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Civil Procedure

Fisk, Fall 2007

FRCP: court centered rule making with Congressional oversight permits flexibility and streamlined method for revising and adjusting the rules.

The role of the Attorney in the adversarial process: The client determines the end goals; the lawyer determines the means (strategy). Representation by counsel takes some participation away from the client, while giving them a strong advocate. The attorney must be a strong advocate - but this may also put them at odds with some larger societal goals. In a civil suit, a judge may appoint a lawyer (ethical issues - who does the judge pick?).

 

The system of adjudication is available only when there is a cause of action and a remedy the courts can provide.

Personal Jurisdiction: The power of a court to issue a binding ruling over persons within its authority. The court can only rule over persons within its authority. Under rule 4(k)(1)(A), the federal court may exercise personal jurisdiction over a defendant who could be subjected to the jurisdiction of a court of general jurisdiction in the state in which the district is located. If a state court down the street could obtain personal JD, the federal court can; if the state court could not; the federal court cannot.

Two Required Elements of Personal Jurisdiction

1. TERRITORIAL AUTHORITY

2. NOTICE

Territorial authority over the defendant: by physical presence (tagging in forum), voluntary appearance in court without objecting to jurisdiction, consent to service, and domicile.

Physical Presence

• Statutory Authority: Statute of forum state

• Constitutional Authority: Unclear. Burnham – extreme unfairness?

• If D is physically within state, can “tag” with service

o If D is just traveling through jurisdiction?

o Burnham v. Superior Court – a NY domicile was visiting CA to see his children and was tagged in CA with divorce papers. He protest jurisdiction because he did not have minimum contacts and did not avail himself of the laws and protections of CA – though he was in the forum. The court agrees that the court has jurisdiction on “tag” jurisdiction, but does not agree why.

▪ Scalia & co. think that the minimum contacts analysis is irrelevant; D was in the forum and it is a long established rule that presence in the forum is sufficient to establish general personal jurisdictions;

▪ Brennan &Co think that minimum contacts analysis here is appropriate, and by entering into CA, he availed himself of health, safety, transportation benefits. Brennan points out that inconvenience can be overcome by a change of venue – says exercise of PJ over D based on voluntary appearance is OK.

▪ Burnham applies to people – who move. Corporations do not. Seems to make tag jurisdiction over individuals easier than that of corporations.

o Flying above, lured in –do not appear to give territorial authority. Little availment, no voluntary appearance.

If D is not physically within the state, the court must show that D has minimum contacts with the forum such that maintenance of the suit does not disrupt traditional notions of fair play and substantial justice (see later in Long Arm Jurisdiction)

o Shaffer v Heitner: applies the Int’l Shoe test to all cases (in personam, in rem, and quasi-in rem) where personal jurisdiction is not based on consent or service while in forum state). D owned stock in DL company and D attached stock. Thus, ownership of property in a forum state is one of many contacts a D has, but in and of itself is insufficient to establish general in personam jurisdiction for suits unrelated to the property. Jurisdiction exercised over a D because of property in a state that is unrelated to the potential suit is a violation of the defendant’s due process. When PJ does not exist, attaching a piece of property and claiming quasi in rem jurisdiction is not fair and violated due process. Important to look at purposeful availment.

Consent

• Statutory authority: state or federal contract or other statutory law

o Ex – Shaffer – accepting a directorship in a DL corporation implies consent to PJ in DL

• Constitutional standard: extreme authority/unfairness

• The failure to object to a court’s lack of personal jurisdiction by entering a ‘special appearance’ is waived if omitted from an initial response ( objecting to personal jurisdiction is the first thing do (so I believe filing a counterclaim immediately = consent to personal jurisdiction)

o 12(h)(1): if you don’t contest personal jurisdiction in the first motion or pleading, you consent to it

o Compare to Subject matter jurisdiction: can be waived by court, or parties, at any time

o Compare to Venue -- ???

• Entering into a contract providing for jurisdiction over a claim:

o Carnival Cruise Lines v. Shute: personal jurisdiction can be waived by contract with a forum selection clause, even if they are unbargained for. This reduces transaction costs, avoids litigation in multiple states, and generally keeps prices down.

o Forum Selection Clauses

o Appointment of an agent

• Statute: motor vehicle statutes

• Consent to service on agent:

Domicile:

• Territorial jurisdiction exists over persons domiciled in a state.

• Domicile= where person lives and intends to permanently remain

• Do not give up domicile until you establish a new one

• See diversity jurisdiction section for more on domicile

Long Arm Jurisdiction: When a D is not subject to general jurisdiction or a domicile, the state may ‘pull’ the defendant in under the long arm statute. The scope of these statutes vary (enumerated, to the limits).

Long arm analysis:

1) Does the defendant come under the terms of the long arm statute

2) Does the Defendant have minimum contacts with the forum such that the assertion of jurisdiction would not violate Due Process?

a) Has D purposefully availed

b) Does the lawsuit arise out of or relate to the D’s purposeful contacts with the forum. If not, are D’s contacts so extensive that no such relationship is necessary (general in personam jurisdiction)

3) Will exercise of jurisdiction be unreasonable, taking into account the interest of the defendant, the forum state, the plaintiff, and other states

1. Enumerated Act Long Arm Statutes: authorize jurisdiction over specific types of contact with the forum state.

2. Limits of Due Process Statutes

a. The reach of this type of statute may exceed its constitutional grasp – still need to analyze minimum contacts

Minimum Contacts Analysis: Purpose availment - Constitutional touchstone. A showing of purposeful availment or purposefully directed activity is required for the exercise of jurisdiction to be fair.

(1) Entering state and conducting business

International Shoe: D was a MO company with no office in WA, made no contracts in WA, but did employee salesmen who solicited business in the state. D found to have minimum contacts – rent for rooms for salesmen, paid salesmen, solicited business, enjoyed revenue – protection of state laws. The suit arose out of these contacts, and personal jurisdiction was affirmed.

Purposeful Availment:

(1) Contractual relations with forum residents; solicitation of business in the state, having offices in the state, communication with people in the state for business purposes (see Burger King).

Hanson v. Denkla: activity cannot be unilateral; Defendant must purposefully direct their activities towards the forum state. Here, the trust, a necessary party in the lawsuit, did not purposefully direct business towards FL, but the owner of the trust moved to FL. Court compares to McGee, where the D insurance company mailed statements, policies. Convenience to plaintiffs is insufficient to overcome the harm to D’s due process rights. This unilateral action by one party does not subject the other party to PJ if the other party lacks minimum contacts.

Burger King: D and friend opened BK franchise in MI. Never physically entered FL, but were sued there for a contract claim. Negotiated contract with BK, purchased equipment from BK, knew FL office made all business decisions. Court held that when D himself causes substantial connections and continuing obligations with the forum state, he avails himself of the privilege of conducting business there. Once minimum contacts have been established, need to look at reasonableness factors (fair play/substantial justice): burden on D, interest of forum state, access to evidence, other state’s interest, P’s interest, general interest in efficiency).

(2) Stream of Commerce

WWVW: NY residents sued dealer and distributer in OK for product liability claim stemming from accident in OK. PJ was not proper, because the dealer and distributor did not target business to OK, solicit business, or derive revenue. While it is foreseeable that cars may travel to OK, foreseeability does not equal the exercise of PJ (Hanson v. Denkla). The foreseeability analysis is not the likelyhood that the product would enter state, but the likelyhood that D would be haled into court – and here P’s unilateral activity brought the car into OK.

Asahi: P’s tire exploded and brought product liability suit in CA against tire manufacturer Cheng Shin. Cheng Shin indemnified valve manufacturer Asahi, a TW company. Asahi was aware that the valve assemblies might end up in CA, but did not direct business there.

justices agree that personal jurisdiction is not OK on fairness; there is no substantial CA interest in the indemnity dispute between foreign corporations; the huge burden on Asahi. But, there is no majority opinion on what a relevant stream of commerce to establish minimum contacts is.

