information that occurs on the Wed site to determine if sufficient contacts exist to warrant the exercise of jurisdiction (Zippo) Passive sites include simple access while interactive sites allow users to exchange information with the host computer Internet advertisement alone is never enough to subject the advertiser to jurisdiction in Ps home state. There must be something more to indicate D purposefully directed his activity. Some courts consider the number of hits received by a web page from residents in the forum state Test: The likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet (Zippo) Weston says they are pretty much using the old test, because they don't really know what else to use. Cannot use the effects test in a case like this because that is used with intentional torts where the action is directed at a P causing injury where P lives. The effects test does not apply with the same force to a company as to an individual because a corp does not suffer harm in a particular geographic location in the same sense as an individual does. Weston doesn't really buy this reasoning. In this case, C.Fls contacts are insufficient to establish purposeful availment to meet the first prong of the specific jurisdiction test. The court holds it does not comport w/ traditional notions of fair play & substantial justice (Shoe) for AZ to exercise PJ over an allegedly infringing FL web site advertiser who has no contacts with AZ other than maintaining a home page that is accessible to AZ people. The website was passive so it does not quality as purposeful activity with benefits and protection of AZ. Weston talked about (Bensusan v. King case) a jazz club that used the same name as a local small business in middle America. The case was thrown out when the jazz club sued the small business in a NY court because the info was nothing like the jazz club info. The content negates any showing of purposeful availment. Looking at this from a business specific view, the businesses were nothing alike so there would be no confusion. This is very fact specific.. Cable News Network v. CNNews.com (US Dis. Court for Eastern Dis. Of Vir. 2001) CNN (P) is a Del. Limited Liability Partnership with PPB in GA. It owns the trademark CNN which is registered in the US and many other countries including China. CNNs services area available worldwide via the internet name cnn.com. D operates cnnews.com which provides news and info to Chinese speaking people and it has this name because cn is the abbreviation

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for China. Under anti-cyber squatting, CNN files, in Virginia, an in rem action on the theory that the domain names interferes with CNNs domain name. Brought it in Virginia b/c cnnews.com had registered with a registry in Virginia. The issue is jurisdiction. First the court determines this action meets the ACPA (Anticybersquatting Consumer Protection Act) criteria for an in rem action. (Criteria to maintain such an action: the action must be brought in the jurisdiction where the registrar or registry of the infringing domain name is located and only if in personam jurisdiction does not exist over the registrant.) The issue becomes whether judicial disposition of an absent registrants substantive rights to an infringing domain name in an ACPA in rem action is consistent with due process. The court finds in rem jurisdiction in this case to be constitutional because Verisign is located within this district and has control over the cnnews.com domain name. Definitions of In Rem Actions: Note Rem in Latin means in sight referring to property; Res means thing True In Rem: Arises when a court adjudicates the property rights corresponding to a particular res for every potential rights holder, whether each rights holder is named in the proceeding or not. LAW SPECIFICALLY CALLS FOR THIS ACPA. Ex: The case at bar is true in rem because it involves the rights of a disputed property item (trademark) for every potential right holder Quasi In Rem I: Allocates property rights as against particular named persons Ex: Actions to remove a cloud on a land title or actions seeking quiet title against an individuals claim Quasi In Rem II: Rights of a particular person or persons in a thing, but is distinguished from I claims because the underlying claim in a II matter is unrelated to the res that provides jurisdiction. Ex: Shaffer shareholders derivative action alleging misconduct against a corporations directors and officers was unrelated to the res that established the jurisdiction (stock certificates) Weston likes these summaries of Quasi in rem and how they compare to in personum jurisdiction. She likes the context that this case puts each "in rem" category in, to help distinguish them. The court interprets Shaffer and its minimum contacts analysis to hold only that quasi in rem actions require the same minimum contacts as in personam jurisdiction actions (must satisfy due process as discussed in Shoe). Thus, where the action is properly categorized as a true in rem or quasi in rem I action, there is no requirement that the owner or claimant of the res have minimum contacts with the forum, only need to be located in the forum. This case is a True In Rem action so there is no requirement that the owner or claimant of the res have minimum contacts with the forum, it is enough that the registry is located in the forum. Is the statute here valid? What Maya (D) is saying, is that this is an unconstitutional statute, but court is saying that in rem is ok. Look at the nexus between the registry and the domain name, NOT the registrant and a registrar if registry is in this district, PJ is proper Hy Cite Corporation v. Badbusinessbureau.com (Western Dis. WI 2004) This is the best case to review PJ. This recitation of the law is great for every single answer you need to give in a question of PJ on an exam. (except for the one bad sentence on WW) Hy cite (WI corp) sells cookware. D is BBB.com which allows clients to post complaints about companies. BBB.com is based in West Indies. Consumers had submitted at least 61,000

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complaints to D but only 30-40 complaints were about Hy Cite. Hy Cite contacted BBB.com to try to resolve the issues. BBB.com told Hy Cite they could enroll in the Corporate Customer Advocacy Program from $50,000. No WI company has purchased any ad space, the link to purchase a book was used by only one WI resident. Hy Cite decided not to participate and then P sues D for unfair competition, false advertising, disparagement and trademark infringement in violation of state and federal law. P chooses to bring the suit in WI. D files motion to dismiss for lack of personal jurisdiction. Analysis of the law On a motion to dismiss for lack of PJ, the burden of proof rests on the party asserting jurisdiction. A fed court has PJ over a non-consenting, non-resident defendant to the extent authorized by the law of the state in which that court sits. WI courts require Ps to satisfy the requirements of WIs LA statute as well as the due process clause of the US constitution In this case, assume the LA statute extends as far as the due process clause; not addressing state analysis of LA statute Due Process analysis: (see PJ checklist) PJ and the internet SC has said fed courts should be sensitive to changes in technology, communication and transportation when conducting a PJ analysis (Hanson) Advertising on the internet targets no one in particular and everyone in particular in any given geographic location One attempt at a test: Inset where the court found due process from merely being able to access the Internet. This creates problems because it would allow anyone with a website to be sued anywhere in the world. Another attempt: Zippo where the court concluded that the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet. They set out a sliding scale of website interactivity to determine whether PJ existed. Interactive conducting business versus Passive Clearly = D enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the internet Passive = D simply posted info on the internet which is accessible to foreign jurisdictions. PJ would not be proper. Problems with this test: Not clear why a websites level of interactivity should be determinative for PJ Regardless of how interactive website is, cannot form the basis for personal jurisdiction unless a nexus exists between website and cause of action Court had no need to adopt a specialized test purpose of minimum contacts test was to be flexible so special tests werent needed This court (7th cir. Court of appeals) does not adopt the Zippo test in lieu of the minimum contacts test. The ultimate question remains the same: whether Ds contacts with the state are of such a quality and nature such that it could reasonably expect to be haled into the courts of the forum state stick with Intl

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Shoe test no special test for internet However, the websites interactivity is not irrelevant in deciding whether the exercise of jurisdiction is appropriate. It may help analysis whether D availed itself purposefully of the benefits or privileges of that forum state. Analysis of this case No general jurisdiction P did not meet the burden of establishing the standard test is still Intl Shoe the fact that someone can access their website is not enough would be subject to suit anywhere in the world absurd No specific jurisdiction P did not show how D has made such purposeful availment of the benefits of WIs law that it could reasonably anticipate being haled into court in this state (most of the alleged contacts are only potential contacts, WI never targeted, no transaction ever occurred, and the one book sale does not provide a nexus between the sale and the cause of action etc- However, had the book defamed Hy Cite, that would be a different story) Effects test not satisfied because P fails to allege any facts showing D expressly aimed its activities at WI. Merely identifying Ps PPB is not enough without more to show that the P has suffered the brunt of the injury in the state Holding: P has failed to meets its burden to show specific or general jurisdiction. The case is dismissed for lack of PJ. This case is a good analysis of how to go through an exam: General Intl Shoe, Min. Contacts Specific Minimum contacts + Effects Test (intl torts) Stream of Commerce Highlights just about every case weve gone through These standards we have studied are the same for state and federal courts, thats unlike subject matter jurisdiction the analysis is the constitutional question, the other half is the long arm statute make sure to always address this dont have PJ without the long-arm statute AND constitutional fairness States authority to make someone come into court

The Statutory Component of PJ

State legislatures have the power, within constitutional limits, to confer jurisdiction over foreign defendants via long arm statutes (LA). When analyzing PJ, you must find both a constitutional and statutory basis. While it is unlikely that statute will be unconstitutional on its face, the issue is whether it is unconstitutional as it is applied in the context of a particular case. In every personal jurisdiction case, your job is to 1. Find the long-arm statute and identify it (say the justification) 2. and show that there is a constitutional basis for the PJ

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There are different kinds of LA statutes. The California kind are short and broad and lawyers love this kind (basically says can do whatever the constitution allows). WI has a classic enumerated LA statute that is very specific. 801. 05 WI Statute Governing Personal Jurisdiction (p. 278 280). WIs statute is topical. The first part is general jurisdiction. You must find to see if you fit within this. When looking at the LA statute, first argue that there is a statute that covers the situation and then discuss the constitutional part. No matter what a long-arm statute says, a state can't exercise jurisdiction over a D if it would violates Due Process to do so. DONT FORGET TO TALK ABOUT HOW THIS APPLIES TO STATE COURT. Long-arm statute - Four ways to treat it No statute Statute ok Statute applies but RESULT unconstitutional Hy Cite for example Statute unconstitutional Shaffer for example Gray v. American Radiator & Standard Sanitary Corp. (ILL SC 1961) P was injured when a water heater exploded because of a faulty valve. P sues Titan, a foreign corporation, for negligently constructing the safety valve. Summons was issued and served on the registered agent in Cleveland, Ohio and the corporation appeared specially and filed a motion to quash b/c they argued the tortious act was not committed in IL and therefore this was not covered under the long-arm statute, no PJ. When you are going to file a lawsuit against an out of state defendant, you have to find a statute that exists for this purpose and determine if the statute contemplates who you will sue. (Does the statute apply to this situation) IL statute: 17(1)(b) A non-resident who, either in person or through an agent, commits a tortious act within its State submits to jurisdiction [i.e. there will be jurisdiction over a person who commits a tortious act within the state of Illinois) The reason we talk about what constitutes a tortious act is because we need to find a LA statute that applies. If the LA statute does not cover the activities, then there is no case. The issue is whether the act was committed in ILL, so as to warrant the assertion of PJ by service of summons in Ohio. Only the consequences of the wrong occurred in IL. The court finds that the alleged negligence in manufacturing the valve cannot be separated from the resulting injury, so the tort was committed in ILL. (WW wasnt decided yet) Titan then argues even if the statute applies to confer jurisdiction, it violates the requirement of due process of law. The issue is the extent to which due process permits substituted service where D had no agent or employee in the state of the forum. Whether the type of activity conducted within the state is adequate to satisfy the requirement depends on the facts of a particular case. In deciding what is fair and reasonable, the relevant inquiry is whether D engaged in some act or conduct by which he may be said to have invoked benefits and protections of the law of the forum. Remember, WW, Shoe, and Asahi have not been decided yet Holding: Ds association with this state is sufficient to support the exercise of jurisdiction. 12(1)(b) is construed as providing for jurisdiction under the circumstances shown in this case and the statutes does not violate due process of law

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Kopke v. Hartrodt (WI SC 2001) P (truck driver) injured by pallets when unloading the paper pallets and he becomes a quadriplegic. Italian company Binda loads paper on pallet, LArciere loads the pallets into the containers, they come to WI. Issue is around the way the paper was loaded and positioned and transported. P sues the companies. LArciere moved to dismiss for lack of PJ. Every personal jurisdiction issue requires a two-step inquiry: It must first be determined whether defendants are subject to jurisdiction under Wisconsins long-arm statute If the statutory requirements are satisfied, then the court must consider whether the exercise of jurisdiction comports with due process requirements The inquiry is whether D engaged in conduct described in 801.05(4): Local injury; foreign act. In any action claiming injury to person or property within this state arising out of an act or omission outside this state by the defendant, provided in addition that at the time of the injury, either: (b) Products, materials or things processed, serviced or manufactured by the defendant were used or consumed within this state in the ordinary course of trade. The question is whether the word process means to bring about a physical transformation upon the products, materials, or things themselves or whether process is a broader term. Parties look to dictionary definitions first, and find slightly different definitions in Webster and Random House definitions Statutory construction Give meaning to every word and avoid redundancy The objective of the statute was to expand PJ so a broad definition of process properly reflects the legislative intent in adopting the statute D was engaged in processing under WIs LA statute LArciere also tries to say, per FL statute, that there is no jurisdiction, but the court says they dont care what FL says Since LArciere falls within the grasp of the LA statute, there must be a due process analysis, which presents two inquiries Whether D purposefully established minimum contacts in the forum state. P carries the burden Min. contacts requires Ds conduct and connection with the forum state to be such that he should reasonably anticipate being haled into court there. (BK) There must be some act by which D purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws. Court decides it is appropriate to use the stream of commerce theory in this case. (as set forth by Brennan in Asahi this is the broad definition that does not require any additional actions to find foreseeability) Court decides P met his duty of establishing minimum contacts for the exercise of PJ under a stream of commerce theory. If answer yes to the first question, then consider Ds forum-state contacts in light of other factors to determine whether the assertion of PJ would comport with fair play and substantial justice. D carries the burden. SC has identified factors that are relevant to the analysis of whether PJ is reasonable (Asahi) The forum states interest in adjudicating the dispute The Ps interest in obtaining convenient and effective relief

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The burden on D The interstate judicial systems interest in obtaining the most efficient resolution of controversies Shared interest of the several states in furthering fundamental substantive social policies Using the first three factors for analysis, the court concluded D has not met his burden of making a compelling case that exercise of jurisdiction is unreasonable. PJ is permissible Dissent (Sykes): There is basically nothing to tie LArciere to WI so they could not reasonably anticipate being haled into court here Nothing to suggest purposefully directed any activity toward WI to establish minimum contacts. Thinks due process precludes the assertion of PJ Republic of Panama v. BCCI Holdings (Luxembourg) S.A. (US Court of Appeals 11th Cir. 1997) ***We didnt cover this case any more than what is below. Rule 4 of FedRCP There are certain federal laws that contain a certain amount of statute provisions that have nationwide service of process Federal courts generally allow service of process anywhere in the US Generally speaking, proper service tags personal jurisdiction as long as proper statute long-arm personal jurisdiction is connected to proper service The Re-emergence of Transient Jurisdiction Burnham v. Superior Court of CA (US SC 1990) Scalia, Rehnquist, and Kennedy = when served within the state, no minimum contacts is needed, DP satisfies; White = good rule, so long as the presence in the state is voluntary; Stevens = join in everything except Shaffer opinion part; Brennan, Marshall, Blackmum, OConnor = good rule, but have to do DP analysis This is good law good argument that voluntary physical presence satisfies the test Scalia wrote this opinion but this is not the majority opinion. 4 concur. This case is a divorce action. When a couple separates, the wife moves to CA with the kids and the husband remains in NJ. While they agreed to file for divorce based on irreconcilable differences, husband files on grounds of desertion but wife is never served. She files for divorce in CA and when the husband comes to see the kids after a business trip in CA, he is served. Husband moves to dismiss on grounds that the court lacked PJ because his only contacts with CA were a few short visits to conduct business and visit his kids. Superior court and CA Court of Appeals denied the motion and it goes up to the SC. The SC affirms the action saying the due process clause does not prohibit the CA courts from exercising jurisdiction over petitioner based on in-state service. QP Can PJ exist where a person is served while traveling through a state, for an action unrelated to his activities in that State? No if in the state, even for a short period, can be served and forced to appear. Transient Jurisdiction: Jurisdiction based on physical presence alone constitutes due process because it is one of the continuing traditions of our legal system that define the due process standard of traditional notions of fair play and substantial justice International Shoe confined its minimum contacts requirement to situations in which the defendant is not present in the territory of the forum. Shaffer does not expand this concept at all because Ds were not present in the state. So, when Shaffer says that all assertions of state court jurisdiction must be evaluated

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according to standards set forth in Shoe (fp and sj) it doesnt really mean all doesnt apply to those Ds served in the state. (Dont need to do minimum contacts test here) Also, when Shaffer says that the minimum contacts HAVE to deal with the underlying suit, that doesnt apply here either different standard since the D is not in the territory For new procedures that are unknown right now, Due Process clause requires analysis to determine whether traditional notions of fair play and substantial justice have been offered. But a doctrine of PJ that dates back to the adoption of the 14th Amendment (like this one) and is still generally observed (like this one) unquestionably meets that standard. No need to go into DP. Scalia disagrees with Brennans concurring opinion Scalia says no need to do a subjective assessment of what is fair and just; in fact that goes against the idea of traditional notions dont look at what each justice believes is fair What he creates is a totality of the circumstances test, this is not right White concurring: join I, II-A II-B, and II-C, concur in judgment; this rule is long used and still good, dont strike it down by trying to do a DP argument Brennans concurring: while he concurs with the affirmance of the motion, he says you need to take an independent inquiry into the fairness of the prevailing in state service rule. You can look at historical acceptance, but must look to more what if historical acceptance is no longer good? Tradition must be examined, but it is not dispositive The minimum contacts analysis developed in Shoe represents a far more sensible construct for the exercise of state-court jurisdiction Need to use minimum contacts Historical background of transient jurisdiction is relevant in that if provides a D voluntarily present in a state clear notice that he is subject to suit In this case, there are minimum contacts D formed a voluntary connection with the state so state can have jurisdiction Fairness by purposeful availment into the state and getting benefit from it; AND modern technology does not make it burdensome to have to appear in another states court Stevens concurring: agree with judgment, but dont approve of broad jurisdictional rules like this and in Shaffer Be careful to recognize there is not a majority opinion but in the end, they all agree there is state court jurisdiction over the D Warning for exam: dont just say transient jurisdiction is enough. You say physical presence, just passing through, is likely good enough either because traditionally the law recognized or because the physical presence satisfied the min contact test (then talk about the min contacts) National Equipment Rental v. Szukhent

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III. FINAL CONSIDERATIONS OF PLACE OF TRIAL

Venue
When the question is: Where can I bring a lawsuit? Consider three concepts in this order: 1. What court system has subject matter jurisdiction (state and federal court)? 2. Which states are there courts within the system we have selected that we can consider appropriate? Caveat if we are in federal court is there nationwide service of process? Personal jurisdiction? 3. Where does venue lie? Venue is known as the localizing principle. It tells you which court. It is the term for the final selection point of a place where the trial can be heard in terms of local geography. (If in WI state court, it tells you permissible counties in which you may properly file suit. If in WI federal court, it tells you Eastern v Western district.) Venue rules are statutory. Find the appropriate venue statute, read it, done. If a case is brought in the wrong place, and no objection is made, the defect can be waived. This would be a 12(b) motion so the remedy in the fed rules is a motion to dismiss for lack of venue. However, U.S.C. 1406 provides that if improper venue is asserted as a defense, a court can dismiss or it can simply transfer the case. (If it can be easily corrected by transferring, why make the party re-file?) Different court systems use widely varying factors in determining venue. Be careful when reading the statute to look for words like any D or many etc. Actions concerning land are often restricted to bringing where the land is. The requirement of venue is intended to require that trials be held in a logical and convenient place. Federal venue statute 28 U.S.C. 1391 (venue generally) and 1404 (change of venue) Wis. Venue Stat. 801.50 (page 214 of book)

Transfer (Change of Venue)

When a case is brought in proper court, a party displeased with the forum selection can ask the court to make a discretionary determination to move the suit to another forum. Issue: We have been learning all along that the plaintiff is the master of his or her case but the only exception is Removal with respect to subject matter jurisdiction. The second exception is Transfer. There are two basic options for transfer Those authorized by statute Wis. Stats. 801.52 on page 215 Allows for consideration for inconvenient forum as well Federal transfer statute 28 U.S.C. 1404 on page vii (also see 1631) Those based on the common law doctrine of forum non conveins ***Look at Glannon for the circles also, remember that you must ALWAYS address

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venue for exam: 1. Subject matter a. Diversity b. Federal Question 2. Personal a. Long Arm Statute b. Constitutional DP requirements 3. Venue

