1 Civil Procedure I Prof.

Algero Fall 2011 Outline

Chapter 2: The Constitutional Framework for US Litigation

A. Personal Jurisdiction a courts power to bring a person unto its adjudicative process; jurisdiction over a defendants personal rights rather than merely over his property interests. a. A court MUST have both personal jurisdiction and subject matter jurisdiction in order to hear a case. b. Personal jurisdiction is a constitutional requirement for both state and federal courts. A judgment rendered against a person over whom a court does not have jurisdiction violates a persons right to due process. c. There are three traditional types of jurisdiction: In personam jurisdiction Definition jurisdiction over the defendant himself --Long arm statutes In rem jurisdiction Definition jurisdiction over a defendant through a claim arising based on ownership of property. --Lawsuit arises based on defendants ownership of property. --Jurisdiction over defendant through property Obtained by serving process to the defendant personally Obtained by seizing the property. **Courts now tend to require that defendant is served personally if the plaintiff knows where he is residing. Effect of judgment it only affects the property in the claim and is limited to the value of the property; plaintiff cannot use the judgment against the defendant to seize other property Quasi in rem jurisdiction This jurisdiction came about if a claim arose out of something else besides someones ownership over property. --Property serves as an asset to satisfy a judgment that the court entered against defendant **This has since been eliminated** Obtained by seizing the property.

Effect of judgment it binds the defendant personally; defendants assets can be seized to satisfy the judgment against him

Service of process there must be proper service on a defendant before a court can exercise personal jurisdiction over him. A. Proper service has been looked at as whatever is reasonable service so that the defendant has notice of the suit and can prepare for the suit

2 B. A judgment that is entered against him without proper service violates the defendants constitutional right to due process. C. Most state statutes or rules determine what ways a defendant can be properly served --Part 2 Personal Jurisdiction A. The Origins = Pennoyer v. Neff the test for personal jurisdiction began here. Supreme Court reasoned here that a court could exercise jurisdiction over any person or any property found within its borders at the time the suit was commenced. In rem jurisdiction is only valid if the property is attached or seized at the beginning/ outset of the property. a. Presence was sufficient for jurisdiction, whether the person lived in that state or was merely passing through as long as the person was served while in the state. b. Notice for in personam, the person had to be personally served while within the state for notice to be proper; for in rem, the court could seize or exercise dominion over the property at the outset of the action. c. Full faith and credit even though states could enforce judgments on others based on sister states judgments, a court did not need to enforce enforce a judgment over a defendant who the court did not have jurisdiction over. d. Due process individuals have a right to due process under 14th Amendment, so a court cannot enforce a judgment from a previous court against a defendant that the previous court did not have jurisdiction over i. This last section was technically DICTA because the due process clause was not yet effective in law, but courts have upheld this part of the case as good law e. REMEMBER only defendants can challenge personal jurisdiction B. What Type of Jurisdiction? Specific Jurisdiction General Jurisdiction --Jurisdiction that stems from the --A courts authority to hear all the claims defendants having certain minimum against a defendant based on the place of contacts with the forum state such that the defendants domicile or place of forcing the person to litigate in that forum service without any showing that a did not offend "traditional notions of fair connection exists between the claims and play and substantial justice." the forum state. --Contacts: substantial --Contacts: continuous and systematic --The defendant must perform some act or --This will apply to corporations in the state consummate some transaction within the where they are incorporated or their forum by which it "purposefully avails" principal place of business itself of the privilege of conducting activities --This will apply to a person where the in the forum, thereby invoking the benefits person is domiciled and protections of the forum and having --An individuals physical presence in a "fair warning" that a particular activity state at the time process is served upon may subject it to jurisdiction them satisfies traditional notions of fair play and substantial justice. C. How to determine GENERAL personal jurisdiction: a. For an individuals domicile, the test for domicile is i. Actual, physical residence AND ii. Intent to remain where the person keeps his true fixed home and principal establishment & to which he intends to return when absent

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3 1. The intent will be measured by objective criteria registration to vote, drivers license, vehicle tags, new bank account, buy a new residence, etc. 2. A human can only have ONE domicile at a time, and every person has a domicile until they do both of the above to change it. For a corporations domicile, the test is where the business is incorporated and where its principal place of business is [2 domiciles]: i. State of incorporation legal act by which the corporation is created which takes place under state law. ii. Principal place of business corporations only have ONE PPB; courts use a test to determine where this location is: 1. Old Muscle test = where are most of the corporations actual physical activities, like manufacturing and sales 2. **Hertz Nerve center = where is the corporate management and operations decisions taking place? Headquarters? a. Where the managers direct, control, and coordinate the corporate activities = headquarters. This is what is used NOW. 3. Hertz Hybrid test = muscle test will be applied for corporations that have physical activities taking place in one state & nerve center for corporations that have significant physical acts taking place in several states. Miliken v. Meyer if someone is domiciled in a state, then there is automatic jurisdiction over that person because he benefits from and is protected by the forum states laws and rules. i. Domicile is NOT contingent upon continuous presence in the state. There is a difference between where someone is a resident and where someone is domiciled a person can be a resident one place but be domiciled somewhere else. Domicile is what matters! ii. The place a corporation is incorporated can be looked at similarly to domicile because it is basically like a hometown, even though there may be no employees, assets, or operations in that state. Burnham v. Superior Court served with process in California with a claim that arose outside of Cali [general jurisdiction]. Anyone, even though he is a non-resident, who is served personally in a state while he is present will be subject to jurisdiction in that state. Plurality: 4-4 [one judge didnt join either] i. Scalia Theory: 4 justices held that jurisdiction is proper because of the long history of upholding jurisdiction based on personal service in forum state. Minimum contacts test does not need to be assessed here. 1. Traditional basis of service of process in the forum based on presence is alternative to International Shoe test. Pennoyer. ii. Brennan Theory: 4 judges held that minimum contacts should be applied regardless to every single case, but personal service plus presence equals general jurisdiction. Presence = purposely avail himself of the benefits of the state. iii. **The only time personal service on defendant present in forum state will not be held as proper to confer jurisdiction is if the defendant was brought to the forum state involuntarily, like kidnapping Perkins v. Benguet Consolidated Mining Co. A state may exercise jurisdiction over a foreign corporation, even when the cause of action does not arise in the state or relate to any of the corporation's activities in the state, if the corporation carries on continuous and systematic corporate activities in that state.

4 i. General Jurisdiction = Even though the president returned to his home in OH, which was not the place the business was incorporated; he continued the operations of the business at home. ii. While in OH, he maintained an office and did many things on behalf of the company. He kept office files, carried on correspondence relating to the business and its employees, drew and distributed salary checks, maintained bank accounts that contained company funds, held director's meetings, etc. f. Helicopteros Nacionales De Colombia, SA v. Hall general jurisdiction is used here so Heli must either be incorporated in Texas, have its principal place of business in Texas, OR some approximation of business is in Texas i. These are not sufficient contacts to justify general jurisdiction under precedent that mere purchases are not sufficient contacts. If the purchase is not related to the action, or if it cant be proved that it enhanced the nature of Defendants contacts with Texas, it is not sufficient g. Goodyear Dunlop Tires v. Brown: Two 13-year old boys from North Carolina died as a result of a bus accident outside of Paris. Goodyears subsidiaries are in foreign countries and the accident took place in a foreign country. NO Jurisdiction! i. Corporation Domicile state of incorporation and the state of principal place of business. But what about general jurisdiction over a corporation like Walmart? There must be some physical presence PLUS selling in a state to create general jurisdiction. 1. Contacts must be continuous and systematic & the defendant must be hometowned in the forum state. ii. Holding = Goodyear's foreign subsidiaries were not amenable to suit in North Carolina on claims that were unrelated to any activity by them in that state no specific jurisdiction. D. The Modern Constitutional Formulation of Power a. International Shoe Co. v. Washington minimum contacts test for in personam jurisdiction i. Look at the connection between the defendant and the forum state. Jurisdiction was proper over a defendant who had minimum contacts with the state such that maintenance of the suit would not offend traditional notions of fair play and substantial justice. ii. The number of contacts necessary depends on whether the suit arose out of those contacts. 1. Arose out of contacts one or occasional contact with the state would be enough 2. Did not arise out of contacts no jurisdiction even if contacts were significant 3. **Court did hold that if contacts were systematic and continuous, then there may be jurisdiction over a corporation even if the suit does not arise from those contacts b. Shaffer v. Heitner Seizing property at the outset of the lawsuit by attaching the 26 board members stock + International Shoe minimum contacts test for in rem jurisdiction. NO Jurisdiction because there were no minimum contacts! i. In rem jurisdiction really affects the defendants interest in the property, not the property itself. Thus due process applies too. ii. Minimum contacts test if the suit does not arise out of the contacts with the state, then there is no jurisdiction. Although a defendant may have a contact with the state, the contact must be sufficient for jurisdiction not to offend traditional notions of fair play and substantial justice

