CIVIL PROCEDURE OUTLINE 2010 - KangSUBJECT MATTER JURISDICTION Federal SMJ is the federal court’s power and authority to hear a particular case. Federal courts are courts of limited jurisdiction, with their judicial power granted from Article III of the U.S. Constitution. Article III sets the outer limits of the courts power. The power of the federal courts is limited by statutes, specifically §1331 (federal question), §1332 (diversity), §1367 (supplemental), and §1441 (removal from state to federal). FEDERAL QUESTION – 28 U.S.C. §1331 “ARISING UNDER” Question: Does the cause of action arise under federal law (federal statute, regulation, constitution, federal common law)? Well-pleaded complaint rule: Court looks only at the complaint and considers only the claim itself (ignore everything else, including arguments from the defendant) [Louisville & Nashville Railroad v. Mottley (1908)] "Arises under if "a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law." [Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal. (1983)] Louisville & Nashville Railroad v. Mottley (1908, p.179): P sued for breach of contract (free lifetime travel passes) in federal court. D countered that the passes were no longer valid b/c of a federal statute that prohibited the RR from renewing the passes. Court ordered for dismissal due to lack of SMJ (no diversity and no FQ) b/c the original complaint did not arise under federal law. NOTE: Supreme Court’s “arising under” jurisdiction is broader than federal courts b/c they are governed by Article III in the Constitution and §1257 authorizes SC to hear the case if they grant certiorari. FEDERALIZING WARP Cause of action is created by state law but there is a substantial federal interest, either the case turns on an interpretation of federal law or implicates federal interests, federalizing the case to warrant federal question SMJ. *There is no real coherence regarding which causes of actions compel a substantial federal question CASES Smith v. Kansas City Title & Trust Co. (1921, p.183): P alleged D bank as trustee had violated a state law allowing it to invest only in legal securities. BUT the allegedly “illegal” securities were bonds issued by a federal agency under a federal law that P claimed was unconstitutional. There was jurisdiction. Grable & Sons Metal Prod. Inc. v. Darue Eng. & Mfg. (2005, p.183): Land sold on IRS lien for unpaid taxes and former owner sued to recover claiming that notice of sale was inadequate. Proper FQ jurisdiction; FQ jurisdiction of a state-law claim doesn’t disturb any congressionally approved balance of federal and state judicial responsibilities. Presented a nearly “pure issue of law, one that could be settled once and for all and thereafter would govern numerous tax sale cases.” Empire Healthchoice Assur. Inc. v. McVeigh (2006, p.183): Insurer sued to recover benefits already paid. Federal statute authorized insurer’s suit to recoup medical benefits BUT there was no FQ jurisdiction b/c the action was triggered by the settlement of a personal-injury action and the issue was what was payable to insurer. Fink and Tushnet Test to determine if there is a substantial federal issue: What is the national interest of disposing of the case as a whole (with federal fact-finding) in the federal courts, compared to the interest of disposing of it in the state courts? How likely is it that the national interest will be in fact implicated? How likely is it that the Supreme Court will use its limited resources to decide the federal issue where the record is made in the state court? DECLARATORY JUDGMENT ACT (28 U.S.C. §§2201-02): empowers federal district court to hear certain cases in which a potential D doesn’t seek a coercive remedy by a declaration of rights. Switching the P and D b/c what would come up as a defense now becomes the cause of action b/c you’re asking the court for a declaration that say that your use of something (license, patent, etc.) is legal under federal law. E.g. patent holder sues for declaration that the infringer is infringer the holder’s rights Impact of a final judgment or relief No declaration that you’re immune, by virtue of federal law, from a nonfederal claim that the other party may have. 1 CIVIL PROCEDURE OUTLINE 2010 - Kang DIVERSITY JURISDICTION – 28 U.S.C. §1332 Federal court has original jurisdiction over cases where the claim exceeds $75,000 and is between (1) citizens of different States; (2) citizens of a State and citizens/subjects of a foreign state; (3) citizens of different States and in which citizens/subjects of a foreign state are additional parties; and (4) a foreign state as a plaintiff and citizens of a State or of different States. CITIZENSHIP *Complete Diversity Rule: each Plaintiff must be diverse from each Defendant [Strawbridge v. Curtiss] Measure diversity of citizenship at the time the complaint is filed and then again when parties are joined to the suit U.S. CITIZENS State citizenship test: A U.S. citizen is a citizen of a state in which they are (1) DOMICILED/RESIDENCE (can only have ONE domicile), and (2) INTEND TO REMAIN IN THE STATE INDEFINITELY. (Hawkins v. Master Farms, Inc.) *State citizenship doesn’t change unless BOTH requirements are fulfilled. Choctaw Indians: domicile = physical presence and intent to remain Hawkins v. Masters Farms, Inc. (D. Kan. 2003, p.6): P resided in KS but had ties to MO. Court held P was KS citizen b/c he resided (physical presence) in KS and showed intent to remain there (lived with wife, had his personal belongings in KS, and contributed to household costs). “Floating intention” to move to MO and driver’s license was insufficient to overcome his residence in KS. **Can be a USC and not have a domicile in the U.S. (Johnny Depp dilemma) Redner v. Sanders (S.D. NY 2000, p. 190): P is a USC and resides in France; three Ds are all citizens of NY (two people and one corporation). Dismissed for lack of SMJ b/c P is not a citizen of France but only resides there. P then claimed that he was a citizen of CA but there was not enough evidence to prove (license to practice law, law office he visits four times/year since living abroad, CA driver’s license, solicitation of possible employment, and affidavit that he has not given up intent to return to CA). Also, there was no discussion of P’s relationship to France for the court to accurately gauge P’s intent. FOREIGN CITIZENS 1988 deeming amendment: LPR is deemed a citizen of the State in which they are domiciled (applies only when suit is against a USC) *Can’t be a citizen of a U.S. state unless also a USC or an LPR Saadeh v. Farouki (D.C. Cir. 1997, p.197): P (Greece) and D (LPR/Jordan and resided in MD). The “deeming” amendment only applies when the suit is against one U.S. citizen and a foreign citizen, so there is no SMJ when the suit is against two foreign citizens, even if one is an LPR, because (1) the intention of the amendment was to decrease the number of cases in federal court, not to allow the federal court to have jurisdiction over a type of case it didn’t have before; and (2) under Article III §2, there is no jurisdiction over foreign v. foreign and a literal reading of the amendment risks unconstitutionality CORPORATIONS – 28 U.S.C. §1332(c) State citizenship is: (1) the state of incorporation, and (2) your principal place of business. (Can be citizens of multiple states) There can only be ONE principle place of business 1) Nerve center – where the decisions are made, headquarters 2) Muscle center – where the corporation does more stuff than anywhere else 3) Mixture a) If corporation’s activity is far flung (substantial operations in multiple states), then usually use the nerve center b) If all the activity is in one state, then usually use the muscle center *Partnerships: citizenship of all the partners/members AMOUNT IN CONTROVERSY 1) 2) 3) 4) Must exceed $75,000 Plaintiff’s $ claim governs unless it is clear to a legal certainty that they can’t recover more than $75,000 [St. Paul Mercury v. Red Cab] Aggregation: add multiple claims to meet amount in controversy requirement a. Can aggregate claims if it’s one plaintiff vs. one defendant b. Can’t aggregate separate claims from separate individuals c. Multiple Ps with the same claim (common undivided interest) CAN aggregate claims to meet AIC [number of parties is irrelevant because any person could be liable for the full amount of damages] Compulsory counterclaims: can be heard as long as the original claim meets AIC 2 CIVIL PROCEDURE OUTLINE 2010 - Kang SUPPLEMENTAL JURISDICTION – 28 U.S.C. §1367 §1367(a)applies to federal question jurisdiction cases Gives supplemental jurisdiction when a claim is so related that they form part of the same case or controversy as to the claim that arises under federal law STANDARD: “Share a common nucleus of operative facts with the claim that invoked jurisdiction” (same real world event) *United Mine Workers v. Gibbs (1966)] §1367(b)applies only to diversity cases that would destroy diversity (blades w/ 3 cups) 1) Claims made by the original plaintiff against parties joined under Rules 14, 19, 20, 24 2) Claims made by plaintiffs proposed to be joined under Rule 19 3) Somebody seeking to intervene as a plaintiff under Rule 24 §1367(c)court’s discretion to deny supplemental jurisdiction Claim raises a novel or complex issue of state law Claim substantially predominates over the claim or claims over which the district court has original jurisdiction District court has dismissed all claims over which it has original jurisdiction Compelling reasons for declining jurisdiction (exceptional circumstances) In re Ameriquest Mortgage Co. Mortgage Lending Practices Litigation (N.D. Ill. 2007, p. 207): P filed suit under the Truth in Lending Act (TILA) against Ameriquest for misleading and improper disclosure of her right to cancel her mortgage. She also filed two state fraud claims. Court found a loose factual connection btwn claims (so long as the facts are common and operative) is sufficient for “same case or controversy.” To determine if claims are connected by common core of operative facts (Gibbs), court can compare the facts necessary to prove both claims. There was supplemental jurisdiction and the court chose not to exercise their discretion (§1367(c)) even though there was a novel issue of law for the court (the state statute had never been applied to this situation), stating that they might get some precedent before this case is decided in federal court. Szendrey-Ramos v. First Bancorp (D.P.R. 2007, p.209): P filed Title VII (violation of federal employment law) suit and several state law claims associated with being fired (wrongful discharge, violations of the P.R. constitution, and defamation and tortious interference with contracts). Court declined to exercise supplemental jurisdiction over the P.R. law claims b/c they raised novel or complex issues re P.R. professional ethics, which was a novel issue for P.R. courts. Unintended consequences: Complete diversity required to maintain SMJ§1367 DOES NOT overrule Strawbridge’s complete diversity rule (§1367(b)) o Exxon Mobil Corp. v. Allapattah Services, Inc. (2005): the court interpreted §1367 to allow such smaller claims that don’t meet the amount in controversy requirement under the basic diversity statute, so long as the name party satisfied the amount in controversy requirement o General Rule: "If the court has original jurisdiction over a single claim in the complaint, it has original jurisdiction over a 'civil action' within the meaning of 1367(a)." o Exception: Incomplete diversity "destroys original jurisdiction with respect to all claims" Exclusion: “A failure to complete diversity, unlike the failure of some claims to meet the requisite amount in controversy, contaminates every claim in the action.” AIC aggregation rules: as long as one party meets the AIC requirement, the other claims that do not can still be heard in federal court What happens if a TPD is joined and the P doesn’t make a claim against the third party D, but they destroy complete diversity? CA-->NY Rule 14 NY impleads CA; P doesn't make a claim against CA CA TPD makes a claim against P and P counterclaims to CA TPD Complete diversity is not destroyed. If TPD makes a claim against P, and P then makes a counterclaim against TPD, then there could be argument that ancillary jurisdiction may allow the case to be heard in federal court b/c the counterclaim isn’t to the original D 3 CIVIL PROCEDURE OUTLINE 2010 - Kang REMOVAL – 28 U.S.C. §§1441, 1446, 1447 Qualifications of removal are based on status of case AT TIME REMOVAL IS SOUGHT (exception – see Catepillar) *Removal does NOT waive objection to personal jurisdiction ONLY UP: Remove from State to Federal court (doesn’t go the other way) if federal court had original jurisdiction over the claim. STRAIGHT UP: Can only be removed to federal court embracing the state court where the case was originally filed D’s only: §1441: removable if the case invokes SMJ (meets diversity or federal question). Defendant can remove if the case could have originally been brought in federal court. (a) Federal court must have had original jurisdiction over the case (b) LOCAL DEFENDANT RULE: a diversity case, even though there was federal original jurisdiction, can’t be removed if there is an in-state defendant. (c) If separate and independent claim is joined to a set of claims that are non-removable, the whole set of claims can be removed, giving temporary jurisdiction over the claims that really don’t have any grounds for jurisdiction so that jurisdiction can be sorted out later (i.e. dismissal of claims lacking SMJ) (d) Foreign state party can remove to federal court §1446: Procedure (a) File notice of removal in district court where state court is located (b) 30 days to file for removal after the receipt of service; one year limit to remove case based on diversity Must remove within 30 days from service of the document that first made the case removable (not from knowledge or courtesy copyMurphy Bros. v. Mitchetti Pip Stringing, Inc.) Circuits are split when it is more than one D as to whether the time period starts 30 days from the serving of the first D or from the particular D who initiates removal If multiple Ds, all Ds must agree to removal §1447: Remand to state court (c) 30 days to remand on the basis of any defect other than SMJ after filing of motion to remove; remand available any time before final judgment for lack of SMJ (e) Court has discretion to allow joinders that will destroy SMJ Caterpillar, Inc. v. Lewis (1996, p.215): Federal jurisdiction based on diversity can be sustained even if complete diversity doesn’t exist at the time of removal, as long as complete diversity exists at the time the district court enters judgment. District court’s error in failing to remand case improperly removed is not fatal to the ensuing adjudication if federal jurisdictional requirements are met at the time the judgment is entered. D prematurely filled for removal b/c there wasn’t complete diversity and also local defendant rule applied, BUT at the time of judgment, there was proper SMJ. CHALLENGING FEDERAL SMJ Rule 12(b)(1) Rule 12(h)(3): court can bring up question of SMJ sua sponte (on the court’s own motion) and dismiss the case 4 CIVIL PROCEDURE OUTLINE 2010 - Kang PERSONAL JURISDICTION A court cannot exercise power over a defendant if doing so would “deprive any person of life, liberty, or property, without due process of the law.” Personal jurisdiction is about the ability of the court to exercise power over the defendant. There are three grounds in which the government can assert power over the defendant: physical presence, contacts, and consent to jurisdiction. LAW Common law and due process clauses of the Constitution th th 14 Amendment for state courts and 5 Amendment for federal courts MACHINE 1) State’s long-arm statute or federal court’s long-arm statue: Rule 4(k)(1)(A) a. Federal court only has personal jurisdiction if the state court in the forum also has personal jurisdiction 2) Constitutional analysis: Is personal jurisdiction constitutional? Does it violate due process rights? a. Consent? b. Physical presence in the forum state? (DOESN’T APPLY TO CORPORATIONS) c. No consentGeneral or specific jurisdiction? Does the cause of action arise out of or related to the defendant’s contact’s with the forum