Transfer by Statute Hoffman v. Blaski (US SC 1960) This is a patent infringement action brought by Blaski and others, all residents of ILL, against a TX company and Howell for infringing. Filed in Fed court in district in TX. Defendants did not reside, maintain place of business, or infringe the patents in Illinois, the courts of IL lacked venue over the action. Howell (D) brings a motion to transfer to ILL, TX courts transfer it. It is assigned to judge Hoffman in ILL. P moves to vacate the order and send it back. Hoffman orders the case to stay. Case is against Hoffman b/c there was a writ This is not for the sake of convenience so we dont really know why this is going on. This isnt about a defect. This is under 1404 (change of venue). Seventh circuit granted a writ to move the case back to TX. The US SC AFFIRMS jurisdiction NOT proper in IL. Arguing over 1404s phrase where it might have been brought P argues it could not have originally been brought in the new venue The court holds the power of a district court under 1404(a) to transfer an action to another district is made to depend not upon the wish or waiver of the D but, rather, upon whether the transferee district was one in which the action might have been brought by the P Cant allow Ds to bring a suit wherever they like and just waive venue thats ridiculous Rule: this narrows the places for transfer to places where it might have been brought on the first day that the claim was filed. Transfers can only be made to districts where the case could have been originally brought, regardless of whether D now consents to suit in the alternate forum. This is remanded back to TX Dissent by Frankfurter, Harlan, Brennan: They argue the language suggests a broad interpretation. Weston thinks this argument is a huge stretch b/c the words cant really be read in this way. Dissent argues it is about convenience and justice. If not convenient/just for EITHER, then no transfer, but this is what to look at not where P could have originally brought it Transfer case SEE STATUTE Ferens v John Deere (US SC 1990) This is Westons favorite case. Ps use of tactics is described as chuptzah (this kind of gall and applies to someone with an enormous superego) Ferens lost his hand on his farm in Penn in a combine harvester made by Deere and he lets the SOL in Penn lapse before a suit was filed. Deere is spread across the county. In Pennsylvania he brings a contract and warranty claim because Penn. is convenient to him

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and the SOL hadnt run for these claims yet. Then Ferens brings his tort claim in Miss. because Miss. has a 6 year SOL on tort claims. Deere is not trying to dismiss for lack of PJ in Miss. (This is called claim splitting. He filed one suit in Penn and one in Miss.) Miss SOL applies to the tort case in Miss but they get to use Penn substantive law because of Klaxon. The fed court in the exercise of diversity jurisdiction must apply the same choice of law rules that Miss state courts would apply if they were deciding the case. A Miss. court would rule Penn substantive law controls the PJ claim but that Miss.s own law governs the limitation period. Now, the Ferens, after having chosen the fed court in Miss to take advantage of the States limitations period, moved under 1404(a) to transfer the action to the fed court in Penn on the ground that Penn was a more convenient forum. They believed that after the transfer, the choice of law rules in Miss forum (including a rule requiring Miss SOL to apply), would continue to govern the suit. Although it seems counterintuitive that P would want to transfer since P chose the venue in the first place, there is nothing in the statute that prohibits P from transferring. The district court in Penn consolidated the transferred tort action with the pending warranty action but declined to honor Miss. SOL and ruled because the Ferenses moved for transfer as P, the rule in Van Dusen did not apply since P made the motion to transfer and so the 2 year SOL required the tort action to be dismissed. 1404(a) is silent about choice of law. SC looks at rule of Van Dusen: the law applicable to a diversity case does not change upon a transfer initiated by a D. This ensures a more convenient forum but not gaining a tactical advantage by undercutting the tactical advantage of the P when they chose the initial forum There were three reasons for the decision in Van Dusen 1404(a) should not deprive parties of state law advantages that exist absent diversity jurisdiction 1404(a) should not create or multiple opportunities for forum shopping (dont allow Ds to forum shop by changing the choice of law) either way, P already has the option of forum shopping because P chooses where to file the claim the decision to transfer venue under 1404(a) should turn on considerations of convenience and the interest of justice rather than on the possible prejudice resulting from a change of law Courts will, like in Van Dusen, be reluctant to grant transfers if it will harm a party, which will use more resources IMPORTANT 1404(a) is not only for the convenience of the parties, but also for the witnesses, the juries, the courts, etc (JUSTICE) Rule: These policies (listed above) require a transferee forum to apply the law of the transferor court, regardless of who initiates the transfer. (A transfer under 1404(a) does not change the law applicable to a diversity case) The court said the desire to take a punitive view of the Ps actions should not obscure the systemic costs of litigating in an inconvenient place Foresight and judicial economy now seem to favor the simple rule that the law does not change following a transfer of venue under 1404(a) This rule effects the appropriate balance between fairness and simplicity True that this may allow P the choice of law and choice of forum, but no other alternative will produce a more favorable result This doesnt mean the law of Miss. controls the case, it means the SOL of Miss. would have applied and so this transfers (the SOL is the only part of Miss. law that will apply, the case proceeds under Penn. Statutes)

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Dissent by Scalia, joined by Brennan, Marshall, and Blackmun: Apply the law of the state in which the case sits. Cant allow a P to pick an inconvenient forum and then use that states law in another, more convenient forum. Cant allow the P to have his cake and eat it too. In cases where the cost to the court/witnesses/others besides the parties are too great, the court can move sua sponte to have it transferred. Transfer by Forum Non Conveniens The law changes between Gilbert and Piper. **1404 was passed after this case b/c of this case** Gulf Oil Corp. v. Gilbert (US SC 1947) This opinion is written before the transfer statute (1404). The court (dissent) invites congress to tackle the issue. This decision is made under the doctrine of forum non conveniens Does a district court have inherent power to dismiss a suit per nc? P brought this action against D who worked for P and carelessly handled gasoline and Ps warehouse blew up. P brought the action in NY even though everyone, the warehouse, the accident occurred in Virginia. There is SMJ (diversity), PJ, and venue present in NY because D had business in NY as well so P is doing what lawyers are supposed to do. P files in NY and D claims the appropriate location is Virginia by filing a motion to dismiss for forum non conveniens. P unquestionably had the right to do what he did. The D simply does not like Ps choice so D relies on common law doctrine of forum nonconveniens (because there is no 1404 yet). D argues Virginia is more convenient for everyone (witnesses, warehouse location, transportation, etc) The principle of forum non conveniens: a court may resist imposition upon its jurisdiction even when jurisdiction is authorized by the letter of a general venue statute. (this can never apply if there if absence of jurisdiction or mistake of venue) The doctrine leaves to the discretion of the court the decision to change the place of trial Interest of the private interest of the litigant: factors to consider: the relative ease of access to sources of proof availability of compulsory process for attendance of unwilling the cost of obtaining attendance of willing witness (probably most important factor) enforcement of judgment possibility of view of premises Plaintiff may not vex, harass, or oppress the defendant by inflicting upon him expense or trouble not necessary to his own right to pursue his remedy all other practical problems that make trial of a case easy, expenditious and inexpensive (judicial efficiency) The court will weigh the relative advantages and obstacles to fair trial. Unless the balance is strongly in favor of D, the Ps choice of forum should rarely be disturbed. Public interest factors should also be considered Admin difficulties occur when litigation is piled up in congested centers instead of being handled at its origin Jury duty should not be imposed on the people of a community which has no relation to litigation There is reason to hold the trial where the people affected can see it Local interest in having localized controversies decided at home The court asks P to justify his choice and P says because Virginia juries are unaccustomed to dealing with such large amounts of money claimed as damages, but NY people are. Virginia juries will be shocked by the amount. The court finds no basis for this assumption and so convenience and other factors mean Virginia is the correct forum.

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Holding: Even though what the plaintiff did was absolutely correct and we honor the plaintiffs choice of forum, they dismissed the case and the plaintiff will have to re-file in the forum of Virginia. Weston says this might not be fair to the P which is what the Dissent is saying Dissent Black: Neither venue statute or implication says that the federal court can decline to exercise jurisdiction once jurisdiction and venue requirements are met. Policy does not favor courts declining jurisdiction; almost every corporate D would be able to claim a more convenient forum; this is unfair to Ps, in some cases the SOL may run due to filing in the wrong court; also, this will create too much delay. If there is going to be change, Congress should do it. Piper Aircraft Co. v. Reyno (US SC 1981) When this case is decided, there is the transfer statute (1404) but this is before Ferens. Even though they have 1404, they use FNC!!! Plane crash in Scotland and 5 Scottish citizens were killed. The surviving family was also Scottish. The aircraft was manufactured in Penn by Piper and the propellor was made in Ohio by Hertzell and the aircraft was registered in England. This got into a CA probate court because the Ps attorney filed in CA probate court to make the attorneys legal secretary the administratrix which this makes this a CA proceeding so jurisdiction is in CA. First Reyno filed wrongful death actions in CA state court because of the USs strict liability laws. Piper moved to remove to fed court on diversity. It was moved to central district of CA because of a limitation under removal law (can remove a case to the fed court that houses the state court where it was filed). Then they move to transfer under 1404(a) to Penn fed court. Now they file a motion to dismiss on the grounds of forum non conveniens. This sequence is the result of strategic decisions. In the forum non conveniens motion they are asking the court to dismiss because this is not convenient compared to Scotland. The court does not have the power to assign a case to another countrys court system. All they can do is dismiss. The transfer statute only allows transfer in the US court system. Issue is not whether there is another forum in the US where it should be heard, but Ds are arguing it shouldnt be heard in the US at all thats why its under FNC and NOT 1404. Transfer statute is for within the federal system. Forum non conveniens is the common law doctrine and can be outside the federal system (looking for dismissal because the court should not hear it because it does not have the power to transfer the case where it belongs) So use common law now only when trying to get out of US altogether (foreign party) Or, possibly use this is state court depending on if state court has a transfer statute The SC analyzed the case. P is arguing the court is Scotland does not recognize SL so there would be an unfavorable change in law to the P. Gilbert: Central focus of a FNC inquiry is convenience; implicitly recognized that a dismissal may not be barred solely because of the possibility of an unfavorable change in law Look to Gilbert factors Dismissal will occur if the venue chosen by the plaintiff imposes a heavy burden on the defendant and where the plaintiff cannot offer any specific reasons of convenience supporting his choice Rationale: If substantial weight were given to the possibility of change, FNC would become useless. Weston wants us to go back and review procedural history of Merryl Dow. Plaintiffs typically choose the forum for perceived advantages of favorable law so if the possibility of an unfavorable change were a factor in FNC inquiry, then dismissal would rarely be

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proper Courts would have to go into a choice of law analysis, too much! Would have to interpret the laws of other jurisdictions The point of FNC is to help courts NOT have to do this complex analysis Judicial Economy Courts would become extremely attractive to foreign plaintiffs; flood our court system P does not automatically 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 P than that of the present forum. The possibility of a change in substantive law should ordinarily not be given conclusive or even substantial weight in the forum non conveniens inquiry Congress enacted 1404(a) to permit change of venue between federal courts. The statute was not intended to codify the common law of forum non conveniens, it was a revision District courts were given more discretion to transfer under 1404(a) than they had to dismiss on grounds of forum non conveniens The possibility of an unfavorable change in law can be relevant in a forum non conveniens inquiry If the remedy provided by the alternative forum is so clearly inadequate or unsatisfactory that it is no remedy at all, the unfavorable change in law may be given substantial weight But in this case, the remedies provided by the Scottish courts do not fall within this category There is ordinarily a presumption in favor of the plaintiffs choice of forum, which may be overcome only when the private and public interest factors clearly point towards trial in the alternative forum. Applies with less force where P is foreign When the home forum has been chosen, it is reasonable to assume that this choice is convenient Forum non conveniens determinations are committed to the sound discretion of the trial court and may be reversed only where there is a clear abuse of discretion; where balancing of factors is reasonable, court deserves substantial deference The court says this is a case that should be determined in Scotland because Scottish people were killed in a Scottish plane crash and the American lawyer is just trying to take advantage of American law; also Ds have shown evidentiary problems in defending in US. The court is free to grant a dismissal for forum non conveniens even if it works as a disadvantage for P because this is inter-system (not intra-system) Weston says the problem with this is that it doesnt jury trump Ps choice, it kills Ps case. Theme courts are very concerned about administration, case loads, not being overburdened, having their say about what kinds of cases they hear, and reasonable persons could disagree about the opinion Weston also says that because parts of it were manufactured in USA and people from USA are generally in these planes, there is a strong USA interest Dissent by Stevens, joined by Brennan: When the court answered the question (can they deny FNC because of law) in the negative, the inquiry was over. Westons wants us to remember that you can do everything right, and it still won't matter.

The Enforcement of Contractual Forum Selection

Since PJ and venue requirements are waivable, parties may contract to a place of trial in the event of litigation.

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Concerns of voluntariness, generally in contracts between business and consumers or large v small business, should be considered Bremen v. Zapata Off-Shore Co. (US SC 1972) American company contracted with German Corporation to tow a drilling rig by sea from Louisiana to Italy. Forum selection for the London Court of Justice. A dispute arises and the American P filed suit in fed court in Fl. D attempted to enforce the forum selection clause. This court involves a freely negotiated international commercial transaction between a German and an American corporation. Selection of the forum was from a reasonable effort to bring a vital certainty to their international transaction and to provide a neutral forum. Any inconveniences were apparent at the time of contracting. Unless party seeking to escape the contract can show that trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court, there is no basis for concluding that it would be unfair or unreasonable to hold that party to his bargain Carnival Cruise Lines v. Shute (US SC 1991) The Shutes sign up for a cruise from CA to Mexico. On the tour, Mrs. Shute slips and injures her back. When the Shutes return to WA where they purchased the cruise, they sue Carnival in the western district of WA claiming injuries were from Carnivals negligence. Carnival argues the forum selection clause on the ticket requires the case be brought in FL. Shutes argue that they cannot afford to go to FL, so they will be deprived of their day in court. Also, they argue that they didnt get to negotiate as to the forum, it was selected for them. The majority says the Shutes had notice of the forum selection clause because it was on the ticket. (The dissent disagrees saying people couldnt read the clause and never received the clause until already purchased the ticket. (K needs meeting of the minds and that doesnt seem to be here says Weston) This was reasonable, even though it was a form contract they need to limit where they can be sued and it will eliminate confusion on where suit should be brought; by accepting these form contracts, the passenger benefits by reduced fares Majority says this is a business judgment made by Carnival and they cant run the business effectively if they have lawsuits everywhere. If they had to pay to defend lawsuits in other places, the price goes up. (Weston says this doesnt seem right because Carnival does not have the unilateral right to refuse to negotiate, to conceal the clause, and then say the passengers can choose) Weston was offended by this decision. Carnival is a bully. This is not fair. Courts in general like to enforce forum selection clauses. They are good for contracts but you need to be sure the clause is fairly bargained for. Be aware of unequal bargaining powers that can change all discussions of fairness, etc that we have been concerned about in PJ and venue. Look at convenience if totally inconvenient to one part, may be unenforceable; here though, they couldnt show that it was that inconvenient; not in a foreign forum, WA is not better suited since the injury took place in MX; this is not in bad-faith because Carnival has its principal place of business in FL and departs from FL most of the time Dissent Stevens, joined by Marshall: No notice no one really sees this clause; by the time you purchase the ticket, youre bound and cant cancel without losing all your money. This is one sided bargaining and not allowed; this is contrary to public policy b/c it limits the place to bring suit.

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IV. CHOICE OF FEDERAL V STATE COURTS AND CHOICE OF LAW

The Erie Doctrine Swift v. Tyson (US SC 1842) Was standard from 1842 to 1938. We start with this case to know what the law was and what they were thinking Norton received a bill of exchange from Tyson in return for a sale of property. Norton then transferred Tysons bill to Swift and then Tyson refused to pay because Norton did not have title to the land he sold Tyson. Swift sues Tyson, a NY resident, in NY fed courts alleging Tyson dishonored a bill of exchange. D wants the court to apply NY law. If the law were to be decided under the common law of New York State, a pre-existing debt does not constitute, in a general rule, valuable consideration applicable to negotiable interests (i.e. Swift could not collect from Tyson) This is a diversity case. In 1842 the FRCP didnt exist and the law was the RDA (Rules of Decision Act) which is found in the Judiciary Act in section 34 of Title 20. Today you find this in 28 USC 1652 that the laws of the several states, except where the C, treaties, or statutes of the U.S. shall otherwise require or provide, shall be regarded as rules of decision in trials at common law in the Courts of the U.S., in cases where they apply. Laws of the states is interpreted to mean statute and constitutional provisions and not common law of the state. Rule: In fed court, judicial decisions on matters of state law coming from the state courts are not binding. When Fed courts are deciding state law, they are bound to apply state statutory law, but not obligated to apply state common law. Issue What law will control? The law of NY or the commercial law? The substantive law of the case will determine who wins and who loses The parties want them to follow federal general law state law/federal common law Whats really going on is that the US is fairly young and there are economic problems want to establish themselves as commercial partners with Europe court is concerned that the quality and uniformity of the law federal courts want to control the law, therefore follow commercial law The court decides a pre-existing debt does constitute a valuable consideration in the sense of the general rule already stated, as applicable to negotiable instruments. Court decides to apply the general commercial law because common law is not identified as state laws that are statutes promulgated by Legislature. This is a NY contract, so it will be governed by NY law Judicial decisions are not laws, but expressions of what the law is Weston says there are reasons why they do this: Natural law: the notion that man living in a state of nature, still knows that the rules of nature (from god, physics, etc anything). There are laws to which we conform our conduct to live in harmony and therefore the task of the common law judge is to figure them out This gives a national standard of commercial law. This allows the concepts of fairness to be seen in the law. The courts were worried that diversity jurisdiction was scaring international business from operating in the US because of the varying state laws. The US wanted to become a good trading partner so they decided to define state law as narrowly as possible under the RDA. However, this gives judges unbridled discretion to decide how they choose when trying

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to ascertain the ideal right rule on any common law question. This did more to undermine a predictable legal system. It created chaos for almost 100 years. As a result, diversity jurisdiction created an alternative forum so that the outside party did not receive adverse treatment. However, as the law developed where the Feds could decide however they wanted, there were very different outcomes between fed and state (where state courts had to follow precedent) Weston says we end up with chaos and not uniformity Court's agenda was to clear the way to create Federal Common Law. The result is the exact opposite. Judges were allowed, in cases that weren't governed by statute, to decide essentially whatever they thought was right. Erie Railroad Co. v. Tompkins (US SC 1938) same year as the FRCP were passed, but this does the opposite thing no more national understanding of law, must be subservient to the SC of the states! We are being pulled in two different directions T, a citizen of Penn, was walking next to a RR on a dark night and as an Erie train passed, he was hit by something protruding from the train. T claimed Erie was negligent and that he was rightfully on the premises as a licensee because of a commonly used footpath which ran along the tracks. T brought the action in fed court for southern NY which had jurisdiction because the company is a corp of NY. There is no discussion of NY law because the law that applies is federal general law (based on Swift). The D argued Penn law should apply (which would bar recovery since there was no evidence the RR acted willfully or wantonly). Penn law held persons using pathways along rr are trespassers and so rr would not be liable for injuries to undiscovered trespassers resulting from negligence. T denied such a rule existed in Penn and that since there was no statute in Penn, the rrs duty and liability should be determined in fed courts as a matter of general law. The court overturned Swift even though no one argued for this. This is a huge change! The court says the legislative history of the judiciary act (RDA) was misconstrued by the court. Swift was an interpretational error. Law meant court decisions AND statutes! The court recalls the holding of Swift, the problems it caused, and the widespread criticism of it. Extreme forum shopping Black & White Taxicab v. Brown & Yellow Taxicab Co. (DID TALK ABOUT) BY, Kentucky owned, made a deal to have the exclusive privilege of soliciting passengers and baggage transportation from the Nashville RR and thus BW, a competing Kentucky corp, would be prevented from interfering. Because common law of Kentucky would not allow this, BY re-incorporated in Tenn. And the contract with the RR was made in Tenn. The suit was then brought by the Tenn corp in fed court in Kentucky to stop competition from BW. This was allowed as the courts cited Swift. Holmes dissented in BW Taxicab. This becomes one of the reasons for Erie. The benefits expected to flow from the rule in Swift have not accrued bad policy choice The Swift rule never led to uniformity of rules, rather it created multiplicity of rules on recurrent issues. Equal protection problem. Burdens are apparent in that Swift introduced grave discrimination in favor of noncitizens of the state (ie: in state company had to follow state rules but a diverse D could remove to fed court and get new rule if wanted) Also, fed courts dont have the authority to make law in areas in which the fed gov has no delegated powers. But under Swift they were. The Erie Doctrine: Statutory construction Except as matters governed by the

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Federal Constitution or by Acts of Congress, the law to be applied in any case is the law of the State (where the case sits). And whether the law of the State shall be declared by its Legislature in a statute or by its highest court in a decision is not a matter of federal concern. There is no federal general common law. Fed court must look to the body with the authority to make those rules. So when it comes to common law matters not within the fed govs delegated powers, that body is that state (either by statute or judicial decision). Rule: Starting in 1938, Fed Courts deciding matters of state law (sitting in diversity) are bound by state court determinations on the matter of law on those issues (case law counts) So in this case, they applied Penn law. Justice Holmes dissented, said the common law so far as it is enforced in a State whether called a common law or not, is not the common law generally but the law of that State existing by the authority of that State without regard to what it may have been in England or anywhere else Butler concur in holding, dissent in how they got there, joined by McReynolds: They didnt raise this constitutional question, so we should not answer it. The majority would hold 34 of the Judiciary Act UC, making it so that the federal courts answer to the state courts Congress has this power and the court is wrong in changing it. Concur in holding by Reed: Swift is UC, but not the course pursued by the federal courts. Instead, we should read 34 to say that the laws include in their meaning the decisions of the state courts. ***Erie belongs ONLY in Diversity cases under Subject matter jurisdiction What body of substantive law do federal courts use in deciding diversity cases? State law!