5 1. No more quasi in rem jurisdiction!! 2. Property may provide sufficient contacts if the case directly involves the ownership of the property example: a boy trips on defendants property in forum state even though defendant does not live in forum state c. World-Wide Volkswagen Corp. v. Woodson purposeful availment test and the fairness test. NO Jurisdiction = no purposeful availment! i. A connection between a defendant and the forum state counts as a contact only if it results from defendants act that was purposefully directed at the forum state so that the defendant could reasonably expect to be brought into court there 1. Foreseeability is not a sufficient benchmark for jurisdiction under Due Process. The foreseeability that is critical to DP is that the defendants conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there. ii. Brennans Dissent: The Fairness Test should not be relevant to the case unless there are sufficient contacts first, which there were because the defendant purposefully availed itself of the forum state. E. How to determine if a court has specific personal jurisdiction a. Minimum Contacts Test two steps i. Are there any contacts between the defendant and the forum state? If not, then the analysis stops. If there is at least ONE contact, go on ii. Is the contact(s) a result of directed purposeful activity or purposeful availment of the benefits and protections of forum states laws? If yes, then go on to Fairness Test 1. Minimum contacts are NOT mere fortuity or unilateral act by another party must target the state or seek to serve the state. b. The Fairness Test [balancing test between all of these factors] i. The burden on the defendant [primary concern] how far must the defendant travel to defend himself in the suit? Are the legal systems different from defendants residence? ii. The forum states interest in adjudicating the dispute a state will be interested in hearing a case if one of its residents is involved or if the dispute directly affects that state. iii. The plaintiffs interest in obtaining convenient and effective relief is the forum convenient for the plaintiff? Are the witness and evidence readily available in that state? Is plaintiff from that state? iv. The interstate judicial systems interest in efficient resolution of controversies is the chosen forum the only place all the claims can be heard? Do the parties have to be split up in order to try the case? Where is the evidence? Where did the event take place? v. All the states shared interest in furthering fundamental substantive social policies if a group of states have shared laws that underlie the issue in the case, then this will come into play! F. Example of the two tests at work: a. Ashai Metal industry Co. v. Superior Court involves the US and a foreign defendant. The defendant did have contacts with the forum state, but jurisdiction was denied because the circumstances in the case did not pass the fairness test. i. Everyone agreed here: Burden on defendant was great because of distance from Ds residence to forum state, different languages of parties, and differences in legal

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6 systems; the forum had no interest in the dispute because it was a 3rd party indemnification suit; plaintiff had no interest because he was brought into the forum state by other parties and was not resident there; no efficiency issues because the case could have been litigated in the foreign states; the policies were foreign so litigating in one of those court systems would better protect their nations policies. ii. This was a plurality: 4-4 1. Brennan Theory: 4 other judges held that placing a product into the stream of commerce + reasonably anticipate that defendants goods might enter the forum = sufficient to constitute purposeful availment for personal jurisdiction. 2. OConner Theory: 4 judges held that mere awareness that defendants goods might enter the forum was insufficient to constitute purposeful availment. BUT take what Brennan said + intent to serve the forum state!! Defendant must have advertised in forum state, designed product for the forum state, etc. 3. Stevens, didnt join either: defendants sheer volume of business from products entering that state was enough to satisfy the minimum contacts test McGee v. International Life Insurance Co. since the insurance company had gone across state lines to gain customers to insure, they had made contacts purposely directed at the forum state. i. It passed the fairness test because the mode of traveling is much easier in modern times so the burden was not great on the defendant AND the plaintiff and forum state had interest in the dispute being adjudicated there since plaintiff lived in forum state & state wants to protect its citizens from crappy ins. companies. Hanson v. Denckla there were no contacts between defendant and the forum state because the woman had moved to the forum state after the connection was already made. Unilateral activity of decedent/ plaintiff cannot satisfy the requirement of contact with the forum state. Defendant must seek out = purposeful availment! Burger King Corp. v. Rudzewicz the defendants activities were purposely directed at the forum state because he sought out BK there and knew his profits were going to be sent there. Go through contacts and fairness test! i. This was a contract case and performance of the contract would take place in Florida. The contract gave the contacts with the state along with visits the defendants had made with the forum state. J. McIntyre Machinery v. Nicastro P had seriously injured his hand in New Jersey while operating a machine manufactured in England by D, a corporation that was incorporated and had its operations in England. A court may not exercise jurisdiction over a defendant that has not purposefully availed itself of doing business in the jurisdiction or placed goods in the stream of commerce in the expectation they would be purchased in the jurisdiction. i. Plurality NO JURISDICTION! 1. McIntyre did not have a presence in NJ, nor did it specifically target the NJ market. McIntyre did not own any property, offices, bank accounts, licenses, nor were any of its agents in NJ. McIntyre only came to the US for routine shows to display its merchandise to potential customers only distributed products through these shows. ii. Kennedy Theory: 4 justices adopted OConners view. When D sent products into stream of commerce, it did not have the intent to serve the forum state. NO CONTACTS. iii. Breyer Theory: 2 justices adopted both Brennan and OConners theories.

7 iv. Ginsberg Dissent: 3 justices here would have upheld jurisdiction. If you target the US, then you can be sued in any state where your product causes injury. This is broader than the Brennan opinion in Asahi. G. Internet Cases: The Effects Test and The Sliding Scale a. The Sliding Scale from Zippo i. The likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of an entitys commercial activity over the Internet. 1. This is based on determination of the website's "interactivity" 2. The greater the commercial nature and level of interactivity associated with the website, the more likely it is that the website operator has purposefully availed itself of the forum state's jurisdiction. ii. Interactivity is measured through an examination of the website's features and intended uses. 1. Websites designed to facilitate or conduct business transactions will often be characterized as interactive. 2. A highly interactive website is one that allows the consumer to interact with the company through the ability to purchase products or enter into contracts 3. A passive website that simply makes the information available to the user will be less likely to have a basis for personal jurisdiction. iii. Websites are effectively divided into three categories: 1. Websites that conduct business over the Internet, 2. Websites where users exchange information with the host computers, and 3. Websites that do little more than present information iv. The test does not require an actual presence in the state. However, the commercial activity must be substantial enough to approximate physical presence v. NOTE: Websites that do business over the Internet will yield a finding of purposeful availment, while websites that simply present information will not. b. The Effects Test [deals with an intentional act!] i. This deals with cases where there are insufficient interactivity or minimum contacts, but where an action is targeted at a particular forum. ii. In Calder, a Cali resident in the entertainment business sued the National Enquirer, located in Florida, for libel based on an allegedly defamatory article published by the magazine. 1. Personal jurisdiction was properly established in Cali because of the effects of the defendants' conduct in that state. Since the article concerned a Cali resident with a career in Cali and relied on Cali sources, the Court found the defendants actions were expressly aimed at Cali. 2. In the Internet context, the effects test can be used to examine the exact nature of a defendant's Internet activities to determine whether its out of state actions were directed at parties or entities within the forum state. iii. This is referred to as "purposeful direction," which requires 1. An intentional action, that was 2. Expressly aimed at the forum state, with 3. Knowledge that the brunt of the injury would be felt in the forum state. iv. If a court finds that a defendant's actions meets the standard of purposeful direction, then personal jurisdiction may be asserted based on Internet activities which do not

8 meet the requirement of interactivity or minimum contacts needed for personal jurisdiction. 1. Remember hat jurisdiction must NOT offend traditional notions of fair play and substantial justice! c. Pavlovich v. Superior Court no specific jurisdiction over defendant because of the sliding scale and the effects test. i. Ps website was merely passive that simply made information available to users. Merely asserting that he knew or should have known that his intentional acts would cause harm in the forum state is not enough to establish jurisdiction d. Verizon Online Services v. Ralsky the knowledge necessary means knowledge that wherever Verizon servers were you were intentionally targeting them and hurting them [dont necessarily need to know the state]. H. Consent alone is enough to confer jurisdiction over any D; it is either express or implied a. Most parties expressly consent to jurisdiction in a state because of a contract: i. Choice of Law clause the person agreeing to a contract with this clause is only agreeing to a choice a law. This is not enough to place somebody under the jurisdiction of a state specified in the clause. ii. Consent to Jurisdiction clause if the person is brought in suit under that specified states jurisdiction, then he/she will not argue against jurisdiction. However, he/she can bring suit somewhere else if they choose to. iii. Forum Selection clause parties are saying that they will be subject to personal jurisdiction in the specified forum state. They are consenting to jurisdiction of a state through this clause in the contract b. Carnival Cruise Lines, Inc. v. Shute forum selection clause in the contract between the parties. The court must look at contract to see if it is enforceable against D. i. Ds consented to the forum state jurisdiction by signing the contract because they admitted that they knew about the Forum-selection clause in the contract. I. How to Challenge Personal Jurisdiction only defendants can do this!! a. Collateral Attack Defendant believes the forum state does not have jurisdiction, so he simply wont answer the complaint. As D will not answer the suit, the court will enter a default judgment against him. After the default judgment is handed down, the plaintiff will likely attempt to enforce the default judgment in Ds state court. D would then challenge jurisdiction from the forum state, arguing that the default judgment is invalid because the original court lacked personal jurisdiction over him. i. Danger of this approach if defendant loses the jurisdiction argument in his forum state so the default judgment is enforced against him, he cannot litigate any merits of the case because the default judgment would be binding against him. b. Special Appearance defendant can appear in court simply to argue lack of personal jurisdiction without submitting himself to jurisdiction of the court. i. Defendant is only allowed to argue lack of personal jurisdiction however. If he raises any other defenses or issues during this appearance, he is deemed to have made a general appearance and thereby waives the jurisdiction defense. ii. If a defendant loses on the jurisdictional question in his special appearance, he has two options: 1. He can proceed to defend the case on the merits, which means he submits himself to jurisdiction of the court. He can appeal the case if it is ruled against him on all the same things without the defense of lack of jurisdiction.

