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Civil Procedure Outline, Fall 2003

I. Personal Jurisdiction A. Constitution i. 14th Amendment: Due Process a. No state shall deprive any person of life, liberty, or property without due process of law or deny any person equal protection. b. States cannot reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system World Wide VW c. State courts cannot bind a person to a decision if the court doesnt have JX over them 1. Protects individuals liberty in not being bound to such decisions ii. 5th Amendment a. Limits courts ability to bind citizens of other countries. b. Scope of 5th amendment generally doesnt come up because Rule 4(k)(1) says that federal courts can only have the same JX as the state in which they sit for diversity actions. 1. We rarely have occasion to ask the 5th Amendment question because Rule 4 (k)(1)(A): federal courts dont exercise jurisdiction beyond what a state court across the street would do. This rule says dont be anymore aggressive than state court. Therefore, federal court has to be bound by 14th amendment and long arm statutes. iii. Full Faith and Credit Clause a. States must respect and enforce the valid judgments of courts of other states in the same way the courts of that state would b. States need not and cannot enforce judgments invalid b/c of lack of JX. B. Pennoyer Framework Pennoyer v. Neff Supreme Court, 1887 (p 77)
Facts: In a previous lawsuit, Mitchell sued Neff for unpaid legal fees in Oregon state court. Neff was an out of state resident and could not be found to serve summons, Mitchell served constructive summons by publication, and Mitchell won by default. Neff also could not be found to force payment, so land that Neff had acquired since the lawsuit was seized by the sheriff and sold to Pennoyer. Neff returned to Oregon and sued Pennoyer for ejectment by collaterally attacking validity of first lawsuit. Was the decision of the original lawsuit valid, thus validating the sheriffs seizure of Neffs property and Pennoyers title to the property? OLD: Constructive service by publication may be brought against non-residents who have property within the state. Constructive service of summons by publications is not allowed for in personam suits against nonresidents because the court has no personal jurisdiction over that person. To bring an in personam suit against a non-resident, he must be served while in the state, or he gave consent to have his agent receive such summons for him within the state, or he must voluntarily show up and waive his right of summons. Constructive service of summons is allowed for in rem suits because owners are considered to be in possession of their property and any seizure will inform them of the action. Dicta: This doesnt mean states cant make laws requiring people entering partnerships in their state to give consent to be served via agent or make other such requirements. States are sovereign, and to allow one state to have such control over the personal rights of citizens of other states would interfere with this sovereignty and would violate due process. The full faith and credit clause of the Constitution is applicable only when the court that made the decision had jurisdiction over the parties and subject-matter. For in personam JX to attach, D must be served while within the state, ID agent w/in state to receive service, or voluntarily waive service.

Issue: Rule: Analysis:

Rationale:

Concl:

i. Notes: Every state possesses exclusive jurisdiction and sovereignty over people and property, but no power over people and property outside of it. Even if they found Neff in another state, they wouldnt have power over him to serve him. a. Power: Personal JX b. Consent: identify and agent w/in state to receive service or voluntarily waive service
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Civil Procedure Outline, Fall 2003

c. Notice: served in the state, in rem or quasi in rem JX ii. In personam JX JX over the person or corporation, or unincorporated association. a. D must be personally served with in the state for D to have proper notice of the lawsuit. Any presence at all is enough. b. Used to be that people were actually physically seized. iii. In rem JX - Property within state that is the subject of the lawsuit is attached at time of filing a. Constructive notice will suffice because D is assumed to be in possession of his property, and any seizure will inform D. b. Judgment is limited to the value of the property c. May be real or personal property (Harris v. Balk) d. Harris v. Balk (p 88): 1. Epstein serves Harris while he is in MD because Harris owes Balk money who owes Epstein. Epstein seizes money from Harriss pocket. Epstein says that this is Balks money, so Epstein is seizing Balks property in MD. Balk sues Harris for money Harris owes Balk. 2. Supreme Court said that Harris didnt owe Balk because the MD judgment was a valid quasi in rem proceeding. iv. Quasi in rem JX Property attached at the time of the lawsuit but is not the subject of the lawsuit. v. Consent and Presence a. Implied consent b. States may still have the power to grant divorces to their citizens and may require non-residents to appoint an agent to receive service. c. Became difficult b/c way more interstate travel, and corporations were present in states where they did business and where incorporated. C. Modern Constitutional Formulation of Power International Shoe Co. v. Washington SCt, 1945 (p 95)
Facts: International Shoe Co. is a corporation headquartered outside of WA. Had salesmen in WA who placed orders but did not fill them and did not enter into contracts to sell shoes. Salesmen had some permanent showrooms, but mostly traveled around showing samples provided by International Shoe. State of WA sued International Shoe for unemployment taxes on the commission these salesmen received. WA served a salesman personally and sent a summons in the mail to Internationals out of state headquarters. Were the activities of the salesmen sufficient to manifest the presence of the corporation within the state and give state courts jurisdiction over the corporation? These activities were sufficient to establish a presence of the corporation in the state, giving the courts of the state JX over the corporation. Summons served on a salesman of the corporation and mailed summons to the out of state headquarters is sufficient to notify the corp. of the suit. The regular business of the salesmen in addition to their permanent showrooms resulting in flow of products into the state is enough to establish a presence. The corporation exercised the privilege of conducting business within the state and enjoyed the protection of the laws of that state, including the right to resort to the courts for enforcement of those rights. Casual presence of a corporate agent or conduct of single or isolated items in the state are not enough to subject it to suit on causes of action not connected with these activities, and to require the corporation to defend such a suit away from its home is and unreasonable burden. Corp. must have minimum contacts in state such that PJ would not offend traditional notions of fair play and substantial justice.

Issue: Analysis:

Concl:

i. Modern minimum contacts test: are there 1) minimum contacts and 2) doesnt offend traditional notions of fair play and substantial justice by creating too much inconvenience (International Shoe). a. No longer require that D be served within the state if corporation has enough contacts within a state for it to be fair for them to be sued. Presence means contacts and thus JX. b. All JX should be subjected to International Shoe test, including individuals and in rem/quasi in rem actions (Shaffer).

Civil Procedure Outline, Fall 2003

1. In personam A) Consider presence as one contact among others. Consider convenience of litigating in that state (Burnham). B) If a state has in personam JX over a D, it follows him and the courts can get at any property D has, in the state or elsewhere. Other states must respect the judgment, even against property in those states. C) State has PJ over residents and if satisfy minimum contacts and fair play and substantial justice test. 2. In rem Property connected to the suit is an important contact for minimum contacts test and can be enough to establish PJ. A) Usually, in rem actions would pass the International Shoe test because property in the state that is the subject of the lawsuit is strong, related contacts. 3. Quasi in rem Property not connected to suit is not enough to give state power over D. Such property is one contact to consider, and minimum contacts test must be satisfied. Shaffer v. Heitner SCt, 1977 (p 104)
Facts: Issue: Heitner, Greyhound shareholder, sued directors and officers of Greyhound for violating their duties. Heitner sued them in Delaware, where Greyhound is incorporated, and attached their stock. Defendants challenge Delawares JX over them as individuals. Should the International Shoe rule of minimal contact to uphold fair play and substantial justice apply to in rem actions as well as in personam actions? If so, did the defendants, by owning stock in and working for a corporation incorporated in Delaware, have minimal contacts sufficient to be amenable to suit in Delaware? When claims to property are the basis of an action, states would usually have JX. If D has a claim to property in the state that is the subject of litigation, D expects to benefit from states laws to protect that property and thus D has minimal contact. Quasi in rem actions where the property is not the subject of the action are different. D does not necessarily have minimal contacts with the state. Holders of stock in a corporation do not necessarily have sufficient contacts with the state in which it is incorporated. All assertions of state court jurisdiction must be evaluated according to the standard of fair play and substantial justice and minimal contacts in International Shoe. The defendants here did not have minimal contacts in Delaware because owning stock in a corp. is not enough to give the state that incorporated the corporation JX over you. This is a quasi in rem action attaching the directors stock and option to purchase stock. Quasi in rem actions were allowable under Pennoyer, but just because something is old doesnt mean it has to be followed (p 109)

Analysis:

Concl:

Notes:

c. Minimum contacts: minimally adequate or sufficient contacts. 1. General or specific JX (Nature and quality of the contacts)? Look at quantity of contacts and how related the contacts are to the suit.
Connected to lawsuit Continuous and systematic contacts Casual or sporadic contacts Yes. Strongest case. Maybe, depending on Unconnected to lawsuit Generally no, but may be if contacts are strong enough No.

A) Specific JX D liable for suits arising out of the contacts with the state, but not necessarily for any other suits because contacts are not strong enough. (go on with minimum contacts test). B) General JX Ds contacts are sufficiently strong to support claims that are unrelated to the contacts. There is a point at which contacts are so high that relatedness doesnt matter; courts have personal JX. (jump to General JX). 2. Purposeful availment There must be some act by which D purposely avails himself of the privilege of conducting business in the forum state (Hanson).
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Civil Procedure Outline, Fall 2003

A) The unilateral decisions of a person tied to the D isnt enough to satisfy minimum contacts requirement (Hanson). Hanson v. Denckla SCt, 1958 (p 117)
Facts: Issue: Analysis: Ms. Donner established trust in Delaware and later moved to Florida and died there. a. Beneficiary sued the trustee in FL for not doing job properly. Can the trustee be sued in FL, where the donor moved after establishing the trust? The trustee was managing a trust for a person who lived in FL. However, Ms. Donners move didnt have any connection to the trustees purposeful activity. The unilateral decisions of a person tied to a D isnt enough to satisfy minimum contacts requirement. There must be some act by which D purposely avails himself of the privilege of conducting business in the forum state.

Concl:

B) Soliciting business and collecting payment from a resident of that state are sufficient contacts for D to be sued on a cause of action arising from that business (McGee). C) Marketing in a state, soliciting business there, is enough for purposeful availment because D is taking advantage of the protections of the forum state. D) Reciprocity If you take advantage of the protective laws of a state, it is only fair that you should be accountable in that state. D doesnt have to be there, could have stopped, and is intentionally benefiting. E) Invoking the physical infrastructure of the state is enough to open D to suit in forum state (Brennans concurrence in Burnham). McGee v. International Life Insurance Co. SCt, 1957 (p 116)
Facts: Issue: Analysis: Life insurance policy sold to another company who sold to resident of CA. Company solicited CA resident. Can insurance carrier based in TX be sued in CA for cause of action arising out of a life insurance policy issued to CA resident? Suit is based on a K that had a substantial connection to CA. It is now less burdensome for D to defend in state where he engages in some economic activity. This company was soliciting business in CA, got checks from resident in CA. CA and its courts have an interest in making sure that its citizens are protected. Out of state company that sold life insurance policy to CA resident can be sued in CA for cause of action arising out of the policy.

Concl:

3. Stream of commerce purposeful direction. A) Knowingly placing product in a stream of commerce that reaches the forum state is not enough because purposeful availment requires something more than awareness. I) If there were something else, like advertising in that state, or tailoring the goods for that state, this may be enough to make placing in stream of commerce enough. B) But, Brennans dissent: Regular course of dealing over time and goods being a significant part of revenues bridges the gap between knowledge and purpose by injecting the goods into a stream of commerce (Brennans dissent in Asahi). I) In Asahi, goods not taken there after purchase but goods actually arrive by selling to middlemen and retailers. You have no idea where your customer will take product, but you know where the middleman will take the product. II) Brennan would rather merge the two parts of the test and look at them together. Otherwise, it is too rigid.

