Personal Jurisdiction

A. General Jurisdiction
1. Systematic and Continuous presence
2. Fair play and Substantial Justice

B. Specific Jurisdiction
1. Plaintiff’s Claim arises out of defendant’s conduct
2. Minimum Contacts
3. Fair Play and Substantial Justice
4. Internet Cases

C. Cases outside the minimum contacts test

1. Domicile
2. State of incorporation
3. Presence
4. Consent

Constitutional requirement: PJ is a constitutional requirement for both state and federal courts. A judgment
rendered against a person over whom the court has no PJ violates that person’s right to Due Process.

(A). General Jurisdiction

= A defendant is subject to PJ if the D has a systematic and continuous presence in the forum state,
provided the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice.
= Most likely basis for PJ when the underlying substantive cause of action has no factual connection to the
forum state

1. Systematic and continuous presence

= D may be sued in forum for any claim, even one completely unrelated to its in-state activities.
= If the D is a corporation that has incorporated in the forum state, a systematic and continuous presence
will be presumed even if the D has no business operations there.
= A D who is a natural person is always subject to jurisdiction in her state of domicile.
= Even the temporary relocation of the office of the D corporation to eh forum constituted a systematic and
continuous presence. (president, corporate files , bank accounts were located there) -> the situs of corporate
decision making established a S & C presence.
= management offices and corporate decision making occur outside the forum, but physical presence may
be of a size and nature that is S & C.
= even without everything above, the D might be doing business in the form state S & C. (number of
transaction, significant revenue stream, constant flow of products would matter)

2. Fair Play and Substantial Justice

= Even with a S & C presence in the forum, an out-of-state D is not subject to PJ unless the court’s exercise
of PJ is also consistent with traditional notions of fair play and substantial justice.
= HOWEVER, if there are purposeful contacts, it requires a very strong showing of unfairness to defeat
jurisdiction.
- The burden of the D: this factor considers not only the distance D must travel but also any other
circumstances that make defending in the forum burdensome on D
- The interests of the forum: A state is interested in hearing a case if any of the parties are from that
state or if the dispute directly affects that state.
- The P’s interest: This factor is satisfied if P is from the forum of if the forum is a convenient place
to try the case because of the availability of witnesses or other evidence.
- Efficient resolution: It is inefficient when a case involving multiple parties must be split up and
 litigated in several different places. If the chosen forum is the only place that all claims can be heard,
this factor supports jurisdiction.
- Furthering social policies: If the alternate forum does not recognize P’s claim, refusing to exercise
jurisdiction frustrates the policy underlying the substantive law. This is most likely to be an issue
when plaintiff is forced to refile in a foreign court.

(B) Specific Jurisdiction

= A D is subject to PJ if that D has only isolated or limited contacts with the forum state, provided the cause
of action arises out of those contacts, a long-arm statute authorizes the exercise of jurisdiction over the out-
of-state D, and again, the exercise of jurisdiction does not offend traditional notions of fair play and
substantial justice.

1. Plaintiff’s claim arises out of Defendant’s forum conduct

= The nexus could be sufficient if one or more of the elements of the plaintiff’s cause of action occurred in
the forum state (e.g. the breach, decision, or injury)
= Or more broadly, the nexus may be established if the cause of action relates to the D’s contacts with the
forum state.
= Only where the COA has absolutely no connection or relation to the forum state is this inquiry likely to be
dispositive.

2. Minimum contacts

= When specific jurisdiction is employed, the standard for minimum contacts is much lower that the
“systematic and continuous” contacts required for establishing general jurisdiction.
= The minimum contacts test applies to individual as well as corporate defendants.
= A D may have sufficient minimum contacts even though she did not act within the state.
= Minimum contacts analysis focuses on the time when the defendant acted, not the time of the lawsuit.
= A contact does not count unless it is the result of purposeful availment by D of the benefits and
protections of the forum.
= Merely entering into a contract with a resident of the forum is not alone sufficient
= However, if the contract is negotiated and/or to be performed in the forum, that is evidence that the
parties have purposefully availed themselves of the forum.
= The Stream of Commerce problem arises when a D distributes its good nationally through a third party.
= The issue in PJ is whether purposefully injecting goods into the stream of commerce constitutes
purposeful availment with a state in which one of those goods causes injury.
- Awareness plus rule: mere awareness that D’s goods would enter the forum was insufficient. Such
awareness could constitute purposeful availment only if it was accompanied by other acts
specifically directed at the forum (advertising, designing for the special needs of the forum)
- Mere Awareness rule: mere awareness that products entered the state was enough.

3. Internet cases

= they are conceptually similar to the stream of commerce problem.

= Passive site is one that may only be viewed; the viewer cannot submit information
- Jurisdiction rarely exists in the case of a passive site. The main exception is when the site contains
material clearly directed at another state.
= Active site is one where the viewer may input information and enter into a transaction.
- Operation of an active site clearly constitutes a contact with the viewer’s state, at least if the
viewer does interact. Therefore, a seller who contracts to sell goods to a buyer has established
contacts with the buyer’s state.
= Interactive site lies somewhere in between.
- Here, courts look to all of the circumstances, including the level of activity and whether the site is
 commercial in nature.

4. Cases outside the minimum contacts test

(1). Domicile
(2). State of incorporation: a state can exercise jurisdiction over a corporation in its state of incorporation,
even though D had no assets, employees, or operations in that state.
(3). Presence: a state can exercise jurisdiction over anyone who was served while present in the state.
- The only situation where the different approaches might affect the outcome is when D’s presence is
not voluntary.
(4). Consent: if a party consents to a court’s jurisdiction, it is unnecessary to evaluate minimum contacts.
- Express consent: e.g. Contract that specifies that disputes arising under the contract may be heard in
a specific court. A twist on the contractual consent is the forum selection clause, where the parties
specify that disputes can be heard only in a particular court. If a party sues elsewhere, the other side
may move for dismissal. In most jurisdictions, FSC are enforceable provided they are
fundamentally fair. Fairness is measured at the time the agreement is made, not when the case is
filed.
- Implied consent: a party may consent to PJ by taking action inconsistent with his argument that the
court lacks power over him. (failure for objection to PJ deemed to have consented to the court’s
jurisdiction)

Questions and Answers

= A two-step minimum contacts test is used to establish PJ – contacts and fairness

To establish contacts, D must have taken actions that were purposefully directly toward the forum state and
from which D derived the benefits and protections of the state’s laws. Ashley’s contact was driving through
the state of Georgia. This is purposeful activity. While driving in Georgia, Ashley was protected by Georgia
police and traffic laws.