9 2. He can take no further action, and if a judgment is entered against him in the case, he can appeal enforcement of the judgment alleging lack of jurisdiction again. However, if he loses on appeal, he is bound by the judgment against him and cannot raise any other defenses. c. However, there are limits to raising defenses against jurisdiction. These are provided under FRCP Rules 12(g) and (h). i. There are time limits [21 days] on objecting to personal jurisdiction, and if the defendant fails to file under that time limit, then he loses that right [waived]. ii. Rule 12(h) = If defendant brings a pre-answer motion raising any 12(b) defenses or objections, he must also assert any objections to personal jurisdiction at that time if he doesnt, he will lose the right to object to personal jurisdiction. iii. Those 12(b) pre-answer motions include lack of SMJ, lack of personal jurisdiction, improper venue, insufficient process, insufficient service of process, failure to state a claim where relief can be granted, and failure to join a party under Rule 19. 1. Rule 12(g) states that all of these motions must be joined together; if D fails to file all motions together he will waive 12(b)(2)-(5) lack of PJ, improper venue, insufficient process, and insufficient service of process. iv. If a defendant files pre-answer motions to the complaint, he reserves the right to bring any of these defenses up on appeal if the judgment is entered against him. J. The Constitutional Requirement of Notice Due Process clause in 14th Amendment requires that a defendant receive adequate notice of the litigation. a. Notice means the plaintiff serves a summons on the defendant and gives a copy of the complaint to the defendant. The summons commands the defendant to answer the complaint in a certain amount of time b. There need not be personal service, but notice has to be reasonably calculated, under all the circumstances, to apprise interested parties of the pending action and afford them an opportunity to present their objections. i. FRCP Rule 4 for service of process is always constitutional, so if you follow these rules, service will be constitutional. ii. Even if the defendant does not receive service of process, service of process done by the guidelines of FRCP Rule 4 will be held as constitutional in court. c. Mullane v. Central Hanover Bank & Trust Co. the court held that where there is a case dealing with multiple parties as defendants, there is no need to notify all the beneficiaries when the trust concerns many small interests. Sending notice to most of them will protect their interests sufficiently. The majority that was reached would most likely raise the issues of those who didnt know about the case protecting their interests. i. Notice has to be reasonably calculated, under all the circumstances, to apprise interested parties of the pending action and afford them an opportunity to present their objections. ii. Notice by publication may be used, but it will not suffice if the reason is because it would be burdensome for plaintiff to notify all parties involved. Notice by publication will suffice only if there is no practical way of knowing the identity or location of the party. iii. *Mullane only tells us about how the US Supreme Court sees the outer bounds of proper service of process. But state laws deal with their own legal ways to serve process of people. K. Notice of suit and FRCP Rule 4. Process consists of a summons and a copy of the complaint.

10 a. Rule 4(a)(1) the summons must contain the courts name both parties names, plaintiffs address or attorney, the time the defendant must appear/ defend, failure to defend will result in default judgment, clerks signature, and the court seal. b. Rule 4(m): If a defendant is not served within 120 days after the complaint is filed, the court must dismiss the action without prejudice [or file an order specifying a time]. If plaintiff can show good cause for his failure to serve process, the court must extend the time for service to an appropriate period. c. Rule 4(a)(2) Service of process can be made by any non-party who is at least 18 years of age. No minors or incompetents. d. Rule 4(e) Serving an individual = Rule 4(e)(2) has 3 different alternatives i. Personal service actually serving someone the papers for notice by handing them over; this can take place anywhere ii. Substituted service must be at the defendants dwelling or usual abode AND you must serve someone of suitable age and discretion who resides there. 1. Example: babysitter does not work; butler works because he lives there. iii. Service of defendants agent these can be authorized by appointment or by law. iv. Rule 4(e)(1) allowed to use methods of process allowed by state law, such as wherever the federal court sits or using mail to serve process e. Rule 4(h)(1) Service on a business (service must be in the US) i. Service of summons and complaint must be on an office agent [managing or general agent]. This will vary with the facts, but look for someone with sufficient responsibility that you would expect to transfer important papers. ii. This can also be done by substituted service and service on defendants agent^. f. Rule 4(d) waiver of service by first class mail. Plaintiffs have a duty to avoid unnecessary expenses of serving summons. Therefore, the plaintiff can request that the defendant waive service. i. Plaintiff would send off the service process to the defendant with a copy of the complaint, 2 copies of a waiver form, and a prepaid means for returning the form. 1. The defendant has 30 days to return the waiver if he is located in a US district, or 60 days if he is outside. If the defendant is in the US and waives service, he has 60 days to answer [instead of 30]; if outside US, its 90 days. ii. Rule 4(g)(5) = waiving service does not waive the right to object to personal jurisdiction or venue. iii. If defendant doesnt return waiver of service and has no good reason for failing to return it, then plaintiff will actually serve the defendant. The defendant will then be required to pay expenses for service and reasonable expenses, like attorneys fees. L. Long Arm Statutes as a Restraint on Jurisdiction a. For service on out-of-state defendants, states have implemented long-arm statutes. These statutes are a response to cases like International Shoe. b. These statutes are divided into 2 classes: i. Specific cases only allowed in specific situations enumerated in the statute itself. Example: car accident, commission of a tort, etc. 1. *Example: jurisdiction based on commission of tort some courts hold that an injury taking place in forum state constitutes the tort; other courts hold that the tort does not occur in forum state because the part/ product was manufactured in another state. ii. Broad cases allowed whenever the state can exercise personal jurisdiction over a defendant within the limits of the Constitution [DP clause].

11 c. Gibbons v. Brown the fact that Brown previously brought a suit in the forum state does not constitute sufficient activities, without more, to subject her to personal jurisdiction in the state. The fact the D had filed her suit 2 years before this suit was filed was also a substantial factor in not exercising jurisdiction over D. M. Venue = Venue determines where litigation will take place, and venue flows solely from statutory sources rather than constitutional sources. Normally only defendants can challenge venue; plaintiffs choose this at the start of lawsuit. a. Unlike personal jurisdiction, venue locates litigation not just in a state but also in a particular federal judicial district within the state If someone is clearly subject to jurisdiction in Florida, there are 3 different venues of federal judicial districts b. 28 USC 1391(a) = Venue is proper in any of the following for diversity cases: i. A district where one defendant resides, if all the defendants reside in the same state; 1. A person resides where he is domiciled ii. Any district where a substantial part of the events or omissions giving rise to the claims occurred events or omissions are substantial only if they are relevant to plaintiffs claims 1. For in rem jurisdiction, this applies to where the property lies iii. If there is NO district anywhere in the US that meets any of the two above, this will apply. Any district where any defendant is subject to personal jurisdiction this is the safety valve option because only one defendant needs to be subject to personal jurisdiction. 1. However, any defendant could then bring action for lack of personal jurisdiction. c. 28 USC 1391(b) = Venue is proper in any of the following for federal question cases will be exactly the same as above except for the third: i. If there is NO district anywhere in the US that meets any of the two above, this will apply. Any district in which any defendant may be found. d. 28 USC 1391(c) treats each district as a separate state and provides that a corporation defendant is deemed to reside in that district if it has minimum contacts with that district. This also means that the district that has the most significant contacts will win over the others. i. Wherever a corporation is incorporated, it will subject to jurisdiction in all that states districts. Venue is proper is any district where there would be personal jurisdiction over the corporation. ii. If a state has jurisdiction over an individual or corporation defendant (yor not), then any district may be the venue for the litigation plaintiff gets to choose. iii. If plaintiff sues a citizen of the US and an alien, then the alien is deemed to be a resident in every district in the US venue would then be proper where the US citizen defendant resides. N. Discretionary Refusal of Jurisdiction Transfer & Forum Non Conveniens a. Forum Non-Conveniens court created doctrine that allows a federal or state court to dismiss an action even though venue is proper. This takes place when transfer is not allowed because the proper court is not in the same system as the original court. i. Court process: 1. The court will first ask is an alternate forum available to hear the case? 2. If so, the court will then consider public factors and private factors in determining whether the chosen forum is grossly inconvenient. ii. Private factors relate to individual litigants and making the trial easy, expeditious, and inexpensive.