Civil Procedure Outline, Fall 2003

Asahi v. Metal Industry Co. SCt, 1987 (p 129)


Facts: Zurcher (CA resident) got in accident in CA. Sued Cheng Shin Rubber for faulty tires. Cheng Shin brought Asahi Metal into the suit as a third party defendant. Cheng Shin settled with Zurcher. Case here is about JX of CA court to hear suit against Asahi (Japanese company) by Cheng Shin (Taiwanese company). Is mere awareness on part of foreign manufacturer that the components would reach the forum state enough? Part IIA: There must be a substantial connection beyond being aware that products would make it into the forum state. Ds awareness that the stream of commerce may or will sweep the product into CA does not demonstrate that they purposely availed themselves of the CA market. (this is dicta b/c not majority of justices) only half agree. Part IIB: Personal JX should not be exercised if it offends traditional notions of fair play and substantial justice. The burden of companies from two foreign countries litigating in CA is too high. CA no longer has as much interest in the action b/c CA citizen no longer part of the suit. When minimum contacts has been established, it is often enough even if there are serious burdens, but minimum contacts are not always enough if the burden is great (this is the holding, b/c a majority joins). Considering the great burden on D and the slight interests of the forum state, PJ is unreasonable and unfair. This is an international dispute. Dont want state courts to pass judgment on foreign countries in ways that seem unfair.

Issue: Analysis:

Concl: Notes:

4. Foreseeability For minimum contacts, Ds conduct and connection with the state must be such that he could reasonably expect to be hailed into court there (World-Wide VW). Must have fair warning (Shaffer). A) Mere foreseeability that the product might end up there after purchase is not enough. Foreseeability + purposeful availment = minimum contacts I) The seller has to reasonably expect to be sued there because he purposely took the goods to the market of the forum state. World-Wide Volkswagen Corp. v. Woodson SCt, 1980 (p 119)
Facts: Robinsons (NY residents) purchased Audi in NY, were rear-ended in OK, and the car caught on fire. Sued: Seaway (retailer) World-Wide VW (regional East Coast distributor) contest PJ. Does it violate the due process clause for a state to have personal jurisdiction over a car retailer and distributor whose only connection to the state is that a car they sold elsewhere was in an accident in that state? World-Wide and Seaway did not solicit business in OK, market to OK, advertise there. While it is foreseeable that a car they sold may end up in OK, this is not enough without purposeful availment of privileges of the state. Robinsons acted of their own accord in taking the car to OK, and World-Wide did not have purposeful contacts with OK. Ds conduct and connection with the state must be such that he could reasonably expect to be hailed into court there. It may be foreseeable that a product may end up in that state, but this is not enough. (Brennan): More weight should be placed on the forum states interest in the matter. OK has a legitimate interest in making sure its highways are safe. The sale of the car does purposefully inject the car into the stream of interstate commerce so that it can travel to distant states. Minimum contacts is about Ds interests, not as much about states stepping on other states toes b/c PJ is waiveable, and we wouldnt allow states rights to be waived by a D.

Issue: Analysis:

Concl: Dissent:

Notes:

Civil Procedure Outline, Fall 2003

5. Contractual Agreements A) How many contacts are required varies with convenience (Burger King). B) A long-term contract w/ an out-of-state corporation, negotiations with that corporation, and further contacts and dealings with that corporation are sufficient minimum contacts to subject D to personal jurisdiction within the corporations state (Burger King). I) K itself may not be enough, but K is one step in an ongoing relationship btwn the parties, which includes the K, negotiations leading up to the K, performance based on the K (Burger King). II) A choice of law clause in a K gives D the benefits of the laws of that state, and is a purposeful availment of the laws of that state (BK). Burger King Corp. v. Rudzewicz SCt 1985 (p137)
Facts: MacShara and Rudzewicz enter into 20-year franchise agreement with Burger King to take over a franchise in Michigan. Rudzewicz fronts all the money, and MacShara attends BKs trainings in Miami and manages the business. The contract they signed with BK says that all control comes out of the FL BK office, & choice of law clause (FL). D sent payment to FL, all decisions come out of FL. D behind in rent. BK sued in Federal District Court in FL and wins. Appeal reverses, BK appeals to SCt. Is the owner of a franchise subject to PJ in the federal courts of the state of the franchise corporation for an action arising out of the contract between the two parties? D purposely entered into a long-term contract. A contract alone is not enough to establish minimum contacts, but the prior negotiation, course of dealing, and contract together established minimum contacts. R and M were experienced businessmen, and there was no duress or disadvantage that could invalidate the contract. K states that if there is a dispute, FL law applies. This ruling is not so broad that it will affect out-of-state consumers making modest purchases. A long-term contract to have a franchise with an out-of-state corporation, negotiations with that corporation, and further contacts and dealings with that corporation are sufficient minimum contacts to subject a franchisee to personal jurisdiction within the corporations state. Stevens: D didnt do any direct business in FL. Also, this was a boilerplate K with no room for negotiation.

Issue:

Analysis:

Concl:

Dissent:

d. Fair play and substantial justice 1. Look at estimate of inconvenience (World-Wide Volkswagon). A) Forum states interest in regulating the activity B) Burden on D to litigate there and ability of P to find a convenient forum elsewhere (Overall convenience) C) Foreign affairs concerns (Asahi) D) (Interest in obtaining the most efficient resolution possible) E) (Shared interest of the several states in furthering fundamental substantive social policies) 2. Burden of inconvenience can overcome minimum contacts (Asahi), but must be great inconvenience. 3. Less contacts are needed if burden on P in going to another state is greater than the burden on D of staying (Brennans concurrence in Burnham) ii. Internet and PJ a. Anti-Cybersquatting Consumer Protection Act allows P to bring an in rem action in the location of the domain name registrar and attach the disputed domain name as property. b. Zippo Mfg v. Zippo Dot Com (p 146) 1. Zippo Mfg is in PA. Zippo.com is CA-based news service. Zippo Mfg sues Zippo.com for trademark infringement in PA ct based on the web activity by 3000 Zippo.com subscribers who live in PA. PJ upheld b/c level of interactivity was high enough.
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Civil Procedure Outline, Fall 2003

c. Pavlovich v. Superior Court (Supp p. 381) 1. F: D posted code on a passive website for decoding the safeguards that prevent DVD copying. No evidence that any Cal residents accessed the site. D didnt encourage user to illegally copy, but he did know they might. He didnt know specifically the company that made the safeguard, DVD CCA was in Cal. 2. R: A) (Specific) PJ is proper when D clearly does business over internet and contracts w/ residents of the forum state. B) PJ may be proper for an interactive website where user may exchange files based on level of activity and commercial nature with forum state C) Passive website making info available isnt grounds for PJ 3. H: Mere knowledge that passive website may affect industries in the forum state is not purposeful direction toward the forum state. iii. General JX a. General JX comes into play when contacts are not related to the claim. 1. International Shoe suggests there may be a level of activity that will cause general JX. b. Consent to General JX (Washington Equip) 1. An out-of-state business doing business in the forum state can only consent to general JX in a state if there is some knowing act. Washington Equip. Mfg Co. v. Concrete Placing Co. Wash. App. Ct 1997 (p 148)
Facts: Washington requires out-of-state corps to have an agent in state and get a certificate of authority to do business. Concrete Placing Co. did this to build a road. Later, bought plant from Wash. Equip. and didnt pay full price, Wash. Equip sued. Concrete Placing is arguing no personal jurisdiction. Does an out-of state corporation consent to general jurisdiction by securing a certificate of authority and appointing an agent in order to do business? General jurisdiction focuses on whether activities are substantial and continuous. Washington statute regarding certificate did not include that corporation consents to general jurisdiction, and other statutes specifically require this consent. Consent to general JX requires some knowing act. An out-of state corporation does not consent to general jurisdiction by securing a certificate of authority and appointing an agent in order to do business in Washington because the statute does not specifically include consent to general jurisdiction as a mandatory requirement.

Issue: Rule: Analysis:

Concl:

c. Presence: Transient or tag JX 1. Mere presence of an individual at the time of service of process is sufficient because it has been sufficient for a long time (Burnham). There need not be contacts if present at the time of service, and the contacts need not be related to the suit. A) A rule that is completely fair at time of ratification of 14th Amendment cannot go against traditional notions of fair play and substantial justice. B) Scalia has a hard time reconciling Burnham with Shaffer (minimum contacts test always required even though quasi in rem actions were traditionally allowed). C) BUT World-Wide said that what matters is whether you are on notice that you have obtained enough benefit that it is fair that you can be sued there. D) Burnham reasoning: burden on D isnt so great if he already traveled there once (Amar thinks this is absurd).

Civil Procedure Outline, Fall 2003

Burnham v. Superior Court SCt 1990 (p 150)


Facts: Issue: Husband and wife separated and agreed to file for divorce. Wife moved to CA with kids (husband stayed in NJ). Husband filed for divorce in NJ, but didnt serve wife. W files for divorce in CA and served H while in CA to do business and visit kids. Does due process require a connection between the litigation and Ds contacts with the state in cases where D was physically present in the state at the time process is served on him? Physical presence alone constitutes due process. When minimum contacts consists of property ownership, and it is a substitution for physical presence, the contacts must be related to the litigation. Due process does not require a connection between the litigation and Ds contacts with the state in cases where D was physically present in the state at the time process is served on him. The potential burdens on a transient defendant are not so great now because it is easy to travel. Brennans concurring decision is wrong because 3 days benefit is not enough (Brennan): Tradition is not enough to uphold a rule. Shaffer required that all rules of JX, even ancient ones, must satisfy contemporary notions of due process. Transient D gets benefits of forum state while he is there, and he knows state can exercise jurisdiction over his person or property while there. If he just got benefits and was immune from service, this would be unfair. Majority agrees with holding, but court disagrees about reasoning.

