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[Note: Numbers in brackets refer
to the printed pages of the Emanuel Law Outline where the topic is discussed.]
Emanuel Law Outlines
Civil Procedure
Chapter 1
INTRODUCTION
I. CIVIL PROCEDURE GENERALLY
1. Personal jurisdiction: First,
make sure that the court has "personal jurisdiction" or
"jurisdiction over the parties." You must check to make sure that:
(1) D had minimum contacts with the forum state (whether the court is a
state or federal court); and (2) D received such notice and opportunity to
be heard as to satisfy the constitutional requirement of due process. [7 -
85]
2. Venue: Then, check whether venue
was correct. In federal court suits, the venue requirement describes what
judicial district the case may be heard in. Essentially, the case must be
heard either: (1) in any district where the defendant resides (with special
rules for multi-defendant cases; or (2) in any district in which a
substantial part of the events giving rise to the claim occurred. See 28 U.S.C. §1391. [86 - 97]
3. Subject matter
jurisdiction: If the case is a federal case, you must then ask whether the
court has subject matter jurisdiction. Essentially, this means that one of
the following two things must be true: [100 - 146]
a. Diversity: Either the case is
between citizens of different states (with "complete diversity"
required, so that no plaintiff is a citizen of the same state as any
defendant) and at least $75,000 is at stake; or
b. Federal question: The case
raises a "federal question." Essentially, this means that
plaintiff's right to recover stems from the U.S. Constitution, a federal
treaty, or an act of Congress. (There is no minimum amount required to be
at stake in federal question cases.)
6. Ascertaining applicable law:
Now, figure out what jurisdiction's law should be used in the case. The most
important problem of this type is: In a diversity case, may the federal
court apply its own concepts of "federal common law", or must the
court apply the law of the state where the federal court sits? If the state
has a substantive law (whether a statute or a judge-made principle) that is
on point, the federal court sitting in diversity must apply that law. This
is the "rule" of Erie v. Tompkins. (Example: In a diversity
case concerning negligence, the federal court must normally apply the
negligence law of the state where the court sits.) [234 - 256]
8. Multi-party and
multi-claim litigation: If there is more than one claim in the case, or more
than the basic two parties (a single plaintiff and a single defendant), you
will face a whole host of issues related to the multi-party or multi-claim
nature of the litigation. You must be prepared to deal with the various
methods of bringing multiple parties and multiple claims into a case. In
federal courts: [305 - 376]
a. Counterclaim: D may make a
claim against P, by use of the counterclaim. See FRCP 13. Check whether the
counterclaim is "permissive" or "compulsory." (Also,
remember that third parties, who are neither the original plaintiff nor
the original defendant, may make a counterclaim.) [309]
c. Joinder of
parties: Multiple parties may join their actions together. Check to see
whether either "permissive joinder" or "compulsory
joinder" is applicable. Also, remember that each of these two types
of joinder can apply to either multiple plaintiffs or multiple defendants.
See FRCP 19 and 20. [316]
d. Class actions:
Check whether a class action is available as a device to handle the claims
of many similarly-situated plaintiffs, or claims against many
similarly-situated defendants. See FRCP 23. Look for the possibility
of a class action wherever there are 25 or more similarly-situated
plaintiffs or similarly-situated defendants. [330]
f. Interpleader:
Where a party owes something to two or more other persons, but isn't sure
which, that party may want to use the device of interpleader to prevent
being made to pay the same claim twice. After checking whether
interpleader might be desirable, decide whether the stakeholder should use
"statutory interpleader" or "Rule interpleader." See 28 U.S.C. §1335 (statutory interpleader)
and FRCP 22 (Rule interpleader).
[360]
g. Third-party
practice (impleader): Anytime D has a potential claim against some third
person who is not already in the lawsuit, by which that third person will
be liable to D for some or all of P's recovery against D, D should be able
to "implead" the third person. (Example: Employee, while working
for Employer, hits Victim with a company car. Victim sues Employer in
diversity, under the doctrine of respondeat superior. Under traditional
concepts of indemnity, Employer will be able to recover from Employee for
any amount that Employer is forced to pay Victim. Therefore, Employer
should "implead" Employee as a "third party defendant"
to the Victim-Employer action.) See FRCP 14(a). Once a third-party
defendant is brought into the case, consider what other claims might now
be available (e.g., a counterclaim by the third-party defendant against
the third-party plaintiff, a cross-claim against some other third-party
defendant, a counterclaim against the original plaintiff, etc.). [368]
i. Jurisdiction:
For any of these multi-party or multi-claim devices, check to see whether
the requirements of personal jurisdiction and subject matter jurisdiction
have been satisfied. To do this, you will need to know whether the
doctrine of "supplemental" jurisdiction applies to the
particular device in question. If it does not, the new claim, or the new
party, will typically have to independently meet the requirements of
federal subject matter jurisdiction. (Example: P, from Massachusetts, sues
D, from Connecticut, in diversity. X, from Massachusetts, wants to
intervene in the case on the side of D. Because supplemental jurisdiction
does not apply to intervention, X must independently satisfy the
requirement of diversity, which he cannot do because he is a citizen of
the same state as P. Therefore, X cannot intervene.)
9. Former adjudication: Lastly,
check whether the results in some prior litigation are binding in the
current suit. Distinguish between situations in which the judgment in the
prior suit is binding on an entire cause of action in the present suit
(under the doctrines of merger and bar), and the situation where a finding
of fact is binding on the current suit, even though the judgment itself is
not binding (the "collateral estoppel" situation).
b. Full Faith and Credit: Lastly,
if the two suits have taken place in different jurisdictions, consider to
what extent the principles of Full Faith and Credit limit the second court's
freedom to ignore what happened in the first suit. [410]
Chapter 2
JURISDICTION OVER THE PARTIES
I. GENERAL PRINCIPLES
A. Two kinds of jurisdiction: Before
a court can decide a case, it must have jurisdiction over the parties as well
as over the subject matter. [7]
1. Subject matter jurisdiction:
Subject matter jurisdiction refers to the court's power to decide the kind
of case before it. (Examples of subject matter jurisdiction issues: (1) Does
the federal court for the District of New Jersey have the power to decide
cases in which the two parties are citizens of different states? (2) Does
the Binghamton Municipal Court have the power to decide cases involving more
than $1,000?)
2. Jurisdiction over the parties:
Jurisdiction over the parties refers to whether the court has jurisdiction
to decide a case between the particular parties, or concerning the property,
before it. (Examples of issues concerning jurisdiction over the parties: (1)
Does Court X have jurisdiction over D, who is a citizen of State X, but who
is temporarily out of the state? (2) Does Court Y have jurisdiction over
property in State Y where the action is one by P to register title to the
land in his name?)
B. Jurisdiction over the parties:
There are two distinct requirements which must be met before a court has
jurisdiction over the parties: [8]
1. Substantive due process: The
court must have power to act, either upon given property, or on a given
person so as to subject her to personal liability. The Constitution's
Fourteenth Amendment Due Process Clause imposes this requirement of power to
act, as a matter of "substantive due process."
2. Procedural due process: Also,
the court must have given the defendant adequate notice of the action
against him, and an opportunity to be heard. These, taken together, are
requirements of procedural due process, also imposed by the Fourteenth Amendment's Due
Process Clause.
C. Three kinds of jurisdiction over
the parties: There are three different kinds of jurisdiction which a court may
exercise over the parties - one of these three must be present for the case to
go forward. [8]
1. In personam: In personam
jurisdiction, or jurisdiction over the defendant's "person," gives
the court power to issue a judgment against her personally. Thus all of the
person's assets may be seized to satisfy the judgment, and the judgment can
be sued upon in other states as well. [8]
2. In rem: In rem jurisdiction, or
jurisdiction over a thing, gives the court power to adjudicate a claim made
about a piece of property or about a status. (Examples: An action to quiet
title to real estate, or an action to pronounce a marriage dissolved.) [8]
3. Quasi in rem jurisdiction: In
quasi in rem jurisdiction, the action is begun by seizing property owned by
(attachment), or a debt owed to (garnishment) the defendant, within the
forum state. The thing seized is a pretext for the court to decide the case
without having jurisdiction over the defendant's person. Any judgment
affects only the property seized, and the judgment cannot be sued upon in
any other court. [8]
4. Minimum contacts requirement: If
jurisdiction in the case is in personam or quasi in rem, the court may not
exercise that jurisdiction unless D has "minimum contacts" with
the state in which the court sits. In brief, the requirement of minimum
contacts means that D has to have taken actions that were purposefully
directed towards the forum state. (Examples of the required action: D sold
goods in the state, or incorporated in the state, or visited the state, or
bought property in the state, etc.) Without such minimum contacts, exercise
of jurisdiction would violate D's Fourteenth Amendment federal constitutional
right to due process. [8]
a. Unreasonable exercise: Even if
D has the requisite "minimum contacts" with the forum state, the
court will not exercise jurisdiction if considerations of "fair play
and substantial justice" would require making D defend in the forum
state so unreasonable as to constitute a due process violation. But in
most cases, if D has the required minimum contacts with the forum state,
it will not be unreasonable for the case to be tried there.
D. Long-arm statute: Most states have
"long-arm statutes." A long-arm statute is a statute which permits
the court of a state to obtain jurisdiction over persons not physically
present within the state at the time of service. (Example: A long-arm might
allow jurisdiction over an out-of-stater who has committed a tort in the
state.) [9]
II. JURISDICTION OVER INDIVIDUALS
A. Different categories: In most
states, there are a number of different criteria which will enable the court
to take personal jurisdiction over an individual. Some of the most common
(each of which will be considered in detail below) are: [9]
Note: Regardless of the criteria
used by the state and its long-arm for establishing personal jurisdiction
over the individual, due process requires that the individual have minimum
contacts with the forum state before personal jurisdiction may be exercised
over her. The meaning of "minimum contacts" is discussed further below in the treatment of
jurisdiction over corporations.
B. Presence: Jurisdiction may be
exercised over an individual by virtue of his presence within the forum state.
That is, even if the individual is an out-of-state resident who comes into the
forum state only briefly, personal jurisdiction over him may be gotten as long
as service was made on him while he was in the forum state. [10]
Example: D and his wife, P, separate
while residing in New Jersey. P moves to California with their children. D
visits California on business, and stops briefly to visit the children. While
D is visiting, P serves him with process in a California suit for divorce. D
never visits the state again.
Held, California can constitutionally
assert personal jurisdiction over D based on his presence in the state at the
time of service, even though that presence was brief, and even though D had
virtually no other contacts with the state. [Burnham v. Superior Court].
C. Domicile:
Jurisdiction may be exercised over a person who is domiciled within the forum
state, even if the person is temporarily absent from the state. A person is
considered to be domiciled in the place where he has his current dwelling
place, if he also has the intention to remain in that place for an indefinite
period. [11 - 13]
D. Residence: Some
states allow jurisdiction to be exercised on the basis of D's residence in the
forum state, even though he is absent from the state. A person may have
several residences simultaneously. (The Supreme Court has not yet passed on
the due process validity of jurisdiction based solely on residence, so this
remains presumptively a valid method of gaining jurisdiction.) [13]
E. Consent:
Jurisdiction over a party can be exercised by virtue of her consent, even if
she has no contacts whatsoever with the forum state. [14]
Example: P, who does
not reside in Ohio or have any other contacts with Ohio, brings suit against D
in Ohio. By filing the suit in Ohio, P will be deemed to have consented to
Ohio's jurisdiction. D may then counterclaim against P. Even if P dismisses
his own suit, his consent to the action will be binding, and the Ohio courts
will have personal jurisdiction over him on the counterclaim.
F. Non-resident
motorist: Most states have
statutes allowing the courts to exercise jurisdiction over non-resident
motorists who have been involved in accidents in the state. [15]
Example: P is a resident of the forum
state. D, not a resident of the forum state, is driving his car in the forum
state, and has a collision with P's car. Even if D has no other contacts with
the state, a non-resident motorist statute will probably be in force in the
state, and will probably give the forum state's courts jurisdiction over a
tort suit by P against D.
G. In-state tortiousness: Many states
have statutes allowing their courts jurisdiction over persons committing
tortious acts within the state. [16]
Example: D, an out-of-stater, gets
into a fight with P at a bar in P's home state. P wants to bring a civil
battery claim against D in the state. If, as is likely, the state has a
long-arm provision governing tortious acts within the state, P will be able to
get personal jurisdiction over D in the battery action.
1. Out-of-state acts with in-state
consequences: Some "in-state tortious acts" long-arm clauses have
been interpreted to include acts done outside the state which produce
tortious consequences within the state. In a products liability situation, a
vendor who sells products that he knows will be used in the state may
constitutionally be required to defend in the state, if the product causes
injury in the state. [Gray v. American Radiator
Corp.] [16]
H. Owners of in-state property: Many
states exercise jurisdiction over owners of in-state property in causes of
action arising from that property. [18]
I. Conducting business: States often
exercise jurisdiction over non-residents who conduct businesses within the
state. Since states may regulate an individual's business conduct in the
state, they may constitutionally exercise jurisdiction relating to that doing
of business. [19]
J. Domestic relations cases: Courts
sometimes try to take personal jurisdiction over a non-resident party to a
domestic relations case. However, the requirement of "minimum
contacts" applies here (as in every personal jurisdiction situation), and
that requirement may bar the state from taking jurisdiction. [26]
Example: A father resides in New
York, and permits his minor daughter to go to California to live there with
her mother. Held, the father does not have sufficient minimum contacts with
California to allow the mother to bring an in personam suit in California
against him for increased child support. [Kulko v. Superior Court]
III. JURISDICTION OVER CORPORATIONS
A. Domestic corporations: Any action
may be brought against a domestic corporation, i.e., one which is incorporated
in the forum state. [21]
B. Foreign corporations generally: A
state is much more limited in its ability to exercise jurisdiction over a
foreign corporation (i.e., a corporation not incorporated in the forum state).
[22 - 27]
2. Dealings with
residents of forum state: Usually, a corporation will be found to have the
requisite "minimum contacts" with the forum state only if the
corporation has somehow voluntarily sought to do business in, or with the
residents of, the forum state. [23 - 27]
Example 1 (minimum
contacts found): D has no activities in Washington except for the activities
of its salesmen, who live in the state and work from their homes. All orders
are sent by the salesmen to the home office, and approved at the home
office. The salesmen earn a total of $31,000 per year in commissions.
Example 2 (minimum
contacts found): D is a Texas insurance company. It does not solicit
business in California. However, it takes over, from a previous insurance
company, a policy written on the life of X, a California resident. D sends X
a new policy; X sends premiums from his California home to D's out-of-state
office. X dies; P (the beneficiary under the policy) is a California
resident. P sues D in California for payment under the policy.
Example 3 (minimum
contacts not found): D is a Delaware bank, which acts as trustee of a
certain trust. S, the settlor of the trust, is a Pennsylvania resident at
the time she sets up the trust. Years later, she moves to Florida. Later,
her two children, also Florida residents, want to sue D in Florida for a
judgment that they are entitled to the remaining trust assets. D has no
other contacts with Florida.
Held, D does not
have minimum contacts with Florida, and therefore, cannot be sued in
personam there. [Hanson v. Denckla]
Note: The key idea
is that D will be found to have minimum contacts with the state only if D
has purposely availed itself of the chance to do business in the forum
state. Thus in McGee (Example 2 above), the
insurance company offered a policy to someone who it knew was a resident of
the forum state. In Hanson (Example 3 above), by
contrast, the trustee never voluntarily initiated business transactions with
a resident of the forum state or otherwise voluntarily did business in the
state - it was only S's unilateral decision to move to the forum state that
established any kind of connection with that state, so minimum contacts did
not exist.
C. Use of agents: Sometimes an
out-of-state company does not itself conduct activities within the forum
state, but uses another company as its agent in the state. Even though all
business within the state is done by the agent, the principal (the foreign
corporation) can be sued there, if the agent does a significant amount of
business on the foreign company's behalf. [27]
D. Operation of an Internet Website
that reaches in-staters: A hot question today is whether the operation of an
Internet Website that's hosted outside the forum state, but that's accessed by
some in-staters, constitutes minimum contacts with the state. The main issue
is, did the Website operator intended to "target" residents of the
forum state? If yes, there are probably minimum contacts; if no, there
probably aren't. [27 - 29]
1. Passive site that just posts
information: So if an out-of-state local business just passively posts info
on the Web, and doesn't especially want to reach in-staters or conduct
transactions with them, this probably doesn't amount to minimum contacts,
even if some in-staters happen to access the site.
Example: D operates a local jazz
cafe in a small town in Kansas. He puts up a Website with a schedule of
upcoming events, and uses a trademark belonging to P on the site. P, based
in New York, sues D in N.Y. federal court for trademark infringement. Even
though a few New Yorkers may have accessed D's site, this won't be enough to
constitute minimum contacts with N.Y., because D wasn't trying to attract
business from N.Y. [Cf. Cybersell, Inc. v.
Cybersell, Inc.]
2. Conducting
transactions with in-staters: But if D runs an "e-commerce" site
that actively tries to get in-staters to buy stuff from the site, and some
do, that probably will be enough to constitute minimum contacts with the
state, at least where the suit relates to the in-staters' transactions. (And
if the Web-based transactions with in-staters are "systematic and
continuous," as discussed in the next paragraph, then these contacts
will even be enough for jurisdiction in the state on claims not relating to
the in-state activities.) [32]
E. Claims unrelated to in-state
activities: The above discusses generally assumes that the claim relates to
D's in-state activities. Where the cause of action does not arise from the
company's in-state activities, greater contacts between D and the forum state
are required. The in-state activities in this situation must be
"systematic and continuous." [29 - 31]
Example: D is a South American
corporation that supplies helicopter transportation in South America for oil
companies. D has no contacts with Texas except: (1) one negotiation there with
a client, (2) the purchase by D of 80% of its helicopter fleet from a Texas
supplier, (3) the sending of pilots and maintenance people to Texas for
training, and (4) the receipt out-of-state of two checks written in Texas by
the client. D is sued in Texas by the Ps (Texas residents) when they are
killed in South America while being transported by D.
Held, the Ps cannot sue D in Texas.
Because the Ps' claims did not arise out of D's in-Texas activities, those
Texas contacts had to be "systematic and continuous" in order to be
sufficient for jurisdiction. The contacts here were too sparse for that. [Helicopteros Nacionales de
Colombia v. Hall]
F. Products
liability: The requirement of "minimum contacts" with the forum
state has special bite in products liability cases. [32 - 37]
1. Effort to market in forum state:
The mere fact that a product manufactured or sold by D outside of the forum
state finds its way into the forum state and causes injury there is not
enough to subject D to personal jurisdiction there. Instead, D can be sued
in the forum state only if it made some effort to market in the forum state,
either directly or indirectly. [33]
Example: The Ps are injured in
Oklahoma in an accident involving an allegedly defective car. They had
purchased the car in New York while they were New York residents. The Ps sue
in Oklahoma. D1 is the distributor of the car, who distributed only on the
East Coast. D2 is the dealer, whose showroom was in New York. Neither D1 nor
D2 sold cars in Oklahoma or did any business there.
Held, neither D may be sued in
Oklahoma. Neither D had made efforts to "serve directly or
indirectly" the Oklahoma market. Any connection between the Ds' product
and Oklahoma was merely an isolated occurrence, completely due to the
unilateral activity of the Ps. [World-Wide Volkswagen v.
Woodson]
2. Knowledge of
in-state sales enough: But if the out-of-state manufacturer makes or sells a
product that it knows will be eventually sold in the forum state, this fact
by itself is probably enough to establish minimum contacts. However, if this
is the only contact that exists, it may nonetheless be
"unreasonable" to make D defend there, and thus violate due
process. [34 - 37]
Example: P is
injured while riding a motorcycle in California. He brings a products
liability suit in California against, inter alia, D, the Taiwanese
manufacturer who made the cycle's rear innertube. D "impleads" X,
the Japanese manufacturer of the tube's valve assembly, claiming that X must
pay D any amount that D has to pay to P. X has no contacts with California,
except that X knew that: (1) tires made by D from X's components were sold
in the U.S., and (2) 20% of the U.S. sales were in California. The P-D suit
has been settled but the D-X case is to be tried.
Held, X had minimum
contacts with California, because it put its goods into a stream of commerce
that it knew would lead many of them to California. But despite these
minimum contacts, it would be "unreasonable and unfair" - and thus
a violation of due process - for California to hear the case, because of the
burden to X of having to defend in California, the slenderness of
California's interest in having the case heard there, and the foreign
relations problems that would be created by hearing an indemnity suit
between two foreign corporations. [Asahi Metal Industry Co. v.
Superior Court]
G. Unreasonableness: As the case in
the above example shows, even where minimum contacts exist, it will be a
violation of due process for the court to hear a case against a non-resident
defendant where it would be "unreasonable" for the suit to be heard.
The more burdensome it is to the defendant to have to litigate the case in the
forum state, and the slimmer the contacts (though "minimum") with
the forum state, the more likely this result is to occur. [35]
H. Suits based on contractual
relationship: The requisite "minimum contacts" are more likely to be
found where one party to a contract is a resident of the forum state. But the
fact that one party to a contract is a resident does not by itself
automatically mean that the other party has "minimum contacts" - the
existence of a contract is just one factor to look at. [37 - 40]
1. Contractual relationship
involving the state: Where the contract itself somehow ties the parties'
business activities into the forum state, this will be an important factor
tending to show the existence of minimum contacts. For instance, if one
party is to make payments to the other, and the latter will be receiving the
payments in the forum state, this stream of payments coming into the state
is likely to establish minimum contacts and thus to permit suit against the
payor.
Held, P may sue D in Florida. The
fact that the payment stream comes into Florida is an important factor,
though not by itself dispositive, in the court's conclusion that there were
minimum contacts with Florida. [Burger King Corp. v.
Rudzewicz]
2. Choice-of-law
clause: Where there is a contract between the parties to the suit, the fact
that the contract contains a choice of law clause requiring use of the forum
state's law will also be a factor (though not a dispositive one) tending
towards a finding of minimum contacts. (Example: On the facts of the above
example, the franchise contract stated that Florida law would be used. This
was a factor helping lead the court to conclude that D had minimum contacts
with Florida.) [40]
3. "Reasonable
anticipation" of defendant: In suits relating to a contract, as with
any other kind of suit, the minimum contacts issue always boils down to
this: Could the defendant have reasonably anticipated being required to
litigate in the forum state? The fact that the other party was a resident of
the forum state, the fact that a stream of payments went into the forum
state, and the fact that the forum state's law was to be used in the
contract, are all non-dispositive, but important, factors tending towards
the conclusion that the out-of-stater had minimum contacts with the forum
state. [40]
I. Class action plaintiffs: An
"absent" plaintiff in a class action that takes place in the forum
state may be bound by the decision in the case, even if that plaintiff did not
have minimum contacts with the forum state. [Phillips Petroleum Co. v.
Shutts] [40 -
42]
J. Libel and slander
cases: The First Amendment imposes certain limits on the
substantive libel and slander laws of the states (e.g., that no "public
figure" may recover without a showing of "actual malice"). But
this special first amendment protection does not affect the personal
jurisdiction requirements for libel and slander suits - no more extensive
contacts between D and the forum state must be shown in defamation suits than
in any other type of case. [Calder v. Jones] [42]
IV. FEDERAL JURISDICTION OVER THE
PARTIES
A. General principles: To determine
whether a federal court has personal jurisdiction over the defendant, you must
check three things: [45]
1. General rule: As a general rule,
in both diversity actions and federal question cases, service of process may
be made only: (1) within the territorial limits of the state in which the
District Court sits; or (2) anywhere else permitted by the state law of the
state where the District Court sits. FRCP 4(k)(1)(A). [45]
Example (within the
territorial limits of state): P sues D in a federal action in the Northern
District of Ohio. Whether the suit is based on diversity or federal
question, service will be territorially valid if D is served with process
anywhere within the state of Ohio, since this is the state where the
district court sits. This is true even if service is physically made in the
Southern District of Ohio.