12 Where did the underlying events occur? Where are the witnesses and evidence located? What are comparative overall costs of litigating in the 2 places? Would it be possible to compel unwilling witnesses to testify in Ps chosen forum? Are there any language issues? Would a judgment in the chosen forum be enforceable in the place where Ds assets are located? iii. Public factors relate to the court system 1. Administrative difficulties of the courts, 2. Interest in having local controversies decided at home, 3. The interest of having the trial in a forum that is familiar with the law governing the action {choice of law), 4. The avoidance of unnecessary problems in conflict of laws or the application of foreign law, and 5. The unfairness of burdening citizens in an unrelated forum with jury duty iv. Only defendants can move for dismissal under this doctrine. There is no fixed time limit for when a defendant can move for dismissal based on forum non-conveniens. v. **The more convenient forum must have personal jurisdiction over defendant and subject matter jurisdiction over the case. However, most courts cannot ascertain whether the alternate forum can hear the case, so they will grant this dismissal with conditions. 1. Example: dismissal will be granted only if the defendant agrees not to challenge personal jurisdiction in the alternate forum vi. Piper Aircraft v. Reyno a suit involving plaintiffs from Scotland suing American defendants in US; cause of action was a wreck that took place in Scotland. Court held that private factors favored Scotland because the wreckage of the plane and witnesses were there. Court also held that public factors favored Scotland because Scotland had a greater interest in the dispute because Scottish people brought it and Scottish law would govern. Case DISMISSED on Forum-Non! a. The fact that Scotland law might be less favorable to Reyno did not provide a reason to dismiss the defendants motion. b. Transfer only federal courts can use these federal statutes to transfer cases, and they may only transfer these cases to other federal courts. States usually have their own statutes governing this practice, but a state cannot transfer a case to federal court, a different states court, or to a foreign court. i. The transferee federal court must meet TWO requirements proper venue and personal jurisdiction, and these must be independently true. 1. Defendant cannot waive either of these above requirements! ii. All the parties do NOT have to agree to transfer!! iii. 28 USC 1404 allows transfer to a court for the convenience of parties and witnesses, in the interest of justice. 1. Either party may move for transfer under this statute & that party has the burden of showing that the alternative forum is more convenient. There is no time limit. 2. Private Factors considered by the court: convenience of witnesses, convenience of parties, where the claim arose, and the location of physical evidence. 3. Public factors considered by the court: comparative ease of enforcing a judgment, whether the judges will be familiar with the governing law, relative judicial economy, and local interest of deciding issues at home 1. 2. 3. 4. 5. 6.

13 iv. 28 USC 1406 allows transfer from a district where there is improper venue. It also allows dismissal or [in the interest of justice] transfer. 1. This will mostly dismiss a case; courts will usually only grant transfer when the issue is statute of limitations 2. The governing law on a case that is transferred under this statute will apply the new courts laws. v. 28 USC 1631 allows transfer to another court when the original court lacks jurisdiction. The transferred action relates back to the original date of filing.

CHAPTER 3 Subject Matter Jurisdiction of the Federal Courts

A. Subject matter jurisdiction jurisdiction over the nature of the case and the type of relief sought; the extent to which a court can rule on the conduct of persons or the status of things a. This has NOTHING to do with personal jurisdiction. Question is what court are we going to? State or federal court? i. SMJ is jurisdiction over the claims. You must determine if EVERY SINGLE claim and counterclaim meets SMJ requirements. b. This is basically a federal or state courts authority to adjudicate and decide a case. i. Any party can challenge subject matter jurisdiction and move to dismiss based on lack of SMJ. c. State courts can hear any kind of case because they have general subject matter jurisdiction. Exception: some federal question cases must be brought in federal court [not allowed in state court] i. Bankruptcy, patent infringement, etc. d. Article III, 2 limits federal courts jurisdiction to a list, making federal courts exclusive and limited. This implies that a case not listed in this section may not be heard in federal court (can only be heard in state court) i. The judicial power shall extend to all cases arising under this constitution, the law of the US, and treaties made. ii. Diversity of citizenship cases. e. NOTE: Some litigants would rather bring action in federal court because the dockets are shorter, greater federal sympathy to the claim, etc. B. How to Challenge Federal Subject Matter Jurisdiction a. Any party can challenge a courts subject matter jurisdiction. A court may also raise sua sponte of its own will its own lack of subject matter jurisdiction over a claim. i. If court raises sua sponte, the parties cannot vest a court by consenting to the court. b. There is no time limit on raising lack of subject matter jurisdiction parties can raise it any time, as well as courts PLUS it can be raised on appeal by courts even if it had never been questioned before. c. If you believe there is no federal subject matter jurisdiction, you could move for dismissal under FRCP Rule 12(b)(1). d. Rule 12(b)(1) motions for lack of subject matter jurisdiction based on arising under generally take one of two forms: i. (1) A facial attack on the sufficiency of the complaints allegations as to subject matter jurisdiction attack the claim stating there is no federal claim so no jurisdiction; or

14 ii. (2) A challenge to the actual facts upon which subject matter jurisdiction is based theres no jurisdiction because theres no claim arising under federal law. e. The other option is Rule 12(b)(6) motion to dismiss the substantive claim, which means if a court grants this then the federal law raised does not apply to the facts of the case Doctrine Constitutional Source Statutory Source Effect Personal Jurisdiction Due Process clause in the 14th Amendment State and federal long arm statutes Rule 4(k)(1)(A) Limits the power of state and federal courts in any given state over cases involving particular defendants Federal Subject Matter Jurisdiction Article III, 2 Federal jurisdictional statutes 28 USC 1331, 1332, etc. Limits power of federal courts to certain kinds of cases those involving federal claims, diverse parties, etc.

C. Federal Question Jurisdiction - the exercise of federal court power over claims arising under the US Constitution, an act of Congress, or a treaty. Diversity and amount in controversy does NOT matter here. a. 28 USC 1331 federal courts shall have original jurisdiction over all civil actions arising under the US Constitution, laws, or treaties of the US i. Federal court jurisdiction under 1331 is concurrent jurisdiction, which means the case can be filed in either state court or federal court ii. Federal Question only looks at the plaintiffs claim! iii. Arises under per 28 USC 1331 means the plaintiffs well-pleaded complaint establishes either that 1. Federal law creates the cause of action OR 2. The plaintiffs right to relief necessarily depends on resolution of a substantial question of federal law iv. The federal claim must be substantial and the federal claim must be necessary to the plaintiffs case. v. The question to ask: is the plaintiff enforcing a federal right? 1. Issue spotting = federal law mentioned in hypo. b. Louisville & Nashville Railroad v. Mottley Ds brought action for breach contract and asserted federal question because of RRs defense to their claim. A suit arises under the US Constitution and US laws only when the plaintiffs statement of his own cause of action shows that it is based upon those laws or the Constitution. i. Well-pleaded complaint test only look at the claim! Breach of contract claims or tort claims tends to be state law claims. ii. The plaintiff cannot allege an anticipated federal law defense to his cause of action and gain federal subject matter jurisdiction. c. Declaratory judgment a binding adjudication that establishes the rights and other legal relations of the parties without providing for or ordering enforcement.

15 i. The right to seek this type of judgment was created by a federal statute; however, exercising this right does not necessarily mean the suit arises under federal law because this is a for of remedy, not a substantive claim ii. If a court is given a suit where a party is seeking a declaratory judgment, the court will look behind the declaratory judgment to what the actual nature of suit. D. Diversity Jurisdiction = diversity of citizenship a federal courts exercise of authority over a case involving parties who are citizens of different states and an amount in controversy greater than the statutory minimum. a. 28 USC 1332(a) provides that the suit must be between citizens of different states or subjects or citizens of a foreign state & the amount in controversy must exceed $75,000. i. Citizens of different States; ii. Citizens of a State and citizens or subjects of a foreign state; iii. Citizens of different States and in which citizens or subjects of a foreign state are additional parties; or iv. A foreign state, defined in section 1603(a) of this title, as plaintiff and citizens of a State or of different States. b. Subjects of a foreign state = citizen of foreign nation. However, when someone is a citizen of the US and a citizen of a foreign nation, the US citizenship is the one counted. c. NOTE: An alien admitted to the US for permanent residence shall be deemed a citizen of the state in which the alien is domiciled. Most courts use this section to defeat diversity. i. Courts will not hear a case between two foreign citizens, even if they are from different nations. d. Examples:

P1 Kentucky vs. D2 New York D2 Louisiana

P1 New York P2 & P3 Louisiana vs. D1 Mexico

P1 Kentucky P2 England, UK vs. D2 New York D2 Louisiana

P1 Indonesia Vs. D1 Ohio D2 - Louisiana

e. SPLIT IN JURISDICTION!! 7th circuit holds that for diversity purposes a resident alien is like a corporation with dual citizenship a citizen of both her state of residence and of the foreign nation where she still holds citizenship. 3rd circuit holds that the permanent alien is a citizen of the state where he resides not of his native land. f. Citizen of an individual = Domicile determines citizenship!