Analysis:

Concl:

Concurring:

Note:

D. General JX i. JX over corporations a. Corporations can be sued where they are incorporated or in their principal place of business. ii. JX over individuals a. Place of domicile E. Consent as a Substitute for Power i. By waiver: Showing up and defending on the merits means you accept PJ and waive right to attack it. ii. D may submit to JX by consent if state lacks power. a. State may designate actions that imply consent, like driving on the highway. b. State may require or D may voluntarily designate agent of service. iii. Consent through contract: Ask if clause applies and if it limits JX. a. K provisions affecting procedure 1. Forum selection clauses consent to JX. A) Consent to JX clause: permit but not require suit to be brought in a place (Natl Equip, Burger King). B) Suit may only be brought in a particular state (Carnival Cruise). C) May say just where suit cannot be brought and otherwise subject to minimum contacts test. 2. Choice of law clause: substantive law of a particular state governs, but doesnt specify where suit must be brought not consent to PJ, but count as a contact. 3. Arbitration clause: Must arbitrate rather than go to court. 4. Cognovit clause: attorney can decide and parties waive right to sue in court. Only enforced if party really understands and he gets something in return. b. National Equip Rental v. Szukhent SCt 1964 (p 168) 1. F: On back of lease, says the renters designate Ms. Weinberg, an officer of National, to accept service of process on their behalf for lawsuits arising under the contract. D default on lease. 2. H: Clause constitutes consent to PJ. c. Adhesion K are subject to scrutiny for fundamental fairness: was it put there to discourage claims or for a legitimate reason, did customers have notice? (Carnival Cruise) 1. Other reasons to allow: Customers get a benefit from lower price b/c of clause, seller has a special interest in limiting the forum?
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Civil Procedure Outline, Fall 2003

2. Stevens dissent in Carnival Cruise: Forum selection clauses in adhesion K should not be upheld if 2) they create additional expense for one party or deny remedy, or 2) they are contrary to public policy. A) BUT, adhesion K have stronger case when it is for a necessity rather than a luxury: apt rental rather than vacation. Carnival Cruise Lines, Inc. v. Shute SCt 1991 (p 169)
Facts: Shutes bought cruise tickets. The contract had a forum restriction clause: all suits arising from the contract will be brought in FL only. Mrs. Shute injured on trip, sued in Washington. Lower court found that contract was enforceable. Was the court of appeals correct in refusing to enforce the forum-selection clause? Should the forum-selection clause be enforced in contracts that are not a product of negotiation? Forum clause in this kind of contract may be permissible because: 1) Cruise line may have a special interest in limiting the forum because their passengers are from everywhere; 2) such a clause can dispel confusion about where suit should be brought; 3) passengers who buy these tickets get lower prices because cruise line limits forum. D could have returned tickets for refund after they got the terms. Fundamental fairness should be scrutinized: no indication that CC put in forum clause to discourage claims (FL is the home base of company, and many cruises depart from there) AND Shutes were given notice and saw the clause they could have rejected the contract. Forum clauses are enforceable even in contracts of adhesion but they are subject to judicial scrutiny for overall fairness. (Stevens): Forum selection clauses that were not freely bargained for should not be upheld if they create additional expense for one party or deny a party remedy. Also, contractual limitations on forum may be denied if they are contrary to public policy.

Issue: Analysis:

Concl: Dissent:

F. Constitutional Requirement of Notice (p 174) i. States must have either power (from Ds contacts) or consent (by prelitigation agreement OR by waiver) AND D must have notice that he is being sued. a. Under Pennoyer, power and notice went hand in hand. If your property was attached by a lawsuit, you were assumed to know because people monitored their property ii. Method of notice must be reasonably calculated to apprise interested parties and afford them of opportunity to present their objections (Mullane). a. When there is no sure form of notice possible, the form must not be substantially less likely to inform than any other customary form. 1. The kind of notice that is required is the kind of notice that would be adopted by one who wanted to accomplish actual notice. b. When names and addresses are known publication is not enough but mail is. 1. For a common set of parties, it is sufficient that most are actually notified, because an individual interest serves the interest of the whole. A) You dont have a right to be heard even if what you say has already been said. This is an interpretation of due process not always used. c. Constructive notice 1. Publication is the best and only means available to notify parties who are unknown or whose whereabouts are unknown. 2. Businesses need not got to unreasonable lengths or expense to notify parties who are unknown or whose whereabouts are unknown. iii. Mullane v. Central Hanover Bank SCt 1950 (p175)
Facts: Bank (D) set up a common trust. When trust was created, Bank notified all known beneficiaries by mail and included copy of NY trust statute. NY common trust law requires a triennial accounting of trust where there is a judicial decree that settles all matters of the trust in that time period (beneficiaries can no longer bring complaints about trustees management or fees for that period). At time of first accounting, Bank published notice in a local newspaper in accordance with minimum requirements of NY law. They did not mail notice to beneficiaries. Judicial settlement occurred but was later contested by Mullane on the grounds that notice was inadequate to afford due process under 14th Amendment. 9

Civil Procedure Outline, Fall 2003 Issue: Analysis: Does the NY statutory requirement of publication only violate due process when whereabouts of some of the beneficiaries is known? The Bank had the names and addresses of many of the beneficiaries and demonstrated that they are able to mail to all beneficiaries. Notification by mail is sufficient for these even though notice will not reach all parties. When there are many parties with the same interest, notice is sufficient if it is reasonably certain to reach most of them, as any objection by one party serves all parties. 1) Notice must be reasonably calculated to inform those affected or where conditions do not permit such notice, the form chosen must not be substantially less likely to give actual notice than any other feasible and customary forms of notice. 2) Publication alone is not sufficient to notify parties whose identity and whereabouts are known, and they must be notified at least by mail. 3) Publication is the best and only means available to notify parties who are unknown or whose whereabouts are unknown. After a judicial settlement, no claims can be brought for actions before the settlement. Does the purposeful availment by the person who set up the trust extend to the beneficiaries?

Concl:

Note:

iv. Notice requirement applies to in rem actions. a. Walker v. Hutchinson SCt 1956 (p 184) Personal notice that property was being condemned required for a landowner whose name and address were in the citys land records. v. Service of process a. Can mean the method of service or service can actually establish JX in transient JX (Burnham). b. Lack of proper service can be referred to as lack of JX. c. Service may be quashed if form was incorrect even if notice was actually accomplished. vi. Federal courts a. Four tiers of Federal Court PJ 1. Fed cts have same PJ as state court across the street. 2. Fed ct has JX over any party joined under Rule 14 or 19 within 100 miles even if state wouldnt have PJ A) Rule 14 (impleader: third-party D brought in by 1) D or 2) P when there is a counterclaim against P) B) Rule 19 (compulsory joinder b/c complete relief wouldnt be possible, their interest wouldnt be served, or would leave open to multiple obligations). 3. Federal legislation provides broad, national power of federal court AND is constitutional. A) Federal Interpleader Act B) Clayton Act allows service of process world-wide for anti-trust claim. 4. D subject to PJ in federal court for federal claims against D not subject to PJ in any particular state. b. In federal court, we could ask what contacts you have with the federal district, or we could ask whether you have contacts with the US (most lower courts accept. 1. May be enough to have contacts generally even if there isnt enough in any particular state. c. Service of process in Fed Ct: Rule 4 1. Must include the summons and the complaint, be signed and sealed by the clerk. 2. D can waive service of summons by accepting mailed request of waiver (this isnt waiver of objection to venue or JX). A) Must have at least 30 days to reply (60 outside US). B) D gets extra time to answer 60 days (90 outside). If doesnt waive, may have to pay for service of summons. 3. Service in US: A) By state law of court or where service is effected B) Personally C) Leaving at dwelling w/ person of competent age living there OR D) Giving to a designated agent.
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Civil Procedure Outline, Fall 2003

4. Service outside US: A) Internationally agreed means reasonably calculated to inform such as by Hague Convention B) If no international agreement: I) Any manner proscribed by law in country II) As directed by foreign authority III) By personal delivery or mail if not prohibited by law C) By other means not prohibited by international treaty. 5. Service on infants and incompetent persons: By manner proscribed by state law A) Cant serve waiver 6. Service on corporations: A) By state law of court or where service is effected B) To by delivering to an officer or agent by appointment or law, and if statutorily authorized and if statute requires, also by mail. C) Outside US: Same as individuals out of state except not personal service. 7. US, its agencies, officers, corporations, employees: A) Service on US: I) By delivery to US attorney of the district, OR to authorized employee, OR by certified mail AND II) By certified mail to US Attorney General AND III) If attacking validity of order of an agency or officer not a party, by certified mail to them B) Service on officer, agency, emp, corp: I) When in an official capacity: service on US and by certified mail to agency. II) When in connection with acts in performance of duties, service on US and by any service for individual. 8. Must be within 120 days of filing complaint for US D. A) May be extended by discretion of ct. 9. Must have proof of service. G. Challenging Personal JX i. Collateral attack Dont show up, get a default judgment against you, and collaterally attack lack of PJ later. a. You cannot defend on the merits b. You can only collaterally attack if you havent litigated on the merits at all. ii. Special appearance Appear to challenge PJ a. Rule 12(h) lack of PJ defense is waived if not objected to in a timely motion before the responsive pleading or not included in the responsive pleading. 1. Asserting a claim for FNC does not waive objection to PJ b/c FNC is not a claim for affirmative relief (Washington Equip). b. Appeal options depending on the state: 1. Challenge PJ, then litigate on the merits, then have opportunity to appeal both (CA). 2. If you lose PJ challenge, you can either litigate on the merits and waive right to appeal PJ OR appeal PJ and waive right to litigate on the merits 3. Some states allow appeal of PJ decision if you lose, then allow litigation on the merits. c. When attacking PJ, D must submit to courts power for discovery process in determining PJ or court will assume PJ (Insurance Corp. of Ireland). 1. Once D attacks PJ, D cannot collaterally attack later. 2. D must submit to discovery b/c: A) Waiver theory D waives right to object to PJ under Rule 12(h) by refusal to comply with discovery to determine PJ I) By submitting to the JX of a court to determine JX, D agrees to abide by that courts determination of JX. Otherwise, D is wasting the courts time.
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B) Presumption theory Failure to produce proof allows court to assume bad faith and lack of merit of Ds argument. Insurance Corp. of Ireland, Ltd. V. Compagnie SCt 1982 (p 160)
Facts: Compagnie got insurance for business interruption from Insurance Corp. Insurance Corp. refused to pay for a claim. Compagnie sued them in Penn. federal district court. Insurance Corp. challenged PJ in special appearance and then refused to comply with discovery requests, court threatened to assume JX if didnt comply. Can ct assume PJ as a sanction for a parties refusal to comply with discovery order directed at establishing facts for PJ? Rule 37(b)(2)(A) allows ct to sanction party for non-compliance w/ ct instructions by assuming lack of merit of Ds defense. Waiver theory: Under Rule 12(h), defense of lack of personal jurisdiction is waived if not raised in the answer or a pre-answer. In the same way, personal JX can be waived by refusing to comply with an order for discovery to determine whether there is personal jurisdiction. Presumption theory: A presumption of bad faith of an answer can be assumed from the failure to produce proof refusal to produce evidence is an admission of the lack of merit of the asserted defense. D is always free to not respond, get a default judgment and collaterally attack that judgment on the basis of lack of personal JX. A court may assume there is PJ as a sanction for failure to comply with discovery orders aimed at determining PJ. This opinion is far too broad and does away with minimum contacts test. The facts presented by P show that there was PJ.

Issue: Rule: Analysis:

Concl: Concurring:

H. States Restraints on JX Power i. Legislature or courts may limit JX even when Constitutionally allowed by: long arm statutes, venue, discretionary refusal of JX. ii. Long-Arm Statutes a. JX limited by state or federal government within constitutional outer bounds (minimum contacts plus notice). 1. States have right to restrict their courts as long as they remain within the outer boundaries set forth by the Constitution. 2. CA: As long as allowed by state constitution or US Constitution, so statutory question collapses into the constitutional question. 3. State courts may interpret Long-Arm statutes broadly (broader than language would appear to authorize). b. Policy may want to reduce case load or may want state to be more business friendly. c. Federal Courts 1. Federal courts sitting in diversity or w/ supplemental JX must apply Long-Arm statutes as state court across the street would. 2. Federal Interpleader Act (2361) allows service of process nationwide. d. Gibbons v. Brown, FL Dist. Ct. App., 1998 (p 192)
Facts: Ms. Gibbons and Mr. and Mrs. Brown were in a car accident in Montreal, allegedly because of faulty driving directions by Ms. Gibbons. Mr. Brown was the driver, and both Mrs. Brown and Ms. Gibbons were injured. Ms. Gibbons, TX resident, sued Mr. Brown in Florida (Mrs. Brown was not a party). Two yrs later, Mrs. Brown brought action in FL against Ms. Gibbons for her injuries in the accident. Ms. G contests PJ in FL. Mrs. B argues that Ms. Gibbons subjected herself to PJ in FL by bringing the prior lawsuit, and this action arises from the same subject matter. Is Ms. Gibbons subject to PJ in FL under the FL long-arm statute because she brought a prior lawsuit there arising from the same subject matter as this action? FL Long-Arm: must show 1) D is engaged in substantial and not isolated activity in the state, whether or not the claim arises from that activity, and, if 1), there are 2) sufficient minimum contacts to comply with due process. 12

Issue: Rule:

Civil Procedure Outline, Fall 2003 Analysis: Mrs. Brown has not shown that Ms. Gibbons is engaged in any activity in FL (other than defending current suit). It doesnt matter whether or not litigation counts as substantial and not isolated if that litigation is over. Also, given the length of time between the two actions, and the fact that the prior suit named Mrs. Brown as a non-party, there is not satisfactory ground for PJ. D is not subject to PJ in FL under the FL long-arm statute because she was not currently engaged in substantial and not isolated activities in FL. Would likely pass constitutional test b/c D did purposefully avail herself of the states laws by bringing suit there.

