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CP OUTLINE: Michalski 12/15/14 5:58 PM Personal JRX :
CP OUTLINE: Michalski
12/15/14 5:58 PMPersonal JRX:
Court’s power to hear a case based on parties relationship to the forum state. No personal jrx over a party, any order
or judgment court renders does not bind that party.
Constitutional requirement for state & fed. court.
Establishing the Power to Exercise PJRX: (Domicile, in-state service, consent, general jrx, minimum contacts [specific jrx])
International Shoe: Minimum Contacts Test
o Courts of a state may exercise personal jrx over a D if she has such minimum contacts with the state that it would be fair to
require her to return & defend lawsuit in the state. (Purposefully avail yourself)
Some cases single contact will do, but not “casual” or “isolated”
D voluntarily benefits from & is protected by laws, then duty to answer for in-state activities.
Power of court limited to cases arising out of D’s relationship to the state.
Do not have to be in state for minimum contacts to apply if you know acts will cause harm in state. (Ex: Write
defamatory article in Florida, but it is to be circulated in California. Subject to Personal jrx in CA for damage caused as
result of article.)
Contacts focused on time D acted, not time of lawsuit
Specific jrx: In-state activity limited, D only subject to jrx for claims arising out of those specific contacts
Minimum contacts focuses on time of act, not time of lawsuit.
Do not have to be in state for minimum contacts to apply if you know acts will cause harm in state. (Ex: Write defamatory
article in Florida, but it is to be circulated in California. Subject to Personal jrx in CA for damage caused as result of article.)
Min. contacts is that standard from in rem jrx (cases involving property). (What contacts? Jrx reasonable?)
Purposeful Availment:
o Purposeful availment: make deliberate choice to relate to state in some meaningful/beneficial way you have purposefully
availed yourself. This is a minimum contact
Stream of Commerce:
o Stream of commerce: 1) A, out-of-state, sells components to B, out-of-state. B puts component into finished product &
distributes into forum state. 2) A sells finished products to B, out-of-state. B resells in forum state to retailer. Retailer to
consumer
o Broad view: minimum contacts because original seller benefits. Narrow: require clearer evidence D seeks to serve
market in particular state (designing for market, advertising)
o Effects test holds that a foreign act w/foreseeable effects in the forum state gives rise to specific jrx.
General jrx: In-state contacts very substantial, D subject to general in personam jrx (any claim)
o So substantial & continuous she would expect to be subject to suit there on any claim & suffer no inconvenience from
defending there.
o Individual: domiciled there.
o Corporations: state of corporation, h’qrtrd, continuous presence/doing substantial business in the forum.
Consent:
o Consent to pjrx can be established by prelitigation agreement, or by waiver (No challenge to pjrx)
Forum Selection Clauses:
*Prorogation Clause: In addition to state w/minimum contacts there is consent to an additional state unrelated to
contacts.
Doesn’t take pjrx away from anyone. Much less suspect
*Derogation Clause: (Same as Carnival Cruise)
Makes it very clear to consumer (Benefit)
Suspect to shadiness. Takes min. contacts pjrx away.
*Typically want to bargain forum clauses.
*Other types of clauses: choice of law & arbitration clause.
*Transaction lawyer have to consider forum clause. If you don’t, malpractice. If you consider, but don’t include, have to
document why.
Service of Process: Service of the initial notice to the D of a filing of a lawsuit against him. Service of initial summons notifies the
D that he’s been sued & & the court intends to adjudicate his rights.
o Rule 4: provisions of service of process on various Ds within the US. Apply whether D is served in district where suit is
pending, or in other federal districts.
o (a) – Contents of the summons
o (e) – Service on individuals: 5 methods (Service can be made by any person over 18 not a party to complaint)
3 traditional: 1) Personal delivery summons & complaint to the D, 2) leave copies of summons & complaint at home
w/person of suitable age & discretion residing therein, 3) delivering papers to agent appointed by D to receive papers
on his behalf.
4: Serve D under provisions governing service on individuals in courts of the state where fed court sits. (Ex: bring suit
in MA fed district court, P can serve D located in NY via any method of MA state court service provisions.)
5: Can serve D located out of state where suit is brought via any method of service where D is located. (Ex: bring suit in
MA fed district court, P can serve D located in NY via any method of NY state court service provisions, even though suit
is in MA.)
o (h) – Service on corporations: Can serve officer, managing or general agent of the D, or to an agent authorized to
receive service of process. Can serve these people in the same manner as individuals.
o As it pertains to serving these people via some service method of the state in which the suit is brought or state in
which the D is located, the method needs to be prescribed by the state’s law for service on a corporation; not method
applicable to individuals.)
o Waiver of Service: P solicit waiver of process by sending D the complaint, two copies of notice of the action & a request
that D waive formal service of summons & complaint upon him.
o D’s incentive: 1: 4(d)(1) creates duty “to avoid unnecessary expenses of serving the summons”. 2: Cost of service of
summons will be imposed on D who refuses to waive service w/out good cause. 3: D who waives gets 60 days to
respond to the complaint as opposed to the usual 20.
o Quick note: Challenge to service of process attacks adequacy of the method used to give notice to D, not challenge
court’s power to exercise PJRX. Both must be met in order for a suit to proceed.
o Rule 4(k) “Long-Arm Statute” (Territorial Limits of Effective Service)
o For the majority of cases, the reach of PJRX in a Fed. Court is the same as the reach of PJRX in the courts of the state in
which it sits. Same 2 ?’s must be answered. Has state LA statute authorized pjrx for this case? Would it be constitutional
to exercise pjrx under 14th amendment given the circumstances of the case.
o There are some other cases authorizing pjrx for fed court where state wouldn’t have it, but they’re limited.
o Other Mechanical Aspects: 1) Server must make proof of service 2) Service made w.in 120 days of filing the complaint,
or action may be dismissed. This is separate & in addition to requirements of any applicable statute of limitations. 3) All
other papers: motions, pleadings other than complaint, discovery requests, & all other papers filed w/the court must be
served on each party to the action. However, virtually all these papers are subject to more flexible provisions of FRCP 5,
w/authorize service of these papers by mailing them to the party’s attorney.
Notice: Separate from pjrx. In order for pjrx to be exercised, the D must be properly notified.
o ”The fundamental requisite of due process of law is the opportunity to be heard.” Opportunity to be heard is
meaningless unless the party has been notified about the court proceeding. NOTICE IS VITAL
o All cases require form of notice that was sensible under the circumstances & reasonably likely to actually inform the D of
the lawsuit.
*Notice means have to use tools that are such that there’s a good chance they will reach the people you are trying to
reach. Compare this with what somebody would do who would reallyyyyy want to provide notice. If close together
considering circumstances, then good enough. If too large a gap, no go.
*Does not mean the person must be notified. Rather, the attempt to notify him must be reasonable.
Easier for me to think of notice as another dimension of pjrx, but Michalski looks at it as a separate
requirement. Doesn’t effect meaning, but phrase it as separate to pjrx on a test. (If it comes up)
Statutory Limits on PJrx
Every PJRX issue 2 step analysis: 1st) Court must ask if state statute authorizes pjrx under the circumstances of the case 2nd)
Determine whether its constitutional under due process to do so. (Sometimes PJRX statute may be deemed unconstitutional
under certain circumstances)
State legislatures free to grant courts pjrx to limits of due process. One advantage of this provision is its self adjusting: when
due process clause expands, state jrx expands width it.
“Enumerated Act” Long Arm-Statutes (EALAS): Not all states give courts blanket authority. They pass “long-arm” statutes,
which authorize their courts to exercise pjrx based on certain contacts w/state. (Long-arm signifies how they reach out & submit
noncitizens to pjrx).
Some contacts can be within due process, but if not covered by statute, then state no pjrx.
Why not give blanket authority? 1) Many states reluctant to tinker w/statutes that have worked fine for years & have been
construed repeatedly by their courts. 2) list of sufficient acts in enumerated act long-arm statutes provides some guidance
to nonresident about pjrx consequences pertaining to certain actions. 3) EALAS give courts leeway to reject some cases
having little connection to the state w/out making constitutional pronouncements.
Statutes that may fall outside the scope of due process in some instances may still be applied to others when it is constitutional
All LA statutes that base pjrx on specific enumerated acts require claim arise out of act itself.
Various EALAS authorize pjrx when there is no physical contact w/state itself but cause effects w/in it. Ex: Business
transactions, supplying things in the state, tortious act out of state causes tortious injury w/in, etc. (Publish defamatory
article in FL, distribute in CA. pjrx in CA.)
Frequently hear “EALAS intended to reach limits of due process.” Meaning, the specific categories of jrx conveyed by the LA
statute are to be interpreted as liberally as due process allows. “Reaching limits of due process” language does not fill in any
interstices the provisions fail to cover.
Challenging PJRX:
Special Appearance: Do not believe court has pjrx over you, can file “special appearance.” :
o Appear before court at beginning of original action & make argument over pjrx. Only submits to pjrx if mentions merits
of the case.
o Many courts have abandoned this view for a more liberal special appearance as that of Federal Law. May argue pjrx at
outset & then merits after, if court does not buy pjrx argument.
o Most states allow D to challenge pjrx, then challenge merits, & still object to pjrx ruling if lose on merits. (Some state
even allow an appeal to pjrx ruling immediately w/out arguing merits. If win appeal, save time & money. If lose, lose
time & money. Only some states allow pjrx interlocutory appeal because of this risk)
Collateral Attack: Don’t make special appearance. Stay in home state. Default judgment entered against you, & P comes to
your state trying to enforce judgment. Then D argues lack of pjrx.
o May be beneficial to argue pjrx in home state for bias reasons.
o If certain jrx is lacking, save a lot of time & money.
o However, if lose pjrx battle in enforcing state, no opportunity to argue merits. Deemed to have waived them by not
showing at original action. Automatic judgment. RISKY.
Venue: *Venue localizes litigation w/in state boundaries. Puts case in specific county (State courts) or judicial district (Fed.
Courts).
State court- state venue law
Fed court- fed venue law (focus of this class)
State court & removed to fed- venue lies in judicial district encompassing the state court from which the case was
removed.
Venue can be waived FRCP 12(h)(1)
Why venue? Convenience. Counties can be on opposite sides of the state, making it costly to travel. Venue tries to limit
these costs by localizing litigation.
Venue must be proper. When not challenged, it’s waived. When it is challenged, look through the rules & find out if
proper.
Forum Non Conveniens: Forum Non Conveniens:
Common law doctrine that gives a court the discretion to dismiss actions that are more appropriately/conveniently litigated in
a different forum. (Even though court has jrx.) *Apply list of private & public interest factors:
Private factors: location of parties, relative ease of access to sources of proof (evidence), availability of compulsory
process for the attendance of unwilling witnesses, cost of attendance of witnesses, possibility of viewing the scene if
appropriate to the action, & other practical matters related to making the trial easy, expeditious, & inexpensive.
Public factors: administrative difficulties of the courts, interest in having local controversies adjudicated at home,
interest in having trial in a forum familiar with the law governing the action, avoidance of unnecessary problems in
conflict of laws or application of foreign law, & unfairness of burdening citizens in an unrelated forum with jury duty.
More convenient forum is in same judicial system, transfer is the appropriate response.
Harder cases: filed in state court but should’ve been filed in a different state, or case filed in US that should’ve been
filed in another country.
Subject Matter JRX
Federal ?’s & Federal Cases: Jrx “Arising Under” Federal Law
Article III §2 of the Consitution lists the categories of cases Feds can hear:
o Cases between states
o Cases between citizens of different states
o Cases involving foreign ministers & consuls
o Admiralty & maritime cases
o Cases arising under Federal Constitution & Federal Law
o Few other narrow categories of suit.
o Exclusive Federal jrx through specific statutory grants (Bankruptcy, Patent & Copyright, Antitrust, Postal Matters, IRS
cases, Security Exchange Act. Admiralty, Ambassadors, public ministers, consuls, Case where U.S. is a party, etc.)
“Arising Under Fed Law”: USC’tional Scope
o For jrx of a case arising under fed law, 1 of the parties would have to rely on fed law to establish either a claim or a
defense in the lawsuit, or at least raise a federal issue in proving her case. (Broad reach)
The Need for both Constitutional Power & Statutory Authority
o Congress establishes lower fed courts & gives them their authority, not AIII §2. (Could give them blanket authority as
AIII §2 gives Supreme Court, or give them authority in some categories but not in others.)
o If filing suit in fed court, 2 question to ask: 1) is this a case which constitutionally may be granted to fed courts
because granted in AIII §2? 2) If case does fall into 1 of categories of AIII §2, has congress conveyed jrx over this
type of case in a fed statute?
28 USC §1331: Authorizes jrx to federal district courts for “cases arising under the Constitution, laws, or treaties of the US.”
o Sounds broad like AIII §2, but construed much more narrowly. The statute does not confer jrx on fed district courts over
cases that involve fed law unless the fed issue is necessary to the proof of the P’s claim.
o Mottley Rule : In Louisville & Nashville R.R. v. Mottley (1908) Mottley was given free passes for life to settle for a prior
injury. Thirty-some years later, R.R. refused to renew the passes because of a federal statute barring railroads from
giving free transportation. Mottley sued breach of contract; R.R. used the federal statute as a defense. Mottley countered
raising federal issues that should entitle them to relief. After going from fed trial court to supreme court, supreme court
stopped the case by pointing out, at their own finding, the case arose from state contract law: breach of contract. Despite
R.R.’s federal defense & Mottley’s counter, the case was dismissed due to the P only requiring state law to establish her
claim.
Mottley Rule remains the law today primarily because furthers sensible judicial administration.
Courts need to determine jrx from outset; rule allows court to do so based solely of P’s case before D answers.
If decided that all cases simply involving issue of fed law were the rule, P’s might establish fed jrx by simply
asserting potential defenses based on federal law. P could speculate that a defense based on federal law will be
made, but it might not actually be asserted during the actual case. Case could go through Fed. Court without ever
getting to anything related to federal law.
Courts could waste time & money going through the litigation process then realize smjrx was never satisfied &
case cannot be heard.
For the most part:
o If the source of the P’s legal right against the D is federal, than lower fed courts have jrx.
o Sometimes the need to resolve an issue of federal law to prove a state cause of action will support federal jrx,
but only when issues of federal law are substantially embedded in the P’s claim. (In order for the P to prove
her state claim, she must resort to federal law.)
o Fed SMJRX cannot be waived by a party. The court can raise it on its own motion, even on appeal.
o Typically, SMJRX objection cannot be made after case is decided. Not clear when default though.
o Challenge fed & personal jrx, court will decide what is most obvious. Even if that bars P from bringing claim to
a state court w/in the forum (lack of pjrx)
SMJRX: Diversity JRX (DJRX): AIII §2 USC (SCOPE): Federal courts have jrx over cases where the P & D are domiciled in
different states.
o Complete diversity between all Ps & all Ds used to be required, but now diversity jrx is satisfied as long as some
parties to the action are diverse.
o No amount-in-controversy required.
o SMJRX based on diversity in lower Fed. Courts requires (normally) complete diversity when the case is filed.
o Rationale? - Avoid state’s prejudice against outsiders.
o Proper parties in diversity cases: 28 USC §1332(a) Read it
1. Citizens of different states
2. Citizen of a state & a foreigner
3. Citizens of different states & a foreigner
4. Foreign state v. citizen of a domestic state * No diversity between citizens of foreign states
How to Determine Citizenship? Answer: Domicile
Individuals: State where person has taken up residence with the intent to reside indefinitely.
o “Indefinitely”-person’s presence in the state is open-ended; no definite intent to leave to make home elsewhere.
This can be met even if person expects to move at some point, but has no definite plans to do so at any particular
time or upon occurrence of a particular event.
o EX: A quits job, moves to FL. Hopes to find new job. He’s established new domicile, even though he may leave at
some point if job-market proves unpromising. Conversely, if he moves to FL for an undercover job w/intent to
return home to CA once job is completed, then no domicile. Even if he is unsure of exact return date.
Corporations: Domiciled in state where principal place of business & state of incorporation.
o When significant business in multiple states, most courts choose state that contains “definable center of the
productive activities” if there is one- (manufacturing or other profit-making activity).
o Sometimes called “place of operations” or “bulk of corporate activity” test.
o Looks where corporation would be most local; employs the most people, conducts most activities, most public
interaction etc. Support DJRX rationale
o Business so dispersed, principal place of business unascertainable, look to h’qrtrs (“nerve center”).
Unincorporated association: (Partnerships, labor unions, etc.) For purposes of DJRX, are considered to be citizens of
every state in which any member is a citizen.
o 28 USC §1332 : Only allows SMJRX based on diversity in lower Fed. Courts when there is complete diversity. Potential
damages must meet amount-in-controversy, 75k * has to be at least 1 cent over 75k, exclusive of interest & cost.
(Only when it is so clear that it is a “legal certainty” the $75k wont be met can a judge dismiss for failure to meet the
amount-in-controversy.)
Because it is so hard to ascertain the exact amount of damages in a large number of cases, it does not need to be fact
that 75k will be recovered, just needs to be controversy that 75K.01 is possible. (Intangible damages: hard to quantify:
pain & suffering, emotional distress, punitive damages, etc.)
Amount-in-controversy: Aggregation of claims
1. Single P asserts 2 or more claims against single D, amounts can be added together to satisfy amount-in-controversy.
2. Single P can’t aggregate amounts sought from different Ds. Must meet requirement against both. (Even if 75k is met
against 1 D, but not the other)
3. Ps may not add claims together to meet amount requirement. If one P does, but another does not, then the claim can
be heard as long as there is only one D.
Supplemental JRX:
28 USC §1367:
(a) Except as provided in subsections (b) & (c) or as expressly provided otherwise by Federal statute, in any civil action of
which the district courts have original JRX (**anchoring claim), the district courts shall have supplemental JRX over all other
claims that are so related to claims in the action within such original JRX that they form part of the same case or controversy
under Article III of the United States Constitution. Such supplemental JRX shall include claims that involve the joinder or
intervention of additional parties.
(b) In any civil action of which the district courts have original JRX founded solely on section 1332 (Diversity) of this title, the
district courts shall not have supplemental JRX under subsection (a) over claims by Ps against persons made parties under
Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure, or over claims by persons proposed to be joined as Ps under Rule
19 of such rules, or seeking to intervene as Ps under Rule 24 of such rules, when exercising supplemental JRX over such claims
would be inconsistent with the JRX’al requirements of section 1332. *This section does not apply to FQJRX cases
(c) The district courts may decline to exercise supplemental JRX over a claim under subsection (a) if—
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 JRX,
3. The district court has dismissed all claims over which it has original JRX, or
4. in exceptional circumstances, there are other compelling reasons for declining JRX.
SMJRX requires 3 step process:
1. Must be determined whether Consitutional power under AIII, §2, to hear supplemental claim.
2. Determine if statutory grant of jrx under 28 USC §1367:
a. Grants statutory authority to hear state law claims that are part of the same case.
b. Certain claims in diversity cases, which would contradict the limits on jrx in §1332, are exceptions.
3. 28 USC §1367 (c) Once court determines Consitutional & statutory authority, must decide, based on discretionary
factors, whether to do so.
ANY CLAIM WIH INDEPENDANT FSMJRX & WITHIN JOINDER & INTERVENTION RULES CAN BE HEARD, REGARDLESS OF
PARTY.
SUPJRX in DJRX cases:
- P add non-independent FSMJRX claims against original D as long as from same events, but no NI-FSMJRX claims against any
other party.
- D can add NI-FSMJRX as long as from original events.
- Ds can assert NI-FSMJRX cross-claims that are from original events.
-Impleaded 3rd party Ps & Ds may assert NI-FSMJRX claims if from same events
-Joined co-Ps can assert NI-FSMJRX claim against diverse D only when one D in the action.
-2 Ps cannot add claims to meet AIC. If one does and other doesn’t, other claim can be heard as long as there is only one D in
the action.
SUPJRX in F?JRX cases:
-Allows any additional claim related to events that led to original claim.
*Unless court declines under part (c).
Removal: U.S.C. §1441, §1446, §1447 (Not word for word, outlined)
U.S.C §1441:
(a) Removal JRX only available to D if P could’ve commenced case in Fed court. (F?JRX/DJRX).
Case removed from state court, can only go to fed court in the district where the state court lies.
(b) (2) When DJRX, D can’t move from state court if he’s domiciled in the state where case was brought.
No reason to seek benefits of neutral site. No local prejudice from courts in home state.
(c) (1) if civil action includes
(A) State court case asserting a FSMJRX claim, and
(B) State claim not under diversity or supplemental jrx, case is removable, but
(2) Fed court has to sever state claim and remand that claim back to state court.
(d) Non-citizen of U.S. in state court for civil action may remove to Fed. Court in that district. Tried by judge w/out jury.
(f) Federal court not precluded from hearing case that lacks JRX in state court. Doesn’t change fact Fed. Court must have
PJRX & FSMJRX over the claim.
U.S.C. §1446:
a) All Ds desiring removal need to file notice in fed. district court pursuant to rule 11 FRCP. Should contain a short &
plain statement of the grounds for removal, together w/copy of all process, pleadings, & orders served upon such D or
Ds in such action.
b) (1) Notice must be filed w/in 30 days of receiving P’s pleading.
(2) (A) Civil action removed solely under §1441(a), all Ds properly joined & served must join in or consent to
removal.
(B) Upon being served w/initital pleading, each D has 30 days to file notice of removal.
(C) Last served D has 30 days. Doesn’t matter if 30 days for other people has ran out.. Has to get everybody to
remove with him though
(3) If case state in initial pleading doesn’t have fed jrx, but P amends it so there would be FSMJRX, D has 30 days from
that point forward to file notice of removal.
c) (1) Case can’t be removed after a year, unless court finds P acted in bad faith to prevent D from removing w/in that
year period.
(2) P’s dollar demand in initial complaint is the AIC. Exceptions for D to assert AIC in notice of removal:
(A) (i)P sues for nonmonetary relief (such as an injunction)
(ii)P sues for monetary relief of $75k or less in a state in which claim does not cap what she can recover.
(B) D removes after asserting AIC exceeds 75k, fed court will hold hearing and may keep case only if it finds by
preponderance of the evidence that AIC exceeds 75k. (Burden is on the D at this point, because she is party
attempting to invoke FSMJRX)
(3) (A) If case initially not removable because P asserted 75k or less in pleading, but it becomes apparent at some
point later on, through information constituting “paper”, that P could recover more than 75k, case will be
removable. Any “information that is in the record of the State proceeding, or in responses to discovery,”
constitutes “paper”. (E.g., Something in discovery phase would work)
(B) Notice of removal filed more than 1 yr after commencement of action and fed district court finds P
deliberately failed to disclose actual AIC to prevent removal, finding shall be deemed bad faith.
d) Requires D promptly give written notice of removal to “all adverse parties” & file copy of the notice in state court.
State court precedes no further unless & until case is remanded.
U.S.C. §1447
(a) Any case removed from State court, fed district court may issue all necessary orders & process to bring before it all
proper parties whether served by process issued by State court or otherwise.
(b) May require removing party to file, with fed. district court clerk, copies of all records & proceedings in State court or
may cause the same to be brought before it by writ of certiorari issued to such State court.
(c) Removal back to state is not irrevocable. If motion for remand is based on procedural issue, remand motion must be
made w/in 30 days of removal or the objection is waived. Removal for remand based on lack of SMJRX, may be made
at any time prior final judgment.
(d) An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise,
except that an order remanding a case to the State court from which it was removed pursuant to section
1442 or 1443 of this title shall be reviewable by appeal or otherwise.
(e) If after removal P seeks to join additional Ds whose joinder would destroy subject matter JRX, court may deny joinder,
or permit joinder & remand the action to State court.
Class hypos:
o Ex 1) Two foreigners, no domicile jrx, but claim is federal. Court has F?JRX
o Ex 2) Domicile proper, AIC is alleged. But D only owes 20k. Not going to meet 75k AIC. Court won’t allow her to
receive more than she is owed.
Erie : When does a Fed. Court apply state law?
Vertical choice of law v. Horizontal Choice of Law (HCOL):
A. Horizontal choice of law: The question of which state’s law governs outcome of case
Choice of applicable law is between equal political entities (states)
Courts make determination based upon doctrines of “choice of law”
Each state free to adopt its own rules for determining choice of law questions
o E.g., Contracts cases, common HCOL approach is to apply law of state in which parties entered contract.
o E.g., Tort cases, common (not universal) approach is court should apply law of the place of injury. P, Ohio, and D,
New Mexico. Don’t know each other. Both on vacation in HI. D, driving rental car, negligently hits P. P sues D in NM
to recover. Court in NM, applying NM’s “choice of law” rules, will probly conclude HI tort law governs, because
injury was suffered in HI. Thus, NM court will look to HI law to determine elements of P’s claim and of D’s defenses
o State choice of law rules are treated for Erie purposes as substantive, not procedural.
B. Vertical Choice of law (VCOL):
VCOL: Issue is whether the Fed. Court should apply state law at all.
If Fed. Court decides state law, then they consider horizontal choice of law inquiry
Erie address VCOL issue
Erie:
1. Federal Court has to apply State Common Law in diversity cases.
They’re cases based on state law matters. Constitution grants no power to the Fed. Courts to change this.
“Congress has no power to declare substantive rules of common law applicable in a state”
Aright, this doesn’t mean that congress can’t create law that displaces state law.
What this does mean is Congress can only pass legislation where it has been prescribed legislative authority by
the constitution. This is called Federal Law.
A. Could they have done that in Erie? Interstate commerce, they dam well could have. They hadn’t done it at
that point though. Which means they needed to apply state law.
What the Constitution does not grant the fed government power to do is create common law where the states
have their own sovereign power to regulate. Separation of Powers.
Whether common law is prescribed in state statute or handed down by the court is not a matter of federal concern.
10th amendment
Litigant Equality- The Erie decision destroys the power of litigants to choose between Fed. Court or state court to
seek an advantage based on what law will be applied.
2. Post Erie
o Klaxon-Byrd
After Erie, state common law must be applied to “rules of decisions” (Substantive law)
Led to issues of whether or not some procedural issues were “rules of decision” and whether not they should
follow state law or federal law.
Courts went on to interpret Erie as a rule of “outcome equality” as opposed to “litigant equality” (Federal courts
are clones of the state for diversity cases, apply state procedural and substantive)
Byrd changed that to rules that are “bound up in substance” and not procedural issues.
State procedural rules only need be applied in cases in which failure to apply them will be outcome
determinative.
Mindset was Fed. Court has its own systematic interests as a separate judicial system. Where the federal
interest outweighs the state, & its not an outcome determinative issue—fed court can apply its procedural
rules.
3. Hanna: Twin Aims of Erie
Court said if we look at the outcome determinative test from Guaranty Trust we’ll find that at some point, every
procedural variation will be outcome determinative.
Modified-outcome-determination test:
Guaranty was too wooden. Erie had 2 goals (Twin aims of Erie):
1. Discouragement of forum shopping
2. Avoidance of inequitable administration of laws
The question should be whether the different between applying state law and ignoring state law would lead to the P
to prefer the federal forum. If so, the Fed. Court should lean toward applying state law.
So the facts in Hanna were outcome determinative, but not in MOD test sense:
No litigant—in assessing where to sue at outset of litigation—would sue in Fed. Court just to avoid the personal
service of process requirement of state law.
However, this is all dicta. It applies to the Rules of Decision Act—substantive issues.
Hanna was a question of procedure, so rather than the RDA, it was the Rules Enabling Act (REA)
The REA allowed the promulgation of the FRCP—which are drafted, approved by the supreme court, and then
approved by Congress.
Supreme Court and Congress makes sure the rules pass both parts of the REA 1) Only procedural matters 2) Do not
stray into matters of substance.
When the rules are approved at both levels, they become FRCP and trump state law.
o Why? Supremacy Clause—Federal law is the supreme law of the land.
The Two Prong Analysis
What it finally comes down to is this; When deciding the VCOL question:
Court asks “federal directive on point” (Constitution, federal statute, FRCP); if yes—then,
1. (Hanna Prong) Check validity—Passes constitutional test “arguably procedural”, and statutory test (REA)“really
regulates procedure”
Federal directive not on point then,
2. (Erie Prong) If no federal directive on point, Erie or (RDA) analysis must be made:
* Modified-outcome-determination test (Twin aims of Erie):
Discouragement of forum shopping
Avoidance of inequitable administration of laws (Give those invoking diversity access to federal rules
that those within the state can not invoke in the same circumstances)
The question should be whether the different between applying state law and ignoring state law would
lead to the P to prefer the federal forum. If so, the Fed. Court should lean toward applying state law.
Harlan Concurrence in Hanna: “The focal point of any test to determine the applicability of state or federal law
should be an inquiry into whether the choice of rule would substantially affect those primary decisions
respecting human conduct”—Substantive or procedural?
Weigh federal and state interests
If federal interest high- outweighs state rule—federal rule applies
State law--If yes to the MOD test, Harlan concurrence & federal interest not high.
Federal directive on point:
i. Federal directive is only on point when it clearly covers the point in dispute (Direct conflict):
Courts read federal directives very narrowly (any doubts—go to Erie)
If only one interpretation of the rule & it directly answers the question in dispute (on point)
If two interpretations are possible, take the narrower one and assess it with state interests under Erie prong
Reason being, Hanna means federal directive (if valid), and federal law trumps state law in all circumstances: No
assessment of outcome-determination.
Reading narrowly allows fed court to sneak peak at state law and its interests in Erie prong, and then then make a
choice.
Federal directive must apply to facts of the case
Determining Validity
Constitutional provision: if on point, always valid
Statute: Valid (beyond scope of class)
FRCP: pass both levels of REA, always valid (never been held invalid)
Unwritten doctrine, common law rule, etc: State law
Pleadings: The documents in which claimants set forth their claims and defending parties respond to the claims and raise
defenses.
I. Overview:
Today their principle role is to inform other parties of each party's contentions.
Relatively brief stage and gives way to the discovery phase.
Pleadings set the basic boundaries and tenor of the litigation, in discovery the parties learn the details and find
whether the real-world evidence supports the contentions they made in their pleadings
P must allege a cognizable claim in her pleading (usually called the complaint) to get the case in the system.
Can’t do this, the case can be dismissed at the pleading stage, w/out wasting litigant and judicial time in discovery
and other aspects of litigation.
Modern procedure has made it easier for P to get past pleading stage & get to discovery.
o Critics: given expense of discovery phase of litigation, commentators and judges believe that the pleading barrier
should be raised to make it more difficult to state a claim & get case into litigation stream
D must respond in timely & proper fashion after being sued—Make motion or file & serve pleading (answer)
o Failure to make appropriate response puts D at risk of losing by default
o Issues properly asserted by P and denied by D are ”joined” and case can go into discovery on such issues
Modern pleading generally liberal about allowing parties to amend pleadings as they adapt to facts of case.
Pleadings still important; lawyer can get her & client into trouble neglecting requirements of pleading rules.
II. Pleadings in Modern Practice
FRCP 7(a): 3 basic pleadings
(a)(1): The complaint
(a) (2)(3)(4) & (6): The answer
(a) (7): The reply
FRCP 10: Gives guidance for the form of all pleadings
(a): Concerns form of all pleadings and requires each “must have caption w/court’s name, a title, file number, and
rule 7(a) designation.
(b) : requires party to set forth allegations in “numbered paragraphs”; limited as far as practicable to single set of
circumstances
(b) & (c): allow incorporation by reference of paragraphs
Instead of reiterating allegations of paragraph as needed, party incorporates previous allegations by reference
(c): party may attach a written instrument as exhibit to pleading and it is considered part of pleading
E.g., Dispute over contract; append copy of contract to the complaint.
Details of Pleading: Caption w/ numbers, court initials, parties, body of complaint—see pg. 311 & 312
FRCP 11 (a): Parties are not required to plead under oath. Pleadings can be executed on basis of best information and
belief of the parties; lawyer signs them. (Verified pleading is under oath, very few)
III. The Complaint
FRCP 3: Case is commenced when P files the complaint
FRCP 8 (a): Sets forth three requirements of any complaint.
1. Statement of the ground for subject matter jrx.
2. Statement of the claim
3. Demand for the relief sought
Complaint lacking any is subject to dismissal, but court usually permit P to correct problem & file again
A. FRCP 8 (a) (1): Statement grounds for SMJRX
“Complaint must contain a short and plain statement of the grounds for the court’s jrx. (Not PJRX)
(a) (1): Should not make it too short—look to the forms in the appendix of rules booklet
o Form 7(a): Federal question jrx
o Form 7(b): Diversity jrx—Asserts citizenship of both parties in different state and meets AIC. No explaining.
o Always use citizenship in diversity cases, not resides
B. FRCP 8 (a) (3): Demand for Relief Sought
Requires P to make demand for relief sought, often called Prayer for relief. Put at the end of the complaint
Sometimes called ad damnum clause when seeking monetary relief.
Damages usually pleaded as a lump sum. Dollar figure or “damages in an amount to be shown at trial”
Diversity cases have to allege exceeds $7k, but can also include judgment amount determined at trial.
Rule 54(c): P can receive whatever shown appropriate at trial, not limited to amount demanded in complaint
Except default judgments; can’t exceed amount sought.
C. FRCP 8 (a) (2): Statement of the Claim
“P must set forth short & plain statement for the claim showing that the pleader is entitled to relief.”
Complaint can be attacked for two kinds of insufficiency: Legally insufficient or factually insufficient
Challenging the sufficiency you make a motion to dismiss for failure to state a claim under FRCP 12(b)(6)—either
granted or denied.
Legal Sufficiency
Complaint doesn’t state a claim, court may dismiss sua sponte “on its own, w/out motion by party”
Complaint sets forth several purported claims, but one defective, court may dismiss defective claim.
Usually made w/leave to amend, allows P another chance to state a legally sufficient claim.
At some point court dismisses w/out leave to amend if its clear P can’t state sufficient claim. (Waste $)
Ruling on legal sufficiency, court looks to face of claim. Does not look at evidence.
“If P proved everything alleged her, would she win?”—Other words, does law recognize a right to recover on facts
alleged? If no, then no point in having litigation continue. If yes, litigation continues. (Ex’s 318)
If complaint dismissed because law doesn’t grant right to recovery from claim stated, P can appeal and attempt to
have law changed by appellate court. (Trial court can’t do this; they are bound by appellate and supreme court.) If
appellate court changes law, case remanded and trial court applies new law. If not, judgment affirmed against P.
Counsel must address all elements of the claim in the complaint for it to be legally sufficient
Factual Sufficiency
How much factual detail in the complaint to support the claim?
Goal of the drafters was to lower the barrier erected by pleading rules to entering litigation system.
The idea is that the P is not in a position to plead much detail at the outset of litigation, and pleading rules should not
impose an unrealistic barrier to her getting to the discovery phase of litigation.
FRCP 8 requires P give D “fair notice of what the P’s claim is and the grounds upon which it rests”—shorthand “notice
pleading”
Very little is required (Forms 11-15), but lawyers usually include more. Why?
Standard is a floor, not a ceiling. Adding more is good just to be safe your complaint is not sufficient
Pleading launches us into litigation. When writing for P, we have first opportunity to frame the dispute. If phrase
our story well, we paint a clear picture to the court for the rest of litigation. Makes our lives easier.
Most cases don’t go to trial. Much that litigators think about is how to get a good settlement. To do this, we show
in the complaint that our factual story is well developed enough to make the defense miserable at trial. Could
help us get to good settlement sooner.
IV. Iqbal (Usage of FRCP 8)
Majority opinion clarified methodology set forth in Twombly
1) Court ruling on motion to dismiss under 12(b)(6) ignores “legal conclusions” alleged in the complaint.
2) Court looks to factual allegations to see if claim is plausible.
Court is to “draw on its judicial experience and common sense.”
Critics say it makes the standard subjective depending on the judge’s background.
Ds in case could be liable only if rights they allegedly violated were “clearly established” at time they acted.
Legal allegations: The court said failure to state a claim—“nothing more than formulaic recitation of elements of the
claim”—ignored legal conclusion
Factual allegations: Complaint made statements consistent with Ds acting on the basis of race, religion etc. However,
the claim was not plausible given the likely explanation of the 911 attacks.
Should not have come to any surprise that law enforcement was directed to those who might be suspected link to
attacks.
V. D’s Response: Answer & Motions
o Overview
FRCP 12(a)(1) : D respond w/in 21 days of being served w/process.
Starts day after process is served, and if last day is weekend or holiday, then D may respond next business day. E.g.,
June 2 served, 21 days starts June 3rd. 21st day is June 23rd. Sat., Sun., Holiday, next business day is good.
(a)(1)(A): D serves and files a pleading called an answer, or (a)(4) which is a motion.
Motion is not a pleading, it’s a request that the court do something.
Can be made in writing, lack of PJRX or transfer venue. Can be made orally, motion to strike witness’s answer at
trial.
Answer or motion must be filed w/in 21 day period. If motion is filed and dismissed, upon notice of dismissal the D
has another 14 days to file answer, even if exceeds 21 days after complaint was filed.
Notice of dismissed motion on July 10, file answer no later than July 24.
Defensive Motions: 12(b) 12(e) 12(f)—brought in lieu of answer
Responding by answer or motion is strategic; Motion may dismiss case altogether.
On the other hand drafting answer may be appropriate when D needs more time to develop the facts supporting
particular motion to dismiss.
Often defense responds w/ both: Move to dismiss for lack of PJRX; court grants motion case is over. But if court
denies, D must serve and file an answer. Important not to fuck w/waiver provisions 12(g) & (h) though.