16 g. Citizenship of a Corporation = Domicile state of incorporation and principal place of business! i. 28 USC 1332(c) = for diversity, a corporation is considered a citizen of both the state of incorporation and the state of its principal place of business. 1. Corporations can be citizens of TWO states!! This matters for diversity. ii. An unincorporated association, such as a partnership or LLCs, is considered a citizen of each state where at least one of its members is a citizen. 1. Example: law firm the partners of the law firm are citizens of 15 states. Thus the law firm is a citizen of 15 states. h. Complete diversity this means that all the parties on both sides of the case must be from different states No diversity if any plaintiff is a citizen of the same state as any defendant. No same state on both sides of the lawsuit. i. The cases that fall under this statute may be litigated in either federal court or state court. Diversity of citizenship must be established at the outset of the lawsuit it does not matter if one of the parties moves after. Realignment of parties in a lawsuit may destroy diversity, which would dismiss the case. i. However, if a plaintiff moves to another state prior to commencing his suit for purposes of creating diversity, she most likely will be allowed to bring her suit in federal court ii. 28 USC 1359 deprives district courts of jurisdiction in cases where a party has been improperly or collusively joined to invoke diversity jurisdiction no destroying diversity! j. Redner v. Sanders plaintiff was US citizen domiciled abroad in France. Court held that a US citizen who is living abroad or is domiciled in another country cannot sue or be sued in federal court under diversity jurisdiction. He will never qualify as a US citizen under 1332 since he is domiciled somewhere else, plus he is not a citizen of the foreign state since he is a US citizen. k. Saadeh v. Farouki When the suit was filed, Farouki was a citizen of Jordan but also had permanent resident status residing in Maryland. Saadeh was a citizen of Greece. Farouki later became a U.S. citizen while the lawsuit was pending. Diversity of citizenship does not exist between an alien and an alien who has permanent resident status in the US. Despite the plain language of 1332, it was intended to eliminate diversity in suits between a citizen and an alien with permanent resident status living in the same state. a. The amendment was not intended to create diversity jurisdiction for suits between an alien and another alien with permanent resident status. l. Amount in Controversy must exceed $75,000. This is measured by the sum sought in plaintiffs complaint and the amount must appear to be legally certain. b. How do courts deal with cases where there is no actual cost in controversy, but a specific performance required by plaintiff? Courts will look at: i. Cost to the plaintiff; ii. Cost to the defendant to specifically perform; and/ or iii. Cost or value to the party seeking federal jurisdiction c. Aggregation doctrine the rule that precludes a party from totaling 2 or more claims for purposes of meeting the minimum amount necessary to give rise to federal diversity jurisdiction under the amount in controversy requirement.

17 i. RULE: A single plaintiff may aggregate all her claims against a single defendant to satisfy the amount in controversy. a. Claims do not have to be related at all!! ii. Multiple plaintiffs may not aggregate their claims together if there are multiple parties on either side. iii. Exception: Multiple plaintiffs may join together if their claims are factually related if one of their individual claims satisfies the amount in controversy. a. Joint claim = the amount totaled needs to exceed $75,000; number of parties does not matter. b. Example: one plaintiffs tort claim against 3 defendants and amount in controversy exceeds. E. Supplemental Jurisdiction jurisdiction over a claim that is part of the same case or controversy as another claim over which the court has original jurisdiction. This is only possible when at least one claim independently qualifies for federal subject matter jurisdiction = called the federal claim [either diversity or federal question]. a. 28 USC 1367 (a) = except for (b) and (c), where it would have original jurisdiction, district courts will have supplemental jurisdiction over all other claims that are so related in the action that they form part of the same case or controversy under Article IIII of the US Constitution. b. Gibbs standard = first step is to determine if the state and federal claims have a sufficient factual relationship Do the two form part of the same case or controversy under Article III of the US Constitution? common nucleus of operative facts i. The claims must arise out of the same basic set of facts same witnesses and evidence, or claim comes from the same transaction or occurrence. c. If so, the next step is to see if the claims fall under one of the these exceptions which will take away supplemental jurisdiction: i. 28 USC 1367(b) in cases where jurisdiction over the federal claim(s) is based solely on diversity [where the plaintiff improperly joins other parties to create diversity], there will be NO supplemental jurisdiction. 1. This will only take away supplemental jurisdiction over certain claims by the plaintiff; does not apply to claims by defendant. ii. 28 USC 1367(c) courts are also free to decline to exercise supplemental jurisdiction in specified or exceptional circumstances. There are four instances where a court can decline to exercise supplemental jurisdiction: 1. The claim raises a novel or complex issue of State law; 2. The claim substantially predominates over the claim or claims over which the District Court has original jurisdiction; 3. The District Court has dismissed all claims over which its has original jurisdiction; OR 4. In exceptional circumstances, there are other compelling reasons for declining jurisdiction d. If the court finds that 1367(b) or (c) apply, then the court will only dismiss the state law claim but retain jurisdiction over the remaining claims. e. In re Ameriquest Mortgage Co. Mortgage Lending Practices Litigation - To determine whether the federal and state law claims are connected by common and

18 operative facts, the facts necessary to prove the federal claim are compared with those necessary to the success of the state claim. i. Plaintiffs claims were so related. The factual basis for the federal and state claims is essentially the same, and the resolution of one claim impacts the other. f. Szendrey-Ramos v. First Bancorp The court does have supplemental jurisdiction over the claims brought by (P), but there are some issues: (1) State law claims raise novel and complex issues of state law; and (2) State law claims substantially predominate over the federal claim i. Puerto Rican state law on some of the central matters is substantially different than American law with regard to lawyer conduct. ii. State claims are far greater in number & to prove them, case goes way outside the scope of what is needed to prove the federal claim. F. Removal it moves cases from state court to federal court [different from transfer]; courts or plaintiffs can remand, which moves a suit from federal court down to state court. a. 28 USC 1441 a defendant in a state law case may remove a case of which the district courts of the US have original jurisdiction. All of the claims must be removed together, SO removal is impossible if one or more of the claims do not meet the requirements of this statute. i. The federal court must have original jurisdiction, which means the case either needs to have federal question, diversity, or supplemental jurisdiction. 1. Federal question the well-pleaded complaint rule applies here. So if a plaintiff does not assert her federal claims in the complaint, the case cannot be removed. a. This is determined when at time of removal so if the plaintiff has amended her complaint, then the amended complaint will be used here. 2. Diversity treated as normal, besides two big exceptions!! a. Cannot remove a diversity case if a defendant is a citizen of forum state. if the case is pending in the defendants hometown, then he cannot remove it. b. Time diversity must exist both when the case was originally filed AND at the time of removal. b. Process for Removal is under 28 USC 1446 defendant shall file a notice of removal under the requirements of FRCP Rule 11 containing a short and plain statement of the grounds for removal along with a copy of all process, pleadings, and orders served upon himself in the action. i. However, if the case is not removable at first but later from an amending pleading is, you only have one year to remove if its based on diversity of citizenship. If its not based on diversity, then there is no 1-year cap. ii. IMPORTANT FACTORS under 1446: 1. Only a defendant may remove a case. 2. All defendants must join together in a motion for removal. 3. Removal must be motioned for within 30 days from service of documents that the case was removable. Amended complaint starts a new 30-day timeframe.