O'Connor: need 'additional conduct' beyond placing into stream to establish intent to serve forum state. IE, marketing, advertising, establishing distributor in forum state

Brennan: by placing a product into the stream of commerce with some knowledge that it might find its way to the forum state, the possibility of a lawsuit should not be a surprise.

(3) Causes an Effect (generally injurious)

Kulko – parents divorced and custody of two children lived in NY with father. Children wanted to live with mother in CA and father allowed them to; mother sues father for custody of children in CA. The court rules that CA’s assertion of personal jurisdiction over the father was unreasonable – the father never availed himself of the protection of CA laws. The single act of purchasing an airline ticket to acquiesce in his children’s desire to live with their mother is insufficient – policy reason – do not want to establish minimum contacts via an act which a father undertook for family harmony.

Calder – libel by FL writer against CA actress. The writing was targeted to have an effect in CA and the magazine had its largest circulation in CA – therefore D could reasonably expect to be haled into court.

Intentional effects test:

1) D commits intentional tort

2) brunt of harm felt to plaintiff in forum state

3) D aimed tortious conduct at forum state.

Revel: libel on an internet forum. D was not a TX residents and had no contacts with TX; P was a TX resident and said brunt of harm was there. Court says that TX was not the focal point of harm, defamatory acts must be somehow aimed at forum state if P is to rely on Calder (fairness- so D can expect to be haled into court there).

Relatedness and General in personam jurisdiction:

General jurisdiction arises from continuous and systematic activity in a state. Lots of sales, lots of offices, lots of advertising.

An individual is subject to general jurisdiction in the state in which they are domiciled

A corporation is subject to general jurisdiction in the state in which they are incorporated [primary place of business and headquarters??]

Just making purchases from the state is not enough (Helicopteros)

Perkins v. Benguet: P sued D, a Philippines mining company working out of OH, in OH court. In OH, D operated interim offices, held meetings, disbursed checks and kept files. D carried on continuous and systematic activities – even though the suit did not arise out of the corporations activities in OH, the court ruled that OH was free to take or not take personal jurisdiction over the corporation. Part of the decision was based on fairness to the D - there was apparently nowhere else to sue.

Reasonableness of Jurisdiction:

*Does the forum state have an interest in litigating the disputes

Challenging personal jurisdiction:

1) Direct attack: D must immediately move to quash PJ or else he will waive his objection

a) Special Appearance

2) Collateral attack: permissible if D has ignored the proceeding and default judgement is entered against him

Service of Process and Notice to Defendant: To obtain jurisdiction over a D, the court must have territorial authority and give D notice to fulfill the requirements of Due Process. Often, the SOL is tolled only when the D has been properly served; therefore, improper service may bar a lawsuit. Prospective D must object to method of service on first response (like jurisdiction).

Defendant must be served in a manner that is both constitutionally permissible and authorized by statute.

Waiver of service: 4(d) Generally, D’s have a duty to avoid the expense of service.

• D’s subject to 4(d): individuals within a judicial district of US, persons in a foreign country, corporations partnerships or associations. When P files the waiver, proof of services is not required.

• Waiving summons does not waive objections to personal jurisdiction or jurisdiction.

• D sends P a copy of the complaint and a Notice/Request for Waiver of Summons by a reliable means (1st class mail). D has:

o 30 days to return the waiver if D is within US

o 60 days if D is outside of US

• Failure to waive: the court must impose on D the costs of service and the expenses of any motion required to collect the service expenses.

• What happens if P’s mail fails to reach D?

• There may be an incentive to not waive if SOL is tolled only by service and will run out by the end of the waiver period! Thus, P should seek a waiver only if there is ample time left in the SOL.

Personal service: giving the D or its authorized agent a copy of the summons and complaint.

• Individuals: 4(e)

o Personally served

o Leaving service at D’s residence with person of suitable age and discretion who resides there

o Delivering copy to authorized agent

• Corporations: 4(f)

o Officer or managing agent of corporation – must be sufficiently connected with company to render it likely that service on that individual will provide notice to the defendant.

• AICPA v. Affinity- Service of individual who was not a representative, did not claim to be a representative, and had not even heard of the company. Even if constructive notice is obtained through defective service, such actual notice does not cure an otherwise defective notice. The procedural posture of this case was important – this was a motion to vacate default judgement [I don’t quite understand this]

• Challenging service: the burden usually falls on the party who served (usually the P)

Constitutional Standard

• Mullane: Notice must be reasonably calculated to apprise interested persons of the pendant litigation against them. They cannot just go through the motions, there must be some intent to reach interested D.

o When addresses known – actual notice

o When addresses unknown – publication is OK

o The court recognizes that the character of the proceedings may affect the notice; there are practical difficulties that make investigation of large numbers of D’s difficult and keeping them informed may be expensive and an unfair burden.

Subject Matter Jurisdiction: the ability of a court to hear a particular type of case; decided by statutory (USC 28) and constitutional authority (Article III – lists possible areas of jurisdiction, does not actually confer them over courts: Congress must OK). States have SMJ over all matters unless federal law expressly precludes it; whereas federal courts are of limited subject matter jurisdiction, only if federal law allows it. The burden is on the P to establish SMJ. SMJ cannot be waived, and the court or parties can object to SMJ at any time in the litigation.

Federal Question Jurisdiction:

a) There are two sources of “arising under” federal question jurisdiction, Article III and USC 1331.

i) The Constitutional Arising Under standard is very broad, requires just a “federal ingredient” and has not been tested.

ii) The Statutory 28 USC 1331 standard is narrower. Under this standard, it is not enough that P refers to federal law in her complaint; in deciding whether the case arises under federal law, the federal law must be a necessary part of the complaint and must establish the elements needed to prove the claim to relief.

1) Well Pleaded complaint: a case arises under FQ jurisdiction only if is apparent from the efface of the P’s well pleaded complaint that federal law is an essential element of P’s cause of action; thus, federal question jurisdiction here is established at the beginning of the litigation.

2) There is no FQJ based on defense, it must be an element of the claim for relief.

3) Federal question:

a) Merrill Dow: suing under federal tort law for violation of FDA labeling act. The court said that this is a private parties dispute, not much federal interest (the gov’t itself can go after drug manufacturers who are mis-labeling their drugs). The federal labeling standard did not list a federal cause of action. There was concern that if this was allowed, any federal standard without a federal cause of action would end up in state court. Flood of litigation.

b) Grable v. Darue: quiet title action in state court, D wanted to remove to federal court. This was OK – why: Concern over proper notice in IRS tax sale, this is a federal organization and a federal statute. When the meaning of a federal statute is in dispute, a state claimant may pursue the claim in federal court. Test:

i) Is an essential ingredient of the claim federal?

ii) Is the meaning of federal law in dispute?

iii) Is there a federal interest in adjudicating the dispute?

1. Why different outcome than Merrill Dow? Turned on interpretation of government action.

iv) Will federal adjudication of the dispute disrupt federalism issues?

1. Merrill Dow turned on a state tort claim, Grable turned on the method the IRS used for notice in a federal tax sale.

Diversity Jurisdiction: the power of the federal courts to adjudicate disputes between citizens of different states if more than $75,000 is at stake.

Policy:

• Pro- DJ: prejudice to out of state litigants, local favoritism, state court judges are not politically insulated

• Cons: judicial inefficiency, misappropriation of federal resources, unequal access to federal resources (why should citizens from different state have access to federal courts when citizens of the same state do not for the exact same dispute – this does not seem to make sense)

1) Complete diversity requirement - no P from same state as D - Strawbridge (this is not a Constitutional requirement, but rather a limit on federal jurisdiction)

i) The burden is on P to support allegations of non-diversity when the issue is challenged by D

ii) Domicile is determined at the time the suit is filed, NOT at the time the incident(s) occur(s)

1) Parties can amend their complaint to add/dismiss diversity creating or destroying parties, but a post-filing change citizenship will not impact diversity determination (Grupo Dataflux)

2) How is citizenship determined for diversity purposes?

a) Individuals - Domicile: where person lives and intends to remain permanently. An individual can only have one domicile.

i) Factors in domicile (non are required, multifactoral depending on circumstances: voter registration, where living, property location, employment

b) Corporations:

i) State of incorporation. If incorporated in more than one state, forum doctrine: if a corporation is incorporated in multiple states, the other states of incorporation are ignored for determining diversity

ii) Where is of principal place of activity?

