Civil Procedure I Outline

Civil Procedure Outline

A. Traditional Bases for Jurisdiction Pennoyer v. Neff

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Personal Jurisdiction is acquired by personal service inside the territorial limits of the forum state or by the voluntary appearance of the defendant there to contest the suit on its merits.

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Plaintiffs are not free to bring suit wherever they chose. The 14th Amendment to the U.S. constitution forbids the states from “depriving any person of life, liberty or property without due process of law.” No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States

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No state can exercise jurisdiction over persons or property outside its territory

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In Personam jurisdiction State exercises jurisdiction over the person because: i) the person is present in the State; ii) the person consents to (or waives objection to) the exercise of jurisdiction, agreeing to be present in the State. iii) the person is a citizen of the state; iv) the person's status is being determined based on a relationship to a citizen of the state.

[2] Consent A defendant may consent to the court’s personal jurisdiction in advance of suit, and such consent, if expressly made, functions to cure any jurisdictional defects that might otherwise exist. Examples of express consent include: (1) forum-selection clauses in contracts [see Carnival Cruise Lines, Inc. v. Shute,499 U.S. 585 (1991), in which the Court upheld a clause printed on the back of the plaintiff’s steamship ticket]; and (2) consent documents filed by foreign corporations with state authorities as a condition for doing business in the forum. [3] Waiver When a nonresident defendant objects to a state’s personal jurisdiction over him/her on due process grounds, he/she must preserve such objection or risk waiving it. Waiver need not be express. It is enough that a party act in a way which is incompatible with the party’s argument that the forum lacks a basis for asserting personal jurisdiction over him/her. Defendant will waive his/her challenge to personal jurisdiction if he/she either fails to include it in a motion to dismiss made on other grounds, or fails to otherwise raise the matter by motion or pleading. Today, most states, as well as the federal system, no longer require a defendant to make a special appearance for the purpose of contesting jurisdiction, separate and apart from any other grounds on the merits of the case. Defendant does not prejudice his/her motion to dismiss by joining with it other grounds for dismissal. Blackmer v. United States: Personal jurisdiction authority can be based on upon U.S. citizen ship (served outside the U.S. was a U.S. citizen) Miliken v. Meyer: Personal Jurisdiction may be based upon the defendant’s domicile within the forum (domicile in WY lived in CO).

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In Rem jurisdiction: State exercises jurisdiction over property based on the property's presence in the State.

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quasi in rem jurisdiction: State exercises jurisdiction over a person based on his/her ownership of property present in the State. Jurisdiction limited to disposition of the property, or judgment in an amount no greater than the value of the property

To satisfy the Constitutional requirement of due process, personal jurisdiction requires the presence or consent (actual or implied) of the defendant or his property.

Could Mitchell serve Neff by mail based on: 1) Neff's close relationship to Oregon,

2) his having engaged Mitchell to do legal work there, 3) his ownership of property there, 4) his having lived there when the debt was incurred, 5) his use of Oregon law and courts to file his claim for his land, and 6) his intent to return there to live? 1877 -> 1945

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Under Pennoyer, a state could not exercise jurisdiction in an action in personam over an absent, non-consenting, non-resident defendant. But if the defendant was “doing business” in the state, it was sometimes construed to have consented or be present in the state, and therefore subject to jurisdiction under Pennoyer.

B. Expanding the Bases of Personal Jurisdiction Hess v. Pawloski

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Personal Jurisdiction may be acquired by enactment of a nonresident motorist statute. The decision rests upon the state police power.

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Massachusetts has a statute that states by driving in the state you appoint the registrar (now the secretary of state) as your agent for service process

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Limited the proceedings to accidents in the state no hostile discrimination of non-residents but tends to put them to the same standards of their residents.

C. A new theory of Jurisdiction International Shoe Co. v. Washington

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Implies that the minimum contacts jurisdiction is limited to claims arising out of or related to the defendants contacts with the forum state (i.e. claims arising out of shoes sold in Washington).

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In an action in personam, a State MAY exercise Personal Jurisdiction over persons found outside its borders if they have such minimum (read substantial) contacts, ties or relations with the forum state that the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice. Contacts cannot be casual or isolated.

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The Supreme Court extends jurisdiction in actions in personam to certain absent, non-consenting, non-resident defendants, as long as their contacts, ties and relations with the state are sufficiently substantial that the exercise of jurisdiction does not violate traditional notions of fair play and substantial justice.

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What criteria do we look for -

Undue Burden -- substantial inconvenience to Defendant.

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Whether Defendant had systematic & continuous activities in the state which gave rise to the claim.

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Whether Defendant has exercised the benefits and protections of the state’s laws.

D. Specific Jurisdiction and State Long Arm Laws

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Specific Jurisdiction is properly asserted when the defendant’s activities in the state gave rise to the claim. (arise from or related to) A nexus exists between the defendant, the state, and the claim

1. The development of the Long Arm Laws: reach out of the state to call a nonresident defendant back into the state to defend lawsuits. If they base personal jurisdiction on specific acts they require that the claim arises out of those acts.

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Gray v. American Radiator & Standard Sanitary Corp. In this case the court assumes that the valve is going to be sold in interstate commerce (other places than Ohio). The Gray court concluded the that Ohio valve maker (which had done nothing in Illinois) had “committed a tortious act” in the state, since the explosion that caused P’s injury took place in Illinois. Expansive interpretation (criticized but not overruled)

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“As a general proposition, if a corporation elects to sell its products for ultimate use in another State, it is not unjust to hold it answerable there for any damage caused by defects in those products.”