state? i. Yesspecific jurisdiction 1. Purposefully availed minimum contacts 2. Fair play factors ii. Nogeneral jurisdiction 1. Systematic and continuous contacts iii. Ascertain the facts and analyze whether the facts satisfy the legal standard 3) Notice 4) Venue: localized jurisdiction in the state by district LONG-ARM STATUTES State long-arm statute gives power to the state and the federal long-arm statute gives power to the federal courts (4(k)(1)(A)). But th th the Due process rights as an individual (14 and 5 Amendments) limits the reach of the state/federal long-arm statutes. The constitutional analysis consists of determining whether the defendant has consented to jurisdiction or there is personal jurisdiction through physical presence or contacts in the forum state. FEDERAL LONG-ARM STATUTE Rule 4(k)(1): serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant (A): who is subject to the [personal] jurisdiction of a court of general [subject matter] jurisdiction in the state where the district is located Federal courts arms are only as long as the reach of the state courts in the forum state (B): who is a party joined under Rule 14 or 19 and is served within a judicial district of the United States and not more than 100 miles from whether the summons was issued [100-mile bulge rule] (C): when authorized by federal statute Rule 4(k)(2): For a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if: (A): the defendant is not subject to jurisdiction in any state’s courts of general jurisdiction; AND (B): exercising jurisdiction is consistent with the United States Constitution and laws *Someone who doesn’t have sufficient contacts in any state in the United States to establish personal jurisdiction but has contacts to the Unites States and there is a federal question, then serving summons establishes personal jurisdiction STATE LONG-ARM STATUE Gibbons v. Brown (FL Dist. Ct. App. 1998, p.155): Car accident in Canada between Gibbons (TX) and Mrs. Brown (FL). Gibbons sued Mr. Brown in FL in 1995. In 1997, Mrs. Brown sued Gibbons in FL, arguing that there was PJ over Gibbons b/c Gibbons brought the first suit in FL. FL’s long-arm statute is stricter than the federal long-arm statute, requiring more activities or contacts than the U.S. Supreme court for PJ. Gibbons did not engage in “substantial and not isolated activity within the state” b/c the only activity was the suit in FL over two years ago. Just b/c she brought a suit in FL doesn’t mean that she can be sued anytime in FL. 5 CIVIL PROCEDURE OUTLINE 2010 - Kang CONSTITUTIONAL ANALYSIS SPECIFIC JURISDICTION CASES CASE Pennoyer v. Neff (p.61) Milliken v. Meyer YEAR 1877 McGee v. International Life Insurance Company (p.83) Hanson v. Denckla (p.83) Shaffer v. Heitner (p.86) EFFECT ON PJ? NOTES In rem jurisdiction: power over a person’s property (exercised when the person is not present in the state) Publication service is ok In personam jurisdiction: power over a person Publication service not ok b/c D is not physically present in the state If domiciled in a state, then you are subject to personal jurisdiction in that state. You can be served in another state if you live in the forum state and are away from your residence for some purpose. Minimum contacts (measured through activities that show that the corporation gained the privileges and obligations of the state) and fair play and substantial justice The state has power over people and property inside its boundaries. Can’t serve someone outside of the forum state if they don’t reside there. 1940 International Shoe Co. v. Washington (p.75) FACTS No PJ over D’s who are physically absent from the state or have not consented to the court’s jurisdiction. Personal service must be served while the D is in the state and the original default judgment in the first suit is invalid and the sale of Neff’s property was invalid. 1945 1957 1958 1977 IS was subject to PJ in WA even though it was a DE/MO corp and had no offices or contracts in WA b/c IS had sufficient contacts from customers, $$ from WA customers, merchandise shipped to WA, advertisements, interstate business, sales people. IS purposefully availed themselves of the benefits of conducting business in the state Franklin took out a life insurance policy from D when he received a mail solicitation from them. He paid his premiums by mail to their office in TX. D never had an office or an agent in CA. PJ established in CA b/c D solicited business in CA through mail (conducted economic/business activity) and had a contract with a resident of CA. It would also be a disadvantage for P to have to litigate in TX. Donner created a trust while living in PA. DE bank was the trustee. She moved to FL and continued to conduct business re her trust in DE. There was no jurisdiction over the DE bank in FL b/c they did not solicit business sin the state (unilateral activity and no purposeful availment) and they conducted no business in FL (no minimum contacts). Heitner filed shareholder’s derivative suit against Greyhound (P owned one share). Court held there was no PJ over the board members in DE. Using IS model, their only contacts were the stock in the company and they were board members of a DE corporation. There was no reason to expect to be hailed to DE b/c they did not purposefully avail themselves of the laws of DE. There was also no consent to jurisdiction in DE just b/c they accepted a position as a board member. Purposeful availment (quid pro quo) through business conducted by mail across state lines, which means that D engaged in economic activity in CA. Contract must have substantial contacts with the forum State interests in providing effective means of redress for its residents when their insurers refuse to pay Unilateral business activity is not purposeful availment Contact must result from D’s purposeful availment International Shoe standard (minimum contacts) applied to all PJ cases (regardless of whether in rem, in personam, or quasi in rem). The defendant’s contacts with the forum must be such that maintenance of the suit would not offend traditional notions of fair play and substantial justice. Pennoyer established a doctrine of presence in the forum state for in personam jurisdiction, but if the D is not physically present in the forum state for proper personal service, in personam jurisdiction can still be found if the D has minimum contacts within the state. 1. Solicited the contract from the forum 2. Relatedness: claim arises from the contact 3. State’s interest in providing justice for its people Existence of a contract with a resident of a state is NOT enough to meet the minimum contacts req. if you did not purposefully avail yourself of the protections of the state No quasi in rem jurisdiction; can’t attach property to a claim that is unrelated to the claim State interests: DE doesn’t have strong interest in the corporations incorporated in the state, just those with property in the state 6 CIVIL PROCEDURE OUTLINE 2010 - Kang World-wide Volkswagen Corp. v. Woodsen (p.96) Burger King Corp. v. Rudzewicz (p.111) 1980 1985 Ps sued various Ds for a car crash in OK for defective design. WWV conducts no business in OK, no products are sold or shipped to OK, no agent, and no advertisements. The only contact was the P’s car. Financial benefits alone (w/o contacts) is not enough to establish PJ, especially b/c the person they sold the car to was in another state P’s signed a franchise agreement with BK that included a choice of law clause (FL). There was PJ in FL b/c P voluntarily accepted a 20-year contract with BK and the relationship with BK was not random, fortuitous, or attenuated. The Michigan office was not helpful, so their business dealings were with headquarters in FL. Fairness: Burden on D to show that forum is so gravely inconvenient that the D is at a severe disadvantage to the P Asahi (Japan) was joined to suit between Zurcher and Cheng Shin (Taiwanese) for defective tire valve. Z and CS settled, leaving CS and A in the suit. A manufactures the tire valves in Japan, selling some to CS which was only 1.24% of income in 1981, 0.24% in 1982). Asahi Metal Industry Co. v. Superior Court (p.105) 1987 PURPOSEFUL AVAILMENT: O’Connor/Rehnquist/Powell/Scalia: mere awareness that your products may end up in the forum is not sufficient for PJ; must have intent to serve forum. The acts of D must be purposefully directed toward the forum, not just placing your product in the stream of commerce. Brennan/White/Marshall/Blackmun: Putting yourself into the stream of commerce is purposeful availment b/c regular and extensive sales of component parts to a manufacturer it knew was making regular sales of the final product to CA was sufficient to establish minimum contacts in CA (mere knowledge is enough) Foreseeability that D’s conduct and connection with the forum state would make the D reasonably anticipate being hailed into the court Fair play factors: What is the burden on D? What are the interests of the forum state? What is the interest of the plaintiff in litigating the matter in the state? Does the allowance of jurisdiction serve interstate efficiency? Does the allowance of jurisdiction serve interstate policy interests? Purposeful availment of the benefits and protections of a state obtained through execution of a 20 year contract is grounds for PJ due to long term business relationship with FL. Fair play factors from WWV sometimes serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts (required). If the burden severely disadvantages D, then PJ may not lie. Fair play factors: Think about special difficulties with international litigation; if the burden is too high and unfair, then no PJ even if there are minimum contacts Foreseeability isn’t really a factor in determining PJ WWV clears this up and says that there is no foreseeability standard b/c the question is whether it is foreseeable for the D to be hailed to the forum, not whether the widget will end up in the forum based on their purposefully availed contacts. PJ can’t be grounded in a contract that was obtained through fraud, undue influence or overweening bargaining power *Choice of law clause: FL law will govern, but that doesn’t mean that FL is to be the forum Foreseeability does no independent work but is rather reasonable expectation that you’ll be hailed to forum through purposeful availment *(4-4-1 decision) Stream of commerce: justices are split on how the product being placed into the stream of commerce constitutes purposeful availment No law, just two theories (O’Connor and Brennan) *Gray v. American Radiator: forum state does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum state Stevens: shipping over 100,000 units annually constitutes purposeful availment 7 CIVIL PROCEDURE OUTLINE 2010 - Kang Pavlovich v. Superior Court (p.117) 2002 FAIR PLAY (majority): PJ would be unfair b/c two foreign parties and the transaction took place in Taiwan. The burden on D is severe; CA has no state interest; courts are wary of injecting jurisdiction over international Ds. P posted the source code of a program on the internet that injured DVD CCA (CA/DE). P didn’t know who owned the specific company his code would injure and his activities were not expressly aimed at the forum, nor was he benefiting from the benefits of CA. Court held that there was no PJ. Effects test (Calder v. Jones): a court can exercise jurisdiction over the D based on the effects of their conduct in that state (don’t have to step foot into the forum); actions must be “expressly aimed” at forum Knowledge that your conduct may harm industries in the forum is important to determining whether there is PJ, but the knowledge alone is not grounds for PJ Specific jurisdiction over a nonresident when 1) D has purposefully availed themselves of the forum benefits; 2) controversy is related to or arises out of the D’s contacts with the forum; and 3) the assertion of PJ would comport with fair play and substantial justice. GENERAL JURISDICTION A corporation can be sued on any claim in the state where they have substantial and sufficient contacts (every corporation has one state, i.e. Microsoft and WA); usually the state of incorporation or the state of domicile has general jurisdiction CASE YEAR FACTS EFFECT ON PJ? NOTES Perkins v. Benguet Consolidated Mining Co. (p.123) Heliocopteros Nacionales de Columbia, S.A. v. Hall (p.124) 1952 1983 D conducted its business from Ohio (Philippines corporation). The breach of contract claim did not arise from D’s contacts with Ohio, so sought general jurisdiction. Court held OH did have general jurisdiction b/c D had continuous and systematic contacts (maintained an office where personal and business affairs were conducted; kept office files, correspondence, salary checks distributed, bank accounts, meetings, supervision; president personally served in OH). H (Colombian) has contract with TX/Peruvian company to supply helicopters. One of their planes crashed. Suit was brought in TX state court. SC held that TX did not have PJ. Continuous and systematic contacts not established with one trip to Houston by President, checks drafted from a TX bank, over $4 million worth of purchases (helicopters that constituted about 80% of fleet, spare parts, and accessories), and training in FW. “continuous and systematic contacts” – contacts sufficiently substantial and of a nature as to permit the forum to have general jurisdiction to hear a case where the cause of action arose from activities distinct from D’s activities in the forum “Even when the cause of action does not arise out of or relate to the foreign corporation’s activities in the forum State, due process is not *Jurisdiction by necessity b/c unclear whether there was another forum (such as the Philippines) where suit could have been brought No continuous and systematic contacts 8 CIVIL PROCEDURE OUTLINE 2010 - Kang PHYSICAL PRESENCE Burnham v. Superior Court (1990, p.126): D (NJ) sued in CA on a claim that didn’t arise in CA but served with process in CA. All nine justices agreed that CA had general jurisdiction. *4-4 split Scalia/Rehnquist/Kennedy/White: If the D is voluntarily physically present in the forum and is served in the forum, then there th is PJ over D. Traditional basis exists along with the IS model and doesn’t violate the Due Process Clause of the 14 Amendment. Minimum contacts analysis is only a substitution for physical presence; service of process when you are present in the forum is always grounds for jurisdiction. Pennoyer is alive. Brennan/Marshall/Blackmun/O’Connor: Must apply IS every time and the traditional basis are gone. Under IS model, there is jurisdiction b/c he was availing himself of the health and safety guaranteed by the state’s police, fire, and emergency medical services, free to travel on state’s roads and waterways, and enjoys the fruits of CA economy for three days (business trip and visit children). CONSENT Consent to suit in a particular state also establishes jurisdiction in that state. ELEMENTS OF CONSENT Fair play factors? Balance of fairness and reasonability (p.137) Bad faith? Fraud or overreaching? Notice of provision? Explicit Implied Voluntary **gold standard** Implied in fact: don't explicitly verbalize consent, but actions clearly indicate consent (consented by your actions) Implied consent from presence in the forum and contacts in the forum Coerced A threat is an offer you wish you never received: "your money or your life" Implied in law: imply consent by force of law, both notice and consent (e.g. boilerplate language in a contract even if you don't read it-->constructive notice) Manager/director position Shaffer v. Heitner language-->statute that treats acceptance of directorship as consent to jurisdiction in the state o DE did pass a statute afterwards that if you accept a directorship position in DE, then you consent to PJ in DE Registration Knowlton v. Allied Van Lines, Inc. (8th Cir): Appoint agent to receive service of process and consent to that jurisdiction Siemer v. Learjet (5th 92): mere act of registering an agent wasn’t consent Carnival Cruise Lines, Inc. v. Shute (1991, p.135): forum selection clause in contract requiring passengers to consent to suit in FL; court held that you can waive your constitutional protections and that minimum contacts are not necessary when there is consent (through the waiver on the P’s