Example (out-of-state service based
on state law): Under the New Jersey long-arm statute, if a non-resident is
involved in a motor vehicle accident inside New Jersey with a New Jersey
resident, the New Jersey resident may serve the non-resident outside New
Jersey, and the New Jersey courts may then exercise personal jurisdiction.
P, a New Jersey resident, and D, a California resident, have an accident in
New Jersey. P may sue D in diversity in federal District Court for New
Jersey; P may serve D with process in California, because the long-arm of
the state where the district court sits (New Jersey) would allow such
service. FRCP 4(k)(1)(A).
2. 100-mile bulge:
A special 100-mile bulge provision (FRCP 4(k)(1)(B)) allows for out-of-state
service sometimes, even if local law does not permit it. When the provision
applies, it allows service anywhere (even across a state boundary) within a
100-mile radius of the federal courthouse where suit is pending. The bulge
provision applies only where out-of-staters will be brought in as additional
parties to an already pending action. There are two types of parties against
whom it can be used: [47 - 48]
Example: P sues D
in a New Jersey federal district court diversity action. D claims that if
D is liable to P, X is liable to D as an indemnitor. The suit is pending
in Newark, less than 100 miles from New York City. D may serve X in New
York City, even if no New Jersey long-arm statute would allow the suit.
b. Indispensable
parties: So-called "indispensable parties" - that is, persons
who are needed in the action for just adjudication, and whose joinder will
not involve subject matter jurisdiction problems - may also be served if
they are within the bulge.
Example: P sues D
for copyright infringement in federal district court for the Eastern
District of Kentucky, located in Lexington. D files a counterclaim against
P. D wants to join X as a co-defendant to this counterclaim, arguing that
P and X conspired to violate D's copyrights. X resides in Cincinnati,
Ohio, located 78 miles from Lexington. If the court agrees that X is
required for just adjudication of D's counterclaim, service on X in
Cincinnati is valid, even if the Kentucky long-arm would not allow service
there.
3. Nationwide service of process:
In several kinds of cases, Congress has provided for nationwide service of
process. Suits against federal officials and agencies, and suits based on
statutory interpleader, are examples of nationwide service. [47]
Example: D, a
French company, without setting foot in the U.S., solicits business by phone
and mail from residents of a large number of states. D does not solicit
enough from the residents of any one state to satisfy that state's long-arm.
Therefore, D could not be sued in any state court for a claim concerning its
activities. P, a New York investor, brings a suit based upon the federal
securities laws against D in the federal district court for the Southern
District of New York. Assuming that D can be said to have had minimum
contacts with the United States as a whole, the New York federal court will
have personal jurisdiction over D for this federal-question claim, because D
is not subject to the jurisdiction of the courts of any state. FRCP 4(k)(2).
5. Gaps possible: A
defendant who is not located in the state where the district court sits may
not be served if he does not fall within one of the four special cases
described above (servable pursuant to state long-arm, 100-mile bulge,
nationwide service or foreign defendant not servable in any state), even if
he has the constitutionally-required minimum contacts with the forum. This
is true whether the case is based on diversity or federal question. [49]
Example: P, a
Connecticut resident, wants to bring a federal diversity suit in Connecticut
against D, a New Yorker. The suit involves an accident that occurred in New
York. D owns a second home in Connecticut, as well as lots of other real
estate there. Assume that this ownership gives him not only minimum contacts
but "systematic and continuous" contacts with Connecticut.
However, Connecticut has a very narrow long-arm, which would not allow
service on D in New York for a Connecticut state action.
C. Manner of service: Once you
determine that the party to be served lies within the territory described
above, you must determine if the service was carried out in the correct
manner.
d. Local state law: By serving D
in the manner provided by either: (1) the law of the state where the
district court sits, if that state has such a provision, or (2) the law of
the state where the person is being served. (Example: P brings an action
against D, a resident of California, in New Jersey federal court, and
wishes to serve him by certified mail. Service will be possible if either
the courts of New Jersey or California allow certified-mail service.)
2. Corporation: Service on a
corporation may be made by leaving the papers with an officer, a managing or
general agent, or any other agent authorized by appointment or by law to
receive process for the corporation. FRCP 4(h)(1).
a. Local state law: As with
individuals, service on a corporation may also be made in the manner
provided by the local law of (i) the state where the action is pending or
(ii) the state where the service is made. FRCP 4(h)(1), first sentence.
3. Waiver of service: Rule 4(d) allows plaintiff to in
effect serve the summons and complaint by mail, provided that the defendant
cooperates. P mails to D a "request for waiver of service"; if D
agrees, no actual in-person service is needed.
a. Incentives: D is free to
refuse to grant the waiver, in which case P must serve the summons by the
in-person methods described above. But, if D refuses the waiver, the court
will impose the costs subsequently incurred by P in effecting service on D
unless "good cause" is shown for D's refusal. (FRCP 4(d)(2), last sentence.)
D. Amenability to suit: If D was
served in an appropriate territory, and in an appropriate manner, you still
have to determine whether D is closely-enough linked to the state where the
federal district court sits to make him "amenable to suit" in that
court. [52 - 54]
1. Federal question: In federal
question cases, most courts hold that D is amenable to suit in their court
if jurisdiction could constitutionally be exercised over him in the state
courts of the state where the federal court is sitting, even if the state
court itself would not (because of a limited long-arm) have jurisdiction.
[52]
Example: P sues D for copyright
infringement. The suit is brought in the Northern District of Ohio. D's only
contact with Ohio is that he sold 100 copies of the allegedly infringing
book in Ohio. The state courts of Ohio, although they could constitutionally
take personal jurisdiction over D in a similar state-created claim - libel,
for instance - would not do so because the Ohio long-arm is very limited and
would not cover any action growing out of these facts. However, the federal
district court will hear the federal question copyright claim against D,
because P has minimum contacts with the state where the federal court sits.
a. Foreign defendants: In
general, if the defendant is a foreign corporation or resident, most
federal courts will exercise jurisdiction over the defendant only if that
defendant has minimum contacts with the state where the federal court
sits, not merely minimum contacts with the United States as a whole.
(Again, as with an out-of-state but not foreign defendant, the federal
court will hear the federal question claim even though the state courts
might not exercise jurisdiction over the defendant due to a limited state
long-arm.)
i. Narrow exception: If a
foreign defendant could not be sued in any state, he may be sued on a
federal-question claim in any federal judicial district, assuming that
he has minimum contacts with the U.S. as a whole. (FRCP 4(k)(2).) But assuming that the
foreign defendant could be sued in at least some state court, the
general rule described in the prior paragraph (D must have minimum
contacts with the state where the federal court sits, not just with the
U.S. as a whole) continues to apply.
2. Diversity: In diversity cases,
the federal courts exercise only the jurisdiction that is allowed by the
statutory law of the state in which they sit. So if the state statutory law
does not go to the limits of due process, the federal court will follow
suit. [54]
V. JURISDICTION OVER THINGS
A. Two types of actions: There are
two types of actions that relate primarily to "things" rather than
to people: (1) in rem actions; and (2) quasi in rem actions. [57 - 68]
1. In rem actions: In rem actions
are ones which do not seek to impose personal liability on anyone, but
instead seek to affect the interests of persons in a specific thing (or
res). (Examples: Probate court actions; admiralty actions concerning title
to a ship; actions to quiet title to real estate or to foreclose a lien upon
it; actions for divorce.)
a. No personal liability: In all
of these types of in rem actions, no judgment imposing personal liability
on anyone results - all that happens is that the status of a thing is
adjudicated. (Example: In a quiet title action, a determination is reached
that A, rather than B, is the owner of Blackacre).
2. Quasi in rem actions: Quasi in
rem actions are actions that would have been in personam if jurisdiction
over D's person had been attainable. Instead, property or intangibles are
seized not as the object of the litigation, but merely as a means of
satisfying a possible judgment against D.
1. Specific performance of land
sale contract: One important type of in rem action is an action for specific
performance of a contract to convey land. Even if the defendant is out of
state and has no connection with the forum state other than having entered
into a contract to convey in-state land, the forum state may hear the
action. D does not have to have minimum contacts with the forum state for
the action to proceed - it is enough that the contract involved in-state
land, and that D has received reasonable notice. [58]
2. Effect of Shaffer: The landmark
case of Shaffer v. Heitner, discussed below, has almost no effect on in
rem suits. Shaffer holds that there must be minimum contacts before a quasi
in rem action may proceed; but no minimum contacts are needed for the court
to adjudicate the status of property or some other thing located in the
state, even though it affects the rights of an out-of-state defendant. [59]
1. Definition: As noted, a quasi in
rem action is one that would have been in personam if jurisdiction over D's
person had been attainable. Instead, property or intangibles are seized not
as the object of the litigation, but merely as a means of satisfying a
possible judgment against D. [59]
Example: P wants to sue D on a
contract claim in California state court. The contract has no connection
with California, nor does D himself have sufficient contacts with California
to allow that state to exercise personal jurisdiction over him. D does,
however, own a bank account in California. Putting aside constitutional due
process problems, P could attach that bank account as a basis of
jurisdiction, and bring a quasi in rem action on the contract claim. If P
wins, he will be able to collect only the value of the bank account, and D
will not be personally liable for the remainder if the damages exceed the
value of the account.
2. No res judicata value: Quasi in
rem judgments have no res judicata value. (Example: If P wins against D in a
quasi in rem action in Connecticut, he cannot in a later suit against D in
California claim that the matter has been decided for all time. Instead, he
must go through another trial on the merits if he wishes to subject D to
further liability.) [60]
a. Possible exception: Some
courts hold that if D makes a limited appearance (an appearance that does
not confer personal jurisdiction over him) and fully litigates certain
issues, he will not be allowed to re-litigate those issues in a subsequent
trial. But other courts hold that even here, the first suit will not
prevent D from re-litigating the same issues later on.
Example: P brings a
shareholder's derivative suit in Delaware on behalf of XYZ Corp. against 28
of XYZ's non-resident directors and officers. None of the activities
complained of took place in Delaware, nor did any D have any other contact
with Delaware. P takes advantage of a Delaware statute providing that any
stock in a Delaware corporation is deemed to be present in Delaware,
allowing that stock to be attached to provide quasi in rem jurisdiction
against its owner. Thus P is able to tie up each D's XYZ stockholdings even
though there is no other connection with Delaware.
Held, this use of
quasi in rem jurisdiction violates constitutional due process. No D may be
subjected to quasi in rem jurisdiction unless he has minimum contacts with
the forum state. Here, neither the Ds' actions nor the fact that those
actions related to a Delaware corporation were sufficient to create minimum
contacts, so the exercise of jurisdiction was improper. [Shaffer v. Heitner]
4. Jurisdiction
based on debt, insurance or other obligation: Shaffer basically abolishes the
utility of quasi in rem jurisdiction - since quasi in rem is only used where
there is no personal jurisdiction, and since the same minimum contacts
needed for quasi in rem will suffice for personal jurisdiction, quasi in rem
will rarely be advantageous. (The one exception is where minimum contacts
are present, but the state long-arm for personal jurisdiction is too narrow
to reach the defendant, yet a state attachment statute applies.) One big
practical effect is that attachment of a third party's debt to the
defendant, or attachment of an insurance company's obligation to defend and
pay a claim, are largely wiped out as bases for jurisdiction. [61 - 62]
Example 1: Harris,
of North Carolina, owes $180 to Balk, of North Carolina. Epstein, of
Maryland, has a claim against Balk for $300. While Harris is visiting in
Maryland, Epstein attaches Harris' debt to Balk by serving Harris with
process in a Maryland suit. Under pre-Shaffer law, this established quasi
in rem jurisdiction over the $180 debt, on the theory that the debt goes
wherever the debtor goes. If Epstein won, he could require Harris to pay the
$180 to him rather than to Balk. [Harris v. Balk] [61]
But after Shaffer, the fact that Balk's
debtor happened to be in North Carolina and available for personal service
was irrelevant. Since Balk himself did not minimum contacts with Maryland,
and thus could not be sued there personally, Shaffer means that a quasi in
rem suit based on Harris' debt to him may also not be heard in Maryland.
Example 2: Same
facts as above, except assume that instead of Harris' being sued, Insurance
Co., which had an obligation to defend Balk and pay judgments issued against
Balk, was served in Maryland. Pre-Shaffer, this would have been
enough for quasi in rem jurisdiction over Balk. [61]
But because of Shaffer, the fact that Insurer had
minimum contacts with Maryland would be irrelevant - an insurance company's
obligation to defend the debtor in the forum state and to pay claims arising
out of suits in the forum state is not enough to subject the insured to a
quasi in rem suit in the forum state.
1. Definition: Some states allow a
"limited appearance." Under a limited appearance, D appears in an
in rem or quasi in rem suit, contests the case on its merits, but is
subjected to liability only to the extent of the property attached or debt
garnished by the court.
a. Distinguished from special
appearance: Distinguish limited appearances from special appearances - in
the latter, a defendant against whom personal jurisdiction is asserted is
allowed to argue the invalidity of that jurisdiction without having this
argument, or his presence in the court, itself constitute a submission to
the court's jurisdiction.
1. General rule: Quasi in rem
jurisdiction is allowed in a federal court if: (1) the law of the state in
which the federal court sits permits such quasi in rem jurisdiction, and (2)
P cannot obtain personal jurisdiction over D in the state through reasonable
efforts. Rule 4(n). (Examples of conditions
satisfying (2): D is a fugitive, or the local long-arm is too weak to reach
D even though he has minimum contacts with the state where the district
court sits.)
2. Amount in
controversy: In a federal quasi in rem case, courts are split as to whether
it is the value of the attached property, or the amount claimed, which
should control for the $75,000 amount in controversy requirement.
VI. NOTICE AND OPPORTUNITY TO BE HEARD
A. Notice generally: Even if the
court has authority to judge the dispute between the parties or over the
property before it (covered in the above sections), the court may not proceed
unless D received adequate notice of the case against him. [69 - 78]
1. Reasonableness test: In order
for D to have received adequate notice, it is not necessary that he actually
have learned of the suit. Rather, the procedures used to alert him must have
been reasonably likely to inform him, even if they actually failed to do so.
[70]
Example: P's process server leaves
the summons and complaint at D's house, with D's wife. D's wife throws it in
the garbage, and D never learns of it. D has received adequate notice, so
the court can exercise jurisdiction over him. Conversely, if P's process
server had left the papers on the sidewalk outside the house, and D had
happened to pick them up, this would not be adequate notice to D - the
procedures used were not reasonably likely to give D notice, and they are
not saved by the fact that D in fact learned of the suit.
2. Substitute service: Personal
service - handing the papers to D himself - will always suffice as adequate
notice. But all states, and the federal system, also allow "substitute
service" in most instances. Substitute service means "some form of
service other than directly handing the papers to the defendant." [71]
a. Leave at dwelling: The most
common substitute service provision allows the process papers to be left
at D's dwelling within the state, if D is not at home. These provisions
usually require the papers to be left with an adult who is reasonably
likely to give them to D. (Example: FRCP 4(e)(2) allows the papers to be
left with a person of "suitable age and discretion residing in the
dwelling place in question.")
b. Mail: Some
states, and the federal system, allow service to be made by ordinary first
class mail. However, usually this method is allowable only if D returns an
acknowledgement or waiver form to P's lawyer. If D does not return the
form, some other method of service must then be used. See FRCP 4(e)(1).
3. Service on out-of-staters: Where
D is not present in the forum state, he must somehow be served out of state.
Remember that in a state court suit, this can only be done if the state has
a long-arm statute covering the type of case and defendant in question. Once
the long-arm covers the situation, the out-of-state defendant must still be
given some sort of notice. [72]
b. Public official: Sometimes,
service may be made by serving a state official, plus giving notice by
mail to D. (Example: Many non-resident motorist statutes allow P to serve
the state Director of Motor Vehicles with a matching mailing to the
out-of-state defendant.)
a. Corporate officer: Many states
require that a corporation, if it wishes to be incorporated in the state
or to do business in the state, must designate a corporate official to
receive process for suits against the company. Service on this designated
official is, of course, deemed to be adequate notice.
b. Federal Rule: The Federal
Rules, and the rules of many states, are more liberal, in that they allow
service on any person associated with the corporation who is of
sufficiently high placement. Thus FRCP 4(h)(1) provides that service on
a corporation may be made by giving the papers to "an officer, a
managing or general agent, or to any other agent authorized by appointment
or by law to receive service of process."
1. Mail notice to all the
identifiable parties: For instance, if a party's name and address are
"reasonably ascertainable," publication notice will not be
sufficient, and instead notice by mail (or other means equally likely to
ensure actual notice) must be used. [Mennonite Board of Missions
v. Adams]
[74]
C. Opportunity to be heard: D must
not only be notified of the suit against him, but must also be given an
opportunity to be heard. That is, before his property may be taken, he must be
given a chance to defend against the claim. This "opportunity to be
heard" must be given to D not only when his property will be taken
forever, but even before there is any significant interference with his
property rights.
1. Pre-judgment remedy:
Opportunity-to-be-heard questions arise most frequently in the context of
pre-judgment remedies, which protect plaintiff against the defendant's
hiding or squandering his assets during litigation. Two common forms of
pre-judgment remedies are the attachment of D's bank account and the placing
of a lis pendens against her real estate.
Example: A state
statute allows P to get a prejudgment attachment of D's real estate
without D's having a hearing first, so long as P "verifies by
oath" that there is probable cause to sustain his claim. Factor 1
above (the strength of D's interest) works against allowing attachment,
since an attachment clouds D's title and affects his credit rating. Factor
2 (risk of erroneous deprivation) also supports not allowing the
attachment, since the judge can't accurately determine the likely outcome
of the litigation based solely on P's one-sided conclusory statements in
the oath. Factor 3 (strength of P's interest) also works against the
attachment, since P is not required to show D is dissipating his assets.
Consequently, the grant of a prejudgment attachment of D's property
violates his due process rights. [Connecticut v. Doehr]
VII. DEFENSES TO CLAIMS OF JURISDICTION
A. Special appearance: In a
"special appearance," D appears in the action with the express
purpose of making a jurisdictional objection. By making a special appearance,
D has not consented to the exercise of jurisdiction. [80]
2. Federal substitute for special
appearance: The federal courts (and the many state courts with rules
patterned after the Federal Rules) have abolished the special appearance.
Instead, D makes a motion to dismiss for lack of jurisdiction over the
parties; making this motion does not subject D to the jurisdiction that he
is protesting. FRCP 12(b)(2). [80]
a. Waiver: The right to make a
motion to dismiss for lack of personal jurisdiction is waived in the
federal system if: (1) D makes a motion raising any of the defenses listed
in Rule 12, and the personal
jurisdiction defense is not included; or (2) D neither makes a Rule 12
motion nor raises the defense in his answer.
1. General enforcement of
judgments: A judgment entered in one jurisdiction may generally be enforced
in another. That is, if State 1 enters a judgment against D, D's property in
State 2 (or wages owed him in State 2) may be seized to satisfy the earlier
State 1 judgment. [81]
2. Collateral attack on default
judgment: If D defaults in an action in State 1, she may collaterally attack
the default judgment when it is sued upon in State 2. Most commonly, D
collaterally attacks the earlier judgment on the grounds that State 1 did
not have personal jurisdiction over her, or did not have valid subject
matter jurisdiction. [82 - 83]
Example: D has no contacts with
Iowa. P, an Iowa resident, sues D in Iowa court. D never appears in the
action, and a default judgment is entered against him for $100,000. P then
brings a suit in D's home state of New Jersey to enforce the earlier Iowa
judgment. D will be permitted to collaterally attack the Iowa judgment, by
arguing that Iowa lacked personal jurisdiction over him. The New Jersey
court will undoubtedly agree with D that, because D did not have minimum
contacts with Iowa, Iowa could not constitutionally take jurisdiction over
him. Therefore, the New Jersey court will decline to enforce the Iowa
judgment.
3. Waiver by D: A defendant who
appeared in the original action without objecting to jurisdiction, or one
who unsuccessfully litigated the jurisdictional issue in the first action,
may not collaterally attack the judgment. (Instead, a defendant who
unsuccessfully litigates jurisdiction in the first action must appeal to the
first state's system, rather than later making a collateral attack.) [82]
C. Defense of fraud or duress: A
court may constitutionally exercise jurisdiction over a defendant found within
the forum state, even if D's presence was the result of fraud or duress on the
part of the plaintiff. But the court may exercise its discretion not to
exercise jurisdiction. (Example: P entices D into the jurisdiction with a
false love letter and a false statement that she is leaving the country
forever and wants to see D once more. When D arrives at the airport in the
forum state, P serves him with papers. Held, the forum state will decline to
exercise its jurisdiction because of P's fraud. [Wyman v. Newhouse]) [83]
D. Immunity: Most
jurisdictions give to non-residents of the forum state an immunity from
service of process while they are in state to attend a trial. This is true
whether the person is a witness, a party, or an attorney. Most states also
grant the immunity for related proceedings such as depositions. [84 - 85]
VIII. VENUE
A. Definition: "Venue"
refers to the place within a sovereign jurisdiction in which a given action is
to be brought. It matters only if jurisdiction over the parties has been
established. (Example: State X is found to have jurisdiction over the person
of B, in a suit against him by A. Venue determines in which county or district
of State X the case should be tried.) [86]
B. State action: In state trials,
venue is determined by statute. The states are free to set up virtually any
venue rules they wish, without worrying about the federal constitution. [87]
1. Basis for: Most commonly, venue
is authorized based on the county or city where the defendant resides. Many
states also allow venue based on where the cause of action arose, where the
defendant does business, etc. [87]
2. Forum non conveniens: Under the
doctrine of forum non conveniens, the state may use its discretion not to
hear the case in a county where there is statutory venue. Sometimes, this
involves shifting the case to a different place within the state. At other
times, it involves the state not having the case take place in-state at all.
Usually, it is the defendant who moves to have the case dismissed or
transferred for forum non conveniens. [88 - 90]
a. Factors: Three factors that
state courts often consider in deciding whether to dismiss for forum non
conveniens are: (1) whether the plaintiff is a state resident (if so, he
has a stronger claim to be able to have his case heard in his home state);
(2) whether the witnesses and sources of proof are more available in a
different state or county; and (3) whether the forum's own state laws will
govern the action (transfer is more likely if a different state's law
controls).
C. Venue in federal actions: In
federal actions, the venue question is, "Which federal district court
shall try the action?" Venue is controlled by 28 U.S.C. §1391. [90 - 97]
1. Still need personal
jurisdiction: When you consider a venue problem, remember that venue is not
a substitute for personal jurisdiction: the fact that venue lies in a
particular judicial district does not automatically mean that suit can be
brought there. Suit can be brought only in a district that satisfies both
the venue requirements and the personal jurisdiction requirements as to all
defendants. [91]
2. Three methods: There are three
basic ways by which there might be venue in a particular judicial district:
(1) if any defendant resides in that district, and all defendants reside in
the state containing that district; (2) if a "substantial part of the
events … giving rise to the claim occurred, or a substantial part of
property that is the subject of the action is situated," in the
district; and (3) if at least one defendant is "reachable" in the
district, and no other district qualifies. Each of these is considered
below, as sections 3, 4 and 5. [91]
3.
"Defendant's residence" venue: For both diversity and federal
question cases, venue lies in any district where any defendant resides, so
long as, if there is more than one defendant, all the defendants reside in
the state containing that district. [92]
Example: P, from
Massachusetts, brings a diversity suit against D1, from the Southern
District of New York, and D2, from the Eastern District of New York. Venue
will lie in either the Southern District of New York or the Eastern District
of New York - each of these is home to at least one defendant, and each of
these two districts is in a state that is home to all the defendants. But if
D2 had been a resident of the District of Connecticut instead of any New
York district, there would not be any "defendant's residence"
venue anywhere.