Concl: Notes:

iii. Venue (p 197) a. Venue is entirely statutory and locates litigation within a particular district within the state. 1. Both venue and PJ must be satisfied. 2. Much like PJ, venue looks at where parties live, where cause of action arose, where property involved is located, convenience of parties and witnesses. 3. If venue isnt proper, may be transferred rather than dismissed. 4. Legislation may add to venue statute. A) Clayton Act (anti-trust) venue is appropriate wherever D transacts business or where D is found. b. Federal Venue statute 1391 (a) If founded solely on diversity JX, except as otherwise provided by law, (1) in a district where any D resides if all D are in the same state. (2) in a district where a substantial part of the events or omissions giving rise to the claim occurred or where a substantial part of the property that is the subject of the action is located. (3) if there is no other place, in a district where any D is subject to PJ at start of action. (b) If not founded solely on diversity, (1) in a district where any D resides if all D are in the same state. (2) in a district where a substantial part of the events or omissions giving rise to the claim occurred or where a substantial part of the property that is the subject of the action is located. (3) If no other place, in any district where any D may be found (where can be served is sufficient). (c) Corporation resides in any district where subject to PJ at time action begins. - If there is more than one district, in any district where there would be minimum contacts if district were a separate state. - If no such district, in district with most significant contacts. (d) An alien may be sued in any district (doesnt affect anything if P is an alien) (e) When D is an officer or employee of US under official capacity, in a district where (1) any D resides (2) a substantial part of the events or omissions giving rise to the claim occurred or where a substantial part of the property that is the subject of the action is located. (3) P resides if there is no real property involved. (f) Against a foreign state (1) in district where a substantial part of the events or omissions giving rise to the claim occurred or where a substantial part of the property that is the subject of the action is located. (4) in US District Court DC if against a foreign state or political subdivision. c. Dee-K Enterprises, Inc. v. Heveafil, Dist Ct ED of VA, 1997 (p 199)
Facts: Issue: Rule: Ps, corporations in US, are suing Ds, foreign manufacturers of rubber thread and domestic corporations that sell the foreign Ds products, for conspiracy to fix prices. 1) Is there personal JX over Indonesian manufacturer who consummates sale in Indonesia? 2) Is venue proper in Eastern Dist. of VA? Federal Venue statute 1391(b)&(c) 13

Civil Procedure Outline, Fall 2003 Analysis: 1) Service of process was appropriate under Clayton Act and venue statute, so only need to look at constitutional test of substantial justice and fair play (5th Am due process). Satisfied b/c D had exclusive US sales agents and tailored products for US. 2) Foreign D doesnt conduct business in Eastern Dist. of VA, but is an alien under 28 USC 1391(c), which allows venue for aliens to be anywhere. Domestic D: Subsection (1) where D resides if in same state and (2) where substantial part of cause of action arises do not apply. (3) where D can be found must be used for domestic D because no foreign Ds are found just b/c foreign Ds may be sued there doesnt mean they can be found there. Some Ds contend that there is business in WD of VA, but not in ED. Court here asks contacts question treats Eastern Dist. like a state and asks if there would be PJ in ED of VA. 1) There is PJ over Indonesian manufacturer because Clayton Act allows service of process world wide, and because exclusive US sales agents and tailoring products for US market. 2) P has not alleged enough for Eastern Dist and must show more or may be transferred to Western Dist. of VA.

Concl:

d. Local-action rule 1392 in any local civil action involving property located in different districts of the same state, may be brought in any of these districts. e. Venue in state courts 1. States have their own venue statutes (p 202) 2. When an action starts in state court but is removed to federal court, venue lies in the district of the original state court. iv. Transfer and Forum non conveniens a. Both state and federal courts may decline to exercise JX even when they can. b. Forum Non Conveniens (p 204) 1. forum non conveniens case dismissed on courts discretion because the current forum is grossly inconvenient. A) FNC comes from common law and happens rarely. B) Only get one chance for FNC. C) Choice of law is determined by the new forum. 2. There is a strong presumption in favor of Ps choice of forum that can only be overcome when public and private factors clearly point to an alternative forum. This presumption is reduced when P is a foreign citizen. (Piper Aircraft) A) Whether the law of an alternate forum would be less favorable to P isnt generally given weight unless would allow no remedy. B) If P could get no remedy because S/L had run, court may require D to agree not to raise S/L as a defense. Or court that dismissed may allow suit to be refiled if it cant be filed elsewhere. C) P choosing a forum close to home is entitled to more respect than P choosing forum not close to home because laws are favorable. 3. State courts: dismiss for refiling in another state or country. 4. Federal courts: dismiss for refiling in another country. 5. Piper Aircraft v. Reyno, SCt 1981 (p 204)
Facts: Small commercial plane crashed in Scotland. Pilot and passengers died. All and their heirs were Scotland subjects and residents. Aircraft was owned and maintained by Scottish company but manufactured by US companies. CA lawyer brought suit in Cal. Superior Court. D removed to Federal Court, then sought and was granted a 1404(a) transfer to Fed Ct in PA, where Piper does business. D seeks to dismiss on grounds of forum non conveniens. District court granted, Appellate court reversed on grounds that FNC dismissal is never appropriate where law of alternative forum is less favorable to P (Scotland law would be). Should FNC be denied b./c law in other forum would be less favorable to P? In reviewing forum non conveniens, should review only whether there was clear abuse of discretion. 14

Issue: Rule:

Civil Procedure Outline, Fall 2003

Analysis:

Concl:

The possibility of change in substantive law should ordinarily not be given conclusive or even substantial weight in FNC inquiry. P gets to choose forum, so forum is likely to be the most favorable and others therefore less favorable. If alternative forum will allow no remedy, unfavorable change may be considered. Ordinarily there is a strong presumption in favor of Ps choice of forum, which may be overcome only when the private and public interest factors clearly point to alternative forum. When P is foreign, this assumption is much less reasonable. There are evidence and witnesses on manufacturing issue in US, but most evidence, etc. is in UK. Trying case in PA. would require both PA and Scottish law, which would be confusing for jury. Less favorable law for P doesnt preclude dismissal under FNC. There is a strong presumption in favor of Ps choice of forum, but presumption reduced when P is foreign.

c. Transfer among federal courts 1. 1404: May transfer because of inconvenience of parties or witnesses, in interest of justice upon motion or consent of parties. A) When transferred, the law followed in the original state goes with it. B) May be sought by P or D. 2. Incorrect venue: district court may dismiss or transfer to proper venue if it is in the interest of justice (1406). 3. Lack of PJ: court may transfer to court with PJ if it is in the interest of justice, and action will be as if filed in the second court upon the date it was originally filed ( 1631). 4. Judicial panel may consolidate cases from different districts even if venue is proper, but may only do so pretrial (1407). Actions need to share a common question of fact or law. 5. State courts can transfer within state according to state law but cant transfer to other states courts but can only dismiss (FNC) for refiling. II. Subject Matter JX A. Intro (p 213) i. SMJ: what kinds of cases can be brought in which courts. ii. Constitution a. Article 1 established Supreme Court, Article 2 allowed Congress to set up a lower court system. 1. Article 1 gives federal judges life tenure unless impeached for bad behavior and no reduction of salary. 2. Congress cannot add to SCts original JX. A) There is no clear consensus about how much power Congress has over lower federal courts original JX. B) If Congress doesnt make lower courts, do they have to allow SCt original JX in order to give cases opportunity to be heard? b. Article 3 limits the outer boundaries of federal courts JX to a list of cases in 2. 1. Congress may limit even more than Constitution. 2. Federal courts may constitutionally hear: A) Cases arising under federal law (constitution, federal statutes, federal treaties) B) Ambassadors C) Admiralty (anything happening on the water) D) Cases where US is a party E) Diversity questions: controversies between citizens of different states. iii. Thus federal courts are courts of limited jurisdiction: a. Ask two questions: 1. Does the case fall within categories in Article 3, 2? 2. Has Congress authorized that JX? b. Rule 8(a) requires a short plain statement of grounds upon which JX depends (well pleaded complaint).
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c. State courts are courts of general JX. 1. Difference is in presumption: A) in state courts, the presumption is that the case can be heard, and it must be shown that it isnt allowed. B) In federal courts, the presumption is that it cannot be heard, and P must show that it can be heard 2. Federal government has enumerated powers; states have everything else. iv. Federal courts share most of their JX with state courts: concurrent JX. a. Federal courts have exclusive JX over some federal question cases (bankruptcy, anti-trust). v. Why choose federal court? Logistics, strategy, crafty lawyering (other lawyer is less familiar). vi. Subject matter JX divisions a. Some courts only hear certain kinds of case: bankruptcy, tax b. State courts have subject matter divisions: probate, small claims, family court. c. Diversity JX doesnt actually have to do with the subject matter of the suit but the domicile of the parties, but it is still SMJ. B. Federal Question JX (p 215) i. Before civil war, lower courts had no general power to hear federal question cases. There werent as many federal laws then. a. First statute authorizing had an amount in controversy requirement. ii. Lower courts have JX over all civil actions arising under the Constitution, law, or treaties of the US ( 1331). a. Questions to ask when D challenges federal question JX: 1. Is there a federal issue? 2. Does it give rise to Ps claim? 3. If not, is it sufficiently important to federalize the case? b. Well-pleaded complaint rule: Suit can only arise under when Ps well-pleaded complaint shows that the cause of action is based on these laws (Mottley). 1. A well-pleaded complaint states the cause of action, not possible defenses. 2. It is not enough that P alleges some anticipated defense by D is invalidated by Constitution. D may not end up raising the defense. A) Otherwise P could include off the wall defenses in order to get into fed ct. B) It isnt enough that federal laws are implicated. 3. Federal courts do not have original JX when there is not cause of action arising under federal law in a well-pleaded complaint, but SCt has appellate JX over all cases, including cases where federal questions are raised as a defense. 4. Applies to removed cases: must be federal question on face of well-pleaded complaint and not just in an answer. 5. Exceptions to well-pleaded complaint rule A) If P has to prove that D violated federal law in order to prove negligence for a state law claim, there is federal law claim on the face of the well-pleaded complaint, but action doesnt arise under state law. c. Expansive vs. restrictive views of arising under JX. 1. T.B. Harms Co. v. Eliscu, 2d Cir 1964 (p 221) I: was the ownership of copyrighted songs transferred? H: doesnt arise under federal copyright law but actually state property law. 2. Expansive view: Smith v. Kansas City Title and Trust, SCt 1921 (p 221) F: D allegedly violated state law by investing illegal securities. The illegal securities were federal bonds. H: cause of action arose under federal law. d. Case may arise under federal law even if there is no challenge to the federal law by D. 1. Ex: P says employer violated federal labor law. D doesnt contest law but says P didnt work as many hours so isnt entitled to as much pay as P asks for.
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A) Arises under federal law even though D doesnt contest the applicability of the federal law. e. Declaratory Judgment Act allows fed courts to decide declaration of rights rather than coercive remedy cases. Potential D seeks declaration of rights in anticipation of being sued. 1. Hard to apply well-pleaded complaint rule because you are seeking an answer, but your claim doesnt arise under a body of law. 2. Courts have recognized and allowed because other party could sue otherwise. Declaratory judgment allows you to get around the well-pleaded complaint rule. f. Caterpillar is an exception: court recognizes that a lot of resources have been expended and adjudicates even though case doesnt arise from federal JX. iii. Louisville & Nashville RR v. Mottley, SCt 1908 (p 217)
Facts: RR gave Mottleys lifetime free passes b/c they were injured. Later, Congress passed law making free passes illegal, and RR refused to honor them, citing this new federal legislation. Mottleys alleged in their complaint: 1) the Act does not prohibit passes under this circumstance, and 2) if the law is construed as prohibiting them, it is in conflict with Fifth Amendment because it deprives P of their property without due process. Trial court granted relief to Mottleys. RR appeals. Court decides to review SMJ. Does the complaint arise under federal law or the Constitution? To have SMJ, suit must arise under Constitution or law of the US ( 1331). Suit arises under the Constitution and the laws of the US only when Ps statement of his own cause of action shows that it is based upon Constitution or fed laws. A suggestion by one party that the other will or may have a defense under the Constitution or laws of the US does not make the suit one arising under the Constitution or the laws of the US. Ps request for specific performance arises under state contract law. Lower courts did not have SMJ because there is no showing in the complaint that Ps cause of action arises under the Constitution or federal law. Case refiled in state court and eventually heard again in SCt on the merits on appeal.