McGee v. International life Insurance Co. Although the defendant has only single or isolated contact with the forum sate, there is personal jurisdiction on a cause of action related to that forum activity (specific jurisdiction) 

In the due process test they focus on California’s interest in litigating this claim and the convenience factors. Balance the interests of the plaintiff, defendant, and the forum to determine if exercising jurisdiction is desirable.

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Note that in note 2 on p. 90 the authors ask if the case should be seen as: 1) illustrating a two-part test. First, are there enough contacts to satisfy the requirement of due process. Second, if yes, do the interests of the plaintiff, defendant and forum, on balance, favor jurisdiction; or 2) illustrating a relaxed requirement of contacts when the interests of the forum state and the plaintiff strongly favor jurisdiction

Hanson v. Denckla

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It is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum sate, thus involving the benefits and protections of its laws.

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Choice of law: A claim with multistate contacts or a claim of federal or state, we have to decide what law to use. Separate from choice of jurisdiction.

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Unilateral activity cannot satisfy the requirement of contact. . . .

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"It is essential in every case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws". (p.92)

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Minimum contacts may be based on systematic and continuous relationship, or on single substantial contact, but there must be a purposeful relationship with the forum state, an intentional affiliation.

2. Due Process and Long-Arm Statutes World-Wide Volkswagen Corp. v. Woodson 

Supreme Court held that Oklahoma had no jurisdiction because foreseeablity is not enough. Quantity as well as quality of the contacts, only one car it is too much of a stretch to get jurisdiction.

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Forseeabilty question is not whether product will forseeably reach forum state, but whether Defendant’s contacts with the State are such that it should "reasonably anticipate being haled into court there" (foresee itself being sued there). (p. 98).

Keeton v. Hustler Magazine: The plaintiff’s lack of contacts with the forum state will not defeat otherwise proper personal jurisdiction

Kulko v. Superior Court: In order for the defendant to be subject to personal jurisdiction based on an act done outside the forum state that has effects there, the act mst be “wrongful activity” or “commercial activity” affecting state residents.

Burger King Corp. v. Rudzewicz 

An individuals contract with an out-of-state party alone cannot automatically establish sufficient minium contacts in the other party’s home forum. The factors of prior negotiations, and contemplated future consequences along with the terms of the contract and the parties actual course of dealing that must be evaluated in determining whether the defednat purposefully established minimum contacts.

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Supreme Court: The contract by itself is not enough and needs contacts, and the contacts need to be purposefully established.

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Two Prong Test: Have to find minimum contacts then the Court must consider burden on the Δ, interests of the forum state, plaintiff’s interest in obtaining relief, the interstate judicial system interest in obtaining the most efficient resolution, shared interest of the several states in furthering fundamental substantive social polices. If these things can be found then the contacts can be more minimal. (pg 109 last paragraph)

Asahi Metal Industry Co. v. Superior Court: Failed to establish minimum contacts if they did find minimum contacts it would fail the second prong because it was unreasonable to subject a Japanese company to CA jurisdiction.

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Everyone joins in Part I (statement of the facts), Part (II A) O’Connor, Powell, and Scalia (minimum contacts: no minimum contacts in this case, awareness/foreseeabilty not enough need other things), Part (IIB) O’Connor, Brennan, White, Marshall, Blackmun, Stevens, Powell, Reinquest even if they did have minimum contacts would not be reasonable because they still need to look at other factors (burden on the Japanese company) Court must consider burden on the Δ, interests of the forum state, plaintiff’s interest in obtaining relief, the interstate judicial system interest in obtaining the most efficient resolution, shared interest of the several states in furthering fundamental substantive social polices. If these things can be found then the contacts can be more minimal. (pg 109 last paragraph) Part III did not establish minimum contacts so not subject to jurisdiction

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Dissent Brennan, White, Marshall and Blackum thought that there were minimum contacts agree with parts I (statement of the facts) and IIB (not reasonable to subject Japan company to CA jurisdiction). Do not agree with IIA (no minimum contacts) said that they did have minimum contacts because of the foreseeability/awareness of placing the product in the stream of commerce do not need to add other stuff (i.e. Green paragraph)

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Dissent Stevens, White, Blackum: Part IIB alone requires reversal (unreasonable and unfair to subject Asahi to CA jurisdiction) so there is no need to even talk about if there are minimum contacts since it fails on the other part.

E. General Jurisdiction and State Long-Arm laws Perkins v. Benguet Consolidated Mining Co. : If contacts are continuous and systematic then it is ok to have jurisdiction over the Company. Contacts were continuous and systematic (had an office, files, correspondence, salary checks, meetings, and bank accounts) so it is not violating federal due process. Helicopteros Nacionales de Columbia, S.A. v. Hall: If the cause of action does not arise out of or relate to the nonresident defendant’s activity in the forum state, the defendant cannot be sued there unless there is significant continuous and systematic form activity. 

Justice Brennan believed that if the lawyers of the decedents attached a negligence charge on the piolots then the contacts would arise out of and relate to the claim

New Bases of Jurisdiction-technological Contacts Bellino v. Simon 

No jurisdiction over Mr. Spence because they only had one phone conversation initiated by Mr. Aubert. (his ads in a national trade magazine was not sufficient because they were maintained by his company not by him personally.) Jurisdiction over Simon because although in the beginning initated by Mr. Aubert, Mr. Simon’s contacts were more continuous, and on his website that invited communication (by filling out a form on the web, he invited people to talk to him). Court said that this was sufficient to establish contacts. Looking at the five factors in the reasonable test (in green) the court said it was. (the defendant did not show that it would be unreasonable or he would suffer a great burden).