4. "Place of
events or property" venue: For both diversity and federal question
cases, venue lies in any district "in which a substantial part of the
events or omissions giving rise to the claim occurred, or a substantial part
of property that is the subject of the action is situated…." This is
"place of events" venue. [92]
a. Multiple districts: There can
be multiple districts qualifying for "place of events" venue, as
long as each district was the locus for a "substantial part" of
the events relating to the claim. (Example: P, from Massachusetts, sues D,
a car dealer from Connecticut. P alleges that D sold P a car in
Connecticut, that P drove the car to Massachusetts, and that a defect in
the car caused P to be injured in Massachusetts. Probably venue in either
the District of Massachusetts or the District of Connecticut would be
allowed under the "place of events" provision, since probably
both the selling of the defective car and the incurring of the accident
were a "substantial part" of the events.)
5. "Escape hatch"
provision: Finally, for both diversity and federal question cases, there is
an "escape hatch," by which venue may be founded in a district
with which some or all defendants have close ties, if there is no district
in which the action may otherwise be brought. This escape hatch is used
mainly for cases in which nearly all the events occurred abroad. [93 - 95]
a. Diversity: In a case founded
solely on diversity, the escape hatch gives venue in any judicial district
"in which any defendant is subject to personal jurisdiction at the
time the action is commenced, if there is no district in which the action
may otherwise be brought." §1391(a)(3).
Example: P, from
Massachusetts, brings a diversity suit against D1, who resides in the
Southern District of New York, and D2, who lives in the District of
Connecticut. P's suit is brought in the Southern District of New York. The
suit relates solely to matters which occurred in Mexico.
The escape hatch
applies - even though there is no "defendant's residence" venue
or "place of events" venue in S.D.N.Y., the escape hatch works
because at least one defendant (D1) is subject to personal jurisdiction in
S.D.N.Y. by virtue of his residence there. The escape hatch works only
because there's no other district where the suit could have been brought -
there's no "defendants' residence" venue since there's no single
state in which all defendants reside, and there's no "place of
events" venue since everything happened in Mexico. (Also, remember
that there still has to be personal jurisdiction over each defendant. So
D2 will have to have minimum contacts with New York, and be reachable
under the New York long-arm.)
b. Federal
question cases: In federal question cases, the escape hatch provision
gives venue in any judicial district "in which any defendant may be
found, if there is no district in which the action may otherwise be
brought." §1391(b)(3). (Probably a defendant is
"found" in a district if he can be subject to personal
jurisdiction in that district, i.e., he has minimum contacts with that
district. So there's probably no real difference between the escape hatch
for federal question cases and the one for diversity cases.)
7. Corporation: The residence of a
corporation for venue purposes matters only if the corporation is a
defendant. A corporation is deemed to be a resident of any district as to
which the corporation would have the "minimum contacts" necessary
to support personal jurisdiction if that district were a separate state.
Thus a corporation is a resident of at least the district where it has its
principal place of business, any district where it has substantial
operations, and probably any district in its state of incorporation. But
merely because a corporation does business somewhere in the state, this does
not make it a resident of all districts of that state. [95]
Example: XYZ Corp. is incorporated
in Delaware, and has its only office in San Francisco. XYZ has no contacts
with any part of California other than San Francisco. If XYZ is a defendant,
it will reside, for venue purposes, in the district of Delaware and in the
Northern District of California. XYZ is not a resident of any other
districts in California - thus "defendant's residence" venue would
not lie against XYZ, for instance, in a suit brought in the Central District
of California, located in Los Angeles.
9. Federal forum
non conveniens: In the federal system, when a defendant successfully moves
for forum non conveniens, the original court transfers the case to another district, rather than
dismissing it. Under 28 U.S.C. §1404(a), "for the convenience
of parties and witnesses … a district court may transfer any civil action
to any other district or division where it might have been brought."
[96 - 97]
a. Defendant's motion: Usually,
it is the defendant who moves for forum non conveniens. When this happens,
the case may be transferred only to a district where P would have had the
right, independent of the wishes of D, to bring the action. (Example: If
suit in a particular district would not have been possible, as an initial
matter, because one or more of the Ds could not be personally served
there, or because venue would not have been proper there, even the consent
by all Ds would not authorize the action to be transferred to that
district.)
b. Choice of law: When federal
forum non conveniens is granted, the state law of the transferor court is
to be applied by the transferee court. (Example: P brings a diversity
action against D in Mississippi federal court. That court grants D's
motion to have the case moved to Pennsylvania District Court. If, as is
likely, Mississippi federal court would have applied Mississippi state law
rather than Pennsylvania state law under Erie principles, the
Pennsylvania federal court must also apply Mississippi state law.) This is
true whether the forum non conveniens was sought by P or by D. [Ferens v. John Deere Co.] [97]
Chapter 3
SUBJECT MATTER JURISDICTION
I. GENERAL PRINCIPLES
A. Diversity vs. federal question: In
the federal courts, there are two basic kinds of controversies over which the
federal judiciary has subject matter jurisdiction: (1) suits between citizens
of different states (so-called diversity jurisdiction); and (2) suits
involving a "federal question." [100]
1. Other cases: Certain other kinds
of cases specified in the constitution also fall under the federal judicial
power. These are cases involving ambassadors, cases involving admiralty, and
cases in which the United States is a party. But except in these very
unusual cases, when you are considering a case that is brought in the
federal courts, you must ask: Does it fall within the diversity jurisdiction
or federal question jurisdiction? If it does not fall within either of
these, probably it cannot be heard by the federal courts.
B. Amount in controversy: In federal
suits based on diversity, an amount in excess of $75,000 must be in dispute.
This is the "amount in controversy" requirement. In federal question
cases, there is no amount in controversy requirement. [101]
C. Burden: The party seeking to
invoke the jurisdiction of a federal court must make an affirmative showing
that the case is within the court's subject matter jurisdiction. (Example: If
P wants to invoke diversity jurisdiction, in her pleading she must allege the
relevant facts about the citizenship of the parties.) [101]
D. Dismissal at any time: No matter
when a deficiency in the subject matter jurisdiction of a federal court is
noticed, the suit must be stopped, and dismissed for lack of jurisdiction. See
FRCP 12(h)(3), requiring the court to
dismiss the action at any time if it appears that the court lacks subject
matter jurisdiction. [101 - 102]
Example: A case
brought under federal question jurisdiction goes through trial and through one
level of appeals, and is then heard by the Supreme Court. The Supreme Court
decides that there was no federal question in the first place. Held, the
entire case must be dismissed for lack of federal subject matter jurisdiction.
[Louisville & National RR
v. Mottley]
II. DIVERSITY JURISDICTION
A. Definition: The Constitution gives
the federal courts jurisdiction over "controversies ... between the
citizens of different states...." This is the grant of "diversity
jurisdiction." [103 - 110]
Example: P, a citizen of California,
wants to sue D, a citizen of Oregon, for hitting P with D's car. Assuming that
P's damages exceed $75,000, P can bring her negligence suit against D in
federal court, because it is between citizens of different states.
2. Domicile: What controls for
citizenship is domicile, not residence. A person's domicile is where she has
her true, fixed and permanent home. (Example: P has his main home in New
York, but has an expensive second home in Florida. D has her only home in
Florida. P can bring a diversity action against D, because P is deemed a
citizen only of New York, not Florida, even though P has a
"residence" in Florida.) [105]
b. Presence of foreigner: In a
suit between citizens of different states, the fact that a foreign citizen
(or foreign country) is a party does not destroy diversity. (Example: P, a
citizen of Ohio, sues D1, a citizen of Michigan, and D2, a citizen of
Canada. Diversity jurisdiction exists.) (In situations where one side
consists solely of foreign citizens or foreign countries,
"alienage" jurisdiction applies. See below.)
Example: P, a citizen of New York,
brings a suit against D1, a citizen of New York, and D2, a citizen of New
Jersey. We ask, "Is there any plaintiff who is a citizen of the same
state as any defendant?" Since the answer is "yes," the
requirement of complete diversity is not satisfied, and there is no
diversity jurisdiction.
4. Pleading not dispositive: In
order to determine whether diversity exists, the pleadings do not settle the
question of who are adverse parties. Instead, the court looks beyond the
pleadings, and arranges the parties according to their real interests in the
litigation. [104]
a. Nominal parties ignored: In
determining the existence of diversity, nominal or purely formal parties
are ignored. (Example: Where a guardian of an infant sues, the guardian is
deemed to be a citizen only of the same state as the infant. See 28 U.S.C. §1332(c)(2).) [104 - 105]
B. Alienage jurisdiction: Related to
diversity jurisdiction, but analytically distinct, is "alienage"
jurisdiction. Alienage jurisdiction exists where there is a suit between
citizens of a state, on one side, and foreign states or citizens thereof, on
the other. (Example: P, a citizen of Mexico, sues D, a citizen of Illinois.
Even if there is no federal question issue, there will be federal subject
matter jurisdiction of the "alienage" variety, assuming that the
amount in controversy requirement is satisfied.) [106 - 107]
1. Suit between two foreign
citizens: But a suit solely between citizens of two foreign countries does
not fall within the alienage jurisdiction. (Example: If P, a citizen of
Canada, sues D, a citizen of Mexico, there is no alienage jurisdiction.)
C. Diversity involving corporations:
For diversity purposes, a corporation is deemed a citizen of any state where
it is incorporated and of the state where it has its principal place of
business. In other words, for diversity to exist, no adversary of the
corporation may be a citizen of the state in which the corporation is
incorporated, or of the state in which it has its principal place of business.
(Example: XYZ Corp., a corporation which is incorporated in Delaware, has its
principal place of business in New York. In order for there to be diversity,
no adverse party may be a citizen of either Delaware or New York.) [107]
a. Home office: Some courts hold
that the corporation's principal place of business is ordinarily the state
in which its corporate headquarters, or "home office," is
located. This is sometimes called the "nerve center" test.
D. Devices to create or destroy
diversity: The federal courts will not take jurisdiction of a suit in which
any party has been "improperly or collusively joined" to obtain
jurisdiction. 28 U.S.C. §1359. [108 - 110]
1. Assignment: This means that a
claimant may not assign her claim in order to create diversity. (Example:
Alex and Dennis are both citizens of Florida. Alex wants to bring a
diversity action against Dennis. Alex assigns his claim to Barbara, a
Massachusetts citizen, with the understanding that Barbara will remit to
Alex 80% of any recovery. The court will not take diversity jurisdiction
over the Barbara-vs.-Dennis action, because Barbara's presence in the suit
was an improper or collusive joinder. [Kramer v. Caribbean Mills]) [108]
2. Devices to
defeat removal: A plaintiff suing in state court may sometimes seek to
defeat her adversary's potential right to remove to federal court. There is
no federal statute prohibiting "improper or collusive" joinder for
the purpose of defeating jurisdiction. However, as a matter of judge-made
law, courts will often disregard obvious removal-defeating tactics (e.g.,
joinder of a defendant who has nothing to do with the underlying dispute,
but who is a citizen of the same state as a plaintiff.) [108 - 110]
a. Low dollar claim: But the
state-court plaintiff is always free to make a claim for less than the
amount in controversy ($75,000), in order to defeat removal, even if P has
really suffered a loss greater than this amount. (But the
less-than-$75,000 amount must be named before D removes.)
III. FEDERAL QUESTION JURISDICTION
A. Generally: The Constitution gives
the federal courts authority to hear "federal question" cases. More
precisely, under 28 U.S.C. §1331, the federal courts have
jurisdiction over "all civil actions arising under the Constitution,
laws, or treaties of the United States." [112 - 113]
1. Federal claim: There is no
precise definition of a case "arising under" the Constitution or
laws of the United States. But in the vast majority of cases, the reason
there is a federal question is that federal law is the source of the
plaintiff's claim. (Examples: A claim of copyright infringement, trademark
infringement or patent infringement raises a federal question, because in
each of these situations, a federal statute - the federal copyright statute,
trademark statute or patent statute - is the source of the right the
plaintiff is asserting.) [112]
a. Interpretation of federal law:
It is not enough that P is asserting a state-created claim which requires
interpretation of federal law. (Example: P brings a state-court product
liability suit against D for injuries sustained by taking a drug made by
D. P claims that D violated the federal FDA statute by mislabeling the
drug, and that this mislabeling automatically constitutes common-law
negligence. D wants to remove to federal court, so it claims that the case
is within federal question jurisdiction, because its disposition requires
interpretation of a federal statute. Held, no federal question is raised,
because P's claim did not "arise under" federal law. [Merrell Dow
Pharmaceuticals, Inc. v. Thompson]) [112]
b. Claim based on
the merits: If P's claim clearly "arises" under federal law, it
qualifies for federal question jurisdiction even if the claim is invalid
on the merits. Here, the federal court must dismiss for failure to state a
claim upon which relief may be granted (FRCP 12(b)(6)), not for lack of subject
matter jurisdiction. [113]
c. Anticipation
of defense: The federal question must be integral to P's cause of action,
as revealed by P's complaint. It does not suffice for federal question
jurisdiction that P anticipates a defense based on a federal statute, or
even that D's answer does in fact raise a federal question. Thus the
federal question must be part of a "well pleaded complaint."
[113]
Example: P claims that D Railroad
has breached its agreement to give P free railroad passes. A
recently-passed federal statute prohibits the giving of such passes. In
P's complaint, he anticipates the railroad's federal statutory defense,
claiming that the statute violates the Fifth Amendment.
Held, since P's
claim was merely a breach of contract claim, and the federal statute was
not essential to that claim, there was no federal question - the fact that
federal law was an integral part of D's anticipated defense is irrelevant.
[Louisville & Nashville
RR v. Mottley]
IV. AMOUNT IN CONTROVERSY
A. Diversity only: In diversity
cases, but not in federal question cases, plaintiff must satisfy an
"amount in controversy" requirement. In all diversity cases, the
amount in controversy must exceed $75,000. [114]
B. Standard of proof: The party
seeking to invoke federal diversity jurisdiction does not have to prove that
the amount in controversy exceeds $75,000. All she has to show is that there
is some possibility that that much is in question. [115]
1. "Legal certainty"
test: To put it another way, the claim cannot be dismissed for failing to
meet the $75,000 requirement unless it appears to a legal certainty that the
claim is really for less than the jurisdictional amount. [St. Paul Mercury Indemnity
Co. v. Red Cab]
a. Discretion to deny costs: But
the federal court has discretion to deny costs to P, and even to impose
costs on him, if he recovers less than $75,000. 28 U.S.C. §1332(b).
C. Whose point of view followed: The
courts are split as to which party's point of view is to be considered in
calculating the amount at stake. Most courts hold that the controversy must be
worth $75,000 to the plaintiff in order to satisfy the jurisdictional amount.
[115]
D. Aggregation of claims: In
multi-plaintiff or multi-claim litigation, you must understand the rules
governing when aggregation of claims is permissible for meeting the
jurisdictional amount: [116 - 118]
1. Aggregation by single plaintiff:
If a single plaintiff has a claim in excess of $75,000, he may add to it any
other claim of his against the same defendant, even though these other
claims are for less than the jurisdictional amount. This is done by the
doctrine of supplemental jurisdiction. [116]
a. No claim exceeds $75,000: Even
if a plaintiff does not have any single claim worth more than $75,000, he
may add together all of his claims against a single defendant. So long as
these claims against a single defendant total more than $75,000, the
amount in controversy requirement is satisfied.
Example: P has two claims, each
for $40,000, against D1. P will be deemed to meet the amount in
controversy requirement as to these claims, because they aggregate more
than $75,000. But if P tries to bring D2 into the lawsuit, and has a
single claim worth $40,000 against D2, most courts will not allow this
claim, because P's total claims against D2 do not exceed $75,000, and the
doctrine of supplemental jurisdiction does not apply.
a. At least one plaintiff meets
amount: If one plaintiff meets the jurisdictional amount, it's not
completely clear whether the other plaintiffs may join their related
claims against that same defendant. The plaintiffs may probably use the
doctrine of "supplemental jurisdiction" so as to enable the
low-amount plaintiffs to join their claims together with the high-amount
plaintiff.
b. No single claim meets the
amount: If no single plaintiff has a claim or claims meeting the
jurisdictional amount, aggregation by multiple plaintiffs is not allowed.
(Exception: Where two or more plaintiff unite to enforce a single title or
right in which they have a common and undivided interest, aggregation is
allowed.)
c. Special restrictions for class
actions: In class actions, until recently there has been an especially
stringent, and clear, rule: every member of the class had to satisfy the
jurisdictional amount. This meant that class actions in diversity cases
were rarely possible. [Zahn v. International
Paper Co.]
[117] Some courts, however, have recently ruled that as long as the named
class representatives each have a claim in excess of $75,000, the
supplemental jurisdiction doctrine applies, so that the unnamed members
need not meet the jurisdictional amount. [Free v. Abbott Labs.] [117]
1. Suit initially brought in
federal court: If P sues in federal court for less than the jurisdictional
amount, and D counterclaims for an amount which (either by itself or added
to P's claim) exceeds the jurisdictional amount, probably the amount in
controversy requirement is not met.
2. Removal by defendant: If P
originally sues in state court for less than $75,000, and D tries to remove
to federal court, amount in controversy problems work out as follows:
a. Plaintiff removal: The
plaintiff may never remove, even if D counterclaims against him for more
than $75,000. (The removal statute simply does not apply to plaintiffs,
apart from amount-in-controversy problems.)
b. Defendant removal: If the
defendant counterclaims for more than $75,000, but plaintiff's original
claim was for less than $75,000, the result depends on the type of
counterclaim. If D's counterclaim was permissive (under state law), all
courts agree that D may not remove. If D's claim was compulsory under
state law, courts are split about whether D may remove.
V. SUPPLEMENTAL JURISDICTION
A. "Supplemental"
jurisdiction: Suppose new parties or new claims are sought to be added to a
basic controversy that by itself satisfies federal subject-matter
jurisdictional requirements. Under the doctrine of "supplemental"
jurisdiction, the new parties and new claims may not have to independently
satisfy subject-matter jurisdiction - they can in effect be "tacked
on" to the "core" controversy. See 28 U.S.C. §1367. [120 - 134]
2. Provision generally: Section 1367(a) says that "in any
civil action of which the district courts have original jurisdiction, the
district courts shall have supplemental jurisdiction over all other claims
that are so related to claims in the action within such original
jurisdiction that they form part of the same case or controversy under Article III of the United States
Constitution. Such supplemental jurisdiction shall include claims that
involve the joinder or intervention of additional parties." [124]
Example: P and D are both
citizens of New York. Both sell orange juice nationally. P sues D in
federal court for violation of the federal trademark statute, arguing that
D's brand name infringes a mark registered to P. P also asserts that D's
conduct violates a New York State "unfair competition" statute.
There is clearly no independent federal subject matter jurisdiction for
P's state law unfair competition claim against D - there is no diversity,
and there is no federal question. But by the doctrine of supplemental
jurisdiction, since the federal claim satisfies subject-matter
jurisdictional requirements, P can add the state law claim that is closely
related to it.
Example: P's husband and children
are killed when their small plane hits power lines near an airfield. P
sues D1 (the U.S.) in federal court, under the Federal Tort Claims Act,
for failing to provide adequate runway lights. Then, P amends her
complaint to include state-law tort claims against D2 and D3 (a city and a
private company) who maintain the power lines. There is no diversity of
citizenship between P and D2 and D3, and no federal-question claim against
them. But because P's state-law claim against D2 and D3 arises from the
same chain of events as P's federal claim against D1, P may bring D2 and
D3 into the suit under the supplemental jurisdiction concept, and the last
sentence of §1367(a). [This overrules Finley v. U.S.] [125]
ii. Rule 13(h) joinder of additional
parties to compulsory counterclaims. (Example: P, from New York, brings
a diversity suit against D, from New Jersey. The claim is for $80,000. D
counterclaims that in the same episode, D was injured not only by P but
also by Y; D's injuries total $1,000. Y is from New Jersey. D may bring
Y in as a Rule 13(h) additional defendant to D's compulsory counterclaim
against P, even though D and Y are both from New Jersey, and even though
D's claim does not total $75,000 - supplemental jurisdiction applies,
and obviates the need for D-Y diversity or for D to meet the amount in
controversy requirement.)
iii. Rule 13(g) cross-claims, i.e.,
claims by one defendant against another. (Example: P, from Ohio, brings
a diversity suit against D1 and D2, both from Kentucky. D1 brings a Rule
13(g) cross-claim against D2 - since it is a cross-claim, it necessarily
relates to the same subject matter as P's claim. Even though there is no
diversity as between D1 and D2, the cross-claim may be heard by the
federal court.)
iv. Rule 14 impleader of
third-party defendants, for claims by and against third-party
plaintiffs, and claims by third-party defendants, but not claims by the
original plaintiff against third-party defendants. (Example: P, from
California, sues D, a retailer from Arizona, claiming that a product D
sold P was defective and injured P. The suit is based solely on
diversity. D brings a Rule 14 impleader claim against X, the
manufacturer of the item, claiming that if D owes P, X must indemnify D.
X is a citizen of Arizona. Because D's suit against X falls within the
court's supplemental jurisdiction, the lack of diversity as between D
and X makes no difference. Supplemental jurisdiction would also cover
any claim by X against P. But any claim by P against X would not be
within the court's supplemental jurisdiction, so P and X must be diverse
and the claim must meet the amount in controversy requirement.)
i. Claims against third-party
defendants: Claims made by a plaintiff against a third-party defendant,
pursuant to Rule 14(a), are excluded.
(Example: P sues D, and D brings a third-party claim against X,
asserting that if D is liable to P, X is liable to D. P and X are
citizens of the same state. P does not get supplemental jurisdiction for
her claim against X, so the P-vs.-X claim must be dismissed. [Owen Equipment v. Kroger, codified in §1367(b).] )
ii. Compulsory
joinder: When a person is joined under Rule 19(a) as a person to be
"joined if feasible" ("compulsory joinder"), neither
a claim against such a person, nor a claim by that person, comes within
the supplemental jurisdiction in a diversity-only case.
iii. Rule 20 joinder: When a
plaintiff sues multiple defendants in the same action on common law and
facts (Rule 20 "permissive
joinder"), supplemental jurisdiction does not apply. (Example: P is
hit by D1's car, then negligently ministered to by D2. P is from New
York, D1 is from Connecticut, and D2 is from New Jersey. P's claim
against D2 is for $20,000. The federal court cannot hear the P-D2 claim,
because it does not meet the amount in controversy and does not fall
within supplemental jurisdiction.)
iv.
Intervention: Claims by prospective plaintiffs who try to intervene
under Rule 24 do not get the benefit
of supplemental jurisdiction. This is true whether the intervention is
permissive or of right. (Example: P1 sues D in diversity. P2, on her own
motion, moves for permission to intervene under Rule 24(b), because her
claim against D has a question of law or fact in common with P1's claim.
P1 is a citizen of Indiana, P2 of Illinois, and D of Illinois. Because
there is no supplemental jurisdiction over intervention, the fact that
P2 and D are citizens of the same state means that the court may not
hear P2's claim. The same result would occur even if P2's claim was so
closely related to the main action that P2 would otherwise be entitled
to "intervention of right" under Rule 24(a).)
c. Defensive posture required: If
you look at the situations where supplemental jurisdiction is allowed in
diversity-only cases, and those where it is not allowed, you will see that
basically, additional claims asserted by defendants fall within the
court's supplemental jurisdiction, but additional claims (or the addition
of new parties) by plaintiffs are generally not included. So expect
supplemental jurisdiction only in cases where the claimant who is trying
to benefit from it is in a "defensive posture." [125]
5. Discretion to reject exercise:
Merely because a claim is within the court's supplemental jurisdiction, this
does not mean that the court must hear that claim. Section 1367(c) gives four reasons for
which a court may decline to exercise supplemental jurisdiction that exists.
Most importantly, the court may abstain if it has already dismissed all
claims over which it has original jurisdiction. This discretion is
especially likely to be used where the case is in its early stages.
(Example: P sues D1 (the U.S.) under a federal statute, then adds state-law
claims against D2 and D3, as to which there is neither diversity nor federal
question jurisdiction. Soon after the pleadings are filed, the court
dismisses P's claim against D1 under FRCP 12(b)(6). Probably the court will
then exercise its discretion to decline to hear the supplemental claims
against D2 and D3.) [130]
6. No effect on
personal jurisdiction: The application of the supplemental jurisdiction
doctrine does not eliminate the requirement of jurisdiction over the
parties, nor does it eliminate the requirement of service of process. It
speaks solely to the question of subject matter jurisdiction. (But often in
the supplemental jurisdiction situation, service in the 100-mile bulge area
will be available.) [134]
a. Venue: Where supplemental
jurisdiction applies, probably venue requirements do not have to be
satisfied with respect to the new party. But usually, venue will not be a
problem anyway in these kinds of situations.