Court free to order different timetable, and 6(b) allows motion for extension of time
Parties often stipulate to extensions, but they must be approved by the court to be effective.
Parties agree to extension of 45 days from service, draw up written stipulation for judge to sign.
Important to note stipulations may relate specifically to answers not a response. Might not have 45 days to file a
motion.
Responding by Motion under Rule 12(b)
7 defenses: raise them in answer—affirmative defenses; or by motion
1. Lack of SMJRX, 2. Lack of PJRX, 3. Improper venue, 4. Insufficient process, 5. Insufficient service of process, 6. And
7. Failure to join absentee under Rule 19.
Most important thing to learn about 12(b) defenses:
12(g) and 12(h): in a nutshell, require D to assert 12(b)(2), 12(b)(3), 12(b)(4), 12(b)(5) in FIRST RESPONSE.
Thus, if 1st response is a Rule 12 motion, the defenses must be included or they’re waived.
The other defenses can be raised at anytime through the end of trial.
Motion for Judgment on the Pleadings under Rule 12(c)
Exact same as 12(b)(6) motion for failure to state a claim. Judgment on pleading is just brought after the D has
served her answer.
Court does same thing; takes all allegations as true & determines whether they state legally cognizable claim.
We know everything we need to decide the question. No issue of fact, just of law. (Discovery and rest of
litigation isn’t necessary)
Motion for Definite Statement under 12(e)
D brings motion for more definite statement when it’s so vague or ambiguous that D cannot reasonably prepare
a response.
*If there’s not enough there move for 12(b)(6) motion to dismiss.
Must be made before filing answer—intuitive; she’s saying so vague she can’t respond.
Doesn’t address legal or factual sufficiency like Rule 12(b)(6) motion.
Aimed at a complaint that just can’t be understood.
Court grants motion P has 14 days to make it more clear.
D must respond within 14 days after being served w/clarified complaint.
Can only be used to challenge responsive pleading (P can’t 12(e) motion an answer to the complaint)
Motion to Strike under Rule 12(f)
Permits any party to strike pleadings or portions thereof.
Court may strike insufficient defense or any redundant, immaterial, impertinent or scandalous matter.
May be legally/factually insufficient
May grant motion to strike w/leave to amend so D can assert defense appropriately.
Strict timing of this motion
D required to make motion before responding to complaint, and P must move to strike w/in 21 days after
being served w/D’s response.
Court can strike on its own; Even after an untimely motion to strike, court can consider it and strike on their
own accord if they think its necessary.
Motion to strike disfavored; often used to delay proceedings. Thus, rarely granted.
Courts only grant when moving party shows the matter to be stricken will cause her some harm if left in
pleading.
Rarely successful in cases tried to the court because judge won’t allow inappropriate allegations in a pleading.
Sometime motion to strike might be used to determine important issue early in the proceedings. E.g., parties
disagree over trial by court or jury—motion to strike jury demand will determine issue before trial.
Rule allows striking scandalous matter: Scandalous allegations might hold them up to ridicule to the jury or
public.
Unduly derogatory allegations will be stricken
Party not entitled to have all scandalous allegations stricken though. If relevant to case (case is of scandalous
matter) it may be critical to party’s argument and damages.
Responding by Answer
Answer is a pleading (remember motion is a request for the court to do something prior to the answer)
D must accomplish 2 primary goals: FRCP 8(b) respond to allegations in complaint and 8(c) raise affirmative
defenses
FRCP 8(b): Go through each allegation word by word to ensure careful response.
8(b)(1)(A) & 8(b)(5): 3 possible responses to P’s allegations: 1) Admit allegations 2) deny 3) lack sufficient
information on which to admit or deny—8(b)(5); has the effect of a denial if done properly.
FRCP 8(b)(6): If you don’t deny an allegation, it is considered an admission. Be careful! (Doesn’t constitute an
admission of damages though.) (Ex. Pg 338)
Admitting allegations: Usually some allegations have to be admitted to. Can’t deny in bad faith (R11).
Ex: DJRX is established, admit to it.
Once admitted to certain facts, no need to adjudicate them.
Lack Knowledge or Insufficient Info to form belief about truth of allegation
Rule 11 requires states D cannot use this approach if she’s in possession of relevant info or if matter allege is
something of public record.
Ex: If D has no precise recollection of something, but has the info in her files, she has to attempt to look for it.
If she does in good faith & still cant find the answer, she may say so—works as denial.
Denying Allegations
Fairly respond to allegation. “Keep it simple. Don’t get argumentative. No new facts. Just deny.”
If D denies allegation, the issue is “joined”, meaning it requires adjudication.
“D denies the allegations of Paragraph 6”—that’s it. If you don’t do this sufficiently, it will be an
admission.
Drafting an answer: List the paragraphs you want to admit & those you want to deny—“D admits allegations
of paragraph 1 and 6 of the complaint, D denies the allegations of each other paragraph of the complaint.”
Usually more complicated; Deny and admit some things in same allegation.
Rule 8(b)(3): deny only part of allegation, specifically deny designated allegations or generally deny all
except those specifically admitted.
8(b)(4): Party that wishes to deny part of allegation must admit the part that is true and deny the rest.
General denial. First sentence 8(b)(3)—“D denies each and every allegation in complaint”
Have to be careful w/general denial though. Usually not warranted. If general denial is filed and
unwarranted, face Rule 11 sanctions.
If there is anything that should be admitted, D should admit it.
Raising Affirmative Defenses: FRCP 8(c)(1)
Unlike responses just discussed, affirmative defenses inject new facts
An affirmative defense is additional material to an allegation that, if proven true, entitles D to judgment on
the allegation.
19 of them listed, but not exhaustive (self defense is not listed)
Failure to assert can waive the defense
If it is not pleaded and at trial you try to assert evidence, P can object evidence is at variance with pleading
and the court should refuse to allow it.
Think of AD in terms of elements. P has burden to prove all of the elements. She may prove them all with the
evidence she has, but you can assert affirmative defense that would negate her proof. E.g., Battery claim you
assert affirmative defense of self defense. (element is established in absence of it, but when asserted, the
element is destroyed.)
P wins if A+B+C+D are proved unless D establishes affirmative defense
Sometimes D must assert affirmative defense of truth
E.g., Defamation case P must assert a negative. She can’t prove a negative. “I am not a prostitute for x, y,
and z.” How do we know that means she’s not a prostitute? D is in best position to offer proof on the
issue. Law accommodates for burdens of pleading and proof pragmatically.
VI. The Reply
Reply is a pleading made in response to the D’s answer.
FRCP 7(a)(7)—reply only required if “court orders one.” Why? Reply isn’t necessary. Other provisions protect P
from anything raised in D’s answer
FRCP 8(b)(6) “if responsive pleading is not required, allegation is considered denied or avoided.” Layman’s—any
allegation in D’s answer is automatically deemed denied by P.
VII. Heightened Pleading Requirements: FRCP 9(b)
Certain topics require more detailed factual allegations
FRCP 9(b): Fraud—intended to protect the other party from the reputational harm caused by the imputation of
fraudulent behavior.
Assertions of fraud are often made for nuisance value or increase chances of favorable settlement.
*Fraud claim should be given in detail to enable accused to respond and defend.
Obvious purpose of heightened pleadings is to make it more difficult for allegations to get past the pleading stage
and into the litigation stream. ‘
Fraud is often asserted as a claim, but 9(b) applies to all parties who assert fraud or mistake.
Difficulty is determining how much detail is to be applied. Drawing line between staying simple in conjunction with
8(b)(2) and being detailed enough to support the rules intent has proven difficult.
Appropriate approach enforcing rule 9(b) is grant a motion to dismiss for failure to state a claim under Rule 12(b)
(6) or motion to strike under 12(f).
Logistics of Rule 9(B):
o Opposing party must raise the heightened pleading requirement of rule 9(b). Failure to do so waives the
requirement of particularity.
o Conclusory fraud allegations aren’t sufficient
o The allegation should include identity of persons making it, when and where the fraud happened, how it was
communicated, and the resulting injury.
VIII. Hypothetical and Inconsistent Pleading
FRCP 8(d)(2): Party may set out 2 or more statements of a claim or defense alternatively or hypothetically, wither
in a single count or defense or in separate ones.” “if a party makes alternative statements, the pleading is sufficient
if any of them is sufficient.
FRCP 8(d)(3): Allows a party to state as many separate claims of defenses as it has, regardless of consistency.
Policy: Recognizes party may not be in a position at the outset of the case to know what actually happened or what
facts may be established at trial. Permits parties to plead alternative and even more inconsistent theories and facts,
and recognizes that the parties will learn about the facts through discovery.
Frees the parties of the burden to guess which set of facts will be established at trial.
E.g., McCormick v. Kopmann Pg. 351
Rule 11 requires the claims are still made in good faith.
Not limited to Ps either. D can adopt alternative theories in defenses and counterclaims.
IX. Rule 11 and Other Sanctions: Professional Responsibility
Aim: To ensure veracity in pleading and other elements of litigation practice.
11(a): Signature from attorney on every pleading, written motion, and other paper.
1. Court must strike any document that is unsigned unless omission is promptly corrected
11(b): Signature is a certification to the court—says by signing the person certifies that to the bets of the person’s
knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, the 4 items are
true.
o *Main Point—11(b) presumes lawyer made reasonable inquiry under circumstances before signing
document to be filed in court.
o Reasonableness depends on facts of the case and timing
o Attorney re-certifies all things in complaint are true in subsequent signing, filing, or later advocating
something asserted in the signed document.
1. Under 11(b)(1) signer certifies the document is not presented for an improper purpose such as delay
or harassment.
2. Legal contentions in the document are warranted by law and not frivolous
o Protects creative lawyering and the assertion of novel theories of law; only limitation is they aren’t
frivolous.
3. Signer certifies the factual contentions have evidentiary support, or if specifically identified, will
likely have evidentiary support after reasonable opportunity for further investigation and discovery.
o Protects lawyer who believes evidence will be found to support a factual assertion
4. Same thing as b(3) but aimed at D’s asserting denials w/factual contentions that have evidentiary support.
11(c): Raising violation of Rule 11
(1)(B) Courts raise violation of rule 11 by entering an order to show cause (O.S.C.)—requiring a party,
attorney, or law firm to show cause why specified behavior did not violate rule.
(2) Party files motion for sanctions specifying what conduct allegedly violated rule 11(b) and must be
brought separately form any other motions.
However, Safe Harbor Provision—party moving for sanctions has to give the D 21 days to fix the issue before
filing w/court.
*Intended to save court from being saturated w/11(b) motions.
(4)- The actual sanctions (imposed in the discretion of the court; purpose of sanctions not to punish, but
deter)
Nonmonetary sanctions are appropriate; reprimands, warning, directives that offender take some act
Occasionally court will order lawyer to circulate the judicial opinion concerning misconduct to her client
and law partners.
Permits court have lawyer pay pentaly to court
May require offender to pay all or part of litigation expenses—expressly including attorney fees.
Party represented by attorney does not bear any costs incurred by attorney’s rule 11 violation
11(d): Discovery documents do not have to be signed under Rule 11
X. Amended and Supplemental Pleadings
FRCP allow parties to amend their pleadings because they will learn facts that make it necessary or desirable to
change what they asserted earlier.
Amendments of Right and Leave to amend (Leave to amend just means court allows the party to amend)
Rule 15(a)(1): Amendment as a matter of course—Courts approval isn’t necessary, just file and serve
amended pleading.
(a)(1)(A): D has right to amend once w/in 21 days after serving her answer (can save the waived 12(b)
motions if amend within this period)
(a)(1)(B): P has a right to amend w/in 21 days after being served w/D’s answer or pre-answer motion.
Rule 15(a)(2): Permissive pleadings—apply in all cases in which there is no right to amend.
Only allowed if opposing party consents in writing or the court grants leave to amend.
To obtain court permission have to file a “motion for leave to amend”—court has liberal discretion.
Court must state its reason for denying a motion to amend.
Applies when the right to amend under 15(a)(1) expires.
Rule 15(a)(3): When P amends, D (unless court says otherwise) must respond to amended pleading within the
21 day window allowed for the P to amend or w/in 14 days (whichever is longer).
Amendments During and After Trial: “Variance”
Rule 15(b)—Called Variance: Party seeks to introduce evidence at trial of a claim or defense that she didn’t
plead.
When party seeks to introduce evidence at trial that goes beyond the scope of pleadings, other party may
object & ask court to exclude the evidence, so it will not be part of the trial record the fact-finder considers in
reaching a conclusion
Two possible variance scenarios: 15(b)(1) 15(b)(2)
15(b)(2): When party proffers new evidence not in pleadings, opposing party can 1) Allow/forget to object—
evidence is included and treated as if raised in initial pleading; or 2) Object to proffered evidence.
If party objects and court agrees it is out of scope of pleadings, court can uphold objection and bar the evidence
However, when party objects on the grounds of variance, the party proffering evidence can move to amend the
pleadings and the court may permit them to do so.
o Standard for allowing to amend is in 15(b)(1): Court should freely permit amendment when doing so will
aid in presenting the merits & the objecting party fails to satisfy to the court that the evidence would
prejudice the party’s action or defense on the merits.—burden is on the other party to show rejudice
o Amendment like this is rare; Discovery has already taken place and probably for a long period of time,
there’s probably a jury that the court doesn’t want to burden by allowing time to amend, its moving party’s
fault.—the amendment has to truly advance the decision on the merits w/little if any prejudice to
adversary.
Relation Back (Rule 15 (c))
15(c)(1)(B): P/D may seek leave to add new claim/raise new defense after the statute has run.
15(c)(1)(C): P seeks leave to join a new D after the SOL has run.
Policy Clash—One hand we favor resolution of disputes on merits so we favor liberal amendment policy; other
hand SOL protects D from assertion of old claims so this unfairly lengthens the time for which she is subject to
suit
“Relation Back”: Treats amended claim to relate back to pleading that was filed during the SOL
Circumstances:
15(c)(1)(A): Statute providing period of limitations expressly allows for relation back then there will be
relation back.
15(c)(1)(B)—relation back is permitted if the amended pleading arose out of “conduct, transaction, or
occurrence” set out in the initial pleading.
Rationale: If arises from same events as original pleading, D was put on notice of her potential liability
before the statute expired.
Courts routinely permit amendment when claim only adds a new theory of liability arising from same real-
world events alleged in original complaint.
Only when amendment raises new matter which D was not fairly put on notice of by original complaint would
relation back be inappropriate
Rule 15(c)(1)(C): Adding a new D; must satisfy three requirements
1) claim arises from same conduct, occurrence, etc. as original complaint
2) W/in 120 days of filing the original complaint the new D has received such notice of the suit that she
won’t be prejudiced in defending--(c)(1)(C)(i)
3) W/in same 120 day period, new D knew or should have known that but for a mistake by P, new D would
have been original D. (E.g., P gets the name of the D wrong; usually a corporation mix-up—Carnival
cruiselines international instead of Carnival Cruiselines Fl. Inc.)
Only thing that must occur is that the original complaint is served within SOL. New D doesn’t have to be put
on notice during the SOL, just during the 120 days after complaint is filed.
Supplemental Pleadings (Rule 15(d))
Any transaction, occurrence or event that happened after date of the pleading to be supplemented.
There is no right to supplemental pleadings like there is to amend pleadings.
Must be raised on motion by party seeking leave to supplement, district court has great discretion in decision
Most courts allow unless cause unduly delay or prejudice, or if party seeking supplement is guilty of bad faith
Supplemental pleadings permitted even if original pleading was defective—P fails to state a claim, but
permitted to supplement her complaint, seems likely court will allow D to respond.
Summary Judgment
2 Phases of Summary Judgment:
W/S-J’ment, the P has stated a claim. The case is in the litigation stream & beyond the pleading stage.
Phase 1: somebody moves for S-j’ment, they’re saying there is no genuine dispute as to any material fact
Phase 2: If there is no genuine dispute as to any material fact, all that remains is a question of law, which the judge may
decide w/out trial.
Different from judgment on the pleadings. Judgment on the pleadings are based solely on the allegations in the
complaint.
Assessing Whether Appropriate:
Court may go beyond the pleadings & consider evidence—sworn statement that might be proffered if trial were held.
Summary judgment is made on paper, there is no live testimony or jury hearing the motion. Everything is written and
attached to paper.
Court can “pierce” pleadings and look at what actually happened in the real world beyond mere allegations in pleadings
of what parties thought happened.
Whenever materials proffered show there is a dispute of fact, S-j’ment should be denied.
Pleadings don’t suffice as evidence because they typically are not made under oath. If a party offers there pleadings
to dispute fact, they are offering their opinion/belief that there is dispute, but this is not sufficient evidence to prove
that there actually is a dispute.
Pleadings can be useful when a party has failed to deny something and it works as an admission. Court can rule S-
j’ment on that issue since the admission serves as recognition there is no dispute of fact.
Moving for S-j’ment
Any party can move for S-j’ment; claimant may seek S-j’ment on her claim or D can seek S-j’ment on an affirmative
defense.
Motion for S-j’ment does not have to be on entire case. Can be on one issue, usually called partial
S-j’ment. (Elements A,B,C,D—D has no evidence to dispute element A, P can move for summary judgment and it should
be awarded.)
When motion for S-j’ment is granted, the issue is settled and does not need to be adjudicated at trial. Judge will tell jury
that specific issue has been established.
Material Used:
56(c)(1): Party can rely upon certain parts of the record “depositions, documents, ESI, affidavits or declarations,
stipulations (those made for the purposes of the motion only), admissions, interrogatory answers, or other
materials.”
Rule does not require affidavits (FRCP 56(c)(4)), but generally very useful to a party moving for S-j’ment
1. Affidavits must be made on personal knowledge
2. Set out facts that would be admissible in evidence
Conclusory statements aren’t viable facts. “I know D signed it.”
3. Show that the affiant or declarant is competent to testify on the matters stated
o Aimed at ensuring they contain the sort of information—under oath, based upon personal knowledge (not
hearsay)—that might be admitted at trial. (Affidavits themselves might not be admitted at trial because they
would constitute hearsay if they would be used to establish the truth of what they assert.)
o Drafted by lawyers and can be tailored specific to S-j’ment.
o Must be signed by affiant, so lawyer must be careful to ensure it reflects person’s true recollection
Documents proffered as evidence for S-j’ment must be authenticated—must provide admissible evidence from a
person w/firsthand knowledge sufficient to allow her to have the document admitted into evidence.
Depositions, answers to interrogatories, various other discovery documents may be look at by court because
they are also made under oath.
The information that is usable w/in these materials must be meet the same requirements as an affidavit.
Like admissions in pleadings, court may use other admissions made in open court, in stipulations of the parties, or
in correspondence w/the court.
Court may take these matters as admitted and thus not subject to genuine dispute—permits court to enter
summary judgment as a matter of law.
FRCP 43(c) allows courts to hear live testimony if the motion is not based on facts in the record, but its rarely
permitted because the purpose of S-j’ment is to avoid trial. Live witness testimony is like a mini trial.
For a P to win summary judgment, must establish proof of every element of claim to show that there is no
reasonable way the D could win at trial.
Parties can move for cross-motions while the other party has moved for summary judgment asserting their evidence is
so more persuasive than yours and a jury could not find for the other party based on that evidence.
Burden Shifting
When party moves for S-j’ment supported by evidence, burden shifts to adversary to proffer evidence showing there is a
genuine dispute of material fact. Cannot defeat motion by merely relying on pleadings.
If pleadings were allowed, then there would never be an instance where there wasn’t a genuine issue and S-j’ment
would not serve any point.
If party moving for S-j’ment fails to demonstrate there is no genuine dispute of material fact, she should lose. (True even
if other side offer nothing in response)
If this occurs, it’s because the evidence proffered is insufficient or inadequate. (might only submit pleadings/might
submit evidence that isn’t necessarily on point with the issue in question/might assert no issue to a fact that is not
material)
Party who does not have the burden of proof at trial may move for summary judgment w/out producing evidence.
Party points out that the record is devoid of evidence supporting the other party’s position. (Claim/element of claim)
Material Fact
Materiality is determined by the substantive law creating the claim or defense.
A material fact is one that might affect the outcome of the case under governing law.
Celotex:
After Celotex, a party who does not have the burden of proof at trial may move for summary judgment w/out producing
evidence. (Permitted by 56(c)(1) when “a fact cannot be . . . supported”)
Party points out that the record is devoid of evidence supporting the other party’s position. (Claim/element of claim).
Especially helpful to Ds, and allows them to move for S-j’ment on basis of an absence of record evidence supporting an
element of the P’s claim—force P to put all cards on the table & produce evidence support that aspect of her claim.
Evidence must be viewed in the light most favorable to the nonmoving party.
You have to produce your evidence early otherwise opposition can move for summary judgment before you’ve put it
together and it’s too late for you to proffer.
“No Genuine Dispute”
Genuine dispute means nonmoving party has to come up with admissible facts to dispute the issue raised in S-j’ment
Claims not based on fact don’t raise genuine dispute.
There only has to be 1 piece of evidence to dispute the facts, even if the other side has 100 pieces of admissible evidence
against your 1.
Has to be genuine though “When a party moves for summary judgment, the nonmovant must either produce evidence to
establish that they can meet the burden of proof on a necessary element of the claim, or directly contradict the evidence
proffered by the moving party. To directly contradict the moving party’s evidence, the nonmovant must produce
testimony from persons’ familiar w/the particular events to which the movant’s witnesses testified or must otherwise
cast more than metaphysical doubt on the credibility of that testimony. General evidence that does not contradict the
more specific evidence asserted in a motion for summary judgment isn’t usually enough to defeat the motion.”
CRED ISSUES & COURTS DISCRETION
Court is never required to grant motion for summary jment
It has discretion to conclude that it would be more appropriate to go to trial rather than to grant the motion
It is completely legitimate to resolve reasonable doubts against entering summary jment.
One source of doubt may be credibility
Answers to interrogatories and affidavits can be crafted with care, with assistance of counsel, and are given w/out
cross examination
Deposition testimony on the other hand is given live—this makes courts less nervous about accepting deposition
testimony at face value.
This doesn’t mean that affidavits and answers to interrogatories can’t be taken at face value; simply raises possibility
that doubts about credibility may make summary judgment inappropriate.
One instance court denied summary judgment noting that the affiant’s credibility could be questioned because any
contrary statement in the affidavit would have harmed her position in her pending criminal case.
Court has no discretion—and must deny summary judgment—if the admissible evidence shows a genuine dispute of
material fact
Ex: Suppose one party produced admissible evidence showing that the traffic life was green at the time of the accident
and the other party produced admissible evidence that the traffic light was red
Court must deny motion for summary judgment for the simple reason that, here, admissible evidence creates a
genuine dispute as to a material issue of fact: color of the light at the time of the accident—precisely the situation in
which we need a trial to resolve a dispute of fact.
Court should not decide credibility—that is, who is lying and who is telling truth—on a motion for summary jment.
Put another way—credibility of the affiant is a genuine question of fact.
Question of which affiant is telling the truth—the one who said light was red or one who said it was green—can’t be
judged w/out fact finder’s seeing the two testify at trial.
Similarly, court generally should not grant summary jment simply because the moving party produces more affidavits
than the opposing party.
So if the party claiming the light was green had five affidavits to that effect and the party claiming it was red had
one, summary jment would still be denied.
Timing of the Motion
Rare cases a court may enter summary jment on its own motion; ordinarily a party will make a motion for summary
judgment.
Rule 56(b) provides that a motion for summary jment may be made “at any time until 30 days after close of all
discovery”
As a practical matter, summary jment generally becomes an option after the parties have engaged in some discovery and
the lack of a genuine dispute on a material fact has become obvious (at least to the moving party)
Court has great discretion in setting the timing for hearings and responses to motions for summary jment and will
usually be quite generous w/time limits
Ex: when appropriate, it may allow the responding party time to conduct discovery on issues subject to the motion
The motion itself will include a brief, arguing to the court why a summary judgment is appropriate, supported by
affidavits or declarations and other documents used to support motion.
Opposing party will also file a brief & should also append affidavits or declarations and other documents in opposition
to the motion.
It is incumbent on the parties to put the specific relevant evidence in the judge’s hands w/the motion papers.
Discovery
I. Generally:
FRCP 26(b)(1): Unless the court orders otherwise, parties may discover “any nonprivileged matter that is relevant to
any party’s claim or defense.”
The parties find out what the other side’s claims or defenses are really all about & what facts they’re based upon
Typically supervised by the parties
Court generally only gets involved when there is a disagreement
FRCP 29(b) permits parties to stipulate to many issues concerning scheduling and scope of discovery
Benefits:
Virtually anything is available that is relevant to trial.
Each side should be able to know virtually every relevant thing the other side knows
May promote settling because one side may realize her argument is well supported or the other side’s is.
Allows parties to see where they both agree so trial can be solely focused on areas of disagreement.
Avoids trial by ambush—parties know what’s coming so lawyers can’t surprise anybody by using unknown evidence.
Costs:
Can seem too intrusive because of how widely available information to the opposing side is
Can be very expensive—each party bears the expense of complying w/other parties discovery requests
Very time consuming
II. Six Tools for Conducting Discovery:
1. Required Disclosures—FRCP 26(a)
Disclosures each party must make even though nobody asks for them
Controversial because they take away party’s autonomy, but any good lawyer would ask for them anyways
Required Initial Disclosures 26(a)(1)(A): (Jump starts discovery process & assists in determining how to proceed)
1. Name, address, & telephone number of each person “likely to have discoverable information-along w/subject of that
information-that the disclosing party may use to support its claims or defenses;
2. A copy (or description by category & location) of all documents, ESI, & tangible things in the possession or control of
the disclosing party that she may use to support her claims or defenses.
3. P must provide a computation of damages claimed, and evidentiary material on which the computation is based;
4. D must identify (and make available for copying) any insurance agreement under which an insurer may be liable to
satisfy all or part of the judgment.
26(a)(1)(A): permits court order or stipulation of the parties to vary the timing & scope of the initial disclosures.
Required Disclosures: Expert Witnesses 26(a)(2)
26(a)(2)(A): Each party disclose the identity of anyone who may be used at trial to present expert testimony
(a)(2)(B): Experts who must provide a written report
(a)(2)(C): Experts who don’t have provide a written report
Usually becomes relevant after discovery through the traditional discovery devices & parties are focusing on
whether they will have expert testimony at trial.
Court usually directs the parties when to exchange the information concerning expert witnesses.
No court order or stipulation by parties ,26(a)(2)(C)(i) requires this info be produced at least 90 days before trial.
Lay witnesses not permitted to offer opinions. Only give facts related to events they observed.
Required Pretrial Disclosures:
26(a)(3)(A): each party must serve on other party detailed info. about evidence she anticipates presenting at trial
At this stage parties have honed the issues remaining to be adjudicated (May be years down the line)
The parties not only serve the information on each other, but file it w/court as well—Pretrial requires disclosures
are the only ones that must be filed. Court does not get copies of other required disclosures.
2. Depositions: Rules 30
Person being deposed (deponent) orally answer questions asked by opposing counsel.
She can review her answers, which are made under oath, before signing it under penalty of perjury
Lawyers for each party are present, along w/deponent, and a court reporter who types out everything said.
30(b)(1): A party wishing to depose someone must “notice” the deposition—served on all parties under Rule 5 via
mail or by delivery to a party’s attorney.
Notice must name the person to deposed and indicate date, time, and place of deposition.
Anyone who has discoverable information can be deposed—parties and nonparties.
A Subpoena should be issued to a nonparty who is to be deposed; otherwise nonparty has no obligation to attend.
Subpoena FRCP 45, emanates from the court commanding the nonparty appear and give testimony.
Subpoenas are required for nonparties because they, unlike parties, have not been brought before the JRX of the
court
Deponent is required to testify based upon present knowledge and recollection.
Deponent is under no obligation to review all relevant files before being deposed.
Strategy: Person is only allowed to be deposed once, so opposing counsel must be fully prepared to ask all
relevant ?’s
Follows that epositions are rarely before interrogatories (gain helpful background info & proper line of
questioning)
# & Timing: Unless court order or stipulated by parties, no more than 10 depositions and limited to 7 hours each.
3. Interrogatories—Rule 33
Each party is allowed to serve one set of maximum of 25 interrogatories (including subparts), which are to be
w/in 30 days of being served.
Lawyers assist parties drafting the answers, and then they are signed by party under oath, under penalty of
perjury.
May object to interrogatory if information in answer is privileged; must respond invoking that privilege.
Info in interrogatories invaluable to discovering background facts—any objective data relevant to claims or
defense of any party.
Questions sent by D ask P to detail the alleged complaint, forcing other party to take a position.
Usually interrogatories are used to collect information to prepare for depositions, and unlike depositions where
deponent only has to answer based on recollection, party answering interrogatories must give info reasonably
available to her. (If information is in her files, she must go get it.)
Rule 33(d) provides another option “business records option”—obtaining the information for answer to
interrogatory requires the same burden for both parties, Party B can just give part A permission to access the
records to find the answer.
Can only be sent other parties, no nonparties.
4. Requests For Production—FRCP 34
Permits party to request that another party produce documents, electronically stored information (ESI), or
tangible things, or allow entry upon land to permit various acts, such as testing. The materials must be in
possession, custody, or control of the party to whom the request is made.
Useful because allows opposing party to inspect and copy documents but also inspect the tangible product or
property damage in dispute.
34(b)(1)(C) permits party to sending a request for ESI to specify the form they want the information to be
produced.
34(b)(2)(D) allows opposing party to object to requested form of production (may prefer to produce information
in a form that can be searched electronically.
FRCP 34(b)(1) refers to the rule for drafting the request. (served on all parties by FRCP 5(b), usually by mail)
Can specify documents individually or by categories
Responding party must respond w/in 30 days of request indicating that inspection will be allowed or object.
Requires documents to be produced documents in an organized fashion so opposing party can’t bury info.
Rule 45(a)(1)(A) allows a subpoena to be served a nonparty to produce information. W/out subpoena no
obligation
5. Medical Exams—FRCP 35(a)
(a)(1) party must shows the opposing party’s mental or physical condition (including blood group) is in
controversy
(a)(2)(A) must demonstrate good cause in motion for medical exam
Only court can order someone take medical exam.
The motion and court order (if granted) must state time, place, manner, & scope of the exam & give the name
of the person who will perform it. *W/out court order, this tool could easily be used to harass or oppress
other parties.
Conclusory allegations not sufficient to justify order of an exam; party must make “affirmative showing…that each
condition for which exam is sought is really & genuinely in controversy & good cause exists for ordering each
exam”
Ability to obtain the information in some less intrusive fashion is relevant to whether party establishes good
cause.
FRCP 35(a)(1) permits order for medical exam only of a party but also somebody under party’s control (their
child).
Have to show good cause and employees are not included in this category.
Examination done by any suitable healthcare professional (No M.D. required) & the party seeking the examination
compensates the examiner. (Becomes cost of litigation, so if party requesting exam wins, loser compensates her)
After examination, the examiner send a report to the party who sought the exam and if the examined party wants
to a copy of the report, the seeking party must deliver it to the person
However, FRCP 35(b)(3) provides that if the examined requests and obtains the report, she waives any
privilege to information kept by her personal doctors about the condition that prompted request of
examination—must produce reports of her own doctors concerning the condition
6. Requests for Admission—FRCP 36(a)(1)(A)
Device to force a party to take a position on specific issues but can only be served on parties.
May narrow the scope of issues to be tried
Generally no limit as to number of requests that can be made, but FRCP 26(b)(1) empowers court to limit # by
order
Party responding to request may not say she lacks knowledge on the matter unless she states she made a
reasonably inquiry & that the information obtainable is insufficient to permit her to admit or deny. (Or may object
if request asks for any improper, irrelevant, or privileged matter.
Message is simple: If you can honestly deny, the simply state “party denies this request for admission”—don’t try
to argue because may run risk of failing to deny, which constitutes an admission.
III. Duty to Supplement Responses—FRCP 26(e)(1)
Supplement or correct any required disclosures & responses to interrogatories, requests for production, & requests for
admission
Applies only if party learns disclosure or response is incomplete or incorrect & only if corrective info has not been made
known to other parties during the discovery process or in writing.
Applies to any information that may have become misleading or inaccurate over time, even if no party asks for it
IV. Scope of Discovery—26(b)(1)
The key to what information is discoverable is determining what constitutes as relevant.
Something is relevant if it has the tendency to make any fact more probable or less probable than w/out it.
Doesn’t have to be admissible at trial as long as the info requested may lead to the discovery of admissible evidence.
Judge has discretion to broaden the scope of discovery from only info relevant to claims or defenses to info relevant to
the subject matter in the action
A. Privileged Matter
26(b)(1) limits discovery to only nonprivileged matter
Privileged matter is confidential communication between particular people—lawyer-client, doctor-patient, spouses,
etc.
The relation has to be of the variety specifically recognized by the rule for information to be privileged.
Privileges only attach to confidential information and the information told must have been made in furtherance of
providing professional services (telling your lawyer something in a crowded elevator is not privileged, nor is telling
something to your lawyer on the golf course if it isn’t related to his professional capacity)
Rationale for privileged information: relationships would be harmed if parties to confidential communications
were forced to divulge the content of those communications. We want people to speak freely to their lawyers, spouses,
clergymen, etc. w/out fear that the confidential communication will later be divulged.
Privileges must be expressly claimed when withholding information FRCP 26(b)(5)(A) and they usually are filed
with the court in a “privilege log”. They can be waived if not properly asserted according to FRCP 26(b)(5)(A).
Inadvertent disclosure 26(b)(5)(b): Party must promptly return, sequester, or destroy information that was
inadvertently disclosed. (Simply put, party can’t use this material)
For thus rule to apply, the party that made the disclosure must have taken reasonable steps to prevent disclosure
and tried to promptly remedy the problem once she found out about it.
Even if a party has waived her privilege, the waiver only applies to that document alone.
B. Proportionality—26(b)(2)(C)
Requires court to limit the frequency or extent of discovery when
1. The discovery sought is unreasonably cumulative or duplicative, & can be obtained from some other source that is
more convenient, less burdensome, or less expensive
Not enough that there is some overlap, court must determine whether the requests are unreasonably redundant.
2. The party seeking discovery has had ample opportunity to obtain the information by discovery in the action;
If you have a chance to discover something, do it promptly.
3. The burden or expense of the proposed discovery outweighs its likely benefit
Court has huge discretion here, but typically flexible w/discovery and enforces production of material requested.
Zubulake the court used its discretion to shift some of the costs of producing $273k worth of ESI to the requesting
party.
Courts have used this discretion in one specific area though: ESI
ESI proportionality
Party receiving request to produce ESI may object if too burdensome
This party has burden of demonstrating that complying w/request would be unduly burdensome or expensive.
The court then specifies the condition for the discovery including possibility the parties share the cost of
production
Metadata: information stored by a computer about a documents history
a) When document is produced in e-form, the receiving party may be able to “mine” it for such metadata. Doing
so may giver her access to privileged material or work product.
b) Other hand, party producing the material may want to “scrub” the document so adversary can’t access
metadata
c) If no litigation is pending, party may want to scrub metadata. Once litigation is filed (or even anticipated),
there is a litigation hold, meaning the parties must not destroy or alter relevant materials—this can
constitute spoliation or misconduct.
C. Work Product—FRCP 26(b)(3)(A)
“Documents and tangible things that are prepared in anticipation of litigation or for trial”
Work product is the materials compiled by lawyers during the course of litigation in preparing for trial
Work done before the case has been filed can constitute work product if the party prepared the material in
anticipation that there would be litigation.
Once something is considered work product, it is protected from discovery
Allowing the other side to discover work product would reward freeloading—if the other party wants the
information, they should do their own investigation.
The party asserting work product protection has the burden of expressly claiming and describing the material in a
way that enables others to assess the claim.
Expressing work product is done in a privilege log and can be waived just like a privilege can, but is also subject to
liberal provisions that allow a party to claim inadvertent disclosure just like privilege.
Parties are not allowed to exploit work product by requesting the information through interrogatories FRCP 26(b)(3)
FRCP 26(b)(3)(A)(ii) Opposition can overcome work product protection if they satisfy two conditions:
i. They show they really need to prepare their case
ii. They show they cannot get it elsewhere.
This rule makes sense because if a party satisfies this condition, they are obviously not freeloading
Even if the exception has been invoked, opposition does not have access another party’s opinion work product—
mental impression, conclusions, opinions, or legal theories.
When a document contains both discoverable work product and opinion work product, the opinion work product
should be redacted from the document—opinion work product is blocked out in the copy given to opposition.
Work product is not limited to attorneys. The party being represented, insurer, hired investigator, etc. can have their
work product protected as long as it was done in anticipation of litigation.
D. Consulting Experts & Expert Witnesses—FRCP 26(b)(4)
Gives the party the right to depose any expert witness identified through Rule 26(a)(2)
Party seeking discovery of expert witness must pay reasonable fee to the expert for time spent responding to the
discovery request
No discovery of facts known or opinions held can be obtained from experts who aren’t going to testify at trial.
Only exception is when there is no other way for a party to gain access to such information
E. Protective Orders—FRCP 26(c)(1)
Permits judge to enter “protective order” to shield from annoyance, embarrassment, oppression, or undue burden or
expense.
26(c)(1)(d): Court must weigh the need to protect w/the duty to permit discovery as envisioned by the discovery
provisions.
Protective orders may be aimed at the dissemination of info gleaned in discovery (trade secrets, Coke’s recipe).