ticket). Contract with forum selection clause was held valid b/c the ticket had a warning to read the terms on the back where the clause was located. The clause was fair b/c CC didn’t have a bad faith motive for including the clause, their principal place of business is in FL (with much of their business in FL), and they didn’t obtain consent through fraud or overreaching. P also had the option of rejecting the contract. *Ex ante boilerplate language is enforceable and a means of consent In any contract you draft, you should include a forum selection/choice of law clause that is beneficial for your client K CLAUSES: Choice of law: don’t tell you which court you have to file in, but only what substantive law governs Consent-to-jurisdiction clauses: parties (or one of the parties) consent to suit in a particular place, thus waiving challenges to personal jurisdiction; permits suit be brought in a specific place, but doesn’t require it Forum selection clause: limit forum to a single location Arbitration clauses: disputes taken out of judicial system and in an arbitration procedure 9 CIVIL PROCEDURE OUTLINE 2010 - Kang NOTICE – Rule 4 How do we serve an individual? Rule 4(e)(1): federal court incorporates methods for serving process allowed by the state in which the federal court sits or the state in which service is actually effected Rule 4(e)(2): Personal service, substituted service (someone of suitable age who resides at D’s home), agent of the company How do we serve a corporation? Rule 4(h): serve an officer or a managing/general agent (someone w/ enough responsibility to be considered reliable for passing along important documents) Waiver of service by mail Rule 4(d): D can waive service by return a form within a specified time period (30 days after request sent or 60 days if outside U.S. judicial district) Jurisdictional limitations: Court must have power over the defendant, flowing from the relationships based on contacts or D’s consent, either through prelitigation agreement (Carnival) or waiver (when D appears but fails to challenge jurisdiction). Rule 4(k)(1): if the factors for personal jurisdiction exist and the D is served in the forum, then jurisdiction is established Rule (4(k)(1)(b)): party joined to litigation under Rule 14 or 19”100-mile bulge” in the personal jurisdictional reach of the federal district court, even if the state didn’t have PJ over the party originally Rule 4(k)(2): when D isn’t subject to jurisdiction in any state court and exercising jurisdiction is consistent with U.S. Constitution Assume D has enough national contacts, but not enough contacts for PJ in a specific state Mullane v. Central Hanover Bank & Trust (1950, p.141): "Notice reasonably calculated under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Compliance with state notice statute isn’t enough if it doesn’t meet the constitutional notice requirements because it’s a deprivation of life, liberty or property (5th and 14th Amendments and their right to sue). Court has power to hear the case in NY b/c the trust was established in NY (jurisdiction). STANDARD: People are identifiable and you have access to their contact info: personal service People are impossible to identify: constructive notice is ok Notice is possible but burdensome: must make reasonable efforts to find the people (due diligence) using reasonable business practices Constructive notice (publication notice): notice through the newspaper, in most instances, is not good because it doesn’t satisfy the Mullane standard. However, Mullane does permit constructive notice if notice could not be provided by better means b/c identities are not known. Jones v. Flowers (2006): If P is aware that D did not receive notice, then you must take other measures. SC determined that the two certified mail notices sent to P’s last known address by the state authorities prior to a tax sale was not sufficient notice. No suggestions were given as to what additional steps the state should have taken in order to contact P. CLASS ACTIONS Rule 23(c)(2) requires individualized notice for some classes while other only receive “appropriate” notice b/c personal notice might be overly burdensome [see CLASS ACTIONS] COMPLICATION Shutts: notice and opt out is sufficient, but is it also necessary? Those who could not be reached were excluded from the class It's only optional 23(c)(2)(A), but necessary? Is it necessary that those who can’t be reached be kicked out of the class? Mullane: Those who could not be reached can be included in the class "Notice reasonably calculated under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." It is unclear what the courts would do if the group of people who could not be reached were actually included in the class b/c in Shutts those people were excluded. In Mullane, the courts say that it is ok for those who could not be reached to be included in the class. In Shutts, the notice and opt out option was sufficient notice, but the court doesn't say that excluding those who couldn't be reached is necessary for notice standards to be satisfied. 10 CIVIL PROCEDURE OUTLINE 2010 - Kang WAIVER OR CHALLENGING PERSONAL JURISDICTION COMMON LAW: Some courts still follow this, but most states have adopted rules similar to federal rules. Special appearance: defendant appears especially for the SOLE purpose of objecting to the court’s personal jurisdiction. If the defendant raises any issue other than personal jurisdiction, then they are considered to have WAIVED their objection [more restrictive]. *NOTE: A D who stays away entirely from the forum doesn’t waive their objection to PJ and can raise their objection collaterally when the P comes to the D’s state to enforce their default judgment FEDERAL LAWMOTION Removing a case to federal court does NOT waive the right to object to personal jurisdiction. Once removed, the defendant can challenge personal jurisdiction with a Rule 12(b)(2) motion. This objection can be included with other objections or defenses, BUT the motion must be raised in D’s first response to the complaint (pre-answer motion or answer, if no pre-answer motion was filed). What happens if objection to PJ is denied?-->D will have to litigate the case based on merits, and if they lose, can appeal based on lack of PJ. If D wins on appeal, the case will have to be relitigated in a court that does have PJ over the D. Challenge in the “enforcing court” Full Faith and Credit Clause – U.S. Constitution: states generally have to honor each other’s judgments But the enforcing court entering judgment on a judgment can determine whether there was personal jurisdiction in the original case. If there is PJ, then they enforce the other state’s judgment; if not, then they don’t enforce the judgment. Enforcing state doesn’t have to have personal jurisdiction over the D in order to enforce the prior court’s judgment. It just has to be in a state where the D has property that can be sold in order to enforce the judgment. *Default assumption: if the parties don’t bring up any challenges to venue, PJ, etc. (except for SMJ), the court won’t bring it up sua sponte and it is considered waived (Rule 12(h)) 11 CIVIL PROCEDURE OUTLINE 2010 - Kang VENUE – 28 U.S. C. §1391 *Only applies to cases originating in federal court (not to state court cases or cases removed from state to federal court) §1391(a) diversity cases If all Ds in same state, where any D resides Substantial TorO occurred If strike out on first two, wherever any D subject to PJ §1391(b) federal question cases If all Ds in same state, where any D resides Substantial TorO occurred If strike out first two, wherever any D may be found Found v. Subject to PJDifference? Complicated because of Burnham, where physical presence in the forum establishes personal jurisdiction RESIDE: (akin to domicile) Individuals: similar to citizenship but localized to a specific district within the state Corporations: don’t confuse with 1332(c) 1391(c): corporation resides in any district in which it is subject to personal jurisdiction at the time of the action More than one judicial district, corporation resides in the district which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate state Aliens: §1391(d): can be sued anywhere, includes individuals and corporations TRANSFER Can transfer from one federal trial court to another [§§1404, 1406] TRANSFEREE MUST BE A PROPER VENUE AND MUST HAVE PERSONAL JURISDICTION OVER THE DEFENDANT §1404 applies when the Transferor was a proper venue. Transfer permitted for “convenience of parties and witnesses” and “in interest of justice” Can transfer to any district or division “where it might have been brought”make sure there is SMJ, PJ, and venue in forum The defendant’s waiver on issues of PJ and venue, after the case has begun, are insufficient to transfer if D moves to transfer to a district where there was no PJ originally (Hoffman v. Blaski) Can’t take ex post consent to justify transfer b/c it would allow reverse forum shopping Apply the laws of the first courts (Van Dusen v. Barrack (1964): held that even when a case is transferred to a federal court in another state, it takes with it the substantive law and choice of law rules of the state where it was originally filed) §1406 applies when Transferor is an improper venue. Court can dismiss or transfer to correct venue in the interest of justice §1631 Transferor lacks personal jurisdiction. Court can transfer to the correct court and there is no discussion of statute of limitations Whose law applies? Transfer under §1404(a): law of the transferor court (origin court) to shut down gaming (Van Dusen v. Barrack) Transfer under §1406(a) (improper venue): law of the destination court b/c that’s where it should have been brought Transfer under §1631 (no PJ): law of the destination court b/c you’re acting like the case was originally filed in the destination court One court held differently in §1631 transfer (Ross v. Colorado Outward Bound School) Forum non conveniens: law of the destination court, not the origin court Dee-K Enterprises, Inc. v. Heveafil Sdn. Bhd. (E.D. VA 1997, p.160): Sued a number of rubber thread corporations alleging international conspiracy to fix prices. There is PJ over the foreign and domestic corporations, but uncertain whether venue is proper for U.S. corps. Venue lies anywhere for foreign companies; §1391 trumps any special venue statues. Analyze PJ for U.S. D’s b/c residence and events didn’t apply. It is uncertain whether contacts are in the W.D. of Virginia rather than the E.D. of Virginia. 12 CIVIL PROCEDURE OUTLINE 2010 - Kang FORUM NON CONVENIENS (FNC) MACHINE 1) Is there an alternative forum? 2) If there is an alternative forum, does the substantive law of the alternative forum make it so that there would be “no remedy at all”? 3) If not, then balance the Gilbert factors and determine if the public and private factors cut in favor of FNC or not. DOCTRINE Court dismisses b/c the litigation would be far more appropriate in another court and transfer is impossible b/c the other court is in a different judicial system (foreign) and therefore you can’t transfer the case *Piper Aircraft v. Reno] *applicable to both state and federal courts Presumption in favor of P’s initial choice of forum, BUT when P is foreign and chooses a non-home forum, their choice is given less deference Substantive law: ordinarily don’t care, but only if the alternative forum is so inadequate as to be “no remedy at all” o Substantive law being less favorable isn’t “no remedy at all” o Change in substantive law isn’t usually given much weight in the FNC inquiry o Difference in damages amounts is not grounds to deny FNC (Gonzales v. Chrysler Corp.) GILBERT INTEREST FACTORS (Gulf Oil Corp. v. Gilbert) – balance o Public factors: Relative ease of access to sources of proof availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing witnesses Possibility of viewing the premises, if appropriate to the action All other practical problems that make trial of a case easy, expeditious and inexpensive o Private factors Administrative difficulties flowing from court congestion Local interest in having localized controversies decided at home Interest in having the trial of a diversity case in a forum that is at home with the law that must govern the action Avoidance of unnecessary problems in conflict of laws, or in the application of foreign law Unfairness of burdening citizens in an unrelated forum with jury duty o Once case is dismissed for FNC, then burden is on P to re-file the case in the appropriate forum Piper Aircraft v. Reyno (1981, p.164): Aircraft rash in Scottish highlands, resulting in the death of the Scottish passengers. Negligence and S/L suits brought against U.S. aircraft and propeller manufacturers in CA court. Case removed to federal court based on diversity, then transferred by Ds to M.D. of PA (where they conduct business). Ds then moved to dismiss on grounds of FNC. Scotland not unfair alternative forum b/c negligence is still available, although S/L isn’t. Private interest factors included that D wouldn’t be able to implead third-party defendants, fewer evidentiary problems if trial held in Scotland since a large proportion of the relevant evidence is in Great Britain; D’s want to join D’s from Great Britain who could relieve their liability. Scotland also has a very strong interest in litigating in Scotland b/c the accident occurred in their airspace, decedents were all Scottish, and all potential Ps and Ds were either Scottish or English. American interest wasn’t sufficient to justify the enormous commitment to judicial time and resources. Bhopal and the Crime of Union Carbide – Leak of methyl isocyanate (toxic gas) that caused injury to an entire city. Suit was originally brought in NY District Court and D (Union Carbide) moves to dismiss for FNC, calling it “gratuitous denigration to call the Indian legal system deficient.” Motion was granted. Case was re-filed in India, where it took five years to settle and Ps received $470 million (insurance payout). 