Application of Erie Mason v. American Emery Wheel Works (US COA 1st Cir. 1957) The accident occurred in Miss. when an emery wheel exploded while P was using it and P was injured. This is a component part issue. P brings a tort case for personal injuries in RI fed court. In this case, the P was not in privity in the K with the D so D argues according to Miss law, there is no cause of action. Prior to the turn of the last century, tort law was concerned with duty. The relationship between K and tort was that one could control ones duty by containing ones duty to a reasonable circle of people based on who the relationship was with (usually based on K between the parties, even if the action was tort and not a K cause of action) In this case, while Ford Motor Co v. Myers (1928) followed the general rule that a contractor, manufacturer, etc is not liable to third parties who have no contractual relations with him for negligence in the construction, manufacture, etc of articles. The court did not follow this Miss law but rather realized a new general tort law had developed from MacPherson v. Buick Motor and so looked to Miss SC dicta as indicative of their understanding that there was newer law that would better apply and remedy the situation and that they would approve of this change were it presented with a case on point. We have no doubt that when this occasion does come to pass, the Supreme Court of Mississippi will declare itself in agreement with more enlightened and generally accepted modern doctrine. Federal court HAS to apply the law of the state of RI law of the state where the court sits but they want to argue MS because that is where the injury occurred Strictly under Erie, it should have followed the law of MS, the old law that didnt allow

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recovery Where a state court has an outmoded precedent b/c it has not had to decide such an issue in a while: If a court that must apply applicable state law, Erie, the courts job is not to find the most recent state supreme court case on point Its job is to apply the law that it believes the state would apply (Although this decision would not bind the state court if they get to decide on this issue in the future) It is not necessary that a case be explicitly overruled in order to lose its persuasive force as an indication of what the law is through exceptions and erosion over time it might not be persuasive anymore Weston says the problem with this is that this decision was still a substantive law changed as a result of the move to federal court Concur Hartigan: We are not helping district court judges determine how clear dicta must be to prevail over a prior controlling decision. McKenna v. Ortho Pharmaceuticals (US COA 3rd Cir 1980) P suffered from a stroke, etc because of the ingestion of birth control. P brought this suit for negligence, misrepresentation, and products liability against Ortho who made the birth control she ingested. P sued in Penn state court. Ortho had the suit removed to fed district court in Pittsburgh, OH. At the end of the trial, the district court granted Orthos motion for a directed verdict on grounds that the action was barred by Ohios SOL. (It is not disputed that all of the significant events occurred in Ohio so that the cause of action arose in Ohio.) Although Penn courts ordinarily apply the SOL of the forum state (Penn), the Penn borrowing statute meant that the court needed to apply Ohios SOL (where the action arose); if barred in the state the action occurred in, then its barred in Penn. The issue is what is the SOL rule in Ohio and whose law is used to determine when the SOL starts running? The Penn court has to look to Ohio to decide the time period for the SOL and also when it begins to run. They need to determine what the pertinent Ohio law is and then determine how to apply it to this controversy. The problem of ascertainment arises when the highest court has not yet authoritatively addressed the critical issue. The court must predict how the states (Ohio) highest court would decide the issue were it confronted with the problem. To make a prediction, use all relevant sources of that states law in order to isolate those factors that would inform its decision. It is important that the prediction is not a recitation of previously decided cases. Relevant state precedents must be scrutinized with an eye toward broad policies that informed those adjudications and to the doctrinal trends which they evince. Rule: a federal court attempting to forecast state law must consider relevant state precedents, analogous decisions, considered dicta, scholarly works, and any other reliable data tending convincingly to show how the highest court in the state would decide the issue at hand. (consider trends in that specific area of law) A federal court must be sensitive to the doctrinal trends of the state whose law it applies and the policies which inform the prior adjudications by the state courts. A diversity litigant should not be drawn to the federal forum by the prospect of a more favorable outcome than he could expect in the state courts, but neither should he be penalized for his choice of the federal court by being deprived of the flexibility that a state court could reasonably be expected to show. Analysis in this case:

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Tippy v. Wyler holds cause of action begins when patient doctor relationship ends, not at the discovery of the injury. The court invites the legislature to change this is they want to. Ohio curts have used the termination of treatment for a long time dont adopt the discovery of injury rule The legislature makes no change Melnyk revisits the question in the surgical context and applies the discovery rule with the limitation to a very narrow set of facts legislature did not react to this, so the court will adopt it Holding: a fair scrutiny of the relevant Ohio precedents, with an eye toward the principles and policies underlying them, strongly indicates the Ohio SC would extend the discovery rule set forth in Melnyk to include the type of PI action here. So the applicable SOL in this case was tolled until the McKennas knew, or by reasonable diligence should have known, the cause of her injuries. Dissent Higginbotham: Melnyk does not overrule Wyler, it carved out a very specific exception for when something is left inside a patient.

Certification
Certain states have statutes that provide for different methods for resolving question of federal law. Read the statute carefully; it will indicate which courts (Fed COA/ Other State SC/ US SC) can certify questions. DONT CERTIFY THE CASE, certify the question. When states choose to adopt a certification statute, other courts trying to decide how the state would resolve the question can send the question to the state SC. The state SC has the option but not the duty to accept the question and answer it. If the state SC chooses to accept it, the state SC will decide how to resolve the question of law. They do not decide the case. They simply tell the certifying court how to apply/interpret the law 821.01 Wis. Stats. Power to answer; 821.02 Method of Invoking; 821.03 Contents of certification order; 821.08 Power to Certify; 821.11 Construction; (all found on page 257-258) Weston says this is problematic b/c normally you decide issues in the context of a case this influences the outcome asking the court to decide something much more abstractly than the case usually evolves. Plastics Engineering Co v. Liberty Mutual Insurance Co. (US COA 7th Cir 2008) Liberty appeals determination of defense and indemnity obligations with respect to asbestos lawsuits against Plenco; Plenco also appeals. Three questions certified to C.A. What constitutes an occurrence in an insurance contract when exposure injuries are sustained by numerous individuals, at varying geographical locations over many years Whether 631.43(1) applies to successive insurance policies Whether Wisconsin courts would adopt an all sums or pro rata allocation approach to determining liability when an injury spans multiple, successive insurance policies WI law permits the WI SC to consider and respond to certified question of state law, provided the questions may be determinative of the causepending in the certifying court and as to which there is no controlling precedent in the decisions of the supreme court and the court of appeals of WI A case is appropriate for certification where it concerns a matter of vital public concern, where the issue will likely recur in other cases, where resolution of the question to be certified is outcome determinative of the case, and where the state SC

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has yet to have an opportunity to illuminate a clear path on the issue True that they will take into consideration that the moving party chose the forum, but that is not determinative If the outcome of a case is largely fact-dependent, and the facts are particularized to the case, resolution of the issues by a court may have limited precedential value; thus certification to a state SC may be inappropriate. Typically, but not always, this is true of Ks Where resolution of contract questions by a states highest court will be useful beyond the parameters of the instant dispute, and the other criteria for certification are met, certification is appropriate In this case, certification is appropriate b/c standardized language that undoubtedly appears in other insurance Ks governed by WI law all three of the above Deweerth v. Baldinger (US COA 2nd Cir 1994) Famous oil painting stolen from a castle in Germany. The painting resurfaced in another location many years later and then years after that a family member finds it and wants it back. DeWeerth commenced a diversity action to recover the painting from the good faith purchaser, Baldinger. The Second Cir COA found that NY law required DeWeerth to show reasonable diligence in locating the stolen property and that she failed to make such a showing. A few years after this ruling, the same issue arose in an unrelated case in NY state court. The highest state court in NY held that the showing of reasonable diligence was not required. It stated the state had a policy of favoring owners over bona fide purchasers DeWeerth returned to fed court and wanted her judgment vacated. DeWeerth would have prevailed in her case had she originally brought her suit in NY state courts. Rule: Fed courts sitting in diversity are bound to follow state law on any matter of substantive law not governed by the Fed C or by Acts of Congress. Fed courts must predict how the state court would decide the issue. Federal courts following state law does not mean that a subsequent change in state law will provide grounds for relief. As long as the court did their best in attempting to predict how the state court would decide the issue, the judgment stands. Value in Finality right or wrong, a case is over when there is a final decision, and you cannot continue to open judgments because the law changes this would be worse for the system than mis-predicting. It is important people can rely on the final judgment. Only if there are extraordinary circumstances that would justify the reopening of the case but not here. Holding: DeWeerth cannot re-open her case. Dissent Owen: The purpose of Erie is so that federal cases are handled roughly the same as state cases; here, in state court the SOL would not have expired, but the feds said it did this is bad. This is an extraordinary case, she should be allowed to re-open in light of the new state law. Erie and the Substance v. Procedure Distinction Before FRCP were adopted, there were two procedures and two courts, law and equity. FRCP collapsed them into one form of action: a civil action. Erie requires fed courts to apply judicial law, not just statutes. Erie was a substantive case. Erie applies to question of substantive law, for other questions, FRCP can apply. Erie becomes very difficult to apply when it is hard to determine if the issue is substantive or procedural

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Guaranty Trust Co. v. York (US SC 1945) A class action is brought on behalf of non-accepting note holders for an alleged breach of trust by Guaranty in that it failed to protects the interests of the note holders in assenting to the exchange offer and failed to disclose its self-interest when sponsoring the offer. This was brought in fed court on diversity. This case is dealing with the struggle between the separation of law and equity. The issue was whether a fed diversity court must apply the state SOL to a claim or whether it was free to apply its own more flexible laches doctrine to the case. Distinguishing issue is that statute of limitations are legislative and are generally proscribed to control Common law actions (i.e. Courts of Law) and there were not statutes of limitations in Equity, there was the Doctrine of Laches (the idea that the appropriate amount of time in which a case can be brought is really made in a case by case basis.) The question becomes: Whether a statute concerns merely the manner and the means by which a right to recover, as recognized by the State, is enforced, or whether such statutory limitation is a matter of substance in the aspect that alone is relevant to our problem, namely does it significantly affect the results of a litigation for a fed court to disregard a law of a State that would be controlling in an action upon the same claim by the same parties in state court? The intent of Erie was to insure that, in all cases where a fed court is exercising jurisdiction solely because of the diversity of citizenship of the parties, the outcome of the litigation in the fed court should be substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a State court. Do not want fed courts to disregard state law in diversity cases This is important to federalism A statute that would completely bar recovery in a suit if brought in a state court bears on a state-created right vitally and not merely formally or negligibly. When consequences intimately affect recovery or non-recovery, a fed court in a diversity case should follow state law. Diversity jurisdiction is to ensure nonresident litigants courts free of local bias, not to provide them another body of law. The operation of a double system on conflicting laws in the same state is plainly hostile to the reign of law. The court refuses to classify SOL as either procedural or substantive. Some things can be classified as both. Statute of limitations are an expression of the nature of the right that you have been granted and an appropriate length of time before your right to recover goes away. This is an expression of policy by the state. Therefore it can be substantive as well as procedural. Instead, the court adopts an outcome determinative test. Outcome Determinative Test: The outcome should be decided the same in state and fed court. Does it significantly affect the result of a litigation for a federal court to disregard a law of a State that would be controlling in an action upon the same claim by the same parties in a State court? The intent of that decision was to insure that in all cases where a fed court is exercising jurisdiction solely because of diversity of citizenship of the parties, the outcome of the litigation in the federal court should be substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a State court. Would the result of applying fed law in the diversity case actually give a different outcome then if this case had been litigated under state law in state court? If yes, then apply state law. In this case, the court held that the SOL statute must be applied, in order to implement the policy of Erie since the claim was barred under that statute but might have been allowed to proceed under the federal laches doctrine. Glannon: Where Erie commanded follow state tort law because there can be no other

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law (meaning Congress had no C authority to create rules of tort law), York pronounced follow state law, even where there can be federal law, if it will further the policy of uniform outcomes in state and federal court in diversity cases. Dissent: All we should look at is whether the SOL has run thats it. Byrd v. Blue Ridge Rural Electric ( US SC 1958) Byrd is NC resident in SC - was working for a SC company. He is part of a contract. He was injured on the job in SC and sues in fed district court based on diversity. SC has a workers comp statute stating the rights and remedies granted exclude all other rights and remedies so he can only get workers comp. This is a workers comp case set up under state law and resolved by an administrative determinative. If unhappy, then appeal at state court level. So in this case, there would be no jury because the trial court judge is basically hearing an appeal. The Erie issue is whether the judge or the jury should determine Ps status as an employee of the D. State law left the question to the judge, but the practice in federal court was to send such issues to the jury. Analysis Reaffirms Erie and York First, fed courts must follow state law if fed court has no power to create a separate fed law. Then, if Eries constitutional analysis does not require the fed court to follow state law, following York, fed courts should follow state practice of form and mode (rather than substantive) if ignoring them would substantially affect the outcome of the litigation (apply outcome determinative state law even on procedural issues as to which there is a fed constitutional authority to make its own rule) This court recognizes a broader policy to the effect that the fed courts should conform as near as may be, in the absence of other considerations, to state rules even of form and mode where the state rules may bear substantially on the question whether the litigation would come out one way in fed court and another in state court if the fed court failed to apply a particular local rule. But, there are affirmative countervailing considerations to think about. The fed system is an independent system for administering justice to litigants who properly invoke its jurisdiction. An essential characteristic of that system is the manner in which, in civil common-law actions, it distributes trial functions between judge and jury and, under the 7th Amendment influence, assigns the decisions of disputed questions of fact to the jury. The policy of uniform enforcement of state-created rights and obligations cannot in every case exact compliance with a state rule which disrupts the fed system of allocating functions between judge and jury. In deciding whether to follow state law in matters of form and mode (matters when fed courts follow state law as a matter of policy not constitutional command), the fed court must consider not only the York policy of uniform outcomes in diversity cases, but also countervailing fed policies that arise from the fed courts status as an independent judicial system. Holding: in these circumstances, the fed court should not follow the state law. The court does not think the likelihood of a different result is so strong as to require the federal practice of jury determination of disputed factual issues to yield to the state rule in the interest of uniformity of outcome. The C right to jury trial under the 7th A to the C was implicated in making the choice between judge and jury. The importance of that right in the administration of fed court meant that the Erie policy of maximizing uniformity should yield to the federal policy. Further, cant show that the outcome would be very different with a jury in state court

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than with the judge in federal court! Rule: There is a countervailing consideration that needs to be considered before applying the outcome determinative test. Ask if there is some stronger federal policy that will be implicated if we dont use federal law. Ex: the right to a jury trial in the fed court is a strong policy because of the 7th Amendment. Erie and the Federal Rules Hanna v. Plumer (US SC 1965 (FRCP 4(d)(1) v Mass. Stat. for service upon executor) The petitioner, Ohio citizen, is in a car accident in SC and files a complaint in district court for the district of Mass but the person is dead. Brings the diversity suit against the estate and when she serves the copies of the complaint, they are left with the executors wife, Mass citizen, in compliance with fed rules for service of process but not with the state rules. The respondent, executor, files a defense saying the service of process was insufficient because it didnt comply with state law of service by in hand delivery. There are two big decisions in this opinion Hanna part 1: This test applies where the conflicting federal practice is not embodied in a rule or statute. This is to be used for situations like Byrd, not like the facts of this case! This is dicta. The court develops a modified outcome determinative test to apply when deciding between an un-codified federal judicial practice and state law Twin aims test: when determining if something is outcome determinative, it must be viewed in light of the twin aims of Erie (Weston says you cant really distinguish between these two aims) Discouragement of forum-shopping Avoidance of inequitable administration of the laws Modified Outcome Determinative Test: In an unguided Erie case, unrelated to the Federal statutes or the constitution, the Erie question becomes 1. [York] is the application of state versus federal law Outcome determinative? 2. And if so, how does it square with the two aims of Erie to prevent (1) forum shopping and (2) avoidance of inequitable administration of the laws. Glannon: inequitable administration may be found where using the federal approach instead of the state rule would open up a significant difference in litigation opportunity. 3. [Byrd] Then, if state law prevails, is there a strong countervailing federal policy? Applied to this case: the application of state law may be outcome determinative, but the court cannot imagine that someone would choose federal court over state court based on the method of service because it is so insignificant (i.e. leaving at the house versus handing to the homeowner). Therefore there is no argument to use the State court rule in Federal Court under this test We begin to see that courts believe that the selection of a forum is viewed as evil and unfair Hanna part 2: Apply this test when a FRCP DIRECTLY conflicts with state law regarding procedure Rule: When there is a conflict between Federal and State law, the Federal will always win if it is constitutional. Is it arguably procedural? The supremacy clause says the federal rules trump state rules REA enact in 1934 and is still in effect. REA authorizes the SC to prescribe general rules

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of practice and procedure for the federal courts. Pursuant to this authority, an advisory committee appointed by the SC drafted the Fed Rules. They were promulgated by SC and submitted to Congress for review before taking effect. So there is both constitutional and statutory authority for the adoption of the Fed Rules The court in Hanna held that Article III and the N&P clause provide broad constitutional authority to make rules governing the practice and pleading in fed courts, which in turn includes a power to regulate matters which, though falling within the uncertain area between substance and procedure, are rationally capable of classification as either. This language suggests that Congress and the Court have broad constitutional authority to promulgate any rule that is arguably procedural. The first section of the REA also provides broad statutory authority to promulgate general rules of practice and procedure This suggests that in the REA, Congress has granted the SC authority to adopt any Fed Rule that is arguably procedural. It is hard to invalidate one of these rules because the Court would have to conclude that the Advisory Committee, the SC, and Congress had all erred in their judgment that the rule could validly be applied in fed court. Note: a federal rule has yet to be found unconstitutional but it came close in regards to medical examination, so it could happen Does it impinge on substantive rights? The second section of the REA provides that such rules shall not abridge, enlarge or modify any substantive right. This brings back the substantive v. procedural distinction Glannon: this will be very infrequent. It will have to have a substantial impact on a state policy unrelated to litigation to be declared invalid It must be more than an incidental impact on substantive rights If a rule impinges on the substantive rights, it is invalid. Holding: Rule 4(d) is arguably procedural in nature, therefore it is a valid enactment under the constitution and therefore, because it is in conflict with the state law, the Federal rule will be applied over the state law. Concur by Harlan: State rule will always prevail; even if there is conflicting federal rules. Walker v. Armco Steel (US SC 1980) (No direct conflict between FRCP 3 and state law for service) Petitioner was a carpenter injured when pounding a nail in 1975 and filed a complaint in Ok fed court based on diversity and the summons was issued on Aug. 19, 1977, but the service didnt happen until Dec. 1, 1977 (but there was no reason why after SOL ran for state law). The issue was whether the P had to file suit or serve process on D within the limitations period. State Law: Does not deem an action commenced for purposes of the statute of limitations until the service of summons on the defendant Federal Law: Rule 3 of FRCP governs the manner in which the action is commenced in federal court for all purposes, including tolling of the statute of limitations SO, served properly under Federal but NOT state rules What has changed since Ragan? The Hannah decision Analysis This situation does not fall into the Hanna analysis Hanna analysis requires a direct collision between the FRCP and the state law. Is the scope of the FRCP sufficiently broad to control the issue before the Court? If yes, apply Hanna.