VI. REMOVAL TO THE FEDERAL COURTS
A. Removal generally: Generally, any
action brought in state court that the plaintiff could have brought in federal
court may be removed by the defendant to federal district court. [139]
Example: P, from New Jersey, sues D,
from New York, in New Jersey state court. The suit is a garden-variety
automobile negligence case. The amount at issue is $100,000. D may remove the
case to federal district court for the District of New Jersey.
Example: P, from New Jersey, brings
a negligence action against D, from New York, in the New York state court
system. D may not remove the case to federal court for New York, because he
is a citizen of the state (New York) in which the action is pending. (But if
P's suit was for trademark infringement - a kind of suit that raises a
federal question but may be brought in either state or federal court - D
would be able to remove, because the "not a citizen of the state where
the action is pending" requirement does not apply in suits raising a
federal question.)
2. Where suit goes: When a case is
removed, it passes to the federal district court for the district and
division embracing the place where the state cause of action is pending.
(Example: If a suit is brought in the branch of the California state court
system located in Sacramento, removal would be to the federal district court
in the Eastern District of California encompassing Sacramento.) [139]
B. Diversity and amount in
controversy rules applicable: In removal cases, the usual rules governing
existence of a federal question or of diversity, and those governing the
jurisdictional amount, apply. (Example: If there is no federal question,
diversity must be "complete.") [139]
C. No plaintiff removal: Only a
defendant may remove. A plaintiff defending a counterclaim may not remove.
(Example: P brings a suit for product liability against D. D counterclaims for
libel in an amount of $100,000. P is from Ohio; D is from Indiana. The suit is
pending in Michigan state court. Even though P is not a resident of the state
where the action is pending, P may not remove, because the right of removal is
limited to defendants.) [140]
D. Look only at plaintiff's
complaint: The right of removal is generally decided from the face of the
pleadings. The jurisdictional allegations of plaintiff's complaint control.
[140]
Example: P is badly injured in an
automobile accident caused by D's negligence. P's medical bills total $80,000,
but P sues only for $60,000, for the express purpose of thwarting D's right to
remove. The jurisdictional allegations of P's complaint control, so that D may
not remove even though more than $75,000 is "really" at stake.
E. Removal of multiple claims: Where
P asserts against D in state court two claims, one of which could be removed
if sued upon alone, and the other of which could not, complications arise.
[141 - 143]
2. Federal question case: Where the
claim for which there is original federal jurisdiction is a federal question
claim, and there is another, "separate and independent," claim for
which there is no original federal jurisdiction, D may remove the whole
case. 28 U.S.C. §1441(c). [142]
Example: P and D1
are both citizens of Kentucky. P brings an action in Kentucky state court
alleging federal antitrust violations by D1. P adds to that claim a claim
against D1 and D2, also from Kentucky, asserting that the two Ds have
violated Kentucky state unfair competition laws. Section 1441(c) will allow D1 and D2 to
remove to federal court, if the antitrust claim is "separate and
independent" from the state unfair competition claim.
a. Remand: If §1441(c) applies, and the entire
case is removed to federal court, the federal judge need not hear the
entire matter. The court may instead remand all matters in which state law
predominates.
i. Remand even the federal
claim: In fact, the federal court, after determining that removal is
proper, may remand all claims - even the properly-removed federal claim
- if state law predominates in the whole controversy.
F. Compulsory remand: If the federal
judge concludes that the removal did not satisfy the statutory requirements,
she must remand the case to the state court from which it came. (Example: If
in a diversity case it turns out that one or more of the Ds was a citizen of
the state in which the state suit was commenced, the federal judge must send
the case back to the state court where it began.) [143]
2. All defendants joined: All
defendants (except purely nominal ones) must join in the notice of removal.
(However, if removal occurs under §1441(c)'s "separate and
independent federal claim" provision, then only the defendant(s) to the
separate and independent federal claim needs to sign the notice of removal.)
Chapter 4
PLEADINGS
I. FEDERAL PLEADING GENERALLY
a. Reply: In two circumstances,
there will be a third document, called the reply. The reply is, in effect,
an "answer to the answer." A reply is allowable: (1) if the
answer contains a counterclaim (in which case a reply is required); and
(2) at plaintiff's option, if plaintiff obtains a court order allowing the
reply.
2. No verification generally:
Pleadings in a federal action normally need not be "verified,"
i.e., sworn to by the litigant. However, there are a couple of exceptions,
two of which are: (1) the complaint in a stockholders' derivative action
(see FRCP 23.1); and (2) when the
complaint is seeking a temporary restraining order (FRCP 65(b)). [151]
3. Attorney must
sign: The pleader's lawyer must sign the pleadings. This is true for both
the complaint and the answer. By signing, the lawyer indicates that to the
best of her belief, formed after reasonable inquiry, the pleading is not
interposed for any improper purpose (e.g., harassing or causing unnecessary
delays), the claims and defenses are warranted by existing law or a
nonfrivolous argument for changing existing law, and (in general) the
allegations or denials have evidentiary support. FRCP 11. [152]
a. Sanctions: If Rule 11 is violated (e.g., the
complaint, as the lawyer knows, is not well grounded in fact, or supported
by any plausible legal argument), the court must impose an appropriate
sanction on either the signing lawyer, the client, or both. The most
common sanction is the award of attorneys' fees to the other side.
4. Pleading in the alternative: The
pleader, whether plaintiff or defendant, may plead "in the
alternative." "A party may set forth two or more statements of a
claim or defense alternately or hypothetically." FRCP 8(e). (Example: In count 1, P
claims that work done for D was done under a valid written contract. In
count 2, P claims that if the contract was not valid, P rendered value to D
and can recover in quantum meruit for the value. Such alternative pleading
is allowed by Rule 8(e).) [157]
II. THE COMPLAINT
A. Complaint generally: The complaint
is the initial pleading in a lawsuit, and is filed by the plaintiff. [157]
1. Commences action: The filing of
the complaint is deemed to "commence" the action. The date of
filing of the complaint is what counts for statute of limitation purposes in
federal question suits (though in diversity suits, "commencement"
for statute-of-limitations purposes depends on how state law defines
commencement.)
c. Relief: A demand for judgment
for the relief (e.g., money damages, injunction, etc.) which the pleader
seeks.
B. Specificity: Plaintiff must make a
"short and plain statement" of the claim showing that she is
entitled to relief. The level of factual detail required is not high - gaps in
the facts are usually remedied through discovery. Plaintiff needs to state
only the facts, not the legal theory she is relying upon. [158]
C. Special matters: Certain
"special matters" must be pleaded with particularity if they are to
be raised at trial. [160]
2. Effect of failure to plead: The
pleader takes the full risk of failure to plead any special matter.
(Example: P brings a diversity claim for breach of contract against D. P has
suffered certain unusual consequential damages, but fails to plead these
special damages as required by FRCP 9(g). Even if P proves these
items at trial, P may not recover these damages, unless the court agrees to
specially permit this "variance" between proof and pleadings.)
[160]
III. MOTIONS AGAINST THE COMPLAINT
A. Defenses against validity of
complaint: Either in the answer, or by separate motion, defendant may attack
the validity of the complaint in a number of respects. Rule 12(b) lists the following such
defenses: [161]
B. 12(b)(6) motion to dismiss for
failure to state a claim: Defense (6) above is especially important: if D
believes that P's complaint does not state a legally sufficient claim, he can
make a Rule 12(b)(6) motion to dismiss for
"failure to state a claim upon which relief can be granted." The
motion asserts that on the facts as pleaded by P, no recovery is possible
under any legal theory. (Example: If P's complaint is barred by the statute of
limitations, D should move under 12(b)(6) for failure to state a valid
claim.) [161 - 163]
1. Different motion once D files
answer: A Rule 12(b)(6) motion to dismiss is
generally made before D files his answer. After D has filed an answer, and
the pleadings are complete, D can accomplish the same result by making a Rule 12(c) motion for "judgment
on the pleadings." [164]
C. Amendment: If the complaint is
dismissed in response to D's dismissal motion, P will almost always have the
opportunity to amend the complaint. [162]
1. Amendment as of right: If D
makes a motion against the complaint before filing his answer, and the court
grants the dismissal, P may automatically amend - Rule 15(a) allows amendment without
leave of court any time before a responsive pleading is served, and motions
made under 12(b) are not deemed to be
responsive pleadings.
2. Amendment by
leave of court: If D serves his answer before making the Rule 12(b) motion, and is then
successful with the motion, P may amend only by getting leave of court
(i.e., permission). But the court will almost always grant this permission
following a 12(b) dismissal.
D. Motion for more definite
statement: If the complaint is so "vague or ambiguous that [the
defendant] cannot reasonably be required to frame a responsive pleading,"
D may move for a more definite statement under Rule 12(e). [164]
E. Motion to strike:
If P has included "redundant, immaterial, impertinent or scandalous"
material in the complaint, D may move to have this material stricken from the
pleading. Rule 12(f). [164]
IV. THE ANSWER
A. The answer generally: The
defendant's response to the plaintiff's complaint is called an
"answer." In the answer, D states in short and plain terms his
defenses to each claim asserted, and admits or denies each count of
plaintiff's complaint. Rule 8(b). [168]
1. Alternative pleading: Defenses,
like claims, may be pleaded in the alternative. (Example: In a breach of
contract suit brought by P, D can in count 1 of his answer state that no
contract ever existed, and in count 2 state that if such a contract did
exist, it was breached by P, not D.)
B. Signed by defendant's attorney:
The answer must be signed by the defendant's lawyer. As with the complaint,
the attorney's signature constitutes a certificate that the signer has read
the pleading, believes it is well founded, and that it is not interposed for
delay. Rule 11. [169]
C. Denials: The
defendant may make various kinds of denials of the truth of plaintiff's
allegations. [168]
e. Denial based on information
and belief: D may deny "based on information and belief." By
this, D effectively says, "I don't know for sure, but I reasonably
believe that P's allegation is false." This kind of denial is often
used by large corporate defendants.
D. Affirmative defenses: There are
certain defenses which must be explicitly pleaded in the answer, if D is to
raise them at trial. These are so-called "affirmative defenses."
[169 - 170]
1. Listing: Rule 8(c) lists 19 specific
affirmative defenses, of which the most important are contributory
negligence, fraud, res judicata, statute of limitations, and illegality.
2. General
formulation: Also, Rule 8(c) contains a more general
requirement, by which D must plead affirmatively "any other matter
constituting an avoidance or affirmative defense." Any defense which
relies on facts particularly within the defendant's knowledge is likely to
be found to be an affirmative defense.
E. Counterclaim: In addition to
defenses, if D has a claim against P, he may (in all cases) and must (in some
cases) plead that claim as a counterclaim. If the counterclaim is one which D
is required to plead, it is called a compulsory counterclaim. If it is one
which D has the option of pleading or not, it is called a permissive
counterclaim. A counterclaim is compulsory if it "arises out of the
transaction or occurrence that is the subject matter of the [plaintiff's]
claim...." Rule 13(a). [170]
V. TIME FOR VARIOUS PLEADINGS
VI. AMENDMENT OF THE PLEADINGS
A. Liberal policy: The Federal Rules
are extremely liberal in allowing amendment of the pleadings. [171]
B. Amendment as of right: A pleading
may be amended once as a matter of right (i.e., without leave of court) as
follows: [171]
C. Amendment by leave of court: If
the above requirements for amendment of right are not met, the pleading may be
amended only by leave of court, or by consent of the other side. But leave by
the court to amend "shall be freely given when justice so requires."
(Rule 15(a).) Normally, the court will
deny leave to amend only if amendment would cause actual prejudice to the
other party. [171]
D. Relation back:
When a pleading has been amended, the amendment will relate back to the date
of the original pleading, if the claim or defenses asserted in the amended
pleading "arose out of the conduct, transaction or occurrence set forth
or attempted to be set forth in the original pleading." Rule 15(c). This "relation
back" doctrine is mainly useful in meeting statutes of limitations that
have run between filing of the original complaint and the amendment. [172 -
174]
Example: On Jan. 1, P
files a complaint against D for negligently manufacturing a product that has
injured P. The case is brought in diversity in Ohio federal district court. On
Feb. 1, the Ohio statute of limitations (which controls in a diversity case)
on both negligence and product liability claims arising out of this episode
runs. On March 1, P amends to add a count alleging strict products liability.
Because the products liability claim arises out of the same conduct or
transaction as set forth in the original negligence complaint, the amendment
will relate back to Jan. 1, and P will be deemed to have met the statute of
limitations for his products liability claim.
1. A single "conduct,
transaction or occurrence": Courts take a fairly narrow view of when
the amendment and the original pleading involve the same "conduct,
transaction or occurrence" (the requirement for relation-back). If
what's amended is simply P's claim or theory, the court will typically find
that the "same conduct" test is satisfied. But where the
underlying facts needed to sustain the new pleading are materially different
from those alleged in the original complaint, the court is likely to find
that the "same conduct" standard is not met. [173]
2. When action is deemed
"commenced": According to Rule 3, an action is deemed
"commenced" as of the date on which the complaint is filed. In
federal question cases, it is to this date that the amendment relates back.
In diversity cases, by contrast, it is the date that state law regards as
the date of commencement which controls. [172]
Example: In a
diversity case, assume that state law regards the date on which the
complaint is served, not the filing date, as being the commencement. In a
diversity action in that state, any relation back will be to the date the
complaint was served, not to the filing date.
3. Change of party:
Where an amendment to a pleading changes the party against whom the claim is
asserted, the amendment "relates back" only if three requirements
are met: (1) the amendment covers the "same transaction or
occurrence" as the original pleading (the same rules discussed above); (2) the party to be
brought in by amendment received actual notice of the action before the end
of the 120 days following original service; and (3) before the end of that
120-day service period, the new party knew or should have known that
"but for a mistake concerning the identity of the proper party, the
action would have been brought against the [new] party." Rule 15(c)(3). [174]
Example: P's
complaint names D1, and is filed just prior to the expiration of the statute
of limitations. Ten days after the running of the statute, P discovers that
the complaint really should have named D2. P amends the complaint to name
D2, and serves D2 60 days after the filing of the original complaint. The
amendment as to D2 relates back to the original, timely filing, because
within 120 days of the original filing, D2 received notice of the action and
learned that but for P's mistake about the proper party, the action would
have been brought against D2 rather than D1.
VII. VARIANCE OF PROOF FROM PLEADINGS
A. Federal practice: The Federal
Rules allow substantial deviation of the proof at trial from the pleadings, so
long as the variance does not seriously prejudice the other side. Rule 15(b). Unless omission of the issue
from the pleading was intentional, and was designed to lead the objecting
party into wasted preparation, the court will almost certainly allow amendment
at trial. [175]
Example: P brings a
diversity action for breach of contract against D. P's complaint does not
allege any special damages. At trial, P shows that P lost considerable
business and profits. D objects that special damages were not pleaded. Since D
probably cannot show the court that D has wasted preparation, the court will
almost certainly allow P to amend his pleadings to allege the special damages.
If necessary, the court will give D extra time to develop evidence to rebut
P's newly-claimed special damages.
Chapter 5
DISCOVERY AND PRETRIAL CONFERENCE
I. GENERAL PRINCIPLES
II. SCOPE OF DISCOVERY
A. Scope generally: Rule 26(b), which applies to all forms
of discovery, provides that the parties "may obtain discovery regarding
any matter, not privileged, that is relevant to the claim or defense of any
party." So the two principal requirements for discoverability of material
are that it is: (1) not privileged; and (2) relevant to some claim or defense
in the suit. [183 - 184]
B. Relevant but
inadmissible: To be discoverable, it is not required that the information
necessarily be admissible. For example, inadmissible material may be relevant,
and thus discoverable, if it: (1) is likely to serve as a lead to admissible
evidence; or (2) relates to the identity and whereabouts of any witness who is
thought to have discoverable information. [184]
1. Who may assert: Only the person
who could assert the privilege at trial may resist discovery on the grounds
of privilege. (Example: P sues D1 and D2 for conversion. At P's deposition
of D1, P asks D1 questions relating to the facts. D1 knows the answer and is
willing to respond, but D2's lawyer objects on the grounds that the
questions may violate D1's privilege against self-incrimination. D2's
objection is without substance, because only D1 - the person who could
assert the privilege at trial - may assert the privilege during discovery
proceedings.)
2. Determining existence of
privilege: Generally, in diversity cases, state law of privilege applies.
See Federal Rule of Evidence 501. (Example: P brings a
diversity action against D, asserting that D intentionally inflicted
emotional distress on him. D seeks to depose P's psychotherapist, to
determine the extent of P's anguish. The suit is brought in Ohio Federal
District Court. The privilege laws of the state of Ohio, not general federal
principles, are looked to to determine whether patient-psychotherapist
confidences are privileged.)
D. Trial preparation immunity:
Certain immunity from discovery is given to the materials prepared by counsel
for trial purposes, and to the opinions of experts that counsel has consulted
in trial preparation. This immunity is often referred to as
"work-product" immunity. [188 - 193]
a. "Representative"
defined: A party's "representatives" include his attorney,
consultant, insurance company, and anybody working for any of these people
(e.g., a private investigator hired by the attorney).
b. Hardship: The privilege is
"qualified" rather than "absolute." This means that
the other side might be able to get discovery of the materials, but only
by showing "substantial need of the materials in preparation of [the]
case" and an inability to obtain the equivalent materials
"without undue hardship." Rule 26(b)(3).
Example: A car
driven by D runs over P. D's insurance company interviews X, a non-party
witness to the accident. The insurer then prepares a transcript of the
statement. This transcript was prepared "in anticipation of
litigation," so it is protected by the qualified work-product
immunity. Therefore, P will be able to obtain discovery of it only if he
can show substantial need, and the inability without undue hardship to
obtain the substantial equivalent by other means. Since P could conduct
his own interview of the witness, the court will probably find that the
qualified immunity is not overcome.
2. Absolute immunity: In addition
to the qualified work-product immunity discussed above, there is also
"absolute" immunity. Rule 26(b)(3) provides that even where a
party has substantial need for materials (in other words, the showing for
qualified immunity has been made), the court "shall protect against
disclosure of the mental impressions, conclusions, opinions, or legal
theories of an attorney or other representative of a party concerning the
litigation." [191 - 193]
Example: Same facts
as above example. Now, D's lawyer reads X's statement, and writes a memo to
the file stating "X appears to be lying for the following three
reasons...." This lawyer memo, since it reflects the mental impressions
and conclusions of an attorney or other representative of a party, will
receive absolute immunity, and no showing by P will entitle him to get the
memo.
E. Statements by witnesses: A person
who makes a statement to a party or the party's lawyer may obtain a copy of
that statement without any special showing. Rule 26(b)(3). This is true whether the
person making the statement is a party or a non-party. [193 - 194]
Example: In an
accident suit, D's insurance company takes P's statement about the accident,
and transcribes it. D must give P a copy of P's statement, without any special
showing of need by P.
F. Names of
witnesses: The "identity and location of persons having knowledge of any
discoverable matter" (so-called "occurrence witnesses") are
discoverable. Rule 26(b)(1). This means, for instance,
that each party must upon request disclose to the other the identity and
whereabouts of any eyewitness to the events of the lawsuit. (Example: In an
accident case, D's lawyer and investigator locate all eight people who saw the
accident. D must on request furnish this list to P.) [194]
1. Some disclosure is automatic: If
a person has discoverable information that a party plans to use in its case,
then that party must automatically disclose the person's name and address
(even without a specific request from the adversary), early on in the
litigation. See Rule 26(a)(1)(A).
b. Report: Second, the party who
intends to call an expert at trial must have the expert prepare and sign a
report containing, among other things: (i) the expert's opinions, and the
basis for them; (ii) the data considered by the expert; (iii) any exhibits
to be used by the expert at trial; (iv) the expert's qualifications; (v)
her compensation, and (vi) the names of all other cases in which she
testified as an expert in the preceding 4 years.
2. Experts retained by counsel, but
not to be called at trial: Where an expert has been retained by a party, but
will not be called at trial, discovery concerning that expert (her identity,
knowledge and opinions) may be discovered only upon a showing of exceptional
circumstances making it impractical for the party seeking discovery to
obtain the information by other means. Rule 26(b)(4)(B). [196]
3. Unretained
experts not to be called at trial: Where an expert is consulted by a party,
but not retained, and not to be called at trial, there is virtually no way
the other side can discover the identity or opinions of that expert. [196]
4. Participant
experts: A participant expert - one who actually took part in the
transactions or occurrences that are part of the subject matter of the
lawsuit - is treated like an ordinary witness. (Example: P's estate sues to
compel D, an insurance company, to pay off on a policy covering P's life. D
claims that it was a suicide, based on the results of an autopsy conducted
by X, a pathologist. P may depose X, even though X is an expert - because X
participated in the events, he is treated like an ordinary witness for
purposes of discovery.) [197]
a. Expert is a party: Similarly,
a party who is herself an expert (e.g., a doctor who is a defendant in a
malpractice suit) is treated like an ordinary witness for discovery
purposes, not like an expert.
H. Insurance: A party may obtain
discovery of the existence and contents of any insurance agreement under which
any insurer will be liable to satisfy any judgment that may result. (Example:
P brings an automobile negligence suit against D in diversity. P may ask D, in
an interrogatory, whether D has insurance, and in what amount by what insurer.
P may do this without any special showing of need.) [198]
1. Automatic pre-discovery
disclosure: Under Rule 26(a)(1), a party must, even without
a request from the other side, automatically disclose certain things early
in the litigation. The most important are:
a. All witnesses with
discoverable information: First, each party must disclose the name,
address and phone number of each individual likely to have discoverable
information that the party plans to use in its case.
Example: P sues D concerning a
car accident in which P and D drove cars that collided. D plans to call W,
who saw the accident, as a trial witness. Early in the case, D must
automatically disclose W's name and address to P, even without a request
from P for this information. (But if D didn't plan to call W, perhaps
because W's story favors P, then D would not have to disclose W's name
unless P specifically asked for this type of information in discovery.)
b. Documents: Second, a party
must furnish a copy, or else a description by category and location, of
all documents and tangible things in that party's possession, that the
party plans to use in its case.
J. Privilege log: If a party is
declining to furnish documents or information because of a claim of privilege
or work product immunity, the party must make the claim expressly, and must
describe the nature of the documents or communications. (Thus the party can't
keep silent about the fact that such a claim is being made or about the nature
of the documents/communications as to which it is being made). Rule 26(b)(5). [203]
K. Duty to
supplement: A party who makes a disclosure during discovery now normally has a
duty to supplement that response if the party then learns that the disclosed
information is incomplete or incorrect. [202]
1. How it applies: This "duty
to supplement" applies to any automatic pre-discovery disclosure
(mainly witness names and documents); to any disclosure regarding experts to
be called at trial; and to any responses to an interrogatory, a request for
production, or request for admission. Rule 26(e)(1); 26(e)(2).
Example: P is suing
D regarding a car accident in which P was injured. Early in the litigation,
P gives D a list of all witnesses to the accident that P knows of, as
required by Rule 26(a)(1)(A). If P later learns of
another person who saw the accident, P must "supplement" her
earlier disclosure by telling D about the new witness.
III. METHODS OF DISCOVERY
A. Characteristics: The various forms
of discovery (depositions, interrogatories, requests to produce, requests for
admission and requests for examination) have several common characteristics:
[207]
B. Oral depositions: After the
beginning of an action, any party may take the oral testimony of any person
thought to have information within the scope of discovery. This is known as an
oral deposition. Rule 30. [208 - 210]
2. Subpoena: If a non-party is to
be deposed, then the discovering party can only force the deponent to attend
by issuing a subpoena. This subpoena must require the deposition to be held
no more than 100 miles from the place where the deponent resides, is
employed, or regularly transacts business in person. Rule 45(c)(3)(A)(ii).
a. No subpoena for party: If a
party is to be deposed, a subpoena is not used. Instead, non-compliance
with the notice can be followed up by a motion to compel discovery or to
impose sanctions under Rule 37.