1) Principle place of business –where do operations occur

2) Nerve center of corporate decision making

3) Hybrid test – combines both

iii) Unincorporated entities: citizen of all states where a member of the association or partnership is domiciled. A party’s post-filing change in citizenship cannot cure a lack of SMJ based on non-diversity that existed at the time of filing a diversity suit.

3) U.S. Citizens abroad – if a US citizen is domiciled outside of the US, there is no diversity. This is because 1332 is read very closely and does not provide for this situation. Elizabeth Taylor.

4) Foreigners: what is important is that there is a dispute between citizens of different states

a) There IS diversity if there are aliens on both sides and diverse US citizens on one or both sides

Mexico + VA v. Mexico + NC is OK

b) There is NO diversity if there are aliens on both sides and a US citizen only on one side

Mexico + VA v. Bahamas is not OK

c) There is NO diversity for disputes between two aliens – limiting SMJ (parochialism goes both ways?)

Mexico v. Bahamas is not OK

d) An alien permanent resident of the US is a citizen of the state where he is domiciled for diversity purposes

5) Exceptions to Diversity: federal courts cannot adjudicate domestic relations or probate issues, regardless of diversity status.

a) Example: May a case where a diverse surrogate mother and adoptive mother have a contract dispute over the surrogacy be adjudicated in federal court? It depends on if you see this as a child custody case (federal jurisdiction is not permissible) or a breach of contract case (federal jurisdiction is permissible)

6) Amount in controversy requirement: must exceed $75,000 with legal certainty on the face of the complaint. Subsequent events that alter the amount in controversy will not affect SMJ, as long as at the time of filing the requirement was met (Coventry Sewage)

a) Injunctions: when claims are not for money damages, you look at the value to P and harm to D. The value to P and D can differ greatly, so some think that the standard should be the value to the party invoking DJ.

b) Rules of aggregation:

i) An individual p can aggregate their joined claims against an individual D to get to $75,001

P (D tort: 50K and breach of contract 50K, aggregation to 100K and meet amt in controversy

ii) Multiple P’s cannot aggregate their claims against one D

Ptort 50K + Pcontract 5oK v. D - whole suit fails to meet amt in controversy requirement

iii) One P’s claims cannot be aggregated against multiple D

P ( Dtort 50K +Dcontract 50 K – whole suit fails to meet amount in controversy requirement

The Law Applied to Diversity Cases

The Rules of Decision act of 1789 stipulated that state laws would apply in federal court, because there was no federal law at the time. Swift held that a federal trial court could ignore the common law of the state that it sat in – and that the federal courts could invoke and apply their own common law. Problems! Lack of uniformity, forum shopping due to lack of uniformity and consistency. Even though conformity acts were created, the procedure between federal courts in different states different, and there would be a lag between states changing their procedure and federal courts doing the same.

Congresses’ Rules Enabling Act of 1934 was in response to some of these conformity between federal court problems, and delegated the power to create federal procedural law to the supreme court, and the FRCP were enacted in 1938.

Erie ( state substantive law

Rules Enabling Act ( Federal Procedural Law

The court in Erie held that a federal court sitting in diversity should follow the substantive state legal standards imposed by state law. The holding in Klaxon broadened this principal, holding that a federal court exercising jurisdiction over a state law claim must apply the substantive state law that the state court in the district where the federal court sits would. Use that state’s choice of law provisions.

Guaranty Trust v. York: diversity suit, class action. Does a federal court apply the state SOL or the federal SOL when application of the state SOL would preclude recovery. The court said that the substance/procedure line was immaterial, what was important was whether the application of different rules significantly affects the result of litigation. The purpose of Erie was to prevent different outcomes in federal/state court as to avoid forum shopping. So, if the choice of law is outcome determinative, the court must apply state law. [problem -> to some extent all law choices are outcome determinative, and the FRCP would always be displaced in diversity cases – silly and inefficient]

Byrd v. Blue Ridge: issue of whether a question is one for the judge or one for the jury. In federal courts, it was a question for the jury; in state court, it was a question for the judge. Using the York test strictly - this question may be outcome determinative. However, there are other interests here- in the federal system, a fact issue was for the jury, this was an important part of the federal courts, and state laws cannot alter an essential function of the federal courts. Critical issue here: federal interests, not just “outcome determinative” -- standard which looks to certainty and predictability that an outcome will differ between state and federal courts, with judge v. jury, no certainty; but in York with SOL, there was certainty that a different outcome would occur. [federal interest]

Hanna v. Plumer: issue over service; Purusant to Rule 4, service was made by leaving summons with an executor, but a more restrictive state law required personal service on the executor. The court focuses on the policies underlying Erie: discourage forum shopping and avoid inequitable administration of laws. The court uses these to encourage the application of federal laws.

Conflict between federal statute and state statute:

Stewart v. Ricoh: conflict regarding forum selection clause – state looks unfavorably upon them, whereas they are allowed under FRCP. The court decides that if a rule regulates what occurs in the litigation process, it is procedural; whereas if a rule regulates what happens before the litigation process (ie, contract law) it is generally substantive. Courts analysis: (1) does federal rule cover this situation; (2) is the federal rule constitutional?

Federal Interest:

Boyle v. United Technology: state law may be displaced by federal common law when there is a significant conflict with a federal policy, or the application of state law would frustrate the objectives of federal policy.

Supplemental Jurisdiction:

Claims which are related to claims that the federal courts have jurisdiction may enter federal court, even if the claim does not fall under federal jurisdiction. Why: efficient use of judicial resources, potentially more fair to P/D, federal courts are limited jurisdiction and we do not want to allow parties to simply add a third party/issue

Analysis:

1) Is there Constitutional authority to adjudicate the supplemental claim – Gibbs – the court may hear a related claim if there is a claim with original jurisdiction and the related claim arose from the same nucleus of operative fact

2) Is there statutory authority to adjudicate the supplemental claim(s) under 1367?

3) Does it make sense to adjudicate the two together? Efficient? Fair? Does state law dominate (reason to send to state court); is it a new issue of state law?

Supplemental jurisdiction over claims:

Look for “common nucleus of operative fact” – did the claims arise from the same incident? would discovery, witnesses overlap?

So, this includes cross-claims and counterclaims which arise from the same case.

Would deciding the cases in different decisions cause inconsistent outcomes or punishments.

Supplemental jurisdiction over parties:

§1367(a): same case or controversy (nucleus of operative fact)

• Is it efficient to sue together – witnesses, evidence, discovery overlap

• Is it fair to sue together

§1367(b): Even if common nucleus is met, in diversity cases, there is no supplemental jurisdiction over claims by persons proposed to be joined by plaintiffs under rules 14, 19, 20, 24.

• Does not withhold jurisdiction over people made parties under 20/23

§1367(c): discretionary exemptions, where the judge can decline to exert supplemental jurisdiction

1. The claim proposed to be joined raises novel issues of state law (federalism, also federal court decisions are not precedential over state courts, so this an inefficient way to adjudicate state disputes)

2. The claim for which the federal court lacked original jurisdiction substantially predominates over all other claims where the court has original jurisdiction

3. The district court has dismissed all claims over which it has original jurisdiction

4. Exceptional circumstances

Diversity and 1367(b):

• The court has supplemental jurisdiction over non-diverse additional parties’ claims against non-diverse parties.

• When the complete diversity requirement is met, and one party meets the amount in controversy requirement, the other parties may join if they do not independently meet the amount in controversy.