Issue: Rule: Analysis:

Concl: Note:

iv. Policy: Why have fed cts hear federal question cases? a. Uniformity: Supreme Court binds all courts as to meaning of federal law. There is a manageable number of federal courts, and federal cases have more of an opportunity to be reviewed by SCt. 1. There are so many state courts, and so few state court cases get heard by SCt. 2. Litigants know what to expect when there is uniformity. b. Federal sovereignty: 1. Federal judges are politically insulated, and some federal question cases go against the majority of a particular locality. c. Federal courts are better at federal law 1. They look at federal law more, and federal judgeships are more coveted. A) Similarly, trial courts are good at fact finding. 2. Federal judges have more national connections, more exposure to federal law during their previous careers. 3. Federal courts allow less sloppiness. 4. Federal juries look different: come from a broader region than state court across the street. v. Challenging Federal SMJ (p 225) a. D may raise lack of SMJ at any time, even after final judgment if case appealed on other grounds. b. This is a non-waivable right that courts can and has a duty to review SMJ sua sponte at any time. c. Motion to dismiss 1. In diversity actions, D can challenge SMJ with a motion under Rule 12(b)(1). 2. For federal question cases, if there is any arguable basis for a federal claim, court must examine under Rule 12(b)(6) (failure to state a claim upon which relief can be granted) as a motion to dismiss substantive claim (Bell v. Hood). 3. D can still make a 12(b)(1) motion to dismiss for lack of JX if no arguable basis.

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Civil Procedure Outline, Fall 2003

d. Challenging SMJ in a collateral attack unclear if ever possible. 1. If challenge and lose, may not raise again 2. If appear and fail to challenge SMJ, generally dont have right to collaterally attack diversity or federal question JX. A) At some point it needs to be over and final. B) Caterpillar, Inc. v. Lewis D challenged SMJ after final judgment, court upheld judgment even though there was no SMJ because the values of efficiency and finality overrode SMJ. 3. If D defaults, can collaterally attack. A) If you default, we have less of an interest in finality. People rely more on judgments through litigation than default judgment. 4. As long as the case is in direct appeal, SMJ can be raised at anytime, and the court has obligation to raise it. e. Challenging both PJ and SMJ 1. Dismissal has different consequences A) If dismissed on SMJ, P may refile in state court. B) If dismissed on PJ, P may not refile in state court b/c of issue preclusion and the fact that dismissal on PJ means action is not appropriate in the state at all. 2. When court is faced with both claims, may dismiss on the most obvious ground regardless of consequences. C. Diversity JX (p 228) i. Article 3 allows controversies between citizens of different states to be heard in fed ct. a. Congress further limited by requiring amount in controversy to be met. ii. 1332: Diversity JX a. allows suits to be heard in federal court where the amt in controversy exceeds $75K 1. Between citizens of different states 2. Between citizens of a state and foreign citizens 3. Between citizens of different states where foreign citizens are additional parties. A) Ex: CA and Japan v. NY and Mexico b. Permanent resident aliens are citizens of the state where domiciled 1. But, only for excluding diversity JX. Doesnt allow two aliens to sue e.o. in diversity action (Saadeh) c. Corporations are citizens where incorporated or principal place of business. 1. Insurance company defendants are also citizens of the state of the insured if the insured is not a defendant. d. Representatives of estates, infants, incompetent persons are only citizens of the state of estate, etc. iii. Must be complete diversity between Ds and Ps (Strawbridge v. Curtis, SCt 1806) at the time the action commences. a. Constitution and 1332 would allow minimal diversity. b. Court may dismiss non-diverse party if not indispensable and allow action to continue. If party is indispensable, may not be able to continue action in fed ct. iv. Policy a. Fear of state bias, though no longer as valid b. Federal courts are more professional c. Interplay good for federalism d. State courts would be burdened by many more cases e. Against: significant portion of fed court case load; state bias isnt a problem anymore.

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Civil Procedure Outline, Fall 2003

v. Mas v. Perry, 5th Cir, 1974 (p 229)


Facts: Mr. Mas, French citizen, married Mrs. Mas, US Citizen from Miss while they were grad students in Louisiana. They intended to remain in LA only for school, but didnt know where they were going after that. Rented and apt there from Perry, and discovered later that Perry had been watching them through two-way mirrors for 3 mos. P sued for damages and won. D made an oral motion to dismiss for lack of diversity JX during trial and was denied. Challenges now solely on JX grounds. Is there diversity of citizenship between Perry and the Mases? Complete diversity is required for federal diversity JX Mr. Mas is a French citizen and Mrs. Mas is a citizen of Mississippi b/c she never intended to remain in LA after her schooling was finished. Although she doesnt know where she will go after, she doesnt intend to remain, and her domicile is assumed to be the last place she was domiciled. A woman marrying an alien doesnt lose her US citizenship. Because both Mr. Mas is an alien and Mrs. Mas is a citizen of Mississippi, there is diversity between them and Perry, a LA citizen. It is efficient to allow H & W There is diversity of citizenship because plaintiff Mr. Mas is a French citizen, plaintiff Mrs. Mas is a Mississippi citizen who did not intend to remain in LA, and defendant Perry is a LA citizen. w/o Mrs. Mas, this case would be allowed under 1332 b/c suit between US citizen and alien allowed, assuming amt in controversy is met. Each P would have to meet the amt in controversy (?) If 1332(a)(4) had been in effect permanent resident is a citizen where domiciled there would not have been diversity.

Issue: Rule: Analysis:

Concl: Notes:

vi. Amount in controversy a. Amount determined at filing of case 1. P must, in good faith, claim that the complaint meets the amount in controversy 2. If jury actually awards less than amt in controversy, court may order P to pay court costs and fees, but JX not defeated. b. Aggregating claims: Multiple P generally cannot aggregate claims to meet amt in controversy even if claims arise out of the same action. 1. EXCEPT: A) If Ps own property jointly that is the subject of the suit, unless claims are several and distinct. B) A single P can aggregate two or more unrelated claims against a single D. C) Claims by additional P against D who do not meet amt in controversy may be allowed as supplemental JX if meets 1367. c. Measuring injunctive relief 1. How much would P pay to get that relief? OR 2. How much would D pay not to have this injunction? OR 3. Look at the higher of the two. d. Counterclaims 1. Compulsory counterclaims (arising out of the same transaction) can be heard regardless of amt. 2. Permissive counterclaims must meet requirement separately. 3. Law is unsettled if Ps claim is less than $75k and Ds counterclaim increases to above $75k vii. No JX if party joined improperly or collusively to create JX ( 1359) a. Disagreement about what is improper. viii. Parties a. US citizens living abroad cannot sue or be sued in diversity actions. b. Citizens of DC, Guam, Puerto Rico are citizens of a state for diversity purposes. c. Partnerships 1. Considered as a collection of individuals rather than an entity, so citizenship of each must be considered. d. Spouses
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Civil Procedure Outline, Fall 2003

1. Actions for divorce, alimony, child support fall outside diversity, but some domestic actions may have diversity (former spouse for child abuse). 2. Parental Kidnapping Prevention Act doesnt confer fed JX but directs state courts when to heed sister states decree and when to modify it. e. Class actions 1. Must have complete diversity and each P must also independently reach amt in controversy. A) If one P is diverse and meets the amount in controversy, other Ps could be considered supplemental if they meet 1367(b) requirements. 2. These rules make it virtually impossible to have class actions in fed ct based solely on diversity. ix. Citizenship test for corporations a. Corporations are citizens where 1) incorporated and 2) principal place of business. 1. Dual citizenship is to prevent diversity when employee sues corporation. b. Principal place of business is a question of fact. There can only be one. 1. Tests for principal place of business A) Nerve center where administration is B) Everyday business activities (muscle) C) Or combination of the two (Northeast Nuclear) x. Citizenship test for individuals a. The place of domicile: the place party last lived with intent to remain indefinitely. 1. Intent to remain indefinitely is enough, regardless of vague possibility of going elsewhere, even back to previous state. 2. Look at intent at time of filing the suit, not at the time of the incident. A) This means you can move in order to have diversity, and there is opportunity for manipulation. B) But, time of incident isnt always easy to determine. b. If dont intend to remain in current domicile, party is a citizen of the last state in which she intended to remain indefinitely. c. Gordon v. Steele, Dist Ct, PA 1974 (p 7)
Facts: Gordon was treated by doctors (D) in PA where she lived before she went away to school in ID. She had an apt, health insurance, drivers license in ID. She didnt know whether she would remain there or go elsewhere after graduation. She was unlikely to return to PA, where there are few mormon men for her to marry. Is Gordon a citizen of ID, creating diversity of citizenship btwn her and D? Citizenship is determined by both residency and intent to remain for an indefinite period. Gordon moved to ID intending to remain there or go elsewhere after graduation. Intent to remain indefinitely is enough, regardless of vague possibility of going elsewhere, even back to previous state. Gordon is a citizen of ID because of her subjective intent not to return to PA in the foreseeable future.