19 4. Can only remove only to the federal district that embraces the state court where it was filed. c. Challenging Removal is under 28 USC 1447. 1447(c) has provisions concerning remand to state courts: i. Plaintiff can file a motion to remand on the basis of any defect other than lack of SMJ, and he has a 30-day limit after the filing of removal by defendant. 1. This applies to problems that would prevent removal but would not have destroyed federal jurisdiction = lack of PJ & improper venue ii. If you dont file this motion in time, then you will lose your right and the case will stay where the courts decide jurisdiction lies. d. Caterpillar, Inc. v. Lewis if a case in which the parties are NOT diverse is improperly removed, but the district court fails to remand, any judgment rendered by the district court is valid provided that diversity did exist at the time judgment was entered. i. Even though the lower court made a mistake, the result would have been the same for the case even if the motion to remand had been granted. Matters of efficiency, economy, and finality outweigh going back through the case all over again because the result would have been the same e. IMPORTANT Hypo = (D1) is a small-time player from Georgia and (D2) is the big-time player from South Carolina. (D1) gets served first about the suit in Pennsylvania court. (D1) doesnt pay attention to the claims against him in terms of removal because he doesnt believe it matters. (D2) is served a month later, and he asserts right to removal for the case. There is a split in jurisdiction about this situation: i. Some courts believe that it deals with the service of the first defendant in this situation, it means that (D2) would not be able to file for removal because the 30 day limit has run from (D1)s service of the suit. 1. 5th circuit goes with this rule above ii. Other courts believe that it deals with the service of the last served defendant then (D2) would be able to file for removal. They claim that this situation should be the last served defendant because the plaintiff has the duty to serve all the defendants, and all the defendants have their own rights in a case. 1. 6th, 8th, and 11th circuit agree with this rule above

CHAPTER 4 The Erie Problem

A. State Courts as Lawmakers in a Federal System a. The Issue in Historical Context = 1789 Rules of Decision Act i. Codified in 28 USC 1652, RODA provided that the laws of several states, except where the constitution, treaties, or statutes otherwise provide, shall be regarded as the rules of decision in federal courts. ii. Stare decisis precedent set by the highest court in the state will be used in these federal courts to apply to the case, but the federal courts are not necessarily bound by this doctrine iii. Swift v, Tyson this case set out the pre-Erie rule that federal courts were not bound by RODA to follow state judicial opinions on most legal issues. Instead, a federal court could make an independent interpretation of what the common law rule was on the particular subject.

20 1. As federal courts continued to interpret the common law, there developed a body of law called federal common law, which applied in the federal courts only. b. Constitutionalizing the Issue i. Erie Railroad v. Tompkins The Court overturned its original holding and rule from Swift in this case. The court rejected the idea of a general common law that applied with equal force in all common law jurisdictions instead, the court indicated that each sovereign state created its own common law. 1. Unlike state courts, federal courts had NO power to create common law. The RODA required the federal courts to follow the common law rules set out by state courts = Swift gave courts powers not delegated to them in the Constitution 2. In diversity actions, except in matters governed by the Constitution or Acts of Congress, federal courts must apply state common law in addition to statutory law. 3. In diversity cases, federal courts must apply state law as declared by the highest state court in addition to state statutory law. Federal Rules Federal Statute --These cases involve an --These cases will involve a FRCP or other federal rule federal statute. created under the Rules --A federal statute will Enabling Act. always be applied, as long as --The court must first ask it is constitutional and really whether the rule in question governs the situation at can rationally be hand. characterized as a rule governing procedure. --The court must then ask whether the rule unduly abridges, enlarges, or modifies the underlying substantive claim. --If it passes both tests, then the federal rule will apply. **In all 3 cases, its important to ensure federal law actually conflicts with the state law** B. The Limits of State Power in Federal Courts a. Interpreting the Constitutional Command of Erie i. Guaranty Trust Co. v. York In this case, the court held that Erie applied only to matters of substantive law, not procedure. A federal court is free to ignore state procedural rules and rely on customs and practices used in the federal court, but with one BIG exception 1. Outcome determinative test any rule that could affect the outcome of a case should be considered substantive under Erie. A state statute of limitations would clearly change the outcome since it prevents the court from even hearing the case. No Federal Law --There is no positive federal law on the subject. In these cases, the Rules Enabling Act should be applied. --The federal court is trying to decide whether to ignore state law and instead adjudicate the issue based on the judges opinion. --However, courts must decide if the outcome will likely cause forum-shopping --If forum shopping is likely, then state law must apply.

21 2. *However, the outcome determinative test is not a very good test because most every rule that would seem procedural or substantive would clearly determine the outcome. 3. Erie overruled the judicial process of federal courts disregarding state law where it would lead to different results in the state vs. federal court in a diversity action ii. Byrd v. Blue Ridge Rural Electric Cooperative deciding between a judge trial or a jury trial would determine the outcome, but the likelihood of a different outcome would not be great. There is a strong federal interest in using juries because it is evidenced in the 7th Amendment [its not required]. 1. The balance test b. De-Constitutionalizing Erie i. Hanna v. Plumer a federal court should not be required to apply all sate law whenever the outcome might differ, but only when that difference in outcome would contravene one of the aims of Erie. A federal court MUST apply state law only when failure to do so would: 1. Likely result in forum-shopping between state and federal courts AND 2. Result in inequitable administration of the laws. c. Determining the Scope of Federal Law: Avoiding and Accommodating Erie i. Semtek Intl. Inc. v. Lockheed Martin Corp. the claim preclusive effect of a federal judgment on a claim over which subject matter jurisdiction is based solely on diversity is determined by the common law of the state in which the federal district court rendering the decision is located ii. Interpreting State Law: An Entailment of Erie 1. On appeal from the district courts judgment, a federal court of appeals must do its best to decide what the state appellate courts would do when faced with the same appeal. This is called an Erie Guess because they have to guess what the states supreme court would do 2. Certification the federal court asks the state supreme court for an answer to a question about state law. There are several defects to this system C. Tests: Hanna test first and then Erie test. a. If a FRCP or federal statute applies [Hanna]: i. Threshold: Is there a federal rule or statute on point that conflicts with state law? If YES: 1. **If stating there is a rule but it is not sufficiently broad, then you would say its too narrow & go on to the next test! ii. 1) Is rule consistent with the REA; is it rationally capable of classification as procedural? 1. REA 1- rules must be procedural iii. 2) Is rule or statute constitutional? (Art III gave Congress power to make rules governing practice & procedure in federal courts) 1. REA 2 - does it abridge, enlarge, or modify a substantive right? [only applies to FRCP! FRCP is ALWAYS valid!] 2. If YES to both, federal rule controls. b. If no federal rule, but federal practice: [Erie] i. Threshold: Is federal practice sufficiently broad to control the issue before the court? Does it match, or is it on point with the issue?

22 ii. How bound up with the right is the state law? Is the state practice bound up with the substantive rights and obligations of the parties? (if bound up, then state law applies; if not, then go on to #2) [Byrd 1] 1. Typically means the extra requirements in laws that are not in place in the normal rule. Expands remedy [attorneys fees, bonds, etc.] or expands time. 2. Keep in mind that federal practice only has discovery, no attachment of affidavits [its only a practice!] 3. Look at the states interest or reason for placing those extra requirements in the law keeping medical malpractice claims as serious, etc. iii. Is the difference outcome determinative? (if so, then go on to #3) [Guaranty] [Byrd2] 1. Would adhering to federal practice encourage forum shopping? 2. Would adhering to federal practice result in inequitable administration of justice? a. *Twin aims of Erie* Basically, if the federal judge ignores the state law, would it cause parties to flock to federal courts? iv. How important is the federal interest compared to the state interest? [Byrd 3] 1. Balance the two if there is no real reason for the state law, then the federal interest will most likely outweigh the state interest. If the state law was put in place to control an issue in the state, then the state interest will be greater!!! D. NOTE: Elements of a claim ARE ALWAYS substantive state law should apply Chapter 5 Litigation and Its Alternatives B. Remedies a. Generally, a remedy is a statement by the court indicating one partys responsibilities toward the other. These can be broadly divided into 3 categories: i. Substitutionary, Specific, and Declaratory b. Substitutionary remedies these attempt to replace what the plaintiff has lost with something that is roughly equivalent i. Compensatory damages a sum of money that is meant to compensate the injured party for the harm it suffered. 1. The court will assign a value to the plaintiffs injury or harm and award damages in that sum 2. One of the more important things to look here is how much the quantum of the lawsuit is a. This matters greatly to the plaintiff and the defendant for settlement reasons how much the plaintiff wants for a settlement, and how much the defendant is willing to give for a settlement. As an attorney, you will look at prior cases for ball park figures ii. Punitive damages these are meant as a form of punishment, so these are not compensatory. There are some constitutional limits on these: 1. These are usually available only in tort cases and only when a defendant acted intentionally or willfully