However, even if there are minimum contacts with the forum state, the state may not exercise jurisdiction if
considerations of “fair play and substantial justice” make defending the action in the forum state highly
unreasonable.

Notice
1. General rules
2. Adequacy
3. Method
 A. State rule
B. Federal Methods of service on Individuals
C. Federal Methods of service on Corporations and other entities
D. Territorial Limits (Federal court)
4. Waiver

Constitutional Requirement: The Due Process Clause of the Fourteenth Amendment to the U.S.
Constitution requires that D receive adequate notice of the litigation. A judgment without notice is
constitutionally deficient and therefore invalid.

(1). General Rules

= Notice is the other primary requirement for exercising personal jurisdiction

= Constitutional Requirement: Due Process Clause of the Fourteenth Amendment
= A judgment without notice is constitutionally deficient and therefore invalid.
= Contacts and notice are not substitutes. They both are required.
= Definition: A P gives notice of a pending action when she serves the summons and a copy of the
complaint on D.

(2). Adequacy

= Due process requires that service of process be reasonably calculated, under all circumstances, to apprise
interested parties of the pendency of the action and afford them an opportunity to present their objections.
= As long as the method of service meets this reasonableness standard, D is subject to jurisdiction even if D
never actually receives the summons.
- However, if D never receives notice, almost every court system has a procedure whereby D may
have the judgment set aside.
= In addition the traditional means of serving D in hand, various forms of substituted service meet the
reasonableness standard. (e.g. service by first-class or certified mail, service on the secretary of state with
instructions to delive3r it to D, or service to an adult at D’s usual place of abode.)
= Unlike old rules, service by publication alone is not sufficient in in rem actions, holding that when the
addresses of the property owners can be ascertained, some other method of service that is more likely to
reach D is required.

(3). Method

A. State Rule (long-arm statute)

= D in state: States allow for a variety of service methods. Most allow for service in hand and on an agent
of the D designated to receive service. It is up to individual state’s own rule.
= D out of state: Service on an out-of-state D is accomplished by means of the state’s long-arm statute- by
which a state legislature specifies the circumstances in which PJ may be exercised by its courts.
i. Specific cases: Most statutes allow for service on an out-of-state D only in situations specifically
enumerated in the statute itself.
ii. To limits of Constitution: A few statutes forge the difficulties of specifying when service will
be constitutional and simply state that service is allowed whenever the state san exercise
personal jurisdiction over D consistent with the Due Process Clause.

B. Methods of service on Individual (Federal Court)

i. by personally delivering the summons and complaint to the D
ii. by leaving copies of thee summons and the complaint at his dwelling or usual place of abode
with a person of suitable age and discretion residing therein
iii. by delivering the papers to an agent appointed by the D to receive service of process on his
behalf.
iv. To serve individual D under the provisions governing service on individuals in the courts of
 the state where the federal courts sits. (the P in an action in the federal distirct court in
Michgan may use any methods for service of process on individuals that apply in the
Michigan courts.)
v. If an individual is served outside the state where the action is pending, rule authorizes service
pursuant to the law of the state where the D is actually being served. (brought the lawsuit in
state A, but wants to serve D in state B, then any method B’s rule allow may be used.)

C. Methods of service on Corporations and other entities (Federal Court)

= If D is served within the US -> Rule 4(h)(1) [parallel to the first three above]
= If D is served outside the US -> Rule 4(h)(2)
= In rem actions: A federal court may exercise jurisdiction based on seizure of property only when a federal
statute provides for such jurisdiction or when P cannot obtain in personam jurisdiction over D by reasonable
means in that district.

(4) Territorial Limits (determining whether Federal court may exercise PJ)

= The minimum contacts analysis was developed for state courts.

= For federal courts, however, in most cases, the FRCP significantly requires a federal court to act like a
court of the state in which the federal court sits.
= Serving a summons or filing a waiver of service establishes PJ over a D who is subject to the jurisdiction
of a court of general jurisdiction in the state where the district court is located.
= The federal court is authorized to assert jurisdiction if the courts of the state in which the federal court sits
could assert jurisdiction over the D.
= The reach of PJ in a federal court is the same as the reach of PJ in the courts of the state in which it sits.

(5) Wavier

= FRCP 4(d)
= Waiver is an alternative to actual service.
= two copies of a waiver form + a copy of the complaint + prepaid means of return.
= A request for waiver may not be used when D is an infant, incompetent, or governmental unit or officer.
= The request must specify a date by which it must be returned, which cannot be less than 30 days from the
date it was sent for Ds within the US or less than 60 days for Ds outside the US.
= D waives service by returning the request by the specified deadline.
= Failure to return does not constitute a waiver.
= A party who returns the request waives only the requirement of formal service.
= The party does not waive any defenses based on lack of PJ or venue.
= Therefore, a D may argue lack of minimum contacts even if it waives service.
= A D is not required to waive.
- But if D waives, he receives an automatic extension of the time to answer.
- And if D does not waives and is within the US, he has to reimburse plaintiff for the costs of actual
service, together with collection fees, unless there was good cause for the failure.