26(c)(1)(g) might allow this information but ensure it is only limited to use during litigation to uphold competitive
advantage
V. Rule 37- Discovery Sanctions
A. Partial Failures: Two Step Approach to Discovery Abuse
Step 1: Motion to Compel—FRCP 37(a)(1): party seeking discovery will make a motion to compel & be required
to certify to the court that she has tried in good faith to get the information w/out court involvement.
Court considers then either grants or denies motion
Step 2: Violation of the Order Compelling Response
FRCP 37(b)(2)(A): allows court to impose sanctions party when they do no produce information after court order
to do so.
B. Total Failures and Sanction
C. Specialized Sanctions
1. Required Disclosures
2. Medical Examinations
3. Request For Admission
4. Duty to Supplement
VI. Certification FRCP 26(g), Retention Policies, Litigation holds
Rule 11 does not apply to discovery, Rule 26(g) applies to certification that information in discovery documents is
justified in law and fact.
Each document needs to be certified by counsel’s signature or the party herself for answers to interrogatories and
depositions.
(1)
(2)
(3)
Required Disclosures
Traditional Discovery Devices
Litigation Holds: When litigation becomes obvious, parties should go into “litigation hold” mode—parties have a duty
to preserve relevant information.
Courts may consider destruction of relevant information after litigation hold mode should have begun as Spoliation
Spoliation: the intentional destruction, mutilation, alteration, or concealment of evidence.
Setting sanction for spoliation, courts consider 1) the need to deter future destruction, 2) protection of the other
party’s interest, and 3) remedying the prejudice caused.
Trial
Pretrial Conference—Rule 16(a)
Permitted at court’s discretion for variety of purposes—expediting deposition of the action and establishing early and
continuing control of the case.
16(c)(2) lists various topics that can be considered at any such conference.
Final Pretrial Conference—16(e)
Lists the issues to be decided at trial & held as close to the start of trial as reasonable.
Formulates a plan for trial—parties discuss matter in considerable detail, as the plan for trial will include “a plan to
facilitate the admission of evidence” at trial. Their preparation for the conference is guided by the final set of
required disclosure, under 26(a)(3)
After final pretrial conference, court will enter an order—final pretrial conference order 16(d)—roadmap for the
trial itself. Document supersedes the pleadings.
Party who raised an issue in pleadings must ensure it’s preserved & presented in final pretrial conference order, or
risk losing the right to present evidence on that point at trial.
Same w/a party who forgets to list a witness—may encounter serious problem when she attempts to call that
witness at trial.
16(f)—Court may modify final pretrial order issued after final pretrial conference only to prevent manifest injustice.
Party seeking amendment bears the BOP, and, generally, a court will allow amendment only fi refusing to do so
would result in injustice to the party seeking amendment, the party opposing amendment will not be substantially
harmed by the amendment, and the court will not be inconvenience thereby. (Ex: Court dismisses motion to
amend when P has chosen her litigation strategy and tries to amend too far into trial. “P chose her strategy
and his to live w/the consequences.”)
There’s a possibility that a party might try and introduce evidence that is not in the final pretrial conference order. If
the opposing party does not object, the court may admit the evidence—Under R15(b)(2)—(because of the no
objection) & might form the basis for amending the pretrial conference order to conform to the evidence.
Adjudication
Adjudication: Means there will be a judicial resolution on the merits of the dispute
Merits: involve the underlying dispute: breach of contract, D commit a tort, Contributorily negligent, etc.
Purpose/Conduct of Trial & Roles of Judge and Jury
P has alleged things in her complaint, which D either admitted or denied.
If she admitted them, they are deemed established and need not be tried, the issues she denied, however, are
“joined,” or disputed.
Perhaps during discovery the parties were able to hone the number of disputed facts
The final pretrial conference order lists the issues to be decided at trial.
Stating the relevant law is always a function of the judge
When witnesses have given opposing testimony on a fact, outcome hinges in part on which witness the jury believes.
In all trials, bench (judge trial) or jury, judge is responsible for discerning the applicable law. In jury cases, judge
instructs jury on that law to guide its determination of the facts.
Judge must resolve disagreements about what evidence is admissible.
Note on Settling
Litigators must be skilled at contract negotiation and drafting.
Settling the case involves having the parties enter a contract—w/terms well spelled out.
Generally, P agrees to accept money from D, in return for which P signs a release of all claims and of any right to sue
the D concerning the same matter
When money is paid, usually the P will then take a voluntary dismissal.
Outset of Trial
P gives her opening statement first, followed by D’s lawyer.
After opening statement P presents her case-in-chief—calling witnesses who are sworn in and testify under oath
before the judge and jury.
Witnesses testify in response to questions by the lawyers—P’s lawyer examines each of her witnesses, then D’s
lawyer is allowed to cross-examine the witnesses.
Cross-examination: Lawyer attempts to create doubt about the witness’s recollection or to expose inconsistencies
between her testimony and that of other witnesses.
This process is repeated for each of P’s witnesses.
P may present documentary and other evidence in addition to the oral testimony of the witnesses.
General a witness will have to establish the authenticity of documentary evidence, and each piece of evidence is
marked as an exhibit.
When she has presented her case, P rests, which closes the presentation of P’s case-in-chief.
At this point, D may make a motion for JMOL, which, if granted, would obviate the rest of the trial and result in
judgment for D.
If D doesn’t move for JMOL, or motion for JMOL is denied, D puts on case-in-chief
Same process as P—witness by witness, asking questions to elicit testimony under oath.
P’s lawyer may cross-examine each defense witness.
D may introduce documentary and other evidence
When she has presented her case, D “rests”, which closes presentation of her case.
At that point, P may move for JMOL, which, if granted, would obviate the rest of trial and result in judgment for P.
If motion is not made, or is denied, P may then present “rebuttal evidence”.
This is done in the same way as the case-in-chief, but consists of testimony and other evidence designed t rebut
evidence the D presented.
At some point, the parties will have presented all of their cases-in-chief and rebuttal evidence, and the court will
“close all the evidence”.
Then, parties might move for JMOL; if granted, court will decide case, dismiss jury & enter judgment.
If not granted, or if its denied, judge will then instruct jury (if there is one) on the law, and the jury will retire to
deliberate and determine the facts.
Jury is to do so based upon the record evidence—that is, the evidence that the judge admitted into evidence in the
trial.
Jurors are to disregard any evidence to which they might have been expose in trial but which the court found
inadmissible.
Jury will announce itrs result in a “verdict”, which the court will embody in its “judgment”
Arbitration & Settlement
Arbitration: Type of litigation agreed to by parties, typically within their contracts, that disputes to be litigated in front of a
private arbitrator (not a judge, typically an expert in the field) who makes a ruling on the case.
There can be one arbitrator present, but sometimes there is a panel of 3
They are not affiliated with the court by day job, they are not paid for with tax payer dollars.
Benefits of Arbitration:
Most notably it limits time & expense of an actual trial.
1. Informal—takes place at the arbitrator’s office usually
2. Parties write their own procedurally rules—Usually not extensive discovery so it usually much cheaper here
3. Much more convenient access to resoling a dispute—don’t have to be another one of the hundreds of cases on the
docket
4. Arbitrator is usually an expert in the field so they have a very good feel for the material being disputed compared to
judge (generalist).
5. Rules governing admissibility of evidence don’t apply
6. Far less time consuming than a trial
7. Judgments are typically set in stone. Very hard to appeal a judgment. So once its over the winner can feel security that
it won’t be overturned & loser can move on with his life
8. Also very private. There is no public access to any court opinions or media participation in the courtroom.
9. Victorious party may ask court to confirm & enforce the award.
10. Gives parties the autonomy to draft the rules and regulations of any disputes that arise—avoids hostility.
Costs of Arbitration:
Arbitrators are usually experts, but everybody makes mistakes from time to time—if case come out the wrong way it is
incredibly difficult to get it overturned if even an opportunity to appeal it.
No trial by jury
Not always easy to come to arbitration terms pertaining to procedures and boundaries of potential arbitration.
Lack of public access may be negative as it pertains to transparency. No incentive to make public conscious
decisions/lack of objectivity.
If consent to arbitration with big company or employer, face a take-it-or-leave-it scenario. Court cannot mitigate the
company’s power to a level playing field with the P who has shallower pockets and less power when arbitration is the
only form of dispute resolution possible.
Claim Preclusion
I. Defining the Issue
Claim preclusion stands for the proposition that a claimant gets only one opportunity to assert a claim.
If you have one claim, you get one suit to vindicate it.
If you sue a second time on the same claim, the case will be dismissed—the claimant must be careful to seek all rights to
relief encompassed in a single claim in Case 1; if she does not, she cannot seek the rights to relief in Case 2.
Issue Preclusion is narrower than claim preclusion—it precludes litigation in Case 2 of a particular issue that was litigated
and determined in Case 1.
Focus not on a claim, but on an issue—if issue preclusion applies, that issue is deemed establish in Case 2. It will not be
relitigated; the fact finder in Case 2 will be instructed that that issue is established.
IP, then, does not necessarily result in dismissal of case 2, rather it may simply narrow the scope of what must be
litigated in Case 2.
Both claim and issue preclusion are affirmative defenses under Rule 8(c)(1)—thus incumbent on D to raise them or risk
waiving them.
Once D raises a defense of claim or issue preclusion, she bears burden of proof on the issue.
Rare circumstances court raises issue preclusion on their own motion (crowded dockets)
The rules of CP & IP can be treated rather mechanically, but not just technicalities: (Policies below)
1. Legitimate interest in finality
At some point, litigation must be declared finished—it isn’t productive for the parties or for society to allow serial
relitigation of a claim already asserted or an issue already decided by a competent court.
2. At some point D has a right to repose—to know that she cannot be sued repeatedly on the same claim.
3. There is an interest in consistency—if the same issue were to be relitigated several times, there is a chance that it
would be resolved differently in different cases—one jury might find that D was driving her car recklessly while
another jury, determining the same issue, might find to the contrary.
Such inconsistency may erode the public’s confidence in the judicial system by making that system seem more like a
lottery than an orderly mechanism for resolving disputes.
4. The community has a legitimate interest in efficiency—litigation is publicly funded dispute resolution, and the public
has a right to expect that the resources of the judicial system not be wasted.
The use of preclusion reflects confidence in the judicial system: one opportunity to litigate a claim or an issue
suffices to ensure each party of her “day in court”.
OTOH, preclusion doctrines must be flexible; there are occasions—rare, but they do exist—in which the use of preclusion
would not be fair, or when the policies underlying preclusion should give way to some other policy
Additionally, there is the sometimes vexing question of what preclusion law to apply when Case 1 and Case 2 are
litigated in courts of different JRXs
Each state is free to determine its own preclusion rules, so long as they do not violate due process, and states have
adopted different approaches to various issues.
Contrast to preclusion, law of the case establishes that issues decided in a suit will not be relitigated later in the same case.
Different from issue preclusion because the issues are raised in a single case—with issue preclusion, a judgment has been
entered in Case 1, and the question of whether that judgment affects one’s ability to relitigate issues in case 2
II. Claim Preclusion (Res Judicata)
A single claim might include more than one right to recover.
Ex: a single claim arising from an automobile accident may include the right to recover both for personal injuries and for
property damage. Because the claimant gets to sue on the claim only once, she must be careful to seek recovery for all
right to relief in that one case. If she doesn’t, her case will be dismissed under claim preclusion Same cause of
action=same claim
Three requirements for the operation of claim preclusion:
1.Both case 1 and case 2 must be brought by the same claimant against the same D
2.Case 1 must have ended in a valid, final judgment on the merits
3.Both case 1 and case 2mus be based upon the same claim.
A. Case 1 & Case 2—Same Claimant Against Same D
Resist temptation to say that the requirement is simply that case 1 and case 2 involve the same parties—not sufficiently
precise
Compulsory counterclaim rule—Rule 13(a)(1): If a D has a claim against P, and the claim arises from the same
transaction or occurrence as P’s claim, she must assert it in the pending case. Failure to do so waives the claim. From
example on page 575.
Also resist the temptation to say that claim preclusion requires that Case 1 & Case 2 be brought by the same P against
the same D.
D can assert claims against P in a pending case—if she does so, she could be subject to claim preclusion in a second
case.
Claim preclusion applies to parties who assert the same claim twice; thus, it applies to “claimants” & not just
“Ps”
If file a permissive counterclaim as a D, and then in subsequent case against the same party you are the P, precluded
from filing the counterclaim from the first case
Due process provides that one may be bound by a judgment only if she was a party to the case in which that judgment
was entered.
This requirement is satisfies by our definition of claim preclusion, since it may be asserted only against one who was a
claimant in Case 1.
Finally, claim preclusion does not necessarily require that the claimant and Ds be exactly the same persons in case 1 and
case 2.
However, nonparty preclusion does apply when the nonparty is in privity with one who was a party to case 1.
Accordingly claim preclusion will apply if case 1 and case 2 are brought by the same claimant (or someone in
“privity” w/claimant) against the same D (or someone in privity w/D)
Bringing a case on behalf of somebody as his or her guardian establishes privity. Representative is privy to the
represented (vise-versa).
Abe inc. crashes with B. Abe inc. sues for damages, court finds B not negligent. New owner buys Abe inc. one month
later and sues again. He is precluded by privity.
B. Case 1 Ended in a Valid Final Judgment on the Merits
Only a particular kind of judicial order is entitles to preclusive effect—one that has three characteristics:
1. It must be valid
2.It must be a final judgment, and
3.It must be on the merits
1.Validity
Addresses competence of the court in Case 1—inquiry typically focuses on whether the court in Case 1 had SMJRX
over the case & PJRX over the parties
If it did, the judgment is considered valid.
Judgment may be valid even though it is incorrect—if the judgment was wrong on the merits, the losing party
should have appealed the judgment in Case 1 to the appropriate appellate court.
Claim preclusion consequences of a final, unappealed judgment on the merits [are not] altered by the fact that the
judgment may have been wrong or rested on a legal principle subsequently overruled in another case.
2.Final Judgment
Final judgment is one that ends the litigation on the merits and leaves nothing for the trial court to do but execute the
judgment.
Every other order in a case is interlocutory, which just means that it is not final.
An interlocutory order may be amended during the course of the litigation—it would be wasteful to allow an
appeal from such an order or to give it preclusive effect, because the order might not stand the test of time; it might
be changed or abandoned as the litigation develops.
What happens if the final judgment in case 1 is appealed?
Obviously, if the appellate court reverses or vacates the final judgment of the trial court, that judgment is no longer
entitled to preclusive effect—it simply no longer exists in the same form in which it was entered.
Just as obvious, if the appellate court affirms the trial court’s final judgment, it is entitled to continued preclusive
effect.
What is the status of things during the pendency of appeal?
Final judgment entitled to preclusive effect or is it held in abeyance until the resolution of the appeal?
Answer: federal law on the subject says that the judgment is entitled to preclusive effect, and most states agree.
Majority rule accords with the reality that most appeals result in affirming the trial court’s judgment.
3.On the Merits
Merits refers to the underlying dispute—whether the claimant has shown that she is entitled to judgment because, for
example, D breached a contract or committed a tort, and if so, what damage befell the claimant.
So for a valid final judgment to be entitled to preclusive effect, it must have been based on the underlying dispute,
on the question of who did what.
Contrast, a judgment based upon something unrelated to the underlying dispute—say for example, some
procedural or JRX’al basis—should not carry a preclusive effect.
However, many judgments are accorded preclusive effect even though there has been no true assessment of the
merits of the case.
For starters, its helpful to recognize that preclusion does not require that the judgment in Case 1 be determined
literally on the merits—it is more accurate to think of the requirement as one that the court had the opportunity to
get to the merits of the case, even if it did not actually do so.
Ex: if Case 1 went to trial, the resultant valid final judgment is undoubtedly on the merits.
But on the merits does not require that there be a trial
Ex: suppose a valid final judgment is entered on summary judgment; recall that summary judgment allows a
court to rule as a matter of law w/out trial, because there is no dispute on a material issue of fact—such a
judgment is entitled to preclusive effect. It is on the merits for these purposes. It is an adjudication that a
party is entitled to as a matter of law.
How far can we push this concept?
Can a default judgment be on the merits for preclusion purposes?
General answer is yes, because default does establish (by D’s failure to respond) that P’s claim is substantively
valid.
But what about dismissals that have nothing to do w/the underlying claim? i.e., w/a voluntary dismissal, P
simply pulls the plug on the case. Is that dismissal on the merits for preclusion purposes?
41(a) provides that such dismissal is w/out prejudice—which means not deemed on the merits.
What about involuntary dismissals? Starting point is Rule 41(B) and envisions three scenarios:
1. If the voluntary dismissal is based on upon lack of JRX (meaning either personal or subject matter), improper
venue, or failure to join a party under Rule 19 (indispensible party issue), the rule provides that the dismissal
does not operate as adjudication on the merits.
That means, of course, that such a dismissal is not entitled to preclusive effect—this rule makes sense:
A judgment based upon any of these three defenses truly does not involve investigation of the underlying
merits of the case.
2. For failure of P to prosecute or comply w/these rules or any order of court, a dismissal is adjudicated on the
merits.
Broad—dismissal for failure to comply “with these rules” means dismissals for failure to comply w/any
of the FR’s.
Ex: court might dismiss P’s case as a penalty for abusing the discovery provision.
Unless court indicates otherwise in its order of dismissal, such a dismissal operates as adjudication
on the merits (remember this means bars second action on the same claim.)
This rule also makes sense, because a P who is guilty of failing to prosecute the action or of failing to
comply w/the federal rules has had an opportunity to present her case for consideration of the merits,
but has failed to do so properly—legal system has given her a chance, and has an interest in enforcing its
own rules for how cases are to proceed.
Thus, unless court provides otherwise in its order of dismissal, Rule 41(b) treats such a judgment as on
the merits for purposes of claim and issue preclusion
3. Under Rule 41(b), every voluntary dismissal other than those based upon JRX, venue, or Rule 19, is to be
treated as on the merits.
Remember Semtek? Why could P proceed w/suit in Maryland? First, the court concluded, Rule 41(b) is
not aimed at claim preclusion at all—its provision that a dismissal operates as an adjudication on the
merits means only that P cannot refile the same claim in the same Fed. Court that entered the judgment of
dismissal.
Semtek makes it clear that the language of Rule 41(b)—that an involuntary dismissal other than under
that rule (and other than one based upon JRX, venue, or Rule 19) operates as adjudication on the merits—
does not state a universal truth for purposes of preclusion.
True, the rule stops P from refilling in the same Fed. Court that dismissed the action, but whether the first
court’s dismissal is on the merits for claim preclusion and issue preclusion in other courts requires an
analysis of federal common law, which, in turn, in a diversity case usually will look to the law of the state in
which the Fed. Court deciding case 1 sat.
C. Case 1 and Case 2 Were Based on the Same Claim
Even if case 1 and case 2 are brought by the same claimant against the same D and case 1 ended in a valid final judgment
on the merits, claim preclusion applies only if the two cases are based upon the same claim.
The generally broader definition of claim today reflect the more liberal rules of pleading and joinder
Because those rules permit P to package a great deal into Case 1, there is less need for the legal system to provide P with
an opportunity to bring Case 2.
1. Two Major Themes: Focus on Transaction or Same Evidence test
(a) Transactional test: Majority rule for defining one’s claim
Generally, focus is whether the two cases involve the same “operative facts” transaction or occurrence” “basic
factual situation” etc.
RS2 of judgments (most influential definition): a claim encompasses all right to relief “with respect to all or any
part of the transaction, or series of connected transactions, out of which the action arose.”
Ex: P is involved in an auto collision with D. P suffers personal injuries and property damage to her car. In Case 1,
she seeks only damages for the personal injuries. After judgment is entered in that case, she brings Case 2, seeking
to recover for property damage from the same collision.
If the law defines the claim “transactionally”—as all rights to relief arising from a transaction—Case 2 will be
dismissed under claim preclusion. Why? Because P is suing twice about the same transaction; thus, she is suing
twice on the same claim.
Policy: Coerces P to join her personal injury and property damage rights in a single case—if she fails to do so, her
second case will be dismissed under claim preclusion.
Thus, the judicial system deals with only one suit for what it is—one event. Moreover, the transactional test
comports broadly w/tests for joinder and for supplemental JRX.
Final note—because federal rules are liberal (regarding claim joinder) and permit a claimant to assert all claims—
even those not transactionally related—in a single suit, it is fair to impose a claim preclusion rule requiring her to
assert all transactionally related claims in case 1.
Final Ex: P and D, each driving her own automobile, collide, and each suffers personal injuries and property
damage. Immediately after the collision, D jumps from her car, runs to P’s car, reaches through the window and
punches P in the face. D then screams obscenities at P, threatens to kill P, and defames P by shouting to the crowd
of onlookers various libelous falsehoods about P.
How many claims under a transactional test?
RS2 Judgments tells us to adopt a pragmatic approach, with focus on whether facts are connected closely “in
time, space, origin, or motivation [and] whether, taken together, they form a convenient unit for trial purposes,
as well as whether treating them as a single claim will be consistent w/the expectations of parties and
businesses.
Thus, the inquiry becomes a practical one, guided by experience w/particular kinds of cases, sensitive to
relevant policies.
Arguably, the hypo seems to present a single claim. Participants might consider all the events a single event.
Everything occurred in a relatively small area and w/in relatively short time. Witnesses to one aspect were
probably witnesses to the punch and oral argument as well. Having more than one case could burden the
witnesses to testify more than once, and having redundant testimony in multiple cases would waste judicial
resources.
Last note—trial court has discretion to order separate trials of various issues to avoid confusion or
embarrassment.
***The law student who is aware of the various tests covered in her course materials will be able to
demonstrate their application on the exam.
(b) Same Evidence test
Under the same evidence test, claims are the same if “the evidence needed to sustain the second action
would have sustained the first.
What does that mean? All the evidence in the entire action be the same as case 1? If that is the case, usually the
second claim will be allowed because the claim will be different than that of the first, which will probably
introduce new evidence.
Or does it mean the evidence to establish liability in Case 2 must be the same as Case 1? –This is what courts
usually go to.
Ex: D is negligent in & causes physical injuries and car damage, the second claim (assume physical injuries first,
and car damage second) would be precluded because the showing required to establish D was liable for the
wreck is the same in both cases.
Final note—an offer to produce different evidence should not defeat claim preclusion; the point of claim
preclusion is that the claimant gets one shot at a claim, and thus can’t blame anyone but herself for leaving out
some element of recovery for failing to cover the facts in an effective way.
2. Claim as Personal to holder
Ex: L and P are on bus. Bus wrecks. Both suffer physical injury and property damage (luggage). JRX adopts
transactional test. Test will coerce L to sue bus company for personal injuries and property damage in a single case—
both are elements of a single claim, because both were caused in a single transaction. Similarly, transactional test will
coerce P to sue for her personal and property damage in a single case. However, the definition of claim does not
coerce L & P to join together as co-Ps in a single case. Louise’s claim is hers & Patti’s is hers. Claim preclusion
does not force every person injured in a single case to join together in one suit. It simply forces each claimant to join
the various elements of damage and legal theories arising from a claim into a single case.
3. Contract Cases
i. First, a claim, at least w/regard to a single contract, is usually deemed to consist of all breaches that have occurred to
the time of filing Case 1.
ii. If there are separate contracts, they generally are treated as separate claims.
Ex: If D breached contract 1 and contract 2 in similar ways, P would probably have two claims –one for each
contract.
This rule is usually applied even if Contract 2 is identical in every way to Contract 1.
Class Notes:
Claim Preclusion
Test:
Generally successive courts attach the same preclusive effect to a judgment as the rendering court would—full faith
and credit
1st question to ask—what JRX was Case 1 in and what preclusion law/test do they apply?
Ex: Case 1 in NJ and Case 2 in NY, NY applies NJ preclusion law.
What about Fed. Court?—Same as state to state preclusive effect (except Semtek)
Ex: Federal court—Case 1, NY Case 2—NY uses federal law.
Semtek exception—Case in Fed. Court on diversity JRX, subsequent courts use the state law in which the Fed. Court
(where Case 1 took place) sits—why? Forum shopping (Same as with the default rule)
Class Notes:
Issue Preclusion
First—the test
1. An issue of fact or law (Very same issue—both substantive and procedural requirement)
2. Actually litigated and determined
3. Valid & final judgment
4. Determintation was essential to the judgment
III. Issue Preclusion (Collateral Estoppel)
In contrast to claim preclusion, issue preclusion applies only to preclude relitigation of an issue that the parties actually did
litigate and the court determined in Case 1: it generally doesn’t itself cause dismissal of case 2—it streamlines the number of
issues to be litigated in Case 2.
Issue is broader than claim preclusion because its operation is not tied to transactional relatedness—in an issue
determined in Case 1 may be deemed established in Case 2 even though the cases involve radically different real-world
events.
Ex: A determination in Case 1 that a drug causes particular side effects may be used to establish that issue in other cases
involving different persons, hurt at different times in different places.
Standard definition, IP has 5 prereq’s:
1) Case must have ended in a valid final judgment on the merits.
2) Same issue presented in Case 2 must have been litigated and determined in Case 1.
3) That issue must have been essential to the judgment in Case 1
4) As a matter of due process, issue preclusion can only be asserted against one who was a party to Case 1 (or in privity
with a party to case 1—small category).
5) Court in case 2 must assess “mutuality”, which concerns the question of who may assert issue preclusion.
Modern trend is to reject traditional view that only parties to Case 1 may assert issue preclusion in Case 2
A. The Same Issue was Litigated and Determined in Case 1
Issue preclusion allows a judicial system to avoid the burden—and the concomitant risk of inconsistent results—cause
by relitigating an issue that has already been decided.
For IP to apply, the same issue must have been litigated and determined in Case 1—contains three 3 requisites:
1) The issue must have been “litigated” in Case 1.
2) Even though litigated, the issue must also have been “determined” in Case 1
3) We must be speaking of the same issue in both cases.
i. Determining Whether the Issue was Litigated in Case 1
The situation is easy if Case 1 went to trial and evidence was presented on the particular issue—then, clearly, the issue
was litigated for purposes of issue preclusion.
Even if the evidence presented was not sufficient to meet a party’s burden at trial, the issue was litigated in Case 1
(failure to satisfy BOP establishes the nonexistence of a fact for issue preclusion)
But what if case one was decided w/out trial, or without a hearing on the particular issue?
Ex’s: Voluntary dismissal w/prejudice will have a claim preclusive effect; because no issue was litigated in
such a dismissal however, it will not have an issue preclusive effect.
Similarly, though a default judgment can have a claim preclusive effect, it will probably not carry issue
preclusion consequences because no issue was actually litigated in the default.
So, too, facts that are admitted in pleadings or and admission for failure to respond to a request under Rule
36 are not litigated and should not support issue preclusion in a subsequent case.
OTOH, a judgment based upon summary judgment can carry issue preclusive effect—summary judgment entails a
judicial determination that there is no dispute on a material issue of fact and that the moving party is entitled to
judgment as a matter of law.
The determination that there is no material factual dispute is adjudication on what facts exist and constitutes
“litigation”.
ii. Determining Whether the Issue was Determined in Case 1
Not every issue litigated will be determined; Ex: Claimant may present alternative theories of recovery at trial.
The fact finder may base its decision on one of the alternatives and ignore the other.
Similarly, D may present alternative defense.
Once fact-finder determines that one such theory is established, it may ignore the others; or the parties may present
evidence on an issue and then withdraw the issue before submission to the fact-finder.
Because issue preclusion applies only to issues that are litigated and determined in case 1, it will not apply to such
issues.
In non-jury trials, judge will enter findings of fact and conclusions of law, which ought to make clear what issues were
actually determined.
In jury trials, the jury can be pinned down on specific determinations through the use of special verdicts or
interrogatories to the jury.
In some cases however, the issues actually litigated and determined will not be clear.
Bench trials occasionally result in less-than-full findings and conclusions.
More frequently, the problem will arise in a jury trial in which neither the special verdicts nor jury
interrogatories were used.
If it’s not clear what issues were litigated and determined in Case 1, how should the court in Case 2 proceed?
Party asserting issue preclusion bears the burden of proof of establishing that the requirements are met; this
burden includes presenting to the court in Case 2 an adequate record from case1 to support the assertion.
The court in Case 2 may have to review the trial record (including the transcripts from Case 1, to determine what
issues were actually litigated, and whether any of those issues are presented in Case 2.
For examples of this look to pg. 597 & 598.
iii. Determining Whether the Cases Involve the Same Issue
Obviously, issue preclusion is only appropriate when same issue is presented in both cases—the entire thrust of issue
preclusion is to ensure that we not relitigate something that has already been determined by a competent court.
Sometimes a party will try to justify relitigating an issue in Case 2 by asserting that she has new evidence supporting an
assertion that was rejected in Case 1.
While discovery of new evidence may justify setting aside a judgment under Rule 60(b)(2) (but only in
limited circumstances, Ch 9.), it does not avoid the operation of issue preclusion—the party had her chance to litigate
that issue, she doesn’t get another.
Serious problems can arise concerning the characterization in Case 2 of just what “issue” was litigated and determined
in Case 1:
Ex: if claimant in Case pursued a particular theory of negligence, is she precluded from raising a different
theory in case 2? If D in case raised a defense that was rejected, is she precluded from raising a different defense in
Case 2?
The assessment of the scope of the issue determined in Case 1 may differ depending upon the party against
whom preclusion is asserted
The court can assess the scope (thinking transaction test remember) of the transaction either broadly to
preclude the issue, or narrowly, to allow it—problems arise because either way, somebody is left out to dry. So what
does the court do?
RS2 of Judgments, urges pragmatism—specifically, it instructs the court to look at such things as the degree
of overlap between the evidence or arguments made in Case 1 and Case 2; whether new evidence or argument in Case
2 involves the same rule of law as that in Case 1; whether the pretrial preparation (including discovery) in Case 1
could reasonable have embraced the new evidence or argument in Case 2; & whether there is a close relationship
between the claims asserted in Case 1 and Case 2
Hypo analyzing this issue in terms of defense preclusion is on page 600.
The application of the factors will not always lead to a clear answer—pg. 601 for an explanation.
Almost always a party will seek to invoke issue preclusion as to a question of fact that was litigated an determined in
Case 1; but does issue preclusion apply to rulings of law from Case 1?—the general answer (assuming the other
requirements for issue preclusion are satisfied) is yes.
Ex: A court’s determination that a claim for wrongful discharge of employment was preempted by federal law—clearly a
question of law as applied to a given set of facts—was entitled to issue preclusive effect.
SCOTUS has indicated that issue preclusion might not be available, however, for “unmixed” or “pure” questions of law
that arise in successive cases “involving unrelated subject matter.—Scope and purpose of this sections aren’t terribly
clear.
B. That Issue was Essential to Judgment in Case 1
The issue under subject to possible preclusive effect must also have been essential to the outcome of Case 1
To determine essentiality, we ask: if the finding on this had come out the other way, would the judgment be the same? If
so the finding is not essential to the judgment, because the judgment does not rest on the finding on that issue. Ex’s
page 602-603
There are two main policy supports for refusing to accord the issue preclusive effect to the finding in Case 1 that R was
negligent:
1) Because R won the judgment in that case, he would not have been able to appeal the finding that he was negligent.
The right to appeal is from the judgment, not from an individual finding.
The party losing the judgment has a right to appeal—because R would have had no opportunity to have the finding
of his negligence reviewed on appeal, that finding was not subject to full judicial scrutiny and thus is not worthy of
issue preclusion.
2) Because the finding on R’s negligence was irrelevant to the outcome (R had to win once D was found contributorily
negligent), there is a sense that the jury may not have devoted sufficient attention on the issue.
For these two reasons, courts conclude that tey should accord issue preclusive effect only to those findings that
mattered in the ultimate judgment. More hypos on pg 603 & 604
The problem of Alternative Determinations
Alternative determinations are findings on issues, any one of which would be sufficient to compel the judgment that
was entered.
Courts have not agreed on whether to consider alternative findings essential for issue preclusion purposes.
Traditional approach to the problem, reflected in the 1st restatement of Judgments, holds that both of the alternative
findings are essential—thus, both the finding that Z was not negligent and that A was negligent would be entitled to
issue preclusion in Case 2. (Ex and note 105, pg. 604)
Under the RS2 of judgments, alternative determinations are deemed not to be essential to the judgment in Case 1
and thus neither one is entitled to issue preclusion in case 2. (See example)
Why did the RS2 take this approach? There were two main reasons:
1) Because the alternative determination is not necessary to the decision, it might not have been considered as
fully by the fact-finder—IOW, once the fact-finder determined that A was negligent, it might not have paid all
that much attention to the determination of whether Z was negligent, because the ruling on that issue would not
affect the outcome.
2) Losing litigant, faced w.two negative finding, might be dissuaded from seeking appellate review—on appeal she
would still lose even if the appellate court affirmed on just one of the two issues.
Forcing her to appeal to avoid the effect of issue preclusion would increase the burden on courts and litigants.
To avoid that burden, the drafters decided to free the losing litigant from the effects of issue preclusion
altogether (unless there is an appeal that results in affirming either or both of the issues.
It is important to be able to recognize alternative determinations in a fact pattern—it is also important to
remember that courts disagree on how to treat them. 1
Moreover, be careful not to confuse alternative determinations—in which either of two findings would dictate the same
judgment—with the situation in which both findings are necessary to a result. For example, let's return to a hypothetical
we saw
o A sues Z for negligence. The case is tried to a jury. The jury returns a special verdict finding (1) that Z was
negligent and 2) that A was not negligent. The court enters judgment, accordingly, in favor of A.
These two findings are not alternative determination. With alternative, remember, either finding would dictate the
judgment. That is not the case here. If all the court in Case 1 deter mined was that Z was negligent, 'that finding alone
would not justify the judgment in favor of A. Why not?
Because in a contributory negligence state, the claimant can win only if two things are established: that the D
was negligent and that the claimant was free from negligence. In this fact pattern, both of the findings are
necessary to \ get a judgment for A. Stated another way, if you took away either of the findings, the judgment in
favor of A could not stand. So here, both 1issues are essential to the judgment and both are entitled to issue
preclusive effect in Case 2.
C. Due Process: Against Whom is Preclusion Asserted?
Concerns the questions of against whom preclusion may be asserted.
Due process ensures that one can be bound by a judgment from Case 1 only if she had a full and fair opportunity to
litigate in Case 1—so preclusion can only be asserted against someone who had a full and fair opportunity to litigate in
Case 1.
Because this precept is commanded by constitutional principles, it must apply in all cases in whatever court system—
federal or state.
Also applies in claim preclusion.
1. Starting Point: Parties to Case 1 Can Be Bound
Although a full and fair opportunity to be heard is flexible, it includes someone who was properly joined as a party in
Case 1.
Conversely a nonparty to Case generally will not be bound by the judgment in Case 1.
o In Case 1, P1 sues Airline, alleging injuries in a crash operated by Airline, and Airline’s negligence caused the
crash. Case goes to trial and Airline wins because the jury makes an express determination that Airline wasn’t
negligent. In Case 2, P2 (who wasn’t a party to Case 1) sues Airline to recover for her injuries suffered in the
same crash. Clearly, airline can’t invoke claim preclusion against P2. (Why??2) But can Airline assert issue
preclusion on the finding that it wasn’t negligent? (It’s the same issue, it was litigated and determined in Case 1,
and Case 1 ended in a valid final judgment on the merits.
o Based upon what we’ve seen so far, the answer is clear: Airline can’t use issue preclusion—P2, the party in Case
2 against whom preclusion is sough, was not a party in Case 1 and thus, cannot be said to have had a full and fair
opportunity to litigate in Case 1. Many courts would say P2 has never had her “day in court” and cannot be
bound by preclusion.
o Note, by the way, how difficult due process makes things for Airline. Suppose 100 persons were injured in the
crash, and that they bring 100 separate suits against Airline. Even if Airline wins 50 cases in row, with each case
resulting in an express finding that Airline was not negligent, Airline cannot assert issue preclusion against P
because no P was a party to a preceding case.
2. Nonparty Preclusion: Expanding “Privity”
It’s clear judgment from case 1 binds parties to case 1, but can it bind litigants in Case 2 who weren’t technically
joined as party in Case 1?—Answer is yes, judgment in Case 1 binds not only parties, but persons deemed in “privity”
with parties to case 1.
Privity refers to a relationship between a nonparty to Case 1 and a party to case 1—The idea is that the nonparty
may be so closely aligned with a party to Case 1 that the nonparty has, in effect, had her "day in court."
In the important case of Tayfor v. Sturgell, the Supreme Court catalogued the circumstances in which nonparty
preclusion may be appropriate:
1 Advice for exam: Whenever class has covered an area on which courts disagree, be prepared to discuss the approaches taken by the courts. Professors put topic like this on exam so we can demonstrate we know the different approaches.2 Because claim preclusion applies only if Case 1 and Case 2 were brought by the same claimant against the same D. Here, Case 1 is brought by P1 and Case 2 was brought by P2.
1.Nonparty agrees to be bound. Sometimes, someone who is not a party to a case will agree to be bound by the
outcome of a case. The best example is the “test case”:
Six sets of cases are pending, brought by six groups of Ps against the same D, seeking tort damages for an
allegedly defective product. All of the parties to the six cases agree that one of the six case will proceed to
trial first, and that the result of that trial will bind all others—win or lose—on the issue of D's liability.
2.Nonparty is bound by pre-existing substantive legal relationship w/a party.