 Sliding scale test: (active, passive, interactive) Active (conducts business over the net) Passive (gives information) Interactive (exchanges information with a host computer) pg 141 Harris v. Balk: The situs (position or site) of a debt is not the place where the creditor is located, but wherever the debtor may be. The debt seized was not related to the plaintiff’s cause of action

F. Jurisdiction Based upon Power over Property Shaffer v. Heitner: changed the rule means that the minimum contacts analysis of personal jurisdiction is now applicable to quasi in rem and in rem jurisdiction. In this type of quasi in rem where the cause of action is closely related to the property sequestered (seized) the factual nature of the controversy is likely to provide the necessary minimum contacts among the forum state, the defendant, and the litigation. In this case the court did not find minimum contacts and held that Delaware did not have jurisdiction.

In in rem: because the presence of the property within the forum state suggests that there would be other ties among the defendant, the forum state, and the litigation. Unless there are other contacts with the non -resident there is no jurisdiction.

Jurisdiction based on physical Appearance Burnham v. Superior Court

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Husband goes to CA to visit his kids and conduct business after dropping off the kids the wife serves him with a CA court summons. The defendant tries to say that his contacts are not minimum as stated in Shaffer v. Heitner. The court says that minimum contacts are not needed when served and present in the forum state (it has been that way for over a 100 years). Other rules are needed to prove consent or presence for an absent defendant.

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Brennan talks about the benefits that someone has when they visit the state (are the minimum contacts) in addition to being present. Scalia says that minimum contacts are not necessary when present because then when someone were to visit those minimum contacts (benefits) are then sufficient to be served when you leave. Scalia says fairness exists because of the continuing tradition. Brennan says that fairness exists by the contacts.

Insurance Corp. Of Ireland v. Compagnie Des Bauxites 

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CBG incorporated in DL but principal in Republic of New Guinea purchased insurance from a domestic insurer in Penn. And from a group of foreign insurance companies through a London brokerage. Sued in Penn foreign insurance companies contested jurisdiction. CBG was trying to get proof of jurisdiction through discovery the insurers did not have the option of blocking the reasonable attempt of CBG to meet its burden of proof.

Bremen v. Zapata off-shore Co.

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Zapata a Houston based American Co. contracted with a Unterweser a german Co. to move a drilling rig from LA to Italy. The rig was damaged off of FL. Contract had a provision that all disputes would be litigated in “London court of Justice”. Contract had a provision to bring suit in London cannot sue in Florida.

Carnival Cruise Lines, Inc. v. Shute 

Had a provision that all disputes would be litigated in Florida plaintiff tried to sue in Washington (Wash. Resident injured on the ship). The court said because of the provision it was ok to litigate in Florida because the Cruise had many locales, limits confusion to what forum to bring suit conserves judicial resources, passengers benefit by having reduced fares.

 Forum selection clauses will be honored unless enforcement is shown by the resisting parties to be unreasonable under the circumstances.

FEDERAL COURTS Rule 4K: (1)(A) federal court piggybacks the states long-arm statute Policy issue do not want to give more rights in federal court Federal JX over the Parties: There is a two step analysis involved for finding federal jurisdiction over the litigating parties: (1) statutory authority and (2) Constitutional authority under the 5th Amendment. Rule 4K: (1)(B) parties joined under rules 14 and 19 “100 miles from the place from which the summons issues. Rule 4K: (1)(C) defendant who is subject to federal interpleader jurisdiction which allows for nationwide service Rule 4K: (1)(D) is a service rule that the federal court may use when a federal statute authorizes jurisdiction Rule 4K: (2) limited federal long arm provision applies to defendants whom claims arising under federal law are asserted when there is no applicable federal process provision and who are not amenable to suit in any one of the fifty states.

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R: The 5th Amendment due process clause has been held to allow a federal court to exercise jurisdiction over a non-resident ∆ if she has the appropriate national contacts (FRCP 4(k)(2)) and when authorized by statute of the United States under rule 4 (k)(1)(d). • R:Under FRCP 4(k)(1)(A) the π won’t be able to obtain jurisdiction over a resident ∆ in federal court unless she could do so in local state courts. Fair notice: Even if a court has authority to judge the dispute between the parties or over the property before it, the court may not proceed unless ∆ received adequate notice of the case against him. The procedure used must be reasonably calculated to apprise the parties of the action. Feasibility of Individual Notice Alternative means of notice, such as newspaper publication, may satisfy due process where individual notice is impracticable and the party seeking to bypass individual notice can demonstrate that (1) the suit is in the interest of the absentees, (2) they will be adequately represented by one before the court, and (3) the value of their individual interests is not too great. Where the identities and parties can be reasonably ascertained, however, individual notice is required. Mullane v. Central Hanover Bank & Trust Co. 

The court felt that the banking law was unconstitutional did not have sufficient notice. The statute notice to known beneficiaries is inadequate, not because it fails to reach everyone but because under the circumstances it is not reasonably calculated to reach those who could easily be informed by other means (mail). It would not be a burden to have them mail the notice.

Greene v. Lindsey  

Posting a summons on the door of a tenant’s apartment was not sufficient notice, they should have mailed it as well. Brennan said that notice provided must be tested with reference to the existence of feasible alternatives. O’Connor, Burger, and Rehnquist dissented saying that the mail might fail as well due to loss, misdelivery. Posting notice at the tenant’s door at least says that the notice got as far as to the tenant’s door.