13 CIVIL PROCEDURE OUTLINE 2010 - Kang PLEADING – Rules 7-9 COMPLAINT Rule 8(a): A pleading that states a claim for relief must contain (1) [an allegation of jurisdiction]; (2) a short and plain statement of the claim showing that the pleader is entitled to relief; and (3) a demand for judgment for the relief sought, which may include relief in the alternative or different types of relief. Bell v. Novick Transfer Co. (MD 1955, p.17) – P’s complaint was sufficient under the requirements of Rule 8’s short and plain statement criteria, even though it was not sufficient under Maryland practice. The complaint alleged an accident occurred due to D’s negligence, but failed to allege specific acts of negligence. If D needs more information, they need to obtain it through interrogatories or other discovery practices. GENEROUS STANDARD: Conley v. Gibson (1957): “The Federal Rules of Civil Procedure do not require a claimant to set out in detail the facts upon which he bases his claim. To the contrary, all the Rules require is “a short and plain statement of the claim” that will give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.” If conceivable, then sufficient and survives 12(b)(6). “complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Haddle v. Garrison (S.D. GA 1998, p.340): P’s claim that four D’s interfered with his at will employment survived 12(b)(6) motion b/c it may give rise to a claim for damages under the Civil Rights Act of 1871 (at will employment is considered property to be protected) PLAUSIBILITY STANDARD Bell Atlantic v. Twombly (2007, p.359): overrules Conley and states that a pleading requires “enough facts to state a claim of relief that is plausible on its face” (not just possible or conceivable). The claim must raise a reasonable expectation that discovery will likely result in evidence that the D’s did engage in the alleged acts (conspiracy). Court found that the parallel behavior was not plausible b/c it was more likely that explained by lawful, unchoreographed free market behavior (competition). A recitation of the elements of a cause of action is not enough. Facts are needed to prove or tend to prove the cause of action. Conclusory statements are not enough. Iqbal v. Ashcroft (2009, FRCP 418): three step analysis 1) Strike out legal conclusions/conclusory statements 2) Factual allegations are assumed as true (P is not lying about the facts) 3) Plausibility evaluation based on the factual allegations – the facts must be such that the court can draw a reasonable inference that the D is liable for the alleged misconduct Applying Twombly, the factual allegations that FBI detained thousands of Arab Muslim men as part of 9/11 investigation and the policy of holding those detainees in highly restrictive conditions, if taken as fact, would lead to the conclusion that Ds purposefully designated detainees of high interest based on race, religion, or national origin. BUT there are other more likely explanations, so the factual allegations aren’t enough b/c it’s more likely that the policy adversely affected Arab Muslim men b/c we’re at war with the Middle East. Court dismissed the case for failure to state a claim. DISSENT: The majority incorrectly applies Twombly to the case. Twombly doesn’t require a court at the motion-to-dismiss stage to consider whether the factual allegations are probably true. Rather, a court must take the allegations as true, no matter how skeptical the court may be (exception for obviously false allegations). The complaint alleged that Ashcroft and Mueller knew of and condoned the discriminatory policy their subordinates carried out, and that they affirmatively acted to create the policy. Both admitted they are liable for their subordinates conduct. There is no clear standard regarding pleadings. Conley held that the only grounds for dismissal of a complaint were if it was beyond doubt that P could not prove the allegations asserted. Twombly, a federal antitrust case, overruled Conley’s pleadings standard, requiring the claims be plausible. Iqbal further heightened the Rule 8 pleading standard by requiring the factual allegations asserted be plausible, relying on our common sense and experiences. Iqbal also clarified that Twombly doesn’t apply to only antitrust cases, but all Rule 8 pleadings. Decision of whether pleading is sufficient has nothing to do with discovery (Twombly policy). It will likely not apply to standard slip and fall cases, but may detrimentally affect employment discrimination cases, etc. 14 CIVIL PROCEDURE OUTLINE 2010 - Kang SANCTIONS Bridges v. Diesel Service, Inc. (E.D. PA 1994, p.13): P’s claim under the ADA alleging D dismissed him from job b/c of a disability was dismissed b/c P didn’t file a charge with the Equal Employment Opportunity Commission (EEOC) until after commencement of the suit, which was a required step before filing suit. No sanctions (Rule 11) were imposed b/c P learned their lesson and no deterrence was necessary. OPTIONAL PRE-ANSWER MOTION Rule 12(b) motions fire one, fire all b/c it might end up being waived 12(h): when claims are waived 12(b)(2)-(5) are waived if not made in the pre-answer, answer, or amendment (Rule 12(g)(2)) 12(b)(6) can be stated in any pleading, Rule 12(c), or at trial ANSWER Response to the allegations in the complaint must: Admit / Deny / Don’t know = denial / Silence = admission – Rule 8(b) When denying, make sure denial is specific (Zielinski v. Philadelphia Piers, Inc.) Affirmative defenses: Admit, but [DEFENSE] – Rule 8(c) Launch claims: Counterclaim: D makes claims against P (Rule 13); compulsory counterclaims are waived if not in the answer Cross-claim: D1 sues D2 b/c they are the one who caused the injury (Rule 13) Impleader: Add a third party defendant (Rule 14) Zielinski v. Philadelphia Piers, Inc. (E.D. Pa. 1956, p.393): D made a general denial in their answer (Rule 8(b)) rather than a specific denial, resulting in P suing the wrong D (PPI wasn’t the actual employer of the driver who injured P). D’s general denial could have denied employment, but P probably thought the denial was of the negligence and carelessly managed allegations. At trial, P found out that PPI was not Johnson’s real employer. Court granted motion to find that PPI owned and operated the lift (even though they didn’t) and Johnson was an employee of PPI. Fair b/c SOL had run and both PPI and Carload Contractors were represented by the same insurance company (no harm, no foul). The doctrine of equitable estoppel is applied to prevent a party from taking advantage of the statute of limitations where the P has been misled by conduct of such party and they are estopped from taking advantage of a document of record where the misleading conduct occurred after the recording. AMENDMENTS – Rule 15 Courts are pretty flexible when it comes to amending complaints, so long as there isn’t great injustice on either side. 15(a): “*t+he court should freely give leave *to amend+ when justice so requires.” 15(b): deals with amendments during/after trial to reflect the introduction of evidence that is not within the scope of the pleadings 15(c): deals with amendments that are interposed after the statute of limitations on the “new” claim has run th Beeck v. Aquaslide ‘n’ Dive Corp. (8 Cir. 1977, p.403): P injured on a slide that was later determined to not be manufactured by Aquaslide. Using the information from three insurer investigations, D admitted to manufacturing the slide in the answer. SOL expired and 6.5 months later, D moved to amend the complaint after an on-side investigation. Court allowed amendment and severed the trial (Rule 42(a)), and determined that D didn’t manufacture the slide. Aquaslide was slightly blameworthy b/c they should have conducted an onsite visit earlier instead of relying on insurance reports and were on notice to “Aguaslides,” but they would be unduly prejudiced. D didn’t act in bad faith and the slight prejudice to P was not enough to deny the amendment. P can sue the counterfeit manufacturer for fraud (but the damages aren’t as high as products liability). REPLY (if there is a counterclaim) Mandatory for counterclaims if in the answer, the counterclaim is clearly designated or labeled as a “counterclaim” (Rule 7(a)) JUDGMENT ON THE PLEADINGS – Rule 12(c) STANDARD: used when there is an affirmative defense that would end P’s claim, such as statute of limitations MATERIALS: Look at both pleadings (complaint and answer) * 12(d): move for a motion under Rule 12(b)(6) or 12(c), the court will just consider it as a summary judgment b/c you’re looking a documents other than the pleadings (Rule 56) 15 CIVIL PROCEDURE OUTLINE 2010 - Kang DISCOVERY – Rules 26-37 * Formal discovery not the only means of gaining information. Can uncover facts through independent factual investigation (legwork, telephone calls, informal interviews, examination of public records, online searches, etc.) STANDARD: Rule 26(b)(1): allows the parties, without court approval, to seek discovery “regarding any nonprivileged matter that is relevant to the party’s claim or defense.” If a party shows “good cause” the court may grant even broader discovery “of any matter relevant to the subject matter involved in the action.” TIMING: Before trial Districts courts have a lot of power at the discovery stage b/c you can’t appeal a discovery order with a higher court. You have to wait for a final judgment on the case in order to appeal any issues with discovery, whether information is irrelevant, etc. RELEVANCE Information is relevant if the information tends to prove or disprove something the governing substantive law says matters. If it doesn’t matter, the law of evidence will prevent that information from being presented at trial (inadmissible). Is the evidence probative of the allegation that is material to the legal claim? Probative: Does evidence “wiggle” the mind? Does it make allegation more likely or less likely? Material: Is allegation material to the legal claim under the substantive law? Davis v. Precoat Metals (N.D. Ill. 2002, p.417): Request for all discrimination complaints to the company from its Chicago plant employees from 1998 to Feb. 2002 that were based on race and national origin discrimination were relevant to P’s claim for employment discrimination based on race and was not privileged. The information could emphasize a history/pattern of race and national origin discrimination. The request wasn’t overly broad b/c the request was focused on issues related to P’s claim. Steffan v. Cheney (D.C. Cir. 1990, p.419): Questions regarding whether P was engaged in homosexual conduct during or after his tenure as a midshipman was not relevant to his claim that he was constructively discharged and challenged the constitutionality of the regulations that provided for the discharge of homosexuals. Also, b/c the district court is reviewing administrative law, the relevance is further limited b/c the board just indicated he was discharged b/c he stated he was gay, not anything about his conduct. TOOLS OF DISCOVERY – Rules 26-37 DISCOVERY TOOL RULE NOTES TIMELINE Rule 16(b) requires that the judge hold a scheduling conference to discuss how discovery and pretrial will proceed within 90 days after D’s appearance or 120 days after service Rule 26(f)(1) requires the parties meet ASAP (w/o the judge) and at least 21 days before a scheduling conference Rule 26(a)(1)(C) requires the parties to exchange disclosure lists at the Rule 26(f)(1) meeting or within 14 days after it (at least 7 days before the scheduling conference and at least 4 months after the complaint is served on the D) *timeline is different for expert testimony and pretrial disclosures required by Rules 26(a)(2) and (3) Rule 30(a)(2)(A)(i): Without permission, the total number of depositions taken by one side can’t exceed ten, no deposition may exceed a day of seven hours, and no person may be deposed a second time without the permission of the court or the other side Initial required disclosure Rule 26(a) Must provide even if the opposing party doesn’t ask for it (people, names of witnesses, damages, etc.) Rule 26(a)(1) requires exchange of information that the disclosing party may use to support claims or defenses Rule 26(a)(2) requires disclosure of the identities of expert witnesses along with their written report and CV Rule 26(a)(3) requires disclosure of the list of witnesses and documents or exhibits it intends to produce at trial Written and oral depositions Rule 30-31 In person/cross examination; can depose parties and non-parties (through subpoena) where they are pulled in for a series of questions to be answered under oath. There can be objections to particular questions (Rule 30(d)). Can bring a lawyer. Expensive. Written interrogatories Rule 33 Written questions that you can only serve to parties; other side must sign under oath. Objections (Rule 16 CIVIL PROCEDURE OUTLINE 2010 - Kang Document production From party: Rule 34 From nonparty: Rule 34, 45(a)(1)(C) Physical and mental Examinations Admissions Rule 35 Rule 36 33(b)) Advantages: Cheaper for the interrogator Identify persons, things, documents, and digital information that is not on the other party’s disclosure list but might be useful to your argument Drawbacks: Can’t follow up to evasive or unsatisfactory answers Limit of 25 questions unless judge grants additional interrogatories but must be consistent with Rule 26(b)(2). From party: Producing documents, electronically stored information, and tangible things, or entering onto land, for inspection and other purposes Includes any tangible item, land, and electronically stored information (email message on a hard drive, backup tape), photograph, videotape, and documents 34(b)(2)(E)(i): “A party must produce documents as they are kept in the usual course of business or must organize and label them to correspond to the categories in the request.” Rule 45(a)(1(A)(iii): requesting documents, etc. from nonparties through a subpoena Production of documents and things; good cause requirement Useful as a quasi-pleading device for admission of small facts that aren’t really at issue and takes an issue out of controversy and eliminates undisputed issues. Silence is taken as an admission. SANCTIONS (Rule 37(c)(2)) for not answering Ensuring Compliance Rule 37 imposes punishments from awards of expenses to dismissals of an entire case or the entry of a default judgment 37(d) and (f) authorize some sanctions on the occurrence of misbehavior 37(b) other sanctions cannot be sought until after the court orders a party to comply with discovery request Rule 26(g) authorizes attorney fees to be an appropriate sanction for most violations of its obligations Can go to the judge to file a motion to compel discovery Involuntary dismissal (Rule 41(b)): if P misbehaves during discovery, you can sanction P by dismissing the case 17 CIVIL PROCEDURE OUTLINE 2010 - Kang LIMITS TO DISCOVERY PRIVILEGE Privileges typically protect information from certain sources; not meant to block the underlying facts th Self-incrimination in criminal cases (constitutionally protected by the 5 Amendment)can’t ask a D if they committed a crime Attorney-client: protects communication between lawyers and clients concerning the matters the lawyer is handling for the client o Courts have refused to hold that every employee of a large corporation is a “client” for lawyer-client privilege o Upjohn Co. v. United States (1981): held that the attorney-client privilege extended beyond the “control group” (top management) in corporations Doctor-patient Spousal (protecting communications between spouses) Any privilege can be waived Failing to assert, or by taking some action inconsistent with claiming the privilege (disclosing information to a third party; filing a cause of action, such as intentional infliction of emotional distress that opens the door to psychological history) “privilege log”: list of documents removed from production based on a claim of privilege must be compiled on a privilege log and provided to the party requesting the documents; should provide sufficient information about the documents so that the other party can assess the privilege claim of the documents Butler v. Rigsby (LA 1998, p.30): P was hit by a car driven by D; P sued for negligence in federal court based on diversity jurisdiction. D wanted information from two hospitals that were not parties in the suit but treated the Ps. Court held that listing of the total # of patients referred to hospitals by P’s attorneys was relevant b/c it could show a pattern of channeling clients to the hospital and could be a reason for the hospital’s bias. The information was also no privileged. The computer printout of hospital’s current patients was privilege and the identity of patients was not relevant. WORK PRODUCT PROTECTION Rule 26(b)(3): work product in anticipation of trial is not discoverable unless discoverable under Rule 26(b)(1) or party shows substantial need for the materials and can’t obtain it w/o undue hardship Includes work product from any agent (not just attorneys) Protects documents and tangible things that are prepared in anticipation of litigation or for trial (memoranda, briefs, communications, and other writing prepared by counsel for own use in client’s case); attorney’s mental impressions, conclusions, opinions or legal theories Doesn’t protect underlying facts, just the work product that may contain the facts If court orders work product discovery, then the court must protect mental impressions, conclusions, opinions, or legal theories (Rule 26(b)(3)(B)) An individual can obtain a copy of their own written statement (way to get around work product protection) Hickman v. Taylor (1947, p.442): Statements of the crew members that D obtained prior to suit (in preparation) were relevant to contextualizing the tug boat accident. They were not under attorney-client privilege b/c privilege doesn’t extend to information which an attorney secures from a witness while acting for his client in anticipation of litigation, not does the privilege concern the work product. D claimed work product protection even though the documents were relevant and not privileged. If work product was available, it would undermine the adversarial process of litigation True privilege is absolute unless it is waived. Work product is qualified privilege. All written materials obtained or prepared by an adversary’s counsel with an eye toward litigation are not necessarily free from discovery in all cases: Discovery proper if relevant and non-privileged facts are hidden in an attorney’s files and production of these facts is essential to the preparation of one’s case or help locate the existence