• The complete diversity requirement shows the commitment to keep lots of state claims out of federal court

Removal Jurisdiction Only available to Defendants, only state ( federal

• A defendant can override the plaintiff’s choice of state forum in favor of a federal forum if the action could have originally been brought in federal court.

o P can file a motion to remand to contest the lack of federal SMJ, failure to move for remand constitutes a waiver of removal.

o D cannot remove on a counterclaim or federal defense

• The existence of removal jurisdiction suggests that perhaps there is not parity between fed/state courts

• How can P’s avoid removal?

o Join (not fraudulently!) a non-diverse party

o Sue D in D’s state of domicile (D in diversity case cannot remove to home state 1441(b)_

o Limit claim to below amount in controversy test

o Do not sue on a federal question

• Removal jurisdiction takes cases from the federal court to the state court where the federal court sits

• Ds can only remove based on P’s well –pleaded complaint (Mottley) at the time it was filed. Of course, a P can amend their complaint, and a D can remove based on the amended complaint.

• All Ds must remove or none can (are there exceptions to this?? Check)

• Procedure for Removal: 1446(c) and 81(c)

o D files removal petition in state court within 30 days of service of summons and complaint

o D notifies adverse parties, state court

o P waives, or files motion to remand in federal court

|Removal in Diversity Cases |Removal in Federal Question Cases |

|*NO removal for separate/independent claims |*When there are federal question claims joined with state claims that |

| |wouldn’t otherwise be removable (because they are separate and |

| |independent) – district court may accept, or may remand state law claims. |

| |(1441(c) This is because if federal courts are important for the proper |

| |administration of federal rights, D should not lose this just because P |

| |tacks on a state claim. |

|D can remove a case in which DJ first appears only within one|D can remove at any time after FQ jurisdiction appears in the case, so |

|year of the commencement of the action |long as it files the removal petition within 30 days of service of the |

| |pleading that asserts the FQ |

|Only removable if none of the parties joined and served as D | |

|is a resident of the state in which the action is brought | |

|(local prejudice not a problem) | |

|Fraudulently joined, diversity wrecking parties, will be | |

|ignored | |

Venue – which county/federal judicial district

• Venue is entirely statutory (no article III concerns)

• As with personal jurisdiction, parties can consent to venue, even if it would not otherwise be proper (especially through forum selection clauses)

o As a matter of contract law Jones v. GNC

o As a matter of due process Carnival

• Allocates cases in rough proportion to the population/amount of business conducted within a region

• Convenience of parties – actions must be filed closer to where parties reside/events occur

• Residence for the purpose of venues:

o Individuals: same criteria as diversity, domicile = where intends to reside permanently

o Corporations: wherever there would be personal jurisdiction over it (for multi-district states, treat each ‘district’ as a state and analyze minimum contats)

|§1391 | |

|If all D’s from same state |(a)(1) or (b)(1)District where any D resides, if all reside in the |

| |same state |

|Where events take place (may be multiple) |(a)(2) or (b)(2) Judicial district where substantial part of |

| |events/omissions giving rise to claim occurred, or property subject to|

| |action is located |

|If no other proper venue |Judicial district where D subject to personal jurisdiction, if there |

| |is no other proper |

Transfer of venue in Federal Courts: federal court may transfer to other federal court where there is personal jurisdiction and proper venue

• 1404 – venue would be better elsewhere

• For the convenience of parties and witnesses and in the interest of justice, a district court may transfer suit to any other district where it might have been brought, upon motion and consent of all parties

o Strong preference for P’s choice of forum – D’s convenience and necessity must overweigh substantially the P’s choice of forum shopping (Smith v. Colonial Penn)

o Interest of justice/efficiency (Bolivia v. Philip Morris)

o Ease of access of evidence and witnesses

o Practical features that make trial easy/expeditions/inexpensive

o The forum must be one where the suit could have been brought – at the time the suit was commenced, jurisdiction would have been proper in that venue

• If venue was transferred (but was proper when first filed), choice of law rules of the original forum will be applied (Klaxon – in a diversity case, the federal court applies the choice of law rules in the state in which the federal court sits)

o This prevents forum shopping

• 1406 - venue was improper

o District to where the action was transferred will apply their choice of law rules.

Forum Non Convens –a dismissal, not a transfer doctrine.

Common law doctrine allowing court to decline the exercise of jurisdiction to permit a suit to be filed in another more convenient party. The possibility of change in substantive law should not be given a say in the analysis. But, an unsatisfactory remedy in the other forum might be considered (Piper – where US law provided generous recovery, and Scottish law provided enough, but not generous, recovery). Often, P’s refilling is conditioned on D’s waiving SOL defense.

Moving Party must show:

1. That there is an available alternate forum

2. The balance of private and public concerns implicated by the choice of forum weights in favor of dismissal:

a. Cost of obtaining attendance of witnesses, possibility of viewing premises, expense to private parties

b. Local interest in having local interests

c. Interest in having a diversity case decided in a forum at home with the governing law

d. Avoidance of problems between conflicting laws (state v. state, state v. foreign)

e. Unfairness of burdening residents with jury duty for non-forum related incident.

Pleading – short & sweet

The rules governing pleadings and complaints tell us which kinds of claims will be allowed, and when competent counsel should be appointed.

Common law pleading required P to allege the particulars of their COA, making sure to align the facts with each cause of right. Code pleading focused overwhelmingly on facts, and became highly technical (ie, you can’t plead a conclusion, required ridiculous specificity as to the facts) Notice pleading under FRCP allows a claim to be more general (after all, discovery hasn’t even occurred), and is not concerned with testing the factual sufficiency. Under notice pleading, there is a tendency to allow cases to trial, or at least to discovery. The cost of this is a burden on D’s with costly litigation which may turn out to be meritless.

Notice Pleading

• Goal: to put parties on notice (ie, need to identify specific transaction giving rise to the controversy; sale on specific date, accident at the specific place and time), to screen out claims, to provide a record of how a case was decided (often in state court, complaint ( answer ( discovery ( one line ruling by judge, so the only way to know what a ruling means is to look at the pleadings for the facts.

• 8(a): a pleading which sets forth a claim for relieve shall contain

1. A short and plain statement of the grounds upon which the court’s SMJ depends

2. Short and plain statement showing that the pleader is entitled to relief

a. Fact statements

b. Causes of Action

c. Pleadings should not be screened for technical competence, do not want to deprive P of day in court (Diogaurdi), what D needs is notice and general basis – notice pleading is liberal

d. What happens if a Plaintiff fails to comply with Rule 8(a)?

i. Court can dismiss the action and give the P leave to amend (15a), which requires leave to amend to be given freely as justice requires.

ii. If complaint is vague, the D may move for a “more definite statement” under FRCP 12(e): if pleading is so vague that party cannot possibly prepare a response. If the defect is not cured, the court may strike the pleading.

iii. Relation back doctrine: if a complaint is filed prior to the SOL, and if amended, but still “relates back” it will count as filed within the SOL.

iv. If complaint is too long and prolix, the court may complain, as this puts a great burden on judicial resources. Prolixity alone will not defeat an otherwise valid complaint, if the complaint puts the other side on notice.

3. A demand for judgement for the relief the pleader seeks (prayer for relief)

a. Remedies (how much)

b. Injunctive relief (what kind)

4. Request for jury trial, if desired (if not requested, waived)

5. Signature

• Complaint: P’s statement of facts and legal basis for claim

• Answer: D’s response; either denies allegation or offers affirmative defense. Must admit/deny all allegations.

• Counterclaim: D’s claims against P

• Reply: P’s response to counterclaim

• Third party complaint

• Cross-complaint

There are substantive effects of the procedural rules of pleading.