23 2. These are designed to deter similar conduct in the future. How large the damages will be depends on the defendants wealth. 3. The constitutional limits stem from the Due Process clause: a. Prevents grossly excessive punitive damages there will be a comparison of the punitive damages to the actual damages & the type of harm the plaintiff suffered in relation to how malicious the defendant was. iii. Statutory damages these take place where it may be difficult for a party to prove its injury. 1. Liquidated damages: parties who enter contracts often specify an amount as liquidated damages. a. As long as the amount if reasonable, the plaintiff may recover these damages without proving actual injury. 2. Statutory damages: statutes sometimes provide a fixed amount of statutory damages that a party may recover in case of a violation of statute. 3. Multiple damages double or treble damages c. Specific Remedies the court will order a party to act or refrain from acting in a certain way. i. These usually result in a court order. These come in a wide variety of remedies, but the most common is an injunction 1. Violation of one of these orders will result in contempt of court 2. Injunctions may be mandatory or prohibitory a. Mandatory injunction orders the defendant to undertake certain acts. b. Prohibitory injunction orders the defendant to refrain from certain acts. 3. When deciding to grant an injunction, the court will look at: a. Whether the legal remedy is adequate b. The balance between the hardship to the defendant if it were granted and the hardship to the plaintiff if it were denied. c. The public interest d. Declaratory relief this is very unique remedy because it does not obligate the loser to pay money o take a specific action; it merely states the right of the parties. i. The requirements are that there must be real parties, real activities in controversy, and not just a worry to get an advisory judgment ii. Example: case originally starts as Doug v. Bob, and when Bob files for declaratory relief, the suit changes to Bob v. Doug C. Hypo: your client lives Uptown and his next-door neighbor leaves his trash strewn all over the yard. There are now rats and flies, it smells, and its very unattractive. Client has trued to talk to his neighbor, but the neighbor doesnt care. He decides that his only remedy is a lawsuit. a. What remedies could he ask for? You must find out what your client is looking for & then present his options to him. i. Specific remedy = injunction from leaving the trash out on the lawn and clean it up. ii. Sub Remedy = Compensatory damages because of the pests coming onto your lawn and if his grass is dying. BUT this will not necessarily help the problem

24 1. No punitive damages because if there is no statute that allows punitive damages, then you cant as for (and if you do, youll violate Rule 11) iii. The client has the right to decide which things to sue for and he might not want to sue for all the things that he can. iv. You will want to adjust what your claims are based on whether you have a judge or a jury trial. D. Alternatives to Litigation a. Settlement this is simply a contract in which the parties agree how the dispute will be resolved. b. Mediation this is a more formalized attempt to reach a settlement. A third party, a mediator, works with the parties in an attempt to help them reach an agreement as to how to resolve their dispute i. However, a mediator has no power to force the parties to do anything. The mediator will talk to the parties either separately or together in an attempt to find common ground and provide a neutral third partys perspective ii. Some lawsuits will require a mediator, like divorces c. Arbitration this also introduces a third party into the dispute. The arbitrator actually renders a decision, so this is more like litigation in court i. In most cases, the parties are bound by the arbitrators decision; however, the parties can submit to nonbinding arbitration 1. Nonbinding allows the parties the chance to assess the strength of their respective cases ii. This type of alternative normally comes about because it is written into a contract iii. This can be conducted by either a single arbitrator or panel of arbitrators (typically 3) Chapter 6 Pleadings A. Overview of Pleadings a. In a lawsuit involving one plaintiff and one defendant, only one complaint, one or more answers, and a reply to answer [if the court allows it [are allowed in court. Under FRCP Rule 7, pleadings are: i. A complaint, ii. And answer to a complaint, iii. An answer to a counterclaim [designated as a counterclaim], iv. An answer to a cross-claim, v. A third-party complaint, vi. An answer to a third-party complaint, or vii. A reply to an answers IF the court orders one b. A pleadings is basically anything someone files that states an allegation against a party and demands a remedy; a pleading is also an answer to an allegation i. Complaint if basically what the plaintiff files that specifies all the claims he has against the defendant. c. There are general forms for the types of pleading in FRCP i. These forms really only give you some fill-in-the-blanks, but you still need the substance of your claim on your pleading to get your case into court. ii. Big Issue = plaintiffs tend to need more information to fill their pleadings, and the defendants have the information.

25 d. Basic Information Required in a Pleading i. Case information: every pleadings needs a caption that indicates the name of the court, the title of the action, the names of all the parties, the file number, and the type of pleading involved. ii. The claims in a pleading should be divided into different statements and numbered [but this is not usually enforced very strictly, but it does help out!] iii. There are also affidavits, written documents, etc. that may be attached to a pleading when it is filed. B. Pleadings are guided by FRCP Rule 8 a. The system is often called notice pleading the purpose of pleading under FRCP is to give other parties notice of what claims and defenses are being raised. i. Short and plain statement a claim is sufficient as long as it provides the defendant adequate notice of plaintiffs claims and the basic situation in which those claims arise. b. Rule 8(a): Every pleading that states a claim for relief [known as a complaint] must contain: i. A short and plain statement of the grounds for the courts jurisdiction, unless the court already has jurisdiction and the claim needs no new jurisdictional support; 1. Personal jurisdiction, federal question, diversity of citizenship, and/ or supplemental jurisdiction. ii. A short and plain statement of the claim showing the pleader is entitled to relief; and iii. A demand for the relief sought, which may include relief in the alternative or different types of relief 1. Note: some lawyers will include a phrase at the end of every complaint just to cover all possible damages such other and further relief as the Court may deem equitable and just c. Rule 8(b)(3) state what a defendant can do when it comes to denying a pleading: i. A party that intends in good faith to deny all the allegations of a pleading including the jurisdictional grounds may do so by a general denial ii. A party that does not intend to deny all the allegations must either specifically deny designated allegations or generally deny all except those specifically admitted. 1. Rule 8(b)(4) A party that intends in good faith to deny only part of an allegation must admit the part that is true and deny the rest C. How to challenge a complaint Rule 12(b) a. Defendants want the case to go away as quickly and as cheaply as possible, so they will often help courts sort through cases based on pleadings by challenging them. There 6 types of challenges, and these are called pleas: CML Dilatory Plea or Peremptory Plea Jurisdiction Rough Translation not here Example Effect Modern Pleadings Analogue Challenge to personal or subject matter

Defendant asserts that this case does not

Court dismisses case, which can be refilled in

26 belong in federal court Case should not proceed because defendant is on active duty in armed services and unable to defend self until discharged Defendant asserts case is brought in the wrong venue Defendant asserts that allegations of complaint do not state a claim Defendant asserts that allegations of complaint are false Defendant asserts statute of limitations has run on claim. proper court jurisdiction Rule 1(b)(1)(2) Court stays case Typically until defendant handled as a is discharged defense or by from service more comprehensive statutory scheme Court transfers or dismisses case Court dismisses the case Rule 12(b)(3) motion Rule 12(b)(6) or demurrer

Suspension

not now

Abatement

not until this is fixed so what?

hese 6 pleas are separ ated into 2 grou ps: ilator y Pleas e the first grou p does not appr oach the merit s of the case. They take no posit ion on the facts

b. T

Demurrer

Traverse

didnt happen or I didnt do it yes but.

Court grants judgment on merits for defendant Court grants judgment on merits for defendant

Confession and avoidance

General or Specific Denial contained in the answer Rule 8(b) Affirmative defense contained in answer release, statute of limitations, accord and satisfaction, res judicata Rule 8(c)

or laws that form the plaintiffs grievance 1. These simply delay the court proceedings personal jurisdiction, subject matter jurisdiction, failure to state a claim, etc. ii. Peremptory Pleas this second group actually responds to the merits and factual allegations of the plaintiffs claim. iii. Note: It is almost a universal principle that before granting a motion to dismiss for failure to state a claim, a court will give the plaintiff a chance to amend the complaint to cure the deficiency the defendant and court have identified

27 1. Rule 11(b) states that the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery 2. Basically a plaintiff should not put something in his complaint unless he has some type of evidence for the statements he makes D. Consistency in Pleading a. Rule 8(d)(2)-(3) states that a party may set out two or more statements of a claim or defense alternately or hypothetically and a party may state as many separate claims or defense as it has, regardless of consistency. i. This basically means if defendant has allegedly violated a contract with the plaintiff, defendant basically says I never made a contract with the plaintiff and if I did, I didnt breach the contract. b. The reasons for this Rule are three-fold: i. Pleadings come very early in the case, often before parties know all that they will by the time the case comes to trial. Thus the lawyer will set out different, sometimes opposing claims to set forth what seem to him to be the possible versions of law and the facts that appear plausible at the time the pleading is filed. ii. Allegations in pleadings are tempered by burdens of proof. Even though a lawyer may completely believe he clients version of the facts, as a safety net, the lawyer will allege a different set in case she decides she cannot convince a jury that her clients version is the right version. iii. Even though the pleadings may seem very inconsistent and contradictory, the lawyer will eventually settle on a set of facts after discovery takes place. Our pleading system asks lawyers to form pleadings this way. E. Specificity in Pleading The details in a pleading can help distinguish between strong and weak cases, but the more details will normally get a case dismissed before discovery. So then, what is a short and plain statement? a. A complaint should not be dismissed for failure to state a claim unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim, which would entitle him to relief. Conley v. Gibson b. FRCP does not require a claimant to set out in detail the facts upon which he bases his claim FRCP only require a short and plain statement that will give the defendant fair notice of what the plaintiffs claim is and the grounds upon which it. i. The simple guide of Rule 8(f) is that the pleading must be construed so as to do substantial justice c. If a pleading fails to specify the allegations in a manner that provides sufficient notice, a defendant can move for a more definite statement under Rule 12(e) before responding i. Claims lacking any real merit may also be dealt with Rule 56s summary judgment d. Bell Atlantic Corp. v. Twombly = the Court's opinion changed the existing interpretation of the notice pleading requirements of Rule 8 creating a new, stricter standard of a pleading's required. i. The court adopted a more strict, "plausibility" standard, requiring in this case "enough facts to raise a reasonable expectation that discovery will reveal evidence of the plaintiffs claims.