or location of relevant facts Witness is no longer available 18 CIVIL PROCEDURE OUTLINE 2010 - Kang SUMMARY JUDGMENT – Rule 56 STANDARD: Summary judgment: Court should grant summary judgment only when there is “no genuine issues as to any material fact” (or “genuine dispute as to any material fact”). Facts are not disputed, rather the dispute is about law, or where the law is clear but one party lacked evidence supporting a critical element of their case. Trial is pointless. “viewed in the light most favorable to the party opposing the motion” There can be partial summary judgment on subportion or subissue of the lawsuit Specific evidence will generally be more compelling that general evidence (Bias v. Advantage International, Inc.) TIMING: before trial, but after discovery MATERIALS: pleadings and discovery materials Default judgment (Rule 55): D fails to answer a complaint entirely or fails to defend Dismissal (Rule 41(b)): P does not obey an order of the court during the proceedings Voluntary dismissal (Rule 41(a)): P can seek if they think they will be better off starting the suit over OLD STANDARD Burden on the moving party to prove absence of GIMF Adickes v. S. H. Kress Co. (1970): moving party has the burden of showing the absence of a genuine issue as to any material fact. The material they submit must be viewed in the light most favorable to the opposing party. Moving party must show that the other party will not prevail at trial. Kress had the burden of foreclosing the possibility that there was a policeman in the store and the police man reached an understanding with the Kress employee that P not be served. Summary judgment improper. NEW STANDARD Moving party may meet its burden of persuasion by demonstrating that the nonmoving party failed to supply sufficient evidence of a GIMF; burden shifts onto nonmoving party to show that there is GIMF (court draws inferences in the nonmovant’s favor). The nonmoving party gets the advantage that the court must draw all justifiable inferences in its favor (Anderson v. Liberty Lobby), but the nonmoving party has to do more than create a “metaphysical doubt (Matsushita Electric). Celotex Corp. v. Catrett (1986, p.529): Movant is not required to foreclose the possibility of GIMF, but rather show the lack of evidence on the other side. Because it’s the P’s responsibility to bear the burden of proof to support her claim with evidence; if P can’t, then D can move for summary judgment and point out there is no evidence to support the claim (reactive stance). Adickes means that “the burden on the moving party may be discharged by ‘showing’—that is, pointing out to the District Court—that there is an absence of evidence to support the nonmoving party’s case…” It is not saying that the burden is on the moving party to produce evidence showing the absence of GIMF. Adequate time to conduct effective discovery, which should have produced sufficient evidence to prove causation Bias v. Advantage International, Inc. (1990, p.535): Summary judgment held valid b/c there was no GIMF re Bias’s insurability b/c the family claimed he was not a drug user and the D produced two teammates from school who described specific instances where he dealt and used cocaine. P bears the burden at trial to prove that Bias was insurable. Along with the two witnesses, D also provided evidence that insurance companies ask about an applicant’s prior drug use at some point in the process. P offered testimonies from parents and coach, along with prior drug tests, but none of the evidence contradicted D’s testimonies. P also failed to refute D’s evidence re jumbo life insurance policies and drug use. Court concluded that Bias was a drug user and was not insurable. The specific evidence provided by Ds trumps the general denials from P. *Note: usually the jury determines the credibility of a witness rather than the judge. So in Bias, why was the judge allowed to determine that the testimonies of two of Bias’s teammates were more credible than the testimonies of his parents and coach and the drug tests? Plaintiff’s never produced evidence that the credibility of the testimonies should be questioned. th Houchens v. American Home Assurance Co. (4 Cir. 1991, p.34): D filed for summary judgment on P’s claim to recover the insurance policies for her husband’s accidental “death.” P could not prove that her husband died and that his death was accidental. D argues that husband’s death could not be accidental (suicide or natural causes). Judge granted summary judgment for D b/c the presumption of death does not mean a presumption of accidental death. 19 CIVIL PROCEDURE OUTLINE 2010 - Kang TRIAL – Rule 50 JUDGE v. JURY? Basic test is whether reasonable persons could differ; if they could, the court should defer to the jury on the ground that its members are reasonable person whose verdict represent one of several reasonable views [Boeing Co. v. Shipman (5th Cir. 1969)] A mere scintilla of evidence is insufficient to present a question for the jury JUDGMENT AS A MATTER OF LAW (JMOL) Judgment as a matter of law (JMOL)/Directed verdict (DV) (Rule 50(a)): during the trial stage, the case is taken away from the jury and the judge makes a decision on the case as a matter of law. Rule 50 does not grant the judge from making a JMOL motion on their own, BUT the judge can hold a sidebar and hint that they will entertain pre-verdict motions. STANDARD: “a reasonable jury would not have legally sufficient evidentiary basis to find for that party on the issue” *same standard as Rule 56 (summary judgment) When there is a direct conflict of evidence, then direct evidence generally will defeat circumstantial (but this is not always the case). [e.g. DNA in criminal cases v. eye witness account] TIMING: after all parties have been heard but before case goes to the jury MATERIALS: pleadings, discovery, trial, and evidence Reid v. San Pedro, Los Angeles & Salt Lake Railroad (Utah 1911, p.553): Court held that the trial court should have directed a verdict for D b/c there was not enough evidence to decide a verdict b/c P failed to show by a preponderance of the evidence that the cow entered through the open gate (railroad not liable) or the broken fence (railroad is liable). Pennsylvania Railroad v. Chamberlain (1933, p.602): Action for negligence by train brakesman against the RR alleging that certain rail cars collided, killing the brakesman based upon the testimony of one Bainbridge who heard the a loud bang but didn’t see the collision. There were three other employees who said that they did not see the crash. Court held that P’s evidence was all circumstantial evidence (doesn’t come through the direct exercise of your senses) and there was no conflict with direct evidence (sensorial evidence, saw it, heard it, etc.). Therefore, any verdict for P would have rested upon mere speculation and conjecture. When the facts give equal support to inconsistent inferences, a party has not sustained their burden; case dismissed. RENEWED JUDGMENT AS A MATTER OF LAW (RJMOL) RJMOL/Judgment notwithstanding the verdict (JNOV) (Rule 50(b)): post-trial; judge can make a decision after trial as matter of law STANDARD: consider the evidence in the light most favorable to the non-moving party and only grant RJMOL where the evidence so strongly points in the favor of the moving party that reasonable people could not arrive at a contrary verdict. TIMING: Pre-verdict Rule 50 motion required for a post-verdict Rule 50(b) motion; after jury has returned a verdict th Norton v. Snapper Power Equipment (11 Cir. 1987, p.39): Judge granted RJMOL after the jury returned a verdict for the P b/c the jury could not consider some evidence and there was insufficient evidence to show there was a design defect (failure to install a th dead man). The 11 Cir. found that the jury could have reasonably found the mower to be defective and found that the lack of a quick-stop device caused the injuries to P, so granting RJMOL was in error. 20 CIVIL PROCEDURE OUTLINE 2010 - Kang NEW TRIAL – Rule 59 STANDARD: Rule 59 allows for a new trial “for any reason for which a new trial has heretofore been granted in an action at law in th federal court” (7 Amendment connection) gives power to the judge to order a new trial even if neither party does so Allows judges to just reinstate jury verdict should they be overturned on appeal without having to go through another jury trial. TIMING: you can move for both a JNOV and NT at the same time. Rule 50(c): permits a party moving for a JNOV to make (and the court rule on) a conditional motion for a new trial (comes into play only if the JNOV is later vacated or reversed) Permits a losing party to make all its post-trial motions at once, which allows the trial judge to rule on them with the case still fresh in mind and the appellate court to consider them all at once BASIS FOR A NEW TRIAL Flawed procedures: process leading up to the verdict has been flawed Lawyer made an impermissible argument to the jury Judge concluded that she erred in admitting a piece of evidence or gave the jury wrong instructions Juror misbehaved during the trial Ordering a new trial gives the judge an opportunity to correct themselves or otherwise fix the flawed process Flawed verdicts: verdict is unjustifiable, even with a perfect trial Verdict that splits the difference between two parties when the law says one or the other must take alltells the judge that the jury either misunderstood or ignored the instructions Verdict is against the weight of the evidence (similar to JMOL but no judgment is entered, just a new trial) STANDARDS FOR GRANTING A NEW TRIAL FOR ABUSE OF DISCRETION (easier to harder spectrum) th 13 juror, the judge: judge would have ruled differently, so grants a new trialNew trials easily granted Miscarriage of justice: middle of the spectrum re ease of new trials (Lind v. Schenley court adopts this standard) Directed verdictUsually never grants a new trial Lind v. Schenley Industries (3d Cir. 1960, p.611): P alleged an oral contract with the employer that was never fulfilled. Jury found a contract and awarded damages to P. Court granted JNOV and NT to D. P appealed, and the COA found that trial court had abused their discretion by substituting their own judgment over the jury’s; jury verdict reinstated. A jury verdict should only be set aside as against the weight of the evidence upon finding the jury reached a seriously erroneous result. Rule 52(a)(1): the court must find the fact specially and state its conclusions of law separately if an action is tried on the facts without a jury or with an advisory jury Spell out the steps of inferences by which it concluded decision (show your work); not required for juries Rule 52(a)(6): finding of fact made by a trial judge can be set aside on appeal if it is “clearly erroneous” “clearly erroneous” when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed (Anderson v. Bessemer City) If the trial judge provides erroneous instructions to the jury and the appellate court concludes that there is a likelihood that the error affected the jury’s verdict, the judgment will be set aside and a new trial will be ordered. In a bench trial, the judge’s “conclusions of law” provide an analogous road map; if the judge gets the law wrong, he or she will be subject to reversal on appeal CONDITIONAL NEW TRIALS Judge can grant a new trial limited to a particular issue (e.g. damages, etc.) but they have to be sure that whatever influenced the jury to make the incorrect decision regarding damages didn’t affect their decision on liability Remittitur and Additur Remittitur: judge orders a new trial unless the plaintiff agrees to accept reduced damages (P must get a choice; Hetzel v. Prince William County (1998)) o Supreme court has blocked the attempt of lower courts to permit appeals from conditionally accepted verdictsP has a choice: accept the remittitur or prepare for a new trial (Donovan v. Penn Shipping Co. (1977)) Additur: increase in damages Constitutional? th o SC held that remittitur does not violate the 7 Amendment but additur does; many states permit additur and remittitur 21 CIVIL PROCEDURE OUTLINE 2010 - Kang APPEALS – 28 U.S.C. §1291 NECESSARY CRITERIA Final judgment rule: The court of appeals shall have jurisdiction of appeals from all final decisions of the district courts; there must be a final judgment to appeal, no interlocutory appeals o Appeals can’t be used to correct strategic decisions made by counsel during the pretrial or trial stage Interlocutory review: categories that permit going up to an appeal w/o final judgments o 1292(a) and (b): injunctions or certified decisions o FRCP 23(f) and 54(b): class action certification decisions and cases with multiple parties or claims and the court had decided fewer than all the claims Apex Hosiery Co. v. Leader (3d Cir. 1939, p.48): appeal of an order under Rule 34 for the discovery and production of documents before the end of trial was not appealable b/c it was interlocutory and not a final judgment STANDARDS OF REVIEW De novo: do it all anew; conclusion of law Abuse of discretion: court clearly abused their discretion in the ruling Clearly erroneous: trial court clearly made an error in reasoning 22 CIVIL PROCEDURE OUTLINE 2010 - Kang RES JUDICATA POSITIVE LAW – must give the same RESPECT as Court #1 would have given itself Court #1 Court #2 Basis for Preclusion (respect not optional) State State FF & C clause (Art. IV § 1; 28 U.S.C. §1738) State Federal 28 U.S.C. §1738 Federal State Supremacy Clause (Art. VI, cl. 2) Federal Federal Federal common law; 28 U.S.C. §1963 (registration of district court judgments) CLAIM PRECLUSION / RES JUDICATA / ESTOPPEL BY JUDGMENT Can argue claim preclusion when there is the 1) same “parties”, 2) same “claim”, and 3) valid final judgment A suit on part of the whole precludes a later suit on the whole again (Frier: only 2/4 claims went to trial but all the claims are precluded in a subsequent suit). Claim preclusion doesn’t apply if the court rendering the first judgment lacks jurisdiction to hear the case *Claim preclusion is always a defense SAME PARTIES CP operates only between those who were parties in the first and second lawsuit. One is not bound by a judgment in a litigation in which he is not designated as a party or to which he has not been made a party by service of process (Hansberry v. Lee). EXCEPTIONS: Agreement by the parties to be bound by a prior action; Preexisting “substantive legal relationship” (such as preceding and succeeding owners of property); Parties in PRIVITY (e.g. buyer of property “buys” the result of litigation defining the nature of the owner’s rights; or party not named in Suit #1 but so closely connected to the suit that it’s appropriate to treat them as if they were named in Suit #1 b/c they have the same legal right) Adequate representation by someone with the same interests who was a party (such as trustees, guardians, and other fiduciaries); adequate for preclusion purposes only if, at a minimum: The interests of the nonparty and her representative are aligned (Hansberry v. Lee), Either the party understood herself to be acting in a representative capacity or the original court took care to protect the interests of the nonparty, Notice of the original suit to the persons alleged to have been represented. A party “assuming control” over prior litigation; Relitigating through a proxy; and Special statutory schemes such as bankruptcy and probate proceedings, provided those proceedings comport with due process. Searle Brothers v. Searle (Utah 1978, p.681): Property half owned by W was awarded to defendant in a divorce suit. P’s brought suit against their mother for their property interests. Court held that there was not claim and issue preclusion b/c D’s sons who owned the other half interest in the property were not adequately represented by their father in the divorce suit and W was not acting as a rep/agent of the partnership (not in privity). Ps are asserting their own property right, so their interests aren’t mutual or successive. Just b/c you’re a biased, incentivized witness does not make you in privity with the party who litigated the first suit. VIRTUAL REPRESENTATION used to determine future or contingent interests in property (e.g. all trust beneficiaries bound if a sufficient number of them can be identified). Also used when someone not a party to a lawsuit so guides and controls it that a court treats them as if they were a party Taylor v. Sturgell (2008, FRCP 463): Herrick filed a suit to challenge the denial of his FOIA request b/c documents were subject to trade secrets, privileged and confidential; he lost. Taylor made the same request, which was denied, and filed suit, also raising additional issues that Herrick didn’t raise (same claim). Court held that virtual representation is not an exception to the general rule that same parties (or privity) are required for claim preclusion. Court determined that Herrick and Taylor were not in privity and follows the default rule that the victim of preclusion must have had their day in court. 