Issue: Rule: Analysis:

Concl:

xi. Permanent resident aliens (1332(a)(4)) a. 1332(a) doesnt allow suit between two aliens (Saadeh). 1. Amendment was intended to disallow diversity between a resident alien domiciled in a state and a citizen of that state. 2. It was not intended to expand diversity JX to allow diversity between a foreign citizen and a resident alien where no US citizens are involved. This would be potentially unconstitutional because not authorized by Article 3, 2. b. Foreign P & US P v. Foreign D probably not allowed. Strong dicta against this combo by SCt.

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Civil Procedure Outline, Fall 2003

xii. Saadeh v. Farouki, DC Cir 1997 (p 236)


Facts: Issue: Rule: Analysis: Saadeh, a Greek citizen, sued Farouki, a Jordonian citizen who was a permanent resident at the time the suit was filed. He has since become a US citizen. Saadeh sued in federal court, invoking diversity JX. At the time Saadeh filed his complaint, was Farouki a citizen of the state under the 1988 amendment to 1332(a)? An alien admitted to the US for permanent residence shall be deemed a citizen of the State in which such alien is domiciled 1332(a). Must look at legislative intent. It is clear from the records that the addition was made to restrict diversity JX by eliminating SMJ between a citizen of a state and an alien residing in the same state. There is no reason to conclude that this amendment intended to create diversity JX where it did not exist before. Literally reading 1332 would produce a potentially unconstitutional result. It would partially abrogate the rule of complete diversity, and create diversity JX over a lawsuit brought by one alien against another without a citizen of a state on either side. Farouki is not considered a citizen of the state for the purposes of this lawsuit because the 1988 amendment to 1332(a) did not intend to create diversity JX over a lawsuit brought by one alien against another without a citizen of a state on either side merely because on alien is a permanent resident and the other is not.

Policy: Concl:

D. Supplemental JX (p 244) i. Supplemental JX Claims that lack SMJ are allowed in federal court because they are supplemental to another claim. a. Constitutionally valid under Article 3 because it says cases, not claims must be diverse or address a federal question (Gibbs). ii. 1367: Supplemental JX a. All actions w/ fed JX, courts have supplemental JX over all other claims so related that they form part of the same case or controversy under Art. 3. 1. In practice, so related means common facts. b. Action based solely on diversity have no supplemental JX over: 1. Claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24 A) Rule 14: impleader - third-party D brought in 1) by D or 2) P when there is a counterclaim against P B) Rule 19: compulsory joinder b/c complete relief wouldnt be possible, joined partys interest wouldnt be served, or would otherwise leave open to multiple obligations. SMJ must be preserved. C) Rule 20: Permissive joinder any P or D arising out of same transaction where there is a common question of law or fact will arise. D) Rule 24: Permissive intervention 2. Claims by proposed Ps under Rule 19 (compulsory joinder) or seeking to intervene under Rule 24 3. 1367(b) is a mistake b/c allows joined parties to make claims against P, but not the other way around. c. Court may decline to exercise supplemental JX if 1. Claim is a novel or complex state law issue 2. Supplemental claim predominates 3. Claims with SMJ have been dismissed 4. In extraordinary circumstances, for other compelling reasons d. S/L suspended for asserted supplemental JX claims (and others voluntarily dismissed at same time) during decision and for 30 days after dismissal, unless state law allows for longer. 1. Designed to preserve access to fed court for fed claims. Otherwise, people might not bring federal questions because of fear of running out of time to bring state law claim.

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iii. Common law roots: Union Mine Workers v. Gibbs a. Gibbs rule: 1) A case includes claims that arise out of the same nucleus of operative facts, and 2) decision to hear these supplemental claims is up to the courts discretion. 1. Each claim must be based on the same happening. A) But for is not enough. 2. May be heard even if the federal claim is dismissed, but should not if dismissed before trial. 3. Federal claim must be substantial part of the action. b. Old distinctions 1. Pendant JX Allows P to join state and federal claim against D. 2. Ancillary JX Allows claim by party other than P that was related to Ps claim against P, D or a third party. United Mine Workers v. Gibbs, SCt 1966 (p 244)
Facts: Gibbs lost job and haulage contract allegedly as a result of a union plan against him. Fed JX premised on allegations of secondary boycotts (federal law) and state law claim (tortuous interference w/ contract). Jury found for P on both claims. Trial court set aside federal claim and only upheld state claim. D argues no SMJ over the state claim Did federal courts have JX over the state law claim? Pendent (supplemental) JX exists when the relationship between the state and federal claim permits the conclusion that the entire action comprises one constitutional case. If Ps claims are such that he would ordinarily be expected to try them in one proceeding, federal courts have power to hear them all if the federal issues are substantial enough. The court has discretion and it is not Ps right. State claims shouldnt be heard if: fed claim dismissed before trial, state issues substantially predominate, if jury confusion is likely. When the state and federal claim arise out of the same nucleus of operative facts, the federal court may also decide on the state claim even if the federal claim is dismissed. The decision to hear a state claim in this instance is up to the discretion of the court. Secondary boycott a boycott directed not at the employer but at someone who has a relationship with the employer. CODIFIED BY 1367

Issue: Analysis:

Concl:

Notes:

c. Finley v. US, SCt 1989 (p 250)


Facts: Issue: Rule: Concl: Note: Airline passengers in accident. Suing govt because FAA messed up air traffic control. Also want to sue utility under state tort law (no diversity). Does the claim against the utility arise from the same nucleus of operative facts as the claim against the FAA? Federal Tort Claims act allows suit against govt for unintentional torts where P would be otherwise allowed to sue in the state where the incident happens. Court did not extend Gibbs to cover additional Ds. OVERRULED BY 1367

d. Owen Equip. v. Kroger, SCt 1978 (p 249) 1. F: guy who was killed while operating some equipment and the crane he was operating hit a power line. Mrs. Kroger (IA citizen) sued power company (NE citizen). She is suing on a state tort law claim. D impleaded an IA citizen as a 3rd party D, destroying complete diversity. 2. H: P cannot make a supplemental claim against D added by impleader (Rule 19). A) Dont want to give P the incentive to sue the wrong person in order to get into federal court. 3. AFFIRMED BY 1367 E. Removal to federal court i. 1441: Removal a. (a) Removable by D to the fed ct in the same district if case could have originally been filed in federal court. 1. Well-pleaded complaint rule applies 2. May include supplemental claims
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b. (b) Federal question claims always removable. Diversity JX claims removable only if no Ds are residents of the state where filed. c. (c) When a separate and independent claim based on fed question JX is joined with nonremovable claims, the entire case may be removed to federal court. Judge may, in her discretion, remand all matters in which state law predominates. d. (d) Where action is against a foreign state, may be removed. 1. Time allowed for removal may be expanded 2. Tried w/o jury e. (e) 1. May be removed even if D is resident of state if claim could haven been brought in fed court under 1369 (accident where 75+ people died). Also claims arising out of the same incident. Time allowed under 1446 except that D has 30 days after being joined. 2. District court has authority to transfer or dismiss. 3. May be removed even if state court originally had no JX. ii. Some particular cases are not removable (1445) iii. Federal officer or agencies sued for performance of duties may remove (1442) iv. 1446: Removal Procedure a. Must file a notice of removal and a short plain statement of grounds for removal b. Must be filed within 30 days after D is served the` initial pleading. 1. If initial pleading isnt removable, D may remove w/in 30 days of receiving a removable amended pleading. May not be removed on diversity JX basis more than 1 year after commencement of the action. v. 1447: Procedure After Removal a. A motion to remand back to state court (for any reason other than lack of SMJ) must be filed within 30 days of the filing of the notice of removal. b. An order remanding case to state court is not reviewable on appeal or otherwise unless it is a civil rights case c. If P, after removal, wants to join D that would destroy SMJ, court may deny joinder, or remand to state court. vi. Mistake allowed a. In the interest of finality, efficiency, and economy, the absence of complete diversity at the time of removal is not fatal to final judgment if complete diversity is established before that judgment was entered (Caterpillar). 1. This may give D an incentive to hope for district courts mistake, but we dont think that district court judges will be any more deterred if we punish them. 2. Finality takes on an added significance once direct appeal is completed. The finality moment happens after SCt hears or after time limit for SCt granting cert has passed. vii. Caterpillar v. Lewis SCt 1996 (p 252)
Facts: Lewis (P), KY resident, sued (in KY state court) Caterpillar, Delaware Corp with principal place of business in Ill, and Whayne Supply Co, KY corporation with principal place of business in KY for accident that occurred in KY. Liberty Mutual joined as another plaintiff. Lewis settled with Whayne, and Caterpillar removed to federal court one day before end of 1 year limitation on removal in diversity actions. Lewis objected, saying he had settled with Whayne, but Liberty Mutual hadnt, making Whayne a non-diverse party to the action and thus preventing complete diversity. Fed court denied Lewiss motion because Lewis admitted settling with Whayne. Whayne later settled with Liberty Mutual, so there was complete diversity by the time of judgment. Is the absence of complete diversity at the time of removal fatal to the district courts judgment if complete diversity is established before judgment? District court must have original JX in order for a case to be removed.

Issue: Rule:

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Analysis:

Concl:

The district court incorrectly treated Whayne as dropped from the case prior to removal, and complete diversity requirement was not met at the time of removal. However, there was complete diversity by the time of final judgment considerations of finality, efficiency, and economy are overwhelming. To wipe out this judgment, where all federal JX requirements are now met, would impose great costs on dual court system. In the interest of finality, the absence of complete diversity at the time of removal is not fatal to final judgment if complete diversity is established before that judgment was entered.

III. Erie (p 261) A. Intro i. Background a. Rule of Decision Act: The laws of the several states, except where Constitution or federal law provides, are the rules of decisions in civil actions in federal court in cases where they apply 1. Disagreement about what the laws of the several states are. b. Swift v. Tyson (overruled by Erie) 1. Federal courts must only apply state statutes and state court decisions about local matters. A) State court decisions arent laws, just interpretations of laws. B) Federal courts will discover the natural general common law, and states will follow it. 2. Could have been over turned by Congress. A) Stare decisis makes more sense in interpretation of statutes than constitutional interpretations b/c legislature can always overturn court decisions about statutes. ii. Post-Erie a. Courts generate, not discover, common law. b. We respect the common law because the system gives it authority we respect statutes because they were made by the legislature, who were elected by the people. The legislature authorized the courts. B. The (modern) Erie test: i. Is the state law substantive? a. If it would be applied by the state court across the street, it is substantive (Klaxon). ii. Choosing between state and federal procedure in conflict a. Is there a federal statute or Rule on point? b. If Yes, 1. If it is a Rule, is it within the scope of the Rules Enabling Act (It must be arguably procedural and must not abridge or modify a substantive right)? 2. Is it constitutional? 3. If yes to both, the federal rule must be applied. c. If no to either, if it is only a federal practice, 1. Is the state practice bound up in the definitions of the rights and obligations of the parties? If yes, state law applies. A) If no, Is it outcome determinative in that it would serve the twin aims of Erie (reducing forum shopping and the inequitable administration of justice)? I) If the state law would change the outcome, but wouldnt affect these goals, neednt be followed. II) If the state law would affect the outcome but only has to do with the manner of implementation of rights (paper size), it neednt be followed. B) Even if a law is outcome-determinative, is there a strong federal policy for application of the federal practice?