• Short and Plain Statement: efficiency

• Allows P the element of surprise – he does not have to plead every known fact, so he can save some for ‘surprise’ – giving an advantage to Ps

• Relieves P of burden of determining before trial the exact facts/information, as this may be difficult to get without the power of the court

• Heightened specificity required for some allegations (burden on P)

o 9(b): Fraud or Mistake

▪ Easy to allege, harder to prove

▪ Statutes can require other claims to have heightened specificity, for example, some securities transactions

▪ Rejected for employment discrimination (?), even though easy to allege and hard to prove

▪ Rejected for civil rights cases against municipalities (Leatherman) - here, the court said that since some claims are enumerated in the statute, Congress can include more if they want, but they did not include this civil rights/municipal immunity phenomenon. Perhaps if written today, it would be included, but it is not in the rule – and judicial interpretation is not going to write it in, they are only requiring regular 8(a) notice pleading.

What if complaint fails to state a claim? 12(b)(6)

• Fighting the claim on the law, not the facts. Even if all allegations true, P would still not be entitled to any relief, ie, no legal rights were violated.

• Court will generally give leave to re-file

• Efficiency of judicial resources, fairness to defendants.

• Benefit of doubt given to P, and P does not have to prove factual allegations are true (remember, assuming true). Pleadings must be liberally construed in favor of stating a claim/cause for relief.

• Factual statements matter, and the failure to cite correct statute does not affect the merits of a claim (Northrop b. Hoffman) – the test for sufficiency is whether it is detailed and informative enough to allow a defendant to respond.

• A legal theory is required (Kirksey)

• High standard for 12(b)(6) motions:

o If dismissed, P will not have the opportunity to show the case to the trier of fact

The Answer

• Normally due within 20 days (See Rule 12)

• D must admit or deny every allegation, failure to deny is equivalent to an admission

• Must contain any affirmative defenses, may contain negative defenses.

• May contain any counterclaims

What if D does nothing upon receipt of complaint?

• Rule 55: Default judgement.

• Entry of Default. If you don’t do anything on this, it will become a default judgement. A default judgement is much harder to set aside than a default.

o You can file a Motion to Set Aside Entry of Default Motion to prevent it from ripening into a default judgement. You must establish:

▪ D not culpable in default

▪ D has potentially meritorious defense

▪ No undue prejudice to P caused by D

Ethics of Pleadings – Rule 11

Rule 11 was contracted, because there were concerns that it was becoming a fee-shifting device (ie, after the suit is over, the winning party might say not only did I win, but clearly your suit was without merit). Watch out for this concern. Federal judges have (or think they have) the power to go beyond Rule 11 and do what is necessary if not covered by law.

By filing and signing a pleading, an attorney certifies that to the best of their belief, based on a reasonable inquiry under the circumstances: (reasonably inquiry: time available, whether independent confirmation from source other than the client is available, situational, depends on SOL, complexity of case)

• It is not being presented to harass, delay, or increase the costs of litigation

• Claims are warranted by existing law or reason for modifying existing law

• Facts have evidentiary support or will likely after investigation

• Denials are reasonably based on belief or lack of information

The goal of remedies is to deter, not to punish. There is a ‘safe harbor’ provision, and pleadings can be withdrawn without sanctions in 21 days.

Court can bring sanctions sua sponte, or opposing party can bring a Motion for Sanctions (must be made separately from other motions). A Motion for Sanctions requires notice and ability to respond (so party can withdraw their complaint, if they want. This came up in Storming the Court)

Who is liable for sanctions?

• Attorney and law firm (do not want to thrust the burden on one poor associate)

• Client – except for 11(b)(2) – legal basis, so client with counsel can only be sanctioned for factual issues

Discovery

Discovery is the formal exchange of factual information between parties to a lawsuit. Discovery is generally controlled by the parties. Liberal notice pleading gives rise to the need for discovery. The purpose of discovery is to narrow and clarify the issues for trial and as a device for ascertaining the facts, or information regarding these facts, relevant to the issues.

Matters relevant to the subject matter may be obtained with judicial permission

*Think about boundary elements – those inbetween claim/defense relevance and subject matter relevance. Also think about which law of privilege to apply in a diversity action. Also think about whether or not privileges should be qualified or unqualified.

Scope: any matter, not privileged, that is relevant to any claim or defense.

• Federal courts define claim as a group of facts relating to the same transaction or occurrence and giving rise to one or more rights of action.

• 2000 amendment narrowed to “claim or defense” from “subject matter” – subject matter was difficult, because parties were not sure if it made them ‘rat out’ their client for related offenses, and this is not in keeping with the attorney’s ethical requirement to be a zealous advocate for their client. Also, the element of surprise is lost.

• So, asserting more claims means more is open to discovery.

• Relevance: any matter reasonably calculated to lead to the discovery of admissible evidence. The information itself does not have to be relevant/admissible, but it might lead to admissible information.

• Information is discoverable if doing so is not unduly burdensome and expensive. “Unduly” depends on the type of litigation (big lawsuit versus small lawsuit, big more is at state and discovery is likely not so burdensome)

• Information regarding insurance covering liability is available. Policy – if the policy doesn’t cover, or doesn’t cover the amount you want, you might as well settle.

• Assents are only discoverable when punitive damages are sought.

Mechanism of Discovery:

1) Pretrial conference – 26(f). Parties must confer as soon as practicable. Consider the nature of claims, develop discovery plan. Purpose: speedy resolution of trial, a mechanism to mold discovery to the particulars of a case, flexibility in the discovery process.

2) Mandatory “voluntary” disclosure – 26(a). Purpose: to accelerate the exchange of basic information about the case, eliminate barriers to learning basic information, parties cannot opt out of this mandatory disclosure; parties were fighting too much over discovery rules and procedure and this was designed to streamline the process.

a) What: name, address, telephone number of individuals likely to have discoverable information; documents, data, tangible things in possession of disclosing party that may be used to support a claim or defense, expert witnesses and their 26(a)(2)(B) report, information regarding the computation of damages, insurance agreements

i) Note: witnesses you may use to impeach the other side do not have to be disclosed – if they are not to support your claim or defense (hunh?)

b) When: within 14 days of 26(f) pretrial discovery conference. This is early. Why – to encourage settlement before both sides expend resources, to know what the other side is using and plan trial strategy accordingly, to allow the other side to respond to expert testimony.

i) Duty to continue to voluntarily disclose continues throughout the trial process

ii) Duty to voluntarily correct errors - 26(e), applies to whole discovery process

c) Why: to encourage candor and to keep judicial resource usage to a minimum, prior to the introduction of the voluntary mandatory disclosure the judicial system and private parties spent a lot of time getting parties to disclose information.

i) A refusal to answer and provide document may result in a default judgement against a client.

3) Depositions: usually in person. Expensive, effective. There is less surprise at trial if depositions are conducted, each side has some idea what the other side’s witnesses may say.

a) Spontaneous – answers given by memory, no coaching from counsel (may only object to privileged information). Standard for relevance is discovery relevance (relevant to claim/defense, subject to privilege)

b) Recorded, limited to 10, 7 hours each

c) Parties – no subpoena necessary as they are already under the jurisdiction of the court; non-parties, subpoenas

d) If subpoena duces tecum given (30(b)(2)), production of documents may be requested.

4) Interrogatories: Rule 33. Written request for information that must be answered under oath.

a) 30 days to answer. 25 max.

b) Can only be used on a party.

c) Cheaper than depo, but answers are not spontaneous, and the attorney usually will draft the answer.

5) Requests for production of document – Rule 34. Anything relevant to claim or defense, as long as not intangible.

a) Can only be requested from parties.

b) Party can provide records that will answer the question, instead of directly answering it. Why – maybe the other party should have to do the work of sorting through all the crap.

c) Parties should sort through and take out privileged documents, or else that privilege might be waived.

d) Ethics – hiding documents, burying the other side in paper.

e) Request needs to be specific enough so that other side knows what you want, and judge can determine if the other side has complied with the request.