23 CIVIL PROCEDURE OUTLINE 2010 - Kang SAME CLAIM / LITIGATION UNIT Restatement (1) – Same evidence/facts test: same claim if the evidence necessary to sustain a second verdict would sustain the first, based on a common core of operative facts Restatement (2) – Transaction test: all claims arising from a single “transaction” (whether the facts are related in time, space, origin, and motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understandings or usage); must be litigated in a single lawsuit or be barred from being raised in subsequent litigation *Federal government follows TRANSACTION TEST; states vary Rush v. City of Maple Heights (OH, p.43) – CP on suing for property and personal injury in two separate claims arising from a motorcycle accident although precedent (Vasu v. Kohlers, Inc.) in OH allowed for separation of claims for property damage and personal injury Concurrence: Vasu rule is obiter dicta (no power of law). Vasu allowed separate suits from insurer and victim for injuries. th Frier v. City of Vandalia (7 Cir., p.668) – IL adopts the R(1) standard and Court determines CP b/c the same facts are necessary for the replevin action and the due process claim: replevin statute requires a P to show that the property was taken w/o lawful process, so if there was lawful process, P would have no replevin claim; facts are the same (P owns the cars and city didn’t offer a hearing; same conduct by the city (towing and detaining cars). P could have joined the claims in the first suit so waived. Concurrence: Case will be dismissed on summary judgment, but no CP (not the same claim b/c different evidence). There was adequate post-deprivation process b/c there was notice and easily could reclaim property. In a procedural due process action, the legality or reasonableness of seizure is irrelevant (not for replevin action), just adequacy of procedures for seizure. VALID FINAL JUDGMENT ON THE MERITS VALID Think PJ and SMJDid Court #1 have jurisdiction to hear the claim? FINAL Federal courts: as soon as the District Courts issue judgment, there is preclusive effect even though an appeal is possible California state court: after sufficient time has passed for an appeal APPEALS Effect of an appeal on a judgment’s status: Usual rule: judgment is final even though an appeal is pending Few states: pendency of an appeal voids a judgment What should be done if a judgment is given claim-preclusion effect and then reversed on appeal? Some courts solve the problem by postponing the decision on claim preclusion until the appeal is resolved Rule 60(b)(5): file a motion to relieve party or representative of final judgment b/c judgment has been satisfied, released or discharged; based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable “ON THE MERITS” Preclusive effects should only attach to judgments on the merits…but what does that mean? 12(b)(1-5 and 7) are not on the merits 12(c) pleadings, summary judgment, directed verdict, jury verdict, JNOV are all on the merits 12(b)(6) is generally considered dismissal on the merits of the claim (Federated Department Stores v. Moitie), depending on whether the dismissal was with prejudice or leave to amend (not on the merits). Federated Department Stores v. Moitie (1981): if original claim arose under federal law and federal court dismissed with prejudice, then the state courts (if P sought to bring a related claim under state law in state court) would be required to bar the claim. *Rule 41(b) is not a claim preclusion rule. It just means that a judgment on those grounds is “with prejudice.” Federal common law tells us that “with prejudice” means “on the merits.” [see Semtek] th Gargallo v. Merrill Lynch, Pierce, Fenner & Smith (6 Cir. 1990; p.690): Suit 1 (state) – D sued Gargallo for collection and Gargallo counterclaimed a federal securities law violation (exclusive federal jurisdiction). Court dismissed on Ohio Civil Rule 37 for refusal to comply with discovery requests and court orders. Suit 2 (federal) – Gargallo filed suit against ML for federal securities law violations; ML asserted claim preclusion. Court held that you would apply Ohio res judicata law to determine whether a final judgment from a court that didn’t have SMJ is valid (Marrese v. American Academy of Orthopedic Surgeons). Ohio law doesn’t give preclusive effect to judgments made where there was no SMJ. 24 CIVIL PROCEDURE OUTLINE 2010 - Kang ISSUE PRECLUSION / COLLATERAL ESTOPPEL / ESTOPPEL BY VERDICT When 1) an issue of fact or law is 2) actually litigated and determined and 3) valid final judgment is essential to the judgment, the determination is 4) conclusive in a subsequent action between the parties, whether on the same or a different claim. *Can be used offensively or defensively *NOTE: civil and criminal proceedings have different burdens of proof, so a civil judgment on an issue may not have a preclusive effect on a criminal judgment. SAME ISSUE Substantive identity-->kind of close isn't enough; must be the same issue Procedural identity-->burdens of proof different for different claims (civil and criminal claims) Problems Issue is usually the subcomponent/element of a claim (causation in a negligence claim is an issue) Findings of fact Conclusions of law AN ISSUE “ACTUALLY LITIGATED AND DETERMINED” Judgment Default judgments Judgment on the merits Actually litigated and determined Generally no *In Gargallo v. Merrill, Lynch, P would not be precluded on the basis of issue preclusion b/c the claims were not actually litigated. Maybe Final judgment with multiple sufficient causes Litigated but generally not determined; see Illinois Central v. Parks (below) Complications? Yes, if bad conduct (punishment), such as Rule 37 dismissal (In re Daily) for dragging on a case for years Doesn’t necessarily mean that it was actually litigated (such as 12(b)(6) motions) Jury black box; burden on the party pleading estoppel to prove the judgment turned on the fact/issue in question Illinois Central Gulf Railroad v. Parks (Ind. 1979; p.696): Train hit a car; wife sued for personal injuries (won) and husband sued for loss of consortium (lost). Husband then sued for his personal injuries and RR argued issue preclusion. Black box for denying damages to husband (contributory negligence or evidence showed no damages). Court held that if a judgment could have been based on two findings, the party pleading estoppel has the burden of proving the judgment turned on the fact in question or that finding will be open to contention. Issue of whether J was contributory negligent was litigated but not actually determined. No CP b/c he is a separate individual from his wife and has a separate cause of action and Indiana has a narrower claim preclusion definition (same facts and evidence test). AN ISSUE “ESSENTIAL TO THE JUDGMENT” Rule 52(a) requires a judge to set forth findings of fact and conclusions of law in non-jury trials (bench trial, this is very clear) SIMPLE DETERMINATION OF “ESSENTIAL” Strike out issue (of fact or law) in suit #1 Is the result the same w/o this issue? Does the same party still prevail? MULTIPLE, SUFFICIENT GROUNDS FOR JUDGMENTdepends on the jurisdiction Restatement of Judgments: both alternative grounds should be precluded in subsequent litigation Restatement (Second) of Judgments §27 comment i: neither determination is binding unless affirmed on appeal Effect of an APPEAL: §27 comment o-->less incentive to appeal those grounds you believed were wrongly decided Multiple, sufficient grounds and the appellate court upholds both of these determinations as sufficient, and accordingly affirms the judgment, the judgment is conclusive as to both determinations. Court upholds one determination as sufficient but not the other (or refuses to consider whether or not the other is sufficient), and accordingly affirms the judgment, the judgment is conclusive as to the first determination E.g. special verdict (Acme ladder); severed trial to determine manufacture and D wins negligence claimno incentive to appeal manufacturing decision if incorrect b/c they won the case 25 CIVIL PROCEDURE OUTLINE 2010 - Kang BETWEEN WHICH PARTIES (MUTUALITY) The VICTIM OF PRECLUSION must have had their day in court and the opportunity to litigate their issue. Otherwise, preclusion is not applicable. (Hansberry v. Lee, 1940) Mutuality (same parties in suit 1 and 2) is not a requirement for IP to apply but there are jurisdictional differences about how relaxed the mutuality requirement is. R(1): mutuality is required Defensive issue preclusion: less efficiency b/c Offensive issue preclusion: more efficiency b/c preclusion couldn’t be applied to those who weren’t the same party R(2): mutuality is not required DEFENSIVE ISSUE PRECLUSION: when D seeks to stop P from asserting a claim the P previously litigated and lost against another D Promotes judicial economy b/c it precludes a P from relitigating identical issues by merely changing adversaries and provides an incentive for P to join all potential Ds in the first suit (Blonder-Tongue) OFFENSIVE ISSUE PRECLUSION: when the P seeks to foreclose the D from litigating an issue the D has previously litigated unsuccessfully. Court uses their discretion in allowing offensive issue preclusion and considers: Whether you could have joined in Suit 1? (Are you playing me?) Fair to D? Are there procedural opportunities that were lacking in Suit 1 that could result in a different outcome? Plaintiff autonomy – can’t force people to sue Creates an incentive for wait and see in the hopes for a favorable judgment by another P (nothing to lose in not intervening) Unfair to D b/c if D is sued for small or nominal damages, they may have little incentive to defend vigorously, particularly when future suits are not foreseeable or if the judgment relied on is inconsistent with one or more previous judgments GENERAL RULE: In cases where a plaintiff could have easily joined in the earlier action or where the application of issue preclusion would be unfair to the defendant, a trial judge should not allow the use of offensive issue preclusion Parklane Hosiery Co. v. Shore (1978, p.703): In Suit 1, SEC sued Parklane Hosiery for false and misleading proxy statement; judgment for SEC. In Suit 2, Shore sued Parklane Hosiery for pretty much the same claim as in Suit 1. Court determined that a litigant who was not a party to Suit 1 could use offensive issue preclusion to prevent PH from relitigating the issue of whether their proxy was false. Shore couldn’t join suit 1 (SEC suit) and it isn’t unfair b/c D had an incentive to fully litigate in Suit 1, not inconsistent with previous decision, and no procedural opportunities are now available that will cause a different result. State Farm Fire & Casualty Co. v. Century Home Components (Or. 1976, p.710): Fire that caused substantial property damage to P’s property that was stored in D’s shed. Suit #1: Pacific N.W. Bell v. Century Home. Jury verdict for D. On appeal, the court reversed the judgment; remanded for a new trial. On retrial, the court found for P (w/o jury). Court of appeals affirmed. Suit #2: Sylwester v. Century Home (filed while Suit #1 appeal was pending). Jury verdict for D. No appeal. Suit #3: Hesse v. Century Home. Jury verdict for P. Affirmed on appeal. Court held that there was no issue preclusion b/c the prior determinations were inconsistent and it would be unfair to preclude Ds from relitigating the issue of liability. It’s unfair to preclude the D when they have won on prior occasions. NOTES United States v. Mendoza: Court held that the U.S. could not be subjected to nonmutual-issue preclusion. Another party can’t use the issues from a prior suit decided in the other party’s favor in their suit Comparative negligence claims: If judgment apportions liability to both P and D, then a person who was involved in the accident but not a party to the first suit can sue and the apportionment of fault from first suit is bindingboth parties had a fair opportunity to litigate the issue Joint and several liabilitystate’s law re joint and several liability will determine if the passenger can sue and recover in full or the portion of damages for which the driver was liable from only one driver (when two were found comparatively negligent) 26 CIVIL PROCEDURE OUTLINE 2010 - Kang JOINDER AND CLASS ACTIONS JOINDER OF CLAIMS *Make sure to do a jurisdiction analysis in joinder BY PLAINTIFF Permissive claims: Rule 18: a single P can join any and all claims they have against a single D (plaintiff autonomy, so you don’t have to join claims) Rule 42(b): allows the judge to sever claims for trial convenience (like P brought different suits) Compulsory claims: No FRCP, but there could be claim preclusion, which acts as a compulsory joinder of claims rule BY DEFENDANT – Rule 13 - Compulsory counterclaims (a): “arises out of the transaction or occurrence” that is the subject matter of P’s claim AND does not require adding another party over whom the court doesn’t have jurisdiction. Must be brought at the risk of waiving claim Permissive counterclaims (b): A pleading may state as a counterclaim against an opposing party any claim that is not compulsory (doesn’t arise out of the same transaction or occurrence) th Plant v. Blazer Financial Services (5 Cir. 1979, p.741): Court held that debt collection counterclaim to a Truth in Lending Act (TILA) claim was compulsory counterclaim b/c the claims and rights of the parties, coupled with the common factual basis of the claims demonstrates a logical relationship. TILA claims are not one of exclusive federal jurisdiction, so it was intended they could be heard along with debt claims in state court, Congress would have made a statute if the intent was to stop debt claims from being heard with TILA claims b/c it might obstruct goals of TILA, and the claims have a logical relationship (contract and breach of contract). *Other jurisdictions have ruled that debt collection counterclaims are permissive counterclaims b/c different determinations are th required, different evidence needed, and not logically related (Whigham v. Beneficial Finance Co. of Fayetteville (4 Cir. 1979). SAME TRANSACTION OR OCCURRENCE TEST: Are the issues of fact and law raised by the claim and counterclaim largely the same? Would res judicata bar a subsequent suit on defendant’s claim absent the compulsory counterclaim rule? Will substantially the same evidence support or refute plaintiff’s claim as well as defendant’s counterclaim? Is there any logical relationship between the claim and the counterclaim (causal relationship)? o Logical relationship if CC arises from same “aggregate of operative facts upon which the claim rests activates additional legal rights, otherwise dormant, in the defendant” (Revere Copper & Brass, Inc. v. Aetna Casualty & Surety Co.) Relationship between supplemental jurisdiction §1367 (“same case or controversy”) and Rule 13 joinder rules (same TorO)? There will always be supplemental jurisdiction over a compulsory counterclaim; permissive counterclaims must have their own jurisdictional basis “case or controversy” might be broader than “same transaction or occurrence” o Allows a small subset of permissive counterclaims to be covered by supplemental jurisdiction o §1367(b) provides narrower supplemental jurisdictions based on diversity but only for plaintiffs Defendants can make counterclaims, which are governed by Rule 13. If the view is that “same transaction or occurrence” is considered to be narrower than §1367’s “same case or controversy”, then in order for the counterclaim to be compulsory and part of the suit, it would already meet the requirements