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There is no direct collision in this case (although Weston thinks there was). Therefore, since there is no Federal Rule which covers the point in dispute, Erie commands the enforcement of state law. This court finds that Rule 3 governs the date from which various timing requirements of the Fed Rules begins to run, but does not affect state SOL. Rule 3 is not intended to govern when the limitations period is tolled. It only provides the point for calculating various time requirements under the Federal Rules. The OK statute is a statement of a substantive decision by that state that actual service on, and accordingly actual notice by, the defendant is an integral part of the several policies served by the SOL. It is the policy aspects which make the service requirement an integral part of the statute of limitations Rule 3 and OK Stat can exist side by side, each controlling their own intended sphere of coverage without conflict Weston says that York is the closest to this case Because Hanna analysis does not apply, must apply Erie The court notes that while failure to apply the state service law might not create any problem with forum shopping, the result would be an inequitable administration of the law Analysis: Is the scope of the Fed. Rules sufficiently broad to control the issue before the court? Yes? Use Hannah No? Use Erie and Ragan Erie and Federal Statutes Stewart Organization v. Ricoh Corp. (US SC 1988) this is NOT under the FRCP, the prior two were, Hannah and Walker Like Hannah, but condensed Is it a federal statute? If yes, then it applies it will displace state law Two parties had signed a forum selection clause for a choice of venue (Manhattan). When plaintiff filed suit in Alabama, the defendant moved to enforce the forum selection clause and move the trial to the New York District Court. Alabama law holds that choice of venue clauses are unenforceable. The court says there are steps for this analysis Is the Federal Statute sufficiently broad to control the issue? Walker Typically rely on flexible and individualized analysis in the statute Intent of Congress The presence of a forum selection clause that parties entered into is a significant factor in balancing case-specific factors for deciding when to transfer As between two choices in a single field of operation, the instructions of Congress are supreme In this case, 1404 (change of venue) covers the point in dispute and is in dispute with the forum-selection clause in the K The federal system is meant to look at a number of factors, which the state rule does not federal rule is meant to be flexible, the state rule takes this away The two rules cannot exist side by side If yes, is the statute a valid exercise of Congress authority under the constitution? Hannah Federal rule should be classified as procedural and not substantive to remain constitutional Article III Necessary and Proper clause defines scope of Congressional power

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Federal Rules Enabling Act allows Congress to pass the FRCP this is how we know if its procedural Then, a district court sitting in diversity must apply a federal statute that controls the issue before the court and that represents a valid exercise of Congress constitutional powers. Supremacy clause says Federal trumps State, if federal is constitutional The SC upheld application of 28 USC 1404. The court found a state practice refusing to enforce forum selection clauses in conflict with 1404 (which calls from case-by-case discretion in deciding when to transfer a case). Since the question of which federal court should hear a particular case is arguably procedural, Congress had the power to enact 1404. Since 1404 was valid, it applies in fed court even if the state court would apply a different rule. Weston says this is a policy decision Kenney concur: These clauses are good and should be encouraged in state courts. Scalia dissents: Look to the present and the future. This is about contract validity and that belongs to the states! This contract dispute is NOT within 1404. Instead, it belongs as one of the factors, look at convenience and whether it is binding or not. We need to strive to have the same results in state and federal court that would be Congress intent after all. All the court is doing is promoting forum shopping. The court is creating common law in an area that they have no power to do so increases forum shopping and increases in justice, which is what Erie was supposed to avoid. Modern Erie and the Supreme Court Gasperini v. Center for Humanities (US SC 1996) (This is the most modern application of the Modified Outcome Determinative Test) Photographer took pictures while in S. America, gave 300 of them to a company to use in a video and they lost them. The company agrees they are liable. The case is in NY fed court because of diversity jurisdiction. Fighting over damages. A witness testified for each lost slide, the publishing community valued each slide at $1,500. This would give him $450,000. The jury awards him $450,000 and the company doesnt like this so they appeal. First look at NY Precedent Before 1986 law of NY had been the same as the Federal Standards for responding to excessiveness attacks on jury verdicts: the court would not disturb the award unless it shocked the conscience In 1986 a series of tort reforms occurred in NY, one of which was CPLR 5501(c) which requires a deviates materially from reasonable compensation standard for review of settlements. This is a more strict test. This is stricter than shocks the conscience more surveillance, which the legislatures stated was the purpose. Federal court precedent = shocks the conscience Question: in a case where NY law governs the claim for relief, does NY law also supply the test for fed-court review of the size of the verdict? This is substantive and procedural. So ask if federal courts can give effect to the substantive thrust of 5501(c) without altering the federal scheme for the trial and decision of civil cases Analysis under Hanna I: Would not using the state law promote injustice or forum shopping?!?!? NY law 5501 contains a procedural instruction but the states objective is substantive. (goal is the same as a damage cap and damage cap is clearly substantive law). If fed

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courts ignore the change in the NY standard and persist in applying the shock the conscience test, substantial variations between state and federal money judgments can be expected. So this implicates Eries twin aims. YES! If we dont use NY cap, then the award in Federal court will be larger than in state court! Looking at Byrd. In this case, there is a strong federal policy implicated: the 7th Amendment The 7th Amendment only applies to Fed court proceedings, not state court While Byrd involved the 7th Amendments first clause dealing with trial by jury, this case deals with the 7th Amendments second re-examination clause. Nothing in the 7th Amendment stops trial judges from granting new trials for any of the reasons for which new trials have been granted. Juries are really important in American law and in fed courts the 7th amendment says there should be a very limited review of jury decisions. Applying NY law implicates the values of the jury trial. Byrd shows the right to a jury is strong policy. While appellate review of a fed trial courts denial of a motion to set aside a jurys verdict as excessive is newer, the court in the case approves this and says nothing precludes appellate review of the trial judges denial of a motion to set aside a jury verdict as excessive Appellate review is a control necessary and proper to the fair administration of justice, and belongs to the federal courts Ginsburg finds NYs dominant interest can be respected without disrupting the federal system. Holding: The appellate court is able to review the lower courts application of the NY state law based on an abuse of discretion standard (federal standard), but requiring the Trial Court to re-apply the state law of deviating materially to the damages from the jury (NY law). Dissenting Opinions Stevens: agrees with the majority but would affirm the decision of the court of appeals; no need to send it back. He says this has nothing to do with the 7th amendment and the reexamination clause never permitted review of jury awards jury verdicts not supported by law can obviously be reviewed; all the judge did was review the excessive award, it did not review any fact found by the jury. NY law shouldnt be classified as substantive, this is not different from a damage cap so Erie says it should be classified as such. Basically, forget the 7th and look at Erie same result, just different analysis. Scalia: This offends the 7th amendment re-examination clause. This is all about the 7th amendment and they go back to the rules of civ pro. Rule 59 direct collision with NY law. So direct collision and you have to apply that fed law (Hanna part II test).

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V. JOINDER
Joinder addresses the issues of when multiple claims and/or parties may be combined within a single lawsuit. Remember FRCP authorize various procedural devices, they do not give the court power to hear a case it otherwise would not have. (see Rule 82) Rules on multiples claims = 13 (counterclaims and cross claims), 14 (third party claims), 18 (joinder of claims). Procedural rules are 19, 20, 22, and 24 23 for class actions. The proper use of joinder in any case involves a two part analysis Is there an authorizing device that was properly used Is there jurisdiction Who may be a party: FRCP 20: Permissive Joinder of Parties (persons may be joined together as Ps or Ds) Rule 18 and 20 set the basics to use when deciding who to bring in. Joinder Has Two Topics: Joining Claims (18) and Joining Parties (19 and 20)

Part of mastering the joinder rules includes being able to sort between: 1) an indisputable right of a litigant or putative litigant 2) a possibility, subject to the courts exercise of discretion, and 3) application of the courts discretion to re-sculpt a suit by consolidating or separating claims, or even dismissing parties

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Adding Claims Made by Parties Already in a Suit Against Parties Already in the Suit: Counterclaims: when the D or one of the Ds responds to the lawsuit not simply by saying you alleged this and I disagree/agree but that I also have a claim against you there are two categories of counterclaims: compulsory (if you are going to bring a claim, this is the time you have to do it because we wont allow you to bring the claim later) and permissive (basically says the claims are unrelated enough that we wont make you bring them now if you dont want to) Important for: Determining the consequences of failing to bring a counterclaim, and Helping to determine whether jurisdiction over the counterclaim is present REMEMBER! Just because you can join, doesnt mean the court has jurisdiction over it!!! Sparrow v. Mazda American Credit (E.D. CA 2005) P alleges D violated state and fed law by engaging in abusive practices in its attempts to collect a debt from P. P filed in Superior Court in CA (FED Court because FDCPA is a federal law). D answered the complaint and filed three state law counterclaims (none of which qualify for SMJ) against P to collect the alleged underlying debt. P now moves to dismiss Ds counterclaims for lack of SMJ under 12(b)(1). P argues Ds counterclaims are not compulsory so this court does not have Supp J over them. Looking at jurisdiction While there was original jurisdiction over Ps claims under FDCPA which was created by federal law, original jurisdiction does not exist over Ds state-law counterclaims. Diversity does not work because the minimum amount in controversy doesnt exist. So the only basis for jurisdiction over Ds counterclaims is Supp J under 1367 P moves to dismiss Ds counterclaims for lack of SMJ saying SJ is improper. The nonmoving party bears the burden to establish that SMJ exists Types of Counterclaims Compulsory: the 9th circuit applies a logical relationship test to determine whether a counterclaim is compulsory. The court analyzes whether the essential facts of the various claims are so logically connected that considerations of judicial economy and fairness dictate that all the issues be resolved in one lawsuit. SUPP J WILL ALWAYS EXIST

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The traditional rule is that federal courts have Supp J over compulsory counterclaims, since a P would otherwise lose his opportunity to be heard on that claim Permissive: all claims that are not compulsory are permissive. Before 1990, the general rule was that federal courts did not have jurisdiction over permissive counterclaims absent an independent basis for federal SMJ When 1367(a) is passed and is derived from Gibbs and says that fed courts have Supp J over a state law claim that comprises but one constitutional case The 1367(a) test for Supp J is broader than the test for compulsory counterclaims, so counterclaims that are compulsory under the same transaction or occurrence test automatically pass the 1367(a) same article III case or controversy test. The problem arises when looking at permissive claims Supp J and counterclaim Ds counterclaims are not compulsory (so Supp J doesnt exist on this basis) because: The issues raised by the FDCPA claim (abusive, deceptive debt collection practices) are distinct from the counterclaim (K issues) The evidence needed to support each claim differs The claims are not related on a transactional level Ds counterclaims are therefore permissive SUPP J MAY EXIST But the rule that fed courts do not have jurisdiction over permissive counterclaims changed with the passage of 1367 because 1367(a) is broader than 13(a) language Once we know the counterclaims are permissive, ask whether Supp J over the counterclaims exists under 1367(a) (the case or controversy test NOT transaction or occurence) The counterclaim must be so related to the claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the USC. SJ under 1367(a) does exist over Ds permissive counterclaims because they bear a logical and factual relationship to Ps claim in that they are related to a single debt incurred by P Even if there is Supp J over the permissive counterclaims, should the court decline to exercise jurisdiction under any of the 1367 factors (here, 1367(c) which provides that a district court may decline to exercise SJ in one of four situations (see rule)): In this case, 1367 (c)(4) applies. There are strong policy reasons in favor of declining to exercise jurisdiction Allowing a debt collector to bring an action for the underlying debt in a case brought under the FDCPA may deter litigants from pursuing their rights under the statute. A major purpose of the FDCPA is to protect individuals from unfair debt collections practices regardless of whether the individual actually owes a debt The court declines to exercise SJ over Ds state law claims to enforce the debt Note: if court had found it was compulsory, it still would have found Supp J but then still could have declined to exercise SJ based on discretion under (c) Crossclaims Claim against a co-party already in the suit (someone on the same side of v. as you) Ex: A,B,C v. X,Y,Z ABC are all co parties with respect to each other XYZ are all co-parties with respect to each other This is much closer to 13(a) than 13(b) (so there is the suggestion that maybe you cant bring an unrelated claim against a co-party) crossclaims are not compulsory so a party cannot lose the right to assert such a crossclaim as a separate lawsuit

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-If a cross claimant sues the person who crossed claimed against him, THAT is a counterclaim!!! Kirkcaldy v. Richmond County Board of Education (DC of NC 2002) Kirkcaldy was a secretary at a school and filed a lawsuit against the Board and Smith, her supervisor for claims of hostile work environment, IIED, NIED, etc. Smith answered and brought a crossclaim against the Superintendent of the School System and Board members alleging under 1983 that his due process rights were violated. Before this lawsuit, P complained about him. School took action against him. They invoked a process and at the conclusion, they determined D was culpable and they terminated him. P brings a claim and sues school board and D. D asserts a cross claim under 13(g) saying you violated my rights because you deprived me of my property (job) without due process. Smiths present cross-claim filed pursuant to 1983 claims that the school defendants violated his due process rights by denying him a fair hearing prior to his dismissal. The School Ds have filed a motion to dismiss asserting the dismissal of Smiths crossclaim is proper pursuant to Rule 12(b)(6) for failure to state a claim and 12(b)(1) for lack of SMJ No question that the counter claim could be filed in Federal Court since it arises under federal law! But, can he file it in this lawsuit??? NO! SMJ as to Smiths crossclaim against the Board When a co-D asserts a crossclaim against a co-D, the co-Ds crossclaim must meet the Rule 13(g) requirements (arising out of the transaction or occurrence) This court decides that the 4th Cir. definition of transaction or occurrence in Rule 13(a) is directly relevant to the definition of the same term in Rule 13(g) To determine if a cross-claim arose out of the same transaction or occurrence as the complaint, conduct the following inquiries (Painter) **guidelines, dont need to find each one** Are the issues of fact and law raised in the complaint and crossclaim largely the same In this case, Smith section 1983 claim against the Board does not involve the same questions of fact and law as Kirkcaldys harassment claims (see analysis on page 317) different periods of time and different legal theories This suggests Ks and Smiths claims are not part of the same transaction or occurrence Will substantially the same evidence support or refute the complaint as well as the crossclaim In this case, there is a lack of evidentiary overlap This suggests Ks and Smiths claims are not part of the same transaction or occurrence Is there any logical relationship between the complaint and the crossclaim If this inquiry is satisfied, the crossclaims may still be part of the same transaction or occurrence This inquiry is not satisfied, there is a weak logical relationship the claims will focus on different relationships Could cause potential confusion if a fact-finder has to hear both Dont want to take away from Ps case In this case, the court decides Smiths claims against the school board are not part of the same transaction and occurrence as Kirkcaldys claims so Rule 13(g) is not met In this case, there was not a proper counterclaim under 13(g) so the court never gets to talk about jurisdiction.

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Adding Parties to a Suit: Permissive Joinder ****For help see Moores Federal Practice 14.02 NOTE the person who brings in another is the third party P the person brought in is the third party D Can now add additional claims under Rule 20 Derivative Liability = theory of recovery where your ability to recover against someone is contingent upon that person having an obligation to someone else Indemnification is mostly contractual Contribution is saying someone else is partially at fault and so they should be allocated some responsibility Warranty is more similar to idemnification Third Party Claims (Impleader) grounds for adding a Third-party are more restrictive than for asserting a counter or crossclaim because this could allow other parties besides the original P to change the landscape of the lawsuit this is like saying If I am responsible to P, then you are responsible to me. it is okay to bring someone in when it is based on the theory of indemnification, subrogation or shared liability insurance companies are good examples of indemnification (not responsible to pay me unless and until I am sued and then ask for the money) it is not okay to bring someone in by saying it isnt my fault, its his (this would just be a defense and would disagree with the claim in your answer) Maxfour Engineers and Architects v. Arb, Inc (CO Dis. Ct. 2006) This is indemnification saying they are also at fault by contract P is a construction contractor suing ARB for two counts: breach of K from failure to pay its suppliers and employees and breach of K for failure to adequately supervise (that ARB failed to supervise 3rd party D Western who was ARBs supplier). ARB filed a 3rd party complaint against Western (3rd party D). Western moved to dismiss bc it claimed that two different contracts, different acts, and different remedies were involved, so it was not properly joined. Matters not in dispute: D/3rd party P can bring in a 3rd party D on the theory that D is or may be liable to 3rd party P for all or part of the 3rd parties claims against the P. And since these would be based on the same core set of facts, a court having SMJ over the primary dispute will have jurisdiction over the dispute between the 3rd party P and D The court says ARBs claims fall within Rule 14(a) because P specifically cites ARBs failure to properly manage the performance and schedule of 3rd party D as one of the grounds for its suit against ARB. To the extent that bad performance by 3rd party D exposes ARB to liability to the P, ARBs suit against 3rd party D is based on that bad performance. The claim against Western derived from and is dependent on the resolution of P v D claim. The fact that the third party D is not subject to the primacy claims asserted by P

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doesnt matter. ARB has sufficiently stated a claim for contribution or indemnification under the terms of the contract because the terms of the contract do not expressly limit Westerns indemnification obligation to physical injuries. CA law will give effect to the parties contractual indemnification provisions. So the case is not dismissed Frazier v. Harley Davidson Motor Company, Inc (US DC for W. Dis. Of Penn 1985) P injured on a motorcycle and sued Harley regarding crashworthiness (not whether the accident would have occurred but that the way the bike was built exacerbated the injuries). P had been hit by McCormick. He has part of his leg amputated. He argues his injuries would not have been as bad had the motorcycle been more crashworthy. McCormick is now deceased. The potential party is McCormicks estate. Although he could sue McCormick, he doesnt for tactical reasons. It is Ps choice on who to sue! Harley maintains the Ps injuries were caused solely by the negligence of McCormick and so they file a complaint to join McCormicks estate so if Harley is found liable they can demand indemnification contribution from 3rd party D. P files a motion to strike because he doesnt want McCormick in this suit. Says the third party joinder is improper. In order to satisfy Rule 14(a), any liability of a third party D would necessarily be secondary or derivative to the liability of the original D. Harley first argues it is solely McCormicks fault but this is not a basis for third party complaints because D cant make a claim when D is saying he is not liable at all, its this other person. (he can only do this as a defense, but cant bring the party into court) Then Harley says Ms negligence was a substantial factor in the injuries. This is not allowed either because Rule 14 is predicated on the notion that there is joint liability between original D and the third party. D does not show any facts that support a finding that Harley and M were joint tortfeasors or that the liability is derivative. So the joinder is improper under Rule 14(a) The proposed joinder is also improper under Penn law. Penn law defines joint tortfeasors as two or more persons jointly or severally liable in tort for the same injury to persons or property In this case, the court says liability for failing to construct a crashworthy vehicle (product liability) is separate and distinct from the issue of liability for negligent driving. There are two completely different theories. So the court holds Harleys joinder is improper because: It does not comply with Rule 14(a) of FRCP because Ms liability is not derivative Whether the vehicle is crashworthy is completely distinct of the liability of McCormick for hitting him Harleys and Ms alleged tortious acts are distinct occurrences that have no basis for joinder under Penn Law Different evidence to prove them; different theory for which the claim is based NOTE purpose of joinder rule is to cut down on cost and time this case clearly doesnt do that Note: once you have A v. B and B brings in C under Rule 14, can B bring non-rule 14 claims

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against C? Well, Rule 14 must be based on a demand for reimbursement, but Probably because it is more efficient but it probably must be about the same thing (this is essentially like under rule 18) BUT, cannot add under 1367 if doing so would destroy diversity jurisdiction! Adding Parties to a Suit: Required Joinder VERY LIMITED

Rule 19 is used basically when the lawsuit is not telling the whole story and there is need for other parties in the case so the case can be properly resolved. MUST bring other parties into the case or case cant go on This allows someone other than the P to take over the scope of the lawsuit. Therefore Rule 19 has very specific criteria. Rule 19(a) requires a two step analysis: (1) Who is a necessary party/does the situation require joinder and (2) if it does, is it feasible/is there a problem so that they cant be joined in this lawsuit? Joinder may not be feasible if the court doesnt have jurisdiction (SMJ or PJ). Keweenaw Bay Indian Community v. State of Michigan (6th Cir. 1993) Chippewa Indian Community sued to protect and preserve the lake trout fishery, given to them in a treaty, and named three groups as defendants: State of Michigan, Michigan NRC, DNR & the director; five individual members of the Red Cliff Band of Chippewa Indians and three members of the Bad River Band. NOTE, the bands are other tribe members that are not in the home waters they want to fish in Communities waters. Both tribes had approached Community to gain permission and subsequently signed a bilateral agreement authorizing themselves to fish in the MI waters. Community ONLY filed against individual members of the two bands and DID NOT file against the tribes the individual members filed a motion to dismiss for failing to join necessary parties the tribes. Question is whether the tribes are necessary parties and whether they can be joined Community filed a three-count complaint. State filed a counterclaim against the Community, Red Cliff, and Bad River bands themselves. Both bands filed motions to dismiss under 12(b)(7) and under Rule 19 District court focused on Rule 19. In this case, because the resource (fish) is finite, then it is meaningful to bring in all parties involved District Court Analysis: Are the Bands Necessary Parties? Rule 19(a) Both bands were necessary parties under either prong (1)Absent bands have an interest in fishing rights under the treaty and could continue to fish in the MI waters (2)Had a protected interest in the fishing resource would be impaired or impeded by a judgment in this case Further, the disposition absent the bands would leave the State defendants subject to the risk of incurring multiple or inconsistent obligations Are the Parties Indispensable? Rule 19(b) Bands could not be joined because of tribal sovereign immunity (that is why tribe originally went

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after individual) Weighing the four factors in (b), court concluded that the bands were indispensable Analysis: Rule of Required Joinder: Step 1: The court must first determine whether a person is necessary to the action and should be joined if possible. Rule 19(a) sets forth the analysis If the court finds that the absent person or entity falls within either of the two provisions, then the party to be joined is feasible Step 2: If there is personal jurisdiction, then the party shall be joined. If there is no personal jurisdiction then the party cannot be properly before the court (or venue) There is not jurisdiction b/c of the sovereign immunity without partys consent, dont have to appear/respond and cant enforce a judgment against them Step 3: If there is no jurisdiction, then you must determine whether the court may proceed without the party, or if the party is indispensable. (basically under the first part of the rule circumstances indicate the parties should be brought in, but under the second half of the rule we see they cant be brought in. so look at 19(b) to see if the court should make some accommodation or just dismiss the case) Rule 19(b) Four Factors Remember: Rules are not to be applied in a rigid manner and instead should be governed by the practicalities of the individual case Here, have to dismiss cant do a complete adjudication b/c they cant be brought in Is meaningful relief possible?!?! If yes, dont need to dismiss necessarily PURPOSE OF THE JOINDER RULE preserve the right of parties to make known their interests and legal theories Application of Rule to the Case: District court did not abuse its discretion in determining that the absent bands were necessary parties under Rule 19(a) P maintains that the Original Treaty needs to be reviewed Act is either constitutional or unconstitutional however the language of Rule 19 forecloses this type of analysis: Finding that a party is necessary is predicated only on that party having a claim to an interestcourts job to protect that interest Joinder rule is to be applied so as to preserve the right of parties to make known their interests and legal theories sovereign immunity and right to have legal duties determined Because of sovereign immunity, bands cannot be joined Districts analysis of indispensability is correct NOTE not called indispensable anymore called feasible/not feasible Factors: Absent prejudice existing parties Could you reshape/restructure without them Judgment useful even though not there Denied all relief or not Examples of Rule 19: Party that used a standard contract with multiple parties: The company did something so that in case #1 the customer said that there was a violation of the contract and then simultaneously a salesperson sued saying that they were entitled to a commission for the deal that was made regarding the customer; finally Company was arguing as the defendant under Rule 19 to bring the people together. Majority of students said that this was rule 19 and there would be an issue of double damages

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Because it is NOT double damages if you harm two separate people these are TWO separate claims! Just because the claims arose from one contract is meaningless Case Example: A Shopping mall entered into a lease with a tenant and they were a jewelry store and in the lease that there would only be one jewelry store in the mall. Mall then entered into a lease with a store that sold jewelry among other things. Landlord wanted to bring in the second tenant bc he might be sued by the second client if they had to throw them out. Court said if you are stupid enough to enter into two separate inconsistent agreements, then that is your fault this does not fall under Rule 19. Inconsistent obligations referred to in the rule, means going forward, that you want competing claims resolved together if you can but cannot be a defense and the fact that you might owe someone else is irrelevant if in fact you owe damages to two different people. Contrast Rule 19 (required joinder) and Rule 20 (permissive joinder) Rule 20 is about the choice of the litigants while Rule 19 allows courts to impose joinder on you if you dont join someone who is needed in the suit Rule 20 policy considerations: Economical and efficient to get together Strategically some people may want multiple lawsuits or lawyers might not want to work together

Adding New Parties at their initiative rather than being brought in by existing parties Intervention Authorizes an absent party who learns of an action to become a party to the litigation No one is ever required to intervene so no direct right is lost by choosing not to join an existing lawsuit. However, just like with Rule 13(a) and (b), there is an intervention of right (absolute) and permissive intervention (discretionary). Factors to consider when applying to intervene under 24(a): Americans United For Separation of Church and State v. City of Grand Rapids, Defendant v. Chabad House of Western Michigan, Intervenor-Appellant (1990) For the past 6 years, City has allowed Chabad House to erect a menorah in Calder Plaza, a publicly owned area, for the Jewish holiday of 8 days in December. This year on Nov 13, a suit was filed against the city challenging this action as a violation of the 1st amendment and sought an injunction to stop the menorah from being displayed. 6 days before the Jewish holiday was to begin, the judge granted an injunction against the city. When Chabad learned the city might not appeal, it sought to intervene. The judge scheduled a hearing for the motion to intervene for after the Jewish holiday and therefore essentially denied any meaningful judicial review.