Venue
= Venue is the place, considering only those courts that have jurisdiction, where a given action will be heard.
= Thus, jurisdiction must be established before venue can become an issue.
= In other words, venue is an issue only after jurisdiction over the parties exists.
= Venue is determined as of the time the action is filed ( not the time when the claim arose)
= If venue is improper and the D objects, the remedy generally is to transfer the case to a court with proper
venue, not to dismiss the case.
= Venue is a procedural question of administrative convenience.

Constitutional Requirement: Venus is primarily a creature of statute. Although state and federal venue
statutes differ significantly, generally speaking all attempt to ascertain the most convenient place for
litigating the case.
The concept of venue is not required by the Constitution. Therefore, a judgment issued by a court lacking
venue is valid and enforceable.

 Federal venue
 Venue is the place the legislature requires a particular action to be brought
 Overview of §1391
 Venue in the federal courts is defined by district, not by state.
 Plaintiff may choose
 Only if that district also has personal jurisdiction over all Ds in the case.

 Venue in diversity case

a. A district in which any defendant resides, if all Ds reside in the same state (1391(a)(1))
b. Any district in which a “substantial part of the events or omissions giving rise to the claim
occurred” (1391(a)(2))
c. If there is no other option, any district in which any D is subject to PJ at the time the action is
commenced (1391(a)(3))
- Only a single D needs to be subject to PJ.

 Venue in federal question, “combined,” and supplemental jurisdiction cases

a. A district in which any defendant resides, if all Ds reside in the same state (1391(b)(1))
b. Any district in which a “substantial part of the events or omissions giving rise to the claim
occurred” (1391(b)(2))
c. If there is no other option, any district in which any D may be found (1391(b)(3))
- only a single D need be found in the state

 Interpreting 1391(a) and (b)

 No real difference
 If even one D lives in a different state, venue cannot be determined by Ds’ residence.
 Domicile overrules residency
 Events or omissions are substantial only if they are relevant to P’s claim

 Corporate Ds (1391 (c))

 A corporate D shall be deemed to reside in any judicial district in which it is subject to PJ at
the time the action is commenced.
 A single district state -> if subject to PJ in a state -> Venue is also proper
 Multidistrict state -> treats each district as a separate state -> only if it has minimum
contacts with that district.
 A corporation is deemed a resident of any district in which it has its principal place of
business, substantial operations, and in any district in the state in which it was incorporated.
 Unincorporated associations (unions or partnerships) are treated like corporations for
purposes of venue.
 State of incorporation: always can be sued in any district in that state.

 Aliens (1391(d))
 An alien may be sued in any district.
 The court must also have PJ over the alien D.
 Case involving alien and citizen
  Focus on the citizen
 Alien is deemed to reside in every district

 Local action
 Local actions are those that determine or affect the title to property or involve physical
harm to real property.
 It may only be brought in the district where the real property is situated.

 Forum non conveniens

 It is a common law doctrine permitting courts to dismiss a case if there is another forum which
is so much more convenient for the parties and the courts that the case would more
appropriately be tried there.
 FNC is a court-created doctrine that allows a court to dismiss an action even thought venue is
proper.
 State + federal courts
 Federal courts usually transfer.
 However, if the more convenient forum is a foreign court, federal courts will use FNC.
 The court must ascertain that there is an alternate forum available to hear the case.
 Alternate forum = SMJ + PJ
 Difference in remedy
 federal courts, differences in remedy bar dismissal only if they effectively deny plaintiff any
rights in the alternate forum.
 Factors
 Private factors
 Where the underlying events occurred
 Where the witnesses and physical evidence are located
 The comparative overall costs of litigating in the two places
 Whether it would be possible to compel witnesses to testify in the forum chosen by P
 Language issues
 Whether a judgment by the chosen court would be enforceable in the place where D’s
assets are located
 Public factors
 Choice of law questions, including familiarity with and ease of determining the law that
will govern the case
 The policy implications of the case in the more convenient forum
 The backlog in the court chosen by P
 The burden on the court system
 There are no fixed time limits for moving for a FNC dismissal.

 Transfer (proper: 1404 + improper: 1406)

(1) Does personal jurisdiction lie in the transferee district?
2

(2) Is the district a proper place for venue?

Is

(3) Was service of process possible in the transferee distirct?

 The transfer provisions apply only in federal court.

 The transferee court must always be a court in which the case “could have been filed.”
PJ + Venue + SMJ

 §1404 (mainly convenience purpose)

 Transferor court must be proper
 Either party may seek a §1404 transfer.
  The party requesting has the burden of showing that the alternative forum is more
convenient.
 No time limit
 Factors
 Private factors
- The convenience of the witnesses, which many courts consider the most important
factor
- The convenience of the parties
- Where the claim arose
- The location of physical evidence
- Any forum selection clause in the K
 Public factors
- The comparative ease of enforcing the judgment in the transferor and transferee
courts
- Whether the judges in each district are likely to be familiar with the governing law
- Any considerations of relative judicial economy
- Any local interests in deciding issues at home
 Governing law
 In a diversity case, the transferee court will apply the same law that would have been
applied by the transferor court.
 Thus, a P may select an inconvenient court to gain advantage of a favorable rule such as
a longer statute of limitations and then move to transfer the case to a more convenient
forum.

 §1406 (mainly justice purpose)

 The court lacking either PJ or venue
 Transferee court must be proper (PJ + Venue)
 Either party may transfer
 Governing law
 Unlike §1404, the transferee applies the law that would be applied by the courts of the state
in which the transferee court sits.

Subject Matter Jurisdiction

Background: Federal jurisdiction is limited by the U.S. constitution, federal statutes, and, in some cases,
court-created doctrines. Most actual disputes, however, involve the wording of the statutes.