for §1367. Great Lakes Rubber Corp. v. Herbert Cooper Co. (3d Cir. 1961, p.747): P sued D on several unfair competition claims later determined as not arising under federal law; D counterclaimed with an antitrust claim. P’s claims dismissed for lack of SMJ and D’s counterclaims remained. P then counterclaimed with original claims; compulsory counterclaims b/c the same facts and law. CROSS-CLAIM – Rule 13(g) Rule 13(g): cross claim is not a third-party claim or an impleader, but it can include a claim that the coparty is or may be liable to the cross-claimant for all or part of the claim (cross-claim between the Ds) STANDARD: “same transaction or occurrence” as the subject matter of original suit (not derivative liability standard) 27 CIVIL PROCEDURE OUTLINE 2010 - Kang JOINDER OF PARTIES *When adding parties, you also add claims. BY PLAINTIFFS – Rule 20 Rule 20: sue multiple defendants from the same transaction or occurrence, or series of transaction or occurrences, and have to have a common question of law or fact BY DEFENDANTS – IMPLEADER – Rule 14 Rule 14(a) allows a D to assert a claim against anyone not a party to the original action if that third party’s liability is in some way dependent upon the outcome of the original action (secondary liability to the original D) (Barab v. Menford). A third party can only be impleaded if the claim is not a separate or independent claim. “is or may be liable to it for all or part of the claim against it” (REIMBURSEMENT) Can’t implead if “him not me” and trying to remove fault from yourself Can implead if clear joint tortfeasors w/ right of contribution (reimbursement) b/c the D, if could liable, could then sue third party D (joint tortfeasor) for contribution or indemnification agreement o State law determines whether there is derivative liability, allowing for right of contribution, in order for them to be proper impleader (found in tort law or contractual indemnification agreement that grants reimbursement) Federal courts have discretion in determining the propriety of a third party complaint, and in making its determination, a court may consider the burden upon the litigation, as well as the merit of the complaint and the efficiency in adding TPD Advantages for D: o Gives D a way of joining anyone else who might help them foot all or part of the damages o Gives D a way of delaying the case and making litigation more expensive for the P by adding another party Rule 14(b): When a claim is asserted against a P, the P may bring in a third party if this rule would allow a D to do so Price v. CTB, Inc. (M.D. Ala. 2001, p.755): P sued Latco (builds chicken houses) for state law claims. Latco impleaded ITW (nail manufacturer). AL law doesn’t allow right of contribution for joint tortfeasor, but Latco could get reimbursed through implied contractual indemnity. Court holds that impleader is proper (can get reimbursement). GROUNDS FOR OBJECTING IMPLEADER Substantive law doesn’t allow an action for indemnity or contribution Allowing impleader will unjustifiably increase delay or expense JURISDICTION Personal jurisdiction: in most circumstances, the TPD will have been involved in the transaction or occurrence that led to the original claim, so minimum contacts are established (specific jurisdiction) if in the state where the TorO occurred o Rule 4(k)(1)(B): 100-mile bulge rule give extra reach for people joined under Rule 14 or 19 (pinky reach) Subject matter jurisdiction: supplemental jurisdiction §1367 (same case or controversy) Larson v. American Family Mutual Insurance Co. (CO 2007, p.26) – Case remanded to state court b/c complete diversity was destroyed when the P amended the complaint to join a former attorney as defendant. It would waste judicial resources to have two separate suits b/c the same evidence would be presented and the claims arose out of the same series of transactions or occurrences (allegation of collusion between insurance company and attorney made it so that P could not file his claim against the insurance company) and there was a common question of fact/law (failure to disclose they were in negotiations with each other). th Kroger v. Omaha Public Power District (8 Cir. 1975, p.762): P filed sued for wrongful death by electrocution. Omaha impleaded Owen Equipment. P amended complaint to add Owen as a D. Omaha granted summary judgment b/c they were just the electricity supplier and Owen actually owned the equipment that caused injury. Two years later, Owen’s principal place of business was revealed to be Iowa, destroying diversity. Court refused to grant Owen’s motion to dismiss (fairness grounds and Zielinski reasoning) even though SMJ was not waived. Court of Appeals held that supplemental jurisdiction extended to P’s claim against Owen. Owen Equipment & Erection Co. v. Kroger (1978, p.766): SC held that there was no supplemental jurisdiction b/c complete diversity is required between each P and each D. 28 U.S.C. §1359: A district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court. 28 CIVIL PROCEDURE OUTLINE 2010 - Kang COMPULSORY JOINDER – Rule 19 Third parties who are necessary to the litigation (not looking to intervene), without whom the case would be dismissed. D’s motivation is to dismiss the case. EXAMPLES where parties are necessary to a suit involving: An obligation on which two or more persons are, originally or by assignment, either joint obliges or joint obligors, but not all joint obliges or joint obligors are joined as parties Ownership of, or interests in, real or personal property in which some persons claiming an interest (for example, joint owners, lessees, mortgagees, mortgagors, lienors, and holders of equity of redemption) are not included as parties Representative parties in which either the representative or some of the parties being represented are not included Claims to a limited fund or pool of assets, such that potential claimants who are not parties will find the funds depleted when their cases are heard MACHINE 1) Required? 19(a)(1)(A): in that person’s absence, the court cannot accord complete relief among existing parties 19(a)(1)(B)(i): person claims an interest related to subject of suit and impair and impede the person’s ability to protect the interest 19(a)(1)(B)(ii): person claims an interest related to subject of suit and leaves an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest 2) Joinability? Is there jurisdiction? Is there PJ over the party? Is there SMJ over the party? Usually there is SMJ b/c of supplemental jurisdiction. 3) Indispensible? Are you REALLY required? 19(b): when a joinder is not feasible and the person is required , the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed Extent a judgment rendered in the person’s absence might prejudice that person or existing parties; 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 Whether a judgment rendered in the person’s absence would be adequate Whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder Temple v. Synthes Corp. (1990, p.771): P sued D (manufacturer of “plate and screw device”) used by a doctor (sued separately in state court). D tried to dismiss the case for failure to join the doctor and hospital in the suit (12(b)(7)). SC held that while joining the doctor and hospital to case would promote judicial economy, it was not required under Rule 19 b/c they were a permissive party. The doctor and hospital were not required b/c the P could get all the damages relief from Synthes and Synthes could then sue the doctor and hospital if found to be joint tortfeasors, they can protect their interests in state court and no res judicata, and there is no possibility of inconsistent judgments b/c monetary judgment that they could get reimbursed for from contribution suit. th Heizberg’s Diamond Shops v. Valley West Des Moines Shopping Center (8 Cir. 1977, p.774): Court held the compulsory joinder was not necessary b/c there was no PJ over Lord’s and they were not indispensible to the suit. Not having Lord’s in the suit didn’t prejudice Lord’s and the inconsistent judgments that might result were a direct result of VW’s conduct in executing two inconsistent leases for full line jewelry stores. Absence of Lord’s would also not prevent P from getting full relief b/c they can get it from VW, but Lord’s is required b/c failure to join would impede their ability to protect their interests. INTERVENTION – Rule 24 Can intervene if given an unconditional right to intervene by federal statute or claims an interest relating to the property or transaction that is the subject of the action (may impair or impede the movant’s ability to protect its interest) 29 CIVIL PROCEDURE OUTLINE 2010 - Kang CLASS ACTIONS – Rule 23 CLASS CERTIFICATION (TANC) Rule 23(a) Requirements 1) 23(a)(1): Numerosity is established if the class representative can show that enough persons are in the class to make joining them as individuals impractical (typically consist of at least hundreds of persons) 2) 23(a)(2): Commonality is jargon for the idea that the class should be a class—that it should consist of persons who share characteristics that matter in terms of the substantive law involved-->common question of law or fact Some differences are ok, but as long as there is a common question of law or fact that is the central issue 3) 23(a)(3): Typicality is the requirement that class representatives stand, in significant respects, in the same shoes as the average class member (same incentives and motivations as the average class member)-->claims or defenses of the representative parties are typical 4) 23(a)(4): Adequacy has been measured in several ways-->fairly and adequately protect the interests of the class (both the class rep and the lawyer) – VERTICAL PRIVITY Class representative must have 1) common interests with unnamed members of the class and 2) representative will vigorously prosecute the interests of the class through qualified counsel (Senter v. General Motors, Corp). Lawyer should have no conflicts, qualified, and equipped with sufficient support and resources to handle the case What is the difference between commonality and typicality? Commonality: comparison of each class member against the others. Take the extremes (range) and then see if there is something relevant (fact or law) that is common to each of the members Typicality: is this one class representative somehow typical of the distribution of the class. Does one represent the entire class (nothing that makes it gives the representative a different motivation or incentive). There can be differences, but the differences can't make it so that the representative becomes atypical of the class. Substantive law provides range of commonality (e.g. discrimination gives the common range of those who are discriminated against) Rule 23(b) Classification 23(b)(1): larger version of Rule 19 (A) Stop incompatible judgments and assure that similarly situated parties are treated alike (B) Practically dispositive of interests of parties not in suit, or impair or impede ability to protect interests (prevent breaking the bank) 23(b)(2): provides for class actions where the party opposing the class has acted or refused to act “on grounds that apply generally to the class.” Intent of the drafters is that this applies to civil rights claims Primary relief must be injunctive or declaratory relief; can get small amount of $ for attorney fees 23(b)(3): comprises all class actions not captured in 23(b)(1) or 23(b)(2); in particular it includes all claims in which the plaintiffs are seeking monetary damages (both damages and injunction) “small claims” lawsuits in which many persons allege small amounts of damage “mass tort” (airplane crash, hotel fire, exposure of hundreds of thousands of workers to asbestos fibers) Advantages: o Plaintiffs: increased bargaining power from aggregation and prospect of a single overwhelming damage judgment o Defendants: consolidation of suits that would have been brought even without the class action, efficiency, and the possibility of global settlement Factors: o (A) the class members' interests in individually controlling the prosecution or defense of separate actions; o (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; o (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and o (D) the likely difficulties in managing a class action Requirements o Superior commonality: questions of law or fact common to the members of the class must predominate over any questions affecting only individual members; and o Superior method: class action must be superior to other available methods for the fair and efficient adjudication of the controversy, and o Notice must be given to all members who can be identified through reasonable effort and each member has the option to be excluded from the class (Rule 23(c)(2)(B)) at the plaintiff’s expense 30 CIVIL PROCEDURE OUTLINE 2010 - Kang Communities for Equity v. Michigan High School Athletic Assn. (W.D. Mich. 1999, p.803): Gender discrimination against female sports programs. P’s class was “all present and future female students enrolled in MHSAA member schools who participate in interscholastic athletics or who are deterred from participating in interscholastic athletics because of D’s discriminatory conduct and who are adversely affected by that conduct.” Court granted class certification as a 23(b)(2) class. Numerosity: thousands of female high school athletes and would-be athletes Commonality: overarching question of whether D violated Title IX, Equal Protection Claus of the Fourteenth Amendment, etc. Typicality: alleged harms are suffered by all the members of P and class representative (broad-based attacks on discrimination if there was proof of an underlying policy of discrimination) Helped that Ps were an association Adequacy of representation: counsel is experienced in litigation, and Title IX litigation specifically What about those in the class who like the status quo? OK b/c their interests are adequately represented by the Ds and the class is limited to only those who are adversely affected by the discrimination Achieving relief might come at the expense of others (financial constraints that prevent equality). Courts should defer consideration of sub-issues until the relief stage th Heaven v. Trust Company Bank (11 Cir. 1997, p.811): Requirements for certification were met (numerosity, commonality, typicality, adequacy). Class could not be classified. Not a (b)(2) class b/c they were seeking monetary damages. Not a (b)(3) class because D would make counterclaims to particular Ps for debt collection, so counterclaim Ds would have to present individual defenses (separate factual determinations), interests of some of the class members in controlling their own case would be compromised, exposure as counterclaim Ds could exceed the amount they might recover for statutory penalties as class members, and statutory claims asserted by the class would be against interests of the individual class members. Doesn’t satisfy 23(b)(3)(D). CHALLENGE OF ADEQUACY OF REPRESENTATION Satisfaction of state laws does not mean that the federal laws are satisfied. *Virtual representation connection: the class couldn’t have adequately represented someone whose interests are against those of the class (diametrically opposed) and therefore violates the Fourteenth Amendment Due Process rights Hansberry v. Lee (1940, p.816): IL supreme court said that suit 1 was a class action and the Hansberrys were adequately represented (got their day in court). SC held that the “class” did not adequately represent the interests of the Hansberrys. (*Note that SC can’t say that it wasn’t a class action b/c they have to look to IL state law re class certifications b/c IL Supreme Court is the ultimate authority of IL state law; SC can only ask whether the state law violates the federal law.) Inadequate representation by a class violates the Fourteenth Amendment Due Process Clause. There was no intent by the parties to be a class action, just individuals, and there was a sufficient group of people who did not want the racially restrictive covenant to be enforced. No IP on the Hansberrys b/c they must have their day in court. Gonzales v. Cassidy (5th Cir. 1973): An unnamed member of a class was not precluded from bringing a later action even though an earlier class action had failed. The named plaintiff in the earlier