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Chabad appealed what is called a denial of its right to intervene. The court held Chabad could intervene under Rule 24(a) Motion is timely; claims an interest relating to the property/transaction (he owns the menorah) AND so situated that disposition of the action may as a practical matter impair or impeded his ability to protect that interest not being adequately represented by City. Chabad meets these requirements to qualify for intervention (the court finds a decision not to appeal by an original party to the action can constitute inadequate representation of another partys interest Note: Amicus v intervenor Amicus: not a party but given permission to supplement the record by expressing their point of view Intervenor: a party to the case so they can do discovery, present witnesses, etc

Factors to consider when applying for permissive intervention under 24(b): Earth Island Institute v. Baker, National Fisheries Institute, Inc, applicant for intervention (1992) Ps have filed this lawsuit to compel the gov to implement fed statute 1537 (prevent people from using techonogoy that may adversely affect sea turtles). National Fisheres Insitute wants to intervene under 24(a)(2) or (b)(2) because their members will be directly affect by the implementation of the statute. The court just analyzes Rule 24(b)(2) and finds that permissive intervention is appropriate motion is timely, interest relating to the property/transaction, without it may impair/impeded ability to protect interest, and not adequately represented by others. A court may grant permissive joinder only if three conditions are met The party must show an independent ground for jurisdiction The motion must be timely The partys claim must have a question of law and fact in common Satisfying these criteria does not automatically entitle an applicant to intervene. Rule 24(b) gives discretion to the court to determine the fairest and most efficient method of handling the case. Consider whether the intervention will unduly delay the adjudication of the case, and whether the movants interest are adequately represented by existing parties. In this case, NFI can intervene filed less than 1 month after complaint; no undue delay; knowledge that will help the case along (industry standards for example); strong economic stake that govt cant adequately protect Weston says this is a bad teaching case b/c its weak on the facts strategic choice to allow them to join b/c of their knowledge of industry standards and what not Interpleader This is a joinder device available in the limited circumstance when a P or D may be exposed to multiple or inconsistent liability. This allows all claimants to be joined in a single action allow stakeholder to resolve competing claims in the same action, there including multiple claims to a single fund and the total claims exceed the value of the fund.

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28 U.S.C. 1335 provides a jurisdictional statute authorizing interpleader actions in diversity cases that authorizes jurisdiction in cases with less than complete diversity and only $500 in dispute. However, it is not necessary to rely on statutory interpleader if jurisdictional requirements are otherwise satisfied. Ex: Cases involving a big accident with multiple parties and a limited amount of insurance. Try to get everyone together in an interpleader action. The claims can be considered adverse because there are limited funds to satisfy a lot of peoples claims. Sothebys Inc v. Sandra H. Garcia and the Republic Philippines (1992) Garcia lent Marcos $1 million and as collateral Marcos gave a piece of artwork to Garcia. Garcia took the artwork to Sothebys. Then the Philippines tells Sothebys that they are the true owner of the paintings. Garcia appeared at Sothebys and wanted her paintings back. Now Sothebys has a problem because they will get sued no matter who they give it to. Garcia brings an action against Sothebys in Virginia for conversion after Sotheby refused to return the paintings. Sothebys moved to stay the action pending disposition of the instant action or to transfer the action to NY. Sothebys did not want the Virginia action to continue because the Philippines could not be made a party to that action so Sothebys would be at risk of conflicting judgments. Garcia opposed the motion to stay and wanted Sothebys to join the Phillipines in the Virginia action; argued that the claims against Sotheby were not realy claims b/c they were against Marcos and NOT Sotheby. In SUM Sotheby is in a bad place bailee to Marcos (holding it for him), but being demanded by Philippines to give it to them BUT Philippines have sovereign immunity Garcia urges dismissal for lack of SMJ over the interpleader action involving the Philippines as a foreign state. In order to maintain an interpleader action, the stakeholder must be subject to multiple adverse claims against a single fund or liability The purpose of the action is to protect the stakeholder from the vexation of multiple lawsuits and from the possibility of multiple liability that could result from inconsistent determinations in different courts. The availability of the interpleader remedy is not dependent on the merits of the claim asserted against the stakeholder. The mere threat of future litigation is a sufficient basis for interpleader. The party need only have a good faith concern about duplicitous litigation and multiple liability if it responds to the requests of certain claimants and not to others. Here, the letter from the Philippines claiming the paintings is enough when there are two competing lawsuits, usually the first suit should have priority absent the showing of balance of convenience or special circumstances giving priority to the second. This decision lies in the discretion of the judge. In this case, there is a sufficient claim to the paintings to justify Sothebys filing of the interpleader. And here there are special circumstances to warrant giving priority to the later filed suit. The Virginia action does not include the Phil. and they are not amenable to suit there. If Garcia succeeds in the Virginia action, the Phil would be left without a means to satisfy an ultimate judgment in its favor. An interpleader is proper here. The proceeding with the interpleader action filed in NY is best.

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ALSO, helps people who wouldnt otherwise be able to make a claim join Class Actions

MUST HAVE BOTH (a) AND (b)!!! Class Action Requirements: 23(a) Numerosity Common questions of law or fact Typicality of claims or defenses Finding that the representative parties will fairly and adequately protect the interests of the class Classes: 23(b) POSSIBLE to be more than one 2 and 3 are common damages and injunctive relief 1 most infrequent proper if actions by or against individual members of the class would result in inconsistent or varying adjudications with respect to individual class members which would establish incompatible standards of conduct for the part opposing the class, OR where separate actions would be dispositive of the interests of other members not parties to the adjudications (D has limited funds to satisfy the claims of many Ps) D is at substantial risk of incompatible duties, non-party interests are likely to be impaired 2 appropriate when a party opposing a class has acted or refuses to act in the same manner to a definable group and the class seeks declaratory or injunctive relief 3 situations where the questions of law or fact shared by group members predominate over other issues, and the device would be fairest and most efficient way to resolve the controversy Look at rule for the factors to consider Class actions are a joinder device. There were major changes to the rule in 2005. Perceptions about class actions: Often the remedies for the class are seen as meager and the attorneys fees as outrageously high. Historically, class action lawyers were seen as heros. They were doing 2b actions for civil rights cases for injunctive relief. Class actions are similar to Rule 20 but there are some dramatic differences: certification, mandatory judicial review, approval of settlement, attorneys appointed. These extra procedures are appropriate because the rights of a lot of people not directly involved in the suit are directly affected. Rule 20 presumes the individual P is consciously making a decision to sue someone, participate, etc and we believe in P autonomy. Class action suits are different because it allows a group to come forward and assert they are representative of others similarly situated. The problem is, they dont know the other people similarly situated so we dont really know what is appropriate for them. This is why we have the extra procedures. As a class representative, you have the duty to represent the entire class Difference between Rule 20 and Class Actions is based on the number of plaintiffs- and there is no rule per se, but it is unusual to see a class action with anything less than 20 40 plaintiffs Rule 20 allows you as plaintiffs to join together to sue the same defendant but you have a different lawyer representing you.

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Modern Class Actions have been the object of tort-reformers because the lawyers make a huge amount of money, and the actual plaintiffs are left with little to no money i.e. suing people so that greedy lawyers can get rich Policy Justification: Arguably serve a valuable social service by enabling people to bring litigation to recover what would be only a small amount for them, but on large scale has cost consumers $$$$. Cannot interest lawyer in taking the individual claim because the return is so small so it may represent judicial economy for the courts; but more meaningfully it provides civil litigation as a remedy for people who otherwise could not avail themselves of the lawsuit. Make sure before beginning a class action problem that there is JURISDICTION Romberio individually and on behalf of all others similarly situated v. Unumprovident (COA 6th Cir. 2009) This is a claim over insurance policies; claim is breach of fiduciary duty. There are 7 Ps, 7 class actions previously. In 2003 the cases were consolidated (this has nothing to do with Rule 23. This was done by panel for MDL makes sense to bring a bunch of cases together. This is for consolidation for discovery. If they are settled, then the cases are dispersed back to the courts they were brought in). In this case, when the 7 cases would be sent back, it asked to be certified as a class action under 23(b)(2). The district court certified the class. P allege Unum devised and implemented a corporate wide scheme to illegally deny or terminate the long term disability claims, in violation of ERISA. Ps allege Unum engaged in 9 different practices. The court describes each persons individual disability/problem (page 331-332). Definition of the Class per Ps All plan participants and beneficiaries insured under ERISA goverened long term disability insurance policies/plans issued by D and the insuring subsidiaries of D throughout the US who have had long-term disability claim denied, terminated or suspended on or after June 30, 1999 by D or one or more of its insuring subsidiaries after being subjected to any of the practices alleged in the Complaint. The court says certification was improper Must do a vigorous analysis of Rule 23(a) four factors; and 23(b) three categories Here, they are moving under 23(b)(2) D argues no typicality under 23(a)(2), and no cohesiveness under 23(b)(2) That a uniform scheme is alleged, does not mean that a class is easily identified or that a class action is necessarily appropriate. In this case, need breach and cause harm. The class definition is not good The Ps challenge a group of loosely defined practices that were not applied uniformly to a discrete, easily defined class of individuals This is why this isnt like Forbush there, only three mathematical equations were used, so dividing into subgroups was possible A class limited to those persons whose benefits were denied or terminated would necessarily include many individuals whose claims were properly denied for medical reasons. The definition did little to distinguish between the set of individuals whose claims were properly denied for valid medical reasons and the set of individuals whose claims were improperly denied for profit-driven reasons. The only way to distinguish would be to engage in individualized fact finding to make this class definition unsatisfactory. There is also a problem with typicality Typicality: there must be some connection between the merits of each individual

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claim and the conduct affecting the class. Without this connection, there is no basis upon which to fashion class-wide relief. Where a class definition encompasses many individuals who have no claim at all to the relief requested or where there are defenses unique to the individual claims of the class members, it cannot be said that a class member who proves his own claim would necessarily prove the claims of other class members In this case, just because Ps may have been subject to some or all of Unums alleged wrongful practices does not eliminate the need for an individualized assessment as to the ultimate propriety of the benefits decisions affecting each class member Is it necessary to do individualized fact finding?!? If YES, no CERT! Here, even though they may have all been subjected to it, doesnt mean the court is free from doing individualized fact finding The class also does not satisfy requirements for certification under Rule 23(b)(2) Rule 23(b)(2) is referred to as a mandatory class action because class members do not have the automatic right to notice or a right to opt out of the class MUST be cohesive The defining characteristic of a mandatory class is the homogeneity of the interests of the members of the class When individualized determinations are needed, there is no homogeneity Amchem products, Inc v. George Windsor et al. (US SC 1997) Asbestos industry had a ton of building materials caused particles to sit in the lungs latent illness causes cancer. Expectation of 200k cases by 2000 and 265k cases by 2010. The asbestos manufacturers were going bankrupt because of the number and amount of cases. Huge numbers of people have suffered in occupational and environmentally induced injury Procedure: Judiciary appoints a study committee that makes recommendations to congress saying that they needed an Administrative process for dealing with these claims (Congress did not respond). Federal Court authorizes the use of Multi-District Litigation (MDL) appoint judge and divert all pending cases to that judge but this is just for pretrial proceedings (Advantage is keeping discovery costs down ($$ saver)). Lawyers for Plaintiffs and Defendants then work to come up with a settlement but defendants refuse to agree to the deal unless they can come up with a mechanism to settle all of the cases including those that arise later (future cases). File complaint, answer, description of the class and settlement agreement all on the same day with the understanding this is settling and not going to trial. Settlement was troubling because it attempted to bind future litigants that hadnt even filed yet; it also limited the type of diseases that could be covered for the diseases it did cover it gave a range of what could be compensated; it also eliminated some claims that would have been permitted if not a class action. District Court certifies the class; case gets appealed. COA reverses and is appealed to the Supreme Court. NOTE: This is under the old rule, so there isnt as much guidance for courts in settlements Issue: The legitimacy under Rule 23 of a class-action certification sought to achieve global settlement of current and future asbestos-related claims Explanation of law First, the claim must satisfy all four threshold requirements Numerosity Commonality Typicality Adequacy of representation

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Then, the parties seeking certification must show that the action is maintainable under Rule 23(b)(1),(2),or (3) (1) This takes cases where the party is obliged by law to treat the members of the class alike or where the party must treat all alike as a matter of practical necessity ex for b1a: utility work towards customers, gov imposing tax, riparian owner using water as against downriver owners ex for b1b: limited fund cases (2) civil rights cases or class-based discrimination (3) these are class actions for damages designed to secure judgments binding all class members save those who affirmatively elected to be excluded to qualify for certification under 23(b)(3) there are two requirements common questions must predominate over any questions affecting only individual members class resolution must be superior to other available methods for the fair and efficient adjudication of the controversy look to the factors set forth in the rule this is meant for situation where the rights of groups of people who individually would be without effective strength to bring their opponents into court at all Achieve economies of time, effort, and expense, and promote uniformity about other undesirable results Under 23(c)(2) must give proper notice to opt out the court decides that settlement is relevant to a class certification while the court doesnt have to consider if the case would present intractable management problems if the case is going to settlement, other things are still relevant (those things designed to protect absentees by blocking unwarranted or overbroad class definitions) Holding: Stricter review is needed when certifying a class for settlement. MUST first meet (a) and (b), and THEN look at (e); dont get to ignore (a) and (b) just because its a settlement. Even if 23(a)s commonality requirement may be satisfied by that shared experience that they all had been exposed to asbestos products, the predominance criterion in 23(b)(3) is far more demanding they were exposed to diff products in diff amounts at diff times with diff injuries (an overarching dispute about health consequences of asbestos exposure cannot satisfy the Rule 23(b)(3) predominance standard) Also doesnt satisfy 23(a)(4)s requirement that the named parties will fairly and adequately protect the interests of the class diverse medical conditions do not have the same interests Should have made sub classes at the very least They really only satisfy the numerosity requirement. No Class Action allowed Cts cant litigate injuries that havent occurred yet probably not enough notice, but dont have to decide this today It is too complex to manage in the traditional ways that judges are supposed to make decisions, and not want to cheapen the process and allowing it and compromising a ton for mere convenience Class Action Fairness Act of 2005: An Analysis Now allows easier removal by Ds! Relieve state courts of their massive overload of class actions Effective Date: applies to class action filed on or after Friday, Feb 18, 2005. This means originally filed, cannot have been filed and then removed to federal court after Feb. 18,

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2005. Amends both the diversity statute (1332) and the removal laws (1441) to provide for federal jurisdiction, at the election of either P or D, over class action that do not satisfy the traditional complete diversity and amount-in-controversy requirements. Diversity: The new law establishes federal jurisdiction over any action in which any one member of the class (named or not) has diverse citizenship from any one D, and where the aggregate amount in controversy exceeds $5 million. SO, can now aggregate AND dont have to have complete diversity. This means many cases that formerly could not be brought in federal court are not subject to federal jurisdiction They CAN do this because the complete diversity and amount in controversy is STATUTORY technically, it doesnt exist under the Constitution. Removal: incorporates the standard removal requirements and procedures set forth in 1441 and 1446 with a couple of important exceptions that expand the possibility of removal Now, an act may be removed without regard to whether any D is a citizen of the state in which the action is brought. Also, any D can remove without the consent of the other Ds A removal petition may be filed within 30 days of the 1st pleading or paper filed in any state-court class action from which a D can ascertain that the action falls within the scope of fed jur under new 28 USC 1332(d); so, even if more than a year since filed, it is ok COA may accept an appeal of an order either granting or denying a motion to remand, if an application for permission to appeal is filed within 7 days of the order. Used to NOT be able to review. Exceptions: Intended to keep the following cases out of fed court Class actions that involve both class members and Ds who mostly are citizens of the forum state Class actions against state gov Ds Class actions with fewer than 100 class members Shareholder class actions or derivative suits based on state corp law For details see page 348-349 Class action definition: any civil action filed under rule 23 of the FRCP or similar state statue or rule of judicial procedure authorizing an action to be brought by one or more persons as a class action It also defines a mass action and says a mass action will be deemed a class action any civil action other than a class action in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the Ps claims involve common questions of law and facts such as joinder/consolidation claims Mass Action Limitations: Jurisdiction only over those individual claimants whose claims meet the $75,000 requirement No jurisdiction over mass actions involving an event or occurrence that took place within the forum state and caused injury in that state and contiguous states No jurisdiction if formed by Ds motion for joinder Does not include a mass action if it includes private attorney general actions Does not include actions that are consolidated for pretrial purposes only Effect on Jurisdiction if Class not Certified The district court will retain jurisdiction over an action brought in or removed to fed court under the Act even after it denied class certification Any individual claims of the names class representatives would remain to be decided by the fed court after a denial of class certification, even if there would have been no

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arguable basis for fed jur over them if they had originally been filed as part of a non-class action P can remove to state court if they would prefer their case heard there Settlement provisions ONLY for class actions filed under Rule 23, or removed to federal court: New coupon settlement rules on their overall fairness and the award of attorneys fees in coupon settlements: page 350-351; really no change from existing law Coupon settlement = class get coupons and attorneys get cash Now a court may approve a settlement in which class members incur out of pocket losses to compensate class counsel only if the court makes a written finding that non-monetary benefits to the class member substantially outweigh the monetary loss Provisions on notification to fed and state officials, such as the Attorney General of the United States See page 352 for specifics Miscellaneous provisions on page 352 Provisions that were NOT enacted! Right to appeal is not a guarantee its a possibility only Allowing Ps to remove only Ds can remove Article on the results of these rules Dramatic increase in the number of diversity class actions filed as original proceedings in the fed courts Wal-Mart v. Dukes (2011) US SC Betty Dukes, a Wal-Mart "greeter" at a Pittsburg, Calif., store, and five other women filed a classaction lawsuit in which they alleged that the company's nationwide policies resulted in lower pay for women than men in comparable positions and longer wait for management promotions than men. The certified class, which in 2001 was estimated to comprise more than 1.5 million women, includes all women employed by Wal-Mart nationwide at any time after December 26, 1998, making this the largest class action lawsuit in U.S. history. Wal-Mart has argued that the court should require employees to file on an individual basis, contending that class actions of this size formed under Rule 23(b) of the federal rules of civil procedure are inherently unmanageable and unduly costly. The U.S. Court of Appeals for the Ninth Circuit has three times upheld the class certification. Can the small group of women who began the case represent a gigantic class of women? Wal-Mart argues typicality in (a) is not met (not cohesive), and (b)(2) is not met Shady Grove v. Allstate Insurance (2010) US SC Opinion joined by all only for Parts I and II-A; joined by 5 for II-B and II-D; joined by 4 for II-C NY law prohibits class actions in suits seeking penalties or statutory minimum damages; does this preclude a federal district court sitting in diversity from entertaining a class action under Rule 23? Shady Grove gave treatment to Galvez for injuries; she signed over her insurance benefits by Allstate Insurance; Allstate did not pay within 30 days and has refused to pay statutory interest that accrued on the overdue benefits (2% per month not paid) Shady Grove filed in District Court claiming Allstate routinely refuses to pay interest on overdue benefits diversity District court dismissed because: Did not meet amount in controversy (only about $500) NY law precludes a suit to recover a penalty from proceedings as a class action statutory interest is a penalty they said Court of appeals affirmed stating that Rule 23 and NY law address different issues so they do not conflict and the NY law applies under Erie for courts sitting in diversity Discussion:

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Class actions must meet Rule 23 (a) and be in one of (b)s categories; the NY law has requirements for maintaining a class action therefore these rules are in conflict and Rule 23 must govern and it alone decides whether a class action may be maintained, meaning that a P may bring it in federal court; this is proven by Congress making exceptions to Rule 23 in other situations A state cannot limit Rule 23s permission to bring a class action by structuring one part of its statute to track Rule 23 and enacting another part that imposes additional requirements MAY be possible for a state to limit the remedies, but thats not an issue here the NY law doesnt set a ceiling on damages but instead prevents the class actions it covers from coming into existence at all, but thats up to Rule 23 A state statute cannot limit Rule 23 by limiting a Ps power to maintain a class action Will not look at the intent of the state legislatures whether they intended this to limit remedies/damages or not look at the text and what it does This NY law invalidates Rule 23 to the extent that it conflicts with the substantive policies of the NY law not allowed Because Rule 23 regulates procedure the judicial process for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for disregard or infraction of them, and does not alter the rules of decision by which the court will adjudicate those rights, Rule 23 is within Congress power All Rule 23 does is alter how the claims are processed allows federal court to adjudicate claims of multiple parties at once The concurrence is trying to overturn precedent, Sibbach, by stating that the state law is procedural and not preempted so long as it is so bound up with or sufficiently intertwined with a substantive state-law right or remedy that it defines the scope of that substantive right or remedy but that is not the test to look at look at whether the laws conflict and if they do, whether the Federal Law is procedural. Concur by Stevens: Must look at whether the state law actually is part of a States framework of substantive rights or remedies federal rule cannot govern a particular case in which the rule would displace a state law that is procedural in the ordinary use of the term but is so intertwined with a state right or remedy that it functions to define the scope of the state-created right The NY law here doesnt do that though. Dissent by Ginsburg, joined by Kennedy, Breyer, and Alito: Must interpret federal rules with sensitivity to important state interests avoid conflict with important state regulatory policies. The purpose of the NY law limiting a Ds liability in a single lawsuit in order to prevent the exorbitant inflation of penalties, remedies the NY legislature created with individual suits in mind. All the NY law is doing is limiting possible remedies/damages, they can do that! Remedies are up to the state legislatures procedure is up to the Federal Rules. These rules do not conflict.

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VI. PRECLUSION
Preclusion is the common law doctrine concerning fairness. There is a connection between fairness and repose (restful state). We like to have claims at rest/decisions final. GENERALLY final judgment on a claim precludes a second action on that claim or any part of it; as long as the merits were capable of adjudication. There are two types of preclusion: claim preclusion (historically known as res judicata) issue preclusion (historically known as collateral estoppel but also sometimes called res judicata) Claim preclusion A valid and final judgment on a claim precludes a second action on 1) that claim or 2) any part of it that COULD have been brought those that should have been joined but you didnt The judgment must be final but an otherwise final judgment of the trial court is regarded as final even though an appeal from it is pending The first litigation must have had an opportunity to get to the merits; if the P was unable to litigate the merits in the first action because of some procedural barrier, then it is not precluded applies to every matter which was offered and received to sustain or defeat the claim or demand AND to any other admissible matter which might have been offered for that purpose (Main difference between claim and issue preclusion is that claim preclusion forecloses litigation of matters that have never been litigated) Restatement Second: The claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction or series of connected transactions, out of which the action arose. transaction or series determined pragmatically, given weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties expectations or business understanding or usage. This is a process and not an absolute concept. The safe course of action is to bring forward in the first action anything that might later be thought to have arisen out of the same transaction Because FRCP 18(a) allows P to join virtually all possible theories of recovery in a single action, it is not unreasonable to hold that res judicata bars him from suing later on any theory that is omitted from the first suit. There are some exceptions: Acquiescence by the defendant to bringing of two actions, limitations on first proceeding to make it impossible to sue on the entire claims, and conflict with other public policies. Issue preclusion If an issue of fact or law was actually litigated and determined by a valid and final judgment, the determination is conclusive in a subsequent action between parties, whether on the same or a different claim The determination must have been essential to the first judgment. If the court has determined 2 issues, either of which standing alone would be sufficient to support the result, it cannot be said that either determination was essential to the judgment and so it will not be conclusive with respect to either issue. (the final judgment

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requirement is not as rigidly applied as in claim preclusion). A final judgment includes any prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect. Exceptions: There is no issue preclusion if appellate review could not have been obtained of the judgment in the first action, or the issue is one of law and there has been a change of legal context or the claims are substantially unrelated or because a new determination of the issue is warranted by differences in the quality and extensiveness of the procedure; also b/c of public interest/fairness to persons not parties to the first action or not sufficiently foreseeable at the time of the initial action that the issue would arise in the context of a subsequent action FRCP are liberal in facilitating presentation of claims in the first action so they are stubborn and strict in barring a second action. Neither Claim nor Issue Preclusion will apply unless the party against whom preclusion is asserted had a full and fair opportunity to litigate the claim or issue in the first action Parties not bound by a judgment nonparties parties appearing in a different capacity in the 2nd action than in the 1st parties who were on the same side in the 1st litigation are not bound if they are adversaries in the 2nd suit Non-parties precluded Person was a nonparty in name only Parties may be precluded if they had a duty either to become a party or give notice that they intended to pursue a separate litigation Nonparty was somehow represented in the first litigation (i.e. trust beneficiaries are bound by judgments in a suit by the trustee and absent suit members of a class are bound by the judgment in a class action) Nonparty has a substantive legal relationship with the party to the suit (i.e. privity successive owners of property) Rest. 17 Effects of Former Adjudication General Rules A valid and final personal judgment is conclusive between the parties, except on appeal or other direct review, to the following extent: If the judgment is in favor of the plaintiff, the claim is extinguished and merged in the judgment and a new claim may arise on the judgment (see 18) If the judgment is in favor of the defendant, the claim is extinguished and the judgment bars a subsequent action on that claim (see 19) A judgment in favor of either the plaintiff or the defendant is conclusive, in a subsequent action between them on the same or a different claim, with respect to any issue actually litigated and determined if its determination was essential to that judgment. (see 27) Rest. 13 Requirement of Finality The rules of res judicata are applicable only when a final judgment is rendered. However, for purposes of issue preclusion (as distinguished from merger and bar), final judgment includes any prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect.

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Claim Preclusion 18 Judgment for Plaintiff - The General Rule of Merger When a valid and final personal judgment is rendered in favor of the plaintiff (1) The plaintiff cannot thereafter maintain an action on the original claim or any part thereof, although he may be able to maintain an action upon the judgment; and (2) In an action upon the judgment, the defendant cannot avail himself of defenses he might have interposed, or did interpose, in the first action. 19 Judgment for Defendant The General Rule of Bar A valid and final personal judgment rendered in favor of the defendant bars another action by the plaintiff on the same claim 20 Judgment for Defendant Exceptions to the General Rule of Bar A personal judgment for the defendant, although valid and final, does not bar another action by the plaintiff on the same claim: When the judgment is one of dismissal for lack of jurisdiction, for improper venue, or for nonjoinder or misjoinder of parties; or When the plaintiff agrees to or elects a nonsuit (or voluntary dismissal) without prejudice or the court directs that the plaintiff be nonsuited (or that the action be otherwise dismissed) without prejudice; or When by statute or rule of court the judgment does not operate as a bar to another action on the same claim, or does not so operate unless the court specifies, and no such specification is made. A valid and final personal judgment for the defendant, which rests on the prematurity of the action or on the plaintiffs failure to satisfy a precondition to suit, does not bar another action by the plaintiff instituted after the claim has matured, or the precondition has been satisfied, unless a second action is precluded by operation of the substantive law. 24 Dimensions of Claim for Purposes of Merger or Bar General Rule Concerning Splitting When a valid and final judgment rendered in an action extinguishes the plaintiffs claim pursuant to the rules of merger or bar (see 18 or 19), the claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose. What factual grouping constitutes a transaction, and what groupings constitute a series, are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties expectations or business understanding or usage. In most jurisdiction, there are 4 prerequisites for claim preclusion there must be a final judgment many courts give res judicata effect to a judgment once it has become final in the trial court, even if an appeal is pending the judgment must be on the merits See Federated v. Moitie: dismissal for failure to state a clam bars a second action (this is just one jurisdictions view on this though) Look at if the P had a full opportunity to litigate the merits of the first action the claims must be the same in the first and second suits

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2nd R. says this is based on a right to relief arising out of a particular transaction or occurrence this turns on the right to join the claim in the original action, not on whether the claim actually was asserted the parties in the 2nd action must be the same in the 1st an 2nd suit IN SUM claim preclusion is dependent upon a determinations that two cases contain the same claim; that the parties to the two suits are the same, or in privity, and, that the first case ended in a final judgment. Note: Although theories that could have been joined are generally barred, the scope of permissible joinder of parties is much broader than the dimensions of a single claim for res judicata purposes. Therefore, claims against additional parties could be joined under the Rules but will not be barred by res judicata if they are not. A Ps rights to recover from separate Ds are considered distinct claim under res judicata analysis, even though they arise out of the same occurrence. Weston: Realizes there is a tendency for a rather mechanical application of this doctrine (with Sopha being an exception) ---Common that one side argues issue preclusion and the other argues claim preclusion Sopha v Owens-Corning Fiberglass Corp (WI SC 1999) Facts: Case 1 - Asbestos case brought against a former employer. The P had only suffered non-malignant pleural thickening. Statute of limitations had run on the claim and therefore the motion was dismissed. Case 2: Same Plaintiff developed and died from mesothelioma. Wife and estate allege that he has a more serious disease with a long latency period that had not been diagnosed when he filed the initial suit. Analysis of SOL Methods for treating the SOL Single cause of action rule: All injuries caused by a single transaction or series of transaction by a tort-feasor are part of a single cause of action so that a later injury from the same tortious act does not restart the running of the SOL. (this is the rule against claim splitting) D argue this rule should apply and therefore the Ps cause of action accrued with P was diagnosed with pleural thickening or asbestosis in the late 1970s or 80s. D argues P would have had to bring the mesothelioma claim in the first case. Discovery rule: a tort claim accrues for the purposes of the SOL on the date the injury is discovered or with reasonable diligence should be discovered P argue this rule should apply because they had no way of discovering the mesothelioma until he was diagnosed in 1996 so that is when the SOL accrued. This would allow the case to go forward D says this rule does not apply because P knew in the 80s he had an injury attributable to the Ds conduct. D argues even if it is the discovery rule, the appearance of the first compensable injury was in the 80s so the SOL had run. Recovery for damages may be had for reasonably certain injurious consequences of the tort-feasors negligent conduct, not for merely possible injurious consequences in WI, a claimant cannot recover for speculative damages Under this theory, P could not have filed the mesothelioma claim in case 1 Significance of this rule is that the first lawsuit could never have compensated the plaintiff for mesothelioma The court looks at the Ds reasoning and the rules and says if follow D, P would have

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never been able to bring the claim for his mesothelioma The court says the question of what constitutes a cause of action and the concept of SOL is basically a question of public policy. Single cause of action seeks to deterrence claims and to allow repose and to deter vexatious and multiple lawsuits arising from the same conduct Discovery rule considerations of justice, reasonableness, and fundamental fairness Therefore, in this case, the discovery rule militates in splitting the actions and starting the SOL anew upon the diagnosis of mesothelioma This promotes judicial economy because otherwise there will be incentives to rush to court at the slightest sign of illness also, the objective of tort law it to allow people with meritorious claims to recover adequate compensation so SOL does not bar Ps claim for mesothelioma Analysis of Preclusion Final judgment on the merits bars parties from re-litigating any claim that arises out of the same relevant facts, transactions or occurrences. Ordinarily a final judgment is conclusive in all subsequent actions as to all matters which were litigated or which might have been litigated in the former proceedings A subsequent action is barred (by claim preclusion) when the following three factors are present (1) Identity between the parties or privies in the prior and present suits (2) Prior litigation resulted in final judgment on the merits by a court with jurisdiction (3) Identity of the causes of action in the two suits the issue in this case - Are the actions from 1987 and 1997 based on the same cause of action? The court says this is similar to the SOL analysis and the policies underlying claim preclusion are the same as those in the single cause of action rule Ordinarily, a subsequent injury resulting from tortfeasors conduct does not give rise to a new cause of action for the purposes of claim preclusion R(2) Judgments: it is immaterial that in trying the first action that the claimant was not in possession of enough information about the damages, past or prospective, or that the damages turned out to be unexpectedly large and in excess of the judgment Policy reasons of judicial economy, reliance and repose The court says doctrine of claim preclusion is not blindly applied Exceptions to the doctrine of claim preclusion, confined within proper limits, are central to fair administration of the doctrine. Claim preclusion can be disregarded in appropriate circumstances when the policies favoring preclusion of a second claim are trumped by other significant policies. This is a principle of public policy. Holding: this case presents a special circumstance in which claim preclusion should not apply The court adopts a narrow exception for these specific circumstances. The court recognizes that an important factor in creating this exception is that we can reasonably expect latent conditions to materialize in asbestos cases. Here the P cannot discover all possible injuries when the first injury appears so this outweighs the value of finality. Claim preclusion shall not be enforced if it is clearly and convincingly shown that the policies favoring preclusion of a second action are overcome for an extraordinary reason. D asserts a slippery slope argument court says no because this is a limited exception to the single cause of action rule and the claim preclusion doctrine Weston: This is a great case for considering both sides of the arguments and showing the

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policy behind these considerations! Searle Brothers v Searle (Utah SC 1978) Issue preclusion b/c not looking at spousal support or anything else, just at the division of the house Facts: Husband and wife have a controversial divorce. Broad issue is who gets what property? And Narrow issue is who gets the Slaugh House? Wife says that this is marital property. Husband says he individually purchased the property in partnership with his three sons learn in dissent that the deed gives title to H and W only and no partnership is mentioned also, income from rent goes into Hs bank account and the sons have no access to it sons also said that they hadnt paid for it, but that they would pay him back Case 1: Court rules that the property is common marital property and split the proceeds. The wife gets the Slaugh House Case 2: Boys sue their mother for the property (Children against their mother) since they claim that they were part of a partnership with their father Analysis NOT precluded can have a lawsuit against their mother for the property In order for res judicata to apply, both suits must involve the same parties or their privities and also the same cause of action and this precludes the re-litigation of all issues that could have been litigated as well as those that were litigated in the prior action If the subsequent suit involves different parties, those parties cannot be bound by the prior judgment. When determining the applicability of res judicata as a basis for applying collateral estoppel (claim preclusion), there is a 4 element test to apply Was the issue decided in the prior adjudication identical with the one presented in the action in question Was there a final judgment on the merits Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication This is the deciding factor in this case (see below) Was the issue in the first case competently, fully, and fairly litigated Privity: A person so identified in interest with another that he represents the same legal right, which includes a mutual or successive relationship to the rights of property and one whose interest has been legally represented at the time In this case, the sons interest was not mutual or successive. They assert independent, concurrent interests with their father. The sons were not in a privity relationship with their fathers. Further, the sons assert they were partners in the land ownership The partnership interest was not legally represented in the divorce suit, their father was acting in his individual capacity as the husband and not as a representative for the partnership While the mom asserts the father was acting as an agent for the partnership, the general rule is that agents and principals do not have any mutual or successive relationship to rights of property and are not in privity with each other. Right to intervene as a party in the prior suit does not bind the party in the subsequent suit where he so failed to intervene. Sons were witnesses and gave testimony, but they were not a party So the sons are not bound by the prior suit. Res judicata is not available here since the partners were not made partiers to the 1st suit and no evidence shows the interest of the partners was litigated in the 1st suit. Dissenting Opinion (Weston likes this more) Normally, the judgment in the divorce action would not bar Ps action because they were

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not parties However, in this case, when looking at the totality of the circumstances, Ps action should be barred by the doctrine of res judicata The elements are all met Same issue and facts the property was the issue of dispute in the divorce proceedings Issue was essential supporting the judgment in the first case since it is awarded to the mom Privity? Critical question was whether the plaintiffs, the sons of the parties in the divorce action, were sufficiently involved and interested therein that they should properly be regarded as parties in privity thereto. They were in privity, they testified and were actively involved and were aware of the adverse claims being asserted against the property The record was only in the dads name and nothing shows the partnership exists so the father was representing all people claiming interest in the property Purpose of res judicata is to protect party from continued harassment over the same controversy The court should have applied res judicata and estopped the sons from seeking relief against their mother Federated Department Stores v Moitie (US SC 1981) FACTS: Case #1: (Federal Court) US v Federated (brought by the government). Anti-trust case originating in CA, and the Federal Government wins (Federal Court) Brown et al. v. Federated; federal anti-trust claims. Plaintiffs allege as customers that they have been injured by the price-fixing. Dismissed because private persons do not have a cause of action in a federal anti-trust action (State Court) Moitie v. Federated filed in State court and removed to Federal; state anti-trust claims but in fed court. For all of these private claims, the court decides there is no private right to recover in anti-trust law so the cases get dismissed from failure to state a claim. Case #2: All other private individuals appeal the judgment to COA for 9th Cir. Moitie and Brown gets re-filed in State Court. Although they try to focus on the state claims, it gets removed to fed court again and it is dismissed based on preclusion. They appeal. Reiter v. Sonotone Corp has nothing to do with the cases, but there is a holding that retail purchasers can suffer an injury to business or property under the terms used in the Sherman Act (decided by U.S.C) - Yes, private individuals can bring a cause of action for anti-trust claims. Because of Reiter, the other private individuals cases are reversed and remanded remember, their cases were on appeal and the appeal was pending! When Moitie II and Brown II came before the COA for the 9th Cir. the court reversed the district court decision and said that although a strict application of res judicata would preclude review of this decision, it didnt apply the doctrine. It asserted that non-appealing parties could benefit from a reversal when their position is closely interwoven with the appealing parties. Because the decision was based on law that was overruled, red judicata must give way to public policy. Brown I is res judicata to Fed law claims (and this is enough so dont decide about the state law claims) The Court overturns the COA ruling res judicata precludes their claim Should have appealed like everyone else; cant do a collateral attack, should have done a direct attack through appellate court Res Judicata: A final judgment on the merits of an action precludes the parties or

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their privies from re-litigating issues that were or could have been raised in that action. Nor are the res judicata consequences of a final un-appealed judgment on the merits altered by the fact that the judgment may have been wrong or rested on legal principle subsequently overruled in another case This court recognizes no general equitable doctrine which counts an exception to the finality of a partys failure to appeal merely because his rights are closely interwoven with another partys right Public policy dictates there must be an end in the litigation We favor claim preclusion because it is a really strong public policy. Simple justice is that we honor our rules. We should know what the rules are and justice is that we if you dont appeal, you cant take the benefit of the other appeal. In this case, it was clear the parties made a calculated strategic choice to forgo appeals So it is not unfair to unhold the doctrine of res judicata and the importance of finality Concurring: Do not want to close the door upon the possibility that there are cases in which the doctrine of res judicata must give way to overriding concerns of public policy and simple justice But this is not a case where equity requires that the doctrine must give way Brown I is res judicata so as to the state law claims. (basically because it was determined the state law claims were really just disguised but were fed claims) In fact, in complex multiple party cases, especially where a party CHOOSES not to appeal, policy favors final judgment Dissent: Since there were only state law claims raised the second time around and no fed law claim, the court fails to decide the disposition of the state law claims and so it decides nothing Dismissal of Brown I is res judicata not only as to every matter that was actually litigated but also to every ground or theory that might also have been presented CANNOT get an unqualified dismissal of federal claims and then just re-litigate in state court if its the same claims doesnt work like that Mary Anna Rivet v. Regions Bank of Louisiana (US SC 1998) S.C. trying to clarify footnote 2 from the Federated opinion Facts: Holders of second mortgage on Chapter 7 debtor's leasehold estate brought state court action to enforce their interest in property. Defendants removed the action to federal district court, contending that federal-question jurisdiction existed under 28 U.S.C. 1441(b) because the prior Bankruptcy Court orders extinguished petitioners' rights, and holders sought remand. Analysis: A state court action can be removed to fed court if it qualifies as a civil action to which the fed court has original jurisdiction A case cannot be removed to fed ct on the basis of a fed defense even if the defense is anticipated in the plaintiffs complaint, and even if both parties admit that the defenses are the only question truly at issue in the case. Claim preclusion is an affirmative defense. Preclusion is different from federal preemption. Once an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law claim is considered from its beginning a federal claim and therefore arises under federal law. This is not going on in this case. A case blocked by the preclusive effect of a prior federal judgment differs from a case