FRCP 4(d)(2) provides incentives for a defendant to agree to waive formal service and instead accept service by mail. Upon notice of the commencement of the action and a request for waiver of service from the plaintiff, a defendant who so agrees is

granted an extended time within which to answer – 60 days instead of the 20 days granted when process is formally served. FRCP 4 imposes upon the defendant “a duty to avoid unnecessary costs of serving the summons,” and therefore, failure to accept process by mail subjects the defendant to liability for costs of service as well as attorney’s fees incurred in any motion to collect the costs of service. Maryland State Firemen’s Association v. Chaves

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Said that the service was not valid under the old rule 4(c)(2)(C)(II) or the new 4(d) because they mailed it 1st class mail not certified mail as stated in the old rule. In the new rule send notice and a request for waiver of service. If the defendant refuses to waive service the court imposes the costs on the defendant unless there is good cause. The Maryland rule says that the notice also needs to be certified mail not the case here so invalid.

Personal Service: Service By Whom: Federal Rule 4(c)(2)(A) permits service “by any person who is not a party and is not less than 18 years of age Service by an Individual federal Rule 4(d)(1) permits service by: (a) personal delivery(b) abode service, leaving a copy of the summons and process at home or place of abode (c) to an agent authorized by appointment or by law Federal Rule 4(c)(2)(C)(i) permits the plaintiff to borrow the forum-state’s methods of service of process Federal Rule 4(c)(2)(C)(ii) permits mail service to be used but if the defendant does not acknowledge the mail service then follow up service by another method must be utilized. Service to a Business Entity Federal Rule 4(d)(3) permits service by:(a) personal delivery to an officer or a manager or general agent or (b) to an agent authorized by appointment or by law. Federal Rule 4(c)(2)(C)(i) Permits borrowing the forum-state’s methods Federal Rule 4(c)(2)(C)(ii) permits mail service with follow up alternative service required if mail service is not acknowledged National Equipment Rental, LTD v. Szukehent  

The court decided that Florence Weinberg was their “agent authorized by appointment” to receive process within the meaning of Federal Rule 4(e)(2). Even though they did not have a personal relationship with her. Justice Black dissented because he said it was not fair to appoint Florence Weinberg as their agent (not fair to put that kind of stuff in contracts) because it will burden people to defend and travel.

State Ex Rel. Sivnksty v. Duffield  

Majority: If in the state voluntarily then jailed you can be served. Dissent: voluntary became involuntary because he could not post bail. Not fair to serve incarcerated people.

Wyman v. Newhouse (not on midterm)  

He flew to Florida and when at the airport saw her and her sister and was served with a suit for 500k (promise to marry). A stranger came upon him happened to be an attorney that knew the case but he decided to go with his own attorney in NY. The NY attorney told him to ignore the summons and a default judgment was entered. The appeals court said served by fraud and lacks jurisdiction makes the judgment null and void.

Fuentes v. Shevin (not on midterm)

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The Supreme Court says that before a provisional remedy (garnishment or attachment) is used to seize property the 14th amendment requires notice and an opportunity to be heard “at the time when the deprivation can still be prevented”. Ex Parte provision: there may be cases where a creditor could make a showing of immediate danger that a debtor will destroy or conceal disputed goods.

Service of process: A case can be dismissed even if jurisdiction is found for the defendant if there is a defect in the service of process.

North Georgia Finishing, Inc. v. DI-Chem, Inc.

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The trial court thought this was different from Fuentes because it was between two corporations. Owed $51,279 and the Plaintiff got a bond to garnish the bank account and the defendant got a motion to discharge the notice. Still not notice and no provision for an earlier hearing only requires to file with a clerk stating the amount claimed and reason to apprehend the loss, bond for double the amount to protect Defendant, and the defendant can dissolve bond if files a bond conditioned for payment. This does not matter still no notice and no prior hearing not different from Fuentes.

Connecticut v. Doehr

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No notice or hearing or extraordinary circumstances or post of a bond. An assault and battery claim that attached 75 k on the Defendant’s home. Even though the land was not taken away the credit (title) of the defendant was tarnished and is sufficient to require prior notice (due process). Violated due process ex parte absent extraordinary circumstances

Richmond Tenants Organization, Inc. v. Kemp 

Evicted drug offenders from public housing immediately without notice and without a hearing. When the action involves the government less notice and opportunity to be heard is needed.

Opportunity to be heard: Defendant must be given an opportunity to be heard, which must be given to the ∆ before there is a significant interference with his property rights.

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Weighing Analysis: 1. Interest of property owner (degree of harm) 2. risk of error 3. interest of the party requesting the prejudgment remedy

Defenses to claims of jurisdiction:

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Special appearance: In a special appearance, the ∆ appears in court with the express purpose of contesting jurisdiction. By making a “special appearance”, the ∆ has not consented to personal jurisdiction. In accordance with rule 12, the objection for a motion to dismiss suit due to lack of jurisdiction must be made on the first response to the court. General Appearance: Can have a general appearance by filing anything other than a special appearance. Limited Appearance: file in conjunction quasi in rem jurisdiction appearance is limited to the particular piece of property. (cannot serve them on another non related suit) Collateral attack: A judgment won in one jurisdiction is generally enforceable in another, under the full faith and credit doctrine. If the action is won as a default judgment in one jurisdiction, the ∆ may collaterally attack the suit in another jurisdiction on the grounds that the first court had no personal jurisdiction. Statute regarding notice is not valid under due process (Mullane).

FRCP 12(g) and 12(h)(1) provide that the following defenses are waived unless they are asserted in a single pre-answer motion, or, if none is filed, in an answer or reply or any amendment thereto permitted as a matter of course: • lack of personal jurisdiction. [FRCP 12(b)(2)] • improper venue. [FRCP 12(b)(3)] • insufficiency of process. [FRCP 12(b)(4)] • insufficiency of service. [FRCP 12(b)(5)] In contrast, a defense of lack of subject matter jurisdiction [FRCP 12(b)(1)] may be raised at any time, even after the trial. [FRCP 12(h)(3)] Subject Matter Jurisdiction I. II.