action had succeeded in securing relief for himself; at that point, the second court ruled, he had become an inadequate representative of the class by failing to appeal. Failure of the plaintiff in the second action to intervene in the first action for the purpose of appealing was held not to be fatal to his argument that the first decision should not bind him APPEAL Rule 23(f) allows appeal of class action certification ruling within 14 days of the decision 31 CIVIL PROCEDURE OUTLINE 2010 - Kang JURISDICTION SUBJECT MATTER JURISDICTION §1331: SMJ not a problem b/c there is arising under jurisdiction §1332: Diversity jurisdiction and class actions CITIZENSHIP: Only the citizenship of the class representative matters in determining citizenship of the P (Supreme Tribe of Ben-Hur v. Cauble (1921)) AMOUNT IN CONTROVERSY: o Smaller claims that don’t meet the amount in controversy requirement under §1332 allowed so long as the class representative satisfied the amount in controversy requirement (Exxon Mobil Corp. v. Allapattah Services, Inc.) PERSONAL JURISDICTION Phillips Petroleum v. Shutts (1985, p.822): P’s filed suit in KS but most of the class members didn’t live in KS. There were 28,100 class members, 1,500 were excluded b/c notice couldn’t be delivered and 3,400 opted out of the class. Court held that KS had proper jurisdiction over the absent class plaintiffs but was not proper in only applying KS state law to all Ps (must follow the constitutional limitations in applying a particular state law to an out of state P). The class action P is in a different position from an out of state D b/c the D must defend themselves in the forum, may be forced to participate in extended and costly discovery and comply with remedy. Class action P has their interests protected by the judge (during certification) and the class representative. They are almost never subject to counterclaims or cross-claims, or liability for fees or costs and an adverse judgment will not typically bind an absent P’s claim. Court also said that notice was sufficient b/c it described the action and the P’s rights and provided for an opt-out option. NOTICE TO PLAINTIFFS [see NOTICE] 23(c)(2)(B): Mandatory individual notice and opt out for (b)(3) classes P bears the cost of notice, even if expensive; and requires individual notice to all identifiable class members 23(c)(2)(A): Optional notice to (b)(1) and (b)(2) classes (b)(2) classes: no notice if individual P sues b/c the consequences are the same (change in policy/practice); might not want to put burden on civil rights litigants to provide notice to all the class members in a civil rights case 23(d)(1)(B): allows court to order appropriate notice to come or all members of a class 23(e)(1): notice optional SETTLEMENT OF CLASS ACTIONS – Rule 23(e)(1) Notes: Motion to certify class action and settlement agreement can be filed at the same time, so that once the class action is certified, the settlement agreement is also reviewed. Deep anxiety about notice and adequacy of representation Res judicata at bargain basement prices, especially for those who didn’t even know there was a class action 32 CIVIL PROCEDURE OUTLINE 2010 - Kang ERIE DOCTRINE ONLY APPLIES TO FEDERAL COURTS SITTING IN DIVERSITY POSITIVE LAW QUESTION: Whose law applies? Federal courts sitting in diversity (for state law claims) must apply state law b/c of the RDA. RULES OF DECISION ACT (28 U.S.C. §1652): requires that federal courts apply state law in appropriate cases, when it applies RULES ENABLING ACT (28 U.S.C. §2072): empowers the Supreme Court to prescribe general rules of practice and procedure and rules of evidence for cases in the district courts so long as the rules don’t abridge, enlarge, or modify any substantive right. Rules v. statutes: Rules have the power of statues, but can only deal with “practice and procedure”; Statutes can deal with any topic that the Constitution allows Congress to deal with. Swift v. Tyson (1841): NY precedent cases (common law) were not “law” under the Rules of Decision Act so federal courts sitting in diversity only had to apply state written law and were free to exercise independent judgment as to what the common law of the state is or should be. Brown & White Taxi v. Brown & Yellow Taxi (p.226): P reincorporated in another state to invoke diversity b/c federal courts might enforce a contract that wouldn’t be enforceable under state law (follows Swift reasoning). MACHINE What is the result if state law applies? What is the result if federal law applies? Identify the difference between the state and federal outcomes? Is there a collision? If there is a collision, federal law is almost always supreme, BUT there may be an internal surrender provision in federal law, in which instance, the state law would be applied rather than the federal law. o U.S. Constitution? – Supreme law of the land, so apply the Constitution (Supremacy Clause) o Statute? – If constitutional, then the federal statute is valid and would apply o FRCP? – Consistent with REA and the constitution? Then FRCP applies o Federal common law/practice: Federal courts have embedded in the federal law an internal surrender provision that would apply in certain circumstances, such as when there is a collision between state and federal common law/practice. Guaranty Trust – Outcome determination Byrd – Federal interests Hanna – Twin aims of Erie ERIE – NO FEDERAL COMMON LAW Erie Railroad v. Tompkins (1938, p.225): overruled Swift v. Tyson and federal courts in diversity must apply state substantive law; “law” in the RDA means both the written law and the state common law. There is no general federal common law. Statutory arguments: law professor says “laws” include common law in a law review article Policy arguments: Increases forum shopping and discrimination b/c it was helping non-citizens take advantage of the citizen. They could arbitrage in a way that the citizen couldn’t (non-citizen has vertical flexibility between state and federal court but the citizen doesn’t b/c if there is no diversity, then no federal court and can’t remove to federal court b/c of local defendant rule). There was no uniformity between the state and federal courts. Constitutional arguments: Federal courts aren’t conferred the power to create state substantive common law b/c federal government is a government of limited power and they received power from the states when the Constitution was ratified. Just because the federal courts weren’t granted the power to make up federal common law doesn’t mean that there isn’t a federal common law (Congress has power under the Commerce Clause). Concurrence: Federal courts still have the power over procedure (“…but no one doubts federal power over procedure”). FEDERAL COMMON LAW EXISTS! Areas where the federal courts have exclusive jurisdiction (admiralty and maritime, bankruptcy, securities, etc.) Textile Workers v. Lincoln Mills: Taft-Hartley Act gave federal courts jurisdiction to hear labor-management disputes Res judicata Substantive v. procedural? Hanna says FRCP are the procedural rules that must be used in federal courts (the Erie rule has never been invoked to void a Federal Rule which covers the point in dispute) 33 CIVIL PROCEDURE OUTLINE 2010 - Kang OUTCOME DETERMINATION Guaranty Trust Co. v. York (1945, p.233): Issue was whether NY statute of limitations applied to a suit for alleging misrepresentation and breach of trust. If state law applied, then the suit would be barred b/c it ran the statute of limitations. If federal law and the court used equity, then it might not bar the suit. Court held that NY state law applied and the suit was barred. Whether the difference is procedural or substantive is immaterial, the real question is whether the differences in law between state and federal significantly affects the result of litigation with different outcomes. In this case, the statute of limitations difference was outcome determinative, so therefore they used state law. Intent of Erie was to insure in all cases where a federal court is sitting in diversity, the outcome in the federal court should be substantially the same, so far as legal rules determine the outcome of litigation, as it would be if tried in state court. The predictable outcome for an outcome determination test is that state law would always win: Case Burlington North R. v. Woods (1987) Steward Org. v. Ricoh (1988) Gasperini v. Center for Humanities, Inc. (1996) Practice at Issue Is defendant who stays damage Is forum selection clause enforceable? judgment but loses appeal liable for 10 percent penalty? Must federal circuit court decide if damages exceed "reasonable compensation"? State Practice Yes: AL statute (frivolous or not and is mandatory) No: AL case law State law: forum selection clause in a contract is not enforceable Yes: NY statute requiring such review by state appellate courts Federal Practice Fed. R. App. Proc. 38 (discretionary award of extra costs for frivolous appeal) Federal law: FRAP 38: "If a court of appeals shall determine that an appeal is frivolous, it may award just damages and single or double costs to the appellee." (frivolous and discretionary) 28 U.S.C. 1404 Federal law: transfer 1404(a) motion to transfer on the basis of forum selection clause is possible (not mandatory; allows transfers in the interest of justice to districts where the case may have been brought) Reexamination clause of Seventh Amendment Held: Federal practice - no penalty Federal practice - ignore state case law, give substantial weight to clause Modify federal practice - by allowing district courts to examine verdicts for excessiveness Explanation "[T]he Rule's discretionary mode of operation unmistakably conflicts with the mandatory provision of Alabama's affirmance penalty statute." "[Sec. 1404] is intended to place discretion in the district court to adjudicate motions for transfer according to an 'individualized, case-by-case consideration of convenience and fairness'" and trumps state's blanket rule. Unlike Byrd where, "the Court faced a one-or-the-other choice: trial by jury according to the federal practice[, here] the principal state and federal interests can be accommodated" by district court review. Collision between state and federal law? Yes; FRAP 38 directly collides with state law; thus FRAP 38 controls (Hanna) Yes; 1404 directly collides with the state law re forum selection clauses; thus 1404 controls FEDERAL INTERESTS Byrd v. Blue Ridge Electric Cooperative (1958, p.237): Byrd was hired as an independent contractor and was injured on the job. D wanted to classify him as a statutory employee, and would therefore be barred because of workers compensation. Under SC law, the judge would decide the issue of Byrd’s employment classification and in federal court the jury would decide. Court decided not to follow state law even though the outcome may differ because of the strong public policy interest in maintaining the judge-jury relationship established under the Seventh Amendment. Therefore, federal law applied. QUESTIONS: (1) Is the state practice “bound up with the definition of the rights and obligations of the parties”?; If so state law governs. (2) Even if it isn’t part of the substantive rights and obligations, would its application determine the outcome of the case? (3) If so, are there “affirmative countervailing” considerations of federal judicial administration present? 34 CIVIL PROCEDURE OUTLINE 2010 - Kang TWIN AIMS OF ERIE 1) Discouragement of forum shopping 2) Avoidance of inequitable administration of the law: patterns of federal practice that regularly result in different applications of what is nominally the same substantive law, such as federal courts’ pre-Erie willingness to enter injunctions in situations where state courts would not Hanna v. Plumer (1965, p. 240): MA law provided that suits required personal service of process on defendant served as executor of an estate. Process was instead served under Rule 4(e)(2)(B), which allowed for the summons and complaint to be left with a competent adult at the residence of any D. D was served following the FRCP. Court held that FRCP governs when in federal court, even if sitting in diversity. Procedural determinations are always going to be outcome determinative b/c states and federal courts have different procedures, but the court rejects outcome determination because outcome determination must be measured in light of the twin aims of Erie. Federal courts sitting in diversity must apply federal procedural laws and state substantive law (FRCP is sacred and should be used so long as no rule violates the Constitution or the REA). Outcome determination is important, but that doesn’t mean that you don’t apply the FRCP. Congress was given this power, valid and controls. Immunizes FRCP. SEMTEK – MARRIAGE OF RES JUDICATA AND ERIE Semtek Intl. Inc. v. Lockhead Martin Corp. (2001, p.248): P filed suit in CA state court for breach of contract and various torts; case removed to federal court based on diversity and then dismissed b/c it was barred by CA’s two year statute of limitations (on the merits and with prejudice). Case was refilled in MD state court, which has a three year statute of limitations. Case was dismissed b/c of claim preclusion. SC held there was no preclusive effect to the dismissal from CA federal court b/c CA law would preclude. Res judicata: Full Faith and Credit Clause (Article IV §1) and §1738 don’t apply b/c the first court was federal. MD state court must respect the CA federal court’s judgment because of the Supremacy Clause (Article VI, cl. 2). Erie: No federal law on point. Rule 41(b) is not a claim preclusion rule, it just means that a dismissal without cause (except for lack of jurisdiction, improper venue, or failure to join a party under Rule 19) is a dismissal with prejudice. Must then look to state preclusion law to determine what dismissal with prejudice means and whether a dismissal with prejudice is given claim preclusive effect. In this case, according to state claim preclusive law, the dismissal with prejudice barred filing the same claim in the CA district court and would not be given preclusive effect. Dupasseur still applies to diversity cases. Take away: When a federal court is sitting in diversity, federal res judicata law applies. Federal res judicata law makes you apply state res judicata law UNLESS there is a countervailing federal interest (Byrd). *Semtek clarifies that Guaranty Trust, Byrd, and Hanna are all still considered good law re: Erie Doctrine. Dupasseur v. Rochereau (1875): Held that the res judicata effect of a federal diversity judgment “is such as would belong to judgments of the State courts rendered under similar circumstances,” and may not be accorded any “higher sanctity or effect.” COMPLICATIONS Complications arise when federal courts try to predict what a state court will do in a particular situation, especially when there is no precedent on point. Salve Regina College v. Russell (1991): federal court of appeals required to review de novo district court’s determination of state law. Federal courts are then trying to predict what state courts would decide in the same situation Pierce v. Cook & Co. (10th Cir. 1975): there were two cases, one in federal court and the other in state, arising out of one collision. There were two different results from the federal and state courts. P’s moved to vacate the federal appellate decision (SJ for D) under Rule 60(b). In setting aside the judgment, the court of appeals emphasized that there were divergent results from a common vehicular accident and the P’s had been forced into the federal courts and received substantially different results in the federal courts than they would have in the state courts (violation of Erie). DeWeerth v. Baldinger (2d Cir. 1994): Rejected Rule 60(b) attempt to reopen final federal judgment b/c Erie doesn’t allow the proposition that a plaintiff is entitled to reopen a federal court case that was closed for several years in order to gain the benefit of a newly announced decision of a state court, a forum in which she specifically declined to litigate her claim Certification: the federal court asks the state supreme court for an answer to a question about state law o Problems b/c many states don’t have a certification procedure, and when available, the results are unsatisfactory 35