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preempted by a federal statute: The prior federal judgment does not transform the plaintiff's state-law claims into federal claims but rather extinguishes them altogether. Under the well-pleaded complaint rule, preclusion remains a defensive plea involving no recasting of the plaintiffs complaint and is therefore not a proper basis for removal. Claim preclusion, a defense, is properly made in the state proceedings. Holding: Removal was improper. The court clarifies footnote 2 from Federated and reinforces this was a state court determination. This is an analogy to Mottley. Issue Preclusion 27 Issue Preclusion General Rule When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or different claim. 28 Exceptions to the General Rule of Issue Preclusion (see page 360 of book) Issue Preclusion requires: a finding of the existence of an identical issue, which has been actually litigated and determined and which is essential of the judgment. Claim v Issue Preclusion Issue does not necessarily require identity of parties as claim preclusion does. Issue preclusion can only be used when the previous issue has been in fact litigated not that it could have been but wasnt Issue preclusion gives you the ability to take a finding of fact in one case and use it or use it to block in another case because you can demonstrate that this issue was actually litigated and determined and it was essential to the judgment. Actually litigated and determined should be obvious demonstrate in some fashion and not speculate that the claim was addressed Lumpkin v. Jordan (COA of CA 1996) Facts: Baptist minister was the head of a Commission on Human Rights. He made comments about homosexuality and he was removed from the commission because he suggested people should use violence against homosexuals. Files under two federal claims and a state claim bc he was incorrectly discriminated against for his religious beliefs. In Federal Court there was a hearing and it was found that he was not fired for his religious beliefs but for the controversy between the goals of the Commission Court granted summary judgment for the federal claim and remand the state claim (bc dont want to exercise supplemental jurisdiction). State court decides that his claim is precluded because the issue was determined he was not fired for discriminatory reasons; which had already been decided in the Fed Claim Analysis Collateral Estoppel precludes a party from re-litigating an issue of fact or law if the issue was litigated and decided in a prior proceeding. Collateral Estoppel only applied if several threshold questions are met with an affirmative answer: Was the issue decided in the prior adjudication identical to the one presented in the

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action in question? In this case, this is the question of the case. The court decides the answer is yes. The fed cts ruling on SJ must be considered as final. A fed judgment has the same effect in the courts of this state as it would have in fed court. The fed court found the discharge from the Commission was prompted by a series of events which called into question his ability to promote the policies of the Commission. So there was no discriminatory motive shown. This was a very clear determination. Does not matter if you feel that the federal court was incorrect; Regardless of the propriety of summary judgment, it is binding for purposes of application of the doctrine of res judicata, an erroneous judgment is as conclusive as a correct one. Was the issue actually litigated in the prior proceeding and was there a final judgment on the merits? In this case, this is met Was the party against whom preclusion is sought the same as or in privity with the part to the former proceeding? In this case, the reverend was the P in the prior proceeding based on the same controversy Party asserting C.E. has burden of establishing these requirements Important policy reasons Important for the public opinion what would the public think if this same issue was re-litigated and a different result was given for the same problem Collateral estoppel saves us from critique by avoiding it - Weston thinks this is a cop out and we should have faith that another court would find the same thing/hold the same thing Rev. Lumpkin is estopped from pursuing his state court action because of collateral estoppel. Hoult v. Hoult (6th Cir. 1998) Facts: Jennifer sued her father for raping her over a long period of time based on charges of assault, battery, IIED. She wins the case and later writes letters to professional associations and in the letter she asserts the rape of her father. Father sued his daughter for defamation because of her charge of rape. She moves to dismiss on the ground that the jury verdict in the earlier case had determined her father had raped her and so the father was collaterally estopped from re-litigating this finding. Analysis: Rule: When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or different claim The father asserts that there is no proof that the jury ever determined he had committed the rapes and the burden is on his daughter, the party invoking collateral estoppel, to establish that the jury did so determine in the original action. The jury did not make explicit findings the rape occurred. However, an issue can be actually decided for collateral estoppel purposes even if it is not explicitly decided, for it may have constituted a necessary component of the decision reached. The court in the second case can examine the full record in the earlier case to decide whether a rationale jury could have grounded its verdict upon an issue other than that which the moving party seeks to foreclose from consideration The court will review the record and use the review standard that the estoppel is certain to every intent this higher standard than more likely than no is needed because it is severe to tell a party it cannot prove or contest a fact When the earlier case was decided by a general verdict, courts ask whether the finding

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was necessary to the judgment and answer this question by looking at the instructions and the result Necessary = central to the route that led the factfinder to the judgment reached, even if the result could have been achieved by a different, shorter and more efficient route - should be a practically necessary component of the decision reached In this case, the rape charges are the main issue It was important that the jury found the SOL had run, because this was based on testimony by a doctor that the memories of the rape were suppressed. Therefore, the jury must have accepted the testimony about the rape. The court finds the jury necessarily decided that rape had occurred. The burden of proof in this case is important If a jury finds a fact beyond a reasonable doubt, then it definitely satisfies the burden in this second case However, remember if it is a civil decision (no jury) and only found to be more likely than not, that is not enough to find that issue precluded in a later criminal case where the burden is much higher beyond a reasonable doubt. Also, if someone is acquitted on a criminal charge first, he could still later be found guilty on that same issue in a civil case because the burden isnt as high so it might be met This case is unlike Lumpkin because there the court expressly said this is not related to his rights with respect to religion. Here there is no exclusive finding that she was raped. Mutuality of Preclusion 29 Issue Preclusion in Subsequent Litigation with Others (see page 366) General rule of non-mutuality it is NEVER acceptable to take a finding of preclusion and use it adversely in someone who was not a party to the first case. NOT FAIR If there is non-mutual preclusion; it CANNOT be used by one party to the detriment of another party that was not party to the first lawsuit (will not penalized parties who were not in privity) Defensive Nonmutual Estoppel: Occurs when a defendant seeks to prevent a plaintiff from asserting a claim the plaintiff has previously litigated and lost against another defendant. The use of estoppel is nonmutual because the party asserting the estoppel on the issue was not a party to the action in which the issue was first litigated. More easily justified than offensive estoppel because plaintiff was party to the original suit, chose the forum, and the defendant against whom to litigate the issue. Most states have been recognizing exception to requiring mutuality - that they are not necessary where the liability of the def asserting the plea of res judicata is dependent upon or derived from the liability of the one who was exonerated in an earlier suit brought by the same plaintiff upon the same facts (like master and servant) Promoting efficiency, dont want to re-open identical issue, dont want to burden the system to make them hear it twice. This forecloses the possibility of conflicting results - By barring the opportunity for a second and inconsistent determination of the facts, the system looks better This is a question of fairness Bernhard v. Bank of America (CA SC 1942) (remember while this is a great case to cite for the rationale and all 50 states cite to this case, this is CA precedent only) DEFENSIVE ISSUE PRECLUSION defendant is trying to stop the P from re-litigating something that has already been decided P doesnt need its day in court

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Facts: Case 1: Estate (Bernhardt and two other beneficiaries) v. Cook - Beneficiaries for Sather brought suit in probate court to try to get $4,000 back into the estate so it can be distributed to the heirs. Cooks were taking care of Sather and she transferred money to them for her care but then they transferred the $ into Cooks name, and when she died he kept the money. Probate determines that the money transferred was a gift and that Cook doesnt owe the estate. Dealing with ownership of the money, and said that he did own the money. Case 2: Estate (by the Administrator, Bernhardt) v. Bank of America - New Administrator of the estate brings another action against the Bank of America. Theory that they unlawfully dispersed the funds to Cook because she never authorized the withdrawal. Argued a breach of fiduciary duties when they allowed Cook to write the check to himself for the $4,000. They wanted the bank to put the money back in her account. Dealing with wrongful transfer of the money, but connected to the first case b/c if he owned the money, it cant be wrongful transfer. Bank asserts res judicata applies (but they really mean issue preclusion) because the underlying issue has already been decided. There is non-mutuality (different parties) of the party asserting the claim Cook is not the Bank and their lawyers are different and their responsibilities are not necessarily the same (although they might be). Their interests are not the same. Non-mutuality is on the D side in this case. The Ps are the same (mutuality). Analysis If both parties are new and different, but the issue is the same, couldnt assert this The outcome of the other case could be influential, but not fair to preclude Party specific Many courts require mutuality of estoppel before claim or issue preclusion can be raised. The estoppel is mutual if the one taking advantage of the earlier adjudication would have been bound by it, had it gone against him. The requirements of due process forbid the assertion of a plea of res judiciata against a party unless he was bound by the earlier litigation in which the matter was decided. Party only bound if he was a party or in privity with a party. There is no compelling reason for requiring that the party asserting the plea of res judicata (issue preclusion) must have been a party, or in privity, to the earlier litigation. The court says in determining the validity of a plea of res judicata (issue preclusion) ask Was the issue decided in the prior adjudication identical with the one presented in the action in question Was there a final judgment on the merits Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication In this case, D can assert res judicata (issue preclusion) because the issue of ownership of the money is identical with the issue raised in the first case and the plaintiff bringing the present action is in a position of the same capacity as the P in the first suit she represented the same persons and interests in both cases. Bank can rely on issue preclusion so this case then fails because the court already determined the money was properly Cooks so it was legal to allow Bank to transfer it Policy Arguments Judicial resources and efficiency Basic rules of issue preclusion are still satisfied Plaintiff had incentive to get the $ back from Cook in the first case, dont have more incentive, so there is no reason to think that they did not litigate to the best of their ability

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in the first case Why should the plaintiff, by switching defendants get a second bite at the apple Consistency of judgments (what if in case #2 they find it was Cooks fault) Offensive Non-mutual Issue Preclusion Involves a new plaintiff who seeks to borrow a finding from a prior action to impose liability on a party who was a defendant in the prior action. Can NEVER hurt the second party who was not a party to the first case by not allowing them to adjudicate the action. Two Exceptions: 1. Plaintiff can use it against a defendant who already lost (Bernhard) 2. Plaintiff can use it if they were not allowed to join the original motion Issue Preclusion is much more discretionary in its application Fairness and judicial efficiency Application of preclusion is generally good, but not good where it would unduly hinder the notions of justice and judicial efficiency Weston: Recognize that if A sues B and a specific issue of fact is resolved and then C sues D and it sues on the same specific issue, in reality this wont be litigated because there is precedent on point that will dictate the result even though issue preclusion is not and cannot be asserted. This is just reality. Parklane Hosiery v Shore (US SC 1979) OFFENSIVE is allowed, but says this is an exception to the rule generally not likely to permit it because not likely to promote good policy Facts: Case 1: SEC v. Parklane Hosiery. This case tried first even though filed second. Government wins Parklane loses in issue of securities fraud action for materially misleading facts in proxy Case 2: Shore v. Parklane. Two separate plaintiffs (individual stockholders) and the same defendant; technically filed before the other one, but the govt goes first because they want to Shore wants to assert offensive issue preclusion against Parklane. Analysis on offensive collateral estoppel: Defensive non-mutual collateral estoppel has been accepted as okay. This case is offensive use of collateral estoppel a P is seeking to estop a D from relitigating the issues which the D previously litigated and lost against another P. There are several reasons why offensive and defensive should be treated differently Offensive use of collateral estoppel does not promote judicial economy in the same manner as defensive use does Defensive use precludes a P from re-litigating identical issues by merely switching adversaries Defensive gives P a strong incentive to join all potential defendants in the first action Offensive use creates the opposite incentive- a P will be able to rely on a previous judgment against a D but will not be bound by the judgment if D wins promotes a wait and see attitude. So it may increase the amount of litigation, rather than decrease it. Offensive use may be unfair to a D If D in the first action is sued for a small amount of damages, he may not rigorously defend (less incentive to put forth best effort) Allowing offensive may be unfair to a D if the judgment relied on for the basis for

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estoppel is inconsistent with one or more previous judgments in favor of D Offensive may also be unfair if the second action affords the D procedural opportunities unavailable in the first action that could cause a different result This court decides offensive collateral estoppel use should not be precluded but trial courts should have broad discretion to determine when it should be applied General rule: In cases where a plaintiff could easily have joined in the earlier action or where, either for the reasons discussed above or for other reasons, the application of offensive estoppel would be unfair to a defendant, trial judge should not allow the use of offensive collateral estoppel In this case, none of the circumstances that might justify reluctance to allow the offensive use of collateral estoppel are present and it is okay to use it. Shore was unable to consolidate their case with the SEC and since the first case was against the SEC, the D had every reason and incentive to litigate to the best of their ability because the stakes were really high and it was foreseeable there would be subsequent private actions. Also, there are on inconsistent judgments to deal with. Parklane is collaterally estopped from re-litigating the question of whether the proxy statement was materially false and misleading. Weston: recognize these facts are really rare so what this means for the future of offensive collateral estoppel is unsure. Courts get a great deal of discretion. Analysis on collateral estoppel and 7th Amendment right to jury trial Petitioners claim that the scope of the 7th Amendment must be determined by common law as existed in 1791; and at that point collateral estoppel required mutuality of parties; and since mutuality is absent, then it cannot be constitutionally applied Galloway: The Amendment did not bind the federal courts to the exact procedural incidents or details of jury trial according to the common law in 1791. The Amendment was designed to preserve the basic institution of the jury trial in only its most fundamental elements, not the great mass of procedural forms and details.. Collateral Estoppel can still prevent defendants from re-litigating the issue even thought it wasnt present in its current form in 1791. Dissent by Rehnquist: Rehnquist takes issue with right to jury trial should not be defeated by a procedural rule. The right of trial by jury in civil cases at common law is fundamental to our history and jurisprudence. The majority reduces this valued right to a mere neutral factor. Because the 7th A demands preservation of the jury trial right, our cases have uniformly held the content of the right must be judged by historical standards. In this case, the petitioners were denied their 7th A right to a jury trial in this case. Weston: CANNOT use preclusion to the detriment of a party that was not in the first case State Farm Fire and Casualty Company v. Century Home Components, Inc (1976) Fact: Fire in a warehouse destroyed a bunch of property no contributory negligence only issue is, did they sue the right person in the company, can they prove the fire was CHCs fault, and what are the damage Case1: Pac Bell v. CHC CHC is winner by jury verdict. Case is appealed and reversed on appeal CHC Loser Case 4 another appeal, CHC still loses Case 2: Sylvester v. CHC - CHC is winner no appeal and it is final Case 3: Hess v. CHC CHC is Loser and this is affirmed on appeal So at this point, the question of Ds negligence has been tried 4 times and three final judgments have been rendered. D procured one favorable judgment and the P received 2 judgments.

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Case 4: State Farm v. CHC Now this P, who was not party to any of the previous actions, wants to use the prior judgments against D to establish Ds negligence and responsibility for any loss from the fire. Analysis The court looks to Bahler v Fletcher (1970) where the requirement for mutuality as a prerequisite to collateral estoppel was discarded because mutuality is not a relevant basis on which to determine the finality of litigation There are 2 essential conditions for the application of collateral estoppel by a party against one who was a party to a prior action There must exist an identity of issue between the prior action and the action in which estoppel is asserted The party against whom estoppel is sought must have had a full and fair opportunity to contest the issue decided adversely to him Even once these 2 criteria are met, still courts must scrutinize with care any situation where collateral estoppel is asserted by a person who was not a party or in privity to the first case Once it is accepted that the propriety of collateral estoppel is dependent upon the existence of a prior full and fair opportunity to present a case, there seems little reason to limit its application simply because there are multiple claimants in the picture. Prior judgment is treated as conclusive because of the public interest in the finality of judgments and in the efficient administration of justice However, we are not free to disregard incongruous results when the are looking us in the eye. If the circumstances show that our confidence in the integrity of the determination is severely undermined, or that the result would likely be different in a second trial, it would be an injustice to deny the litigant another chance So where it is apparent that the verdict was the result of jury compromise, the losing party should not be precluded by the judgment. Where outstanding determinations are inconsistent on the matter sought to be precluded, it would be unfair to estop a party by the judgment it lost. In this case, the existence of conflicting determinations of similar issues demonstrates that different bodies can legitimately draw different conclusions. The application of collateral estoppel is not fair here. Weston: the philosophical question makes her uneasy always seems fair that once there are inconsistent decisions you must go back and re-try, but then if there are inconsistent opinions, maybe we shouldnt have preclusion at all because we are admitting that juries and judges get it wrong. Interjurisdictional Preclusion Semtek v. Lockheed Martin Corporation (US SC 2001) Facts: Case #1: Filed in 1977 in State court in CA Breach of contract and torts claim Removed to Federal Court bc of Diversity Jurisdiction Defendant responds with Rule 12(b)(1) SOL has run for CA, seek dismissal Case is dismissed in fed court in its entirety and on the merits with prejudice Case # 2: New Case filed in Maryland state court (bc it has a longer SOL) Remember Keeton v. Hustler case filed - Issue in this case was PJ and minimum connections (case did not even touch the issue touched here) Defendants go back to CA Federal Court asking it to issue an injunction directing state court to

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not proceed on the basis that it had been dismissed on the merits (CA says no) Case tried to remove to Fed Court: Statutory exception bc Lockheed was from Maryland and in the removal statute, the defendant cannot remove if the claim is filed in the defendants home state; Defendant then argued for removal based on federal question SOL decided on the merits of the case Fed. Court remanded because the claim did not arise form the federal issue, the defense was raising the federal question (back to Motley) CASE now is back in Maryland State court and dismiss bc of res judicata bc there is a federal issue saying that the case was decided of its merits Based on the Ruling of 41(b), the claim has been decided Maryland COA refuses to review and respondent gets certiori Supreme Court takes cert on a federal question (if it turns on a controlling point of federal law, then Supreme Court can accept the case) ANALYSIS: A Note on Claim Preclusion Need same parties, same claim, and final judgment on the merits If the reason for the policy of claim preclusion is to say that you had your day in court, you could say they chose the forum and so they shouldnt be able to do that If we were just talking policy, maybe it makes sense to say, if you can file your lawsuit in more than one place, and you didnt bother to see that SOL had expired in one jurisdiction versus the other, then too bad for you However, there is a value that litigants are entitled to resolution on the merits and not on a technicality If this is true, then what happened in Keeton is proper Most Important - WHAT are the parties REALLY fighting over the fact that someone filed a case and got it dismissed without reaching the merits, and there are still places to reach a decision on the merits do we really want to deprive someone of that? Is Res Judicata on Statute of Limitations a Decision on the Merits: Similar to Motley case was dismissed in the Federal Court There is a controlling question of federal law so SC can take this Ultimately the Supreme Court reverses the Maryland decision Conformity Act of 1872: (Before FRCP) rules of Federal law and courts for procedural reasons were the local procedural rules of the state court. Decision in Depasseur interpreted the law when the law was totally different so we cannot rely on the case Scalia rejects the Depasseur case as dispositive Semtek - The traditional rule is that expiration of the applicable statute of limitations merely bars the remedy and does not extinguish the substantive right, so that dismissal on that ground does not have claim-preclusive effect in other jurisdictions with longer, unexpired limitation periods.

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This is essentially an Erie question, forcing the court sitting in diversity to decide whether to apply a state law or a federal law. Generally, in accordance with the rules decision act, a court sitting in diversity should apply the substantive law of a State. Using the Guaranty Trust outcome determinative test the CA law would appear to be substantive, because in this case, it would determine the outcome of the case. If the CA statute is applied, it would determine the outcome of the case, and it would be dismissed, but if not, it would not be. But, this is also an arguably procedural rule, because it has to do with the procedure of the case, and the filing requirements. But, the Outcome determinative test has been modified, so that the State law may not be applied if it is does not implicate the twin aims of Erie (i.e forum shopping, and the inequitable administration of justice). In this case, it would at some point seem to implicate these aims, because it appears that the State law would place an additional burden on the Plaintiff, (not a trivial or no substantial burden like that found in Hanna), which could lead to forum shopping. In this case, Plaintiffs would be more likely to attempt to bring their suit in Fed ct, b/c they would have a less of a burden.. Applying the Hanna test, the court would look to see if there is a Federal Rule or law that is on point. I would assume that generally, there is a FRCP that would address the procedure for filing requirements. The court must then decide if there is a direct conflict between the FRCP/Fed law, and the State law. If so, the Court should apply the FRCP (given that is found constitutional which it would be b/c of the Rules enabling act). But, the court should also be cognizant of the fact that the rules can co-exist. B/c there is not a direct conflict between the CA statute, and a FRCP/Fed statute, and the twin aims of Erie are implicated, the court should use the CA statute and dismiss the case. HOLDING: Because the claim preclusive effect of California federal courts dismissal upon the merits of petitioners action on statute of limitations grounds is governed by federal rule that in turn incorporates CAs law of claim preclusion, the case should have been heard in Maryland. The Supreme Court held that the federal court's dismissal did not necessarily preclude the action in the alternate forum state. The dismissal on the merits, based on the statute of limitations, merely barred petitioner's remedy without extinguishing its substantive rights, and thus only precluded petitioner from pursuing the same claim in the dismissing court. Federal common law governed the effect of the dismissal by the federal court sitting in diversity, and such law required that the claim-preclusive effect of the federal judgment was governed by the law of claim preclusion of the federal court's forum state.