3. Request to produce: The person
seeking discovery will often also want documents held by the deponent. If
the deponent is a party, the discovering party may attach a Rule 34 request to produce to the
notice to the party. But if the deponent is a non-party, the discovering
party must use a subpoena duces tecum. [213]
C. Depositions upon written
questions: Any party may take the oral responses to written questions, from
any person (party or non-party) thought to have discoverable information. Rule 31. This is called a
"deposition on written questions." [211]
D. Interrogatories to the parties: An
interrogatory is a set of written questions to be answered in writing by the
person to whom they are addressed. Interrogatories may be addressed only to a
party. Rule 33(a). [211]
E. Requests for admission: One party
may serve upon another party a written request for the admission, for the
purposes of the pending action only, of the truth of any discoverable matters.
Rule 36. This is a "request for
admission." [212 - 213]
1. Coverage: The statements whose
genuineness may be requested include statements or opinions of fact, the
application of law to fact, and the genuineness of any documents. (Example:
P, in a breach of contract action, may request that D admit that the
attached document is a contract signed by both P and D.) [212]
2. Expenses for failure to admit:
If a party fails to admit the truth of any matter requested for admission
under Rule 36(a), and the party making the
request proves the truth of the matter at trial, the court may then require
the party who refused to admit to pay reasonable expenses sustained by the
movant in proving the matter. Rule 37(c). (But no expenses may be
charged in several situations, including where the party who failed to admit
had reasonable grounds to think he might prevail on the issue at trial.)
[213]
3. Effect at trial:
If a party makes an admission under Rule 36, the matter is normally
conclusively established at trial. (However, the court may grant a motion to
withdraw or amend the admission, if this would help the action to be
presented on its merits, and would not prejudice the other side.) [213]
F. Request to produce documents or to
inspect land: A party may require any other party to produce documents and
things. Rule 34. Thus any papers, photos or
objects relevant to the subject matter of the case may be obtained from any
other party, but not from a non-party. (Example: P sues D1 and D2 for
antitrust and price fixing. P believes that the records of both Ds will show
that they set prices in concert. P may require D1 and D2 to produce any
documents in their control relating to the setting of prices.) [213]
3. Land: Rule 34 also allows a party to
demand the right to inspect, photograph and survey any land within the
control of another party. (Example: P sues D, a merchant, for negligence,
because P fell on D's slippery floor. P may require D to open the premises
so that P may inspect and photograph them.)
G. Physical and mental examination:
When the mental or physical condition of a party is in controversy, the court
may order the party to submit to a physical or mental examination by a
suitably licensed or certified examiner. Rule 35. [214 - 215]
1. Motion and good cause: Unlike
all other forms of discovery, Rule 35 operates only by court
order. The discovering party must make a motion upon notice to the party to
be examined, and must show good cause why the examination is needed. [214]
2. Controversy: The
physical or mental condition of the party must be in controversy. In other
words, it is not enough (as it is for other forms of discovery) that the
condition would be somehow relevant. (Example: If P is suing D for medical
malpractice arising out of an operation, P's condition would obviously be in
controversy, and D would be entitled to have a physician conduct a physical
examination of P. But if P were suing D for breach of contract, and D had
some suspicion that P was fabricating the whole incident, a mental
examination of P to find evidence of delusional behavior would probably not
be found to be supported by good cause, so the court order granting the exam
would probably not be made.) [214]
b. Other examinations: Once the
examined party asks for and receives this report, then the other party is
entitled to reports of any other examinations made at the request of the
examinee for the same condition. (Example: P sues D for automobile
negligence. D causes P to be examined by a doctor retained by D, to
measure the extent of P's injuries. P asks for a copy of the report, and D
complies. Now, D is entitled to receive from P copies of any other reports
of examinations made of P at P's request. In other words, by asking D for
the report, P is deemed to have waived the physician-patient privilege as
to exams conducted at P's request.) [215]
IV. ORDERS AND SANCTIONS
A. Two types: Discovery normally
proceeds without court intervention. But the court where the action is pending
may intercede in two main ways, by issuing orders and by awarding sanctions.
The court may order abuse of discovery stopped (a protective order) or may
order a recalcitrant party to furnish discovery (order compelling discovery).
Sanctions can be awarded for failing to handle discovery properly.
B. Abuse of discovery: One party
sometimes tries to use discovery to harass her adversary. (Example: P requests
that D reveal trade secrets, or schedules 10 repetitive depositions of D.) The
discoveree may fight back in two ways: (1) by simply objecting to a particular
request; or (2) by seeking a Rule 26 protective order. [217 - 219]
a. Form of objection: The form
depends on the type of discovery. An objection to an interrogatory
question is written down as part of the set of answers. Similarly, an
objection to a request to admit is made in writing. An objection to a
deposition question, by contrast, is raised as an oral objection by the
lawyer representing the deponent or the party opposing the deposition. The
deposition then continues, and the objections are later dealt with en
masse by the judge.
2. Protective order: Where more
than a few questions are at stake, the party opposing discovery may seek a
"protective order." Rule 26(c) allows the judge to make
"any order which justice requires to protect a party or person from
annoyance, embarrassment, oppression, or undue burden or expense...."
[218 - 219]
Example 1: In a
simple automobile negligence case brought under diversity, D schedules P for
ten different depositions, and asks substantially the same questions each
time. P may seek a protective order in which the judge orders that no
further depositions of P may take place at all. The court will probably
grant this request.
Example 2: P sues D
for patent infringement, alleging that D's manufacturing methods violate P's
patents. In a deposition of D's vice president, P asks the details of D's
secret manufacturing processes. D may seek a protective order preventing P
from learning these trade secrets, perhaps on the grounds that P does not
need to know these secrets in order to pursue his patent case.
a. Prohibition of public
disclosure: One common type of protective order allows trade secrets or
other information to be discovered, but then bars the public disclosure of
the information by the discovering litigant. (Example: On the facts of the
above example, the judge might allow P to get discovery of D's trade
secrets, but prevent P from disclosing that information to any third
party.) [218]
C. Compelling discovery: Conversely,
if one party refuses to cooperate in the other's discovery attempts, the
aggrieved party may seek an order compelling discovery under Rule 37(a). [219 - 220]
1. When available: An order to
compel discovery may be granted if the discoveree fails to: (1) answer a
written or oral deposition question; (2) answer an interrogatory; (3)
produce documents, or allow an inspection; (4) designate an officer to
answer deposition questions, if the discoveree is a corporation.
D. Sanctions for failing to furnish
discovery: The court may order a number of sanctions against parties who
behave unreasonably during discovery. Principally, these sanctions are used
against a party who fails to cooperate in the other party's discovery efforts.
[220 - 223]
1. Financial sanctions: If a
discovering party seeks an order compelling discovery, and the court grants
the order, the court may require the discoveree to pay the reasonable
expenses the other party incurred in obtaining the order. These may include
attorney's fees for procuring the order. Rule 37(b). [220]
2. Other sanctions:
Once one party obtains an order compelling the other to submit to discovery,
and the latter persists in her
refusal to grant discovery, then the court may (in addition to the financial
sanctions mentioned above) impose additional sanctions: [221]
a. Facts established: The court
may order that the matters involved in the discovery be taken to be
established. (Example: In a product liability suit, P wants discovery of
D's records, to show that D made the product that injured P. If D refuses
to cooperate even after the court issues an order compelling discovery,
then the court may treat as established D's having manufactured the item.)
V. USE OF DISCOVERY RESULTS AT TRIAL
A. Use at same trial: The rules for
determining whether the fruits of discovery can be introduced at trial vary
depending on the type of discovery. [223]
B. Request to produce: The
admissibility of documents and reports that were obtained through a Rule 34 request to produce is
determined without regard to the fact that these items were obtained through
discovery. These documents will thus be admissible unless their contents
constitute prejudicial, hearsay, or other inadmissible material. [224]
C. Depositions: The
admissibility of depositions is determined through a two-part test. Both parts
must be satisfied: [224 - 226]
1. Test 1: First, determine whether
the deposition statement sought to be introduced would be admissible if the
deponent were giving live testimony. If not, the statement is automatically
inadmissible. (Example: Deponent says, "X told me that he committed the
murder." If the hearsay rule would prevent deponent from making this
statement live at trial, it will also prevent the deposition statement from
coming in.)
2. Test 2: Second, apply the
"four categories" test. Since the use of a deposition statement
rather than live testimony is itself a form of hearsay, the deposition
statement must fall within one of the four following categories, which are
in effect exceptions to the hearsay rule:
c. Adverse
witness' deposition for substantive purposes: A party may use a deposition
of an adverse witness for substantive purposes, if it conflicts with that
witness' trial testimony. (Example: In a suit by P versus D, W, a witness
favorable to D and called by D, states at trial, "The light was red
when P drove through it." P may introduce W's statement in a
deposition, "The light was green when P drove through," not just
for impeachment but to prove the substantive fact that the light was
green.)
d. Other
circumstances: The deposition of any person (party or non-party) can be
used for any purpose if one of the following conditions, all relating to
the witness' unavailability, exists: (1) the deponent is dead; (2) the
deponent is located 100 or more miles from the trial; (3) the deponent is
too ill to testify; (4) the deponent is not obtainable by subpoena; or (5)
there are exceptional circumstances that make it desirable to dispense
with the deponent's live testimony. See Rule 32(a)(3).
3. Partial offering: If only part
of a deposition is offered into evidence by one party, an adverse party may
introduce any other parts of the deposition which in fairness ought to be
considered with the part introduced. Rule 32(a)(4). (Example: If one side
reads part of an answer, the other side may almost always read the rest of
the answer.)
D. Interrogatories: The interrogatory
answer of a party can be used by an adverse party for any purpose. [226]
1. Not binding: Statements made in
interrogatories, like statements made in depositions, are not binding upon
the maker - he may contradict them in court. (Obviously the witness'
credibility will suffer, but the witness is not legally bound to the prior
statement.)
F. Physical and
mental examinations: The results of physical and mental examinations made
under Rule 35 are almost always admissible
at trial. (Also, remember that if the examined party requests and obtains a
report of the examiner, the examinee is held to waive any privilege associated
with the report, such as the doctor/patient privilege.) [226]
Note: All of the
above discussion of use at trial assumes that the use takes place during the
very proceeding that gave rise to the discovery itself. Where the fruits of
discovery in Action 1 are sought to be used in Action 2, different, more
complicated, rules apply.
VI. PRETRIAL CONFERENCE
A. Generally: Many states, and the
federal system, give the judge the authority to conduct a pretrial conference.
The judge may use such a conference to simplify or formulate the issues for
trial, and to facilitate a settlement. See Rule 16(a) and 16(c). [230 - 231]
1. Scheduling: The federal judge
must issue a "scheduling order" within 120 days after filing of
the complaint. This order sets a time limit for filing of motions,
completion of discovery, etc. Rule 16(b). The trial judge may, but
need not, conduct a pretrial conference.
2. Pretrial order:
If the judge does hold a pretrial conference, she then must enter a pretrial
order reciting the actions taken in the conference (e.g., narrowing the
issues to be litigated, and summarizing the admissions of fact made by the
lawyers).
Chapter 6
ASCERTAINING APPLICABLE LAW
I. NATURE OF PROBLEM
A. Generally: A particular
controversy that is litigable in federal court may also, in most situations,
be brought in state court. This chapter is about which law - federal law or
state law - should be applied in cases brought in federal court. [235]
1. Forum shopping: A key concept to
keep in sight is the federal courts' desire to discourage "forum
shopping." If a particular case could be brought in either state or
federal court, and the state courts would apply rules of law different from
those that would be applied by the federal court, the plaintiff (and in
situations where removal is possible, the defendant) will have an incentive
to choose the court more favorable to her case. To prevent forum shopping of
this sort, the courts generally apply state law in diversity cases. [235]
2. Rules of Decision Act: The Rules
of Decision Act (RDA), 28 U.S.C. §1652, based upon the Supremacy Clause of the Constitution, is the
main statute stating when the federal court should apply federal law, and
when it should apply state law. [235 - 238]
a. Federal law applied: According
to the clear language of the RDA, the federal
Constitution, treaties, and constitutional statutes enacted by Congress,
always take precedence, where relevant, over all state provisions. (In
fact, this rule applies not only to federal proceedings but also to state
court proceedings.)
c. Dispute about
common law: The interesting question, and one on which the RDA is silent, is what the
federal court should do where there is no controlling constitutional or
statutory provision, federal or state. In other words, the key question
is, what law should the federal court follow where what is at issue is
"common," or judge-made, law. [235]
Example: P sues D
in a diversity action arising out of an automobile accident that took
place in Kansas. The Kansas courts apply common-law contributory
negligence. Must the federal judge hearing the case apply Kansas'
common-law contributory negligence, or is the court free to make its own
determination that comparative negligence is a sounder principle? The
answer, as set forth in Erie v. Tompkins (discussed below), is that Kansas common
law must be followed.
B. Erie v. Tompkins: The most
important Supreme Court case in all of Civil Procedure is Erie Railroad v. Tompkins. That case holds that when
the Rules of Decision Act says that the federal courts
must apply the "law of the several states, except where the Constitution
or ... acts of Congress otherwise require...," this language applies to
state common law as well as state statutory law. The net result is that in
diversity cases, the federal courts must apply state judge-made law on any
substantive issue. [237 - 238]
1. Discrimination against citizens:
The contrary rule that had been followed before Erie - Swift v. Tyson's holding that federal judges
could ignore state common law in diversity cases - allowed non-citizens to
discriminate against citizens of the state where the federal court sat.
(Example: P, an Ohio resident, sues D, a Kansas resident, in federal
district court for the District of Kansas. Kansas law would be favorable to
D. Swift v. Tyson, which would allow P to
choose federal or state court in Kansas, whichever was more favorable to
him, would thus allow P to profit at D's expense. Erie v. Tompkins, by forcing the federal
court to apply Kansas law, guarantees D, the Kansas citizen, the benefits of
his own state's law.)
2. Facts of Erie:
The facts of Erie remain a good illustration
of the case's principle, that state rather than federal common law is to be
followed on substantive matters in diversity cases. P, a Pennsylvania
citizen, was injured while walking on the right of way maintained by D, a
New York railroad. Under Pennsylvania judge-made law, P would probably have
lost his negligence suit, because P was a trespasser, to whom D would be
liable only for gross, not ordinary, negligence. P instead sued in New York
federal district court, expecting the federal court to follow Swift v. Tyson and make its own
"federal common law" which P hoped would make the railroad liable
to him for ordinary negligence.
a. Holding: But the Supreme Court
held that the federal court must follow state law on substantive issues,
and that "state law" included judge-made (common) law as well as
state statutes. So Pennsylvania law on the railroad's duty of care was to
be followed (though the Court did not specify why Pennsylvania rather than
New York law was what should be followed).
II. ERIE PROBLEMS
A. Ascertaining state law: Several
problems arise when the federal court tries to determine what is the
"state law," when there is no state statute on point. Obviously if
the highest court of the state where the federal court sits has recently
spoken on the issue, the problem is easy. But where this is not the case, life
gets trickier. The general principle is that the federal court must try to
determine how the state's highest court would determine the issue if the case
arose before it today. [239 - 240]
1. Intermediate-court decisions: If
there is no holding by the highest state court, the federal court looking
for state law to apply considers intermediate-court decisions. These
intermediate-court decisions will normally be followed, unless there are
other reasons to believe that the state's highest court would not follow
them. [239]
2. Where no state court has spoken:
If no court in the state has ever considered the issue in question, then the
court can look to other sources. One important source is decisions in prior
federal diversity cases which have attempted to predict and apply the law of
the same state. Similarly, the federal court may look at the practice of
other states, other authorities (e.g., Restatements), etc. But the issue is
always: What would the highest state court decide today? [239]
3. State decision obsolete: Where
there is an old determination of state law by the highest state court, the
federal court hearing the present case is always free to conclude that the
state court would decide the issue differently if confronted with the
present case. In that situation, the old ruling is not binding. [240]
B. Conflict of laws: The federal
court must also apply state law governing conflict of laws. In other words,
the conflict of laws rules of the state where the federal court sits must be
followed. [Klaxon Co. v. Stentor Electric
Mfg. Co.]
[241]
Example: The Ps,
soldiers, are injured in Cambodia by an explosion of a shell manufactured by
D. The Ps sue D in Texas federal court. Texas tort law allows strict
liability. The law of Cambodia does not allow strict liability.
Held, Texas
conflict-of-laws principles must apply. Since the Texas courts would apply the
tort law of the place where the accident occurred - Cambodia - so must the
federal court. Therefore, strict liability will not be applied, and the Ps
lose. [Day & Zimmermann, Inc. v.
Challoner]
C. Burden of proof:
The federal court must also follow the rules governing the allocation of the
burden of proof in force in the state where the federal court is sitting.
[241]
D.
Procedure/substance distinction: Erie v. Tompkins says that state common law
controls in "substantive" matters. But federal rules and policies
control on matters that are essentially "procedural." Here are some
guidelines for handling the procedure/substance distinction: [241 - 251]
1. Federal Rules take precedence: Erie is only applicable where
there is no controlling federal statute. Since the Federal Rules of Civil
Procedure are adopted pursuant to a congressional statute (the Rules
Enabling Act), the FRCP, when applicable, take precedence over state policy.
So if a Federal Rule arguably applies to the situation at hand, ask two
questions: (1) Does the Rule in fact apply to the issue at hand? and (2) Is
the Rule valid under the Rules Enabling Act? If the answer to both questions
is "yes," then the Federal Rule takes precedence. [242]
Example: FRCP 3 provides that a civil
action "is commenced by filing a complaint with the court." P
files a complaint against D with the court on Feb. 1. The statute of
limitations on P's right of action expires on Feb. 15. On March 1, P
causes D to be served with process. The suit takes place in Kentucky
federal district court. Kentucky state law provides that the statute of
limitations is satisfied only by service upon the defendant, not by mere
filing with the court.
The federal court
for Kentucky must ask, "Does Rule 3 really apply to this
situation?" The Supreme Court has held on these facts that Rule 3
does not speak to the issue of when a state statute of limitations is
tolled, but is merely designed to give a starting point for the
measurement of various time periods in the federal suit. Since neither
Rule 3 nor any other Federal Rule is on point, state common law - in this
case, Kentucky's principle that the date of service is what counts - must
be applied in the federal action. [Ragan v. Merchants
Transfer;
Walker v. Armco Steel
Corp.]
b. Is Rule valid:
If you conclude that the Rule applies to the issue at hand, the next
question is, "Is the Rule valid?" The Rules Enabling Act
provides that to be valid, a Rule must not "abridge, enlarge, [or]
modify the substantive rights of any litigant." But as long as the
Rule is arguably "procedural," it will be found to satisfy this
test. No Federal Rule has ever been found to violate the "no
abridgement, enlargement or modification of substantive rights" test
of the Rules Enabling Act. [242]
Example: P sues D
in diversity in Massachusetts federal court. D is the executor of an
estate. P causes process to be served on D's wife, by leaving copies of
the summons and complaint with her at D's dwelling place. Federal Rule
4(d)(1) (now Rule 4(e)(2)) allows service on a
defendant by leaving copies of the summons and complaint at the
defendant's dwelling place with a person of suitable age and discretion, a
standard met here. But a Massachusetts statute sets special standards for
service on an executor of an estate, which were not complied with here.
Held, first, Rule
4(d)(1) is in harmony with the Enabling Act, since it is basically
procedural. Second, the Rule clearly applies to the issue here, since it
specifies the allowable method of service in a federal action. Therefore,
the Rule takes priority over any contrary state policy or statute, even if
applying the Rule might help produce a different outcome than had the
state rule been applied. [Hanna v. Plumer]
a. Rejection of "outcome
determination": At one time, the test was whether the choice between
state and federal policy was "outcome determinative" - if the
choice was at all likely to influence who won the lawsuit, then the
litigants' substantive rights would be affected by the choice, and the
state policy must be followed. But the Supreme Court has rejected
outcome-determinativeness as the standard. [Byrd v. Blue Ridge] [246]
b. Balance state
and federal policies: Today, the federal court balances the state and
federal policies against each other. Where the state interest in having
its policy followed is fairly weak, and the federal interest strong, the
court is likely to hold that the federal procedural policy should be
followed. Here are some illustrations of how this balancing works out:
[246 - 248]
i. Judge/Jury allocation: Where
the question is, "Who decides a certain factual issue, judge or
jury?" federal policies are to be followed. (Example: Whether P was
an employee rather than an independent contractor is to be determined by
following the federal policy of having factual matters determined by a
jury, not the state policy of having such an issue decided by the judge,
because the federal policy on judge-jury allocation is strong, the state
policy is not tightly bound up with the rights of the parties, and the
choice is not very outcome determinative. [Byrd v. Blue Ridge]) [246]
ii.
Door-closing statute: Similarly, state procedural rules limiting
in-state suits by non-residents against foreign corporations -
"door-closing" rules - need not be followed by the federal
court; the state interest here is weak, and the federal interest in
furnishing a convenient forum for litigants is a strong one. [Szantay v. Beech
Aircraft]
[247]
iii. Unanimity
for jury trials: Federal policy requiring a unanimous jury verdict will
be applied in diversity suits, at the expense of the state policy
allowing a verdict based on a less-than-unanimous majority. The state's
policy (reducing hung juries) has little weight here, since the case is
not taking place in the state system; the federal policy is strong,
supported by tradition; the choice is not heavily outcome-determinative.
iv. Statute of
limitations: But a state statute of limitations must be followed in a
diversity case. Here, the state's interest is heavily
outcome-determinative, and deeply bound up with the rights of the
parties. The federal interest is relatively weak, and there is little to
be gained from district-to-district uniformity. [Guaranty Trust Co. v.
York,
an older case that is still valid.] [244]
3. Federal statute (not Rule) on
point: Where there is a federal procedural statute (as distinct from a
Federal Rule) that is directly on point, it will control over any state law
or policy, even though this may promote forum shopping. [234]
III. FEDERAL COMMON LAW
A. Federal common law still exists:
Even though Erie makes it clear that there is
no general federal common law, there are still particular instances in which
federal common law is applied. That is, the federal court is occasionally free
to disregard state law in deciding the case. [254]
B. Federal question
cases: Most importantly, in
federal question cases, federal common law, not state common law, usually
applies. (Example: P sues D, the United States, in federal district court for
the Northern District of Texas. This suit raises a federal question, since it
involves the U.S. as a party. Even if there is no federal statute on point,
and even if it is clear that under Texas law the U.S. would not be negligent,
the federal court may and should apply general federal common law principles
in deciding whether the U.S. was negligent and is thus liable.) [254]
C. Diversity cases: Occasionally,
federal common law may even be applied where the basis for federal
jurisdiction is diversity. For instance, if P's claim does not raise issues of
federal law, but a defense asserted by D does raise federal law, the validity
of that defense will be determined under federal common law principles. [255]
D. Federal common law in state
courts: Conversely, the states are occasionally required to apply federal
common law. If concurrent jurisdiction (state and federal) exists concerning a
particular claim, and the suit is brought in state court, federal common law
applies there if it would apply in federal court. [256]
Example: P brings a state-court
action against D, a city, under a federal statute giving a cause of action for
deprivation of civil rights. State law requires that P give notice to D within
120 days of injury before suing D if D is a city. Held, the state court may
not impose this state-created procedural rule, since it would abridge
federally-granted rights. [Felder v. Casey]
Chapter 7
TRIAL PROCEDURE
I. BURDEN OF PROOF
A. Two meanings of "burden of
proof": There are two kinds of "burden of proof" which a party
may have to bear. Assuming that the issue is called A: [261]
2. Burden of persuasion: The party
bears the "burden of persuasion" if the following is true: at the
close of the evidence, if the jury cannot decide whether A exists or not,
the jury must find that A does not exist. [261]
Example of two burdens: P sues D,
arguing that D failed to use reasonable care in driving his car, and
therefore hit P, a pedestrian. P bears both the burden of production and the
burden of persuasion as to D's negligence. To meet the burden of production,
P will have to come up with at least some evidence that D was careless; if P
does not do so, the judge will not let the jury decide the issue of
negligence, and will instead direct the jury to find that there was no
negligence. If P comes up with some evidence of negligence, and the case
goes to the jury, the fact that P also bears the burden of persuasion means
that the judge will tell the jury, "In order to find that D was
negligent, you must find it more likely than not that D was negligent. If
you find exactly a 50-50 chance that D was negligent, you must find
non-negligence."