Ex—successive holders of an interest in property: Non party to Case 1 may be bound by the judgment in
that case if she succeeds to property interest held by someone who was a party in Case 1. Relationship of
successor-in-interest closely approximates the common law definition of privity. The succession might be
affected in any way—including sale or inheritance—and the property may be real or personal. Recognizing
that the successor-in-interest is bound by the judgment involving her predecessor protects the other party
from repetitive litigation and thus also avoids potential inconsistent results.
o In Case 1, P sues D1, who owns a lot and house next door to P’s concerning a boundary dispute. Court
enters a valid final judgment on the merits, based upon its finding that the boundary runs over a
particular course. D1 sells his property to D2, who now claims that that boundary is incorrect. In Case 2,
P sues D2 to enforce the boundary as determined in Case 1. Though D2 was not a party to Case 1, she is
bound by the judgment. She is a successor-in-interest to the property and is thus bound
o In Case 1, P1 sues D, asserting that she (and not D) owns certain securities. The court enters a valid final
judgment on the merits in favor of D. P1 dies and P2 inherits everything that P1 owned. In Case 2, P2
sues D for declaratory judgment that she own the same securities. P2 is bound by the judgment in Case
1.
o Husband and wife aren’t always privy—look at definition above.
3.Nonparty bound because she was adequately represented by one who was a party in Case 1.
o Clearest example is the C-Action: members to a C-Action who are represented by someone in court are
bound by the judgment of that case even though they are not there.
o Final note—Parties represented in court by their agents are bound by the judgment, and parties who
lose case 1 cannot escape binding effect of that judgment by having someone else sue in a separate case
on her behalf.
The rules of nonparty mutuality are strict and narrow
Virtual representation was abolished in Taylor v. Sturgell for the same policy reasons that limit nonparty mutuality:
The policy behind keeping the exceptions narrow is that due process due process is deeply rooted in our sense
of justice. It is unfair to bind someone w/out opportunity to litigate either in person or through appropriate
representative.
The question is what constitutes an appropriate representative? The fact that the Court will not permit virtual
representation—In view of the tremendous cost of relitigation—demonstrates just how important the concept
is. If we are willing to allow similarly situated litigants to raise the same issues in the same pleadings, using the
same lawyers over and over, we must be protecting something very important.
D. Mutuality: By Whom is Preclusion Asserted?
Distinguishing again between due process and mutuality: By (not against) whom can preclusion be asserted? This
question involves the concept of mutuality. Because mutuality is not rooted in due process (or any other constitutional
principle), courts are not compelled to apply it. Thus, JRXs may take different approaches to mutuality: They may
embrace it, modify it, or reject it.
i. Mutuality of Estoppel & Exceptions to It
It’s a very simple idea: Only people who can use preclusion in Case 2 are people who would be bound by the
judgment is Case 1
The rule is based upon some basic sense of fairness—one should not be able to take advantage of the judgment
from Case 1 if she would not be burdened by that judgment.
Thus, under the traditional mutuality approach, the only people who can assert preclusion in Case 2 are those who
were parties (or in “privity” with a party) to Case 1.
But fairness can cut the other way—why should one who has already litigated and lost in Case 1 get to relitigate
the same issue against a different party in Case 2?
True, the “new” litigant in Case 2 has not yet been burdened w/litigation, so there is no harm to the interest of
repose, but systematic interests are relevant—relitigation burden the courts at least to some degree by forcing
them to repeat a task.
Moreover, relitigation creates the possibility of inconsistent outcomes.
Most important development in preclusion law over the past two generations has been the move to permit
“nonmutual” assertion of issue preclusion.
Nonmutual means that issue preclusion is being used by someone who was not a party to Case 1.
Two exceptions, and they only apply in indemnity cases page. 618-619
ii. Rejection of Mutuality for Ds: (Nonmutual Defensive Issue Preclusion)
Look up Blonder-Tongue Labs (Patent in 1st case not valid—judgment for D, P1 sues different D in Case 2 on same
patent—D2 issue preclusion because patent ruled invalid in Case 1)
But is issue preclusion always available to someone in Case 2, regardless of whether she was a party (or in privity
w/a party) in Case 1?—No. For starters, remember that every state is free to determine its own preclusion rules, so
long as those rules do not violate constitutional guarantees.
Beyond this caveat, courts have emphasized that preclusion of any sort, including nonmutual preclusion, requires
that the person against whom it is asserted had a full and fair opportunity to litigate in Case 1.
(For context, examples for this bullet and the next are on 622-623) The court recognizes that relitigation
imposes a burden on the judicial system and raised the possibility that avoiding that burden might justify jettisoning
of the mutuality rule. (more than crowded dockets is involved though)
The court has concluded that the system of justice affords a litigant one full and fair opportunity to litigate an issue—
Once that protection has been afforded, the litigant may be bound by the finding on that issue in subsequent
litigation, even by persons who were not parties (or in privity w/a party) to Case 1.
“Nonmutual” means that issue preclusion is being used by one who was not a party to Case 1. “Defensive” means
that the person using issue preclusion in Case 2 is the D (Shield).
New D uses issue preclusions as a shield to estop P from asserting an issue P litigated on in Case 1 and lost against
another D.
Federal law and the law of most states allows nonmutual defensive issue preclusion, as long as the party against
whom it is used in Case 2 was afforded a full and fair opportunity to litigate in Case 1.
Encourages judicial economy (efficiency).
iii. Rejection of Mutuality for Claimants (nonmutual offensive issue preclusion—sword)
Nonmutual is defined above, and it means the same thing here except that it’s not the same claimant in claim 2 as
claim 1. (typical in mass tort cases)
New claimant tries to import (his terminology)- finding from first case to his benefit.
o Ex: Commercial plane operated by Airline crashes, injuring 100. In Case 1, one of the passengers (P-1) sued Airline.
Case was litigated, & a valid final judgment on the merits was entered in favor of Airline; the fact-finder expressly
found that Airline was not negligent. In Case 2, another passenger (P-2 ) sued Airline regarding her injuries from the
crash. Can Airline use issue preclusion on the finding that it wasn’t negligent? No. Why? Due process! Airline is
attempting to use issue preclusion aainst P-2, who wasn’t a party to Case 1 (& wasn’t in privity w/P-1 by any of the
definitions applicable) No problem of mutuality; issue preclusion is being asserted by Airline, which was a party to
Case l.
o This hypo points out, that due process imposes a huge burden on D. To escape liability, Airline would have to win
all 100 cases involving the 100 passengers. Because of due process, it can never use issue preclusion against a
successive P.
o Ex: Same facts about the plane crash & that in Case 1, P-1 sues Airline. The case is litigated and a valid final judgment
on the merits was entered in favor of P-1; the fact-finder expressly found that Airline was negligent and that its
negligence was the proximate cause of P-l's negligence. In Case 2, P-2 sues Airline. Can P-2 use issue preclusion on the
finding that Airline was negligent? All the basic requirements are satisfied, and issue preclusion is being asserted
against Airline, which was a party to Case 1, so due process is satisfied. The problem here is mutuality—Issue
preclusion is being asserted by someone who was not a party to Case 1.
o Notice the policy choices raised; if court follows the mutuality rule, all 100 P’s will be required to prove Airline’s
negligence—same issue will be litigated, in theory, 100 separate times.
o Inconsistent results are likely—some P’s will lose and some will win—fostering the sense that judicial system is
little more than a gaming table. Thus, permitting P2 to use issue preclusion will foster efficiency and
consistency. But at what cost?
o Allowing nonmutual issue preclusion in this case could lead to Airline being liable to 100 people (if claimant 1
proves negligence), and even if P1 loses, they can’t use that judgment to preclude the other 99 from litigating and
trying to prove negligence.
o Should judicial system for entities such as airline to face potential mass liability on the strength of 1 adverse
finding?
o Ex: Suppose the first ten passengers bring individual suits against airline. Airline wins all ten, with the fact-finder
in each case expressly finding that Airline was not negligent. Now P-11 sues Airline. Because of due prsoces, as we
have seen, Airline cannot use issue preclusion against P11, so all issues are litigated. Assume P11 wins a valid final
judgment on the merits, with an express finding that Airline was negligent. Now can P-12 through P-100 use issue
preclusion against Airline in their cases? After all, P-11 won by establishing an issue that P-12 through P100 must
establish
o (All the rest of these bullets are topics derived from Parklane)The defensive use of issue preclusion gives
the claimant an incentive to join all potential D in Case 1. After all, if claimant fails to do so, and loses Case 1, D in
Case 2 can use the adverse finding against the claimant in Case 2. Thus, recognizing nonmutual defensive issue
preclusion probably promotes efficient joinder of Case 1—the claimant will probably join all potential Ds in that
case.
o But the offensive version creates the opposite effect—it counsels potential claimants not to join I as a party to
Case 1. Why? By staying out of case 1, a potential claimant risks nothing and may gain something. If P1 loses in
Case 1, P2 is not bound by the judgment in that case (because of due process). But if P1 wins in Case 1 and the
court recognizes nonmutual offensive issue preclusion, P2 can use P1’s victory to her own advantage in case 2.
Thus, this type of preclusion “will likely increase rather than decrease the total amount of litigation, since
potential [claimants] will have everything to gain and nothing to lose by not joining case 1.
o The answer is not to prohibit, but to apply it only in cases In which it will not reward a private P who could have
joined in Case 1 (discourage “wait-and-see attitude”).
o Moreover, court expressed concern that NMOIP might be unfair to D in various circumstances:
1.D who is sued in case 1 for a small amount of money might have little incentive to defend w/vigor,
especially if she foresees no other litigation concerning the event.—If she lost Case 1, it would be unfair to
allow issue preclusion in Case 2 where claimant seeks a large recovery.
2.If there had been multiple judgments concerning the underlying events it would be unfair to allow a
claimant to get issue preclusion from one in which D was found liable and to ignore another in which D
won.
3.Preclusion would be unfair if D in Case 1 did not have a full and fair opportunity to litigate in Case 1. This
latter point is consistent w/ a safeguard we saw in NMDIP. (no preclusion of any sort ought to be accorded
if the person against whom it is sought did not have such an opportunity in Case 1.
Procedural opportunities: ONMIP might be unfair where D faced procedural hurdles in first suit;
inconvenient forum that withheld D from defending suit to its best capability (too costly to put up good
defense because the inconvenience cost had to be accounted for—flying, hotels, travel, accessibility to
things etc.)
Parklane final analysis, court embraced NMOIP, but only in cases in which these concerns are met (Parklane
being one of them:
1. It was not a case in which allowing preclusion would promote inefficient litigation—Ps in Case 2 could not
have joined in Case 1 because Case 1 was brought by SEC and private Ps would not have been permitted.
2. None of the three examples of unfairness was present—one, given the seriousness of the allegations in
Case 1, and the clear foreseeability that private Ps would sue if the SEC won Case 1; two, there were no
inconsistent judgment on the books—the only judgment was unfavorable to D; three, there were no
procedural opportunities available in Case 2 that were not available in Case 1. Thus, the court concluded
none of the considerations that would justify a refusal to allow the use of offensive collateral estoppel was
present.
Interestingly, the Court saw no unfairness in the fact that the use of issue preclusion in Parklane robbed D of a
right to jury trial on the issue of whether its proxy statement was misleading. That issue was decided in an
administrative proceeding before the SEC, in which there is no right to jury trial. In the ensuing civil case in Fed.
Court, D would’ve had a 7th amendment right to jury trial on that question.
Employing issue preclusion to establish the issue meant that the D was never entitled to have a jury determine
the facts—court did not consider this to be a procedural unfairness that would render issue preclusion
unavailable.
Parklane stands for the proposition that NMOIP is appropriate, but only If the court in Case 2 is convinced (1)
that the party using issue preclusion could not easily have joined in the earlier action, and (2) that the use of
issue preclusion is not unfair to D.
This analysis has been adopted by the Fed. Courts and several states, but still not the majority view—essentially
the majority has not embraced NMOIP.
Ex: (Finish w/ a hypothetical and an insane answer to it): Commercial airplane operated by Airline
crashes injuring 100 passengers. Case 1, one passenger (P-1) sues Airline. The case is litigated and a
valid final judgment on the merits is entered in favor of P-1; the fact-finder expressly found that Airline was
negligent, and that its negligence was the proximate cause of P-l's injuries. In Case 2, a second Passenger (P-
2) sues Airline. Can P-2 use issue preclusion on the finding that Airline was negligent?
Basic requirements for IP: Case 1 ended in valid final judgment on merits, issue of Airline’s negligence was litigated
and determined, and finding on that issue was essential to judgment in Case 1—All satisfied.
Next, there is no problem of due process, because preclusion is being asserted against Airline, which was a party in
Case 1. But the assertion of preclusion her is nonmutual—it is being made by someone (P2) who was not a party to
case 1. And it is offensive—it is being asserted by a claimant in Case 2. Should NMOIP be permitted?
Answer depends on the applicable law. If we are applying the law of a state that adopts only the exceptions to
mutuality, this assertion will not be permitted. Why? Because the exceptions apply on in vicarious liability situations
(not so here), and, even then, only to assertions of issue preclusion by a D. If we are applying the law of a state that
adopts only NMDIP, answer is also no. So only if we are in a JRX that adopts the Parklane approach is there any
chance to have preclusion here.
Now, if we are in a Parklane JRX, we must assess the factors given in that case. First, if P-2 could have joined in Case 1,
the Court indicated, she should not be permitted to use preclusion. To let her do so would reward a "wait and see"
attitude that fosters inefficient litigation. On the other hand, as noted, the Court did not say that failure to join always
led to forfeiture of issue preclusion. Moreover, it did not say whether this factor alone would obviate preclusion even
if the other factors counseled in favor of preclusion. And here the other factors seem to do just that. One, Case 1 was
for a serious claim, and Airline knew that the crash injured 100 people, so it is clear that it had every incentive to
litigate vigorously and could foresee future litigation by the other passengers. Two, there are no inconsistent
judgments on the books here, so P-2 is not simply picking a finding she likes and ignoring those that hurt her cause.
And three, there is no indication that airline did not have a full and fair opportunity to litigate in Case 1. So where
does that leave us? Again, it depends upon how one weighs the factors.
Ex: Suppose the first ten passengers bring individual suits against Airline. Airline wins all ten, with the fact-finder in
each case expressly finding that Airline was not negligent. Now P-11 sues Airline. Because of due process, as we have
seen, Airline cannot use issue preclusion against P-11, so all issues are litigated. Assume P-11 wins a valid final
judgment on the merits, with an express finding that Airline was negligent. Now, can P-12 through P-100 get issue
preclusion against Airline in their cases?
Here, the preliminary analyses are the same as above regarding the basic requirements of issue preclusion, due
process, and whether nonmutual offensive issue preclusion would be permitted. Only in a Parklane JRX is it even
arguable. Under Parklane, would such preclusion be allowed? Again, we have the problem of not knowing exactly
what the Court meant when it assessed whether a later claimant could have joined in an earlier case. Beyond that,
however, here we have inconsistent judgments. Airline has won ten times. It has lost only once. It seems grossly
unfair to allow P-12 through P-100 to take advantage of this one holding. The second of the three "fairness" factors
seems clearly to counsel against use of preclusion here. This case is fairly easy because it seems that the judgment in
the eleventh case was an aberration. We should not repose much confidence in it.
That fact leaves unanswered the big question, however. Assume P-1 wins in Case 1. Because it is first, there are no
inconsistent judgments on the books, and the argument in favor of applying preclusion is stronger under Parklane.
But how do we know that this judgment is not the fluke? Maybe, if all 100 cases were litigated separately, Airline
would win the other 99. Parklane does not tell us why we should repose such great confidence in a single judgment.
Perhaps nervousness over this point explains why some JRXs have never embraced nonmutual offensive issue
preclusion. One way around the problem would be to have a test case (or group of test cases) go through trial to see
which way the wind is blowing, as a means of ultimately settling the overall disputes. (We discussed the test case as
part of the consideration of Taylor v. Sturgell
FRCP 60(b)—motion to set aside judgment (reopen judgment)—incredibly difficult to reopen judgment. If want to
challenge use an appeal because 60(b) is virtually always denied.
Making it to easy to reopen judgment would undermine the validity of a final judgment.
Want to incentivize parties to make their arguments as complete as possible the first time around in court:
Promotes judicial economy
Importance of finality
Other policy reasons
Independent action under 60(b): Has to be a grave miscarriage of justice for this to be an available option.
Court looks at what could have been done, and what was done.
The strictness of the motion is designed to force people to do research to the best of their ability.
United States can never be subject to NMOIP.
IV. Full Faith & Credit and Related Topics
A. In General
Here we are concerned with a different issue: In determining whether the judgment from Case 1 is entitled to claim or
issue preclusive effect in Case 2, what preclusion law does the court in Case 2 use?
There are 4 scenarios where this can happen:
1. Case 1 and Case 2 are decided in state courts of different states; we call this situation "state-to-state
preclusion."
2. Case 1 is decided in a state court and Case 2 is filed in Fed. Court; we call this situation "state-to-federal
preclusion."
3. Case 1 is decided in a Fed. Court and Case 2 is filed in a state court; we call this "federal-to-state preclusion."
4. Cases 1 and 2 are in Fed. Courts in different states; not surprisingly, we call this "federal-to-federal
preclusion."
Answer: A state or Fed. Court in Case 2 must give "the same full faith and credit" as would be given by the state court
that entered judgment in Case 1.
When the rendering court in case 1 was Fed. Court, the rule is generally the same because Fed. Court will apply
preclusion law of the state in which it sits.
Exercises: (In Federal Court)
Hypo #1: Car accident. A sued B for negligence. Court rules for B. A sues again for negligence one month later. Answer: STEP 1:
Test whether we have the same claim from the same transaction and occurrences: Second claim is from the same nucleus of
facts, and is in fact the same claim. Step 2: On the merits? Yes, jury told us. Answer: claim preclusion bars the second claim.
Hypo #2: Same as first but B wins and the second time around just sues for more money. Answer: suing for more money does
not effect claim preclusion from being enforced. Difference in damages asked for does not mean it is a different claim.
Issue Preclusion Hypo:
A gets bad drug from batch #1119 and sues MFR. in Fed. Court on diversity JRX. Court finds drug was defective and awards for
A. B sues same MFR. in Florida state court. Can B invoke issue preclusion?
1) JRX—Florida looks to where Case 1 was held: Federal Court, but based on diversity. Federal court thus applies Kansas state
law, so Florida has to apply Kansas preclusion law. Kansas law requires mutuality, so there is no issue preclusion here.
Client, Z, walks into office saying D punched him. Questions we ask relevant to preclusion: Have you sued this person before,
and has anybody else sued this person before? What else happened during the altercation; any other claims to bring from the
same transaction and occurrence?
Joinder
FRCP 18
Joinder Rules and JRX rules are separate—just because joinder allows it doesn’t mean JRX rules will (and vise-versa).
Step 1: Find the joinder rule. If we have it and it passes then:
Step 2: Check the JRX rules
Joinder
I. Defining the Issue
Federal Rules focus largely on the "transaction or occurrence" giving rise to alleged liability—many (though not all)
joinder rules permit joinder of parties and claims along transactional lines.
Policy: The drafters' goal was to allow resolution of transactionally related disputes in a single case, rather than foster
piecemeal litigation arising from a single real-world event.
o This trend toward "packaging" transactionally related parties and claims into a single case is driven at least in
part by a desire to promote efficiency and consistency—one case burdens the justice system less than multiple
cases; it also avoids the possibility of inconsistent outcomes, which can erode public confidence in the justice
system.
o Of course, the emphasis on packaging, and avoiding duplicative litigation, is heightened in an era of crowded
dockets and litigation delay.
o Most of the joinder provisions are permissive, however, which means that litigants may take advantage of their
packaging potential, but are not required to do so.
o The Rules thus embody a policy of litigant autonomy- that is, they tend to defer to the P's structuring of the case.
o Appreciate the tension between the urge to package the litigation efficiently and this sense that P ought to be
entitled to structure the case as she sees fit.
Mastering the joinder rules is not enough—joinder rules provide the procedural tools for joining parties and asserting
claims in a single case, but hey do not (in fact, under Federal Rule 82, they cannot) affect the requirements for PJRX,
SMJRX, or venue.
Thus, every time a joinder provision is used in fed. court, it raises the need to assess JRX and venue.
o When a party is joined in a defensive capacity, the court must have PJRX over her. (If a new party is joined in an
offensive capacity (to assert a claim), she has submitted herself to the PJRX of the court and waives any
objection on this score.)
o Likewise, we will see that venue is relevant only in a few joinder situations.
o SMJRX is critical—remember; every claim joined in fed. court must be supported by federal SMJRX.
Thus, for every claim asserted, we must assess whether the claim invokes an "independent basis" of SMJRX
—meaning it invokes DJRX, alienage, or FQJRX.
What happens if claim does not invoke independent basis for SMJRX?
o It might still be asserted in fed. court through SUPJRX—SUPJRX permits a fed. court to hear a claim over which it
does not have one of the three major independent bases of SMJRX (see above).
o It is available, however, only if the claim meets the requirements of the SUPJRX statute, 28 U.S.C. §1367.
o Remember, however, that SUPJRX is only relevant for claims over which there is no DJRX, alienage, or FQJRX.
Be mechanical in approaching joinder issues and SMJRX—whether a claim can be asserted (or a party joined) in fed.
court requires us addressing three steps:
1) Is there a joinder provision in the Federal Rules that allows assertion of this claim (or joinder of this party)?
2) If so, does this claim invoke DJRX, alienage, or FQJRX? If so, it may be asserted in the pending case. If not,
3) Third issue is whether the claim can still be asserted in fed. court because it invokes SUPJRX. (28 U.S.C.
§1367(a) &(b))
II. Claim joinder by a Claimant (Rule 18(a))
A. Procedural and Policy Issues
Federal Rule 18(a) governs the question of what claims Pcan assert in a single case. The rule essentially has no
requirements.
The word claims, as used in Rule 18(a), is not necessarily synonymous with the definition of claims for claim
preclusion purposes—In Rule 18(a), the word refers to assertions or bases of liability, but multiple assertions of
liability might comprise a single claim for claim preclusion purposes. (**Quick note "May" is to be contrasted with
"must," which, of course, states a command.)
Rule 18(a) allows the assertion of all claims P may have against D& the claims do not have to be related in any way:
o They can be completely unrelated transactionally, legally, and in terms of the remedy sought.
o They can be independent or alternate claims; they can be legal or equitable.
o There are simply no procedural restrictions. While the provision is simple, it raises several points.
1) Why should the Federal Rules countenance joinder of unrelated claims?
o Rule 18(a) can result in the assertion of disparate and unrelated claims, which runs the risk of confusing
the jury.
o However, this issue is addressed by permitting the trial judge to order separate trials, among other
reasons, to avoid such confusion.
o As a matter of policy, then, the Federal Rules choose to permit Pto put the entire dispute between the
parties into a single case. It may be that such open claim joinder allows the parties to settle all their
overall disputes by allowing packaging of all claims in a single proceeding.
o If the matter goes to trial, the trial judge is armed with tools to keep things manageable for the trier of
fact.
2) The rule provides that P "may" join as many claims as she has against D.
o The word "may" makes this rule "permissive," which means it does not require Pto assert all claims in a
single case.
o P thus may choose how many assertions to include in a single case. (Don't forget claim preclusion might
affect the P's choices.
P and D, each driving her own car, collide; each is injured and each car is damaged. P sues D and
asserts only a claim for personal injuries from the collision; she does not seek recovery for property
damage. There is nothing wrong with this course of action under Rule 18(a), because it is permissive
and does not require her to pack all claims into a single case. Suppose, however, that this case results
in a valid final judgment on the merits and that P files a second case against D, to recover for property
damage from the crash. In a JRX adopting a transactonal defi nition of claim this second case will be
dismissed under claim preclu sion. See §11.2.'3. As a consequence, although Rule 18(a) is permissive,
the majority view on claim preclusion operates to force Pto join all transactionally related assertions
in a single case.
3) Though we say "claim joinder by the P," Rule 18(a) permits any party asserting a claim for relief to join "as
many claims as it has against an opposing party."
o This language recognizes Ds can become Ps by asserting counterclaims, crossclaims, or third-party
claims.
o Note, however, that Rule 18(a) does not apply to them until they become claimants by asserting one of
the listed claims.
A is asserted against a coparty, and must arise from the same transaction or occurrence as the underlying
dispute.
o Suppose P sues two Ds, D-1 and D 2, concerning a contract dispute. Suppose further that D-1 has a claim
against D-2 that is completely unrelated to that contract dispute. D-1 cannot use Rule 18(a) to assert that
unrelated claim until she has asserted a crossclaim against D-2. Why? Look again at the Rule: The "you-
can-assert-anyclaim-you-want" part of the Rule applies only to a party who 1s asserting a claim" (such as a
crossclaim).
o So if D-1 has a claim against D-2 that arises from the underlying contract dispute, she may assert it as a
crossclaim and then use Rule 18(a) to join the unrelated claim. Without the crossclaim, however, D-1
cannot assert the unrelated claim in the pending case.
B. SMJRX
Rule 18(a), like other joinder provisions of the Federal Rules, simply creates a procedure for asserting a claim.
The claims can be asserted in fed. court only if they invoke FSM Junsd1ct10n.
o P, a citizen of California, sues D, a citizen of Nevada, and uses Rule 18(a) to join two claims: (1) that D
had violated federal employment law in firing P and ( 2) that D had breached an unrelated contract
between the two, causing damage to P of $100K. Joinder of the claims is procedurally proper under Rule
18(a). Is there subject mater JRX over the claims? Yes. Claim (1) invokes FQJRX because it arises under
federal employment law. Claim (2) invokes DJRX because 1t 1s asserted by a citizen of California against
a citizen of Nevada and the AIC exceeds $75K.
o P, a citizen of Massachusetts, sues D, a citizen of Arizona, and uses Rule 18(a) to join two state law
claims: ( 1) that D breached a contract between the two, causing damage of $45K to P; and (2) that D
com mitted an unrelated tort, causing damage of $50K to P. (Throughout this chapter, the reference to
claims arising under state law is meant to indicate that they will not invoke FQJRX. Some state law
claims do invoke federal question, as we saw in §4.6.4, but we won't go there in this chapter.) Joinder of
the claims is procedurally proper under Rule 18(a}. Is there SMJRX over the claims? Yes. The case
invokes DJRX. It is brought by a citizen of Massachusetts against a citizen of Arizona, and the AIC
exceeds $75K. Why? The concept of aggregation permits a single P to add the value of all claims that she
asserts against a single D. So here the AIC is $95K.
o P, a citizen of Tennessee, sues D, a citizen of Tennessee, and uses Rule18 (a) to join two claims: (1) that
D violated federal labor laws in a labor dispute and (2) that D violated state law in the same labor
dispute. Joinder of the claims is procedurally proper under Rule 18(a). Is there SMJRX over the claims?
Yes. Claim (1) invokes FQJRX, because it arises under federal labor laws. Claim (2) does not invoke
FQJRX (because it arises under state, not federal, law). Claim (2) also does not invoke DJRX, because
Pand D are co citizens. But Claim (2) does invoke SUPJRX. Why?
o Section 1367(a) grants SUPJRX over claims that are part of the same "case or controversy" as a claim
that properly invoked FSMJRX. As explicated by the Supreme Court, this requirement is satisfied if the
claims share a "common nucleus of operative fact." As we discussed in §4.7, this test is broader than
transaction or occurrence. Here, the two claims asserted by P do arise from the same factual nexus.
Section 1367(b), which removes SUPJRX over certain claims, applies only in cases that invoked DJRX.
This case invoked FQJRX, so §1367(b) does not apply.
III. Permissive Party Joinder (Rule 20(a))
A. Procedural and Policy Issues
Many cases involve 1 P suing 1 D; however, many cases involve multiple parties—either coPs or coDs (or both).
Here, we address the question of "proper parties" to a civil case, meaning those who may be joined in a single case.
The issue is governed in fed. court by Federal Rule 20(a).
o This Rule is available to P when she is structuring the case.—she decides whether to have multiple parties
either on Por D’s side and, if so, who those parties will be.
o Various considerations, including litigation strategy and JRX’al limitations, may affect her choice.
Rule 20(a)(1) defines who may be joined as coPs & Rule 20(a)(2) defines who may be joined as coDs.
o Each Rule prescribes the same two-part test— Rule 20(a)(1): two or more may join together as coPs if
their claims
1) Arise "out of the same transaction, occurrence, or series of transactions or occurrences" and
2) Raise at least one common question (of law or fact).
o Rule 20(a)(2): two or more may be joined as coDs if the claims against them
1) Arise from the same transaction or occurrence and
2) Raise at least one common question (of law or fact).
Few cases raise problems with the second requirement—the Rule requires the existence of only one common
question, and it can be a question of law or fact.
That common question need not be of predominant importance in the case; it simply must exist, which will be
obvious in most instances.
Most of the difficulties encountered with Rule 20(a) involve the requirement that the claims by or against
multiple parties must be transactionally related.
Before exploring that issue, it is important to note that Rule 20(a) continues a theme we see throughout
modern procedure: the packaging in a single case of claims arising from, and parties involved in, a
"transaction or occurrence."
This focus on the transaction—on the real-world grouping of facts—underlies the modern definition of
claim for claim preclusion purposes.
It also underlies several claim joinder devices, and, as we will continue to see, the concept of
transactional relatedness defines the general availability of SUPJRX.
o At the margin, some courts have been remarkably inventive in stretching the concept of the transaction to
allow joinder of parties.
o Perhaps these courts have been especially liberal because Rule 20(a), unlike other transaction-based joinder
rules, speaks not only of claims arising from the same transaction or occurrence, but of a "series of
transactions or occurrences."
o On its face, this language seems broader than rules that speak only of a transaction or occurrence. Few
opinions, however, justify a broad reading of the Rule on the basis of this additional language. (For an
examples see page 666 & 667)
B. Strategic Issues
As we know, joinder of parties under Rule 20(a) is permissive—so because the Rule gives P the option to take or
leave the joinder opportunity it provides, it allows P to engage in strategic choices.
o P-1 and P-2 take a ride in a taxi cab. The driver is negligent and causes a crash that injures both P-1 and P-2.
Those two may join together in a suit against the cab driver under Rule 20(a)(l). Why? Because their claims
against the cab driver (1) arise from the same transaction or occurrence ( the crash) and (2) raise at least
one common question (whether the cab driver was negligent). They do not have to do so. Each may file a
separate action against the cab driver if she prefers.
o Could P-1 (or P-2 or both together) sue two Ds- the cab driver and the company for which the cab driver
works- in the same case? Yes, joinder would be proper under Rule 20(a)(2) because the claims against those
two ( 1) arise from the same transaction or occurrence (the crash) and ( 2) raise at least one common
question (again, whether the cab driver was negligent). Again, the Rule is permissive, so Pcan choose to sue
both Ds in a single case or to sue them in separate actions.
Given these scenarios ? is: Why would a P ever fail to join all possible Ps and Ds under Rule 20(a)?
Depending on the facts, there may be JRX’al limitations on doing so.
For example, perhaps court can’t get PJRX over one of the potential Ds or perhaps joining all the parties
will make it impossible to invoke DJRX.
Our focus here, however, is on the sorts of litigation strategies that might animate the P's selective use of Rule
20(a).
Speaking very generally, Ps prefer to have all potential Ds—everyone who might potentially be liable for her
harm—joined in a single case. Reasons:
1) It is less expensive and less burdensome to sue once than to file a separate case against each potential
D. T
2) The advent of nonmutual defensive issue preclusion gives Pan incentive to sue several Ds at once· if
she sued separately and lost against one D, Di another suit may be able to use issue preclusion against
Pon any negative findings.
3) P can often benefit from each coD's effort in the litigation to shift the blame from itself to other coDs.
4) Quite important as a practical matter, suing individual Ds allows them to whipsaw the P—D in one
case might convince the jury that the harm to Pis not her fault, but the fault of someone who is not a
party in this case. D in the other case can do the same, leaving a P who may have convinced two juries
that she is entitled to relief, but who recovers nothing because each jury thinks the fault lies with an
absentee.
Similarly, as a general matter, Ps prefer not to have coPs suing with them. Reasons:
1) Suing alone may allow Pto recover from a D first, before other Ps can get at the D's assets.
2) She may conclude that her case is more compelling than those of the other potential Ps, and that adding
a coP would tarnish her luster and divert the jury's attention from her.
3) Even if the case settles without going to trial, there is a widely held view that a single P fares better
simply because she does not have to share a recovery with others.
Thus, as a general strategic matter, we expect to see Ps use Rule 20(a)(2) to join all potential Ds into a single
case, but to keep center stage to themselves on the P's side.
C. What Are Misjoinder, Severance, Separate Trials, and Consolidation?
What happens if Pstructures the case in violation of Rule 20(a)? Rule 21 provides that such "misjoinder of
parties" is not a basis for dismissal of the suit—instead, court may "sever any claim against a party."
Severance results in two or more separate suits—each will have its own docket number and will result in its
own judgment.
This concept of severance is different from a court's ordering a separate trial under Rule 20(b) or 42(b)
—a separate trial is just that, a separate adjudication of a claim (or claims) that are part of one case.
o P-1 and P-2, properly joined as coPs under Rule 20(a)(l), sue D on a claim that D breached a contract
between the three. In addition, P-1 asserts an unrelated claim against D, concerning an entirely
separate event. P-1 has the right to assert this unrelated claim under Rule 18(a) (1), as we saw in 12.3.
Although those claims are part of one case, the court may order a separate trial on the unrelated claim
asserted by P-1 against D. After all, it involves different facts from the main claim, and might distract or
confuse the jury hearing that main claim. So the two claims will be tried separately. But ultimately, they
will be determined in a single judgment, because they are part of a single case. (In §14.5.1, we see that
the court might ultimately treat the separate claims as sep arate "cases" for purposes of appeal under
Rule 54(c). But that's for later. The point here is that these claims, although tried separately, are
properly joined in a single case.)
o Contrast that situation with this: P sues two Ds, D-1 and D-2, alleging that they caused him tortious
harm. The court concludes, how ever, that joinder of the two Ds violates Rule 20(a)(2), because they
caused harm to P, if at all, in separate transactions. Here, under Rule 21 the court will order severance.
The result of that order is to cre ate two'cases: ( 1) by P against D-1 and (2) by P against D-2. (Actually,
the court will simply drop D-2 as a D, and P will have to file the second case (against D-2 ) and pay the
filing fee for that case.) But there are now two separate cases, which will result in two separate
judgments. This result is dictated by the fact that D-1 and D-2 were not properly joined in a single case
because the claims against them did not satisfy Rule 20(a)(2). (36The same thing would happen if two
Ps were misjoined under Rule 20(a)(l).)
In this latter scenario, there is another procedural device that might come into play: consolidation under
Rule 42(a).
Consolidation permits a court in which two (or more) separate cases are pending to consolidate the
cases for any or all purposes.
The only requirement is that the separate cases involve at least one common question of law or fact.
Consolidation means that those separate cases will be treated together for whatever purposes the
court deems appropriate.
o For example, the court might order consolidation for purposes of discovery, or for motions, or for
trial, or even for all purposes. Consolidation does not merge the separate cases; they are still separate
cases and will result in separate judgments, even if consolidated for all purposes.38
As we noted above, Ps often attempt to join multiple Ds in a single case to ensure that they will be tried
before the same jury—that way P avoids the risk of having the jury conclude that the real "bad guy" is
someone who is not in the court. If such a P loses the battle of joinder under Rule 20(a)—probably because
the court concludes that the claims against the two do not arise from the same transaction or occurrence-
she might still win the war at trial if the court orders consolidation for trial.
Ex: P owned property in TN and claimed that it was damaged by chemicals poured into the air by two
chemical plants. The plants were operated by different companies. P joined both companies as coDs.
The court rejected the joinder, however, because it concluded that what each company did was a
separate transaction or occurrence. It ordered severance, after which Phad two separate cases, one
against each chemical company. In the same opinion, however, the court ordered that the now
separate cases be consolidated for trial. Thus, Pwould get the advantage of having the two Ds before
the same jury at the same time.
** The separate cases to be consolidated must be pending in same federal district (or division w/in a
district). Thus, a case pending in the SDNY cannot be consolidated w/a case pending in the EDPA.
Remember, however, that cases can, in appropriate circumstances, be transferred from one federal
district to another—If the case in the SDNY were transferred to the EDP, the two cases could be
consolidated. But transfer and consolidation are separate steps.
D. Subject Matter JRX
P uses Rule 20(a) to determine how many Ps and how many Ds will be joined in a single case.
Once she does so, she must ensure that the case as structured can be brought in the court she chooses.
Thus, she must assess whether the court has PJRX over the Ds, whether venue is proper, and, of course, that the
case will invoke SMJRX. Let's assume P wants to sue in fed. court.
o P sues two Ds, D-1 and D-2, properly joining them under Rule 20(a)(2). All three litigants are citizens of
California. P's claim against D-1 alleges that D-1 violated P's rights under a federal statute. P's claim against D-
2 alleges that D-2 breached a state law duty to P. The claims against the two obviously (given one of the
requirements of Rule 20(a)) arise from the same transaction or occurrence. Is there federal SMJRX as the
case is structured?
o The claim against D-1 invokes FQJRX, because it is for violation of a right created by a federal statute.
o The claim against D-2 does not invoke FQJRX, because it arises under state, not federal, law. Further, the
claim does not invoke DJRX, because P and D-2 are cocitizens.
o The claim against D-2 does, however, invoke SUPJRX. First, §1367(a) grants SUPJRX because the claim
against D-2 involves the same "case or controversy" as the claim that invoked FSMJRX (the claim asserted
by P v. D-1 ). Why? Because it meets the "common nucleus of operative fact" test which is actually
broader than "transaction or occurrence" test. So any claim, such as the claim here, that arises from the
same transaction or occurrence as a claim that invokes an independent basis of federal SMJRX will always
meet “common nucleus of operative facts” and, therefore, invoke JRX under §1367(a). Second, §1367(b)
does not remove the grant of SUPJRX, because that subsection applies only in cases that invoked DVJRX.