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28 U.S.C. 1331. Federal Question: The district courts shall have original jurisdiction of all civil
actions arising under the Constitution, laws or treaties of the United States. (This is lawful because it

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mirrors the Constitution!)

28 U.S.C. 1332 (a) (c). Diversity of Citizenship; amount in controversy; cost: (a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between (1) citizens of different States; (2) citizens of a State and citizens or subjects of a foreign state; (3) citizens of different States and in which citizens or subjects of a foreign state are additional parties; and (4) a foreign state, defined in section HYPERLINK

"http://www.law.cornell.edu/uscode/uscode28/usc_sec_28_00001603----000.html"1603 HYPERLINK "http://www.law.cornell.edu/uscode/uscode28/usc_sec_28_00001603----000.html" \l "a"(a) of this title, as plaintiff and citizens of a State or of different States. For the purposes of this section, section HYPERLINK "http://www.law.cornell.edu/uscode/uscode28/usc_sec_28_00001335----000.html"1335, and section HYPERLINK "http://www.law.cornell.edu/uscode/uscode28/usc_sec_28_00001441----000.html"1441, an alien admitted to the United States for permanent residence shall be
deemed a citizen of the State in which such alien is domiciled. (b) Except when express provision therefor is otherwise made in a statute of the United States, where the plaintiff who files the case originally in the Federal courts is finally adjudged to be entitled to recover less than the sum or value of $75,000, computed without regard to any setoff or counterclaim to which the defendant may be adjudged to be entitled, and exclusive of interest and costs, the district court may deny costs to the plaintiff and, in addition, may impose costs on the plaintiff. (c) For the purposes of this section and section HYPERLINK "http://www.law.cornell.edu/uscode/uscode28/usc_sec_28_00001441----000-.html"1441 of this title (1) a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business, except that in any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated, to which action the insured is not joined as a partydefendant, such insurer shall be deemed a citizen of the State of which the insured is a citizen, as well as of any State by which the insurer has been incorporated and of the State where it has its principal place of business; and (2) the legal representative of the estate of a decedent shall be deemed to be a citizen only of the same State as the decedent, and the legal representative of an infant or incompetent shall be deemed to be a citizen only of the same State as the infant or incompetent. ***This makes up 4 of the 9 Article III subject matter categories; 5th one is FQ, and the rest we dont need to know

28 U.S.C. 1441: Actions removable generally. (a) Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending. For purposes of removal under this chapter, the citizenship of defendants sued under fictitious names shall be disregarded.

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(can remove to fed court if fed court had jurisdiction originally only move from state to fed removal is one way) This means that the standards governing federal SMJ are relevant to an analysis of whether removal is permissible. Removal can only be based on Ps claims, not on Ds counterclaims or defenses. If there are multiple defendants, all defendants have to agree in order to remove Note venue rules dont apply: have to remove to district.embracing even if not proper venue (b) Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought. ***The first sentence specifically disclaims taking into consideration citizenship (this is about arising under jurisdiction dont need to consider citizenship or residence). ***The second sentence says if it is not about something arising under the C, then in diversity cases you cannot remove if any d is a resident of the state in which the action is brought. If its a diversity case ex: if P from Nevada sues D from Kansas on a state law claim in Kansas state court, D cannot remove because he is from Kansas so he does not need to be protected from local prejudice because he is local. (c) Whenever a separate and independent claim or cause of action within the jurisdiction conferred by section HYPERLINK "http://www.law.cornell.edu/uscode/uscode28/usc_sec_28_00001331----000-.html"1331 of this title is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters in which State law predominates. (d) Any civil action brought in a State court against a foreign state as defined in section

HYPERLINK "http://www.law.cornell.edu/uscode/uscode28/usc_sec_28_00001603---000-.html"1603 HYPERLINK "http://www.law.cornell.edu/uscode/uscode28/usc_sec_28_00001603----000-.html" \l "a"(a) of this title may be removed by the foreign state to the district court of the United States
for the district and division embracing the place where such action is pending. Upon removal the action shall be tried by the court without jury. Where removal is based upon this subsection, the time limitations of section HYPERLINK "http://www.law.cornell.edu/uscode/uscode28/usc_sec_28_00001446----000-.html"1446

HYPERLINK "http://www.law.cornell.edu/uscode/uscode28/usc_sec_28_00001446---000-.html" \l "b"(b) of this chapter may be enlarged at any time for cause shown.
(e anf) know this as well in Appendix page viii (f) federal court is not precluded from hearing the case simply because the state court lacked jurisdiction over it originally (like a patent claim wrongly brought in state court)

28 U.S.C. 1446: Procedure for removal. Appendix page ix (if you want to remove a case, do the correct paperwork at the correct time and it gets removed. Dont need to ask permission or argue it.) (this deals with amended complaints) (if D moves to remove, the state case automatically moves to fed court for the fed court to decide if removal is proper. This reduces confusion)

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28 U.S.C. 1447: Procedure after removal generally. See Appendix (If you are wrong and it was improperly removed then the fed judge remands it back) (also deals with removal to fed court based on diversity and then P destroying diversity by adding another D.)

28 U.S.C. 1367. Supplemental jurisdiction: (a) Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, 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. (this overturns Aldinger and Finley) (this is Gibbs definition of case or controversy thus it appears this authorizes the courts to hear all claims that arise out of the same nucleus of operative facts as the proper federal claim. This includes additional claims asserted by P and those asserted by other parties (cross-claims, counterclaims)) (b) In any civil action of which the district courts have original jurisdiction founded solely on section HYPERLINK "http://www.law.cornell.edu/uscode/uscode28/usc_sec_28_00001332----000-.html"1332 of this title, 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 HYPERLINK "http://www.law.cornell.edu/uscode/uscode28/usc_sec_28_00001332----000-.html"1332. (This is Kroger. Preserves the limits on ancillary jurisdiction to avoid destroying complete diversity) (c) 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. (this section is the second part of Gibbs) (d) The period of limitations for any claim asserted under subsection (a), and for any other claim in the same action that is voluntarily dismissed at the same time as or after the dismissal of the claim under subsection (a), shall be tolled while the claim is pending and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period. (e) As used in this section, the term State includes the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession of the United States.

FRCP 17: Plaintiff and Defendant; Capacity; Public Officers (for entire rule see appendix page 418)

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(a) Real Parties in Interest (persons substantially affected by the lawsuit, Ps whose direct interests are affected typically P is the party who has been harmed by D) (1) Designation in General: An action must be prosecuted in the name of the real party in interest. The following may sue in their own names without joining the person for whose benefit the action is brought: (A) an executor; (in probate court administering for an estate) (B) an administrator; (C) a guardian; (i.e for minors, persons with disabilities, etc) (D) a bailee; (E) a trustee of an express trust; (F) a party with whom or in whose name a contract has been made for another's benefit; and (G) a party authorized by statute. (3) Joinder of the Real Party in Interest: The court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action. After ratification, joinder, or substitution, the action proceeds as if it had been originally commenced by the real party in interest. (d) Public Officers Title and Name: A public officer who sues or is sued in an official capacity ay be designated by official title rather than by name, but the court may order that the officers name be added. (This is how to get around sovereign immunity. Usually you sue an individual rather than the state. You can sue based on the persons position and not the persons identity since there is often high turnover in government positions)

FRCP 18: Joinder of Claims (page 419) As worded, permissive claim joinder, but not always permissive in reality (a) In General. A party asserting a claim, counterclaim, crossclaim, or third-party claim may join as independent or alternative claims, as many claims as it has against as opposing party. (Weston says the last words should be so long as there is jurisdiction) (you can bring as many claims as you have against the person as long as you have jurisdiction. Always ask if you can join the party and is there jurisdiction) (Ex: x: Diverse parties, A sues B and then brings another claim of $500 for a bad debt cannot sue for both because the $ amount does not satisfy diversity and the claims are not similar so supplemental jurisdiction would not apply.) (b) Joinder of Contingent Claims. A party may join two claims even though one of them is contingent on the disposition of the other; but the court may grant relief only in accordance with the parties relative substantive rights. In particular, a plaintiff may state a claim for money and a claim to set aside a conveyance that is fraudulent as to that plaintiff, without first obtaining a judgment for the money. This is the broad rule! FRCP 42(a) and (b): Consolidation; Separate Trials (a) Consolidation. If actions before the court involve a common question of law or fact, the court may: (1) join for hearing or trial any or all matters at issue in the actions; (2) consolidate the actions; or (3) issue any other orders to avoid unnecessary cost or delay. (b) Separate Trials. For convenience, to avoid prejudice, or to expedite and economize, the

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court may order a separate trial of one or more separate issues, claims, cross claims, counterclaims, or third party claims.

FRCP 13 (a) (f) (a) Compulsory Counterclaim. Use it or lose it. (1) In General. A pleading must state as a counterclaim any claim that at the time of its service the pleader has against an opposing party if the claim: (A) arises out of the transaction or occurrence that is the subject matter of the opposing party's claim; and (B) does not require adding another party over whom the court cannot acquire jurisdiction. (2) Exceptions. The pleader need not state the claim if: (A) when the action was commenced, the claim was the subject of another pending action; or (B) the opposing party sued on its claim by attachment or other process that did not establish personal jurisdiction over the pleader on that claim, and the pleader does not assert any counterclaim under this rule. (b) Permissive Counterclaims. No consequence for failing to include. A pleading may state as a counterclaim against an opposing party any claim that is not compulsory. If it is NOT compulsory, then it is permissive, and therefore you can bring the claim in a separate suit if you fail to bring it in the initial claim. (c) Relief Sought in a Counterclaim. A counterclaim need not diminish or defeat the recovery sought by the opposing party. It may request relief that exceeds in amount or differs in kind from the relief sought by the opposing party. (d) Counterclaim Against the United States. These rules do not expand the right to assert a counterclaim or to claim a credit against the United States or a United States officer or agency. (e) Counterclaim Maturing or Acquired After Pleading. The court may permit a party to file a supplemental pleading asserting a counterclaim that matured or was acquired by the party after serving an earlier pleading. (f) Omitted Counterclaim. The court may permit a party to amend a pleading to add a counterclaim if it was omitted through oversight, inadvertence, or excusable neglect or if justice so requires.

Rule 13. (g) (h) (g) Crossclaim Against a Coparty. A pleading may ***always permissive*** state as a crossclaim any claim by one party against a co-party if the claim arises out of the transaction or occurrence that is the subject matter of the original action or of a counterclaim, or if the claim relates to any property that is the subject matter of the original action. The crossclaim may include a claim that the co-party is or may be liable to the cross claimant for all or part of a claim asserted in the action against the crossclaimant. (h) Joining Additional Parties. Rules 19 and 20 govern the addition of a person as a party to a counterclaim or crossclaim.

FRCP 14: Third Party Practice. (for full rule see appendix) (a) When a Defending Party May Bring in a Third Party. (1) Timing of the Summons and Complaint. A defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of

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the claim against it. But the third-party plaintiff must, by motion, obtain the court's leave if it files the third-party complaint more than 14 days after serving its original answer. (2) Third-Party Defendant's Claims and Defenses. The person served with the summons and third-party complaint the third-party defendant: (A) must assert any defense against the third party plaintiff's claim under HYPERLINK "http://www.law.cornell.edu/rules/frcp/Rule12.htm"Rule 12; (B) must assert any counterclaim against the third-party plaintiff under Rule 13(a), and may assert any counterclaim against the third-party plaintiff under Rule 13(b) or any crossclaim against another third-party defendant under Rule 13(g); (C) may assert against the plaintiff any defense that the third-party plaintiff has to the plaintiff's claim; and (D) may also assert against the plaintiff any claim arising out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the third-party plaintiff. (3) Plaintiff's Claims Against a Third-Party Defendant. The plaintiff may assert against the third-party defendant any claim arising out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the third-party plaintiff. The third-party defendant must then assert any defense under HYPERLINK "http://www.law.cornell.edu/rules/frcp/Rule12.htm"Rule 12 and any counterclaim under Rule 13(a), and may assert any counterclaim under Rule 13(b) or any crossclaim under Rule 13(g). (4) Motion to Strike, Sever, or Try Separately. Any party may move to strike the third-party claim, to sever it, or to try it separately. (5) Third-Party Defendant's Claim Against a Nonparty. A third-party defendant may proceed under this rule against a nonparty who is or may be liable to the third-party defendant for all or part of any claim against it. (6) Third-Party Complaint In Rem. If it is within the admiralty or maritime jurisdiction, a third party complaint may be in rem. In that event, a reference in this rule to the summons includes the warrant of arrest, and a reference to the defendant or third-party plaintiff includes, when appropriate, a person who asserts a right under Supplemental Rule C(6)(a)(i) in the property arrested. (b) When a Plaintiff May Bring in a Third Party. When a claim is asserted against a plaintiff, the plaintiff may bring in a third party if this rule would allow a defendant to do so. (important that a precondition is there needs to be a counterclaim D asserting a claim against P. then P can bring in another party just like the D is allowed) df For FOR HELP

FRCP 19: Required Joinder of Parties (a) Persons Required to Be Joined if Feasible. (1) Required Party. A person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if: (A) in that person's absence, the court cannot accord complete relief among

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existing parties; or (B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may: (i) as a practical matter impair or impede the person's ability to protect the interest; or (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest. (2) Joinder by Court Order. If a person has not been joined as required, the court must order that the person be made a party. A person who refuses to join as a plaintiff may be made either a defendant or, in a proper case, an involuntary plaintiff. (3) Venue. If a joined party objects to venue and the joinder would make venue improper, the court must dismiss that party. (b) When Joinder Is Not Feasible. If a person who is required to be joined if feasible cannot be joined, the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed. The factors for the court to consider include: (1) the extent to which a judgment rendered in the person's absence might prejudice that person or the existing parties; (2) the extent to which any prejudice could be lessened or avoided by: (A) protective provisions in the judgment; (B) shaping the relief; or (C) other measures; (3) whether a judgment rendered in the person's absence would be adequate; and (4) whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder. (c) Pleading the Reasons for Nonjoinder. When asserting a claim for relief, a party must state: (1) the name, if known, of any person who is required to be joined if feasible but is not joined; and (2) the reasons for not joining that person. (d) Exception for Class Actions. This rule is subject to HYPERLINK "http://www.law.cornell.edu/rules/frcp/Rule23.htm"Rule 23.

FRCP 24. Intervention (a) Intervention of Right. On timely motion, the court must permit anyone to intervene who: (1) is given an unconditional right to intervene by a federal statute; or (2) claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest. (b) Permissive Intervention. (1) In General. On timely motion, the court may permit anyone to intervene who: (A) is given a conditional right to intervene by a federal statute; or (B) has a claim or defense that shares with the main action a common question of law or fact. (2) By a Government Officer or Agency. On timely motion, the court may permit a federal or state governmental officer or agency to intervene if a party's claim or defense is based on: (A) a statute or executive order administered by the officer or agency; or

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(B) any regulation, order, requirement, or agreement issued or made under the statute or executive order. (3) Delay or Prejudice. In exercising its discretion, the court must consider whether the intervention will unduly delay or prejudice the adjudication of the original parties' rights. (c) Notice and Pleading Required. A motion to intervene must be served on the parties as provided in Rule 5. The motion must state the grounds for intervention and be accompanied by a pleading that sets out the claim or defense for which intervention is sought. FRCP 22. Interpleader (a) Grounds. (1) By a Plaintiff. Persons with claims that may expose a plaintiff to double or multiple liability may be joined as defendants and required to interplead. Joinder for interpleader is proper even though: (A) the claims of the several claimants, or the titles on which their claims depend, lack a common origin or are adverse and independent rather than identical; or (B) the plaintiff denies liability in whole or in part to any or all of the claimants. (2) By a Defendant. A defendant exposed to similar liability may seek interpleader through a crossclaim or counterclaim. (b) Relation to Other Rules and Statutes. This rule supplements and does not limit the joinder of parties allowed by HYPERLINK "http://www.law.cornell.edu/rules/frcp/Rule20.htm"Rule 20. The remedy this rule provides is in addition to and does not supersede or limit the remedy provided by HYPERLINK "http://www.law.cornell.edu/uscode/28/1335.html"28 U.S.C. 1335, HYPERLINK "http://www.law.cornell.edu/uscode/28/1397.html"1397, and HYPERLINK "http://www.law.cornell.edu/uscode/28/2361.html"2361. An action under those statutes must be conducted under these rules.

FRCP 23. Class Actions. See Appendix, page 422 for full rule. (a) there are 4 distinct criteria to satisfy for a claim to be considered a class action (see below) (b) there are three types of class actions (1) Here we want uniformity. Concerned about people on the sidelines. You have a lake with 60 families owning properties on the lake and a few of the families want action taken by the government with respect to the run-off and others are opposed if the case will effect all 60, then they should participate (2) These are the civil rights cases. This is best defined in terms of relief. (3) This is the damages class. Looking for money damages. (c) Certification judge must determine whether it is proper for the case to proceed as C.A., and then to appoint legal representation for the class (e) Class actions cannot be settled without the courts approval in a process that invites objecting class members to participate in a hearing (g) Standards to be applied by the Court in appointing counsel.

28 U.S.C. 1332(d) (2) - Diversity Jurisdiction for Class Actions. See Appendix. The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5M exclusive of interest and costs and is a class action in which (A) any member of a class of plaintiffs is a citizen of a State different from any defendant

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(B) any member of a class of plaintiffs is a foreign state or citizen or subject of a foreign state and any defendant is a citizen of a State (C) any member of a class of plaintiffs is a citizen of a State or any defendant is a foreign state or a citizen or subject of a foreign state.

FRCP 20: Permissive Joinder of Parties (page 421) Idea of permissive parties as many as fit the lawsuit Just because you can doesnt mean you must! (a) Persons Who May Join or be Joined: 1. Plaintiffs may join in one action as P if: (a) they assert any right to relief jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences, AND (b) any question of law or fact common to all Ps will arise in the action. 2. Defendants, persons and vessels, cargo, or other property subject to admiralty process in rem, may be joined in one action if: (a) any right to relief is asserted agains them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences, AND (b) any question of law or fact common to all Ds will arise in the action. 3. Extent of Relief neither P or D need to be interested in obtaining or defending against all the relief demanded court may grant judgment to one or more Ps according to their rights, and against one or more Ds according to their liabilities. (b) Protective measures save court resources, etc. FRCP 23.1 Derivative Actions (a) Prerequisites. This rule applies when one or more shareholders or members of a corporation or an unincorporated association bring a derivative action to enforce a right that the corporation or association may properly assert but has failed to enforce. The derivative action may not be maintained if it appears that the plaintiff does not fairly and adequately represent the interests of shareholders or members who are similarly situated in enforcing the right of the corporation or association. (b) Pleading Requirements. The complaint must be verified and must: (1) Allege that the plaintiff was a shareholder or member at the time of the transaction complained of, or that the plaintiff's share or membership later devolved on it by operation of law (2) Allege that the action is not a collusive one to confer jurisdiction that the court would otherwise lack; and (3) State with particularity: (A) Any effort by the plaintiff to obtain the desired action from the directors or comparable authority and, if necessary, from the shareholders or members; and (B) The reasons for not obtaining the action or not making the effort. (c) Settlement, Dismissal, and Compromise. A derivative action may be settled, voluntarily dismissed, or compromised only with the court's approval. Notice of a proposed settlement, voluntary dismissal, or compromise must be given to shareholders or members in the manner that the court orders.

FRCP 23.2 Actions Relating to Unincorporated Associations

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This rule applies to an action brought by or against the members of an unincorporated association as a class by naming certain members as representative parties. The action may be maintained only if it appears that those parties will fairly and adequately protect the interests of the association and its members. In conducting the action, the court may issue any appropriate orders corresponding with those in HYPERLINK "http://www.law.cornell.edu/rules/frcp/Rule23_2.htm" \l "Rule23_d_" Rule 23(d), and the procedure for settlement, voluntary dismissal, or compromise must correspond with the procedure in HYPERLINK "http://www.law.cornell.edu/rules/frcp/Rule23_2.htm" \l "Rule23_e_" Rule 23(e).

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