6) Request for physical/mental examination – Rule 35:

a) Close court supervision - these require a court order (why – maybe to prevent embarrassment)

b) Exam may reveal personal, confidential, embarrassing information – forcing other side to settle or submit to a physical/mental evaluation. See Sibbach v. Wilson.

7) Requests for Admission – Rule 36. Good for narrowing issues. Cheap, unlimited number.

a) Admission for purpose of pending litigation – facts, genuineness of any described document.

b) 37(c)(2) – failure to admit may result in payment of expenses incurred in making proof. You cannot refuse to admit what you know is true, pretending like it is the other side’s burden to prove.

8) Court intervention: court can shield party from discovery to prevent annoyance, embarrassment or undue burden (Rule 26(c)); may issue an order compelling party to provide discovery (37(a)(2)); and may impose sanctions (Rule 37)

Ethical issues in Discovery. If you have a document you “might use” but it would allow the other side to find more information supporting your claim, do you have to produce it. If you do, you help the other side and risk not being a zealous advocate for your client, if you don’t produce it and you should have, you may face sanctions.

a) 37(a)(4) – evasive or incomplete disclosure. Sanctions can include refusing to allow the withheld evidence, judgement by default, striking the claim or defense relevant to the withheld information from the pleadings.

b) Delay in disclosure: a signature certifies that discovery is complete as of the time that it was made – so if you do not disclose everything that you have at the time, you face sanctions.

Discovery Abuse {review and fill this in}

1) Increase sanctions for violation of discover rules

a) Places the burden of violation on the violating party

2) Change discovery rules, for example, by making it harder to hide a document

a) Places burden on both parties.

b) May cause increase in document destruction policies, making the truth harder to find

c) May require more judicial supervision, and rules have been written to avoid the burden of judicial supervision.

3) Change the system of financing litigation. Loser pays.

a) May discourage the poor from bringing suits against the wealthy.

Privilege: judicially recognized right to refuse to disclose otherwise relevant information.

• A mater is privileged for discovery if it would be privileged for trial.

• New privileges are rarely recognized.

• Privileges can be waived (implied – ie, sue for malpractice; explicit: inadvertent disclosure – depends; purposeful disclosure – generally a waiver)

o Inadvertent waiver? How to decide if privilege waived?

▪ Look at the circumstances – were reasonable precautions taken to prevent inadvertent disclosure? Was the error rectified quickly? How unfair would it be to one party to waive the privilege?

▪ Some like strict responsibility – party with the knowledge is in the best position to protect its secrecy, this policy encourages people to be careful.

▪ Intent test: looks to see if intent of disclosure was inadvertent. Rational: since disclosure is a client’s right, and not an attorney’s, it is not fair to punish a client for an attorney’s accidental disclosure. Don’t want to take power to waive out of client’s hands.

o Inadvertent waiver raises ethical issues.

▪ “do unto others” – recipient of accidently disclosed privileged information should contact the other side before proceeding. Why? The importance of confidentiality (ie, don’t read any further in the document!)

▪ Finders keepers. If an attorney is to be a zealous advocate for her client, she needs to use all available information, and does not need to inform the other sided that she has them.

o Remedies for inadvertent disclosure: return documents, protective order, disqualification of counsel.

Sources of privilege:

1. Federal Common Law (spousal, priest, attorney client, therapist client to social worker, Jaffe)

a. The federal courts are authorized to define new privileges. In Jaffe, the court identified the therapist (social worker) client privilege because it was necessary for confidence and trust – serves private ends. Advances mental health – serves public ends. The court here rejects a balancing test of parties interest in privacy and evidentiary interests, because they do not want to weaken the privilege. Furthermore, extending the privilege would frustrate the purpose of legislation supported by all states was enacted to further. Uncertain privilege is no good – because then when visiting a therapist, people won’t know if privilege or not – they will not discuss relevant things. Scalia’s dissent: the creation of new privilege has the cost of occasional injustice.

2. State law: only applies when the information sought is relevant solely to a state law claim or defense (ie, diversity cases, supplemental jurisdiction)

3. Constitutional – 5th Amendment – applies in civil cases only to testimony that would make the D criminally liable; jury is permitted to draw adverse implications from refusal to answer.

4. Federal Statute or Rule.

a. FRCP 26 covers work product, non-testifying experts

Attorney/client Privilege: (p. 603-608)

Why does it exist? To encourage candor, to allow the lawyer to know information and to provide advice.

Elements:

1. Where legal advise is sought (ie, dinner party versus office)

2. In lawyer’s professional capacity

3. From a professional legal advisor in their capacity as such

4. Communications relating to that purpose (remember Lassiter case, if she tells her criminal attorney something, can it be used in the civil case against her?

5. Made in confidence (ie, in the office there is a reasonable expectation of privacy, whereas at the scene of an accident, there is not a reasonable expectation of privacy.

6. By a client (and by the lawyer in most jurisdiction) – verbal and non-verbal communication

7. Only the client can waive the attorney/client privilege (but, if the suit relates to the advice, ie malpractice, the privilege no longer exists.

As applied to corporations [corporations cannot represent themselves pro se, they must consult legal advice for shareholder liability reasons]

• A/C privilege is broad, does not only apply to senior executives (the “control group”), but applies to all (subject matter). Why the broader rule?

o Narrow rule frustrates the purpose of A/C privilege by discouraging non-control group members from disclosing relevant information – full and frank information needed

o Balancing test: the more that is privileged, the more truth finding becomes difficult for the other side – this can have public consequences when the other side is law enforcement.

o The communication, but not the facts communicated, are privileged.

o Again, and uncertain privilege serve no purpose – the court rejected the “control group” because the client would have trouble knowing when/which communications were protected.

• The client is the corporation, the client is not the individual employee, but when the employee communicates within their scope of employment, what they say is protected by A/C privilege and is never discoverable.

Work Product Doctrine: covered by FRCP

• Protects the preparation an attorney des in anticipation of litigation. Covers more than just litigation, covers legal research, data collected, etc…

• Documents and tangible items

• Why:

o If it didn’t exist, attorneys would not write down their thoughts

o Inefficiency, unfairness (other side could get trial strategy) would arise. The absence of a work product doctrine does not serve the interests of justice and clients.

o Do not want to let one side do the others work. However, this is inefficient in that it means that the same work may be done twice.

• Unlike the A/C privilege, the work product privilege is a qualified privilege, it can be overcome by the showing of extraordinary need and cannot without undue hardship obtain their substantial equivalents by other means [26(b)(3)] (an example – data from a study done once, maybe? Like a study on the particular bullet in question?).

• Introduced in Hickman v. Taylor: interview with survivors of a boat accident (including attorney’s notes and mental impressions). These notes are not “communications” so not covered by A/C. Note that this information was available elsewhere – other side could have interviewed survivors! Opinion work is very, very rarely discoverable.

Privilege and Expert Witnesses:

• Testifying experts: 26(b)(4)(A): a party may depose any person identified as an expert whose opinions may be present at trial. Generous discovery – anything the expert relied on.

• Non-testifying expert: discovery available only if exceptional circumstances make it impracticable for party to obtain facts or opinions on the same subject by other means. This prevents opposing counsel from relying on another’s work; prevents opposition from gaining knowledge of trial strategy; exceptional circumstances: object of study no longer available, prohibitive cost to replicate.

Joinder Common law joinder was limited to the same form of action, rules were strict. Joinder rules under the FRCP are more liberal.

Joinder of Claims:

Rule 13: Counterclaim and Cross Claim

a) Compulsory Counterclaim:

i) A pleading must state as a counterclaim any claim that – at the time of its service - the pleader has against an opposing party if the claim:

1) Arises out of the transaction or occurrence that is the subject matter of the opposing parties claim; and

2) Does not require adding another party over whom the court cannot acquire jurisdiction

ii) Exceptions. The pleader need not state the claim if it is part of another action…(didn’t cover this)

b) Permissive Counterclaim. A pleading may state as a counterclaim against an opposing party any claim that is not compulsory.