Subject matter jurisdiction is the authority of a court to hear a particular type of case, as opposed to personal jurisdiction, which is the authority of a court to hear a case concerning a particular defendant. The constitution allows congress to grant the federal courts much more authority than it actually has. As such, the question of subject matter jurisdiction in federal courts almost always focuses on statutes, rather than the constitution.

III.

IV.

V.

Diversity of citizenship a. 28 U.S.C. § 1332: federal courts have original jurisdiction over cases in which the plaintiff and defendant are citizens of different states, and the amount in controversy exceeds $75,000. i. Under Strawbridge v. Curtis, complete diversity is required, meaning that no plaintiff can be a citizen of the same state as any defendant. ii. For individuals, citizenship is determined by domicile. 1. Mas v. Perry: “domicile” means living in a place with intent to stay there. iii. A corporation is a citizen of the state in which it is incorporated, and the state in which it has its principal place of business. 1. “Principal place of business” – 3 tests a. “Brain” test: a corporation’s principal place of business is wherever it is headquartered; where most business decisions are made. b. “Brawn” test: a corporation’s principal place of business is wherever it engages in the most activities (sales, manufacturing, etc.) c. “Holistic” test: a combination of the two tests. If an unicorporated association is not treated as a citizen for purposes of federal diversity jurisdiction but instead courts consider the citizenship of each of its members. An alien admitted to the United States for permanent residence shall be deemed a citizen of the state in which such alien is domiciled. Diversity jurisdiction unaffected by the presence of aliens from the same foreign nation. i. Amount in controversy - $75,000 1. A.F.A. Tours v. Whitchurch a. All that is required is that the plaintiff believe in good faith that the damages pleaded are accurate. b. To warrant dismissal based on the amount in controversy, the defendant must prove to a legal certainty that it is less than the required amount. 2. If the defendant pleads the correct amount in controversy, but ends up being awarded less, the court can, at its discretion, refuse to award costs, or even award costs to the defendant. Arnold v. Troccoli i. In a federal court asked for 15k and in a state court originally asked for 6k. Cannot do that did not have a good reason for the increase.

3.

VI.

Zahn v. International Paper Co. i. The Supreme Court held that only those plaintiffs who individually met the then applicable 10k jurisdictional amount requirement could be members of the class. Aggregation of claims a. A single plaintiff may aggregate all claims against a single defendant, and add up the damages for all of the claims for the purpose of the amount in controversy b. If suing one defendant for more than 75k, other parties can tag along with related claims for less than 75k

Federal question a. 28 U.S.C. § 1331 – the federal district courts have original jurisdiction over any claim arising from the constitution, laws, or treaties of the United States. b. In determining what, exactly, is required for a federal question, there are a few tests which may be applied. i. Osborne v. Bank of The United States (1824) 1. The court granted a temporary injunction restraining the state auditor from collecting tax. The state auditor forcibly entered the bank and took the money he claimed the state was owed. The court ordered the state officials to return the money that had been taken from the bank. The only federal question was that the bank was federal it is too remote for federal jurisdiction. 2. The claim is that the state tax violates the federal state constitution (this really is a federal question) even though the court says it is not. c. TB Harms Co. v. Eliscu i. The fact that a certain property interest is created by federal law does not make all claims related to that interest federal questions. ii. In this case, the issue involved a copyright, which is the province of federal law, but the question was over who had a contractual right to the intellectual property, which is a matter of contract (state) law. iii. Therefore, there is no federal question. d. Louisville & Nashville R. Co. v. Mottley i. Anticipated defenses which rely on federal law do not create a federal question. ii. A well-pleaded complaint, stripped of all surplusage, must raise an issue of federal law in order to constitute a federal question.

e.

VII.

2 tests i. Justice Holmes – “Creation” test 1. For there to be a federal question, federal law must create the cause of action under which the plaintiff is suing. 2. This test will work 99% of the time, and is quite easy to apply. ii. Justice Cardozo – “Meaning and Application” test 1. When a state claim raises an issue of federal law, or hinges on the interpretation of a specific federal law, there is a federal question, if the federal law at issue creates a private right of action. a. Merrell Dow v. Thompson i. Using a federal statute as evidence of negligence per se does not raise a federal question, when that statute creates no private right of action. 2. The test has been somewhat refined a. Grable & Sons Metal, Inc. v. Darue Engineering and Manufacturing i. A state law claim hinged on the interpretation of a federal law which did not create a private right of action. ii. The Supreme Court found that this is sufficient to raise a federal question if: 1. The claim necessarily raises an issue of federal law 2. Said issue is substantial 3. Exercising jurisdiction over the claim would not upset the balance of federal and state judicial responsibilities Supplemental Jurisdiction a. United Mine Workers v. Gibbs i. When a claim over which the federal courts have original jurisdiction is brought along with a state law claim, can the federal courts hear the state law claim? 1. Yes, if the claims all arise out of a common nucleus of operative facts (CNOOF), that is, the exact same occurrence gave rise to all of the claims. 2. Reasons in Gibbs: If federal claims are dismissed state claims should be as well, if state claims predominate, whether in terms of proof, of the scope of the issues raised, or the comprehensiveness of the remedy sought the claims may be dismissed without prejudice (back to state court). If the state claim is closely tied to federal policy then it should stay in Federal Court. Diminishing the likelihood of jury confusing that would justify the separation of the claims.