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C. The Erie Doctrine i. Erie doctrine: Federal courts deciding state law issues must apply state substantive law as it would be applied by the state court across the street (Klaxon) and federal procedural law. a. Twin aims of Erie: 1. Reducing forum-shopping Similarly situated people being treated differently b/c some have access to federal court and thus more favorable law. A) Just because certain situations have diversity, those parties have access to potentially more favorable laws than others in the same situation where there is no diversity. B) The purpose of diversity JX is to have impartial forum, not more favorable laws. C) Solution: make federal courts apply laws the way state courts would to reduce difference. D) However, state bias may come in when choosing what substantive law to apply. 2. Reduce inequitable administration of justice b. Federal Rules of Civil Procedure came out just before Erie. 1. Before, fed cts applied state procedural rules. 2. Reeds concurrence is concerned that these Rules will not be followed. Doesnt want fed cts to be limited and unable to do what makes them distinctly federal and is within the power of Congress to provide. c. There is less state common law today 1. There are a lot more state statutes today than there were at the time of Erie, so state courts have fewer areas of discretion. 2. There are a lot more federal laws that restrict what states can decide. d. Balancing interests 1. Deference to state courts as law making bodies 2. Federal courts as independent, autonomous judicial system ii. Overturning Swift a. Not the construction intended by Congress of the Rules Decision Making Act. b. Benefits of federal courts discovering general federal common law never materialized b/c states didnt follow it. c. Constitutional issues: 10th Amendment violating states rights 1. At time of Erie, Congress could not tell RR what to do. As a matter of federalism, RR regulation wasnt within Congresss power. 2. Federal courts can only have power that Congress has and is able to give away, so fed courts cant have any power Congress doesnt. 3. There is federal common law, but there is no general federal common law. Fed courts still have the ability to interpret congressional acts. A) Lincoln Mills (p 272). Supreme Court can construe Act to delegate power to courts if Congress had the authority to exercise and delegate that power. B) States are only bound to federal law if it preempts state law. 4. Reeds concurrence objects to the constitutional reasons in Erie. A) If Erie isnt constitutional but based on an interpretation of a statute, then it can be changed by Congress, and fed courts could have general law making power when sitting in diversity. iii. Erie RR v. Tompkins, SCt 1938 (p 265)
Facts: Tompkins injured in PA when walking near RR tracks by something looking like a door protruding from the train. PA law would require wanton negligence on the part of the RR for liability to attach, but NY law required only ordinary negligence. Tompkins sued in Federal Court and asked for court to apply general law under Swift v. Tyson (allowing fed ct to ignore general state common law). Trial court found for P, appeals court upheld. Must a federal court deciding a case based on diversity JX apply state common law?

Issue:

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Analysis:

Concl: Concurring:

Notes:

The use of this doctrine had created discrimination: The rights enjoyed under the unwritten general law vary depending on whether enforcement is sought in state or federal court. Non-citizens and corporations can choose federal courts in order to get more favorable law. Courts broadly interpreted general law in order to exclude many state laws when federal judges didnt agree with them. This doctrine is unconstitutional. The Constitution preserves the autonomy and independence of the states. Supervision of legislative or judicial action of the state except when specifically authorized by the Constitution is an invasion of the authority of the state and a denial of its independence. There is no federal general common law. Congress has no power to declare substantive rules of common law applicable in a State whether they be local or general in their nature. Except in matters governed by the Constitution or Acts of Congress, the substantive law to be applied in any case is the law of the state. This decision should rest solely on the misinterpretation of the Rules of Decision Act. It isnt clear that the Swift doctrine is unconstitutional. It is preferable to overturn an Act of Congress than to interpret the Constitution. - Tompkins asked district court to interpret state tort common law as general common law and not a local matter. - At time of Erie, NY state court would have applied PA law (law where accident occurred). States dont do this so much now.

D. Determining if state law is substantive or procedural i. Outcome determinative test (Guaranty Trust) a. Rule: Although a law may be procedural in nature, it is substantive under the meaning of Erie if it would lead to a substantially different result in federal court than in state court, so far as legal rules would determine the outcome. 1. Fed courts need not follow state laws that govern merely the manner by which a right to recover is enforced. A) If state clerk wouldnt accept the complaint because of the paper size, this would prevent recovery in state court, but this is merely internal practice, not a legal rule. b. Guaranty Trust Co. v. York, SCt 1945 (p 276)
Facts: P sued D for breach of trust and misrepresentation in federal court b/c of diversity. NY substantive law applied. The NY S/L wouldnt allow this case, so district ct dismissed. Appeals reversed and allowed suit. Is a state S/L law that would deny recovery in state court substantive? The intent of Erie was to insure that the outcome of the litigation in the fed court should be substantially the same as it would be if tried in state court. It doesnt matter if S/L law is substantive or procedural. Here there would be no recovery at all in state court, so the S/L would cause a substantially different result. Fed cts need not follow state law that concerned merely the manner by which a right to recover is enforced. Although a law may be procedural, it is substantive under the meaning of Erie if it would lead to a substantially different result in federal court than in state court. This was a court sitting in equity. Guaranty Trust said that Erie also applies to courts of equity.

Issue: Analysis:

Concl: Note:

c. Other early Erie cases upholding state law (p 280) 1. Ragan v. Merchants, 1949 state law regarding when S/L starts applies 2. Cohen v. Beneficial Indus., 1949 must apply state law requiring a bond for P to be able to sue. 3. Bernhardt v. Polygraphic Co. of America, 1956 narrowly construed federal arbitration statute and upheld state law regarding the enforceability of arbitration agreements. 4. Woods v. Interstate Realty Co., 1949 must apply state law barring suit by out-of-state corporations that had not paid taxes.
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5. In each of these cases, there isnt a conflict of state and federal law, federal law is construed narrowly so that state law applies. d. After the first 10 years, Erie wasnt as broadly interpreted in favor of state law. ii. Interest balancing: Bound up in state law vs. Strong federal policy a. Byrd Test: 1. Is the state practice bound up in the definitions of the rights and obligations of the parties? If yes, state law applies. A) Bound up = integral = central = necessary. A procedure is bound up if the state legislature would not have created the right without the procedure. 2. If no, would the application be outcome determinative? 3. Even if a law is outcome-determinative, is there a strong federal policy for application of the federal practice? b. Byrd v. Blue Ridge Rural Elec. Cooperative, SCt 1958 (p 281)
Facts: Byrd was an contractor injured while working for Blue Ridge. D argued that under state law, P was a statutory employee (independent contractor), so state workers comp law applied. Under state law, judge decides this question. Under traditional federal practice, jury decides. Trial court followed fed law, appeals court said should have followed state law. Should fed court follow state law concerning judge vs. jury decisions where the choice may be outcome-determinative? Fed cts should conform as nearly as possible to state rules, even procedural ones, where the state rules may substantially affect the result (Guaranty Trust) Erie federal courts in diversity cases must respect state-created rights and obligations. The result here may be substantially affected, so there is a case for following state law. However, the outcome-determinative test isnt the only test. There is a strong federal policy reason to have jury decision and no apparent strong reason for state rule. State law must be followed when it is bound up in the rights and obligations conferred. Even if a matter is outcome-determinative, federal law may be applied if there is a strong federal policy and the state procedural law isnt bound up in the rights conferred by the substantive law.

Issue: Rule: Analysis:

Concl:

iii. Modified outcome determinative test (deconstituionalizing Erie) a. In diversity actions, where there is a conflict between federal and state practices, if the federal practice is based on a Federal Rule or statute, ask (Hanna): 1. If it is a Rule, is it within the scope of the Rules Enabling Act? A) The test is: It is arguably procedural and must not abridge or modify a substantive right. B) Rules Enabling Act sets up a process for courts to make procedural rules. They stand unless Congress invalidates them. C) Statutes need not be procedural 2. Is it constitutional? 3. If yes to both, the federal rule must be applied. 4. If no to either or if it is only a federal practice, ask, is it outcome determinative in that it would serve the twin aims of Erie to follow state law? A) Test must address the twin aims of Erie: discouraging forum shopping and reducing the inequitable administration of justice. If the state law would change the outcome, but wouldnt affect these goals, neednt be followed. b. With this test, much turns on whether there is a federal Rule or statute on point because it is likely to be within the scope of the Rules Enabling Act and constitutional. 1. Harlans concurrence says this test is too strong if it is arguably procedural, it will be applicable. A) Thinks should look at whether the state was trying to regulate primary behavior (prelawsuit behavior). If so, state law should be used. State may have had the procedural law to encourage business, for example. B) Doesnt agree with forum shopping consideration. What about people who choose federal court because they like the Federal Rules?
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c. Hanna v. Plumer, SCt 1965 (p 284)


Facts: P filed diversity case in federal court against executor of estate (D). D served in accordance with Federal Rule, by leaving papers with Ds wife, but state law says that executors must be personally served. Trial court said must be state practice, appeals court upheld b/c substantive rather than procedural matter. In a federal diversity case, should service of process be done in the manner proscribed by state law or Rule 4(d)(1)? Outcome determination test must address the twin aims of Erie, discouragement of forum shopping and the inequitable administration of laws. The importance of the state law is only relevant in the context of asking whether application of the rule would make such a difference in the character or result of the litigation that not enforcing it would unfairly discriminate against citizens of the forum state or would be likely to cause P to chose federal court. The Erie rule doesnt void Federal Rules cases have shown that procedures of fed court were not broad enough, so state rule governed, not that state rule displaced federal rule. Applying the state rule now would change the outcome of the case, but adhering to it before would have only changed the manner of process. In diversity actions, where there is a conflict between federal and state practices, if the federal practice is based on a Federal Rule or federal statute, ask: 1) Is it within the scope of the Rules Enabling Act? (The test is: does it really regulate procedure?) 2) Is it constitutional? (Harlan): this test is too strong, and federal rule would almost always prevail.

Issue: Analysis:

Concl:

Concurrence:

iv. Determining Scope of Fed Law a. Burlington RR v. Woods, SCt 1987 (p 296) 1. Constitutional challenge to state procedural practice of awarding costs and extra damages to winner on appeal. Federal Rule of Appellate Procedure 38 says that costs may be awarded if the appeal is frivolous. 2. SCt reads Rule 38 as occupying the whole field of appellate sanctions, that costs may be awarded if and only if the appeal is frivolous. Federal Rule prevailed. b. Stewart Org v. Ricoh, SCt 1988 (p 297) 1. F: Diversity action for breach of K brought in AL. K had a forum selection clause that suit would only be in NY. P pointed to ALs refusal to honor forum selection clauses. D made motion to transfer. 2. Federal statute (1404 transfer statute) is on point, so it applies (Hanna). Fed ct has discretion to transfer and may consider state practice as a factor. A) If D had made a motion for summary judgment, state substantive law would apply. But transfer is arguably procedural, so Hanna test applies. c. Gasperini v. Center for Humanities, Inc., SCt 1996 (p 297) 1. F: D invoked NY law allowing appellate court to order a new trial if jury verdict was unreasonably high. 7th Amendment prohibits reexamination of jury verdict by federal court other than according to common law. 2. H: NY law conflicts with the 7th Amendment, but only for appellate courts. Common law allows district courts to review jury verdicts, and appellate courts can review district court decisions for abuse of discretion. A) Wants to respect NY statute, so allow district courts to review jury award, but this is different from the NY statute, and may not be what they intended. E. Scope of state law i. When state law isnt settled a. District court must use best judgment to determine how the state courts would resolve the issue, but appeal lies only within the federal system. 1. Fed courts will try to determine what the state court of last resort would say. b. When federal courts turn out to be wrong