Rule continues…...

Rule 14: Third-Party Practice

a) When a Defending Party may bring in a third party.

i) Timing: A D may, as a third party plaintiff, serve a summons and complaint on a non-party who is or may be liable to it for all or parts of the claim against it. Must within 10 days, or obtain leave from the court.

ii) Third Party Defendant’s claims and defenses. The person served with the summons and third party complaint, the “third party defendant””

1) Must assert any defense against the third party plaintiff’s claims under Rule 12 (not covered)

2) Must assert any compulsory counterclaim against the third party plaintiff (13a) and may assert any permissive counterclaim against the third party plaintiff

3) May assert against the plaintiff any defense that the third-party plaintiff has to the plaintiff’s claim; and s

4) May also assert against the plaintiff any claim arising out of the transaction or occurrence that is the subject matter of the plaintiff’s claim against the third party plaintiff

iii) Plaintiff’s claims against a third party defendant. The plaintiff may assert against the third party defendant any claim arising out of the transaction or occurrence . The third party defendant must then assert any defense and compulsory counterclaim (13a) and may assert any permissive counterclaim (13b)

iv) Any party may move to strike third party claim or try separately.

v) ….

b) When a Plaintiff may bring in a third party. When a claim is asserted against a plaintiff, the plaintiff may bring in a third party if this rule would allow a defendant to do so.

• Allows for three kinds of claims: indemnity by D against third party D; claims by third party D against P; claims by P against third party D

• Does not allow a D to bring in a third party on a non-indemnification claim (ie, D cannot join a party by rule 14, claiming that the P sued the wrong guy) (Wallkill 5 v. Techtonic)

• Probably allows a plaintiff to indemnify someone from the same state against a counterclaim by the original D. Note that Nat’l Can probably got it wrong- 1367(b) is triggered when the exercise of supplemental jurisdiction would be inconsistent with the jurisdictional requirements of 1332. Look at the original v to determine diversity

K

GuaranteedNC Nat CanDE

14(b) indem. Negligence

HydrovacNC

Rule 42(b): For convenience, to avoid prejudice, or to expedite and economize, the court may order separate trials of counterclaims/cross claims/third party claims.

Rule 18: joinder of Claims

a) A party asserting a claim, counterclaim, crossclaim, or third party claim may join, as independent or alternative claims, as many claims as it has against an opposing party

• Once a party asserts a claim arising out of the same transaction, it can then assert any other cross claim it want; but the additional cross claim must have an independent basis for jurisdiction

Compulsory Counterclaims: arise from the same transaction/occurrence. By their nature, compulsory counterclaims meet the supplemental jurisdiction requirement under 1367, even if the counterclaim does not independently have a basis of SMJ.

• Same evidence, same facts and/or law, same facts. Overlap between facts needed to prove one & the other

• Judicial economy and efficiency; as well as to parties; prevention of multiplicity of actions

• Barred if brought later – use it or lose it.

• Desire to finally adjudicate all claims arising from a common factual background

• A claim under a Fair Lending act and the underlying debt itself were not found to come from the same transaction or occurrence (because one involved a federal statute, the other was a consumer contract; one involved unfair debt collection practices, the other involved the validity of the debt itself), and the claim for the debt itself was found to be a permissive counterclaim, not a compulsory counterclaim. Since this permissive counterclaim for the debt itself did not have an independent basis for federal jurisdiction, the court declined to hear it – and would not extend supplemental jurisdiction to it (Hart v. Clayton-Parker, p. 664)

• Even if it arises from the same transaction or occurrence, a party need not assert it as a compulsory counterclaim if it has not matured when the party serves his answer. Encompasses a claim that depends on the outcome of some other lawsuit. (Burlington Northern RR v. Strong)

Permissive Counterclaims: require an independent basis of SMJ. Are not transitionally related. Are not waived if not raised.

• Bringing them may prejudice the other case (42b)

• Judicial efficiency/parties economic efficiency is a good reason to bring them.

• Value of consolidating claims: judicial economy, complete adjudication, less discovery, encourage settlement

• Harms: prejudice to jury, forced settlement on one issue

Cross-Claims: asserted against co-party (same side of v)

P D

Cross-claim

D

• Cross claims may only be asserted if they arise from the same transaction or occurrence

o This is balancing the efficiency of getting all issues litigated with fairness to the original P, we don’t want to clog up their lawsuit with extra unrelated issues

• Not all claims between parties are considered cross claims, sometimes they are counterclaims. Co-parties become opposing parties within FRCP 13(a – compulsory counterclaim) after one such party pleads an initial cross claim against the other. The initial cross claim must include a substantive claim (ie, breach of K), and not merely a claim for indemnification

Joinder of Parties:

Rule 13(h): Rules 19 and/or 20 govern the addition of a person as a party to a counterclaim or crossclaim.

• Permits a D who has filed a counterclaim or crossclaim to join new parties to that claim

• Court must have personal jurisdiction over new parties

• When a defendant, acting as a third party plaintiff, adds a third party defendant – 1367(b) (supplemental jurisdiction & diversity jurisdiction) is read literally. Since it says …the district court shall not have supplemental jurisdiction over claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24, or proposed to be joined as plaintiffs under rule 19……when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of 1332. So, 1367(b) applies only to claims by plaintiffs whose addition would destroy diversity. Reason – to prohibit original p by only claiming against diverse parties, then joining diversity wrecking parties later. (Hartford Steam Boiler)

Rule 20: Permissive Joinder of Parties

a) Plaintiffs. Persons may be joined as P’s if:

i) They assert any right to relief jointly/severally/in the alternative with respect to or arising out of the same transaction or occurrence or series of transactions or occurrences; and

ii) Any question of law or fact common to all Ps will arise in the action

b) Defendants. Persons may be joined as D’s if:

i) Any right to relief is asserted against them jointly/severally/in the alternative with respect to or arising out of the same transaction or occurrence or series of transactions or occurrences.

• Diversity jurisdiction: all parties must be diverse, at least one claim must meet the amount in controversy requirement

• Federal Question: if claims from new parties are party of the same transaction, then there is jurisdiction unless novel issues of state law are raised, the remaining claim dominates, all claims with original jurisdiction were dismissed.

• Liberal joinder – purpose – to quickly and efficiently resolve the lawsuit (unless doing so would be unfair).

• Rule 20 says “may” join – under certain circumstances, the court will force parties to join

Rule 19: Required Joinder of Parties

a) Persons Required to be joined if feasible:

i) Required Party. A person who is subject to service and whose joinder will not deprive the court of subject matter jurisdiction must be joined as a party if:

1) In that person’s absence, the court cannot accord complete relief among existing parties; or

2) That person claims an interest relating to the subject of the action and is so situated that disposing of the action in the parson’s absence may:

a) Impair the person’s ability to protect the interest, or

b) Leave an existing party subject to a substantial risk of incurring double/multiple/inconsistent obligations because of the interest.

b) When joinder is not feasible. If a person who is required to be joined if feasible cannot be joined, the court must determine whether, in that parties absence the action should proceed among the existing parties or if the action should be dismissed. Factors:

i) The extent to which a judgement rendered in that person’s absence might prejudice that person or existing parties;

ii) The extent to which any prejudice could be lessened/avoided by: protective provisions/shaping the relief/other measures

c) Whether judgement rendered in the person’s absence would be adequate

d) Whether P would have adequate remedy if the action were dismissed for non-joinder.

• Required means something different than “compulsory” joinder of claims, which speaks to claim preclusion issues.

• Remember Hanson v. Denkla – the Trust was a necessary party.

When joining parties, ask:

1) Do the rules allow you to sue together?

2) Are all parties subject to personal jurisdiction?

3) Is there subject matter jurisdiction?

4) Is venue proper? – for compulsory counterclaims, venue applies only to the original claim (Schoot); therefore a third party brought in under 13(h) cannot complain about venue.