Constitutional background: Federal courts are courts of limited jurisdiction. Article III, section 2, of the
U.S. Constitution lists nine categories of federal jurisdiction. Unless a case falls into one of these categories,
it is unconstitutional for a federal court to hear it.
Statutes: Article III itself does not grant jurisdiction to the lower federal courts. Instead, it is up to Congress
to allocate jurisdiction to the district courts.
 Basic Principles
 Meaning: it is the authority of a court to hear a certain class of disputes.
 Where multiple claims, a federal court must have jurisdiction over every claim.
 Independent of personal jurisdiction
 Sources
 Federal courts are courts of limited jurisdiction.
1. Constitutional limits: they can hear only those cases enumerated under Article III and
2. Statutes: only to the extent that Congress has authorized them to hear.
 State courts are courts of general jurisdiction.
 Exceptions: divorce, alimony, and child custody (only in the state courts)
 SMJ cannot be waived. It must exist.

 Challenging SMJ
 Any party may challenge
 Court may raise sua sponte.
 No time limits
 Unlike virtually every other defense or objection, there is no time limits on challenging SMJ.

 Federal Question Jurisdiction

 Federal question jurisdiction allows the federal district courts to hear cases involving federal
and constitutional claims.
 Constitutional authorization
 Article III, §2, of the U.S. constitution: “all cases, in Law and Equity, arising under this
Constitution, the Laws of the U.S. and Treaties…”
 Statutory enablement
1. 28 U.S.C. §1331
2. Exceptions: Exclusivity
28 U.S.C. §1334 – bankruptcy
28 U.S.C. §1338 – patent plaint variety protection and copyright infringement (trademark
– concurrent jurisdiction)

 Overview of §1331
 No amount in controversy requirement
 There is no minimum amount in controversy in §1331.
 Not exclusive
 Federal jurisdiction under §1331 is concurrent, not exclusive. (except for the exception
above)

 Sources of “federal” questions

 Constitution
 Federal law (Statutes or Federal common law)
 Treaties

 “Arising under”
 A case qualifies as arising under when the face of the plaintiff’s complaint seeks a remedy for a
cause of action available under federal law.
 Importantly, a case does not arise under federal law if the plaintiff’s complaint merely
anticipates a defense or counterclaim that may be available to defendant under federal law.
 A claim can arise under one of these bodies of law either if the law itself creates the right, or, in
some cases, when the law is a necessary element of a claim.
1. Federal law create rights
- Plaintiff seeks recovery based on a right specifically granted by federal law.
- If a federal statute creates a cause of action and plaintiff’s complaint invokes that federal
cause of action as the basis for recovery, the case satisfies §1331.
 - However, the federal claim must be substantial.
2. State law with federal element
- Satisfies §1331 when the federal issue involved is “substantial”

 Well-pleaded complaint rule

 To present the federal question on the face of plaintiff’s complaint.
 However, merely including does not suffice.
 Instead, the rule asks whether the federal element is necessary to plaintiff’s case.

 Diversity Jurisdiction (diversity + amount in controversy)

 Diversity jurisdiction allows federal courts to hear certain actions between people who live in
different places.
 The statutory grant (§1332) is narrower than Article III, in that it includes an amount-in-
controversy requirement, while Article III authorizes jurisdiction over all diversity cases.
 Constitutional authorization
 Article III, §2, of the U.S. constitution: “controversies between citizens of different states
and between a state, or the citizens thereof, and foreign state, citizens, or subjects”
 Statutory enablement
 28 U.S.C. §1332
 Not exclusive statute: the requirement of §1332 may be litigated in either state or federal
court
 Rationale: to protect out-of-state parties from discrimination by state courts.
 Diversity must exist at the commencement of the action. Post-commencement event, such
as a move by one of the parties, do not affect the existence of diversity.
 Exceptions
 Abstention
 Collusive joinder: if parties are improperly or collusively joined to create DJ, §1359
directs the court not to exercise jurisdiction.

 Complete diversity requirement

 Not a constitutional requirement (only minimal diversity)
 No plaintiff is a citizen of the same state as any defendant.
 Even if no claim has been filed by a particular plaintiff against a particular defendant, those two
parties must still be of diverse citizenship.
 Exception in case involving aliens
 If realignment destroys complete diversity, the court will dismiss the case.

 Citizenship of individuals and domicile

 In order to be a “citizen of a state” under §1332, a person must be both a citizen of the U.S. and
be domiciled in a state.
 Permanent resident aliens: a foreign citizen who is granted permanent resident alien status by
the U.S. government is treated as a citizen of the state in which she is domiciled.
 Most courts apply the permanent resident alien language in §1332 to defeat diversity, not to
create it.
 U.S. citizens domiciled abroad: cannot sue or be sued in federal court under diversity
jurisdiction
 Domicile
 Domicile and residence are not the same
 Actual residence plus the intent to remain (he has no definite intent to leave to make a
home elsewhere)
 Every person has one and only one domicile

 Citizenship of corporations
 Corporations (1332(c))
 Dual citizenship: a corporation is a citizen of both the state that incorporated it and the state
 in which it has its principal place of business.
- Incorporation is the legal act by which the corporation is created.
- Principal place of business
 Muscle test: a slight majority of courts look to where most of the corporation’s actual
physical activities, such as manufacturing or sales, take place.
 Nerve center: many courts look to where corporate management and operations
decisions are made: the corporate “headquarters”
 Hybrid approach: applying the muscle test for the many corporations that have their
physical activities located mainly in a single state, but employing the nerve center test
for corporations with significant physical activities in several states.
 Partnerships and other unincorporated associations (1332 (c))
 All of the partners of members of the organization must be considered.
 If any of them is from the same state as an adversary party, no DJ.
 Insurance companies (1332 (c)(1))
 The state in which the insured is a citizen
 It’s state of incorporation
 Its principle place of business
 Representatives (1332 (c)(2)
 The representative is deemed to have the same citizenship as the deceased, the infant, or
incompetent.
 Trusts
 The citizenship of the trustee is used to measure diversity.