This case invoked FQJRX, so §1367(b) does not apply.
Now let's push farther with three important hypotheticals:
1) Two Ps, P-1 and P-2, properly joined under Rule 20(a)(l), assert state law claims against a single D (D). P-1
is a citizen of California. P-2 is a citizen of Arizona. D is a citizen of Nevada. P-l's claim is for $100K but P-2's
claim is for $60K. As structured, is there federal SMJRX? Because the claims arise under state law, there is
no FQJRX. What about DJRX? Certainly there is no problem with citizenship, because the two Ps are citizens
of different states from the D. But there is trouble with the AIC. P-l's claim meets that requirement, because
it exceeds $75K and thus invokes DJRX. But P-2's claim does not satisfy the amount in controversy
requirement, since it does not exceed $75K. And when there are multiple parties such as this, they may not
aggregate their claims to meet the AIC requirement, as we discussed in §4.5.3. So it seems that the court
should drop the claim asserted by P-2 from the case. But might the SUPJRX statute change this result?
The claim asserted by P-1 against D invokes DJRX. The claim asserted by P-2 against D does not. But
because the two claims arise from the same transaction or occurrence,§ 1367(a) grants SUPJRX over
the claim by P-2. Obviously, §1367(b) should remove SUPJRX over this claim, or else the AIC
requirement will be eviscerated. But does it? Again, look carefully at its terms. Section 1367(b) applies
only in cases that invoke DJRX (which P-1 v. D does). And it removes JRX over claims brought "by Ps
against persons made parties under Rule . . . 20." That is not the situation in this hypothetical. Here, the
claim is asserted by persons made parties under Rule 20 against a D. Nowhere does §1367(b) remove
the grant of SUPJRX.
In Exxon Mobil Corp. u. Allapattah Services, the Supreme Court embraced this interpretation, and upheld
supplemental JRX over JRX’ally insufficient claims by Ps, so long as they arose from a common nucleus of
operative fact with the claim of a plain tiff that did satisfy the AIC requirement.
2) P, a citizen of California, sues two Ds, D-1 and D-2, properly joining them under Rule 20( a)( 2). D-1 and D-2
are citizens of Kansas. P's claims against D-1 and D-2 arise under state law. The claim against D-1 is for
$100K and the claim against D-2 is for $60K. Here, the claim by P against D-1 obviously invokes DJRX. The
claim by P against D-2 does not, however, because even though it is by a citizen of California against a
citizen of Kansas, it does not exceed $75K.
Based upon the preceding hypothetical, however, we would expect the claim by P against D-2 to invoke
SUPJRX. Indeed, the claim does satisfy 1367(a), as in hypothetical One. But look carefully at§1367(b).
It applies in diversity cases, such as this case. And it removes SUPJRX over claims by Ps against persons
joined under Rule 20. That is exactly what we have here! D-1 and D-2 were joined under Rule 20, so
§1367(b), on its face, removes SUPJRX over this claim.
This result makes no sense. Why should SUPJRX be proper to overcome an AIC problem in a diversity
case when there are multiple Ps but not when there are multiple Ds? The hypothetical simply manifests
one of many problems caused by a very poorly drafted statute.
3) Two Ps, P-1 and P-2, properly joined under Rule 20(a)(l), assert state law claims against a single D (D). P-1
is a citizen of California. P-2 is a citizen of Arizona. D is a citizen of Arizona. P-l's claim is for $100K, and P-
2's claim is for $200K. As structured, is there federal SMJRX? Because the claims arise under state law, there
is no FQJRX. What about DJRX? On the face of it, no. P-1 is diverse from D, but P-2 is not diverse from D. The
structure of the case violates the complete diversity rule. But could §1367 affect this outcome?
Applying the statute literally, it seems the answer should be the same as in hypothetical One above.
Here, as there, it appears that the claim asserted by P- 1 against D invokes DJRX. The claim asserted by
P-2 against D does not. But because the two claims arise from thP same transaction or occurrence,
§1367(a) grants supple mental JRX over the claim by P-2. Obviously, §1367(b) should remove SUPJRX
over this claim, or else the complete diversity rule is rendered meaningless. But does it? Again, look
carefully at its terms. Section 1367(b) applies only in cases that invoke DJRX (which P-1 v. D arguably
does). And it removes JRX over claims brought "by Ps against persons made parties under Rule . . . 20."
That is not the situation in this hypothetical. Here, the claim is asserted by persons made parties under
Rule 20 against a D. Nowhere does §1367(b) remove the grant of SUPJRX.
Arguably, there is no reason that the outcome here, in hypothetical three, should be any different from
that in hypothetical One. There, SUPJRX made up for a lack of AIC in a diversity case. Here, it would
make up for a lack of complete diversity in a diversity case. Both the complete diversity rule and the
AIC requirement are merely statutory (not constitutional) provisions of the grant of DJRX under §1332.
As such, each should be equally amenable to change by §1367. OTOH, concluding that the parties may
use SUPJRX to overcome the complete diversity rule would possibly open the floodgates for more cases
than the courts could handle.
Allapattah, court avoided this by clarifying how JRX attaches in diversity cases. If there is complete
diversity, the presence of a single claim in excess of $75k invokes DJRX. IOW, as in hypothetical 1
above, the claim by P-1 against D constituted a DJRX case in fed. courts, to which the claim by P-2 could
be supplemental. In contrast, the Court said in dictum, if there is not DJRX between all Ps and all Ds,
there is no diversity case at all, and nothing to which SUPJRX can attach. In hypothetical Three, then,
the claim by P-1 against D failed to invoke DJRX, so there was no case in which to exercise SUPJRX.
Stated another way, the Court concluded, the AIC is "claim-specific" while the complete diversity
requirement is "action specific." (An action is the whole, which includes claims.)
IV. Claim Joinder by D
Here, the interest is in suing somebody—asserting a claim against another party. The counterclaim is asserted against
an "opposing party'' (by Dagainst the P, for example), and the crossclaim is asserted against a "coparty" (by one D
against another D, for example).
Remember it is never enough simply to satisfy one of the Federal Rules allowing joinder—in addition (assuming the
case is in fed. court), the claim must invoke federal SMJRX.
So for each claim asserted, the parties and court must address whether it invokes diversity, alienage, or FQJRX;
failing those, they must determine whether the claim invokes SUPJRX.
OTOH, PJRX and venue will not be a problem—if the court lacked PJRX over the D, she should be attempting to get
the case dismissed on that basis rather than asserting a claim.
And by filing suit, P generally has waived any PJRX objection to being sued on a counterclaim.
Moreover, the venue statutes, speak of where an action may be "brought," meaning that they dictate the place
where Pcan sue the D; they do not require separate assessment of venue for counterclaims and crossclaims.
Rule 13(h) provides that a D asserting a counterclaim or crossclaim can join new parties to the claim so long as these
newcomers are joined in accordance with the provisions of Rules 19 or 20.
Rules 19 & 20 are concerned with joinder of parties. Rule 13(h) thus puts a D asserting a counterclaim or
crossclaim on the same footing for party joinder as Pin originally structuring the suit. We see an example of the use
of Rule 13(h) later.
Because the counterclaim & crossclaim are claims for relief, the party against whom they are asserted must respond
just as Dhad to respond to the original complaint. (**Remember, defending party may respond under Rule 12 either by
motion or by answer)
1) Counterclaims (Rule 13(a) and Rule 13(b))
i. In General
Rule 13 contains several subsections governing counterclaims in fed. court.
We see that there are two types of counterclaims: "compulsory" (under Rule 13( a)) and "permissive" (under
Rule 13(b)).
General characteristics common to both:
For starters, a counterclaim is asserted against an "opposing party"—somebody who has asserted a claim
against the party. So if Dhas a claim against P(who has obviously sued the D), it is a counterclaim.
Most counterclaims are asserted by Dagainst the P, but realize that any party against whom a claim is made
may have a counterclaim back against that party. For example, suppose a D (D-1) asserts a crossclaim
(addressed below) against a coD, CD-2). If D-2 has a claim back against D-1, it will be a counterclaim. Once D-
1 asserted the crossclaim against D-2, the two became "opposing parties," making D-2's claim against D-1 a
counterclaim.
It also bears repeating that a counterclaim is a claim, not a defense; thus, it does not attempt to "diminish or
defeat the recovery sought by the opposing party"—that function is handled by responsive pleadings &
motions.
Instead, with a counterclaim, Dis suing the P. Rule 13(c) provides expressly that the coun terclaim may
exceed the Ps claim. In addition, the counter claim can be for a different type of relief than the P's original
claim. For instance, if Psues for damages, Dmay counterclaim for an injunction. Similarly, if Psues for $80K,
Dcan counterclaim for $8 million.
Under Rule 13(a) and (b), a counterclaim is to be asserted in "[a] pleading."
Because Dasserting the counterclaim has already been sued, the pleading will be an answer—so the
counterclaim is asserted in the D's answer.
If the party fails to assert the counterclaim in her answer, she may be able to amend the answer to assert
the claim.
The matter is treated as an amendment question.
What happens, however, if the D's counterclaim does not mature—the claim does not accrue—until after D
has already answered?
That situation is addressed by Rule 13(e), which allows D to assert the claim by "supplemental pleading."
This provision is consistent with our discussion of supplemental pleadings—a supplemental pleading
involves events occurring after a pleading has been filed.
ii. The Compulsory Counterclaim
A. Procedural and Policy Issues
The compulsory counterclaim is created and governed in federal practice by Federal Rule 13(a)(l)(A).
As we know counterclaim is always asserted against an "opposing party.", and when it is compulsory, it
arises from the "same transaction or occurrence" as the opposing party's claim.
In the usual context, it is a claim asserted by Dagainst the P, and it arises from the same transaction
or occurrence as the P's claim against the D.
The compulsory counterclaim is so named because the Rule 13 says the party "must" assert the claim in
the pending case.
"Must" is mandatory; it commands that the act be done—interestingly, the Rule does not expressly state the
consequence of violating the command. Nonetheless, that consequence is clear: The party failing to assert
a compulsory counterclaim loses the claim and cannot assert it in another proceeding.
o Hypo: A and Z , each driving her own car, collide. Each suffers personal injuries. In Case 1, in fed. court, A
sues Z to recover for her personal injuries. Z answers and defends that suit, which is litigated to
conclusion. In Case 2, Z sues A to recover for her personal injuries from the collision. Case 2 should be
dismissed. Z's claim was a compulsory counterclaim in the original case, because it was against an
opposing party and arose from the same transaction or occurrence as A's claim in that case. Z failed to
assert the claim in the then-pending case, so cannot file it anywhere.
When we say "anywhere," we mean not only that Z cannot assert her claim in a separate action in a
fed. court—the compulsory counterclaim rule should operate to bar a subsequent case in state court
as well (even if that state does not have a compulsory counterclaim rule).
The compulsory counterclaim rule, properly understood, should be seen as establishing an estoppel
against D from asserting her claim in a second case. There is no reason the estoppel should not follow
Dand preclude the later litigation in any court.
The converse should also be true: Failure to assert a compulsory counterclaim in Case 1 in state court
(in a state that has such a rule) should bar Dfrom instituting Case 2 on that claim in fed. court.
Remember that claim preclusion applies only when two actions are brought by the same claimant against
the same D.
Here, Case 1 was brought by A against Z. Case 2 was brought by Z against A. Z had never been a claimant
before and is not suing twice on the same claim. Other courts use the language of waiver, which is more
accurate. Case 2 is dismissed because Z, by failing to assert the claim in Case 1, has waived the claim. Some
speak of the compulsory counterclaim rule as working "rule preclusion."
Estoppel rule: Failure to assert the claim in Case 1 estops D from asserting the claim elsewhere.
Because estoppel is an equitable principle, it can be applied with a heart.
o For example, return to the hypothetical we just saw—suppose that in Case 1, Z's insurance company took
over the defense (as would normally be the case'") and failed to inform Z of the compulsory counterclaim
rule. If, through no fault or lack of diligence of her own, Z was not informed of her right (let alone
obligation) to assert the claim, perhaps she should not be estopped from bringing the separate action.
Though the operation of the compulsory counterclaim rule is not the same as claim preclusion, it
serves the same function as the modern approach to that doctrine.
Both serve to force the joinder of transactionally related rights to relief into a single case. (Recall that
the modern approach to claim preclusion defines one's "claim" as all rights to relief arising from a
transaction or occurrence.)
Doing so is efficient and relatively convenient for the fact-finder, which may wrap up all claims arising
from what the parties will generally consider a single real-world event.
Moreover, the focus on the transaction is generally consistent with the exercise of SUPJRX. To be sure,
the definition of "transaction or occurrence" can be troublesome at the margin, but in most cases the
lines will be fairly easy to draw.
At this point, we need to refine our definition of compulsory counterclaim to reflect two situations in which
Dwill not be estopped from bringing a separate action.
1) If an otherwise compulsory counterclaim would "require adding another party over whom the court
cannot acquire JRX," Rule 13(a)(l)(B) provides that the claim is not considered compulsory.
IOW, if the counterclaim implicates nonparties who should be joined but cannot be joined (because,
for example, there is no PJRX over them), it is not a compulsory counterclaim.
2) Under Rule 13(a)(2)(A), D need not assert an otherwise compulsory counterclaim if she has already
asserted the claim in another case.
So in the hypothetical we saw above, suppose Z has already filed suit against A before A sued Z. Then, Z
need not assert the counterclaim against A when A sues her. (Of course, when Z sued A,A's claim
against Z would be a compulsory counterclaim in that case (assuming the JRX has a compulsory
counterclaim rule like Rule 13(a)). This exception makes sense; it tells someone who has already
asserted her claim that she does not have to do so again.
Remember that a counterclaim is to be asserted in a "pleading," which means with the D's answer.
Recall also, as discussed immediately before this subsection on the compulsory counterclaim, that if D's claim
matures after P sues D, it is not a counterclaim. See Rule 13(e).
If the case is resolved without the D's having to answer, the compulsory counterclaim rule will not apply.
o Hypo: In Case 1, A sues Z for injuries sustained in an auto collision between the wo. Z does not answer,
but files a motion to dismiss for improper service of process. The motion is granted and the case is
dismissed. InCase 2, Z sues A to recover for her personal injuries from the collision. Case 2 will not be
dismissed, because the compulsory counterclaim rule never attached in Case 1. Z never answered in
Case 1, so she could not have asserted a counterclaim."
B. SMJRX
Rule 13(a)(1) merely provides a procedural mechanism for asserting a claim.
The claim must invoke federal SMJRX, however, or else it cannot be asserted in fed. court.
As always, this JRX’al inquiry is a separate step, undertaken after determining that the claim is properly
asserted under Rule 13(a)(1).
o Hypo: A, a citizen of Maryland, sues Z, a citizen of Delaware, asserting a state law claim of $500K. Z has
a claim against A that arises from the same transaction or occurrence as A's claim. It is based upon
state law and Z claims damages of $100K. Is there SMJRX over Z's compulsory counterclaim? Yes.
Because the facts state that all claims in this case arise under state law, there is no FQJRX. Obviously,
though, A's original claim invokes DJRX-it is asserted by a citizen of Maryland against a citizen of
Delaware, and it exceeds $75K. Z's claim against A is a compulsory counterclaim, because it arises from
the same transaction or occurrence as A's claim. It also invokes DJRX, because the litigants are of
diverse citizenship and the claim exceeds $75K.
o Same facts as the previous hypothetical, except that the compulsory counterclaim by Z is for $45K. As
above, the original claim asserted by A against Z invokes DJRX.
Again, the compulsory counterclaim arises under state law, and thus cannot invoke FQJRX. Here,
the compulsory counterclaim does not invoke DJRX, because it does not meet the AIC requirement;
it is a claim for $45K and thus does not exceed $75K.
Nonetheless, fed. court can entertain Z's counterclaim under SUPJRX.
Why? Section 1367(a) grants SUPJRX over claims that are part of the same ''case or
controversy" as the claim that invoked FSMJRX (the claim asserted by A against Z). As
interpreted, that requirement is met if the claims share a common nucleus of operative fact.
Seen earlier, this test is always met by claims that arise from the same transaction or
occurrence as the claim that got the case into fed. court initially.
Thus, the compulsory counterclaim always meets this test. By definition, it arises from the same
transaction or occurrence as the underlying case by A against Z.
Section 1367(b) applies in cases that invoke DJRX (such as the claim asserted by A against Z),
but removes SUPJRX only over claims asserted by Ps. This is a claim asserted by a D, so
§1367(b) does not remove the SUPJRX.
iii. The Permissive Counterclaim
A. Procedural and Policy Issues—Federal Rule 13(b)
Any counterclaim, as we know, is asserted against an "opposing party."
The permissive counterclaim is one that is not compulsory—IOW, it does not arise from the same
"transaction or occurrence" as the opposing party's claim.
In the usual context, then, it is a claim asserted by Dagainst the P, and is transactionally unrelated to P's claim
against the D.
The Rule 13(b) claim is called permissive precisely because Dis not required to assert it in the pending case.
How do we know? The Rule provides that the claim "may" be asserted (not "must" be asserted) in the
pending case.
Thus, Dmay file it in that case if she desires, but she may just as readily sue on the claim in a separate case.
Rule 13(b) allows D to join in the pending case any and all claims she may have against the P, regardless of the
fact that they are unrelated to the Ps claim against her.
This provision mirrors the P's unlimited right to join claims under Rule 18(a).
The same policy applies here as there: Allow the parties to put their entire dispute(s) before the court in one
case.
We noted in discussing Rule 18(a) that this unlimited joinder might result in a confusing mix of claims in a
single case. The permissive counterclaim rule can multiply the confusion. The solution, as it was with Rule
18(a), is to equip the court with the discretionary authority to order separate trials of the various claims.
We noted that Rule 18(a)—which allows the assertion in a single case of any and all claims, regardless of
transactional or legal relatedness—applies not only to Ps, but to any claimant, including one who asserts a
counterclaim, but Rule 18(a) is meaningless in the counterclaim situation:
If D has claims against P that do arise from the same transaction or occurrence as the P's claim, she will
assert them under Rule 13(a)(1); if she also has unrelated claims, she can assert them under Rule 13(b).
Rule 18(a) gives such a D nothing that Rule 13(b) does not already give her.
B. SMJRX
Of course, Rule 13(b) simply provides a procedural mechanism for asserting a claim—the claim must invoke
FSMJRX, however, or else it cannot be asserted in fed. court.
o Hypo: A, a citizen of Wyoming, sues Z, a citizen of Colorado, in fed. court, asserting a state law claim for
$200K; the ease clearly invokes diver· sity of citizenship JRX. Z has a permissive counterclaim against A,
arising under state law, for $400.000. ls there subject matter jurisdic· tion? Yes, Because the counterclain1
arises under state law, it does not invoke FQJRX. But Z's claim invokes DJRX. It is by a citizen of Colorado
against a citizen of Wyoming and exceeds $75K.
Regarding hypo above, what happens when a permissive counterclaim does not invoke FQJRX or DJRX? Suppose,
for instance, that the permissive counterclaim in this hypothetical were for $50K, so it could not invoke DJRX. We
would then inquire whether it could invoke SUPJRX. And here we may well encounter a problem.
Why? The fact that a permissive counterclaim does not arise from the same transaction or occurrence as
the underlying dispute means that it generally will not invoke SUPJRX.
Under§1367(a), SUPJRX attaches only to those claims that are part of the same "case or controversy" as an
underlying claim that did invoke federal SMJRX.
As interpreted, that requirement means that the claim must share a "common nucleus of operative fact"
with the underlying claim.
This mechanical approach is wrong. The test for SUPJRX under §1367(a) is broader than "transaction or
occurrence,". Accordingly, it is possible that a permissive counterclaim can satisfy §1367(a).
Hypo: P borrowed money from D to finance the purchase of an automobile. P asserted that D engaged
in racial discrimination in making the loan, thereby violating federal law. P sued for violation of the
federal law, invoking FQJRX. D asserted a counterclaim for the unpaid balance on the car loan. The
Second Circuit concluded that the counterclaim was permissive, and not compulsory, because it did
not arise from the same transaction or occurrence as P's claim of racial discrimination. Nonetheless,
the court concluded, §1367(a) requires only that there be a "loose factual connection" between the
supplemental claim and the underlying suit. Though the permissive counterclaim did not arise from
the same transaction or occurrence as P's claim, it did share sufficient factual overlap to invoke SUPJRX
under §1367(a)
* §1367(b) did not take away SUPJRX. Because Ps claim invoked FQJRX. 1367(b) did not apply at all.
Remember that §1367(b) does not apply in cases that got into fed. court initially through FQJRX. Even if
the underlying claim by P invoked only DJRX. On these facts § 1367(b) would not remove SUPJRX.
Why? Although that subsection applies in diversity cases, it removes SUPJRX only over claims by Ps.
Because the counterclaim was not asserted by P, §1367(b) did not remove SUPJRX.
Obviously, many—probably most—permissive counterclaims will be so factually unrelated from the underlying
claim that they will not invoke SUPJRX. But Jones and similar cases teach two important lessons-(1) that §1367(a)
is broader than "transaction or occurrence” and (2) that SUPJRX should be assessed on the facts of each case.
2) Crossclaims—Rule 13(g)
A. Procedural and Policy Issues
The crossclaim is created and governed in federal practice by Federal Rule 13(g).
Two important requirements.
1.The crossclaim is a claim against a "coparty."—the existence of coparties depends upon Ps original
structuring of the suit using Rule 20(a).
P, when instituting suit, may determine that there should be multiple Ps or multiple Ds—If there are
multiple parties on either side of the case, they are coparties with each other.
Thus, suppose two Ps, P-1 and P-2, are joined in a case against three Ds, D-1, D-2, and D-3. The two Ps
are coparties. The three Ds are coparties. Although a P may assert a crossclaim against a coP (assuming
the other requirement of Rule 13(g) is satisfied and that there is SMJRX over the claim l) more typically,
crossclaims are asserted on the D side.
2. To be a crossclaim, the claim against the coparty must arise from the same "transaction or occurrence" as
the "original action or of a counterclaim therein."
Thus, to be a crossclaim, the claim must be transactionally related to the underlying dispute between P
and D.
The "transaction or occurrence" test serves the same function as in the compulsory counterclaim—to
facilitate the joinder of all transactionally related claims in a single proceeding.
Such joinder is also consistent with the modern view on claim preclusion, and with the general
transactional packaging facilitated by SUPJRX.
Rule 13(g) is permissive—because it says that the claim "may" be asserted, the party is not required to file the
crossclaim in the pending case.
She may if she wishes to, or she may choose to assert it in a separate case.
IOW, there is no such thing as a compulsory crossclaim.
Why should there be an option to assert transactionally related claims against a coparty but a command to
assert such claims against an opposing party?
There has been no move to change the federal rule probably because few litigants fail to assert crossclaims,
so the permissive nature of the Rule does not create much duplicative litigation.
OTOH, surely some parties burden the judicial system by filing separate cases after eschewing the right to
assert a crossclaim. And the burden created might not be remedied by issue preclusion—remember that
issue preclusion (like claim preclusion) flows from entry of a valid final judgment on the merits.
Suppose a D in Case 1refuses to file a crossclaim, but files Case 2 instead. Case 1might not go to final
judgment for years. Thus, issue preclusion cannot streamline the litigation in Case 2 in the meantime,
meaning that both cases may proceed in litigation. We end up with two cases where one would do.
The last sentence of Rule 13(g) provides that a crossclaim may include an assertion that the coparty is or may
be liable for all or part of the claim against the party asserting the crossclaim.
This sentence means that a crossclaim can include a claim against a coparty that the coparty is liable for
indemnity or contribution on the P's claim. This sentence does no harm, but is surplusage; a claim for
indemnity or contribution would seem to satisfy the "transaction or occurrence" test of Rule 13(g) anyway.
Remember that Rule l8(a), allows a litigant who asserts a crossclaim (among others) to assert any claim she
may also have against that coparty; regardless of transactional or legal relatedness. Such claims, like any others
in fed. court, must be sup ported by federal SMJRX.
The following hypothetical is useful for reviewing crossclaims and compulsory counterclaims:
o P, driving her own car, is involved with a collision with D-1, who is driv ing a car owned by D-2. Under applicable law,
D-2 (as owner of the sec ond car) is vicariously liable for the acts of the person to whom she lent the car W- 11."' P
brings a single case against both D-1 and D-2. (So D-1 and D-2 are coparties; why is this proper? (Because Rule 20(a)
permits joinder of coDs if the claim against them arises from the same transaction or occurrence and raises as least one
common question.) Assume that you represent D-2. You don't know who was at fault in the crash. It could have been P
or it could have been D-1. What claims must/may you file in the pending case?
First, you will have D-2 answer and file a compulsory counterclaim against P. The latter is a claim (for damage to
D-2's car) against an opposing party and it arises from the same transaction or occurrence as P's claim against D-
2. Indeed D-2 must assert this claim in the pending case or else she is estopped from asserting it.
Second, you may file a crossclaim against D-1. This is a claim against a coparty and it arises from the same
transaction or occurrence as the underlying case. Note that there will be two aspects to the cross claim. First,
you will claim that D-1 owes D-2 indemnity on P's claim. Thus, if P wins against D-2, this indemnity claim will shift
that liability from D-2 to D-1. That protects D-2 from liability on P's claim. But, if the wreck was D- J's fault, D-2
will want to recover from D-1 for damage to her car. So the second aspect of the crossclaim is to recover for the
property damage. Both are part of the crossclaim, because both arise from the same transaction or occurrence as
the underlying suit.
In sum, by filing these claims, D-2 has protected herself either way-whether the wreck was P's fault or D- l's fault.
If it was P's fault, D-2 will recover on the compulsory counterclaim. If it was D-l's fault, D-2 has done two things:
(1) ensured that D-1 (not D-2 ) is ultimately liable to pay for the judgment to P ( through indemnity) and (2)
asserted a claim against D· 1 to recover for the damage to D-2's car. Again, both of these functions are performed
by the cross claim.
By the way, if D-2 asserted a crossclaim against D-1 only for indem nity on the claim asserted by PIand not for
property damage to D-2's car), what problem might D-2 run into down the road? Claim pre clusion! If D-2 did this,
and the JRX adopted a transactional definition of claim, D-2 would he splitting her claim. (If this point is fuzzy,
review *11.2.)
Now let's take another step. Suppose D-2 files both the compulsory coun terclaim against P and the crossclaim for
indemnity and for property damage against D-1. In addition, suppose D-2 has a totally unrelated claim against D-1
(say, for past-due rent I. Can she assert that claim in the pending case too? Yes. Rule 181al provides that, once D-2
asserted the crossclaim, she may join to it any claim she has against that party.81
Again, suppose D-2 files both the compulsory counterclaim against P and the crossclaim for indemnity and for
property damage against D-1. Suppose also that D-1 has a claim against D-2 arising from the same accident (say,
that D-2's car had defective brakes, which caused the wreck). Can D-1 assert that claim in the pending case? Yes. In
fact, arguably she must or else lose the claim. Why'' Once D-2 asserts a cross claim against D-1, the two have
become ''opposing parties." Thus, the claim back against D-2 is a counterclaim. Because it arises from the same
transaction or occurrence as D-2's clai m against D-1, it is a com pulsory counterclaim
B. SMJRX
Rule 13(g) is a procedural mechanism for asserting a claim, but the claim must invoke FSMJRX to be asserted in
fed. court.
o Hypo: A, B, and C, each driving her own car, collide, and each is injured. Each suffered damages in
excess of $75K. A is a citizen of New York B and C are both citizens of New Jersey. A sues B and C, as
coDs, in fed. court. There is no basis for fed£'ral question JRX, but A's case does invoke DJRX. (Why?82)
B asserts a compulsory counterclaim against A to recover for her injuries from the wreck. (Why
is it a compulsory counterclaim'/"') B also asserts a crossclaim against C for those injuries. It i.s a
crossclaim because it is against a coparty and arises from the same transaction or occurrence as the
underlying suit. Now, is there SMJRX over the counterclaim and the crossclaim? Assume that there is
no basis for FQJRX.
B's compulsory counterclaim againstA invokes diversity ofcitizenship JRX. It is by a citizen of New
Jersey against a citizen of New York and the facts indicate that it exceeds $75K. (Because it invokes
diversity JRX, SUPJRX is irrelevant.)
But the crossclaim does not invoke DJRX jurisdic tion. Even though it would satisfy the AIC for
diversity ( because it exceeds $75K), there is no diversity between B and C. The crossclaim is by a
citizen of New Jersey against a citizen of New Jersey. So the only way the crossclaim can get into
fed. court is through SUPJRX. Does that work here?
§1367(a) grants SUPJRX over claims that arepart of the same "case or controversy" as the
underlying claim that did invoke SMJRX (P's original claim), Claims meet that test if they satisfy the
Gibbs standard of sharing a "com mon nucleus of operative fact" with the underlying claim. This
stan dard is always met if the claim arises from the same transaction or occurrence as the
underlying claim (§1367(a) requires only that the supplemental claim have some "loose factual
connection" with the JRX invoking claim.). By definition, a crossclaim does, because Rule 13ig)
requires that they arise from the same transac tion or occurrence as the underlying dispute.
§ 1367( b) applies in cases that invoked DJRX ( as the claim asserted by A against B and C did). It
then operates to remove SUPJRX over certain claims; but that section only removes SUPJRX over
claims asserted by plainti ffs. The claim in this case is asserted by a defen dant, so *1367(b) does
not remove the grant of supplemental jurisdic tion.
o One last hypothetical in this area, and this one may surprise you. Let's use the same facts as in the
previous hypothetical, with the three-way car crash between A, B, and C. All claims are based upon
state law, and all claims exceed $75K. But here, B and C, as coPs, sue A. A is a citizen of New York. B and
C are citizens of New Jersey. As structured -with the two New Jersey Ps against the one New York D and
with the claims exceeding $75K-this case invokes DJRX. Obviously, A will have a compulsory
counterclaim against the two Ps. But here's the focus: Suppose B asserts a crossclaim for her injuries
against C. It is a crossclaim because it's against a coparty (a coP here), and it arises from the same
transaction or occurrence as the underlying diversity of citizen ship claim. Is there SMJRX over this
crossclaim?
The crossclaim arises under state law, so it cannot invoke FQJRX. It also cannot invoke DJRX, because
the crossclaim is asserted by a New Jersey citi zen against a New Jersey citizen. Now, can the claim
invoke supple mental JRX? The answer should certainly be yes. But apply the SUPJRX statute. Clearly,
§1367(a) grants sup plemental JRX, for the same reason as in the previous hypo thetical. But look
carefully at §1367(b). It applies in cases that invoke DJRX Ias the claims by B and C against A did).
And it removes JRX over claims ..by Ps against persons made parties under Rule . . 20." The claim by
B against C is a claim asserted by a P against someone joined under Rule20 (the only way B and C
could havt' sued together as coPs was to have joined as coparties under Rule 20(a)(1)). Thus, under
a literal interpretation of the statute, there cannot be SUPJRX over this claim.
This result is absurd. It means that all other claims (by B and C against A; by A against B and Cl will be
heard in fed. court but this crossclaim by B against C must be asserted in state court. Thus, the parties
and the judicial system are robbed of the efficiency promoted by the joinder rules and SUPJRX. The
result of a literal interpretation of the statute in this context is also contrary to the underlying premise
of DJRX. After all, in our hypothetical here, each P remains diverse from each D, so there is no danger
that permitting supplemental juris diction over P-l's crossclaim will eviscerate the complete diversity
rule. There is no clear case authority on this issue, but in view of the literal interpretations accorded
§1367 in other contexts, the unfortu nate result suggested above may be difficult to avoid.
V. Overriding P’s Joinder Choices
Rule 20(a) is permissive, so P does not have to employ it to the fullest.
For a variety of reasons, including JRX’al limitations and litigation strategy, a P may eschew full use of the provision and
leave out persons who might have been joined under Rule 20(a)—we refer to such nonparties as "absentees."
The question for us is whether anyone can override the P's structuring of the case by forcing the joinder of
absentees.
The answer is yes, at least in certain circumstances, 3 joinder devices—compulsory party joinder, under Rule
19 impleader under Rule 14, and intervention under Rule 24—can be used to restructure the party joinder of
the case.
Throughout our discussion of these devices, it is important to appreciate the effort to accommodate competing policies.
OT1H, our justice system accords great deference to the P's choices on party structuring; we value litigant autonomy.
OTOH, the P's party joinder choices may lead to inefficiency and inconsistent outcomes by promoting multiple
litigation; it may also subject the interest of the absentee or of D to possible harm.
Federal Rules: Three policy interests that will justify overriding the P's autonomy in party structuring: (1)
efficiency, (2) avoiding harm to the absentee, and (3) avoiding harm to the D.
As we will see, compulsory party joinder, under Rule 19 embraces all three of these policies. Impleader is
based mostly on the first and third policies, and intervention embodies the first two policies.
As we also will see, these devices might be invoked by different persons:
Rule 19 is usually raised by a D, although the judge has the power to raise it on her own.
Impleader is invoked by a defending party.
Intervention is invoked by the absentee herself.
Thus, these three devices empower different persons to assert that one of three policies justifies overriding the
P's autonomy in structuring the suit.
A. Compulsory Party Joinder (Rule 19)
1) "Proper", "Required" (or "Necessary"), and "Indispensable" Absentees
The issue here is whether an absentee (someone P did not join in the pending case) should be forced into the
suit.
Federal Rule 19 is the most comprehensive provision providing for overriding the Ps joinder choices.
Parties and potential parties to a civil case fall into one of three traditional categories, which can be viewed as
concentric circles.
1. The outer (largest) circle reflects "proper" parties to the case. These are persons who may be joined, at the option
of the P, because they have sufficient connection to the dispute. Today, such persons are defined in Rule 20(a).
2. Inside that circle, as a subset of proper parties, are "required" (or "necessary") parties. These are persons whom P
did not join in the case, but whose presence is so desirable that the court will override the P's choice by
requiring them to be joined if joinder is possible. Such persons are defined in Rule 19(a).
3. Inside this circle, as a subset both of necessary and of proper parties, are what have for generations been called
"indispensable" parties. These are persons whom P did not join, and who (because "necessary") should be joined,
but who cannot be joined (e.g., because the court cannot get PJRX over them). And in their absence, the court has
decided that it will dismiss the pending case rather than proceed without such absentees.
We turn now to the Rule, and emphasize at the outset that the Rule 19 inquiry is always case-specific—avoid the
temptation to reach an answer by knee-jerk reaction; apply Rule 19 in a pragmatic way—sensitive to the
underlying policies of why the court might override the P’s party structure.
2) Applying Rule 19
Rule 19, somewhat tough to decipher, prescribes a three-step process, "although this fact is obscured by its
language."
1) First, the court must assess whether the absentee is a "required party" under Rule 19(a). Lawyers and judges
have always called such an absentee "necessary." As restyled in 2007, Rule 19 avoids that word, but lawyers
and judges commonly use "necessary.”
2) Second, if the absentee is required, the court then asks whether she can be joined in the pending case. In the
language of Rule 19(b), the court assesses whether joinder is "feasible." This requires the court to determine
whether (1) the absentee is subject to PJRX; (2) whether the absentee can be joined without affecting DJRX JRX;
and (3) whether the absentee, once joined, would have a valid objection to venue (thus Rule 19 is one of the few
joinder provisions in which venue may be an issue. If joinder is feasible in light of these three inquiries, the
absentee is ordPTed joined to the case.97
3) If joinder of the absentee is not feasible, the court must determine whether, in "equity and good conscience," the
court should (1) allow the case to proceed without the absentee or, on the other hand, (2) dismiss the case. This
assessment is made based upon factors in Rule 19(b). If the court decides to dismiss the pending case rather
than to proceed without the absentee, the absentee has always been labeled "indispensable."
Recall that Rule 12(b)(7) permits a court to dismiss a case for failure to join a party under Rule 19.
That motion will be granted only if the court goes through all of these steps and concludes that the case
should be dismissed. Now we look in detail at each of the steps involved in the application of Rule 19.
Inquiry Number One: Is the Absentee Required (or Necessary)?
The absentee will be required if the present party structure of the case satisfies any of the three situations
prescribed in Rule 19(a).
It is important to understand the policies underlying them; each gives a reason for overriding the P's
structuring of the case.
Of the three bases for forcing joinder of the absentee, one is found in Rule 19(a)(l)(A), and the other two
are found in Rule 19(a)(1)(B).
The difference between the two subdivisions of the Rule is significant, as a careful reading of the Rule will
demonstrate.
Rule 19(a)(1)(B) requires:
1.That the absentee claim "an interest relating to the subject of the suit."
o To qualify, the interest must be "legally protected, and not merely a financial interest or interest of
convenience."—the absentee "must have a direct stake in the pending litigation; an interest in
related subject matter is not sufficient to be defined as a necessary party."(See examples below).
2. Beyond this interest, Rule 19(a)(1)(B) requires that the failure to join the absentee (in view of the
absentee's interest) will harm someone—either the absentee (in Rule 19(a)(l)(B)(i)) or D (in Rule
19(a)(l)(B) (ii)).
o Thus, Rule 19(a)(1)(BJ can be called the prejudice prong of the compulsory joinder rule,
because joinder is effected expressly to avoid prejudice to the absentee or to the D.