Intervention: strangers may intervene, particularly if they have an interest that may be harmed if the suit were to proceed without them. p. 721 (cases: Great Atlantic & Pacific, American Honda)

• Why intervene, instead of filing an amicus brief? May want to actively participate in and steer the litigation, may have financial means to help with litigation, ability to take discovery and make motions

24(a): Intervention of right – given an unconditional right to intervene by statute; or is so situated that disposing of the action may impair the movant’s ability to protect its interests, unless existing parties adequately represent that interest.

• Intervention of right factors:

o Intervener’s interest must be direct, substantial, and legally protectable.

▪ Direct: trying to avoid speculative interests

▪ Is an economic interest legally protectable? Divergent ideas:

• Yes

• No

• Does not have to be explicitly recognized in the law, but must be in the economic policy underlying the law.

o Absent intervention disposition of action may impair intervener’s interest

▪ Would adjudication prevent the party from pursuing a separate suit?

▪ Adverse precedent?

o Adequacy of representation.

▪ Presumed when the would-be intervenor share the same ultimate objective as a party to the lawsuit

o Must demonstrate adversity of interest or incompetence by current parties

24(b): Permissive Intervention. Court may permit anyone to intervene with a permissive right by statute, or has a claim/defense that shares with the main action a common question of law or fact.

• Permissive intervention

o Will intervention delay, complicate or prejudice original suit

o Will intervening party contribute to full development of underlying factual issues

o Court may restrict intervener’s participation in the suit

Intervention & Subject Matter Jurisdiction:

• Interveners must meet supplemental jurisdiction. This is not a problem for federal question cases, but might pose a problem for diversity jurisdiction.

• Court will look beyond pleading to align parties, collusive misalignment is shunned.

Class Action: A suit brought on behalf of a group of persons without having to include them as named parties – the named parties serve as representatives for the class. Social and institutional changes have made these more important, common.

Constitutional requirements: to bind future members of the class, the class representative must represent the interests of absent parties. Due process requires notice and the right to be heard. See Hansberry.

Advantages of class action adjudication:

• Aggregation of small claims

• Judicial efficiency

Disadvantages of class action adjudication:

• Aggregation of small claims -> financial burdens on D (prejudice to D)

• Non-litigating parties may be bound by judgement – may be part of losing class, but might have gotten something had they litigated separately.

o However, prejudice to non-litigating parties is always a concern, perhaps with a class action the large size of the class actually overcomes some prejudicial issues.

Subject Matter Jurisdiction (p. 783): class actions generally follow subject matter jurisdiction for other joinder devices

• Federal question – 1331. If state claims are present, they may be added by supplemental jurisdiction if they are part of the same case or controversy/nucleus of operative fact.

• Diversity

o Look to citizenship of named plaintiffs and named defendants

o As long as one of the named plaintiffs satisfies the amount in controversy test the court has SMJ

Class Action Fairness Act (2005) (p. 786):

• Purpose: to make it easier for federal courts to exercise jurisdiction over large class actions based on diversity, even when they do not satisfy the requirements of 1332(a).

• Enacted because of Congressional concern that certain state courts had become mecca for class action suits and were being used in ways that hurt the class members and the typically out of state Ds.

o Plaintiffs would often include an in-state named P’s, preventing removal to federal court, or purposefully include a diversity wrecking party.

• Minimal diversity: if any member of a class is a citizen of state different than D….see 786

• If sum of amount of controversy is greater than 5M

• Removal from state to federal easier

o 1446 has a one year time limit, whereas a CAFA suit may be removed at any time

o P cannot prevent removal to federal by naming an in-state plaintiff (as they could under 1446)

• While this expands federal courts SMJ, Congress was sensitive that states may have a legitimate interest in adjudicating disputes. CAFA sought to prevent Ps from shopping for state courts, but does contain some exceptions (some discretionary, some mandatory) that allow class suits to be heard in a state court when they would normally fall inside the act.

o Discretion to decline jurisdiction when greater than 1/3 but less than 2/3 of all Ps are citizens of the state in which the action was filed. In declining, federal court looks to: national/interstate interest, choice of law, did P craft to avoid federal jurisdiction, does forum have a nexus with class members/harm.

o Federal courts must decline jurisdiction when all of these are met

▪ More than 2/3 of P classes are citizens of the state where the action was filed

▪ At least one main D is a citizen of that state

▪ The principal injuries resulting from D’s conduct were incurred within that state

o Federal courts must decline jurisdiction when all of these are met

▪ More than 2/3 of P classes are citizens of the state where the action was filed

▪ Each of the primary Ds are citizens where the action was filed.

Requirements for Rule 23

23(a): all four prerequisites must be satisfied

23(b): must satisfy at least one of the three types of action

23(a) factors: all four must be satisfied

1) Numerosity: class is sufficiently large that joinder would be impractical.

a) May depend on circumstances – ie, tenured faculty – little turnover, identification of members of the class is easy, joinder is easy; jail inmates; lots of turnover, joinder is impractical – better to use class action in the inmate situation because joinder is impractical.

2) Commonality: whether there are questions of law and fact in common, and thus would involve duplication in separate suits. Look at representativeness of named parties to class as whole.

a) Does not have to be all facts, just some facts – Marisol v. Guiliani

b) Can split class into subclasses for efficient/fair adjudication

3) Typicality: whether the claims or defenses of the class representative are typical of those of the class as a whole. Are claims based on same legal theory, essential characteristics. It would violate due process if a unique P lost a case for the other class members because their claim was weaker.

a) Are the interests of the named P’s the same/similar to those of the non-named Ps? Hansberry, the interests of the first suit diverged from those of the Hansberry suit.

b) Sellers interests often differ from buyers

c) Named P must have a sufficiently large interest to be a zealous advocate.

d) All classes will have some conflict of interest, the issue is how much is acceptable

e) Example – Hanson Chrysler litigation – Ps with injuries were not included in the class

4) Adequacy: whether the class representatives and their counsel will fairly and adequately protect the interests of the class members.

23(b) factors: at least one must be satisfied. [if action qualifies under (3) as well as (1) or (2), then (1)or (2) will probably control the suit, because courts are fearful that 3’s opt-out provision would place additional burden on parties. At the beginning of a suit, a P may not know which is the best – certification can change.

1) Without a class action, individual suits could create divergent/incompatible standards of conduct, prejudicing D or members of the class themselves.

a) Used in the Boggs chemical case – common questions of law/fact predominate, but courts were concerned about b(3) certification due to the risk of inconsistent judgments.

2) Party opposing the class has acted such that injunctive or declaratory relief is sought. (ie, suit to enjoin company from using discriminatory hiring practices). OK if some have small damages, but the majority of the claim is for injunctive relief. Common in discrimination/environmental cases

a) If a court decides that damages are the primary interest, they may deny certification under b2.

3) Damages. Common question of fact or law.

a) Common questions predominate over those unique to each class member

b) The right to opt out is individual, cannot be unilaterally executed (Hanlon v. Chrysler)

c) Class action would be superior to other forms of adjudication

i) Factors:

1) Class members interests in pursuing separate actions

2) Extent of pending litigation involving class members

3) Desirability of concentrating litigation in selected forum

4) Manageability: difficulty in identifying members and calculating damages. Undistributed funds might be solved by distribution through the market in the form of lowered prices.

d) Expenses for identifying and sending notice to the parties must be borne by the class representative

Alternatives to Litigation:

• Arbitration: a neutral panel considers evidence and issues a decision - binding or non-binding (parties choose). Non-binding lacks authority, weight. Faster than adjudication, but no appeals.

• Mediation: a neutral individual helps settle a dispute on mutually favorable terms.

• General Disadvantages of ADR:

• Cost on parties; not taxpayers

• Non-precedential

• Neutrality issues? Who picks mediator..

• Less discovery

• Lack Error Correcting mechanisms

• General Disadvantages of Adjudication

• Expensive

• May threaten into settlement

• Embarrassing, relationship damages

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