 Alienage jurisdiction
 Suits between a U.S. citizen and “Citizens or subjects” of foreign states (nations).
 Domicile usually irrelevant
 A person need only be a citizen or subject of the foreign nation.
 Where the person is domiciled is not relevant, even if the person is domiciled in US.
 Permanent resident alien -> treated as a citizen of US
 Dual citizens
 Only the US citizenship is counted
 Mixing US citizen and foreign citizens
 Only the US citizenship is counted
 E.g. P1(Michigan) D1(Ohio) P2 and D2 (Indonesia) -> possible
 Actions involving only aliens not covered

 Amount in controversy
 A single plaintiff asserts two or more claims against a single defendant
 YES
 A single plaintiff sues multiple defendants in the same case
 NO
 A single plaintiff sues the defendant and another plaintiff (co-plaintiff) joins in the same action
against the defendant (both plaintiffs seeking less than 75,000)
 NO
 A single plaintiff sues one defendant for more than the required amounts, and another defendant
for less
 NO (cannot be added: 1st claim OK but not the 2nd one)
 A plaintiff sues the defendant for more than the required amount, and a second plaintiff joins to
sue the same defendant for less
 YES (as long as one plaintiff asserts a claim that satisfies the amount requirement, others
may join as co-plaintiffs even though they are seeking less.)

 Supplemental Jurisdiction
(1) Relationship §1367 (a)
 (2) Exception
A. Diversity §1367 (b)
B. Discretion §1367 (c)
 If a district court can exercise jurisdiction over some of the claims in the case, in certain
circumstances it may be able to exercise jurisdiction over other claims that do not themselves
qualify for federal jurisdiction under §1331 or §1332
 Jurisdiction over these other claims is called supplemental jurisdiction.
 SJ is possible only when at least one claim (federal claim) independently qualifies for federal
SMJ under some statute other than §1367.
 §1367 applies only to the federal district courts.
 Applying §1367
 Relationship test (1367 (a))
 The basic analysis for whether the state and federal claims are sufficiently related is
whether the two form part of the same case or controversy under Article III.
 Same case of controversy: if they arise out of the same basic set of facts
 Not over “claims”, but over “case”
 A case comprised all claims that arose out of a common nucleus of operative fact
 Exceptions
(1) Diversity exception §1367(b)
 In cases where jurisdiction over the federal claim is based solely on diversity,
§1367(b) prevents the use of SJ over claims brought by plaintiffs against parties
joined under FRCP 14,19,20,24 or who seek to intervene as plaintiffs under
FRCP 24.
(2) Discretion exception §1367(c)
 A federal court can refuse to exercise SJ over a state claim if the state claim raises
novel or complex issue of state law or substantially predominates over the federal
claim.
 If either §1367(b) or (c) applies, the court will dismiss only the state law claim.

 Removal
 Transfer (§1404, 1406) are a discretionary change in venue from one federal court to another
 Removal, by contrast, is a matter of right and moves the case from state court to federal court.
 28 U.S.C. §1441
 Entire case
 The case must be removed as a whole, if one or more of the claims in a multi claim case
do not fit within §1441, removal is impossible.
 Only defendant may remove.
 Original plaintiff (after counterclaim) who became defendant cannot remove.
 The federal court must have federal question, diversity, or supplemental jurisdiction over
all claims in the case.
 Removal based on federal question
 Determining whether a state court case presents a federal question generally works exactly
as it would had the action been filed originally in federal court.
 The court applies the well-pleaded complaint rule to determine if the complaint states a
federal question.
 It is determined at the time of removal, not when the case is filed.
 Removal based on diversity
 It is treated just as it is in a case originally filed in federal court.
 Exceptions
 Home-state removal bar (§1441(b))
- If any of the defendants is a citizen of the state in which the state court action is
pending, removal is impossible.
- Rationale: a defendant sued in a state court in his home state need not fear prejudice,
and only defendants may remove.
 Time for determining diversity
 -Diversity must exist in the state court case both when the case was filed and at the
time of removal
- But if a plaintiff voluntarily dismisses a non-diverse party, the case become
removable.
 Removal based on supplemental jurisdiction
 Works exactly as it would had the case been filed originally in federal court
 Home-state removal bar may be a factor where jurisdiction over the original claim is
based on diversity.

 Removal of separate and independent claims (§1441(c))

 When involves state law claims that are “separate and independent” from the federal claims,
§1441(c) may allow removal of the entire case.
 Applies only in federal question cases.

 Place to which case removed

 Removes to the federal district court “for the district and division embracing the place
where such action is pending.”
 This is true regardless of the residence of the parties or where the claim arose; as a result,
the federal court may hear a case for which it may not have been a proper venue had the
case been filed in that court originally.

 Procedure in removal (§1446, 1447)

 Notice
 D starts the removal process by filing a notice of removal with the appropriate district
court.
 The notice must contain a brief statement of the grounds for removal.
 D must attach copies of all state court pleadings.
 After filing with federal court, D must file a copy of notice with the state court.
 Timing
 The notice must be filed within 30 days after D receives notice that she is a defendant
in a state court case that could have been filed in federal court.
(a) Original complaint states removable case
- The notice must be filed within 30 days of the earlier of the date D receives a copy of
the complaint or a summons where the service of a complaint is not required.
(b) Case made removable by amendment
- The notice must be filed within 30 days of the date D receives the order or amended
pleading
(c) One-year limit
- A diversity case cannot be removed more than one year after it was originally
commenced, even if the amendment making it removable does not occur until after that
date.
(d) Multiple Ds
- 30 days begins when the first D receives.