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1. If the same cause of action is litigated by different parties, one in state court and the other in federal court, and the state court case comes out differently, the federal court may reverse the decision to comply with state decision (Pierce v. Cook (p 301)). 2. If a cause of action similar to a federal case already decided is later decided differently in state court, federal court may refuse to reverse decision (DeWeerth v. Baldinger (p 302)). ii. Conflict of laws rules a. States have rules for when to apply different states laws. State courts sitting in diversity must apply conflict principles of the forum state (Klaxon Co. v. Stentor Elec (p 272)). b. Klaxon requires fed courts to make predictions about state law even when state courts havent yet interpreted the law. iii. Certification a. Some states have certification procedures where federal courts may ask the court of last resort a question about interpretation of state law. 1. Some states dont have certification procedures. 2. State court may refuse to answer a particular question. A) The effect of misinterpretation may be drastic or political. The greater the state concern, the more likely state court is to abstain from answering. IV. Remedies (p 314) A. Substitutionary Remedies Seek to provide P with a reasonable substitute i. (Specific remedies seek to restore directly that which is taken by D from P.) ii. Compensatory Damages a. Rightful position principle: The fundamental principal of damages is to restore the injured party, as nearly as possible, to the position he would have been in had it not been for the wrong of the other party (Hatahley). 1. Loss of use A) P has a duty to mitigate damages P is only entitled to damages up to the time a prudent person would replace what was lost. B) P need not take unreasonable actions to replace for instance, if cannot get a loan without causing a hardship. 2. Determining the wrong A) If entering into a K is the wrong, P needs to be restored where he was before the K. B) If the breach of the K was the wrong, P needs to be restored to the place he would be if the K had been completed. 3. Proximate cause A) D is liable for consequences that are the proximate cause of the wrong. b. How are damages calculated: Is accuracy or efficiency most important? 1. Should we look at each factor separately should we determine which livestock were lost as a result of the lost horses based on age, etc.? (Hatahley says yes) A) Coming up short is bad I) If victim is faultless, why should he be under compensated? II) If D pays less in damages than the harm he actually inflicts, he will not have adequate incentive to comply with policy. B) If overcompensate, not fair, either I) P shouldnt be better off than she was before. II) If P get more damages, he have more incentive to sue, might become a victim on purpose. P may want to try to get the other party to breach the K. III) If D is paying out more, he may be overdeterred and may not engage in the conduct. We dont want to shut down socially useful activity. C) Or, in the interest of efficiency and lowering costs, should we estimate loss? 2. American rule says each side must pay for its own legal costs. Does this really allow P to be made whole? A) There is also the interest of not encouraging litigation.

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c. Compensatory damages are determined by the loss to the average plaintiff. 1. Otherwise there would be an incentive to trump up personal damage. 2. We dont allow P to recover extra for sentimental value b/c it is too easy to lie about that unless there are items that we usually consider to have sentimental value. 3. Frail victim doctrine. If I bump into you and you broke your arm b/c you are frail, if I was negligent, then it is just my bad luck. d. Pain and suffering 1. Must be determined based on the individual, even in class action suits. 2. Popular to ask how much it would take to compensate for an hour or a day, then multiply by expected duration of the pain. 3. Efficiency A) Many insurance policies specify amounts for particular suffering (loss of arm) B) Some states set maximum amts for recovery for wrongful death. e. Interest 1. In most JX, nature of harm will determine whether prejudgment interest accrues. 2. Most JX allow postjudgment interest to accrue until judgment is paid. f. Sovereign immunity sovereign (state and federal govt) is insulated from judicial process absent a waiver. 1. Sovereign immunity makes sense if you are suing a govt under a cause of action that arises from a right created by the govt. The people who made that right (the govt) can be limited, including excluding the govt. 2. If you are suing for something that the Constitution prohibits, this argument doesnt apply b/c Congress is bound to the Constitution and is not the master of the Constitution. 3. When you sue an officer, you only can get two kinds of relief personal assets of person or future relief as an injunction getting them to do or not do something. A) You cant get at public funds by suing an officer. B) Individual immunity says officials do not personally owe for things they did on the job unless it was really really wrong. 4. Govt can waive immunity: A) Tort Claims Act. If what govt did would be considered a tort if done by a private individual in the state, then can sue. This only applies to unintentional torts. g. US v. Hatahley, 10th Cir 1958 (p 315)
Facts: P, members of the Navajo tribe, grazed their burros and horses on federal land. Govt seized the burros and horses and sold them to glue factory. This damaged Ps ability to farm, raise livestock, get around for medical and religious purposes. P sued under Tort Claims Act, which allows suit against US for behavior that would violate tort law if done by private citizens. Awarded damages for worth of burros and horses, loss of livestock between 1952 and 1957 (last hearing), and $3,500 in mental pain and suffering per P. Were these damages proper? The fundamental principal of damages is to restore the injured party, as nearly as possible, to the position he would have been in had it not been for the wrong of the other party. P were entitled to market value, or replacement cost of their horses and burros at the time of the taking, plus the use value during the interim between the taking and the time they could have, acting prudently, replaced the animals. P didnt prove replacement cost of horses and burros, saying the were irreplaceable b/c of their training. Animals can always be replaced and trained. This should be used to factor their replacement cost. The damages for mental anguish were taken out of thin air. Emotional loss b/c of the loss of horses and burros cant be the same for every P. These damages were improper because they went beyond the loss P would sustain between the time of the taking and the time a prudent person would have replaced the animals.

Issue: Rule: Analysis:

Concl:

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iii. Liquidated, Statutory, and Punitive Damages (p 321) a. Liquidated damages: Parties may agree ahead of time about the price of harm 1. May only agree if the amount agreed upon is reasonable and made in good faith AND A) Dont want to enforce a penalty if too high B) There may be incentive for P to try to get D to get breach K if liquidated damages are too high. 2. The nature of the potential harm is such that it would be difficult to calculate the damages. b. There are other limitations on remedies clauses 1. Only can get replacement or repair, not monetary damages. c. Minimum damages set by statute encourage P to bring suit to enforce public policy even for matters over small dollar amounts. 1. Partly punitive d. Punitive damages aim entirely at punishment 1. Mere negligence is generally not enough, and there must usually be some willfulness. 2. In some JX, P may introduce evidence of Ds wealth for determining how much punitive damages would hurt D suiting punishment to the D. A) Like criminal law in sentencing, evidence may only be introduced after the trial on the merits so that jury wont be prejudiced. 3. Requirements are more like criminal law than other damages. A) Requires clear and convincing evidence B) Criminal law requires review of sentences for proportionality, and so does punitive damages I) Compensatory damages are not subject to this review. 4. Why should P get the punitive damages? (Criminal fines go to the state) A) If we dont give this $ to P, she wont have an incentive to bring this horrible misconduct to light. P is acting like a private attorney general. B) Also, P and D will have an incentive to settle for less than the amount that would deter D because P would get more money as long as they settle for more than the compensatory damages would be, so D isnt actually deterred. I) Sharing with P was experimented with in the 80s, and this is what happened. C) P may not have as much of an incentive to be as zealous. 5. SCt has limited how much punitive damages can be awarded (Due Process clause suggests that there is an outer limit). A) Judicial review of punitive damages must be allowed (Oberg). B) Wealth of D cannot justify otherwise unconstitutional PD (State Farm) 6. Punitive damages may only punish D for conduct up to the amount that he had fair notice he was liable for (Gore). A) States may not punish D for conduct in other states (Gore, State Farms). B) PD cannot be based on Ds acts that are dissimilar to acts that harmed P (State Farm). C) The Constitution requires de novo review of these Gore measures of how much liability D had notice of (Cooper Industries): I) degree of reprehensibility of Ds conduct (most important) a) Physical rather than economic harm b) Indifference or reckless disregard for health or safety c) Target of conduct had financial vulnerability d) Repeated actions rather than isolated e) Harm result of intentional malice rather than mere accident f) One may not be enough, lack of any makes PD suspect (State Farms) II) disparity between the harm suffered or the potential harm and the punitive damages a) Usually, more than a single digit ratio will not satisfy due process. May be more if harm is reprehensible and actual damages small. Also, if compensatory damages are high, ratio should be smaller (State Farms) III) difference between the PD and civil penalties in similar cases
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e. Honda Motor Co. v. Oberg, SCt 1994 (p 323)


Facts: Issue: Rule: Analysis: Jury awarded $900K in compensatory and $5mil in punitive damages. Oregon statute bars judicial review of punitive damages unless there is no evidence of to support the verdict. Does the Oregon statute barring judicial review of punitive damages violate the Due Process Clause of the 14th Amendment? The Constitution imposes a substantial limit on punitive damage awards (Haslip, TXO) Judicial review of punitive damage awards has been a safeguard against excessive verdicts since punitive damages were awarded. There is a dramatic difference between common law judicial review of punitive damages and the Oregon statute. Often, cases have been about how common law review isnt strong enough. Judicial review beyond just if no evidence supports the verdict must be allowed for punitive damage awards. Judges can still review decisions for jury instruction error, and P must present clear and convincing evidence. The Oregon statute is strong enough, and is at least as strong as the procedural protections approved of in Haslip and TXO.

Concl: Dissent:

f. BMW of North America v. Gore, SCt 1996 (p 326)


Facts: Issue: Analysis: Alabama state Jury awarded 4 million and judge reduced to 2 million in punitive damages for cars bought as new that were actually repainted. Actual damage was $4k per car (1000 Ps). Was the punitive damage award of 2 million unconstitutionally excessive? To the extent that the punitive damages punish BMW for conduct outside of Alabama, the award is unconstitutional. A state cannot punish D for conduct that may have been lawful where it occured. A person must receive fair notice not only of conduct that will subject him to punishment but also of the severity of the penalty. Three guideposts indicating lack of fair notice: 1) degree of reprehensibility of Ds conduct (caused no harm beyond economic harm, put no ones safety at risk), 2) disparity between the harm suffered & the potential harm and the punitive damages (PD 500 times actual harm), and 3) difference between the PD and civil penalties in similar cases (civil nondisclosure penalties in AL $2k). Punitive damages awarded here are unconstitutional b/c: they punish conduct in other states, the harm was merely economic, the PD were 500x the actual harm, and civil penalties in similar cases are much lower.

Concl:

g. State Farms Mutual Auto Ins Co. v. Campbell, SCt 2003 (Supp p. 404)
Facts: Campbell (P) were in a car accident most likely their fault. Another driver was killed, another permanently disabled. State Farms (D), Ps insurer refused to settle with drivers families for 50k and went to trial, assuring P that they were not personally liable. Campbell was found at fault, 180k judgment. D refused to pay more than the 50k and refused to appeal. D paid, P sued for fraud. Awarded 1 mil in CD, 145 mil in PD. Is 145 mil too much PD for 1 mil CD? PD must be reviewed de novo at appellate level using Gore factors Examining all 3 Gore factors shows that PD was too high. Courts awarded based on evidence of Ds nationwide scheme to defraud clients. PD may only be based on Ds actions that harmed P, not on hypothetical claims. Also, CD was high and probably somewhat punitive in itself. There is no bright-line limit on PD, but generally more than a single digit ratio between CD and PD will violate due process. If CD is low but conduct is egregious, more than a single digit ratio may be allowed. If CD is high, a lower ratio will be the limit. A 1:1 (approx) ratio is more likely justified b/c the degree of reprehensibility was not high for Ds conduct that harmed P and CD is already high.

Issue: Rule: Analysis:

Concl:

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