b. 28 U.S.C. § 1367 codified the rule in Gibbs i. 1367(a) 1. All claims which are so related to a federal question (CNOOF) that they form part of the same case are subject to federal jurisdiction. This includes claims against other parties. ii. 1367(b) – when jurisdiction is founded solely on diversity: 1. Adding parties which destroy diversity also destroys supplemental jurisdiction. c. 1367(c) i. District courts my, at their discretion, decline supplemental jurisdiction if: 1. The claim raises a novel or complex issue of state law 2. The state claim substantially predominates over the claim over which the federal court has original jurisdiction 3. The federal court has dismissed all claims over which it had original jurisdiction 4. in exceptional circumstances, there are other compelling reasons to decline jurisdiction d. 1367 (d) i. provides a tolling period for SOL for any supplemental claim that is dismissed and for any other claims voluntarily dismissed at the same time thereafter. Tolling period at least 30 days (more if state law allows) for the nonsupplemental claims voluntarily dismissed in federal court and refilled in state court. i. The above list is exhaustive. If none of those features are present, the district court MUST exercise supplemental jurisdiction. ii. When additional parties are joined, based on supplemental jurisdiction, only one of them needs to meet the amount in controversy requirement, if jurisdiction is founded on diversity (Exxon Mobil case). Ankenbrant v. Richards 

As a matter of judicial economy, state courts are eminently more suited to work of this type then are federal courts, which lack the close association with the state and local government organizations dedicated to handling issues that arise out of conflict over divorce, alimony, and child custody decrees. Only exception over a tort action arising out of the domestic relations.

Marshall v. Marshall 

Bankruptcy court did not have jurisdiction over probate matters it did have jurisdiction over tort action arising out of probate matters.

e.

Counterclaims i. FRCP 13(a) – compulsory counterclaim 1. If the defendant wants to bring a counterclaim against the plaintiff, and the counterclaim arises out of the same transaction or occurrence (CNOOF), the defendant MUST bring the counterclaim at the time of the main claim, or it is waived ii. FRCP 13(b) – permissive counterclaim 1. If a counterclaim is unrelated to the claim, the defendant may or may not bring it at the time of the main claim. It is not waived if the defendant does not immediately raise it.

Federal courts § 1312 (d) (1969) which provides that a federal court may retain subject-matter jurisdiction even when the complaint does not present a claim within its original jurisdiction if defendant introduces a federal defense or counterclaim. Holmes group Inc. v Vorna Do Circulation Systems, Inc. 

The core of the courts decision as the view that federal law counterclaims cannot form the sole basis for federal question jurisdiction.

Skelly Oil Co. v. Phillips Petroleum Co. 

Suit was brought under the Declaratory Judgment Act for a declaration that certain contracts had not been terminated. Had the Plaintiff simply sued to enforce the contract, the complaint would not have raised a federal question. Artful pleading anticipates a defense based on federal law would contravene the whole trend of jurisdictional legislation by congress.

Smith v. Kansas city Title & Trust Co. 



An example of a claim that although created by state law “arises under” a law of the United States by virtue of requiring a determination of the meaning or application of such law. Shareholder sued to enjoin the Trust Company, a Missouri Corp. from investing in certain federal bonds on the ground that the Act Of Congress authorizing their issuance was unconstitutional. Supreme Court said it was under federal law because the right of relief depended upon the construction or application of the Constitution or laws of the U.S. , even though it was a state-created cause of action. Justice Holmes (professor Kionka agrees) dissented on the ground that the cause of action had been created by state law and not by federal law so it did not “arise under” federal law.

Moore v. Chesapeake & Ohio Ry. Co. 

Kentucky Employer Liability Act, which provide that the Plaintiff could not be held responsible for contributory negligence or assumption of risk where his injury resulted from the violation of any state or federal statute enacted for the safety of employees. (using the federal Safety Appliance Act as a standard of care) Plaintiff alleged that his injury was due the Defendant’s failure to comply with the Federal Safety Appliance Act. Supreme Court said it was not a federal question because the central issue of the case was a tort and the standard or care was measured from a federal statute so it was really a state action.

Shoshone Mining Co. Rutter 

Allowed miners to file patents on their claims and which set up a shceme for settling the conflicting claims of miners. The federal statute provided that the right to possession was to be determined by the “local customs or rules of miners in the several mining districts, so far as the same are applicable and not inconsistent with the laws of the United States. This case arose from a federally created cause of action that turned on issues of state law so no federal jurisdiction.

Luckett v. Delpark, Inc.



Pantee apparently could have sued for infringement of his patent but chose instead to sue for breach of contract. It was his choice to bring breach of contract so he did not give federal court jurisdiction of the cause as one arising under the patent laws.

f.

Third-party defendants i. FRCP 14(a) – when defendant may bring in third party 1. A defendant may bring a suit against a third party who is or may be liable for all or part of the plaintiff’s claim against the defendant. 2. Third party defendants may then bring counterclaims against the defendant, or the plaintiff ii. FRCP 14(b) – when plaintiff may bring a third party 1. When a counterclaim is made against a plaintiff, the plaintiff may bring third parties in any way that a defendant may, unless diversity is destroyed.

Equipment & Erection Co. v. Kroger 



Kroger (citizen of Iowa) brought a suit in a Federal District court of Nebraska based on diversity Citizenship that OPPD negligent operation of the power line had caused her husband’s death. OPPD in turn filed a third-party complaint against Owen saying that it was their fault. Plaintiff amended the complaint to name Owen as a defendant. Later found out that Owen and the Plaintiff were both from Iowa. Could not have originally brought the claim to Federal Court because Owen and Plaintiff were from the same state (cannot evade the complete diversity requirement by using supplemental jurisdiction). Would be alright if the Defendant brought Owen but because the Plaintiff amended the complaint it made it wrong.

Removal I.