II. PRESUMPTIONS
A. Definition: A presumption is a
convention that when a designated basic fact exists (call the designated basic
fact B), another fact, called the presumed fact (call it P) must be taken to
exist unless there is rebuttal evidence to show that P does not exist. [262]
B. Effect of presumption: The
existence of a presumption always has an effect on the burden of production,
and sometimes has an effect on the burden of persuasion. (In the following
discussion, assume that there is a legal presumption that if B, then P. Assume
also that plaintiff is trying to prove P. Also assume that if there were no
presumption, plaintiff would bear the burden of persuasion as to P.) [262 -
264]
Example: A statute establishes a
presumption that when a railroad locomotive causes damage, the railroad was
negligent. P proves that D's locomotive caused damage to him. Neither party
puts on any evidence about D's actual negligence. Assume that if there were
no presumption, P would have the burden of production on negligence. By
showing damage, P has carried his burden of production; if D does not come
up with any rebutting evidence of non-negligence, the judge will direct the
jury to find for P on the negligence issue.
2. Burden of persuasion: If the
defendant offers enough evidence of non-P that a reasonable jury might find
non-P, it is clear that defendant has met his production burden, and that
the case will go to the jury. But courts are split as to who bears the
burden of persuasion. [262]
a. Federal Rules of Evidence:
Most states, and federal courts in federal-question cases, follow the
approach set out in the Federal Rules of Evidence. Under this approach,
the presumption has no effect on the burden of persuasion, merely on the
burden of production. This approach is sometimes called the "bursting
bubble" approach - once evidence tending to show the non-existence of
the presumed fact is introduced, the presumption bursts like a bubble. See
FRE 301 ("A presumption
imposes on the party against whom it is directed the burden of going
forward with evidence to rebut or meet the presumption, but does not shift
to such party the burden of proof in the sense of the risk of
non-persuasion...").
Example: Same
facts as above example. After P shows evidence of damage by the
locomotive, D comes forward with evidence that it was not negligent. This
is enough to send the case to the jury. Now, under the FRE "bursting
bubble" approach, P will still bear the burden of persuasion - unless
P convinces the jury that it is more likely than not that D was negligent,
D will win on the issue of negligence. This is because the presumption -
that where there is locomotive damage, there is railroad negligence - has
no effect on the burden of persuasion.
b. State law in
diversity cases: But in diversity cases, the federal courts must defer to
any contrary state rule concerning the effect of a presumption on the
burden of persuasion. See FRE 302. In other words, FRE 301, applying the bursting
bubble approach, applies only where a federal claim or defense is at
issue, or state law is silent.
III. PREPONDERANCE OF THE EVIDENCE
A. "Preponderance" standard
generally: The usual standard of proof in civil actions is the
"preponderance of the evidence" standard. A proposition is proved by
a preponderance of the evidence if the jury is convinced that it is "more
likely than not" that the proposition is true. [264]
B. Adversary's denials: A party who
has the burden of proving a fact by a preponderance of the evidence may not
rely solely on the jury's disbelief of his adversary's denials of that fact.
[265]
Example: P asserts that D behaved
negligently by driving through a red light. P produces no affirmative evidence
of this allegation. D takes the stand, and says, "The light was green
when I drove through." P does not cross-examine D on this point. There is
no other relevant evidence. The court must hold that P could not possibly have
satisfied the "preponderance of the evidence" standard as to D's
negligence - the fact that the jury might possibly disbelieve D's denials of
negligence is not enough, and the court must enter a directed verdict for D on
this point.
IV. ADJUDICATION WITHOUT TRIAL
A. Voluntary dismissal by plaintiff:
A plaintiff in federal court may voluntarily dismiss her complaint without
prejudice any time before the defendant serves an answer or moves for summary
judgment. The fact that the dismissal is "without prejudice" means
that she may bring the suit again. See Rule 41(a)(1). [267]
1. Examples: Some of the grounds
for which, under FRCP 41(b), the court may grant an
involuntary dismissal, are: (1) P's failure to prosecute; (2) P's failure to
obey court orders; (3) lack of jurisdiction or venue; or (4) P's failure to
join an indispensable party.
2. Prejudice:
Normally an involuntary dismissal is with prejudice. But some kinds of
dismissals are not with prejudice (and thus the action may be brought anew):
(1) dismissal for lack of
jurisdiction, of both parties and subject matter, or for insufficient
service; (2) improper venue; and (3) failure to join an indispensable party
under Rule 19.
C. Summary judgment: If one party can
show that there is no "genuine issue of material fact" in the
lawsuit, and that she is "entitled to judgment as a matter of law,"
she can win the case without going to trial. Such a victory without trial is
called a "summary judgment." See FRCP 56. [268 - 270]
1. Court goes behind pleadings: The
court will go "behind the pleadings" in deciding a summary
judgment motion - even if it appears from the pleadings that the parties are
in dispute, the motion may be granted if the movant can show that the
disputed factual issues presented by the pleadings are illusory. [268]
2. How shown: The movant can show
the lack of a genuine issue by a number of means. For example, the movant
may produce affidavits, or use the fruits of discovery (e.g., depositions
and interrogatory answers) to show that there is no genuine issue of
material fact. [268]
a. Opponent can't rest on
pleadings: If materials submitted by the movant show that there is no
genuine material issue of fact for trial, the non-movant cannot avoid
summary judgment merely by repeating his pleadings' denial of the
allegations made by the movant. In other words, the party opposing the
motion may not rest on restatements of her own pleadings, and must instead
present by affidavits or the fruits of discovery specific facts showing
that there is a genuine issue for trial. Rule 56(e). [269]
b. Construction
most favorable to non-movant: On the other hand, once the opponent of the
motion does submit opposing papers, he receives the benefit of the doubt.
All matters in the motion are construed most favorably to the party
opposing the motion. The fact that the movant is extremely likely to win
at trial is not enough; only if there is no way, legally speaking, that
the movant can lose at trial, should the court grant summary judgment.
[270]
4. Partial summary judgment:
Summary judgment may be granted with respect to certain claims in a lawsuit
even when it is not granted with respect to all claims. This is called
partial summary judgment. See Rule 54(b). (Example: Where P sues D
for breach of contract, the court might grant P partial summary judgment on
the issue of liability, because there is no genuine doubt about whether a
breach occurred; the court might then conduct a trial on the remaining issue
of damages.) [270]
V. TRIALS WITHOUT A JURY
A. When tried to court: A case will
be tried without a jury if either of the two following conditions exists:
[271]
B. Effect: If there is no jury, the
trial judge serves as both the finder of fact and the decider of law. [271]
C. Evidence rules: The rules of
evidence followed by the judge (in federal trials, these are the Federal Rules
of Evidence) are officially the same in non-jury trials as in jury trials.
However, in practice, judges tend to relax the rules when there is no jury
present. [272]
D. Findings of fact: If an action is
tried without a jury, FRCP 52 requires the trial court to
"find the facts specially and [to] state separately its conclusions of
law thereon...." So the trial judge must set forth the facts with
particularity, and must in a separate section of her opinion state the law
which she believes applies to those facts. [272]
2. Separate findings not required:
The trial judge is not obligated to make separate findings of fact and
conclusions of law when disposing of a motion, except a Rule 52(c) motion for judgment on
partial findings. (Examples: If the judge denies a motion for summary
judgment, or grants a 12(b)(6) motion to dismiss for
failure to state a claim, the judge need not make detailed findings of
fact.) [272]
3. Judgment on
partial findings: The judge can conduct a "mini trial" of just one
issue, if the judge thinks that this will dispose of the case. If the judge
then finds against the party bearing the burden of proof on that issue, the
judge issues a "judgment on partial findings." See FRCP 52(c). (Example: In an auto
accident case, D pleads the three-year statute of limitations. The judge can
conduct a mini trial concerning only the date of the accident; if the date
is more than three years before P started the action, the judge can issue a
judgment in D's favor based on the partial finding that the action is
time-barred.) [272]
E. Appellate review of findings of
fact: Although the appellate court has the full record of the case before it,
it does not review the evidence for the purpose of making its own
determination of what really happened. Appellate review as to factual matters
is much more limited: [273 - 274]
1. General "clearly
erroneous" standard: The general standard is that the trial judge's
findings of fact will be set aside only if they are "clearly
erroneous." FRCP 52(a). (Example: If the trial
judge finds that D behaved negligently in an auto accident case, the
appellate court will not set aside the verdict merely because it believes
that there was only a 40% chance that D was negligent. Only if the trial
judge's findings seem to the appellate court to be "clearly
erroneous," a test not satisfied here, will the court reverse.) [273]
2. Witnesses'
credibility: Where the findings of fact relate to trial testimony given by
live witnesses, the appellate court must give "due regard … to the
opportunity of the trial court to judge of the credibility of the
witnesses." FRCP 52(a). In other words, the
appellate court should be particularly loathe to overturn the trial judge's
findings of fact regarding such testimony. [273]
a. Standard: Where the trial
judge believes one of two witnesses who are telling conflicting stories,
as long as the favored witness' story is internally consistent,
"facially plausible," and not contradicted by extrinsic
evidence, the appellate court will not overturn the findings of fact. [Anderson v. Bessemer City]
VI. THE JURY
A. Seventh Amendment generally: The Seventh Amendment to the U.S. Constitution says
that "in suits at common law ... the right of trial by jury shall be
preserved...." This Amendment applies to federal trials, but does not
apply to state trials. [276]
B. Number of jurors:
Traditionally, juries have been composed of 12 members. But this is breaking
down today. [276]
a. Too few remaining: Normally
the federal court seats more than six jurors, so that if some have to
leave the panel, there will be at least six at the time of verdict. If
there are fewer than six at the time of verdict, the court must declare a
mistrial unless both parties agree to continue.
D. Jury selection: The process by
which the jury is selected is called the "voir dire." In most
states, the voir dire consists of oral questions by both sides' counsel to the
prospective jurors. These questions are designed to discover whether a juror
would be biased, or has connections with a party or prospective witness. [277]
4. Alternates: In
most states, the court orders the selection of up to six alternates after
the "regular" members of the jury have been selected. But under
federal practice, alternates are no longer used (FRCP 48).
E. Instructions: The judge must
instruct the jury as to the relevant law. (Example: If P sues D for
negligence, the judge must instruct the jury about the "reasonable
person" standard, and the requirement of proximate cause.) [277]
F. Juror misconduct: A jury verdict
may be set aside, and a new trial ordered, for certain types of jury
misconduct. (Examples: Talking to a party, receiving a bribe, concealing a
bias on voir dire.) [278]
1. Traditional impeachment rule:
The traditional rule, still followed in most states, is that the jury may
not impeach its own verdict. That is, the verdict will not be set aside
because of a juror's testimony of his own or another juror's misconduct -
only evidence from a third party will suffice. [278]
a. Federal Rule: But the Federal
Rules of Evidence have modified this principle slightly for federal
trials. The general "jury can't impeach its own verdict" rule
still applies, except that a juror may testify about whether extraneous
prejudicial information was improperly brought to the jury's attention, or
whether any outside influence was improperly brought to bear upon a juror.
FRE 606(b). (Examples: One juror can
testify that another read a newspaper article about the case, or was
bribed by one of the parties. But a juror cannot testify that the jury
disregarded the judge's instructions.)
2. Post-trial discovery of bias:
If, after the trial, it turns out that a juror failed to disclose
information during voir dire that would have indicated bias, the party may
move for a new trial. In federal trials, the movant must show: (1) that the
juror failed to answer honestly a material question during the voir dire;
and (2) that a correct response would have led to a valid challenge for
cause. [McDonough Power Equipment
Inc. v. Greenwood] (Example: A party can get a new trial if he proves
that a juror lied about knowing one of the parties, but not if the juror
honestly gave a mistaken answer in voir dire because of confusion about the
question.) [278]
VII. DIRECTED VERDICT
A. Defined: In both state and federal
trials, either party may move for a directed verdict. Such a verdict takes the
case away from the jury, and determines the outcome as a matter of law. [280]
B. Standard for granting: Generally,
the court will direct a verdict if the evidence is such that reasonable people
could not differ as to the result. [280]
1. Federal standard: In federal
trials, the standard is that the judge may enter judgment as a matter of law
"if during a trial by jury, a party has been fully heard with respect
to an issue and there is no legally sufficient evidentiary basis for a
reasonable jury to have found for that party with respect to that
issue." FRCP 50(a)(1).
VIII. SPECIAL VERDICT AND
INTERROGATORIES
A. Special verdict defined: A
"special verdict" is a specific finding of fact, as opposed to a
general verdict (which merely grants victory to one side or the other).
(Example: In a contract case, the jury might be asked to render a special
verdict as to whether a valid contract existed between the parties.) [283]
B. General verdict with
interrogatories: The judge may, instead of requiring a special verdict,
require a general verdict, supported by interrogatories as to specific
findings of fact. See FRCP 49(b). This "general verdict
with interrogatories" approach is more common than the specific verdict
approach. [283]
IX. NEW TRIAL
A. Generally: The trial court, in
both state and federal courts, usually has wider discretion to grant a new
trial motion than to direct a verdict or disregard the jury's verdict (JNOV).
The reason is that the grant of a new trial interferes less with the verdict
winner's right to jury trial. [283]
B. Federal rules for granting: Here
is a summary of the rules on grants of new trials in federal civil cases: [283
- 284]
1. Harmless error: A new trial may
not be granted except for errors in the trial which are serious enough that
they affect the substantial rights of the parties. FRCP 61. This is the so-called
"harmless error" doctrine. Basically, unless the trial judge
believes that the error might have made the case come out differently, she
cannot grant a new trial motion. [284]
3. Objection: For
most types of error at the trial court level, the party injured by the error
must make a timely objection, in order to preserve the right to cite that
error on appeal as a ground for a new trial. (Example: If evidence is
erroneously admitted or excluded, this cannot serve as grounds for a new
trial unless the injured party immediately objects at the time the evidence
is admitted or excluded.) [284]
4. Improper
conduct: A new trial may be granted because of improper conduct by a party,
witness or lawyer, posing a substantial risk that an unfair verdict will
result. Similarly, a new trial may be granted where there is evidence that
the jury behaved improperly (e.g., a juror was bribed or was contacted by a
party). [284]
a. Federal standard: In federal
courts, a verdict must be against the clear weight of the evidence, be
based upon evidence which is false, or result in a miscarriage of justice.
It is not enough that there is substantial evidence against the verdict,
or that the trial judge disagrees with the verdict and would vote
otherwise if he were a juror. (But it is still easier to get a federal
judge to grant a new trial as against the weight of the evidence than to
get the trial judge to direct judgment as a matter of law.)
a. Remittitur and additur: Where
the verdict is excessive or inadequate, the judge may grant a conditional
new trial order - the new trial will occur unless the plaintiff agrees to
a reduction of the damages to a specified amount (called
"remittitur") or the new trial to occur unless the defendant
consents to a raising of the damages (called "additur"). Most
state courts allow both additur and remittitur. In federal practice, only
remittitur is allowed. If a party accepts the remittitur/additur, he may
not thereafter appeal.
7. Partial new trial: The trial
judge may grant a partial new trial, i.e., a retrial limited to a particular
issue. Most typically, this occurs when the trial judge feels that the
jury's conclusion that D is liable is reasonable, but feels that the damages
awarded are inadequate or excessive - the judge can grant a new trial
limited to the issue of damages. [287]
8. Newly-discovered evidence: The
trial judge may grant a new trial because of newly-discovered evidence. The
person seeking the new trial must show that: (1) the evidence was discovered
since the end of the trial; (2) the movant was "reasonably
diligent" in his search for the evidence before and during the trial,
and could not reasonably have found the evidence before the end of the
trial; (3) the evidence was material, and in fact likely to produce a
different result; and (4) injustice would otherwise result. [287]
C. Review of orders granting or
denying new trial: Both the grant of a new trial by the trial judge, and his
denial of a new trial, may be reviewed upon appeal. Where the judge orders a
new trial, the party who won the verdict may not appeal the new trial order,
and must instead wait until the end of the new trial. [287]
X. JUDGMENT NOT WITHSTANDING
VERDICT/JUDGMENT AS A MATTER OF LAW
A. Definition: Most states allow the
judge to set aside the jury's verdict, and enter judgment for the
verdict-loser. This is called a Judgment Notwithstanding Verdict, or JNOV. In
federal practice, the device is called "judgment as a matter of law"
(JML). [289 - 291]
1. Usefulness: Judges like the JNOV
procedure better than directed verdicts, because it allows the jury to reach
a verdict - then, if the judge is reversed on appeal, a new trial is not
necessary (as would be the case if the trial judge erroneously directed a
verdict).
B. Federal practice: Federal practice
for "judgment as a matter of law" is spelled out in FRCP 50: [290]
1. Motion before jury retires: The
most important thing to remember about JML in federal practice is that the
party seeking the JML must make a motion for that judgment before the case
is submitted to the jury. The movant also specifies why (in terms of law and
facts) she thinks she is entitled to the JML. The judge reserves decision on
the motion, then submits the case to the jury. If the verdict goes against
the movant, and the judge agrees that no reasonable jury could have found
against the movant, then the judge may effectively overturn the verdict by
granting JML. [290]
2. Appeal: Appellate courts
frequently reverse both grants and denials of JML. Since a JML is granted
based on the legal sufficiency of the parties' cases, not a detailed
consideration of the evidence, the appellate court is quicker to
second-guess the trial judge than in the case of a motion for a new trial.
[291 - 292]
XI. CONSTITUTIONAL RIGHT TO JURY TRIAL
A. Seventh Amendment: The Seventh Amendment provides that "in suits
at common law...the right of trial by jury shall be preserved...." [292]
b. Equitable
claim: There is no jury trial right as to "equitable" claims
(e.g., a claim for injunction). The distinction between legal and
equitable claims is very important, and is discussed further below.
B. Law in diversity cases: In a
diversity case, the issue of whether a party has a right of jury trial on a
particular claim is to be determined by federal, not state, law. (Example:
Federal principles, not local state law, are used to determine whether a
particular claim is "legal" rather than "equitable," even
in diversity cases.) [292]
C. Suits with both legal and
equitable claims: If a case presents both legal and equitable claims, and one
party wants a jury trial on the legal claims, the court must normally try the
legal claims first. [Beacon Theatres v. Westover] If the court allowed the
equitable claims to be tried first, without a jury, this might effectively
dispose of some of the legal issues as well, thus thwarting the party's right
of jury trial on the legal claims. [293 - 296]
Example: P sues D for
an injunction against certain contract violations. D counterclaims for damages
for breach of contract. D demands a jury trial on its counterclaim. Assuming,
as seems likely, the injunction claim is equitable and the damages
counterclaim is legal, the judge must try the counterclaim to a jury before it
conducts a bench trial of the injunction claim, as long as there may be some
issues common to both claims.
D. Distinguishing
"legal" vs. "equitable" claims: In deciding whether a
claim is "legal" rather than "equitable," the issue is
whether the claim is a claim "at common law." The main test is
whether the claim is one in which the courts of law (as opposed to equity)
would have recognized prior to the 1789 adoption of the Seventh Amendment. Here are the general rules
for deciding this: [293]
3. Shareholder derivative suit: A
shareholder's derivative suit is either legal or equitable, depending on the
status of the corporation's own suit - if the corporation's own suit would
be legal, the derivative action is legal. (Example: P, a stockholder in X
Corp., brings a derivative suit attempting to enforce X's rights against D,
a former officer of X Corp., for an alleged embezzlement by D from X Corp.
The suit seeks money damages. Since a suit on the same cause of action by X
Corp. directly against D would be legal, P's shareholder's derivative suit
is also legal. [Ross v. Bernhard]) [296]
Chapter 8
MULTI-PARTY AND MULTI-CLAIM LITIGATION
I. COUNTERCLAIMS
A. Federal Rules generally: A
"counterclaim" is a claim by a defendant against a plaintiff. The
Federal Rules provide for both "permissive" and
"compulsory" counterclaims. FRCP 13. [307]
Example: Cars driven by P and D
collide. P sues D in diversity, alleging personal injury. D makes no
counterclaim. Later, D wants to bring either a federal or state suit
against P for property damage sustained by D as part of the same car
accident. Neither federal nor state courts will permit D to bring this
action, because it arises out of the same transaction or occurrence as P's
original claim - the car accident - and is thus barred since D did not
assert it as a compulsory counterclaim in the initial action.
i. Exceptions: There are a
couple of main exceptions to the rule that any claim involving the same
"transaction or occurrence" as P's claim is compulsory: (1)
claims by D which for "just adjudication" require the presence
of additional parties of whom the court cannot get personal
jurisdiction; and (2) claims by D in which the suit against D is in rem
or quasi in rem (assuming D is not making any other counterclaim in the
action). See Rule 13(a), including 13(a)(2).
b. Default by plaintiff: If D
asserts a counterclaim (whether compulsory or permissive), and P neglects
to either serve a reply or make a motion against the counterclaim, a
default judgment may be entered against P on the counterclaim. Rule 55(d). [308]
B. Claims by third parties: A
counterclaim may be made by any party against "any opposing party." Rule 13(a), Rule 13(b). [309]
1. By third-party defendant: Thus a
third-party defendant may counterclaim against either the original
defendant, or against the original plaintiff. (In the latter case, a claim
by the plaintiff against the third-party defendant must first have been
made.) [309]
2. By plaintiff: If D has
counterclaimed against P, P may then assert a "counterclaim"
against D, even though P has already asserted "regular" claims
against D. In fact, P's "counter-counterclaim" will be compulsory
if it relates to the same subject matter as D's counterclaim. (Example: P
sues D about a car accident. D sues P for breach of an unrelated contract.
Any claims P might have against D relating to that same contract are now
compulsory counterclaims.) [309]
3. New parties: New parties to a
counterclaim can be brought into a suit. Rule 13(h). (Example: P sues D for an
auto accident. D believes that P and X conspired to ruin D's business, in an
unrelated action. D may not only counterclaim against P for this conspiracy
- a permissive counterclaim - but D may bring in X as a new party to D's
counterclaim.) [309]
C. Subject-matter jurisdiction: The
subject-matter jurisdiction treatment of counterclaims depends on whether the
counterclaim is compulsory or permissive: [310]
Example: A, a New Yorker, sues B,
from Massachusetts. The suit relates to an accident involving cars driven by
A and B. B, in a counterclaim, asserts that A was at fault, and that the
accident caused B $30,000 of damages. A's car was owned by C, a
Massachusetts resident not yet in the action whom B would also like to sue.
B may bring C in as an additional party to his counterclaim. Because
supplemental jurisdiction applies to B's compulsory counterclaim, and even
to the entrance of the new party defending that counterclaim, the fact that
B and C are not diverse, and the fact that B's counterclaim does not meet
the jurisdictional amount, are irrelevant.
2. Permissive counterclaims: A
permissive counterclaim is probably not within the court's supplemental
jurisdiction, and must therefore independently satisfy the requirements of
federal subject matter jurisdiction. (Example: Same facts as above example,
except that now, B's claim against A and C does not relate to the same
transaction as A's claim against B. The absence of diversity as between B
and C, and the fact that B's claim does not meet the jurisdictional amount,
are both fatal, so B's permissive counterclaim may not go forward against
either A or C.)
1. Time-barred when P sues: If D's
counterclaim was already time-barred at the time P sued, few if any federal
courts will allow D to make an affirmative recovery. Some courts will allow
the counterclaim to be used as a defense; the court is more likely to do
this if the counterclaim is compulsory than if it is permissive.