Rule 19(a)(1) (A), in contrast, does not require that the absentee have any interest in the pending case.
o It mandates joinder not to avoid harm to anyone, but to achieve efficiency. It can be called the
complete relief prong of the compulsory joinder rule.
In theory, if the absentee satisfies any of the three situations defined by Rule 19(a)(1)(A) and 19(a)(1)(B),
the court should order her joinder if joinder is feasible. Now we address these three definitions of a
necessary absentee in more detail.
o Rule 19(a)(1)(A): Necessary Absentee
Under Rule 19(a)(l)(A), the absentee should be joined if, without her, "the court cannot accord complete
relief among existing parties."
This clause reflects the traditional aim of equity to decide disputes by the whole, rather than bit by bit.
Joinder under this provision is said to ensure that a court will not enter a "hollow" or "partial" judgment,
one that fails effectively to resolve the overall dispute—joining the absentee obviates the need for other
suits and binds the absentee to the judgment in the pending case; this, in turn, avoids the inconsistent
results that could arise from multiple litigation.
Though these goals are laudable, Rule 19(a)(l)(A), as a practical matter, is pretty worthless.
Why? It is capable of being interpreted in two ways, one of which is always satisfied and the other of which
is never satisfied. (A rule that is either always or never met is not much of a rule.)
First : The Rule may mean that the absentee must be joined whenever leaving the absentee out will fail to
resolve the overall dispute—will fail to "do justice" in some grand sense among all potentially affected
persons.
The problem is that this interpretation is satisfied every time there is an absentee who will sue (or
will be sued) after resolution of the pending case.
The interpretation amounts to holding that the absentee must be joined to avoid multiple
litigation. The archetypal case is said to involve a case by P against an "excess insurer," which is an
insurance company that agrees to cover losses over a particular amount.
o Hypo: P's warehouse burns down. P had insurance on the warehouse and its contents with two
companies: Primary Ins. Co. (Primary) contracted to cover losses through $200K, and Excess
Insurance Co. (Excess) insured losses over $200K. P sues only Excess, asserting that the damage
from loss of the warehouse was $350K (and thus that Excess owes P $150k Some courts and
commentators argue that Primary is required under Rule 19(a)( l)(A), because if the court in this
case (by P against Excess) finds that the damage to P was only $195K, its judgment will be "hollow."
Why? Two reasons: (1) it could not be enforced against Excess (because Excess is not liable for
amounts of $200K and less), and (2) it could not be asserted against Primary (because Primary was
not a party to the case and thus, under due process, cannot be bound by the judgment.
While there is no doubt that such a judgment would be hollow in the ways described, that does
not mean that Rule 19(a)(1)(A) should apply to compel joinder of Primary.
Such an interpretation of the Rule is contrary to its language—the Rule does not require joinder
whenever failure to join the absentee will result in the court's not resolving all disputes among
everybody in the world—instead, it says that joinder is required only when nonjoinder of the
absentee means that the court cannot accord complete relief "among existing parties."
The judgment in the above hypothetical does resolve the entire dispute between those who are
already parties, because it tells Excess that it owes P nothing.
More basically, such a broad reading of Rule 19(a)(l)(A) would swamp all other joinder
devices.
Remember that Rule 19(a)(l)(A), unlike Rule 19(a J(l)(B), does not require that the absentee
have an interest in the pending case—so if this provision is interpreted to require the
joinder of any absentee whose nonjoinder threatens to create multiple litigation down the
road, there is no need for impleader or for intervention.
Second : Focusing on the specific language of Rule 19(a)(1)(A) thus leads to the second possible
interpretation: Rule 19(a)(1)(A) is invoked only when nonjoinder of the absentee means that
the court in the pending case cannot wrap things up completely among those who are presently
parties
As we just saw, it is hard to conceive of a case in which this test will be met. Either Dwill owe
something to Por she won't. No matter what the judgment, it will wrap up the dispute among
existing parties once and for all. So read, then, the Rule never applies.
Because of the problems with determining the proper scope of Rule 19(a)(l)(A), courts seem never
to rely on the rule exclusively to order the joinder of an absentee.
Instead, to the extent that courts pay attention to the subdivision at all, they use it in conjunction
with one of the bases for joinder laid out in Rule 19(a)(1)(B).
Thus, Rule 19(a)(l)(A) has had little impact on compulsory joinder doctrine.
Does that mean that its policy of efficient joinder is meaningless? No. The policy is important,
but is limited in impact to cases satisfying one of the prejudice bases for joinder under Rule
19(a)(1)(B).
Every time joinder is affected under Rule 19(a)(1)(B), it fosters the efficiency and consistency
we desire.
It does so, however, in a way that does not simply run roughshod over P autonomy and render
meaningless the other joinder provisions of the Federal Rules.
o Rule 19(a)(1)(B): Necessary Absentee
As we saw above, both bases for compelling joinder of the absentee under Rule 19(a)(1)(B)—19(a)(l)(B)(i)
and 19(a)(l)(B)(ii)—require that the absentee have some interest in the underlying dispute and that
somebody (either the absentee or the D) stand to be harmed if the litigation proceeds without the absentee.
Rule 19(a)(1)(B)(i): focuses on the potential harm to the absentee's interest if she is not joined in the
pending case.
Specifically, the court assesses whether the absentee is so situated that litigating without her "may as a
practical matter impair or impede [her] ability to protect the interest."
Policy basis for joinder here is clear: We should not allow P's leaving the absentee out of the case to
harm the absentee.
Notice that this provision focuses on practical harm to the absentee's ability to protect her interest.
This language reflects the fact that the absentee generally could not suffer "legal" harm if the case
proceeded as originally structured—absentees (unless in privity with a party, which is rare) cannot be
bound legally by the judgment in a case.
In many circumstances, however, an absentee not bound legally might be adversely affected in a
practical way by the judgment.
For example, that P sues a Trustee, seeking to recover trust funds held by the Trustee. Absentee (A)
claims to be the proper beneficiary of the trust. If P wins the pending case, A is not bound by the
judgment. But, as a practical matter, A's ability to protect her interest may be impaired, because the
money will be in P's pocket, and may be squandered or removed from the country before A can sue P.
One interesting question is whether the absentee's ability to protect her interest might be harmed by the
stare decisis effect of the judgment in the pending case.
Stare decisis is the doctrine of precedent—stands for the proposition that an appellate decree on a
question of law binds all lower courts w/in that JRX. As commonly understood, stare decisis cannot
emanate from a trial court determination of issues of fact. Occasionally, but rarely, stare decisis can
constitute a relevant harm under Rule 19(a)(1)(B)(i).
A good example of the proper use of stare decisis as relevant harm involved disputed ownership of
reefs near FL. Two private parties claimed ownership. If the reefs were part of the outer continental
shelf, however, they would be owned by the US. The case was brought by the US against one of the
private claimants to the reefs. The other private claimant to the reefs was the absentee. The court
recognized that the issue was important enough to the parties to ensure that it would be appealed to
the court of appeals for a determination of the legal question of government ownership. That ruling
would result in precedent that would be very difficult for the absentee to undo in subsequent litigation.
In such circumstances, the court properly concluded, the precedential effect of the case could constitute
a harm justifying joinder of the absentee.
Rule 19(a)(1)(B)(ii): The absentee has an interest in the pending case, but here the absentee must be joined
to prevent potential harm to an existing party in that case.
1. Specifically, as in Rule 19(a)(l)(B)(i), the absentee must have "an interest relating to the subject of the
action" and must be so situated that not joining her might subject a party "to a substantial risk of incurring
double, multiple, or otherwise inconsistent obligations."
2. Policy basis for forcing joinder here is also clear: Itis not to avoid harm to the absentee, but to a present
party. The litigation is structured in such a way that going forward without the absentee involved puts a
party at risk of being hit with double or inconsistent obligations.
We must note two points here:
Although the Rule focuses on harm to anyone who is already a party in the pending case, in fact it is
concerned about harm to a defending party; in most cases, of course, this means the D.
If P has so structured the case as to subject herself to harm, it is not clear why the judicial system
should try to help her, but if she has so structured the case as to cause harm to a party haled into
court in a defensive position, the system should try to ameliorate the situation.
Note that the Rule is aimed at a specific kind of harm to the D: the risk of being put to "double,
multiple, or otherwise inconsistent obligations" because of the absentee's interest.
The Rule does not say the joinder is required to avoid subjecting D to multiple litigation—thus, if the
party structure merely threatens D w/potential multiple suits, that is not enough. This fact is
another factor that counsels a narrow reading of Rule 19(a)(1)(A), as we saw above.
1. Hypo: Busline provides bus transportation. One of its buses is involved in a wreck, injuring six
passengers. Passenger #1 sues Busline for personal injury damages. Are Passengers #2 through #6
necessary under Rule 19(a)(1)(BJ(ii)? No. Although the litigation as structured certainly threatens
Busline with multiple litigation, it does not subject Busline to potential multiple or inconsistent
obligations.
As envisioned by Rule 19(a)(1)(B)(i), inconsistent obligations are created when two (or more) orders
put D in a position in which she cannot satisfy one order without violating the other—such problems
usually arise in claims for equitable relief (like an injunction or declaratory judgment) and not in claims
for damages.
For example, the Rule would be invoked if one judgment ordered a corporation to issue stock in one
person's name while another judgment ordered the corporation to issue stock in a different person's
name. There, the corporation cannot honor one judgment without violating the other. This problem is
not faced with monetary damages. If Passenger #1 wins, the court will order Busline to pay money to
her. Then, if Passenger #2 loses, the court will order that Busline does not have to pay money to her. ln
this case, perhaps Passenger #2 could have won if she could have used nonmutual offensive issue
preclusion against Busline, on the issue of Busline's negligence (assuming that issue was litigated and
determined in the first case). But many JRXs do not recognize nonmutual offensive issue preclusion.)
These are not inconsistent obligations. There is nothing incon sistent in Busline's having to write a check
to one passenger and not to another.
Applying Rule 19(a). Let's try some hypotheticals, based upon cases that may be in your casebook.
o Hypo: P has surgery in which a metal "plate and screw device" is implanted in her spine. The device was
manufactured by Corporation. The sur gery was performed by Doctor at Hospital. The device broke in P's
spine, causing serious personal injuries. P sues only Corporation, and does not join Doctor or Hospital.
(Quick review question: Could P have joined Doctor and Hospital with Corporation as three coDs? (Yes.
This question is covered by Rule 20(a). Joinder of coDs is proper when the claims against them arise
from the same transaction or occurrence and raise at least one common question of law or fact.
Here, the claims against all three arise from implanting the device in P's spine, and all present the
common question of who, if anyone, was negligent.) Are Doctor or Hospital necessary under Rule 19(a)?
These are the facts of Temple u. Synthes Corp. in which a unanimous Supreme Court answered
emphatically: No. According to the Court, joint tortfeasors are not necessary parties. Period. The
Court simply says, "It has long been the rule that it is not necessary for all joint tortfeasors to be
named as Ds in a single lawsuit. Nothin in the 1966 revision to Rule 19 changed that principle."
Thus, if a party wants to force the joinder of additional joint tortfeasors, she must find some joinder
device other than Rule 19 (we see below that the appropriate action is for D to implead the absentees.)
o Hypo: D operates a shopping mall. It leases a space to P, who will operate a jewelry store. [) now plans to
lease another store in the same mall to A, who wi II also operate a jewelry store. P claims that this deal
with A violates a clause in her lease that says that D would not allow another jewelry store to operate in
the mall. P sues D, seeking an injunction to stop D from signing the lease with A. Is A necessary?
Rather than reacting to the question intuitively, apply Rule 19(a) pragmatically—because Rule
19(a)(1)(A) has had little independent impact, let's start with Rule 19(a)(1)(B). (Remember that
anytime the court orders joinder of an absentee under Rule 19(a)(l)(B), the efficiency and consistency
goals of Rule 19(a)(1)(A) are realized.)
1) : A does have an interest in the pending suit, because A has negotiated a lease in the same mall.
(Remember, under both parts of Rule 19(a)(1)(B), the absentee must have such an interest.)
2) : The present joinder scheme threatens to harm A's interest, because if P wins the pending suit, the
court will issue an injunction stopping D from leasing the store to A. Thus, A satisfies Rule 19(a)(1)(B)
(i) because failure to join A may as a practical matter impair or impede A's ability to protect her
interest (the judgment in the case by P against D will not bind A as a legal matter. She is not a party, nor
in privity with a party to that case, and thus, as a matter of due process, cannot be bound. Rather, the
harm to A's interest is practical- D won't sign the lease to her).
3) : This case also satisfies Rule 19(a)(1)(B)(ii) because the present party structure threatens D with
inconsistent obligations. If P wins the present case, the court will order D not to sign the lease with A.
Then A will sue D in a separate case, seeking an injunction to force D to sign the lease. If A wins that
case, D is put in an untenable situation: One decree tells it not to sign the lease with A, and another tells
it to sign the lease with A. Rule 19(a)(l)(B)(ii) is aimed at avoiding exactly that sort of inconsistent
obligation by forcing the joinder of A in the present case.
o Hypo: A owns 1K shares of stock in Corporation, in her own name. P claims that she andA had bought the
stock together and that the stock was sup posed to have issued in both names as joint owners. P sues
Corporation, seeking to have A's stock canceled and the shares reissued in the joint names of P and A. Is A
necessary?
1) A obviously has an interest in the pending suit, since the fight is about stock she presently owns
outright.
2) The present joinder scheme threatens harm to A's interest, because if P wins, A's stock is canceled and
reissued to her and P jointly. A goes from being sole owner of the stock to joint owner of the stock.
Although A would not be bound legally by the judgment (because she was not a party to the case), as a
practical matter, her interest would be worth demonstrably less than it is now.
3) The present party structure also satisfies Rule 19(a)(l)(B)(ii) because it threatens Corporation with
inconsistent obligations. If P wins this case, the court will order Corporation to cancel A's stock and
reissue the shares in the joint names of P and A. Then A will sue Corporation. If A wins that case, the
court will order Corporation to issue the same shares in the name of A only. Corporation cannot satisfy
one decree without violating the other.
o Hypo:P represents the estate of a decedent who was killed in the crash of a chartered airplane. P sues the
manufacturer of the airplane. Are any of these absentees necessary: the company that owned and
operated the plane, the company that serviced the plane, the estate of the pilot?
The quick answer to this case is no, based upon the Supreme Court decision in Temple v. Synthes Corp.,
which we saw above. That case held that joint tortfeasors are not necessary parties. The case on which
this hypothetical is based -Whyham v. Piper Aircraft Corp.121 -was decided before Temple, and is a good
example of sloppy Rule 19 analysis.
The court in Whyham held that all three bases of Rule 19(a) were satisfied.
It concluded that Rule 19(a)(1)(A) was met because the failure to join the absentees would result in
multiple litigation. We discussed above why this conclusion is an erroneous interpretation of the
Rule.
It concluded that Rule 19(a)(1)(B)(i) was met because the absentees somehow would be harmed by
the judgment in the pending case. It is impossible to see how that can be the case, however. If the
court orders the manufacturer to write a check to P, how does that harm the absentees? True, the
manufacturer may now sue the absentees for contribution or indemnification, but the judgment in
this case does nothing to the absentees.
The court concluded that Rule 19(a)(1)(B)(ii) was met because the manufacturer would be
subjected to multiple or inconsistent obligations. The argument is this: If the manufacturer loses
this case and then sues the absentees for contribution or indemnity and loses, the manufacturer will
have to pay the entire loss. Here, finally, the court is on solid ground. Such a scenario does seem to
subject D to multiple obligations as envisioned by Rule 19(a)(l)(B)(ii). In most cases, however, the D
will be able to protect itself by impleading the absentee under Rule 14(a)(1)—(In Whyham, D
manufacturer could not use impleader, because the persons it would implead were not subject to
PJRX. Thus, Rule 19 was the only vehicle for raising the potential harm to D in that case.) To this
point, we have determined that the absentees are necessary.
Inquiry Number Two: Is Joinder of the Absentee Feasible?
Assuming the absentee is required, the next focus is whether the absentee can feasibly be joined to the pending
case. If the answer is yes, the court will force joinder of the absentee under Rule 19(a)(2).
Three factors are relevant to the feasibility inquiry.
First, for joinder to be feasible, the absentee must be "subject to service of process," which means she must
be subject to PJRX in the pending case. Fed. court in which the case is pending may use any long-arm statute
available to state courts in the state in which it sits. In addition, the "bulge rule" allows for service outside
the forum state, regardless of state law, within 100 miles of fed. court house. In addition, the absentee may
waive any PJRX objection by agreeing to be joined in the pending case.
Second, Rule 19(a)(3) also provides that if the absentee "objects to venue and the joinder [of the absentee]
would make venue improper," the court must dismiss the absentee from the case. Such an absentee is
treated as one whose joinder is not feasible Again, however, the absentee may simply waive a venue
objection and be joined if she prefers.
Third, and most important, Rule 19(a) provides that joinder will be feasible if "joinder [of the absentee] will
not deprive the court of SMJRX." As we have seen repeatedly, every claim asserted in fed. court must be
supported by FSMJRX. The FSMJRX limitations are not waivable and the parties cannot avoid them by
stipulation. The Federal Rules cannot affect the JRX of the federal courts."' It is also important to
remember that subject matter JRX attaches to claims, not to parties. Thus, the claim asserted by or against
the necessary party must be assessed for subject matter JRX. Obviously, if the claim asserted by or against the
absentee arises under federal law, it will invoke federal question JRX. Joinder is feasible and the court will
order it. Most problems in this area concern state law claims asserted by or against the absentee, and the
effect of joinder on DJRX.
In such cases, a crucial step in assessing SMJRX is the alignment of the necessary party—once the court
determines that the absentee should be joined, it must then align the absentee in the pending litigation, which
means it must determine whether the absentee should be joined as a P or as a D.
The parties (and perhaps even the absentee) will brief this issue for the court, but the decision is made by
the court itself.
The court must determine, on the basis of the facts of the individual case, whether the absentee's interest is
more closely aligned with P or the D. The decision can have important ramifications for SMJRX.
o P, a citizen of Oregon, sues D, a citizen of CO on a state law claim (so there is no FQJRX) for $200k. The
claim invokes DJRX and is properly filed in fed. court. A, the absentee, is a necessary party and is a citizen
of Colorado. If A is joined as a D, against whom P will then assert a state law claim of more than $75K,
joinder is feasible. Why? Because there is DJRX over the claim asserted by P against A. In other words,
joining A does not harm S JRX. Because joinder is feasible, the court would order that A be joined.
o But suppose instead that the court aligns A as a P to assert a state law claim of more than $75K against D.
Because A and D are cocitizens, the claim asserted by A against D cannot invoke DJRX. Unless SUPJRX can
be used l which we address momentarily), joinder is not feasible, and the court would then go to Inquiry
Number Three (below) to determine whether to proceed in the litigation without A or dismiss the case.
The problem encountered in this last hypothetical is not limited to cases in which the absentee is brought in
as a P—the same problem would be encountered if A in our hypothetical were a citizen of Oregon aligned as a
D. I
In that case, the claim asserted by P against A would lack DJRX (because it would be by an Oregon citizen
against an Oregon citizen).
As another example, even if there were DJRX between the absentee and the party on the opposite side of the
litigation, if the state law claim did satisfy the AIC requirement for diversity cases, the claim could not
invoke DJRX and joinder would not be feasible.
Can SUPJRX support the claim asserted by or against a necessary party?
SUPJRX, as we have seen repeatedly, allows fed. courts to entertain claims that by themselves do not invoke
an "independent" basis of federal SMJRX—in other words, claims that do not invoke DJRX, alienage or FQJRX.
If SUPJRX will support claims by or against necessary parties, it will render joinder feasible because it will
allow the claim to be joined in the pending case.
Why? § 1367(a) grants SUPJRX over claims that comprise part of the same "case or controversy" as a claim
that invokes an independent basis of federal SMJRX. This means SUPJRX attaches to claims that share from a
"common nucleus of operative fact" with the claim that invoked federal question or DJRX JRX. There has
never been serious doubt that claims by and against necessary parties satisfy this test." By definition, such
an absentee has an interest in the case and is so closely related to it that either her interest may be impaired
or her nonjoinder threatens the D with multiple or inconsistent obligations. Thus, §1367(a) clearly grants
SUPJRX over claims by or against a necessary party.
The problems arise with the application of §1367(b), which cuts back on the grant of SUPJRX.
§ 1367(b) applies only in cases that invoked DJRX and then removes SUPJRX over specific listed claims.
Those claims fall into three categories, two of which are relevant here. Specifically, there is no SUPJRX in a
diversity case "over claims by Ps against persons made parties under Rule . . 19 . . of the Federal Rules" or
"over claims by persons proposed to be joined as Ps under Rule 19 of such rules."
Thus, SUPJRX is not available in a DJRX case for claims (1) asserted by Pagainst a neces sary party joined as
a D or (2) asserted by the necessary party if she is joined as a P.
o Hypo: Assume that all claims are based upon state law and that they exceed $75K. P, a citizen of Texas,
sues D, a citizen of Missouri. The claim invokes DJRX and is properly filed in fed. court. A is a necessary
party and is a citizen of Missouri. IfA is joined as a plaintifl her claim against D does not invoke DJRX,
because A and D are cocitizens. SUPJRX is not available (even though the claim asserted by A against D
satisfies§1367(a)) because this is a claim asserted by a person proposed to be joined as a P under Rule
19; §1367(b) prohibits SUPJRX over that claim.
o Hypo: Same facts except here A is a citizen of Texas and will be joined as a D. Here, there is no DJRX over
the claim asserted by P against A, because each is a citizen of Texas. Does SUPJRX help? Again, the claim
by P against A will satisfy §1367(a). But 1367(b) precludes SUPJRX over the claim by P against A because
it is a claim asserted by a P against a person joined under Rule 19; section 1367(b) prohibits SUPJRX over
that claim
So, ultimately the SUPJRX statute may help facilitate joinder of absentees under Rule 19, at least if they are
brought in as additional parties to a counterclaim or crossclaim. It does not seem to help, however, when the
absentee is brought in directly under Rule 19. (And don't forget that §1367(b) only applies in DJRX cases.)
o Hypo: P, a citizen of Tennessee, sues D, a citizen of Tennessee, for violating her rights under a federal
statute. The claim invokes federal question juris· diction and is properly filed in fed. court. A, the
absentee, is a neces sary party and is also a citizen of Tennessee. She is joined as a P and asserts a state
law claim against D. This claim is not supported by FQJRX (because it's based on state law) or by diver
sity of citizenship JRX (because A and D are cocitizens). Does it invoke SUPJRX? Yes. First, §1367(a) grants
supple mental JRX because the claim derives from a common nucleus of operative fact from the
underlying case. Second. §1367(b) does not apply, so it cannot remove this SUPJRX. Remember, §1367(b)
applies only in cases that invoke DJRX. The original claim here invoked FQJRX.
Answer: To this point, then, the court has determined that the absentee is necessary, and has assessed whether
her joinder is feasible.
If joinder is feasible, the court ordinarily gives the P an opportunity to amend her complaint to add the
absentee.
Should P fail to do so, Rule 19(a)(2) provides that the court "must order that [the absentee] be made a
party."—the court may order joinder as D or as P.
If she is joined as a D, ordinarily P will then amend her complaint to state a claim against the absentee; if she
is joined as a P, she will file an appropriate pleading setting forth her claim. (lf a necessary absentee should
be aligned as a P but refuses to participate, the court may order her joinder as a D and then realign her
as a P.)
What happens, though, if the court finds that the absentee cannot feasibly be joined? Then, the court must
move to the third step of the analysis. (Below)
Inquiry Number Three: If Joinder Is Not Feasible, Should the Court Proceed Without the Absentee or Dismiss
the Pending Case?
To this point, the court has concluded that the absentee ought to be joined but that her joinder is not feasible.
Now, the court must either:
(1)proceed with the present litigation, without joining the absentee, or
(2)dismiss the present case.
Each choice is troublesome. If the court proceeds, it risks subjecting either the absentee or D to the kind of harm
Rule 19 is intended to avoid. OTOH, if the court dismisses the case, it denies P the forum she selected. If it
chooses this latter course, the absentee has long been called "indispensable," and the case is dismissed under
Rule 12(b)(7).
How does the court decide which way to go?
The choice is governed by Rule 19(b)—starts by saying that the court should consider whether dismissal is
appropriate "in equity and good conscience."
Beyond this open-ended phrase, Rule 19(b) lists four nonexclusive factors for guiding the decision.
The factors are not listed in hierarchical order, and at first, they echo the sorts of concerns addressed
under Rule 19(a) in determining whether the absentee was required in the first place.
Importantly, however, the thrust of the Rule 19(b) assessment is different—while Rule 19(a) asks the
court to determine whether the sorts of harm envisioned by that Rule might occur (Rule 19(a)(1)(B)
requires only that one of the relevant harms "may" occur; it does not require that such harm must or
necessarily will occur.)
If the absentee is not joined, here the assessment is whether such harm really will occur—there is a
difference in degrees—the decision of whether to proceed or dismiss the case requires a closer look at the
real probability and severity of prejudice caused by nonjoinder versus prejudice caused by dismissal.
1. 19(b)(1): Reflecting this emphasis on probability rather than possibility, the rule instructs the court to
consider "'the extent to which a judgment rendered in the person's absence might prejudice that person or
the existing parties."
Here, the court may sneak a peek at the merits and determine whether the P's claim is likely to result in
harm of either type.
In addition, the court should consider whether either the absentee or D might be able to avoid harm by
taking some action.
For instance, the absentee might be able to intervene; her refusing to do so may indicate that the
absentee does not consider the potential harm to be great.
Likewise, D may be able to avoid multiple or inconsistent obligations by impleading the absentee or,
if the dispute concerns ownership of property, by instituting interpleader.
2. Rule 19(b)(2) calls for the court to be creative and to consider "protective provisions in the judgment,"
"shaping the relief," and other measures to avoid or lessen potential harm to the absentee or the D.
3. Rule 19(b)(3) instructs the court to address whether the judgment can be adequate if the case proceeds
without joinder of the absentee.
This factor implicates both the goal of avoiding harm to the absentee and D and also "the interest of
courts and the public in complete, consistent, and efficient settlement of controversies."
Again, the court looks to whether the harm that is the center of compulsory joinder doctrine will actually
result if the case proceeds and not just that it is a theoretical possibility,
4. Finally, Rule 19(b)(4) counsels the court to address the flip side of the coin—“whether P would have an
adequate remedy if the action were dismissed for nonjoinder."
In other words, if the court dismisses the pending case, will P be able to get justice?
In assessing this issue, most courts look to whether P would have an adequate alternative forum in the
event of dismissal.
If there is a forum in which all interested persons, including the absentee, can be joined in a single
proceeding, dismissal of the pending case may make great sense: It can result in a single case in another
court that binds all interested persons, thus avoiding duplicative litigation and any potential harm either
to the absentee or the D.
As we saw in the second step in applying Rule 19, often the reason the absentee cannot be joined is that
her presence in the case would destroy DJRX.
When that is the case, there may well be a state court in which all parties are subject to PJRX and can
be joined in a single proceeding.
The result of invoking Rule 19, then, may be that P is induced to give up her federal forum for a state
court.
o Hypo: P, a citizen of Louisiana, sues D, a citizen of Texas, in a fed. court in Texas, properly invoking DJRX.
Absentee (A) is a necessary party, and is a citizen of TX. The court concludes that A should be joined in the
pending case as a P. Her claim against D, however, can’t invoke DJRX (because A and D are cocitizens), so
joinder is not feasible. In deter mining whether to proceed without A or to dismiss the case, the court might
well note whether all three parties can be joined in a single case in a state court in Texas (or elsewhere).
This inquiry will include an assessment of whether Texas would have PJRX. If so, dismissing fed. court
case can result in tbe most efficient litigation package possible. If the court dismisses, essentially it will be
telling P that she must give up her federal forum in the interest of an efficient litigation package that will
avoid harm to D and to A.
3) Raising Rule 19 Issues:
Almost always, D raises Rule 19 concerns, either in a motion to join a necessary party or a motion to dismiss the
case under Rule 12(b)(7).
P will rarely do so, because the structuring of the case was the P's idea—it would be unusual for P to change her
mind and call to the court's attention that she failed to join someone who satisfies Rule 19.
Why would D do so?
Obviously, in cases satisfying Rule 19(a)(1)(B)(ii), D's self-interest dictates that she raise the issue.
In those cases, the present structure threatens D with multiple or inconsistent obligations; she will want to
avoid those by forcing joinder of the absentee, or, if joinder is infeasible, she will want to argue that the case
should be dismissed under Rule 12(bJ(7).
What about cases that satisfy only Rule 19(a)(1)(B)(i)?
Here, the threatened harm from the present structure is to the absentee—in theory, there are two protections
for the absentee in such a case.
1. Rule 19(c): which requires a party asserting a claim to "state the name, if known, of any person who is
required to be joined if feasible but is not joined" as well as the "reasons for not joining that person."
The idea is to put the court in a position to raise necessary parties issues—in practice, this Rule provides
little protection, because it seems to be ignored more than it is honored.
The requirement of Rule 19(c) should be expanded to require all parties (not just claimants) to inform
the court of Rule 19 absentees and should be given teeth by being included in the certification made
under Rule 11.
2. The other protection theoretically available to the absentee is intervention
(Discussed Below) intervention of right is available essentially to those absentees who would be found
necessary under Rule 19(a)(1)(B)(ii).
Such an absentee can join the case of her own volition, but the right to intervene is worthless if the
absentee is not aware of the pending case. The advisory committee that drafted the 1966 amendments to
Rule 19 relied here upon Rule 19(c). Again, however, this protection suffers from the lack of respect
accorded Rule 19(c).
B. Impleader (Rule 14)
1) Procedural and Policy Issues
Impleader, is an important tool in the panoply of joinder devices.
It is governed in federal practice by Rule 14(a), and results in overriding P’s party structure.
Importantly, only a "defending party" can join an absentee through impleader—Rule 14(a)
Obviously, a defending party is one against whom a claim has been asserted—usually, of course, that party
will be the D, but a P can be a defending party if, for example, another party has asserted a counterclaim or
crossclaim against her.
Even someone who is impleaded is a defending party, & may, if she has a proper impleader claim, implead
someone else.
The defending party asserting impleader is known as the "thirdparty P," and the absentee joined by impleader is
the "third party D" (TPD).
So, in the usual case, in which D uses impleader, D will be called D and third-party P.
The pleading seeking relief from the TPD is the "third-party complaint."
Rule 14(a)(1) establishes that a defending party has a right to implead within 14 days after she serves her
original answer to the P's complaint.
Beyond 14 days, she must make a motion seeking court permission to implead—such motions are
routinely granted unless doing so will unduly delay resolution of the case on the merits.
Is a defending party required to implead? No. Rule 14(a)(1) is clearly permissive—the first sentence
provides that the defending party "may'' (not "must") implead.
The fact that only a "defending party" can assert an impleader claim becomes obvious when we see what kind of
claim is asserted in impleader—the claim must be against an absentee "who is or may be liable to the [defending
party] for all or part of the claim against it."
This limitation is extremely important—the defending party is not permitted to join an absentee just because
she has a claim against that absentee or because P may have a claim against the absentee—rather, the claim
against the absentee reflects that the absentee owes the defending party for all or part of the claim that has
been asserted against that defending party.
Such claims are almost always for indemnity or contribution. In the usual case, then, D impleads an absentee
(TPD) who owes indemnity or contribution to D for all or part of the P's claim against the D.
Quick Note on Indemnification: We discussed indemnification concerning issue preclusion. The duty to
indemnify is a duty to hold someone harmless—to "pick up the tab" for that person's liability in full.
For example, if you lend a classmate (D) your car, and D runs your car into P, you are vicariously liable
for D's act. P can sue you. If she does, and recovers a judgment against you, however, you can sue your
classmate, D, because she (as the primarily liable actor) owes indemnification to you (the vicariously liable
party).
Another example is insurance coverage. If you drive your car negligently and injure someone who then
sues you and recovers, the insurance company will have to pay that judgment on your behalf. (Assuming,
of course, that the event was within the coverage of your insurance policy and was within the policy limits.
If your policy limit is $100K and P recovers a judgment against you of $130K, the insurance company is
only on the hook for $100K. You pay the rest.)
Contribution is similar, but usually involves a pro rata payment by another person. A good example is
contribution among joint tortfeasors.
o Hypo: X, Y, and Z are joint tortfeasors who injure the P. As a matter of joinder, P can sue all three in a
single case. (Why? Because under Rule 20(a)(2), the claims against all three arise from the same
transaction or occurrence and raise at least one common question) But P does not have to do so.
(Why? Because Rule 20(a) is permissive.) Assume P sues only X. Accordingly, Y and Z are absentees.
They cannot be forced to join the pending case as necessary parties under Rule 19. (Why? Because the
Supreme Court held that joint tortfeasors are not necessary parties in Temple u. Synthes Corp) But X
can implead Y and Z because they, as joint tortfeasors, owe her a duty of contribution, which means
that they each owe their pro rata share of the liability. If P won a judgment against X for $150K, Y
would owe contribution for $50K (one-third of the liability) and Z would also owe contribution of
$50K (one-third of the liability).
Without impleader, X would have to litigate the pending case and, if she lost, would have to pay the
entire judgment, say $150K, to P.
Then, in a separate action, she would sue Y and Z and hope to win her claims for contribution
from them.
She might lose that case, because, after all Y and Z would not be bound by the judgment in the
case by P against X. (Why? Because Y and Z were not parties to the case by P against X, and thus,
as a matter of due process, cannot be bound by the judgment in that case. Thus, for example, Y
and Z could argue that they were not joint tortfeasors with X, and thus that they do not owe
contribution to her).
If she lost that case, she would absorb the entire $150K loss. Even if she wins the case against Y
and Z, however, she would have had to pay the entire judgment in the interim and would have
to pay for a second litigation to perfect her right to contribution.
Impleader, then, overrides the P's party structure of the case to avoid potential harm to the D—without
impleader, D (X in our hypothetical above) runs the risk of losing to P and then losing in a separate case
against her alleged joint tortfeasors.
Avoiding such a loss is akin to the goal of Rule 19(a)(l)(B)(ii), which compels joinder of an absentee to avoid
the D's being saddled with multiple or inconsistent obligations. Thus, impleader fosters efficiency, consistency,
and fairness to the D.
These benefits outweigh the interest in P autonomy, and justify allowing D to restructure the case.
Don’t confuse impleader with the crossclaim under Rule 13(g)—the crossclaim is asserted by a party
against a coparty; the impleader claim is asserted by a party against an absentee.
Moreover, the crossclaim arises from the same transaction or occurrence as the underlying case; the
impleader claim, as we have seen, is narrower—it is for indemnity or contribution on that underlying claim.
We can review these and other points about Rule 14(a)(l) with a hypothetical—this is a great fact pattern, and it
will review a good bit of ground. Before working on it, read Rule 14(a) with great care.
o T has permission from D to drive D's truck. While doing so, he strikes P, a pedestrian. D is vicariously liable for
Ts acts. By the same token, D will have a right of indemnity from T. P sues only D. D may implead T in the
pending case, because T is or may be liable to D for all or part of the underlying claim by P. Why? Because, as we
said, T owes a duty of indemnification to D. This is not a crossclaim. A crossclaim is asserted against a coparty. D
and T are not coparties, because P did not sue the two of them as coDs under Rule 20(a)—( P could have joined
them as coDs under Rule 20(a), but in this hypothetical did not do so). Indeed, T is an absentee, a non party,
until D joins him through impleader. Let's assume that D properly impleads T.
o When we think about it, T now is hoping that D wins the underlying claim. If lJ wins against P, T cannot be
held liable; there would be no judgment for which he would have to indemnify D. Suppose T notices that
lJ failed to raise an important defense to the underlying claim by P against D. Say, for example, D forgot to
raise the statute of limitations as an affirmative defense. Can T raise this defense, even though it is a
defense that D should have raised? The answer is yes. Exactly what part of Rule 14(a) makes this clear?
(The answer here is governed by Rule 14(a)(2)(C), which allows T to raise against P any defenses that D
could have raised.)
o What if T thinks he has a defense against D's impleader claim? What part of Rule 14(a) allows him to raise
that defense in the pending case? (It is Rule 14(a)(2)(A). Once D impleads T, T is a defending party, and,
like any defending party, must respond within 21 days of service under Rule 12.)
o After D impleads T, suppose T has a claim against D that arises from the same transaction or occurrence
as the impleader claim. Suppose, for instance, that T feels the accident was caused by faulty brakes in the
truck. T was injured in the same wreck and wants to recover against D. Not only may T assert this claim
in the pending case, he probably must do so. Why? (The claim by T against D is a compulsory
counterclaim under Rule 13(a)(1). Why? A counterclaim is a claim against an "opposing party." Once D
impleaded T, he became an opposing party. This claim by T arises from the same transaction or
occurrence as the impleader claim, so it is compulsory under Rule 13(a)(1). lf T does not assert it here, he
will be estopped from suing on the claim anywhere) Do not call this claim a crossclaim. Why is it not a
crossclaim? (A crossclaim is asserted against a coparty. D and T are not coparties; P did not sue the two
of them as coDs under Rule 20(a)(2).)
o Go back to the stage in which D impleads T. Suppose (as is likely that D wants to recover from T for two
things. First, he wants indemnification, so if P wins against D, T has to pick up the tab on that judgment.
Second, if the wreck was really T’s fault, D wants to recover from T for the damage to his truck. We know
that he can seek the first of these things through impleader, because this is exactly the kind of claim for
which impleader is designed. Why can D not seek the recovery for property damage through impleader?