28 U.S.C. § 1441 – statute concerning removal a. 1441(a) – any claim over which the federal court has original jurisdiction, which is filed in state court, may be removed, by the defendant (by all defendants, if there are multiple defendants), to the district court sitting in the same geographic location as the state court in which the action was originally brought. b. 1441(b) – when jurisdiction is founded solely on diversity, defendants may not remove if they are citizens of the state in which the action was brought. c. 1441(c) – when there is a federal question, with unrelated state-law claims joined to it, all claims may be removed to federal court, and the district court, at its discretion, may remand all claims in which state-law predominates. d. 1441 also serves as a venue statute. When a case is properly filed in state court, and properly removed to the federal district court in the same geographic region, that court is automatically the proper venue. e. When defendant asserts a federal law counterclaim, the plaintiff may not remove (Shamrock Oil v. Sheets). f. If a plaintiff wants to avoid removal, he cannot amend the complaint to reduce the amount in controversy. i. If the plaintiff drops all federal claims, the court may, at its discretion, remand to state court. g. The district court may remand all claims which raise novel and complex issues of state law, when such claims are joined pursuant to 1367, but it may never remand federal law claims.

Executive Software North America Inc. v. United States District Court for the Central District of California



The district court did not rely on the supplemental jurisdiction statute, 28 U.S.C.S. § 1367(c), in making its decision and failed to articulate how the circumstances that warranted declining jurisdiction were exceptional and compelling under the statute. OUTCOME: The court reversed, holding that the district court clearly erred when it relied on a basis for remanding pendent state claims that was not permitted by statute and failed to articulate its reasons for remanding the pendent claims.

American Fire & Cas. Co. v. Finn



The U.S. Supreme Court held that there was no right to removal because the claim against the insurer was not separate and independent from the claim against the non-diverse codefendant as required under 28 U.S.C.S. § 1441(c). The Court held that the suit involved a single wrong to the insured. The Court then held that the insurer was not estopped from protesting the removal action because a lack of party diversity deprived the district court of original jurisdiction over the action..

Borough Of West Mifflin v. Lancaster





Because the district court had jurisdiction, the action was properly removed from state court under 28 U.S.C.S. § 1441. The court found that § 1441(c) granted to the district court only limited authority to remand a case, and that respondents' claims were not separate and independent. The court found that 28 U.S.C.S. § 1367(c) did not sanction the remand of the entire case because the district court had supplemental jurisdiction over the other claims. 1441 (c) is unconstitutional – when there is a federal question, with unrelated state-law claims joined to it, all claims may be removed to federal court, and the district court, at its discretion, may remand all claims in which state-law predominates. Venue

I. II.

III.

IV.

Venue is the place of trial. It is governed by statute. 28 U.S.C. § 1391(a) a. Applies to cases in which jurisdiction is founded on diversity b. Civil actions may be brought in a district where: i. Any defendant resides, if all defendants reside in the same state, or ii. A substantial part of the events giving rise to the action occurred, or a substantial part of the property which is the subject of the action is situated, or iii. Where any defendant is subject to personal jurisdiction, if there is no district where the action might otherwise be brought. 1. This only applies when the event giving rise to the claim occurs outside the United States, and there are multiple defendants, all of whom reside in a different state. 1391(b) a. Applies to cases where jurisdiction is not founded on diversity (federal question) b. Civil actions may be brought in a district where: i. Any defendant resides, if all defendants reside in the same state, or ii. A substantial part of the events giving rise to the action occurred, or a substantial part of the part of the property which is the subject of the action is situated, or iii. A judicial district where any defendant may be found, if there is no district where the action may otherwise be brought. 1391(c) – a corporate defendant is said to reside in any district in which it is subject to personal jurisdiction. a. In a state which has more than one district, and in which a corporate defendant is subject to personal jurisdiction, the corporation resides in any district in that state within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate state. i. If there is no such district in that state, the corporation is said to reside in the district with which it has the most significant contacts. b. Residence, for individuals, is determined by domicile. c. An alien, under 1391(d) may be sued in any district. Transfer of Venue

I.

Transfer from a proper venue to another proper venue a. 28 U.S.C. § 1404 i. For the convenience of parties and witnesses, and in the interest of justice, the district court may transfer a case to any other district in which it might have been brought. 1. Hoffman v. Blaski – where a case “might have been brought” means where the defendant could have been served, and where there was personal jurisdiction and proper venue. 2. Essentially, where the plaintiff could have brought the action in the first place ii. Public and private interests are to be considered when determining when transfer is warranted iii. Private interests 1. Ease of access to proof 2. Ability to compel witnesses to attend 3. Cost of compelling witnesses to attend 4. Access to the site of the accident (if applicable) 5. Any other problems which show a need to transfer iv. Public interests 1. Administrative difficulties of trial in an inconvenient forum 2. Burden on the community for jury duty 3. Interest in following public proceedings 4. Local interest in local controversies 5. Choice of law issues

v. State law travels with a case transferred under 1404, but not 1406. Ferrens v. John Deere Co. Plaintiff is a resident of Penn. missed the Statute of Limitations in Penn. so sued in Penn. for contract and warranty claims. In a second suit he sued for Torts in a Mississippi court and that case was transferred to Penn., but the court refused to use Mississippi law and dismissed. Supreme court reversed in holding that, in a diversity suit, the transferee forum is required to apply the law of the transferor court, regardless of who initiates the transfer. II. Transfer from an improper venue to a proper venue a. 28 U.S.C. § 1406 i. If an action is brought in an improper venue, the district court shall dismiss, or transfer to a proper venue. ii. If there is no proper venue in the United States, the case must be dismissed. b. Any party who wishes to contest venue must do so in a timely manner, or such objection is waived. 