2. Time-barred after P sued: Where
the statute of limitations on the counterclaim runs after P commenced the
suit, but before D asserted his counterclaim, a federal court will probably
allow the counterclaim. [Azada v. Carson]
II. JOINDER OF CLAIMS
A. Joinder of claims generally: Once
a party has made a claim against some other party, he may then make any other
claim he wishes against that party. Rule 18(a). (Example: P sues D, claiming
that D intentionally assaulted and battered him. P may join to this claim a
claim that D owes P money on a contract entirely unrelated to the tort.) [315]
1. Never required: Joinder of
claims is never required by Rule 18(a), but is left at the
claimant's option. (However, the rules on former adjudication, especially
the rule against splitting a cause of action, may cause a claimant to lose
the ability to bring the unasserted claim in a later suit.)
2. Subject-matter
jurisdiction not affected: Supplemental jurisdiction probably does not apply
to a claim joined with another under Rule 18(a). Thus the requirements of
subject-matter jurisdiction must be independently satisfied by the joined
claim. However, usually there will not be a subject-matter jurisdiction
problem for joinder of claims (since diversity will not be affected, and
since P may add all claims together for purposes of meeting the $75,000
requirement, under the aggregation doctrine).
III. JOINDER OF PARTIES
A. Permissive joinder: Joinder under Rule 20, done at the discretion of
the plaintiffs, is called "permissive" joinder.
("Compulsory" joinder under Rule 19 is described below.) FRCP 20 allows two types of
permissive joinder of parties: (1) the right of multiple plaintiffs to join
together; and (2) a plaintiff's right to make several parties co-defendants to
her claim. [317 - 318]
a. Single transaction or
occurrence: Their claims for relief must arise from a single
"transaction, occurrence, or series of transactions or
occurrences," and
2. Joinder of defendants: If one or
more plaintiffs have a claim against multiple defendants, these defendants
may be joined based on the same two tests as plaintiff-joinder. That is,
claims against the co-defendants must: (a) arise from a single
"transaction, occurrence, or series of transactions or
occurrences"; and (b) contain a common question of law or fact. [317]
c. Long-arm limits: Each D must
be "amenable" to suit. Since federal courts in diversity suits
follow the long-arm of the state where they sit, if a potential
co-defendant cannot be reached by the state long-arm, he cannot be part of
the federal diversity action even if he has the requisite minimum
contacts. (But in federal question suits, it doesn't matter that the state
long-arm can't reach D.)
2. Subject-matter jurisdiction:
There is no supplemental jurisdiction for Rule 20 joinder of multiple Ds;
it's not clear whether there is for multiple Ps. So in a case with no
federal question, it's clear that there has to be at least one P who's
diverse with all Ds, and courts are split about whether it's fatal that some
P is a citizen of the same state as some D. [127 - 128]
Example 1 (multiple
Ds): P, from Mass., may not join as co-Ds D1 from New York and D2, from
Mass, in a diversity action, because there's no supplemental jurisdiction
for Rule 20 joinder of multiple Ds.
Example 2 (multiple
Ps): If P1 (from Mass.) and P2 (from N.Y.) sue D, from N.Y., courts are
split as to whether the action can go forward as a diversity action. Some
say that since the P1-D pair is diverse, supplemental jurisdiction kicks in,
so it doesn't matter that P2 and D are not diverse. But other courts say
that supplemental jurisdiction doesn't apply to Rule 20 joinder of multiple Ps, so
that complete diversity (all Ps to all Ds) is required; in such a court, the
action can't go forward because of the lack of diversity between P2 and D.
Example 4 (multiple
Ps and multiple Ds; at least 1 pair is diverse: P1 (from Mass.) and P2 (from
N.Y.) sue D1 (from N.Y.) and D2 (from N.J.) Courts are split about whether
suit can go forward based solely on diversity. Some say that since there's
one P who's diverse with all Ds (i.e., P1), supplemental jurisdiction
applies [see e.g., Stromberg Metal Works, 128], so P2 can be added.
Other courts say supplemental jurisdiction does not apply to multiple Ps or
multiple Ds, so the case can't go forward.
a. Aggregation: It is not clear
whether multiple plaintiffs may aggregate their claims to meet the
jurisdictional amount in a diversity case. If no plaintiff meets this
amount, aggregation is not allowed. If one or more does, but others do
not, it is not clear whether either the aggregation doctrine or
supplemental jurisdiction will allow the less-than-$75,000 plaintiffs to
be part of the action.
i. Each defendant must meet: If
the Rule 20 joinder involves
multiple defendants, supplemental jurisdiction definitely does not apply
to the claims against them, so each D in a diversity case must have
claims against him equal to $75,000.
C. Compulsory joinder: There are
certain situations in which additional parties must be joined, assuming the
requirements of jurisdiction can be met. Such joinder, specified by Rule 19, is called
"compulsory" joinder. The basic idea is that a party must be joined
if it would be uneconomical or unfair to litigate a claim without her. [320 -
325]
b.
"Indispensable" parties: The second, "more vital"
group consists of parties who are so vital that if their joinder is
impossible for jurisdictional reasons, the whole action must be dropped.
These are called "indispensable" parties. See Rule 19(b).
3. "Indispensable"
defined: If a party meets the test for "necessary" given in
paragraph (2) above, but the party's joinder is impossible because of
jurisdictional problems, the court has to decide whether the party is
"indispensable." [321]
b. Factors: When the court
decides whether a party is "indispensable," the factors are: (1)
the extent of prejudice to the absentee, or to those already parties; (2)
the possibility of framing the judgment so as to mitigate such prejudice;
(3) the adequacy of a remedy that can be granted in the party's absence;
and (4) whether the plaintiff will have an adequate remedy if the action
is dismissed. Rule 19(b).
Example: P sues
D, a bank holding some stock. P alleges that although the stock is
registered solely in the name of X, P and X in fact co-own the stock. P
and D are citizens of different states, but X is a citizen of the same
state as P. X thus cannot be joined as a co-defendant, because his
presence would destroy diversity. The issue is whether X is
"necessary" or "indispensable."
Held: (1) X is definitely a
person who must be joined if feasible under Rule 19(a), because his absence will
expose D to the risk of double obligation - a judgment that P owns the
stock will not bind X, who can later sue D for the whole value of the
stock; (2) X is in fact "indispensable" - his presence is so
important that the suit must be dismissed rather than proceed in X's
absence. [Haas v. Jefferson Bank] [323]
4. Jurisdiction: Where a non-party
is one who must be "joined if feasible," the doctrine of
supplemental jurisdiction does not apply to overcome any jurisdictional
problems. So if the person who is sought to be joined as a defendant is not
diverse with all plaintiffs, or if the claim against that would-be defendant
does not meet the amount-in-controversy requirement in a diversity case, the
joinder may not take place. [321]
IV. CLASS ACTIONS
A. Definition: The class action is a
procedure whereby a single person or small group of co-parties may represent a
larger group, or "class," of persons sharing a common interest.
[330]
1. Jurisdiction: In the class
action, only the representatives must satisfy the requirements of personal
jurisdiction, subject-matter jurisdiction, and venue. (Example: P1 and P2
are the named co-plaintiffs who bring a diversity class action against D.
There are 2,000 non-named class members. Only P1 and P2 must meet the
requirements of diversity vis-a-vis D, so the fact that many non-named
plaintiffs are citizens of the same state as D is irrelevant.)
2. Binding on absentees: The
results of a class action are generally binding on the absent members.
Therefore, all kinds of procedural rules (discussed below) exist to make
sure that these absentees receive due process (e.g., they must receive
notice of the action, and notice of any proposed settlement).
3. Defendant class: In federal
practice, as well as in states permitting class actions, the class may be
composed either of plaintiffs or defendants. The vast majority of the time,
the class will be composed of plaintiffs. [331]
2. Three categories: Once these
prerequisites are met, a class action will still not be allowed unless the
action fits into one of three categories, represented by Rule 23(b)(1), 23(b)(2), and 23(b)(3). (See Table 8-2,
"Class Actions" [331].)
C. Prerequisites: Here are the four
prerequisites which must be met before any federal class action is allowed:
[331]
1. Size: The class must be so large
that joinder of all members is impractical. Nearly all class actions involve
a class of at least 25 members, and most involve substantially more
(potentially tens of thousands). The more geographically dispersed the
claimants are, the fewer are needed to satisfy the size requirement. [331]
4. Fair representation: Finally,
the representatives must show that they can "fairly and adequately
protect the interests of the class." Thus the representatives must not
have any conflict of interest with the absent class members, and they must
furnish competent legal counsel to fight the suit. [332]
D. Three categories: As noted, there
are three categories of class actions, all of which must meet the four
prerequisites listed above. They are covered in Rules 23(b)(1), 23(b)(2) and 23(b)(3). [334 - 335]
Test: A class action is
allowed under 23(b)(1) if individual actions
by or against members of the class would create a risk of either: (a)
inconsistent decisions forcing an opponent of the class to observe
incompatible standards of conduct (Rule 23(b)(1)(A)); or (b) the impairment
of the interests of the members of the class who are not actually
parties to the individual actions (23(b)(1)(B)).
Example: Taxpayers residing in
City XYZ are unhappy with a municipal bond issue by XYZ. Some taxpayers
want the issue declared invalid; others want merely to have the terms of
the issue changed. If each taxpayer brought his own action, as the result
of one suit XYZ might have to refrain from floating the issue altogether,
but as the result of the other suit might just be forced to limit the size
of the issue. XYZ thus faces a risk of incompatible standards of conduct.
Therefore, a Rule 23(b)(1) action would be suitable
on these facts.
Example: Tens of
thousands of women may have been injured by breast implants manufactured
by D. If each brings an individual suit, D's financial resources may be
exhausted, leaving nothing for those who bring suit later. A federal court
might therefore hold that a 23(b)(1) action is suitable for
determining, once and for all, whether D sold a defective device and
whether it typically caused a certain type of medical injury. Each P would
then have a separate claim on causation and damages only. [335]
2. 23(b)(2) actions: The second
category, 23(b)(2), allows use of a class
action if "the party opposing the class has acted or refused to act on
grounds generally applicable to the class, thereby making appropriate final
injunctive relief or … declaratory relief with respect to the class as a
whole." In other words, if the suit is for an injunction or declaration
that would affect all class members, (b)(2) is probably the right category.
[336]
a. Civil rights case: The main
use of 23(b)(2) is for civil rights
cases, where the class says that it has been discriminated against, and
seeks an injunction prohibiting further discrimination. (Example: A class
action is brought on behalf of all black employees of XYZ Corp., alleging
that executives of XYZ have paid them less money and given them fewer
promotions than white employees. The suit seeks an injunction against
further discrimination, as well as money damages. This would be an
appropriate suit for a 23(b)(2) class action.)
ii. Superior method: The court
must also find that "a class action is superior to other available
methods" for deciding the controversy. In deciding
"superiority," the court will consider four factors listed in 23(b)(3), including: (1) the
interest of class members in individually controlling their separate
actions; (2) the presence of any suits that have already been commenced
involving class members; (3) the desirability of concentrating the
litigation of the claims in a particular forum; and (4) any difficulties
likely to be encountered in the management of a class action.
c. Mass torts: (b)(3) actions are sometimes
brought in mass tort cases (e.g., airline crashes) and mass product
liability cases (e.g., mass pharmaceutical cases). But many courts still
frown on (b)(3) class action status for such suits, because individual
elements typically predominate. See supra.
E. Requirement of notice: Absent
class members (i.e., those other than the representatives) must almost always
be given notice of the fact that the suit is pending. [337 - 338]
a. Individual notice: Individual
notice, almost always by mail, must be given to all those class members
whose names and addresses can be obtained with reasonable effort. This is
true even if there are millions of class members, each with only small
amounts at stake. [Eisen v. Carlisle &
Jacquelin]
[337]
2. Contents: The most important
things notice does is to tell the claimant that he may opt out of the class
if he wishes (in a (b)(3), but not (b)(1) or (b)(2), action); and that the
judgment will affect him, favorably or unfavorably, unless he opts out.
F. Binding effect: Judgment in a
class action is binding, whether it is for or against the class, on all those
whom the court finds to be members of the class. [338]
1. Exclusion: In the case of a (b)(3) action, a person may opt
out, i.e., exclude himself, from the action, by notifying the court to that
effect prior to a date specified in the notice of the action sent to him. A
person who opts out of the action will not be bound by an adverse judgment,
but conversely may not assert collateral estoppel to take advantage of a
judgment favorable to the class. (Absent class members in (b)(1) and (b)(2) actions do not have the
right to opt out and thereafter bring their own suit.)
G. Amount in controversy: Only the
named representatives of a class have to meet the requirements of diversity
and venue. However, every member of the class must satisfy the applicable
amount in controversy requirement. [339]
1. Diversity: Thus in diversity
cases, each member of the class must have more than $75,000 at stake. [Zahn v. International Paper
Co.] This
obviously makes diversity class actions difficult to bring (but has not
stood in the way of such actions in mass-tort cases).
H. Certification and denial of class
status: Soon after an action purporting to be a class action is brought, the
court must decide whether to "certify" the action. By certifying,
the court agrees that the class action requirements have been met, and allows
the suit to go forward as a class action. If the court refuses to certify the
action: [340]
1. Continued by representative: The
suit may still be continued by the "representatives," but with no
res judicata effect for or against the absent would-be class members.
Usually, the representatives will not want to proceed on this
non-class-action basis. [340]
2. Sub-class: Alternatively, the
suit may be continued by a sub-class of the original class. If so, res
judicata extends to the members of the sub-class, but not to the other
members of the original class. [340]
I. Settlements: Any proposed
settlement of the class action must be approved by the court. FRCP 23(e). The court will approve the
settlement only if it is convinced that the interests of the absent class
members have been adequately protected (e.g., that settlement is not being
urged by greedy contingent-fee lawyers who will pocket most of the settlement
money). [341]
J. Attorneys' fees: The court may
award reasonable attorneys fees to the lawyers for the class. These fees are
generally in rough proportion to the size of the recovery on behalf of the
class. [342]
1. Federal statute requires: In the
usual case of a class action brought under a federal statute, attorneys fees
may be awarded only if a federal statute so provides. [Alyeska Pipeline Service Co.
v. Wilderness Society.] Congress has authorized attorneys fees for many
important federal statutes that are frequently the subject of class action
suits (e.g., civil rights and securities law).
K. Mass tort cases: Class actions
have begun to be used increasingly in "mass tort" cases. [342 - 350]
1. Definition of "mass
tort": Mass torts fall into two categories. In a "mass
accident," a large number of persons are injured as a result of a
single accident. (Examples: an airplane crash, the collapse of a building,
or the explosion of a factory accompanied by the release of toxic
substances.) In a "mass product liability" case, a defective
product is sold to thousands of buyers, who are thereby injured. [342]
2. Single-accident cases: In
mass-tort cases involving a single "mass accident," or a single
"course of conduct" by one defendant, many courts allow class
certification. Cases involving a single explosion, or a single toxic dumping
by one defendant on one occasion, are examples. [344]
3. Product liability cases: In
mass-tort cases involving product liability, by contrast, most federal
courts have held that the federal class action is not suitable. Usually
courts don't allow it to be used even for the limited purpose of deciding
core "all or nothing" issues like D's negligence, or the product's
defectiveness. [345]
a. State-by-state law variations:
If the suit is based on diversity (as it usually will be in a product
liability case), and involves plaintiffs from many states, and if the
federal court would therefore somehow have to apply the differing laws of
many states (because of Erie), the court is less
likely to grant class status.
d. Novelty of
claim: Where the plaintiffs' claim is "novel," i.e., untested
(e.g., that cigarette companies have fraudulently entrapped young people
into addiction to nicotine), certification is unlikely, because the court
won't want to let the future of a whole industry turn on whether one jury
likes the claim.
V. INTERVENTION
A. Intervention generally: By the
doctrine of "intervention," certain persons who are not initially
part of a lawsuit may enter the suit on their own initiative. The person who
intervenes is called an "intervenor." [356]
2. Distinction: Where the
intervention is "of right," no leave of court is required for the
party's entry into the case. Where the facts are such that only
"permissive" intervention is possible, it is up to the court's
discretion whether to allow intervention.
Example: P (the
U.S. government) sues D, a local Board of Education, charging that D has
drawn school boundaries on racially-discriminatory lines. X, the parent of
a black public school student attending D's schools, wants to intervene.
Probably X's intervention will be of right, since X has an interest in the
subject-matter, and his ability to bring his own action in the future will
be compromised if the U.S. loses the case. X will have to show that the
U.S. may not adequately represent X's interest, which he can do by showing
that the U.S. may be pursuing other objectives, such as settling a lot of
suits quickly.
Example: P, from California, sues
D, from New York, in a diversity suit. X, from New York, would like to
intervene. Even if the court concludes that the requirements of intervention
of right are met by X, X cannot intervene because there is no supplemental
jurisdiction for intervention of right; after X's intervention there would
have to be complete diversity, and this would not be the case since X and D
are both citizens of New York.
C. Permissive intervention: For a
person to seek "permissive intervention," she merely has to have a
"claim or defense" that involves a "question of law or fact in
common" with the pending action. [358]
VI. INTERPLEADER
A. Definition: Interpleader allows a
party who owes something to one of two or more other persons, but is not sure
whom, to force the other parties to argue out their claims among themselves.
The technique is designed to allow the "stakeholder" to avoid being
made to pay the same claim twice. [360]
Example: X and Y both claim a bank
account at Bank. Y demands the money from Bank. If Bank had to litigate
against Y, and then possibly defend a second suit brought by X, Bank might
have to pay the amount of the account twice. By using the interpleader
doctrine, Bank can force X and Y to litigate between themselves as to the
ownership of the account, with Bank paying only the winner.
B. Federal statutory interpleader: 28 U.S.C. §1335 allows a person holding
property which is or may be claimed by two or more "adverse
claimants" to interplead those claimants. [362 - 364]
b. Diversity:
Diversity is satisfied as long as some two claimants are citizens of
different states. (Example: Two New York residents and a Californian all
claim the proceeds of a particular insurance policy. Since either New
Yorker and the Californian form a diverse pair, the diversity requirement
for statutory interpleader is satisfied. The citizenship of the insurance
company is irrelevant.)
2. How commenced: A statutory
interpleader suit is commenced by the stakeholder. The stakeholder must, to
begin the suit, deposit into court the amount of the property in question,
or post a bond for that amount. [363]
3. Restraint on other suits: Once
the statutory interpleader suit is begun, the court may restrain all
claimants from starting or continuing any other action, in any state or
federal suit, which would affect the property. (Example: On the facts of the
above example, the court could prevent the two New Yorkers and the
Californian from starting any state action to collect on the policy.) [363 -
364]
C. Rule interpleader: FRCP 22 provides an interpleader
remedy for any person who "is or may be exposed to double or multiple
liability." This is so-called "Rule interpleader." The
stakeholder may invoke interpleader by coming into court on his own initiative
(i.e., as plaintiff), or by counterclaiming or cross-claiming as defendant in
an action already commenced against him by one claimant. [364]
a. Complete diversity: Thus
diversity must be complete between the stakeholder on one hand and all
claimants on the other (assuming there is no federal question). (Example:
Two New Yorkers and a Californian all claim a particular insurance policy,
which is issued by a California-based insurer. Rule 22 interpleader cannot be
used, because it is not the case that all claimants are of different
citizenship than the insurer.)
b. Service:
Service of process must be carried out as in any other diversity action -
that is, within the state where the district court sits, or pursuant to
the long-arm of the state. There is no "nationwide service of
process" as in statutory interpleader.
VII. REAL PARTY IN INTEREST
A. Generally: FRCP 17, and most states, require
that a complaint be in the name of the "real party in interest."
This means, for instance, that an assignee - a person to whom the original
holder of a claim assigned that claim - must sue in the assignee's own name.
[367]
2. Representatives: Executors,
administrators, bailees and other representatives are considered to be
themselves "real parties in interest." Therefore, they may bring
suit in their own names, not in the names of persons they represent (e.g.,
the estate). But the citizenship of the represented party (e.g., the estate)
generally controls for diversity purposes.
VIII. THIRD-PARTY PRACTICE (IMPLEADER)
A. Impleader right generally: A
defendant who believes that a third person is liable to him "for all or
part of the plaintiff's claim against [the defendant]" may "implead
such a person as a 'third party defendant.'" FRCP 14(a). [368]
Example: Victim is
injured when a van driven by Employee and owned by Employer runs her over.
Victim brings a diversity action against Employer, on a respondeat superior
theory. Employer believes that if Employer is required to pay a judgment to
Victim, Employee, under common law indemnity rules, will be required to
reimburse Employer. Instead of waiting until the end of the Victim-Employer
suit, Employer may instead "implead" Employee. That is, Employer
(the third-party plaintiff or TPP) brings Employee into the action as a
"third party defendant" (TPD), so that in a single action, the court
may conclude that Employer owes Victim, and that Employee owes indemnity to
Employer.
B. Claim must be derivative: For a
third-party claim to be valid, the TPP may not claim that the TPD is the only
one liable to the plaintiff, and that he himself is not liable at all.
(Examples: Impleader works for claims for indemnity, subrogation, contribution
and breach of warranty, since as to each of these, the TPD is liable only if
the TPP is liable.) [368]
2. Partial claim: Also, the TPP may
allege that only a portion of the recovery is due from the TPD. (Example: If
TPP claims that TPD is liable for "contribution" rather than
"indemnity," TPP will recover from TPD at most only part of any
judgment that TPP owes to P.)
C. Leave of court: Leave of court is
not necessary for impleader, as long as the TPP serves a summons and complaint
on a TPD within 10 days after the time the TPP served his answer to P's claim.
FRCP 14(a), second sentence. After this
10-day period, however, the court's permission to implead is necessary. [368]
D. Impleader by
plaintiff: Just as the defendant may implead a TPD, so a plaintiff against
whom a counterclaim is filed may implead a third person who is liable to him
for any judgment on the counterclaim. FRCP 14(b). [369]
E. Jurisdictional
requirements relaxed: Both personal and subject-matter jurisdictional
requirements are relaxed with respect to the third-party claim: [369]
Example: In the
above Victim/Employer/Employee example, if the suit is pending in the
Southern District of New York (Manhattan), Employee could be served in
Newark, New Jersey, even if the New York State long-arm would not reach him.
1. Claim by TPD: Once a TPD has
been impleaded, she may make claims of her own, including: (1) counterclaims
against the TPP (either permissive or compulsory); (2) cross-claims against
any other TPDs; (3) any claim against the original plaintiff, but only if it
arises out of the same transaction or occurrence that is the subject of the
plaintiff's claim against the TPP; (4) any counterclaim against the original
plaintiff, if the original plaintiff has made a claim against the TPD; and
(5) impleader claims against persons not previously part of the suit, if
these persons may be liable to the TPD for all or part of the TPP's claim
against the TPD. [369]
a. Supplemental jurisdiction: All
of the above kinds of claims, except permissive counterclaims, fall within
the court's supplemental jurisdiction, and thus need no independent
federal subject-matter jurisdictional grounds.
a. Jurisdiction: A claim by a
plaintiff against the TPD must independently satisfy jurisdictional
requirements - supplemental jurisdiction does not apply in this situation.
(Example: In a diversity case, the original plaintiff's claim against the
TPD must be supported by diversity between the plaintiff and the TPD, and
that claim must satisfy the $75,000 amount in controversy.)
G. Dismissal of main claim: If the
main claim is dismissed before or during trial, the court has discretion
whether to hear the third-party claims relating to it (assuming that these are
within the court's supplemental jurisdiction, as they will be in the case of
an ordinary impleader claim). [371]
IX. CROSS-CLAIMS
A. Definition: A claim by a party
against a co-party is called a "cross-claim." A cross-claim is made
only against a party who is on the same side of an already-existing claim
(e.g., a claim by one co-defendant against another, or by one co-plaintiff
against another). [374]
1. Transaction requirements: It
must have arisen out of the "transaction or occurrence" that is
the subject of the original action or the subject of a counterclaim. FRCP 13(g). (A cross-claim is thus
comparable to a compulsory counterclaim, in terms of how closely related it
must be to the original claim.)