 Procedure after removal

 Removal is effective when the copy of the notice is filed with the state court.
 State courts loses jurisdiction: any orders it issues are of no effect
 Objections to removal
 Objections must be filed within 30 days following filing of the notice of removal
 Objections to the SMJ can be made at any time.
 Remand
 If the federal court determines that removal was improper, it will remand the case to the
state court.
 Erie
1. Background
2. Conflicts between a Federal Judicial Practice and State Law
3. Conflicts between a Federal Rule and State Law
4. Conflicts between a Federal Statue and State Law
5. Conflicts between a Federal Constitutional Provision and State Law

Constitutional underpinnings of Erie: the court made it clear that the result in Erie was dictated by the
U.S. Constitution. The constitutional basis for the holding is not entirely clear. The best interpretation is that
the holding is based on basic principles of federalism reflected in Article I. Article III, and the Tenth
Amendment. The court began its constitutional discussion with the premises that “there is no federal general
common law.” It ten noted that although Congress clearly has the power to pass laws on specific subjects, it
did not have the power to supplant the entire body of state common law with federal statutes. Furthermore,
allowing federal courts to enact their own common law rules in every diversity case would give the federal
government a back-door way to exercise legislative power over many subject areas reserved to the states.

(1). Background
= Rules of Decision Act (RDA): the laws of the several states, except where the constitution, treaties, or
statutes of the US shall otherwise require or provide, shall be regarded as the ruls of decision in the federal
courts
= Swift v. Tyson
- Federal courts were not bound by RDA 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.
- Here, court decision interpreting the general common law were not laws within the meaning of RDA
- Here, the common law did not trace its origins to any individual state.
- There developed a body of law called federal common law, which applied in the federal courts
only.
= Erie v. Tompkins
- The court overturned its earlier holding in Swift, finding that the reference to laws in RDA included
not only state statue law but also state judicial opinions interpreting the common law.
- The court indicated that each sovereign state created its own common law.
- The court also held that federal courts, unlike state courts, had no power to create common law.
- The court began its constitutional discussion with the premises that “there is no federal general
common law.”
- Federal court does not have power to make law.

(2). Conflicts between a Federal Judicial Practice and State Law

= In York, the court concluded that federal courts should follow state rules if the difference between the
state and federal rules could be outcome determinative.

(3) Conflicts between a Federal Rules and State Law

= The federal rule will apply as long as it can rationally be deemed procedural and does not abridge,
enlarge, or modify any substantive rights.
= It is procedural if is designed to deal with what happens in the process of litigation, as opposed to dealing
with the rights of the parties outside the court.
= Procedure: it concerns the methods by which the courts enforce the rights provided in laws and
statute.
= Substantive law: the rights, duties, and responsibilities that govern the lives and conduct of citizens
outside the courtroom are called substantive law.
= Forum Shopping: It is the process of choosing a court that will treat one’s case favorably. If the federal
courts apply a different rule from the state courts on the same issue, the plaintiff will bring her action in the
court most favorable to her case.

(4). Conflicts between a Federal Statute and State Law

= In this case, the federal statute controls as long as it is valid and can be read actually to cover the situation.

(5) Conflict of laws rules

=The federal court must apply the conflict of laws rules of the state in which it sits, since conflict of laws
rule is considered substantive, not procedural.
Litigation and its Alternatives

(1) Remedies
A. Substitutionary remedies
i. Compensatory damages
ii. Other damages (liquidated, statutory, multiple damages
iii. Punitive damages
B. Specific remedies
i. Equitable remedies
ii. Injunction
C. Declaratory relief
D. Provisional Remedies
i. Preliminary injunction
ii. Temporary restraining order
iii. Pretrial attachment

(2) Attorney’s Fees

<Remedies>

(1). Substitutionary remedies

= A substitutionary remedy attempts to replace what P lost with something that is the rough rquivalent.
= The most common SR is Damages.
= A judgment awarding damages is not an order to pay.
= If the judgment debtor does not pay, the judgment victor can use the judgment to seize assets of the debtor.
= The assets are then sold at a sheriff’s sale, and the proceeds are used to satisfy the judgment.
= However, the victor cannot reach all of the debtor’s property with a judgment.
= A judgment creditor may also be able to obtain other assets of the judgment debtor. E.g. it may be possible
to garnish funds owed by a third party to the judgment debtor, such as wages, or back accounts.
(1.1) Compensatory damages

= CD are a sum of money that is meant to compensate the injured party for the harm it has suffered.
= Because it is impossible for a D to undo the injury, the court assigns a value to the injury and awards
damages to P in that amount.
= What sorts of losses are recoverable are limited by the substantive law.
= No double recovery

(1.2) Other damages (liquidated, statutory, multiple damages

= Liquidated Damages: amount is agreed upon ahead of time

= Statutory Damages: amount fixed by statute
= Multiple Damages: proven damages augmented automatically

(1.3) Punitive damages

= a form of punishment
= they are not compensatory in nature.
= Constitutional limits: stem from the due process clause of the Fourteenth Amendment, which prevents a
state from depriving anyone of property without affording due process of law.
- The Due Process Clause prevents grossly excessive punitive damages.
- A state must also ensure that meaningful judicial review is available for a jury award of PD.
= available only in tort cases and only when D acted intentionally or willfully
= Designed to deter similar conduct in the future

(2). Specific remedies

= The court orders a party to act or refrain from acting in a certain way.
= Unlike damages, a judgment awarding a specific remedy usually results in a court order.

(2.1) Equitable remedies

= Historically, there were crucial differences between equitable and legal claims and remedies.
= There are only two remained.
- Defenses: a party seeking equitable relief is subject to various equitable defenses such as laches,
estoppels, and unclean hands.
- A party could obtain relief in equity only if she could show that her legal relief was inadequate.

(2.2) Injunction

= A mandatory injunction orders D to undertake certain acts.

= A prohibitory injunction orders D to refrain from taking certain acts.
= Factors
- a balance of the hardship to D if the injunction were ordered and the hardship to P if the injunction
were denied, and
- the public interest

(3). Declaratory relief

= It is a unique remedy. It does not obligate the loser to pay money or take specific actions.
= Instead, it merely states the rights of the parties.

(4). Provisional Remedies

= a party may sometimes obtain relief before the case is completely resolved
= a party must make a strong case to be awarded a provisional remedy.
= they are always specific relief and by nature temporary
(4.1) Preliminary injunction

= It is an injunction granted during the pendency of a case.