Goldlawr, Inc. v. Heiman 

Section 1406 authorizes the transfer of an action even if the transferor court lacks personal jurisdiction. Recognizes that the interest of justice may require that the complaint not be dismissed but rather that it be transferred in order that the plaintiff not be penalized. Forum Non Conveniens

I.

II.

Gulf Oil v. Gilbert a. Factors to include for forum non conveniens i. Is there an available alternative forum which is more convenient than the current forum? 1. If so, and that forum is within the United States, it may be transferred 2. If not, it must be dismissed ii. Is the forum selected by the plaintiff prejudicially inconvenient? iii. Consider the public and private interests Private relative ease of access to sources of proof witnesses evidence view of premises and all other practical problems that make trial of a case easy, expeditious and inexpensive. Public congestion of the court Jury duty is a burden to impose money and time cost to a community that has no relation to the suit Local interest in having localized controversies decided at home Piper Aircraft v. Reyno a. If the superior forum is outside the United States, the case must be dismissed. Choice of law: State law in Federal courts

I.

II. III. IV.

Rules of Decision Act – 28 U.S.C. § 1652 a. The laws of the several states, except when Congress or the Constitution has provided otherwise, are to be applied in all civil actions where jurisdiction is founded on diversity. b. This means that in diversity actions, state law is to be the rule of decision, but what type of state law should be applied? Substantive law: Law which governs how people interact in society (criminal law, tort law, contract law, property law, etc.) Procedural law: Law which governs how the court system functions, and how disputes are to be resolved in a legal context (rules of pleading, statutes of limitations, etc.) Swift v. Tyson a. Only state statutory law is to be applied in diversity actions. b. Absent the presence of a state law which is on point, the “general law” (common law) is to be applied. c. This rule led to forum shopping, and companies would even reincorporate in different states to gain favorable law for a given suit.

V.

Erie Co. v. Tompkins a. Under Swift, when there is no applicable state statute, the decisional law of the federal courts is to be applied. b. In this case, there was a direct conflict between state decisional law and federal decisional law. c. Swift v. Tyson was supposed to create uniformity in the law, which never happened. d. The general rule from Erie is that federal courts are to apply state substantive law (whether decisional or statutory), and federal procedural law. Guaranty Trust Co. v. York a. Under Erie v. York, all substantive state law is to be applied in federal courts, while applying federal procedural law. b. This case involved a statute of limitations which would have denied the plaintiff recovery. Should the court apply it? c. The court decided to apply it, rejecting the distinction between substantive and procedural state law in federal courts. d. Instead, it focused on whether a law is “outcome determinative” i. That is, whether the outcome of the case can be significantly affected by the application of, or refusal to apply, the state rule. e. This is based on the notion that the outcome of a case heard by a federal court sitting in diversity should be substantially the same as that of a case heard by the court of the state in which the federal court sits. f. This decision is designed to eliminate the phenomenon of forum shopping, since the outcome of a case should now be somewhat the same in federal and state court. “Outcome determinative” test: a. Strictly speaking, any state procedural law can be seen as outcome determinative, such as rules related to service of process, and how complaints need to be filed. b. However, nobody really thinks that these purely technical rules should be applied in federal courts. c. So, the de facto test is whether a state rule will encourage forum shopping. i. Would a party be inclined to choose a different forum based solely on the application or non-application of this rule? ii. If so, the state rule is to be applied iii. If not, the federal rule is applied.

VI.

VII.

Outcome Determinative

Not Outcome Determinative

Substantive

Apply state law

Apply state law

Not Substantive

Usually apply state law

Do not apply state law

VIII.

IX.

X.

XI.

Hanna v. Plummer a. What if Congress provides for specific procedural rules to be applied in federal courts, as specified by the Rules of Decision Act? b. If it is a procedural rule, it is to be applied, since Congress lacks the authority to pass substantive rules of general application. c. So, when Congress has passed a procedural law to be applied in federal courts, and such a rule directly conflicts with a state rule of law, the federal rule should be applied, since it is a case where Congress has “provided otherwise” pursuant to the Rules of Decision Act. Walker v. Armco Steel The Court noted that in diversity actions, Rule 3 governed the date on which various timing requirements of the Federal Rules began to run, but it did not affect state statutes of limitation. Rule 3 and Okla. Stat. tit. 12, § 97 (1971) therefore each controlled its own intended sphere of coverage without conflict. a. Federal rules should be read to comport with their plain meaning. b. When possible, federal rules should be read narrowly enough that they do not create a conflict with the state rule, enabling the application of both rules without any problem. Stewart Organization, Inc. v. Ricoh Corp. The state law controlled the motion and that state law disfavored contractual forum-selection clauses. The Court held that § 1404(a) governed the parties' venue dispute. The fed rule was more fair takes into account more factors to determine a transfer. a. If a federal statutory rule clashes with a state rule, look at whether the federal rule is constitutionally valid. b. A federal statute is valid if it is “arguably procedural.” i. If a good faith argument can be made that a federal statute does not affect any substantive right, the assumption is that it is procedural, and therefore valid. “R” and “r” rules. a. A federal Rule (capital R) is one which is statutory (FRCP or 28 U.S.C.). i. When there is a conflict between a federal Rule and a state rule (statutory or decisional), the problem is to be analyzed under Hanna, Walker, and Stewart.

ii. Ask: is the rule valid? 1. For a federal rule to be valid, it must be arguably procedural. iii. If the rule is valid, apply it over state law. b. A federal rule (lowercase r) is one which is decisional. i. When there is a conflict between a federal decisional rule and a state rule (statutory or decisional), analyze the problem under Erie and York. ii. Ask: is the state rule substantive? If yes, apply it. 1. If the state rule is not substantive, ask: is the state rule outcome determinative, and will it encourage forum shopping? If yes, apply it.