28 ii. Plaintiffs must look at the substantive law to know what to put in their complaint. At Rule 8, the courts take what the plaintiffs complaint says as true, and the court is looking to see if the plaintiff could win based on his complaint iii. Often times dates and times, written document of some sort, or sworn affidavits will be needed for a complaint. iv. There must be factual basis for what plaintiff alleges. Plaintiffs cannot just throw around allegations in hopes that they can get to discovery to maybe find something a defendant did wrong. e. Ashcroft v. Iqbal = complaint does not require a bunch of detailed factual allegations, but does require more than an unadorned the-defendant-unlawfully-harmed-me accusation. The complaint must contain sufficient facts to state a claim that is plausible. i. Plausibility is not a probability requirement, but it is more than a mere possibility!

possible

plausible

probable

ii. To survive a motion to dismiss, a complaint must contain sufficient factual matter to state a claim to relief that is plausible on its face. iii. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. 1. Example: affidavits of people who witnessed a meeting, tapes of something, official government documents f. Note on Fraud i. FRCP Rule 9(b) fraud or mistake. In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake [specific] ii. In the average fraud cases, the fraud plaintiffs lawyer wants to get to discovery to uncover information proving that defendant was misrepresenting the facts. But discovery will be unavailable if the complaint is dismissed for failure to plead with sufficient specificity to comply with FRCP Rule 9(b) F. Allocating the Elements = In technical terms, which elements of a claim must be part of the complaint by the plaintiff, and which are defenses which the defendant must plead in his answer? a. As a general rule, whichever party has the burden of pleading an issue must also produce evidence to demonstrate the allegation or he will lose the case. i. Either common law cases or applicable statutes will contain the answers. b. Example: A person who is injured by the negligence of another has a cause of action against the person whose negligence caused the injuries. Only has to prove 4 basic elements i. A person who is not negligent himself, but who is injured by anothers negligence has a cause of action against the person whose negligence caused his injuries. 1. ^The plaintiff here would have to prove the 4 basic elements but ALSO that he himself was NOT negligent.

29 c. Note: If someone has the burden at trial to prove a certain thing, then he most likely will have the burden to show it in his pleading beforehand. i. Whoever has the burden of pleading an element of the claim will also have the burden of producing evidence to demonstrate that allegation. d. How does a court decide whether the burden of proving an element falls under plaintiffs complaint or an affirmative defense of defendant? There is a 4 step process: i. The court will first look at the words of the statute. ii. The court will also look at the Rule 8(c), which lists common affirmative defenses. The list in Rule 8(c) is non-exhaustive. The court will then ask if the statute in question provides that the element could be considered an affirmative defense under Rule 8(c). iii. To answer the question above, the court can look at the legislative history of the statute & take into account the normal practice of courts in this situation if exhaustion isnt mentioned as an element of plaintiffs complaint, it will be an affirmative defense. iv. The court will also take into account a catalogue of cases dealing with the same or similar issue. G. Ethical Limitations in Pleading a. FRCP Rule 11 guides the responsibilities of a lawyer to his client and the legal system it is basically the Honor Code for lawyers and law firms i. Rule 11 restricts a lawyers ability to file a pleading when he has no more than a hope that favorable facts or law will emerge as the case progresses. ii. Rule 11 also regulates the way lawyers and clients conduct themselves, and if either screws up, then they can be sanctioned. b. Rule 11(b) states: By presenting to the court a pleading, written motion, or other paper whether by signing, filing, submitting, or later advocating it an attorney or unrepresented party certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances: i. It is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; ii. The claims, defenses, and other legal contentions are warranted by existing law or by a non-frivolous argument for extending, modifying, or reversing existing law or for establishing new law; iii. The factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and iv. The denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information. c. Rule 11(c) if after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose sanctions on the lawyer, the law firm, or the party that violated the rule or is responsible for the violation. d. Courts hold that the central purpose of Rule 11 is to deter baseless filings in district court and thus, consistent with the REAs grant of authority, streamline the administration and procedure of the federal courts.

30 i. Note: If the defendant finds that the plaintiff and his lawyer have filed a frivolous complaint and he provides affidavits and documents, can he catch a remedy? 1. He can file a motion for summary judgment and then file a motion for sanctions under Rule 11 two separate motions [Rule 11(c)]. 2. 21 days must pass before he files the second motion. e. Note: When a defendant wants to challenge the plaintiffs complaint on the basis that it violates any of Rule 11(b), he must first give a written notice to the plaintiff of the deficiencies in his complaint and allow him 21 days to amend his complaint [which plaintiff must file with the court]. i. If the plaintiff does not amend his complaint, then defendant can file a motion to dismiss the claim on basis on violation of Rule 11(b) with evidence of the deficiencies; he can then separately file a motion for sanctions against the plaintiff. ii. However, the defendant does not necessarily have to give written notice to the plaintiff of his plan because a court has the power of discretion to dismiss a plaintiffs complaint based on violation of Rule 11(b) and give sanctions to the plaintiff 1. A court does not have to impose sanctions though; and if it does, the sanctions do not have to be monetary sanctions. iii. Rule 11(c)(5)(a) = Also remember, if a plaintiff is represented by a lawyer, the lawyer will be responsible for any sanctions based on violations of Rule 11(b)(2) because lawyers should know the law before filing a frivolous claim in court. 1. Some states require that Rule 11 sanctions and similar litigation be reported to the state bar, which could then institute a disciplinary proceeding against the lawyer. H. Responding to the Complaint a. Default - A defendant who fails to respond to the complaint can have a default judgment entered against him. b. Pre-Answer Motions think about Rule 7(a) and 7(b) i. Rule 12(b) motions apply here, but since these motions can delay the next stages of a trial, Rules 12(g) and (h) were put in place to balance the availability of these defenses against the possible abuse of these defenses. 1. Rule 12(g) states that if you wish to file multiple motions raising the defenses in 12(b), you must file them in one motion in the suit. a. If you do not, then you will lose the right to file the other ones because you waived it. b. The only ones you cannot waive are failure to state a claim, failure to join an indispensable party, failure to state a legal defense to a claim, and lack of SMJ. 2. Rule 12(h)(1) A party waives any defense listed in Rule 12(b)(2)(5) by omitting it from a motion in the circumstances described in Rule 12(g)(2); or failing to either: a. Make it by motion under this rule; or b. Include it in a responsive pleading or in an amendment allowed by Rule 15(a)(1) as a matter of

31 ii. Rule 12(f) Motion to Strike: Courts will entertain a motion to strike any redundant, immaterial, impertinent, or scandalous matter 1. If the allegations in the complaint have no relation to the case or unnecessarily confusing; 2. If the complaint is overly long and detailed; 3. If the allegations are unnecessarily derogatory iii. Rule 12(c) Motion for Judgment on the Pleading: A plaintiff could move for judgment on the pleadings if the defendant fails to deny any of the allegations in his pleading [his defense is not a real legal defense to the allegations. c. Answer: if the defendant cannot demurrer to the complaint or dispose of it on the ground of Rule 12(b), she has to respond to the factual allegations i. Denials 1. Rule 8(b) points out that a party can admit, deny, or deny because of lack of information. 2. Rule 8(b) provides that a defendant only needs to deny those allegations which he actually disputes; Rule 8(b)(6) provides that any allegations not denied by the defendant is deemed admitted by the defendant. 3. The general denial is an allegation that denies each and every allegation in the complaint. a. A defendant who enters a general denial may well find himself at the end of a Rule 11 inquiry because courts tend to look down on these. ii. Affirmative Defenses Rule 8(c) 1. Accord and satisfaction, arbitration and award, assumption of risk, contributory negligence, duress, estoppel, fraud, illegality, laches, license, payment, release, etc. The list given is not an exhaustive list, only a list to start with. 2. An affirmative defense is more than just disputing the plaintiffs claims it typically means that EVEN IF the plaintiffs claim is true, there are other facts that will bar the plaintiffs recovery. a. Affirmative defense is NOT admitting anything! Example: I deny the existence of contract, and in the alternative, even if we had a contract, I fulfilled it. 3. There is a difference between a defense and a claim a claim asks for a remedy, whereas a defense does not. So if you claim a defense in your counterclaim, the court will allow it and change it to a defense d. Reply