(Because Rule 14(a)( l) impleader only allows recovery against the TPD for all or part of the P's claim
again!:>t the defending party who institutes impleader. It does not a1low recovery for all things that
arise from the same transaction or occurrence as the underlying dispute, so it is narrower than the
crossclaim under Rule13(g).
o So if D impleads T, and asserts the indemnification claim there, can he also assert the claim for damage to
his truck in the pending case? Yes. How does he do that? (By using Rule 18(a)( 1), which we discussed in
§ 12.3. Remember, it allows a claimant who has asserted one of the listed claims to join any other claim-
regardless of relatedness-against that person. One of the listed claims is an impleader claim under Rule
14(a)(1).)
o Indeed, not only may D assert the property damage claim against T in the pending case, but arguably he
should do so. Why? What risk does he run if he impleads T without also joining the property dam· age
claim? (He runs the risk of claim preclusion. Because the indemnity claim and the property damage claim
arise from the same transaction or occurrence, they are part of the same "claim" for claim preclusion
purposes in most JRXs. So if the pending case goes to a valid final judgment on the merits. and D does not
seek property damage, he may be precluded from asserting the property damage claim in a separate
case.)
The foregoing concerned the basic impleader claim under Rule 14(a)(1) as well as some other joinder provisions and
a review of some preclusion materials from Chapter 11. Now we take one more step, pursuing other claims for which
Rule 14(a) provides.
o Assume the same basic facts as in the preceding hypothetical: T borrows D's truck with D's permission, and runs
into P, a pedestrian. D is vicariously liable for T’s acts and D has a right of indemnity from T. P sues only D. D then
impleads T for indemnification and joins a Rule 18(a)(l)(claim for damage to his truck. T files a compulsory
counter claim against D, asserting that D lent him a truck with defective brakes, which caused the wreck and
personal injuries to T."1
o Now that T has been joined in the case, P wants to assert a claim against T, arguing that T is also liable for P's
injuries. May P assert such a claim in the pending case? Yes. Why? (Rule 14(a)(3) permits P to assert a claim
against the TPD if it arises from the same transaction or occurrence as the P's underlying claim. This claim by P
against the TPD does arise from the same wreck that forms the basis of the case, so it meets this test and may be
asserted.)
o Does anything require P to assert this claim against Tin the pending case? No. Why? (Rule 14(a)(3) says P "may"
assert the claim, not that she "must" assert it. Thus, the claim is permissive. Also, there is nothing to fear from
claim preclusion, because P has never asserted another claim against T, so cannot be guilty of splitting a claim.
o Assume that P does assert the claim against T. Oddly, this claim under Rule 14(a)(3) does not have a commonly
accepted name. It is not a counterclaim, since P and T are not yet opposing parties; it is not a crossclaim, because
P and T are certainly not coparties. Based upon the diagram of the case, one good suggestion for a name is an
"upsloping 14{a) claim.”
Diagram here on page 721
o After P asserts the upsloping 14(a) claim against T, suppose T has a claim against P-say, that P somehow caused
the wreck by acting negligently, and that T was injured. T wants to recover from P for these injuries. T may assert
that claim in the pending case. In this scenario, however, Rule 14(a)(l) is irrelevant to her doing so. Why? (The
claim by T against P here is a compulsory counterclaim. Once P sued T, she became an "opposing party" to T. T's
claim arises from the same transaction or occur rence as P's upsloping 14(a)(1) claim, and thus must be asserted
in the pending case under Rule 13(a)(1).
Now go back to the stage where P has sued D, D has impleaded T and T has asserted a compulsory counterclaim
against D.
o Now suppose T wants to assert a claim against P in the pending case. He asserts that the wreck was all P's fault,
and that he (Tl was injured because of it. May T assert such a claim in the pending case? Yes. Why? (Rule 14(a)(2)
(D) permits the TPD to assert a claim against P if it arises from the same transaction or occurrence as the
underlying dispute) Must he assert the claim in the pending case? No. Why? (Rule J4(a)('.l )( D) says the TPD
"may" (not "must") assert the claim. It is permis sive. And there is no risk of claim preclusion against T here,
because T has not been a claimant again.st P in another proceeding.)
o This claim by T against P also does not have a commonly accepted name. Based again on the diagram of the case, a
good suggestion is that we call this a "downsloping 14(a) claim."
o After T asserts this downsloping 14ta) claim against P, assume that P wants to assert a claim against T in the
pending case. What is the claim? (t is a compulsory counterclaim. Once T asserted the claim against P, he became
an "opposing party" to P. So any claim by P against Tis a counterclaim, because it arises from the same transaction
or occurrence as 'I's downsloping 14(a) claim, it is a compulsory counterclaim under Rule 13(a)( 1) and must be
asserted in the pending case.)
Thus, Rule 14(a) creates three claims:
1. The impleader claim under Rule 14(a)(1) asserted by a defending party against an absentee (the TPD) who
may owe her indemnity or contribution on the underlying claim against her;
2. The upsloping 14(a) claim asserted by P against the TPD, under Rule 14(a)(3); and
3. The downsloping 14(a) claim asserted by the TPD against the P, under Rule 14(a)(2J(D). The latter two
claims must arise from the same transaction or occurrence as the underlying dispute. Having mastered the
procedural propriety of these claims, now the fun begins, as we assess JRX’al and related issues.
2) JRX’al and Related Issues
Impleader joins a new party (the TPD to the case)—the TPD is brought in, moreover, in a defensive capacity, meaning
that she faces possible liability.
Accordingly, the TPD must be subject to PJRX in the forum—Indeed, the first sentence of Rule 14(a)(1) assumes as
much, since it requires that the TPD be served with summons and the third-party complaint.
In most cases, fed. court obtains PJRX over the TPD just the way it does over an original D—recall that the PJRX
inquiry in fed. court usually is the same as it is in the state courts in the state in which fed. court sits.
The first step is to consult JRX’al statutes of that state, such as long-arm statutes, to see whether JRX is
possible.
The second step, of course, is to assess whether the exercise of PJRX under that statute on the facts of the
cast> comports with due process.)
There is, however, an additional method of exercising PJRX in the impleader situation—under the "bulge rule" of
Federal Rule 4(k)(1)(B), the TPD can be served outside the forum state—even in the absence of a state long-arm
statute--so long as she is served within 100 miles of fed. Courthouse in which the case is pending.
Thus, assume the case is pending in the E.D.PA, in Philadelphia, and that the TPD is in NJ. Ordinarily, fed. court
would look first to PA law for a statutory provision allowing the exercise of JRX out of state. If there is no such
provision, but the TPD can be served in NJ w/in 100 miles of the Philadelphia fed. courthouse, the bulge rule
allows exercise of PJRX over the TPD. (Remember that the bulge rule applies only to join TPDs in impleader
and necessary parties under Rule 19. It is not available to join original Ds to the case.)
Venue provisions do not create issues of joining the TPD.
For starters, most courts agree that the general venue statutes-§§1404(a) and 1406(a)-apply only to the initial
claims against the D, and not to subsequent claims.
Beyond this, the impleader claim is so closely related to the underlying case (after all, it is for indemnity or
contribution on the underlying claim) that courts routinely recognize "ancillary venue.”—IOW, as long as venue
is proper in the underlying case, the TPD has no right to object that venue is not proper as to her.
This practice makes great sense: As we are about to see, the impleader claim is so closely related to the
underlying case that it will invoke SUPJRX, so there is no need for an independent basis of SMJRX. That being so
with regard to SMJRX—which is not waivable—It must also be available for the concept of venue, which is
waivable.
For the remainder of this discussion, we assume that the court has PJRX over the TPD and that venue is
proper.
The big question usually will be SMJRX—remember, there are three potential claims: the impleader claim, the
upsloping 14(a) claim under Rule 14(a)(3), and the downsloping 14(a) claim under rule 14(a)(2)(D).
Of course, there must be SMJRX over each that is asserted in fed. court.
As always, any of these might invoke an "independent" basis of SMJRX diction (DJRX, alienage, or federal
question JRX) or it may invoke SUPJRX.
Failing all of these, the claim must be asserted, if at all, in state court.
We will use the same fact pattern discussed above, in which T drives D's truck, with D's permission, and hits P, a
pedestrian. D is vicariously liable for T's acts, and T owes a duty to indemnify D.
We worked through the various procedural aspects to this scenario earlier in this subsection.
Now we look at SMJRX—the discussion gets pretty involved, as we deal with several different claims and
address more problems raised by the SUPJRX statute.
We deal with several factual scenarios:
1) P is a citizen of California and D is a citizen of Arizona. All claims in this hypothetical are based upon state (not
federal) law and all claims exceed $75,OOO. P sues D, properly invoking DJRX. D impleads T. T is a citizen of
Utah. Is there SMJRX over the impleader claim? Yes. That claim invokes DJRX, because it is asserted by a citizen
of Arizona against a citizen of Utah, and it exceeds $75K. So it invokes DJRX and can be asserted in the pending
case.
2) Same facts as in One except here T is a citizen of Arizona. The impleader claim thus cannot invoke DJRX
because it is asserted by an Arizona citizen against an Arizona citizen (Remember we could raise the same
issue by having T be a citizen of a state other than Arizona and the claim fail to exceed $75.000. Such a claim
would fail to invoke DJRX because it fails to meet the AIC requirement.) And there is no FQJRX because the
claim is based upon state Jaw. Does the claim invoke SUPJRX? Yes. There has never been any question that the
impleader claim satisfies the Gibbs test for SUPJRX."" As discussed in §4.7, Gibbs always allows SUPJRX over
claims arising from the same transaction or occurrence as the underlying case. The impleader claim is even
narrower than that: It is for indemnity or contribution on that underlying claim.
Section 1367(a) grants SUPJRX precisely because that section adopts the Gibbs test. (See §4.7 .J Section
1367(b) applies in cases that invoked DJRX (as P v. D does), but removes SUPJRX only over claims asserted
by Ps. Here, the impleader claim was asserted by the D, so §1367(b) does not remove the grant of SUPJRX.
The impleader claim can be joined in the pending case.174
3) Same facts as in Two except that here D impleads T and joins a claim under Rule 18( a)( 1) for the property
damage to his truck. (If this point is fuzzy, see note 158 above.) As in Two, T is a citizen of Arizona, so again
there is no DJRX or federal question JRX. We saw in Two that the impleader claim will invoke SUPJRX. What
about the Rule 18(a) claim for property damage? The answer is yes.
Again, §1367(a) grants SUPJRX over this claim because it meets Gibbs-it shares a common nucleus of
operative fact with the underlying claim 1 the collision with P) that did invoke federal SMJRX (the claim by
P against DJ. Just because Rule 18(a) does not require that a claim be transactionally related to the
underlying case does not mean that a claim asserted under that Rule cannot satisfy the Gibbs test. Section
1367(b) applies in cases that invoked DJRX (as P v. D does), but removes SUPJRX only over claims
asserted by Ps This claim is asserted by a D, so §1367(b) does not remove the grant of SUPJRX. The claim
can be asserted in the pending action.
4) Same facts as in Three, except here T is a citizen of California. So D, a citizen of Arizona, is impleading a citizen
of California. And, remember. P is a citizen of California. Is there subject mat ter JRX over D's impleader claim
(and property damage claim) against T? Yes-DJRX! This is a claim by a citizen of Arizona against a citizen of
California, and it exceeds $75K. The fact that T is a cocitizen of P is absolutely irrelevant to this point. P's
citizenship is irrelevant in assessing this claim; P is not a party to this claim.
Now it gets tough. P now asserts an upsloping 14(a) claim against T, to recover for the personal
injuries she suffered when T drove D's truck into her. We know that this claim is procedurally proper
under Rule 14(a)(3) because it arises from the same transaction or occurrence as the underlying case.
But is there subject matter JRX over this claim? There is no DJRX, because this claim is asserted by a
California citizen (P) against a California citizen (TJ. There is no FQJRX because the claim is based upon
state law. So what about SUPJRX?
Section 1367(a) clearly grants supplemental JRX to all Rule 14(a) claims. As we have seen several times,
that section codified Gibbs, which permits SUPJRX over all claims that constitute part of the same "case or
controversy" as the claim that invoked federal SMJRX. As interpreted, this means the claim must share a
nucleus of operative fact as the underlying claim. Upsloping (and downsloping 14(a) claims always meet
this test, because Rule 14(a) permits them to be asserted only if they arise from the same transaction or
occurrence as the underlying claim (*The common nucleus of operative fact test of Gibbs is broader than
"same transaction or occurrence." Therefore, claims that arise from the same transaction or occurrence
as a JRX-invoking claim will always invoke SUPJRX under §1367(a)).
Section 1367(b) applies only in cases that invoked DJRX JRX (such as Kroger and Scenario Four). It
removes SUPJRX over several claims, including those by "Ps against persons made parties under Rule
14."The claim asserted by Pin Kroger ( and in Scenario Four) was precisely that- a claim against a TPD,
brought into the case under Rule 14(a)(l). Clearly, then, the result in this hypothetical is the same under
§1367 as it was under Kroger. (Which means no. P cannot assert claim against impleaded TPD)
5) P, a citizen of Missouri sues D, a citizen of Kansas. All claims are based on state law and all exceed $75K. So
this original claim invokes DJRX and is properly filed in fed. court. D files a counterclaim against?, which also
invokes diversity of citizen ship JRX. Now P impleads T, who, P asserts, owes her indemnity or contribution
for the counterclaim by D against P. T is a citizen of Missouri. Thus, the impleader claim is asserted by a
citizen of Missouri against a citizen of Missouri. Obviously, then, this claim cannot invoke DJRX. And because
it arises under state law, the claim also cannot invoke FQJRX. Is there SUPJRX over this impleader claim by P?
The impleader claim, as we discussed in Scenario Two above, certainly meets the Gibbs test. Moreover,
because the claim is asserted by one acting in a defensive capacity, Kroger did not counsel rejection of
SUPJRX. Thus, before adoption of the supplemental JRX statute in 1990, the answer was quite clear:
Supplemental (then called ancillary) JRX applied to impleader claims asserted by the P. "0
But what does the SUPJRX statute do? Section 1367(a l clearly grants SUPJRX over the impleader claim
because, as we just said and as we saw in Scenario Two, it satisfies “common nucleus” test. Section
1367(b) applies in cases that invoked DJRX (as P v. D does) and removes JRX over certain claims, including
claims asserted by "Ps against persons made parties under Rule 14." The claim in this hypothetical is
exactly such a claim-it is asserted by a P against some one impleaded under Rule 14. Thus, on its face, the
statute prohibits SUPJRX over this claim.
This result is unfortunate. It changes JRX’al law that was well established before passage of the statute.
Moreover, it means that the underlying claim by P against D and the counterclaim by D against P will proceed
in fed. court, while the impleader claim by P against TPD must go to state court. This subjects P to precisely the
kinds of harm irn pleader is intended to avoid. It burdens P with the risk of unfair loss and burdens the judicial
systems with two cases over what is clearly one transactionally related dispute.
No doubt there should be SUPJRX over these claims. But courts are stuck with the language of the statute, and
that language makes no express exception for claims asserted by Ps in a defensive capacity Predictably, courts
have interpreted the statute to prohibit SUPJRX in this fact pattern. 1°" Is it possible that other courts will hold
the other way? Yes, which simply creates another area in which this statute has created uncertainty.
6) P, a citizen of South Carolina, sues D, a citizen of Kentucky. All claims are based upon state law and exceed
$75K. The case thus invokes DJRX and is properly filed in Fed. Court. D impleads T, a citizen of South Carolina.
As in Scenarios One and Four above, this claim invokes DJRX. Now, T asserts a downsloping 141a) claim
against P. That claim does not invoke DJRX, because T and P are cocitizens. It does not invoke FQJRX, because
the claim arises under state law. Does it invoke SUPJRX?
Yes. Section 1367(a) grants SUPJRX because 14(a) claims, by definition, must arise from the same
transaction or occurrence as the underlying case; thus, they satisfy Gibbs. Section 1367(b) applies in cases
that invoked diversity of citizenship JRX (such as this) but only removes SUPJRX over claims by Ps. This is a
claim asserted by the TPD, so §1367(b) does not remove the grant of SUPJRX. The claim can be joined in
fed. court. (This result is consistent with the law before enactment of §1367.)
Now one more step. Suppose P now asserts a compulsory counter claim against T. Once T asserted the
downsloping 14(a) claim against P, T became an "opposing party," so P's claim back is a counterclaim. This
one arises from the same transaction or occurrence as T’s claim, so it is a compulsory counterclaim under
Rule 13(a). Is there SMJRX over this claim? Obviously, there is no DJRX or FQJRX; the two are cocitizens and
the claim arises under state law.
Is there SUPJRX? Before Congress enacted §1367 there was."'' But the statute creates the same problem we
saw in Scenario Five. The compulsory counterclaim would clearly invoke SUPJRX under §1367(a) because it
arises from the same transaction or occurrence as the underlying claim that invoked SMJRX. The problem,
again, comes from §1367(b), which applies in cases that invoked DJRX juris diction (such as this), and
removes SUPJRX over claims by "Ps against persons made parties under Rule 14." This daim is exactly that.
Obviously, there should be SUPJRX, because P is acting in a defensive capacity and, in fact, is filing a
compulsory counterclaim. But, just as obviously, this stat ute fails to address this situation, and creates
uncertainty as to the viability of SUPJRX in this scenario.
7) P, a citizen of Wisconsin, asserts a federal question claim against D, a citizen of Delaware, properly invoking
federal question juris diction. All other claims are based upon state law and exceed $75K. D impleads T, a
corporation that is incorporated in Delaware with its principal place of business in Wisconsin. (So, as we
saw in §4.5.3, the corporation is a citizen of both of those states.) P asserts an upslop ing 14(a) claim under
Rule 14(a)(3) against T. Neither the impleader claim nor the upsloping 14(a) claim invokes DJRX or FQJRX.
Does either claim invoke SUPJRX?
Yes-they both do. Why? First, §1367(a) grants supplemental juris· diction over both, because both satisfy
Gibbs. Second, §1367(b) does not apply, and thus cannot remove the grant of supplemental juris diction
over those claims. Remember, §1367(b) applies only in cases that invoked DJRX. This case did not, so
§1367( b Idoes not apply and does not remove the grant of supplemental JRX.
C. Intervention (Rule 24)
o Procedural and Policy Issues
Intervention is exactly what it sounds like—an absentee brings herself into a pending case.
By doing so, obviously, the absentee overrides the P's party structure of the case.
Intervention is governed in federal practice by Federal Rule 24, which recognizes both intervention of right
(under Rule 24( a )I and permissive intervention (under Rule 24Cb)). 19';
The difference between these two is clear from the names. With the former, the court (at least theoretically)
must allow the absentee to join; with the latter, the court has the discretion to permit the absentee to join.
1) Intervention of Right
An absentee may qualify for intervention of right in one of two ways:
i. Rule 24(a)(1) notes that a federal statute might confer such a right.
A good example is 28 U.S.C. §2403, which requires that the Attorney General of the United States be
notified whenever a case calls into question "the constitutionality of any Act of Congress affecting the
public interest." After notification to the Attorney General, the United States has a right to intervene.
ii. Rule 24(a)(2) is more important—it provides for intervention of right in the absence of a statute, if the
absentee can establish (1) that she "claims an interest relating to the property or transaction that is the
subject of the action", (2) that she is "so situated that disposing of the action may as a practical matter impair
or impede the [intervenor's] ability to protect its interest", and (3) That the existing parties do not
adequately represents her interest.
On its face, Rule 24 seems to suggest that the party opposing intervention would have the burden of
showing that an existing party adequately represented the would be intervenor's interest, but the courts
have made it clear that the intervenor has the burden on all three requirements, including, then, that the
extent parties do not adequately represent her interests.
That said, the Supreme Court has made clear that the burden of showing that no party adequately
represents the intervenor's interest is "minimal" and is satisfied by showing that the existing parties
have some interest that differs from that of the absentee.
*Side Note: This test for intervention of right should ring a bell—the two basic requirements are the
same as the two requirements for finding an absentee necessary under Rule 19(a)(1)(B)(i).
Thus, an absentee who would be found necessary under Rule 19(a)(1)(B)(i) will have a right to
intervene under Rule 24(a)(2) provided she can also show that existing parties do not
adequately represent her interest—this latter point has no counterpart in Rule 19.
o Hypo: A owns 1K shares of stock in Corporation, in her own name. P claims that she and A had bought the stock
together and that the stock was supposed to have been issued in both names as joint owners. P sues Corporation,
seeking to have A's stock canceled and the shares reissued in the joint names of P and A. Does A have a right to
intervene?
We saw the same fact pattern in above, in which the question was whether A was a required party under
Rule 19.
The answer to that question and to the question asked here is yes: A has a right to intervene under Rule
24(a)(2) for essentially the same reasons that she was necessary under Rule 19(a)(1)(B)(i).
1st : she has an interest in the pending litigation; P is currently the sole owner of the stock at issue in
the litigation.
2nd: she is so situated that litigation without her joinder might impair or impede her ability to protect that
interest; if P wins the pending case, A's stock is canceled and reissued to make her merely a joint owner,
instead of outright owner.
These two facts meant that A was necessary under Rule 19(a)(l)(B)(i). With Rule 24(a)(2) we must
also assess the third factor—that A's interest is not adequately represented by any of the present
parties. This certainly seems to be the case; P wants to take away A's present sole ownership of the
stock. D is probably ambivalent on the issue; at least, it is not clear why the corporation cares who
owns the 1K shares. Accordingly, A has a right to intervene under Rule 24(a)(2).
We are left, then, with two Rules—19(a)(l)(B)(i) and 24(a)(2)—that overlap significantly—both Rules are aimed
at overriding the P's party structure for one reason: to protect an interested absentee from harm to her ability to
protect her interest.
Why would two Rules do the same thing?
The answer is that the two Rules empower different persons to force the joinder of the absentee.
Rule 19 is invoked principally by the D, although the court may also raise Rule 19 issues on its own
(assuming that it knows about interested absentees).
In contrast, the absentee herself invokes Rule 24—thus, she is given a mechanism by which to override
the P's structuring of the case expressly to protect herself.
Of course, an absentee can intervene only if she is aware of the pending case. Rule 19(c) is a feeble
attempt to put the court in a position to know of absentees who might have a right to intervene under
Rule 24(a)(2). The drafters of that Rule foresaw the possibility that the court might then inform
absentees of their right to intervene.)
Also, an absentee who qualifies to intervene of right is not required to do so—Rule 24(a)(2) makes it clear that
the absentee "may" intervene, but does not require that she do so.
Remember why parties satisfy the basic test for intervention of right under Rule 24(a)(2): because they had
an interest in that case, and were so situated that their ability to protect that interest may be impaired or
impeded, and their interest was not adequately represented by an existing party. If Ps won the first case, the
absentees' relative places on the promotion ladder would have been lowered; the Ps would have been put above
them.
As noted, under Rule 24, any application to intervene must be ''timely." Contrast this requirement with the
timing requirement for Rule 19. Under Rule l 2{h)(2), a motion to dismiss for failure to join an indispensible
party may be made anytime before entry of judgment at trial; IOW, indispensability under Rule 19 could be
raised at the trial on the merits,
2) Permissive Intervention
The second type of intervention—permissive intervention—is not available of right—instead, whether to permit
the absentee to intervene is addressed to the discretion of the district court.
A permissive intervenor generally is not as closely related to the pending case as an intervenor of right—she
does not have a statutory right to come into the case and her nonjoinder does not threaten her interest with
harm.
Accordingly, there is less need for allowing her to join the case, and the trial judge may look at a wide range of
factors relating to fairness and convenience in deciding whether to allow permissive intervention.
Permissive intervention should be granted only if the court determines that its benefits outweigh the burdens it
creates.
Like intervention of right, there are two provisions concerning permissive intervention.
i. Under Rule 24(b)(1)(A), the absentee may seek to intervene if a federal statute confers "a conditional right
to intervene."
There is such a statutory provision in the Bankruptcy Code, for example, which allows a party in interest
to seek to intervene." Such statutes do not confer a right to intervene, and even those who fall within
them must submit their intervention fate to the discretion of the trial judge.
ii. Rule 24(b)(2) is more significant and allows permissive intervention when the absentee "has a claim or
defense that shares with the main action a common question of law or fact."
The reference to "claim or defense" recognizes that an intervenor might come in on either side of the
case—as a P or as a D.
The requirement of a common question is not very demanding.—recall that it would take more than that
for persons to be joined together as coparties; Under Rule 20(a)(1), persons can join as coPs, for
instance, only if their claims (1) arise from the same transaction or occurrence and (2) raise at least one
common question. Here, the showing required for permissive intervention is merely the second of those
two tests.
The common-question standard is the same as we saw for consolidation under Rule 42(b)
Note that it does not require the absentee to have any interest in the pending case.
Further, it does not require that the common question predominate in the litigation; there simply
has to be at least one common question presented both by the pending case and the absentee's claim
or defense.
However, demonstrating that there is such a common question is no guaranty that permissive
intervention will be granted.
Again, permissive intervention (like consolidation) is a discretionary call for the trial judge.
The court usually looks to such things as (1) whether the absentee has delayed unduly in seeking to
intervene; (2) whether intervention might prejudice any existing parties; and (3) the status of the
pending proceedings.
For instance, if the pending case is nearing completion, and intervention would introduce collateral
issues that would delay resolution, the court should probably deny the application to intervene.
Allowing permissive intervention overrides the P's structuring of the suit and can be disruptive to the existing
parties.
Accordingly, many courts will permit it only if they are convinced that the absentee will make some useful
contribution to the development of the case or issues in the case.
Moreover, intervention can be sought for limited purposes, for example, to litigate only on specific issues.
For example, when the court in a civil rights case ordered that the settlement terms be kept confidential, it
should have granted the motion of newspapers to intervene to challenge the order of confidentiality.
3) Procedure & Timing
Under Rule 24(c), the absentee seeking to intervene must serve on all parties:
i. A motion to intervene and
ii. Her pleading in intervention.
Even when the case involves intervention of right, she must make the motion to intervene and does not become a
party until the motion is granted.
Thus, the absentee must choose to participate on one side of the dispute.
The P-intervenor will offer a complaint in intervention, which states her claim against the D.
The D-intervenor will offer an answer in intervention, which responds to the P's anticipated claim
against her once intervention is granted.
She makes this decision by determining which side is more consistent with her position—often, there will
not be a perfect match of interests, so she must decide which side offers less conflict with her position.
The court has the discretion to look beyond the absentee's characterization and realign her according to
what the court sees as the interests of the parties—this realignment may have serious consequences for
SMJRX, as we will see shortly.
Both Rule 24(a) and (b) begin with the words "on timely application," meaning that any motion to intervene—
whether of right or permissive—must be timely.
Rule 24 does not define what that means—there is no magic time frame.
In one case, intervention was untimely when made four months after a case was filed.
In another, intervention was timely although made four years after a case was filed.
The question is addressed to the discretion of the district judge, who must assess not simply the passage of
time since the case was filed, but all relevant circumstances."
While there is no single exhaustive list of such factors, many courts look to these: (1) how long the
absentee knew of her interest (or. with reasonable diligence, should have known of her interest) befoe
seeking to intervene; (2) the extent of prejudice caused to existing parties by the absentee's delay; (3)
the extent to which denial of intervention might prejudice the absentee; and (4) unusual facts that augur
for or against a finding of timeliness.
Although it is unusual, there are cases in which courts have granted intervention after entry of judgment.
For instance, an absentee whose interests are affected by the judgment might wish to intervene to
prosecute an appeal when the original parties have refused to appeal.
As a general rule, courts are more likely to find the effort to intervene "timely" with intervention of right under
Rule 24(a)(2) than with permissive intervention.
The reason is clear: With intervention of right under that Rule, the absentee's ability to protect her
interest will be impaired by the pending litigation. Joinder is required to avoid such potential harm to the
absentee.
4) JRX’al & Related Issues
Because an intervenor voluntarily enters a pending case, she has no basis on which to object to a lack of PJRX—
she has waived any personal JRX objection she might have had.
Similarly, an intervenor has no basis on which to complain about venue—she has waived any venue objection
she might have had as well.
But, as we know, parties cannot waive or stipulate around limits on FSMJRX.
Every claim in federal court must be supported by a basis of subject matter JRX.
Thus, the court must assess whether intervention can be accomplished consistent with the restnctions on
FSMJRX.
Remember, that the intervenor comes into the case either to assert a claim (as a P) or to have a claim
asserted against her (as a D)—SMJRX is exercised over claims, not over parties—So the appropriate focus is
whether the claim asserted by or against the intervenor invokes federal SMJRX.
o Hypo: P, a citizen of Delaware, asserts a state law claim of $100K against D, a citizen of Illinois. The
claim invokes DJRX and is properly filed in fed. court. A, an intervenor of right who is a c1t1zen of CA,
intervenes as a P to assert a $100K state law claim against D. A's claim invokes DJRX and thus is
properly asserted in this case.
o Hypo: Same facts as in the preceding hypothetical, but here the intervenor is a citizen of Illinois.
Obviously, A's claim against D does not invoke DJRX, because A and D are cocitizens. Also, there is no
FQJRX, because A's claim arises under state law. Can A s claim invoke SUPJRX?
This is an important question. As with the discussions of SUPJRX for each of the joinder devices
addressed in, you must be familiar with the operation of §1367.
Remember that under Rule 19 an "indispensable" absentee is one (1) who is necessary, but (2)
cannot feasibly be joined in the pending case, and (3) as to whom the court has decided to dismiss
rather than proceed.
That third step was determined based upon an assessment of flexible factors under Rule 19(b).
One relevant factor was whether the absentee can protect her interest in the absence of dismissal
Because the absentee satisfying Rule19(a)(1)(B)(i) can intervene under Rule 24(a)(2), she can
protect herself and thus the court should not dismiss.
IOW, the court should not find the absentee (to use a term no longer found in Rule 19, but
widely used) "indispensable."
The basic tests for the two Rules are the same, with one addition in Rule 24(a)(2) that the absentee
show that her interest is not adequately represented by extant litigants—as we discussed above,
however, this latter requirement imposes a minimal burden on the absentee
Back to the Hypo: Under §1367(a), A's claim against D would invoke SUPJRX, because it does satisfy
the “common nucleus” test, as we saw above.
But §1367(b) applies in cases that invoked DJRX (such as our hypothetical) and removes SUPJRX
over certain claims.
Among them are claims by persons "seeking to intervene as Ps under Rule 24—A is such a person,
so §1367(b) removes SUPJRX over that claim.
This means, of course, that P's claim against D, and any counterclaim by D against P, will be
litigated in fed. court, while A's claim against D must be litigated in state court—the SUPJRX
statute robs fed. court of the ability to resolve the overall dispute.
As noted earlier, because § 1367(b) only applies in DJRX cases, and because it increased the
situations in which courts would not have SUPJRX, the statute reflects an antidiversity JRX bias.
The language of §1367(b) is problematic in another way—because the subsection applies to those
"seeking to intervene as Ps," does it include someone who seeks to intervene as a D, but who is
realigned as a P?
The uncertainty on this point simply creates more confusion—some courts have been willing to
realign an intervening P as a D, expressly to save JRX; Others have not done so, feeling bound
by the absentee's choice to intervene on the P's side.
Some litigants have even tried to exploit this language by intervening as Ds when their interests
are more closely aligned with the P.
o Hypo: A holds a stock certificate for 1K shares of Corporation, issued in A's name. P claims that she and
A had agreed to buy the stock together, each paying half, and that the stock should have been issued in
their joint nan1P:->. P, a citizen of Alabama, sues Corporation, a citizen of Delaware, seeking to have A's
stock canceled and then reissued in the joint names of P and A. The stock is worth $500K. P's claim
against Corporation invokes DJRX and is properly filed in Fed. Court. A is required under Rule 19(a)(l)
(B)(i) and has a right to intervene under Rule 24(a)(2). (Remember whv: A has an interest in the
pending case; her ability to protect that interest may be impaired or impeded by the pending case, and
(for Rule 24(a)(2)) her interest is not adequately protected by those who are presently parties.) Will
there be SMJRX if she intervenes?
o In all likelihood, A will choose to intervene as a D. Her interest is antithetical to that of P. After all, P
wants to dilute A's interest in the stock. Corporation is probably ambivalent about who owns the
stock and may be satisfied with the status quo. A wants to keep the status quo. So let's say A would
intervene as a D. She is a citizen of Alabama, so P's claim against A does not invoke DJRX (because
they are cocitizens). The claim likewise does not invoke FQJRX because it arises under state law. So
is there SUPJRX?
o As we saw above. §1367(a) will grant SUPJRX over the claim. because of its close relationship with
the pending case. But does §1367(b) remove that grant? It applies only in cases that invoked DJRX,
such as this, and removes jurisdiction over particular claims.
Some commentators argue that joinder is proper in this case because nothing in 1367(b) precludes it
—after all, there is no claim here asserted by a person "seeking to intervene as a P under Rule 24." So that
prohibition does not apply.
The problem with the argument, as we also saw with regard to Rule 19(a)(1)(B)(i), is that it assumes that
SMJRX is granted over parties.
Why did A intervene as a D? Presumably so she could defend against P's claim to her stock. So she
intervened as a defendant to defend a claim by P against her. Notice, however, that §1367(b) expressly
removes SUPJRX over claims asserted by a P against "persons made parties under Rule . . . 24." This
provision applies to A in this hypothetical. So the claim by P against A—which was the very reason for
A's intervening—cannot be asserted in the pending case.
Finally, claims asserted by or against a permissive intervenor will rarely invoke SUPJRX.
Permissive intervention under Rule 24(b)(2) requires only that the intervenor's claim or defense have at
least one question in common with the pending case—there is thus no requirement that the claim or
defense be so closely related to the pending case as to arise from a common nucleus of operative fact.
Thus, satisfying the requirement of Rule 24(b)(2) does not necessarily satisfy the degree of relatedness
required for SUPJRX under §1367(a).
There may be cases, however, in which the claims asserted by or against a permissive intervenor will share
enough factual overlap with the underlying dispute to invoke SUPJRX, but they are unusual—in most cases,
claims involving permissive intervenors have to invoke DJRX, alienage, or FQJRX to be heard in fed. court.
Easy to understand joinder when diagrammed out.
Joinder is very rule based.
Rules:
Rule 8-P can bring claim against D
Rule 12-Defense and objections
Rule 13—couterclaim and cross claim
Rule 20(a)—permissive joinder of claim against new party
Rule 14-impleader (Yes multiple impleaders allowed), and impleaders can bring crossclaims against each other
14(b) P can implead third party P when a claim asserted against him.
Third party D can assert can assert claims P
P can asser claims against 3rd party D.
B and M–car accident. B sues M for negligence about brakes. M impleads car shop alleging contributory negligence fixing her
brakes. Carshop wants to assert a claim against B to recover an outstanding balance. No JRX’al issues, what is the likely
result.
interpleader & C-ACTION
I. INTERPLEADER
Interpleader allows resolution of competing claims to property in a single case—It is thus limited to the question of who
owns specific property.
A. WhatIinterpleader Is and How It Works: Policy and Terminology
interpleader is a procedural device that allows someone in possession of property or money to force all adverse
claimants to that property to litigate the ownership of that property in a single proceeding.
It is the model of efficient litigation—The question of ownership is litigated once, with all claimants and the present
possessor of the property bound by the judgment.
o Insurance Co. issued a $250K life insurance policy. The insured died, and Insurance Co. must now pay out the
benefit. Three people—A, B, and C—each claim to be the beneficiary of the entire policy amount. Consider how
difficult things would be for Insurance Co. if it could not force A. B, and C to assert their claims to the policy in a
single interpleader cast.
o Suppose A sued Insurance Co. and won. The court would enter a judgment requiring the company to pay the
policy amount to A. Then suppose B sued Insurance Co. The judgment in the case by A against Insurance Co.
would not be binding on B, so B is free to assert her claim that she should get the money. (By the way, why is
the judgment in the case by A v. Insurance Co. not binding on B?3) Suppose B wins. The court would enter a
judgment requiring the company to pay the policy amount to B. Insurance Co. would now be subject to
inconsistent obligations: It could not satisfy the judgment from the first case without violating the judgment
from the second case. If it has to pay both, it will pay out twice as much in insurance proceeds as it contracted
to do. And things might get even more complicated when C sues to claim that she should get the insurance
money.
3 Because due process provides that a judgment cannot be binding against one who was not a party in an earlier case. B was not a party in A v. Insurance Co., nor was any party representing B's interest. So B is not bound.
interpleader avoids these problems by allowing Insurance Co. (or anyone in a similar situation) to join in a single
case all the persons who claim to own the property.
Thus, it is supported by the same policy interest we saw undergirding joinder of necessary parties under Rule
19(a)(l)(B)(ii)4 and impleader under Rule 14(a)(1)5
And because interpleader resolves the conflicting claims in a single proceeding, it saves judicial resources and
avoids the inconsistent results that can erode confidence in the system of justice.
In summary, a many-sided dispute can be resolved economically and expeditiously in a proceeding, and the
stakeholder can be relieved from the obligation of determining who has the rightful claim to the money or
property. In addition, the stakeholder avoids possible multiple liability resulting from inconsistent judgments for
different claimants in different suits. Even if multiple liability is unlikely, both the stakeholder and the judicial
system avoid the expense and delay of multiple litigation. Conflicting claimants to the stake also may benefit
from interpleader, since all conflicting claims arc resolved in a single action and a limited fund can be distributed
equitably. Furthermore, interpleader frequently eliminated the need to find and execute on the debtor's assets.