2. Actual relief:
The cross-claim must ask for actual relief from the co-party against whom it
is directed. (Example: D1 claims that he is blameless, and that D2 is the
one who should be liable for all of P's claims. This is not a cross-claim,
since D1 is not asking for actual relief from D2 - instead, D1 is merely
asserting a defense.)
C. Not compulsory: A cross-claim, no
matter how closely related it is to the subject of the existing action, is
never compulsory. [375]
D. Jurisdiction: Cross-claims are
within the supplemental jurisdiction of the court, and thus need no
independent jurisdictional grounds. [375]
Chapter 9
FORMER ADJUDICATION
I. GENERAL PRINCIPLES
A. Former adjudication generally:
There is a set of rules that prevents re-litigation of claims and issues; the
set is sometimes collectively called the doctrine of "res judicata"
(Latin for "things which have been decided"). [383]
ii. Bar: Under the doctrine of
"bar," if P loses his first action, his claim is extinguished,
and he is barred from suing again on that cause of action.
b. Collateral estoppel: The
second main set of rules prevents re-litigation of a particular issue of
fact or law. When a particular issue of fact or law has been determined in
one proceeding, then in a subsequent proceeding between the same parties,
even on a different cause of action, each party is "collaterally
estopped" from claiming that that issue should have been decided
differently than it was in the first action. This is known as the doctrine
of "collateral estoppel" or "issue preclusion".
i. Use by stranger: Today, even
one who is not a party to the first action (a "stranger to the
first action") may in some circumstances assert in the second suit
that her adversary, who was a party to the first action, is collaterally
estopped from re-litigating an issue of fact or law decided in that
first action.
B. Applicable only to new actions:
The rules discussed in this "Former Adjudication" chapter apply only
to new actions subsequent to the action in which the original judgment was
rendered - they do not apply to further proceedings in the same action in
which the original judgment was rendered. (Examples: These rules do not apply
to a party seeking a new trial, or to one seeking to have a judgment reversed
on appeal.) [384]
C. Privies: The rules of claim
preclusion and collateral estoppel apply not only to the parties to the first
action, but also to other persons who are said to be in "privity"
with the litigants in the other action. [384]
Example: Victim is injured when hit
by a van driven by Employee and owned by Employer. Victim sues Employer under
respondeat superior. Employer notifies Employee of the latter's right to
control the defense, but Employee does nothing. Victim gets a judgment against
Employer, but Employer goes bankrupt before Victim can collect. Victim then
sues Employee. Employee, as an indemnitor of Employer, will be covered by the
same rules of claim preclusion and collateral estoppel in the Victim-Employee
suit as Employer would be in a new suit by Victim. Therefore, Employee will be
collaterally estopped from denying that he was at fault.
II. CLAIM PRECLUSION (MERGER AND BAR)
A. Definition: If a judgment is
rendered for the plaintiff, his claim is "merged" into the judgment
- the claim is extinguished and a new claim to enforce the judgment is
created. If a judgment is for the defendant on the merits, the claim is
extinguished and nothing new is created; plaintiff is "barred" from
raising the claim again. [384 - 385]
Example 1: P sues D for $1,000
damages resulting from an automobile accident. The verdict and judgment grant
P only $500. His claim, or cause of action, is "merged," meaning
that P cannot start a new suit for the other $500.
Example 2: Same as Example 1, but D
is found not to be liable at all. P is now "barred" from making the
same claim in a second suit against D.
B. No claim-splitting: The basic
concept of claim preclusion is that a judgment is conclusive with respect to
the entire "claim" which it adjudicates. Consequently, P may not
split her claim - if she sues upon any portion of the claim, the other aspects
of that claim are merged in her judgment if she wins, and barred if she loses.
[385 - 386]
Example: P believes that D has
breached a contract with him, and that P has lost $100,000 as a result. If P
sues for $25,000 and loses, P may not bring a second suit for the other
$75,000. The same is true if P wins the $25,000 - the rule is "one suit
per claim."
1. Installment contracts: Where the
claim relates to payments due under a lease or installment contract,
generally P must sue at the same time for all payments due at the time the
suit is filed. (Example: If Tenant is six months behind in the rent at the
time Landlord brings suit, Landlord must sue for the entire six months at
once - any months missed that are not sued for when the suit is brought are
waived.) [385 - 386]
2. Personal and property damage
from accident: Today, most states hold that claims for personal injuries
arising from an auto accident are part of the same cause of action as a
claim for property damage sustained in the same accident. Thus generally, P
must bring a single suit for property damage and personal injuries from a
given accident. [387]
3. Multi-theory actions: The rule
against splitting a claim also applies where P has several claims, all
arising from the same set of facts, but involving different theories or
remedies. The modern rule is that there will be merger or bar of all of P's
rights against D with respect to all or any part of the transaction, or
series of connected transactions, out of which the action arose. [386 - 387]
Example: P works for D, and is then
fired. P sues D for breach of an alleged oral contract promising two years
of employment. P loses. P then sues D, alleging the same facts, and
asserting the right to recover in quantum meruit for the reasonable value of
services he performed for D. A modern court would probably hold that the two
suits related to a single transaction or series of transactions, and that
the first judgment against P therefore barred him from bringing the second
suit.
a. Equitable/legal distinction: A
demand for legal relief (generally, money damages) and a demand for
equitable relief (e.g., an injunction) will both be deemed to be part of
the same claim if they relate to the same facts - therefore, demands for
both types of relief will have to be made in the same action. (Example: If
P believes that D is violating P's copyrights, P cannot bring a suit for
an injunction, followed by a separate suit for money damages.) [387]
4. Exceptions based on
jurisdictional requirements: There is one important exception to the rule
against splitting a cause of action - if the court trying the first action
would not have had subject matter jurisdiction for a claim now asserted in
the second action, there will be no bar or merger. (Example: P sues D in
state court under state antitrust law, and loses on the merits. P then sues
D in federal court alleging the same facts, and charging a violation of
federal antitrust laws. Because the federal courts have exclusive
jurisdiction of antitrust claims, the state court could not have heard the
federal claim. Therefore, the second - federal court - action will not be
barred.) [387]
5. State law followed in diversity
cases: In diversity cases, the federal courts follow state law with respect
to the application of the rules of claim preclusion (as well as collateral
estoppel). In other words, if (and only if) the law of the state where the
district court sits would have granted claim preclusion or collateral
estoppel effect to an earlier state court judgment, the federal court will
do the same. [387]
C. Adjudication on merits: Not every
loss by the plaintiff in the first action will act as a "bar" to
subsequent suits on the same claim. Plaintiff will be barred only if the
original adjudication in favor of the defendant was "on the merits."
[388 - 389]
1. Non-prejudicial grounds: In
other words, some of the ways that a plaintiff may "lose" the
first suit are deemed to be "without prejudice" to future suits.
For instance, if the first suit is brought in federal court, plaintiff will
not be barred from bringing a new action if the first action is dismissed
because of: (1) lack of jurisdiction; (2) improper venue; or (3) failure to
join an indispensable party. See FRCP 41(b). Any other type of
dismissal (e.g., dismissal for failure to state a claim under 12(b)(6)) does bar a future claim by
P, unless the court granting the dismissal specifies otherwise in its order.
FRCP 41(b), last sentence. [388]
D. Counterclaims: A defendant who
pleads a counterclaim is, in effect, a plaintiff with respect to that claim.
He is bound by the outcome, just as a plaintiff is bound by the outcome of his
original claim. [389 - 390]
1. No splitting: Thus D may not
split his counterclaim into two parts. (Example: P sues D for damages from
an auto accident. D counterclaims for his property damage from that same
accident, but not for personal injuries. Whether D wins or loses with the
counterclaim, he may not bring a second suit against P for personal injury
arising from that same accident.) [389]
2. Compulsory counterclaim: Observe
that state and federal rules making certain counterclaims
"compulsory" serve a similar function to the merger or bar
doctrine. (Example: P sues D for damages arising out of an auto accident.
The rules of merger and bar do not by themselves force D to assert either
his claim for property damage, or for personal injury, arising out of that
same accident. But in the federal court and in most state courts, any
counterclaim by D for either of these things would be
"compulsory," so that D would not be able to use that claim in a
subsequent suit against P.) [390]
E. Change of law: Once a final
judgment has been rendered (and any appeals resolved), not even a change in
the applicable law will prevent claim preclusion from operating. The fact that
the losing party would, because of such an overruling of legal precedent, win
the lawsuit if she were allowed to start it again, is irrelevant. [390]
F. Privies not party to the first
action: Remember that sometimes, a non-party may be so closely related to a
party to the first judgment, that she will be both burdened and benefited by
that judgment as if she had been a party to it. The non-party is said to be a
"privy" to the first judgment. A trustee and his beneficiary, and an
indemnitor and her indemnitee, are examples of privity relationships. [391]
III. COLLATERAL ESTOPPEL
A. Definition: Regardless of which of
the parties to an action wins, the judgment decides for all time any issue
actually litigated in the suit. A party who seeks to re-litigate one of the
issues disposed of in the first trial is said to be "collaterally
estopped" from doing so. [392]
Example: Cars driven by A and B
collide. A sues B for property damage. Assume that the jurisdiction has no
rules making any counterclaim a compulsory counterclaim. B declines to assert
any counterclaim in the suit brought by A. A recovers $1,000 of damages. The
jurisdiction follows common-law contributory negligence, by which even a small
amount of contributory negligence by A would have barred him from recovery. In
a subsequent suit, B sues A for personal injuries arising out of the same
accident.
The court will hold that B is
"collaterally estopped" from re-litigating the issue of whether A
was negligent - the first judgment in A's favor amounted to a specific finding
that A was not negligent, because contributory negligence would have barred
recovery if he had been. Therefore, B cannot recover from A on a negligence
theory. [Little v. Blue Goose]
a. Issue vs. claim: Whereas claim
preclusion applies only where the "cause of action" or
"claim" in the second action is the same as the one in the first
action, collateral estoppel applies as long as any issue is the same, even
though the causes of action are different.
b. Suit not prevented: Whereas
claim preclusion prevents the second suit altogether, collateral estoppel
does not prevent suit, but merely compels the court to make the same
finding of fact that the first court made on the identical issue.
2. To whom applied: Collateral
estoppel always applies where both the parties in the second action were
present in the first action. Collateral estoppel sometimes, but not always,
applies where only the person against whom estoppel is sought to be used was
present in the first action. [398 - 400]
B. Issues covered: For an issue to be
subject to collateral estoppel, three requirements concerning that issue must
be satisfied: (1) the issue must be the same as one that was fully and fairly
litigated in the first action; (2) it must have been actually decided by the
first court; and (3) the first court's decision on this issue must have been
necessary to the outcome in the first suit. [393 - 398]
a. Need not raise all defenses:
This means that D in the first trial is not obligated to raise all of his
defenses. D does not forfeit these defenses by not raising them as he
would forfeit a compulsory counterclaim. (Example: P sues D for an
installment of rent under a lease, and wins. In a later suit for
subsequent installments due on the same lease, D will not be collaterally
estopped from denying that the lease was ever executed - since the issue
of execution was not actually litigated and decided in the first action,
collateral estoppel does not apply even though D could have raised this as
a defense the first time. [Jacobson v. Miller])
b. "Full and
fair" litigation: Also, the party against whom collateral estoppel is
sought to be used must have had a "full and fair opportunity" to
litigate the claim. (Example: In a negligence case by P against D, D
asserts his own due care, but the trial court unjustly excludes relevant
evidence tending to prove that D was careful. In a subsequent suit by D
against P for his own injuries, D will not be estopped from contending
that he behaved with due care, since he lacked a full and fair opportunity
to litigate the due care issue in the first suit.)
Example: A sues B for common-law
negligence, and loses. The court's findings state that both parties were
negligent, and recovery is denied on the grounds that A was contributorily
negligent. B then sues A. A claims that the earlier finding of B's
negligence, together with the doctrine of contributory negligence, mean that
B cannot now recover as plaintiff.
Held, collateral estoppel should
not be applied against B. The first case's finding that B was negligent was
not necessary to the first verdict, since A's contributory negligence would
have been enough to dispose of the case. Collateral estoppel applies only to
issues whose adjudication was necessary to the verdict in the first action.
[Cambria v. Jeffery]
a. Alternate findings: Where a
judgment rests upon alternate findings, either of which would be
sufficient to sustain it, courts are split about whether either finding
should be given collateral estoppel effect. The modern (and Restatement)
view is that neither should be given collateral estoppel effect, since the
case could have turned out the same way without that finding. [394]
4. Reasonably foreseeable future
litigation: Many courts today apply collateral estoppel in a subsequent
action only where that action was reasonably foreseeable at the time of the
initial suit. Otherwise, "defeat in one suit might entail results
beyond all calculation¼; a trivial controversy might bring utter disaster
in its train." [The Evergreens v. Nunan] [394]
5. Court of limited
jurisdiction: A finding made by a court of limited jurisdiction may be
denied collateral estoppel effect in a subsequent suit that would have been
beyond the first court's jurisdiction. This is especially true where the
first court has jurisdiction limited to a dollar amount, and also has
informal procedures. (Example: If the first suit is in a small claims court,
most of which have no pleadings, no rules of evidence, and usually no
lawyers, a finding will generally not be held to have collateral estoppel
effect in a later suit that could not have been brought in the small claims
court.) [394 - 395]
7. Settlement: In
most jurisdictions, the settlement of an action by consent of the parties
has no collateral estoppel effect. (The settlement document may, of course,
provide otherwise.) [396]
a. Exceptions: But there are two
situations in which a conclusion of law generally will not be given
collateral estoppel effect: (1) where the two actions involve claims that
are substantially unrelated to each other; and (2) where there has been a
significant change in legal principles between the two suits, especially
where use of collateral estoppel would impose on one of the parties a
significant disadvantage, or confer on him a significant benefit, with
respect to his competitors.
Example: D is a liquor
wholesaler. P, a state liquor licensing agency, sues to have D's license
revoked on the grounds that D is really functioning as a retailer. The
trial court finds in D's favor. P then sues X, whose conduct is the same
as D's; a higher court finds in favor of P, and orders X's license
revoked. Now, P brings a second suit against D for revocation.
Collateral estoppel effect will
probably not be given to the first P-D suit, since there has been an
intervening change in legal principles, and since use of collateral
estoppel would give D a perpetual, and unfair, advantage over X and other
similar competitors.
C. Persons who can be estopped:
Generally, only the actual parties to the first action can be bound by the
finding on an issue. [398 - 400]
1. Privies: But someone who is very
closely related to a party in the first action can also be bound. Such
"privies" include successors in interest to real property,
beneficiaries of trusts, and indemnitors. [398 - 399]
Example: A bus owned by Bus Co.
collides with a car driven by Driver. In a suit between these two, Bus Co.
is held to have full responsibility. Passenger, who was riding in Driver's
car, now sues Driver. Even though the court in the first action decided that
Driver was not at all at fault, Passenger is not bound by this finding. This
is because Passenger was a complete stranger to the first action (the rules
about who was a privy do not apply to the passenger-driver situation where
the two are not related), and a stranger can never be bound by any finding
of fact in the first action.
1. Mutuality: Originally, it was
held that a party not bound by an earlier judgment (because not a party to
it) could not use that judgment to bind his adversary who was a party to the
first action. This rule prohibiting a stranger's use of collateral estoppel
was known as the doctrine of "mutuality." [400]
a. Abandoned: Nearly all courts
have abandoned the general principle of mutuality. While many courts
refuse in particular circumstances to allow the use of estoppel by one not
a party to the first action, it is no longer a general rule that a
stranger to the first action cannot benefit from findings of fact made
against her adversary.
Example: A bus owned by Bus Co.
and a car driven by Driver collide. Also involved in the collision is
Pedestrian, who is badly injured. Bus Co. sues Driver for negligence, and
the court decides that Driver was totally at fault. In a separate suit,
Pedestrian now sues Driver. Application of the doctrine of mutuality would
prevent Pedestrian from collaterally estopping Driver on the issue of
negligence. But most courts today would give Pedestrian the benefit of
collateral estoppel in this situation, even though Pedestrian was a
stranger to the first action.
Example: The SEC sues D, a
corporation, based on a false proxy statement D has issued. The trial
court decides in the SEC's favor, concluding that the proxy statement
contained certain falsehoods. P then brings a stockholder's derivative
action against D, based on the same proxy statement. P wants to
collaterally estop D from relitigating the falsity of the proxy statement.
Held, P may use collateral
estoppel. This is true even though P was a stranger to the first action,
and even though P's use is offensive, in the sense that the person seeking
collateral estoppel is the plaintiff in the second action. [Park Lane Hosiery Co. v.
Shore]
ii. Incentive to litigate:
Whether the person to be estopped had a reasonable incentive to litigate
the issue fully in the first suit, which will depend in part on whether
the second suit was foreseeable at the time of the first suit. (The more
incentive the party had to litigate the first time, the fairer it is to
bind him now.)
iv. Multiple plaintiff anomaly:
Whether permitting offensive estoppel would present a danger of the
"multiple plaintiff anomaly." (Example: All 200 passengers are
killed when a plane owned by D crashes. If each P sues seriatim, and
offensive estoppel is allowed, D might win the first 20 suits, lose the
21st, and then be estopped from denying liability in the next 179. This
would be unfair to D.)
v. Procedural opportunities:
Whether there are procedural opportunities not available to the party in
the first action but available now in the second action - if there are,
allowing offensive estoppel is less likely. (Examples: There was less
extensive discovery available in the first action, or no jury trial
right.)
vi. Issue of law: Whether the
issue is one of law or merely of "fact." (Where the issue is
one of law, the court is likely to use the more flexible doctrine of
stare decisis, rather than collateral estoppel.)
3. Criminal conviction: Courts are
split as to whether a party's previous criminal conviction may serve to
collaterally estop him in the subsequent civil action. (Example: D is
convicted of drunk driving after getting into an accident in which V is
injured. In a subsequent civil suit by V, some but not all courts will allow
V to collaterally estop D from denying that he was drunk.) [404]
b. Acquittal: Acquittal in a
criminal case is never binding in a subsequent civil action. The main
reason is that to grant estoppel effect to an acquittal would be to allow
the criminal defendant to bind a non-party. (Example: D is prosecuted by
the state for drunk driving in an accident in which V was injured. D is
acquitted. V now brings a civil action for negligence against D, and seeks
to show that D was drunk. V will not be collaterally estopped by the
acquittal, because V was not a party to the earlier action. A second
reason for rejecting estoppel is that the "beyond a reasonable
doubt" standard of proof necessary in a criminal case was tougher for
the prosecution to meet than the "preponderance of the evidence"
standard used in the later civil suit, so estopping V would be extra
unfair to him.) [405]
IV. FULL FAITH AND CREDIT
A. Full Faith and Credit generally:
Special problems arise when two related suits occur in different
jurisdictions. There may be two different states involved, or a state court
and a federal court. In either situation, the second court's handling of the
first court's judgment is governed by a general principle called "full
faith and credit." [410]
1. Two states: When the courts of
two different states are involved, the result is dictated by the Full Faith
and Credit Clause of the U.S. Constitution (Article IV, Section 1). This clause requires each
state to give to the judgment of any other state the same effect that that
judgment would have in the state which rendered it. [410]
Example: P wins a
judgment against D in Connecticut, but cannot find any property in
Connecticut on which to levy. P then locates property held by D in Illinois.
P may collect in Illinois by bringing a suit based on the Connecticut
judgment. Because of the Full Faith and Credit Clause, the courts of Illinois
must accept this judgment at face value, and may not reconsider any issues
which it concluded. The Illinois courts must therefore give P all the rights
that a judgment creditor would have if he got an Illinois judgment,
including the right to have the sheriff sell D's Illinois assets.
a. Misinterpretation: The rule of
full faith and credit applies even where the second court is convinced
that the first court made a mistake on law or facts. Indeed, State A must
give full faith and credit to an adjudication of State B even if that
judgment was based on a misinterpretation of the laws of State A. [Fauntleroy v. Lum] [410]
b. Collateral
attack on jurisdiction: There is one exception to the rule that the second
court may not reconsider any aspect of the original judgment: the second
court may reconsider whether the first court had jurisdiction (either
personal or subject-matter), provided that the jurisdictional question was
not litigated or waived in the first action. This is the doctrine of
"collateral attack."
Example: P sues D
in Connecticut. D defaults, by never appearing in the suit at all. The
Connecticut court enters a judgment in favor of P. P then sues in
Illinois, having found property of D there. At D's request, the Illinois
court may consider whether the Connecticut court ever had valid personal
jurisdiction over D. If it concludes that Connecticut did not, the
Illinois court need not enforce the judgment. (But if D had litigated the
jurisdictional issue in Connecticut, Illinois could not reconsider the
jurisdiction question, even if it was convinced that Connecticut wrongly
determined that it had jurisdiction.)
2. State followed by federal court:
If the first court is a state court, and the second court is a federal
court, a similar full faith and credit principle applies, but this is not
dictated by the Constitution. Instead a federal statute, 28 U.S.C. §1738, requires every federal
court to give to the judgment of any state court the same effect that that
judgment would have in the courts of the state which rendered it. [411]
3. Federal followed
by state court: Conversely, if the first judgment is in a federal court and
the second suit is in a state court, full faith and credit again applies,
though the mechanism by which this happens is not so clear. (Probably the
Constitution's Supremacy Clause dictates that the state
court honor a federal court judgment). [414]
B. Duty to follow the res judicata
effect of first judgment: The full faith and credit principle - that one
jurisdiction's courts must honor the judgments of another jurisdiction -
applies not only generally, but specifically to the issue of res judicata
effect. In other words, the earlier judgment must be given exactly the same
effect, in terms of claim preclusion and collateral estoppel, as the judgment
would have in the court that rendered it. [412]
1. Two states: Thus a state must
give to the judgment of any other state at least the res judicata effect
that that judgment would have in the state of its rendition. (Example: P
litigates an issue with D in State 1. The issue is decided in favor of P. X
now sues D in State 2 in a suit raising the same issue. The State 2 court
determines that the courts of State 1 would allow X to use offensive
collateral estoppel in this situation. The courts of State 2 must follow
suit, even if the State 2 courts do not themselves generally allow offensive
collateral estoppel in this situation.) [411]
a. Greater effect: Courts are
split about whether they may or should give greater effect to another
state's judgment than it would have in that other state. Probably no
constitutional principle prevents the second state from giving greater
effect to the first state's judgment, so it is within the second court's
discretion whether to do so. (Example: On the facts of the above example,
assume that State 2 would allow offensive collateral estoppel, but State 1
would not. Probably State 2 is free to give the State 1 judgment
collateral estoppel effect, but State 2 might choose not to do so.)
2. State followed by federal:
Similarly, if the first judgment is in a state court and the second suit is
in a federal court, the federal court must grant the state court judgment
the same res judicata effect that it would have in that state. [411 - 414]
a. Right of Congress to specify
otherwise: There is an exception to this rule: Congress is always free to
provide otherwise, in a specific context. If Congress does provide
otherwise, then the federal court may be free to deny the earlier state
court judgment the res judicata effect it would have in the rendering
state. (Example: 42 U.S.C. §1983 gives a person the right
to bring a federal suit against anyone who violates his constitutional
rights "under color of" state law. Suppose Congress added a
clause to §1983 saying that any state court criminal proceeding absolving
an official of unconstitutional conduct should be ignored by the federal
court hearing the §1983 action. If Congress did this, a federal court
hearing a §1983 suit would be free to deny any state judgment the
collateral estoppel effect it would have in the courts of the state that
rendered it. But Congress has not in fact done this in §1983, so the
federal courts must honor the collateral estoppel effect of state court
judgments in §1983 suits.)
b. Can't give
greater effect: The federal court may not give greater preclusive effect
to the prior state court judgment than that state would give it. [Migra v. Warren City Board
of Ed.]
(Example: If the initial state judgment comes from a state that does not
allow non-mutual offensive use of collateral estoppel, the federal court
hearing the second suit may not apply such collateral estoppel, even if
the situation is one in which the Supreme Court allows the use of
collateral estoppel.) [413]
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