= Its primary purpose is to preserve the status quo (현상유지) so that any final relief granted by the court
can be effective.
= Standard
- Likely to prevail
- Irreparable injury
- Balance of the hardships

(4.2) Temporary restraining order

= it is typically issued without notice to the other party because of the urgency of the matter.
= Injury requirement is much more rigorous than it is for a preliminary injunction. The requesting party must
show that he would suffer irreparable injury if he had to use the regular preliminary injunction process.
= In federal court, TRO expires after 10 days unless the court explicitly establishes a different term.

(4.3) Pretrial attachment

= In certain situations, a P may have D’s property seized at the outset of the case and held by the court.
= The purpose is to prevent D from disposing of the property during the course of the case
= D is entitled to due process of law: it constitutes a deprivation by the state of defendant’s property within
the meaning of the Fourteenth Amendment.
= However, it is not always unconstitutional.
- Strength of D’s interest: how strong a right D has in the property and how great an impact the
deprivation would have on that interest.
- Strength of P’s interest: other things equal, if P has a preexisiting interest in the property, the
seizure is more likely to be upheld.
- Risk of a wrongful deprivation:
 Pleading
 Overview
 FRCP 7(a)
 A complaint: the complaint is the paper filed by P that specifies all claims he has against D.
 An answer to a complaint
 An answer to a counterclaim designated as a counterclaim
 An answer to a crossclaim
 A third-party complaint
 An answer to a third-party complaint
 If the court orders one, a reply to an answer

 Forms of pleading: FRCP 10

 Motions: all request to the court other than pleadings are made by motion.
 FRCP 7(b)
 The motion must be in writing unless it is made during a hearing or at trial
 The motion must state with particularity the grounds on which the motion is based.
 The motion must state the relief sought
 All written motions must be signed in accordance with Rule 11.

 Stating a Claim
 FRCP 8, 9
 Contents of complaint
1. A short and plain statement of the basis for SMJ
2. A short and plain state of the P’s claim, and
3. A demand for judgment setting out the relief P seeks.

(1) Jurisdiction
  P must allege the basis for the court’s jurisdiction over all claims.
 Federal question, Diversity of citizenship, Supplemental jurisdiction

(2) Statement of the claim

 A claim is sufficient as long as it provides D adequate notice of P’s claims and of the basic
situation or situations from which those claims arise
 FRCP 8(d) – “simple, concise, and direct.”
 FRCP 8(e) – all pleadings are to be construed “as to do justice.”
 Legal conclusions
 P need not allege exactly how D was at fault.
 However, P may be required to indicate that it has some facts that support its legal
conclusions.
 The complaint must include “enough factual matter to suggest that an agreement was
made.”
 Legal theories
 As long as P states sufficient facts, she can rely on any legal theory that provides a cause of
action under those facts.
 Inconsistency: FRCP 8(d)(3)
 A party may assert alternative, or even inconsistent, grounds for relief.

(3) Prayer for relief

 P must specify the remedy that he would like the court to grant.
 Different types allowed: a P may seek several different types of relief, even on a single claim.

 Higher standard
 Fraud and mistake
 FRCP 9(b)
 Must state the circumstances constituting fraud or mistake with particularity
 P needs to describe in detail the representations made by D and how they were incorrect.
 Malice, intent, knowledge, and any other conditions of mind, are not subject to the higher
standard.
 Pleading special matters
 Capacity and authority: FRCP 9(a)(1)(A) and (B)
 Conditions precedent: FRCP 9(c)
 Official documents and act: FRCP 9(d)
 Judgment of other court: FRCP 9(e)

 Defendant’s response
Answer – general response
Motion – specific response

<Pre-answer Motion>

 FRCP 12(b) contains a special set of objections that may be made by motion, including
challenges to jurisdiction, venue, and the form of the complaint.
 FRCP 12(b)(6) motion
 Failure to state a claim upon which relief can be granted
 The court applies the notice pleading standards
 The court dismiss only if there is no reasonable way to construe a complaint to allege a
recognized cause of action.
 How complaint defective
 Facts: the complaint must simply describe “enough facts to state a claim to relief that is
plausible on its face.”
 Law: in the alternative, P may have fully set out the facts, but those facts do not allow P
to recover under any legal theory
  Effect of granting a Rule 12(b)(6)
 Before dismissing, a court will almost always grant P leave to amend the complaint to
allow it to cure the defect.
 A dismissal on the merits – prevents P from bringing any claim against the same D
based on the same underlying set of facts.

 FRCP 12(e) motion

 Motion for a more definite statement
 If a party is served with a pleading to which a responsive pleading is allowed, but that
pleading is so vague or ambiguous
 Rather use FRCP 12(b)(6) to dismiss

 FRCP 12(f) motion

 Motion to strike portions of a pleading that are redundant, immaterial, impertinent, or
scandalous
 Timing
 Must be made before a responsive pleading is served, if no responsive pleading is
allowed, within 20 days of service of the pleading
 When there is a considerable burden responding

 FRCP 12(g): Joining motion

FRCP 12(h): Waiving
 A motion under this rule may be joined with any other motion allowed by this rule.
 No second pre-answer motion for a defense or objection that was available to the party but
omitted from its earlier motion.
 This strict waiver rule does not apply to lack of SMJ, failure to state a claim, and failure
to join a party under Rule 19.

<Answer> (denials and admissions)

 D must respond to the complaint by filing an answer

 Unlike a motion, the answer must deal with all of P’s allegations.
 Timing: FRCP 12(a)
 Default rule – 20 days
 Effect of waiver of service
 60 days: domestic D
 90 days: D outside the US
 US as D – 60 days
 Effect of motions
 Within 10 days of the court’s ruling on the motion
 If the court grants a motion for a more definite statement, the answer must be filed within
10 days of the date the more definite statement is filed.

 Denials and admissions: FRCP 8(b)

 In general, D should admit or deny the allegations asserted against it by P.
 Effect of failure to deny
 FRCP 8(b)(6): failure to deny an allegation made in a pleading constitutes an admission
 Exception: the amount of damages
 Applies only when a responsive pleading is required.
 Denials must meet substance of complaint FRCP 8(6)(2)
 Effect: ineffective denial -> constitute an admission
 Partial Denial FRCP 8(6)(4)
 In good faith, it must specify which portions it denies.
 Lack of knowledge FRCP 8(b)(5)
 D must specifically state that it lacks knowledge or information about the allegation in
 question
 Effect: treated as a denial
 General Denials FRCP 8(b)(3)
 When D denies every allegation of the entire complaint.

 Defenses
(1) Ordinary defenses
 Considers only the complaint and argues that P may not recover because of a procedural,
legal, or leading defect.
 FRCP 12(b) defenses fall in here
(2) Affirmative defenses
 Usually involves the introduction of new facts that, when coupled with the facts alleged by
P, prevent P from recovering
 FRCP 8(c)
 Not exclusive

 Burden of pleading
 If no party raises a particular issue -> cannot be litigated at trial -> the party who does not have
the burden of pleading on that issue prevails
 Defenses FRCP 8(c) and 12(b) -> burden of pleading on D
 Issues not mentioned in the rules
 consider the facts necessary to establish the defense are more likely to be known byy one
party than the other
 consider analogous issues
 consider language of the statute, if the claim arises under a statute

 Motion for judgment on the pleadings

 If the pleadings, taken as a whole, show that one party should prevail as a matter of law, the
court may grant a motion for judgment on the pleadings
 It is most commonly used by a claimant against a party who has failed to defend against that
person’s claim

 Amendments
(1) Amendments before trial
(2) Amendments during and after trial
(3) Relation back of amendments
(4) Supplemental pleadings

 Amendments before trial

 Before being served with a responsive pleading
Or
 Within 20 days after serving the pleading if a responsive pleading is not allowed
Or
 In all other cases, amendment only with the opposing party’s written consent or the court’s
permission
 The court should freely five leave when justice so requires.
 Leave to amend is denied only if the other party can show prejudice by the amendment
or the defect in the original pleading was the result of inexcusable neglect or
carelessness

 Amendments during and after trial

 If a party consents to introduce evidence on matters outside the pleadings, FRCP 15(b)(2)
provides that any issues raised “must be treated in all respects” as if they were raised in the
pleadings and allows apart to amend its pleadings to make them conform to the newly
raised issues.
  If a party objects, the issue still may end up forming part at the trial. FRCP 15(b)(1)
provides that a court should freely permit an amendment to the pleadings at trial if it will
help resolve the merits of the actions, unless the late amendment would cause the other
parties undue prejudice.

 Relation back of amendments

An amendment to a pleading relates back to the date of the original pleading:
 When adding claims relate back
a. The particular statute of limitations allows the amendment to relate back; or
b. The claim or defense set out in the amended pleading arose out of the conduct, transaction,
or occurrence set out in the original pleading
 When changing parties relate back
a. Above (b) is satisfied; and
b. The party being brought in by amendment acquires sufficient notice about the existence of
the lawsuit within the specified time.
 Sufficiency of notice: the notice must be received early enough to prevent any
prejudice to the party in preparing its defense and contain enough information that the
party is aware of should be aware that he would have been named a defendant in the
original action.

 Supplemental pleadings
 Different from amendments: SP set forth facts that arise after the original pleading was filed.
 Court permission: always require court permission

 Ethical limitations on Pleading and Motions (FRCP 11)

(1) Signature
(2) Representations to the court
(3) Sanctions

(1) Signature - FRCP 11(a)

 Documents governed
 Applies to most documents that the parties file with the court, including pleadings and
motions
 Who must sign
 At least by one attorney
 If the party is not represented, the party himself must sign
 Required information
 The signer must provide her address, email address, and tel number
 Effect of failure
 The court must strike an unsigned paper unless the omission is promptly corrected after
being called to the attorney’s or party’s attention.

(2) Representations to the court – FRCP 11(b)

 Signing (and other actions) constitutes a certification that the signer has conducted background
research, that the assertions in the doc are supported by law and fact, and the doc has not been
filed for an improper purpose.
 If these certifications are not accurate, the party is subject to sanctions.

(3) Sanctions
 Process
 By motion – FRCP 11(c)(2)
 Service: the party first serves the motion on the offending party
 Safe harbor: a motion for Rule 11 sanctions is not immediately filed with the court
 The motion may be filed only if the offending party does not withdraw or correct
the challenged paper within 21 days
  Cost and fees: the court may award cost and reasonable attorneys’ fees to the party who
prevails on the motion for sanctions
 Court’s initiative – FRCP 11(c)(3)
 Before imposing, the court must issue an order the party to show why sanctions should
not be imposed.
 The safe-harbor provision does not apply here.
 Order – FRCP 11(c)(6)
 An order imposing sanctions must specifically describe the offending conduct and
justify the sanctions imposed.

 Nature of a Sanction – FRCP 11(c)(4)

 The rule limits sanctions to whatever suffices to deter repetition of such conduct in the
future.
 Thus, a sanction may be punitive.
 Nonmonetary sanctions
 A penalty
 All costs and attorneys’ fees caused b the violation only when needed for effective
deterrence

 Determining appropriate sanction

 The Advisory Committee notes indicate that a court has considerable discretion in
determining an appropriate sanction.
 Also suggest certain factors
a. Whether the violation was willful or merely negligent
b. Whether the offending party intended to injure the other party
c. Whether the offending person has had legal training
d. Whether there was a pattern of offending conduct, in this case or in others
e. Whether the wrongful activity pervades an entire pleading or motion or only a particular
claim or defense
f. The effect the violation had on the process of litigation ,including a consideration of any
added time or expense