The con tested stake generally will be on deposit with the court.''
interpleader involves specialized terminology:
o The property to which the litigants have conflicting claims of ownership is the stake or res.
o The person in possession of the property is the stakeholder.
o The persons who are joined in the interpleader proceeding, whose conflicting claims of ownership will be
adjudicated, are the claimants.
This Hypo is referenced later:
o S finds an expensive wristwatch in the basement of the house she buys. The previous owner of the house (O) claims
to own it, and argues that she left it in the basement by mistake. A contractor (O) also claims to own it, and argues
that she left it in the basement while doing renovation work. S is the stakeholder. O and C are the claimants. If S does
not claim to own the wristwatch, she is a disinterested stakeholder, and the proceeding will be a true (or strict)
interpleader.
o If, however, S claims that she should be able to keep the wristwatch (because, for example, of a finders’ statute) she
will be an interested stakeholder, and the proceeding will be in the nature of the interpleader.
B. Two Types of interpleader in Federal Court
interpleader practice in the Fed. Courts is complicated because there are two types of interpleader.
Rule 22, also known as Rule interpleader, provides only a procedural mechanism because no Federal Rule can affect
FSMJRX or venue.
It can only be used if some basis for FSMJRX (discussed in Chapter 4) and some basis for federal venue
(discussed in Chapter 5) apply. Typically, Rule interpleader cases invoke DJRX JRX under 28 U.S.C §1332(a)(1)
In addition, however, there is the Federal interpleader Act, which consists of three statutes 28 U.S.C. §§1335, 1397,
and 2361.
This Act creates a different right to interplead and a separate basis of FSMJRX, as well as provisions for venue and
service of process—these three statutes together create what is known as S-interpleader.
The JRX’al and venue differences between Rule and S-interpleader are important, and are addressed in detail below.
Other differences are discussed in the remainder of this subsection. Throughout your consideration of this topic, keep
in mind that there are two completely separate vehicles—Rule interpleader and S-interpleader-for invoking
interpleader in Fed. Court.
C. Claims That Exceed the Stake and Prospective Claims
In the examples we have seen so far, each adverse claimant claimed to own the entire stake—either the wristwatch in
the previous hypothetical or the $250K life insurance fund in the first example. But interpleader is also appropriate
4 That rule permits overriding the P's structuring of a suit expressly to avoid subjecting a party to double, multiple, or inconsistent obligations such as those seen here.
5 Impleader permits a defending party to join in an absentee who owes her indemnity or contribution. Doing so protects the D from the possibility of losing in the pending case and then failing in a separate case to collect indemnity of contributions. Thus, impleader, like joinder of necessary parties under Rule 19(a)(l)(BJ(ii) and interpleader, avoids imposition of multiple liability.
when the total claimed by the claim ants exceeds the value of the stake. Such cases usually involve competing claims
to a liability insurance fund.
o D has automobile insurance that covers her against liability to a total of $300K per occurrence. She is involved in
an automobile crash that severely injures five people. Each of the five (P- l through P-5) files a case against D for
personal injuries from the crash. The total demand in the five separate cases is $1,500K. Thus, the claims exceed
fivefold the amount of insurance coverage. D's insurance company may wish to interplead the $300K fund and
join the five claimants. There are three important points to note here.
1) interpleader litigation deals only with who is entitled to recover the stake; it involves only adverse claims to the
stake6. In this hypothetical, we do not know yet whether the claims by each of the five individual tort Ps will
result in judgments that exceed the $300.000 insurance coverage.
The five tort claims are "unliquidated" because we do not know whether they will actually become claims
against the insurance fund and, if so, for how much. The individual tort cases by P-1 through P-5 against D are
not part of the interpleader case.
Those claims are asserted against D to impose upon D personal liability; they are not claims against the stake.7
As those cases are litigated (or settled), the claim of each P will become "liquidated," which means that a
dollar figure will be attached to it. Then, each P will have a claim against the stake, because each will want to
recover her judgment from the insurance money. (If the stake is exhausted without compensating the
claimants fully, the claimants will attempt to recover the shortfall from D personally.)
2) If the claims of the various tort Ps in this case are not yet liquidated (and might not be liquidated for years
because they are in litigation in separate cases), how can the insurance company interplead now?
Under Rule interpleader by Rule 22, the stakeholder may proceed if separate claims "may expose [the
stakeholder] to double or multiple liability. . . , " Under S-interpleader, the stakeholder may join any who "are
claiming or may claim to be entitled to the stake." Thus, even if the applicable substantive law does not
permit a direct action in the absence of a judgment against the insured, interpleader is proper at the outset."
3) What happens if the claims of the five Ps, as finally liquidated, exceed the value of the stake? Suppose, for
example, that P-1 wins a judgment of $50K; P-2 wins a judgment of $100K; P-3 wins a judgment of $150K; P-4
wins a judgment of $200K; and P-5 wins a judgment of $400K. That is a total of $900K in judgments against D.
The available insurance fund is $300K. If interpleader were not available, we would have a race to recover from
the insurance fund. The race might leave the tardy claimants with nothing.
Thus, in addition to the policy advantages discussed above, allowing interpleader in this situation also serves
the same principle addressed by Rule 19(a)(1)(B)(i)—avoiding harm to an absentee.
o In this situation, interpleader serves to "slice the pie" equitably among the five claimants. As noted, their liquidated
claims total $900K which is three times as large as the insurance fund. Accordingly, the interpleader court will allow
each claimant to recover one-third of her claim. Thus, P-1 will recover $16K.66 from the fund; P-2 will get
$33,333.33; P-3 will get $50K; P-4 will get $66,666.67; and P-5 will get $133,333.33. None recovers her amount in
full, but, more important, none is left outt altogether. (Each one is now free to try to enforce her judgnment against
D personally for the two-thirds not covered by insurance.)
D. Injunctions Against Other Proceedings; Limitations of interpleader
The efficacy of interpleader would be threatened if the claimants were free to assert their rights to the stake in
separate litigation.
For instance, assume S institutes interpleader and joins O and C as claimants. If C can sue S in a separate suit in
another court to recover the stake from S, the advantages of interpleader will be lost. To avoid such duplicative
litigation, it would behoove the interpleader court to issue an injunction against the claimants, prohibiting them
from suing for the stake in another case. In the federal system, interpleader courts certainly have the authority to
enter such injunctions.
6 In all likelihood, D's insurance company will have the duty to defend D in each of those cases, regardless of what the ultimate recoveries by each P may be. It usually is part of a liability insurer's contractual obligation not only to provide the policy coverage from which claimants can recover but also to defend the insured in litigation against her.
7
§2361, which is part of S-interpleader, expressly provides that the federal court overseeing an interpleader case may
"enter its order restraining [the claimants] from instituting or prosecuting any proceeding in any State or United
States court affecting the [stake]."
Note that the language permits the Fed. Court to issue an injunction against claimants from proceeding either in
another Fed. Court or in any state court.8 But §2361 does not apply to Rule interpleader cases. As to such cases, then,
there is no express grant of injunctive power.
What if the overlapping litigation is in a state court? Here, things get more complicated because of the Anti-Injunction
Act, 28 U.S.C. §2283, which provides that a Fed. Court may not issue an injunction against litigants proceeding in a state
court, unless one of three exceptions applies.
Thus, a federal Rule interpleader court can issue an injunction against a pending state action only if one of the
exceptions to the Anti-Injunction Act applies. The exceptions are: (1) when Congress provides that the Fed. Court
may enjoin litigants from proceeding in state court; (2) when an injunction is "necessary in aid" of the JRX of the
court; and (3) when an injunction is necessary to enable the court to effectuate a judgment it has entered. 17 Courts
have concluded that the second exception applies in R-interpleader cases.
In other words, the Fed. Court in Rule interpleader can issue an injunction "in aid of its JRX," because simultaneous
litigation in state court would interfere with the interpleader court's efforts to distribute the stake.
Any injunction prohibiting a claimant from litigating outside the interpleader proceeding must be properly limited.
Specifically, it can only prohibit other claims to the stake itself.
This fact drives home the limitation of interpleader: It is a device for placing in one proceeding claims to specific
property; it is not a device that allows a court to force all potential tort claimants into a single case.
The interpleader case must involve only claims to the stake.
In cases like Tashire, however, there are more assertions of liability than the mere claims to the fund of insurance
money.
In that case, there were tort claims against Greyhound, Nauta, Glasgow, and Clark. None of these tort claims
constituted property brought within the interpleader proceeding. The interpleader could determine only who gets
the $20K of State Farm insurance money for claims against Clark.
Thus, anyone who had already recovered a judgment against Clark could seek to recover it from the State Farm
fund. Those claims were properly asserted only in the interpleader case. But the underlying tort claims against
Clark (and against the others) are not part of the interpleader case; quite simply, they are not claims against the
stake until one tries to enforce a judgment against the insurance fund.
E. Invocation of interpleader
interpleader is odd because it reverses the normal role of plain tiff and D—usually, when P sues D, it is to impose
liability on D.
In interpleader, however, the stakeholder, as P, sues the claimants not to impose liability on them, but to force
them to assert their claims to the property in the interpleader proceeding. In essence, she sues them to force
them to sue her! She does so, however, because interpleader allows her to avoid being sued multiple times by
the various claimants.
What happens, though, if one of the claimants sues the stakeholder before she institutes interpleader? Can there be
defensive invocation of interpleader? Yes. Let's return to the fact pattern we saw above, about ownership of the
wristwatch found in a house. Here, though, assume that 0 has sued S, seeking to recover the wristwatch. S is the D, but
is also the stakeholder, and wants to invoke interpleader by bringing C into the case as well, so all the claimants can
litigate the ownership question in a single proceeding. What does she do? She files a compulsory counterclaim against
0,invoking interpleader and naming 0 as one of the claimants.9 Rule 13(h) permits S to join as additional parties to the
counterclaim any absentee (such as C) who satisfies Rule 19 or Rule 20.10 By definition, absentee claimants in
interpleader (here, C) satisfy Rule 19 and thus can be joined under Rule 13(h).11
8 Instead, the injunction is against the claimants personally, forbidding them from litigating in another court. If a claimant violates the injunction, the Fed. Court issuing it can hold the claimant in contempt, which means that the court can fine that party or even order her jailed until she agrees to abide by the injunction.9 The claim against O a compulsory counterclaim because it is against an opposing party and arises from the same transaction or occurrence as that party’s claim. Here, O's claim against S is for ownership of the wristwatch. S's counterclaim is for interpleader as to the same property; thus, it obviously arises from the same transaction or occurrence as O’s claim. We discussed the compulsory counterclaim earlier. See Fed. R. Civ. P. 22(a)(2): “A D exposed to similar liability may seek interpleader through a crossclaim or counterclaim."
10 Rule 20 concerns permissive joinder of parties. Rule 19 concerns joinder of necessary parties.11 An absentee stakeholder satisfied Rule 19(a)(1)(B)(ii) because her nonjoinder subjects a party (the stakeholder) to the possibility of multiple or inconsistent obligations. As we noted above, if the claimants sue individually, in separate litigation, the stakeholder may be subjected to inconsistent obligations, such as one judgment that C is the owner and another that 0 is the owner. Avoiding such potential harm underlies Rule 19(a)(1)(B) and is the basic underlying reason for interpleader.
F. Stages of Interpleader Litigation and Deposit of Stake or Bond
Assuming the court has PJRX over the parties and SMJRX over the interpleader claim, interpleader litigation proceeds
in two stages.
First, the court determines whether the litigation concerns claims to property that meet the various requirements
for interpleader. If so, the case proceeds to the second stage, in which the claimants litigate the question of who
owns the stake. In true interpleader (where the stakeholder has no claim to the stake), the stakeholder does not
participate in the second stage; she is discharged from the case at the close of the first stage.
OTOH, if the proceeding is in the nature of interpleader (where the stakeholder claims to own the property ), the
stakeholder will participate in the second stage; she is one of the claimants. The result of the second stage of the
litigation is a judgment as to who the rightful owner is. The judgment will bind all claimants who were joined in the
case.
What happens to the stake during the litigation? Under the statute, the stakeholder must deposit the stake with the
court or post a bond with the clerk of the court.
Indeed, this deposit is a jurisdictional prerequisite, so failure to abide by the requirement deprives the court of JRX
to proceed with S-interpleader.
Rule 22, in contrast, does not require deposit of the stake or of a bond, so such a deposit is not a JRX’al requirement
for Rule interpleader. Nonetheless, the court in a Rule interpleader case can and usually does order the stakeholder
to deposit the stake or a bond.
Deposit of the stake with the court is a salutary event—the property cannot be lost, transferred, stolen, or squandered
while the litigation is ongoing.
It also ensures that the property is present for distribution at the end of the case. Later we will see that the court's
determination of what is to be deposited affects the AIC of the case for JRX’al purposes.
II. INTERPLEADER: JRX and Related Issues
A. The Development of Two Types of interpleader
We have said that there are two types of interpleader in the Fed. Court system: Rule interpleader under Federal Rule
22 and S-interpleader under 28 U.S.C. §§1335, 1397, and 2361.
As we know the federal rules cannot affect the JRX of the federal courts—thus, Rule 22 interpleader can be
invoked only if the case brought under it invokes a basis of FSMJRX—usually DJRX and FQJRX.
Very few Rule interpleader cases invoke FQJRX—nearly all such cases invoke DJRX (reviewed below)
Similarly, whether venue is proper is determined for R-interpleader, just as it is for any basic civil case, under
§1391(b).
And, finally, personal JRX over the claimants must be asserted as it would in any DJRX case.
o In sum, then, R-interpleader is—for purposes of JRX, venue, and service of process—just a DJRX case.
But S-interpleader is a completely different proposition—the three statutes, §§1335, 1397, and 2361, respectively
1.Create the claim for interpleader and grant subject matter JRX therefor,
2.Create a special venue provision for S-interpleader claims, and
3.Permit nationwide service of process for S-interpleader cases.
Rule 22 is completely irrelevant to S-interpleader, and S-interpleader is completely irrelevant to Rule 22.
If a stakeholder proceeds under S-interpleader, she is invoking SMJRX under §1335, and not under the general
DJRX statute, §1332(a)(1).
Now we compare Rule interpleader and S-interpleader in terms of personal JRX, subject matter JRX, and venue. Keep
in mind that Rule interpleader is simply a DJRX case, while S-interpleader has its own special provisions for personal
JRX, subject matter JRX, and venue.
The aspect of S-interpleader allowing nationwide service of process on claimants is now found in §2361.
In contrast, Rule interpleader does not have its own separate statutory basis for service of process and personal
JRX.
A Rule interpleader case is treated just as any other case in the Fed. Court—thus, PJRX and service of process
outside the state in which the Fed. Court sits are possible only if they would be proper in a state court there.
o Trustee holds a fund of $100K, to which there are three claimants, C-1, C-2, and C-3. Trustee institutes
interpleader in Fed. Court in CA. Assume that SMJRX and venue are proper. C-1 is a citizen of CA and can be
served with process there. C-2 is a citizen of AZ but clearly has sufficient minimum contacts with CA to be subject
to PJRX there. C-3 is a citizen of FL and has absolutely no contact with California.
o If the case is brought under Rule interpleader, the Fed. Court in California will have in personam JRX (and can
serve process outside state lines) To the same extent as a California state court. Thus, C-1 and C-2 can be brought
before the JRX of the court, because they clearly have sufficient contacts with California. But C-3 cannot be
brought before the JRX of the Fed. Court in California, because she lacks minimum contacts with California.
Because a California state court could not exercise PJRX over C-3, neither can a Fed. Court under Rule
interpleader.
o If the same case were brought under S-interpleader, however, C-3 could be brought before the JRX of the Fed.
Court in California. Under §2361, C-3 is subject to nationwide service of process. Anyone found anywhere in the
United States can be served with process for a S-interpleader proceeding in a Fed. Court anywhere in the
country.
B. Subject Matter JRX
Rule 22, like all Federal Rules on joinder, provides a procedural device—it does not and cannot affect subject matter
JRX requirements—so Rule interpleader is proper only if the case invokes one of the independent bases of FSMJRX:
DJRX, alienage, or federal question.
On the other hand, statutory interpleader has its own legislative basis of SMJRX, separate from the general grants of
DJRX, alienage, and federal question JRX.
C. Federal Question JRX
Whether interpleader arises under federal law can be difficult to assess.
For one thing, as we have seen, interpleader is an odd kind of "claim—it is really a device by which the stakeholder
demands that others assert their claims against her—so it is tough as a conceptual matter to characterize whether
interpleader involves a federal right.
Moreover, interpleader can present the same problem we encountered with deciding whether declaratory judgment
cases arise under federal law. In those cases, (Chapter 4.6.3), courts look to whether coercive action by the stakeholder
would invoke federal question JRX.
D. SMJRX Based upon Citizenship and AIC
• Rule interpleader cases are treated simply as DJRX cases under §1332(a)(1)—so all principles about invoking DJRX,
which we discussed earlier, apply in Rule interpleader. Statutory interpleader is a completely different proposition.
Though as a constitutional matter, the subject matter basis for S-interpleader is DJRX, as a statutory matter, it does
not rely on the general diversity statute, §1332(a)(1).
Instead, §1335 applies—the requirements for subject matter JRX for Rule and S-interpleader differ markedly.
E. To Determine Diversity
Rule and S-interpleader differ in two fundamental ways:
A. Whose citizenships are relevant, and
B. What kind of diversity (complete or minimal) is required.
• Rule interpleader is just a regular diversity case under §1332(a)(1).
Accordingly, the courts look to the citizenship of the stakeholder, on the one hand, and the citizenships of the
claimants, on the other.
In addition, in keeping with the complete diversity, the stakeholder must be diverse from everv claimant.
With statutory interpleader, however, §1335 requires only that one claimant be of diverse citizenship from any other
claimant.
In, general, then, the stakeholder's citizenship is irrelevant in statutory interpleader—we look only to the
citizenship of the claimants.
Moreover, the statute requires only "minimal" diversity—the statute is satisfied if any one claimant is of diverse
citizenship from any other claimant.
o Stakeholder is a corporation, incorporated in DE with its principal place of business in Illinois. There are four
claimants: C-1 is a citizen of Illinois; C-2 is a citizen of Ohio; C-3 is a citizen of Ohio; and C-4 is a citizen of MN
o This case can not invoke Rule interpleader, because the stakeholder is not of diverse citizenship from
every claimant. Stakeholder is a citizen of Illinois, and so is C-1. Thus, the case does not satisfy the
complete diversity rule applicable in Rule interpleader.
o This case can invoke S-interpleader. The stakeholder's citizenship is irrilevant. So the fact that
Stakeholder and one of the claimants, C-1, are cocitizens (Illinois) does not matter. In looking at
citizenships of the claimants, all that is required is that one be diverse from at least one other. Here, the
stakeholders are citizens of Illinois, Ohio, and Minnesota, so the requirement is satisfied. The fact that
that there are two claimants who are citizens of Ohio is irrelevant. Statutory interpleader is based upon
minimal diversity; complete diversity is not required.
Statutory interpleader offers considerable advantages (such as JRX based upon minimal diversity, lower AIC, and
nationwide service of process). So why does Rule interpleader ever get used? There is one fact pattern in which Rule
interpleader is possible but S-interpleader does not appear to be.
o Stakeholder is a citizen of Texas. All claimants are citizens of Louisiana. Obviously, this arrangement would satisfy
the citizenship requirements for Rule interpleader, because Stakeholder is of diverse citizenship from all
claimants. But it does not meet the citizenship requirements for S-interpleader. Why? Because the statute requires
at least one claimant to be diverse from at least one other claimant. Here, they are all cocitizens. So the statute
appears unavailable.
o Suppose, however, on this fact pattern that the AIC requirement for Rule interpleader (in excess of $75K) is not
satisfied, but that the amount requirement for S-interpleader ($500 or more) is satisfied.
o Stakeholder cannot invoke Rule interpleader here because the jurisdictional amount in controversy
requirement is not met.
o On the face of things, it appears that Stakeholder cannot invoke S-interpleader either, because there is no
minimal diversity among the claimants; all claimants are cocitizens.
o But what if the case involves an interested stakeholder? That is, as discussed above, what if Stakeholder in this case
claims she is entitled to the stake?
F. To Determine the AIC
To invoke diversity of citizenship JRX in Rule interpleader, the AIC must exceed $75K. In S-interpleader, §1335
requires only $500 or more. The AIC is the value of the stake to be distributed.
G. Venue
1. Rule Interpleader
Again, a Rule interpleader case is treated simply as a "regular" case—either federal question or diversity of
citizenship—thus, venue is governed by §1391(b).
Those statutes provide for venue, basically, in either of two places: (1) any district where all the Ds reside or
(2) any district in which a substantial part of the claim arose.
As to the second of these choices, there is little meaningful case law guidance on where an interpleader claim
(or a substantial part thereof) arises.
In practice, then, that statutory choice offers no help.
Thus, the stakeholder/P must lay venue in a district where all Ds (claimants) reside.
If they reside in different districts of the forum state, remember, she may lay venue in any of the districts in
which one resides.
Thus, for Rule interpleader, venue can be a significant (and frustrating) restriction. (*Statutory interpleader
cases are brought under §1335.)
o Stakeholder, a citizen of Iowa, wants to interplead two claimants, C-1, who is a citizen of Illinois and resides in the
Northern District of Illinois, and C-2, who is a citi zt>n of Michigan and resides in the Eastern District of Michigan.
There is no district in which venue is proper based upon the rcsidc>nce of the Ds. Thev do not reside in the same
district, nor do they resid<' in different districts of the same state. So §1391(b)(1) is not met. And because no one
seems to know where an interpleader claim arises, §1391(b)(2) gives no help.
But let's take a closer look at §1391(b)(2). It also permits venue in a district where "a substantial part of
property that is the subject of the action is situated."
This seems perfectly suited to interpleader—Under it, in the preceding hypothetical, Stakeholder could lay
venue in the district in which the property is found. If it is movable property, she can take it to whatever
district she prefers for venue. She might, for instance, lay venue in the district in Iowa in which she resides;
certainly that would be most convenient for her.
This means the stakeholder may manipulate venue. The manipulation does not seem unfair to the D, however,
because the chosen venue must have personal JRX over the claimants.
What if the interpleader is asserted defensively? We discussed this possibility in §13.2. 1.
The scenario is usually this: A claimant sues the stakeholder to recover the stake, and the stakeholder files a
counterclaim against the claimant, to which she joins additional claimants under Rule 13(h).
How is the venue handled in such a case? Most courts adopt the idea of "ancillary venue" in such circumstances
—as long as venue was proper in the original case by the claimant against the stakeholder, venue is proper
even as to additional claims involving joinder of additional parties.
Some courts reach this conclusion by noting that the venue statute, §1391, speaks only of the district in which
an action is "brought." Thus, the statute only addresses venue as to the original claim by the P against the D,
and does not apply to subsequent claims involving additional joinder of parties.
2. Statutory Interpleader
Statutory interpleader includes its own section for venue—§1397 provides that venue may be laid in any district
where any claimant resides.
The courts have determined that this provision is exclusive in S-interpleader cases; IOW, §1397 replaces, and does
not augment, §1391.
They reason that §1391 provides for venue only in cases in which there is no statutory provision to the contrary;
§1397 provides the contrary legislation. In most cases, the exclusivity of §1397 will not create a problem,
because it is easier to satisfy than §1391(b)(1).
o Stakeholder interpleads three claimants, C-1, C-2, and C·3. Assume that personal JRX and subject matter JRX are
proper. C-1 resides in the Eastern District of Pennsylvania. C-2 resides in the Western District of Pennsylvania. C-3
resides in the Northern District of Illinois.
o If the case invokes Rule interpleader, no district is a proper venue under §139l(b)(l), because there is no district
in which all claimants reside. (The provision in §1391(b)(2) permitting venue in a district where the property
subject to litigation is found—discussed above—would provide venue in this case.
o If the case invokes S-interpleader, venue may be laid against all three claimants in any of three districts: The
Eastern District of Pennsylvania, the Western District of Pennsylvania, or the Northern District of Illinois. Why?
Because §1397 (applicable only in S-interpleader) permits venue in any district where any claimant resides.
3. Summary
This chart should be helpful in summarizing the major differences between Rule interpleader (invoking diversity of
citizenship JRX) and statutory interpleader.
I. The Class Action
The C-Action permits a representative or multiple representatives to assert or defend against claims on behalf of a group
whose members are similarly situated. Properly executed, class litigation by the representative(s) will bind all class
members.
A. Overview of the C-Action and of Underlying Policy Issues
A C-Action is brought by or against a representative (or multiple representatives) on behalf of a group.
If it's done correctly, the group is bound by the result of the litigation.
This procedure obviously promotes efficiency because it means that the individual members of the group do not
litigate.
In addition, the C-Action can promote the same policies of avoiding harm that underlie Rule 19.
C-Actions raise significant due process issues, precisely because they do bind persons who are not technically parties.
In addition, the C-Action is subjet to abuse, and raises significant ethical issues, as we will see.
B. Development of Federal Rule 23
Federal Rule 23 governs C-Action practice in Fed. Court—the focus is on practicality—on fact patterns rather than
on legal relationships.
The 1966 version of Rule 23 jettisoned the barnacle-encrusted language relating to legal relationships and provided
instead a practical, step-by-step method for analyzing when class litigation is appropriate. (Restyled in 2007, but
not supposed to affect the way the rule operates)
Quick note: it is rare, but possible for defendant class actions, and even plaintiff classes against defendant classes.
For the rest of the outline however, assume the class in on the plaintiff side unless D c-actions are specifically
mentioned.
C. Class Representatives and Class Member
The person (or persons) suing on behalf of a P class is named as a formal party in the case—thus, she is referred to as
the "named representative" or just the "representative."
Because she is a party, all Federal Rules relating to parties apply to her—for instance, only parties can be required to
respond to interrogatories (see §8.2.2). The representative is a party, and thus must respond to interrogatories.
What about the other class members—are they parties to the case?
The quick answer is no—emphasizing this fact, some courts refer to them as "absentee" class members.
Though they are technically not parties, these class members can be bound by the judgment.
How can that happen? Through representation. Recall from preclusion that a valid final judgment on the merits
binds only those who were parties to the case or who were in "privity" with a party—though "privity" is sometimes
difficult to define, it clearly includes the notion of representation.
TYPEStatutory
PJRXNationwide
service of process
VENUEDistrict where any claimant resides
DIVERSITYMinimal diversity between any two claimants
AIC$500 or more
Rule Same as state court in state in which situ- ated; service per Rule 4
Per§1391(b)(where D's residence or property located)
Complete diversity between stakeholder, on one hand, and all claim- ants, on theothe-r-
I In excess of$75K
So a valid final judgment on the merits binds parties to the case and those who were represented by parties to the
case—thus, one important focus of the procedural rule concerning C-Actions is that the members' interests be
adequately represented, precisely so they can be bound by the outcome of the case.
Because class members are not parties, they are not subject to various Federal Rules directed at parties—for example,
the adverse party has no right to serve interrogatories to class members.
OTOH, the party opposing the class may have a legitimate interest in obtaining information from class members.
Courts have balanced this need against the fact that a class member is not a party, and have, on occasion, allowed
limited discovery from class members.
Though class members are not parties, they have no license to ignore court orders. In the usual case, however,
class members will not be subjected to discovery requests. They are, in almost every case, "along for the ride."
They are passive.'"'
D. Potential for Abuse
In many cases, class members may feel that their interests have taken a back seat to those of the lawyers for the class
—this fact underscores significant policy issues related to aggregate litigation.
o Suppose a chain of retail stores has been overcharging on some product in violation of some law. Each customer
is overcharged an average of $5. Obviously, if there were no C-Action device, there would be no civil litigation
about this overcharge. Why? Because no individual customer would sue to recover $5. Even if a particular
consumer were overcharged 20 times, she will not sue for $100; the effort is greater than the return to be gotten.
And, obviously, no lawyer will take the case of a potential P who has been harmed to the tune of $5, or even $100.
o This lack of civil litigation does not necessarily mean that the retail store is "getting away" with its bad behavior.
If the overcharge violates the criminal law or some regulation, there may be a criminal prosecution or
administrative fine. But it is unlikely that there will be any compensatory damages to the injured consumers.
What happens, though, if we do have a C-Action device, and let's assume that there are 500K consumers in the same
boat. Now as a C-Action, there are 500K class members, each harmed by an average of $8. In the aggregate, that is a
"claim" of $4 million, which is certainly enough to attract a lawyer to take the case (usually on a contingent fee basis).
This fact leads us to an interesting irony of the C-Action. The device is praised for its efficiency because it
permits one (large) case to take the place of thousands of (smaller) cases. But in this sort of case—involving
small claims that no one would bring individually—the C-Action creates litigation that otherwise would not
exist at all!
Is that a good thing? It depends on one's point of view—if we emphasize the fact that the C-Action empowers a
group to sue when individually they would not, we might hail the C-Action as "one of the most socially useful
remedies in history."
The Supreme Court has explained: "Where it is not economically feasible to obtain relief within the traditional
framework of a multiplicity of small individual suits for damages, aggrieved persons may be without any
effective redress unless they may employ the class-action device Pointedly, Judge Posner has said:
The realistic alternative to a class action is not 17 million individual suits, but zero individual suits,
as only a lunatic or a fanatic sues for $30. But a C-Action has to be unwieldy indeed before it can be
pronounced an inferior alternative-no matter how massive the fraud or other wrongdoing that will
go unpunished if class treatment is denied-to no litigation at all.
OTOH, the C-Action is enormously coercive, even if the claim on the underlying merits is weak.
Precisely because the C-Action permits the assertion of huge potential liability in a sin gle case, it creates
overwhelming pressure on the D to settle.
Rather than proceed to trial and take a chance on losing $4 million in our hypothetical above, the D might see
the wisdom of writing a check to settle the case.
Even a D convinced that it has done nothing wrong will be reluctant to roll the dice and go to trial with its
entire financial future at stake.
In fact, some empirical studies suggest that class claims (at least in certain substantive areas) are settled
regardless of the strength of the class claim on the merits.
Even weak claims may coerce a sizeable settlement out of a D who wants to avoid the potential devastation of
a C-Action judgment. Emphasizing these facts, some decry the C-Action as "legalized blackmail."
Obviously, neither side has a monopoly on virtue—for us, it is well to keep in mind that the C-Action is both an
important device for achieving justice and a powerful weapon subject to abuse.
But what drives the C-Action?
One possibility is the representative. What is her interest? Though some courts allow the representative to
recover some sort of bonus for vindicating the group's claim, in general there is no financial reason for the
representative to take on the responsibility of the position.
As we see below, she may be required to advance a significant amount of money to give notice to class members,
and in the usual case she does not recover anything other than her personal damages.
Thus, in our hypothetical, the representative will recover $8 (or whatever her damages were).
Why would anyone take on the responsibilities of class representation to recover that amount? Usually, the
representative is motivated by principle—by a desire to 'get justice" for the class.
It is possible, though, that the real moving force behind the C-Action is not the representative at all, but her lawyer.
Most P C-Actions are taken on a contingent fee basis, which means the lawyer is paid a percentage of what the
class recovers.
This arrangement is praised precisely because it permits prosecution of actions that otherwise could not be
brought if the P had to pay an attorney hy the hour.
But the fee structure may create incentives for the lawyer that can conflict with her professional duties to her
clients.
o For example, suppose D offers to settle the case on terms that include a substantial payment of attorneys' fees to
the class lawyer. Going to trial, however, might lead to a better result for the class. The lawyer has a conflict of
interest and must resist the temptation to put her own interest ahead of that of the class.
One common contemporary criticism of the C-Action concerns "sweetheart" deals or "coupon" settlements.
Here, the D offers to settle the C-Action by paying large fees to the class lawyer and to compensate class members
by providing them with coupons for discounts on future purchases of products from the D.
Class counsel may be tempted by such an offer, because it provides her with a substantial payment without the risk
of going to trial.
The D finds such a deal advantageous, because it avoids both the expense of litigation and the risk of devastating
liability at trial.
The persons whose interests may be lost in the shuffle are the class members, for whom coupons for discounted
products from a D who has wronged them may provide little compensation.
Indeed, it is quite possible that many of the coupons will go unused, which further reduces the D's ultimate outlay
to settle the case. Concern with such settlements underlay passage of the C-Action Fairness Act (Discussed below)
E. The Role of the Court
In view of the potential for abuse, who looks out for the interest of the class members?
We are tempted to say that the representative herself is charged with this responsibility.
In reality, though, most class representatives are ill-equipped for the task; they are lay people, unfamiliar with the
law and with civil procedure.
The only person who can protect the class from overreaching by lawyers is the court—the judge who
oversees the C-Action.
Rule 23(e) provides that no certified C-Action may be settled or voluntarily dismissed without court approval.
For present purposes, it is sufficient to note that the court is responsible for protecting the class members from an
unscrupulous deal.
II. Due Process: How Can Class Members Be Bound by a Class Judgment?
Due process permits a class judgment to bind class members only if they are members of the same class as the
representative—stated another way, if the representative and the class members disagree on the key issue in the
litigation, they are not members of the same class; the representative cannot represent people who disagree with her on
that key issue.
In Hansberry, the disagreement was clear—the representative in Burke u. Kleiman wanted to enforce the covenant
and thus could not be allowed to bind those homeowners who opposed the covenant.
Importantly, Hansberry does not stand for the proposition that there can be no disagreement between the
representative and class members—there may be disagreements on matters of strategy and remedy.
However, so long as the class members and the representative are united on the core issues in litigation, there will be
no constitutional problem with the judgment's binding all class members.
Thus, class members can be bound if they are adequately represented. They do not need to be joined as parties.
But do they need to be given notice of the proceeding? Hansberry says nothing about it.
The later case of Mullane v. Central Hanover Bank 86 (see §3.2) held that nonparties can be bound if given
appropriate notice of the proceeding. Mullane did not involve a C-Action, but concerned numerous beneficiaries to
a pooled trust. The Court concluded that "notice reasonably certain to reach most of those interested in objecting is
likely to safeguard the interest of all, since any objection sustained would inure to the benefit of all.
Do Hansberry and Mullane together require that class members in a C-Action be adequately represented and be given
notice of the proceedings?
Apparently not. As we see below, Rule 23 requires notice of the pendency of the C-Action in only one of three
types of C-Action.
In all class cases, however, the representation must be adequate—so the drafters of the Rule seem to have
concluded that, at least in some types of C-Action, adequate representation (without notice) satisfies due process.
III. Prerequisites of Any C-Action Under Rule 23(a)
Rule 23 prescribes specific factors for determining at the outset whether a case should proceed as a C-Action.
(Satisfaction of the requirements of Rule 23 will avoid constitutional problems)
A class action is commenced like any other case—by filing a complaint—the class representative's complaint contains all
the elements of any complaint under Rule 8(a).
In addition, she alleges that the case is brought as a C-Action, and usually states that she is suing "on behalf of a
class of persons (or entities) similarly situated."
In the complaint, the representative will define the class—as we see below, it is important that the definition strike
the court as a manageable group.
There is no need to list the individual members of the class. (Indeed, in many cases t hat would be impossible.)
At this point, the case is merely a "putative C-Action" and the group is merely a "putative class."
The case does not become a class action until the court enters an order "certifying" it as such.
Thus, at some point after filing the case (and after the D has responded to the complaint), the class representative
will make a motion to certify the case as a C-Action. We discuss this process and the court's role in detail below.
The focus in the motion to certify will be whether the class (1) satisfies the prerequisites of a class in Rule 23(a),
and (2) falls within one of three types of classes recognized in Rule 23(b). We discuss the prerequisites in this
section and the types of classes later.
A. Implicit Requirement of a "Class"
Before listing four express prerequisites, Rule 23(a) refers to the existence of a "class."
The wise lawyer will be aware of the need to convince the court—as a practical matter—that a ''class" does indeed
exist.
In her complaint and in the motion to certify the class12, then, counsel will avoid defining the group in open-ended
terms, such as people "interested in peaceful political discussion" or by subjective intent, such as "those people
who were eligible to apply for aid but who were dissuaded because of the relevant agency's treatment of others.”
If the class prevails, or if the C-Action is settled, the court will have to determine who will receive what remedy.
The prudent lawyer will continually assure the judge that this will be a manageable task.
The first opportunity to do this is in the complaint, and counsel will do well to impose reasonable temporal and
geographic limitations on the class.
There is no need to name each class member—defining the group by salient characteristics is sufficient.
For example, in a securities fraud case, the class might consist of "all persons who (or entities which) purchased
common stock of the XYZ Corporation after June 15, 2013, and before September 30, 2013.
Depending on the size of that group, the lawyer might consider circumscribing the class to purchasers of the stock
who reside in a particular state or region.
12 P must define the class in the complaint, and will do ·:m again in the motion for certification. Often, these definitions will differ. because in the interim ( perhaps because of discovery) the class lawyer may have learned something that makes the class definition more definite. From the outset. thuugh -starting with the complaint-it behooves the class lawye:r tu define the class in a way that convince the judge that the case will be manageable.
The idea is to reassure the judge that if the court eventually has to distribute a remedy, it can find the people who
should get it.
We see below that there are different types of C-Actions—one type—under Rule 23(b)(3)—requires that the
identifiable members of the class be given individual notice of the pendency of the case.
That type of C-Action usually involves claims for monetary relief—in such cases, because the court will need to
give individual notice and (if the class wins) to award money to the various class members, the court will expect
especial specificity in the class definition.
In contrast, another type of C-Action—under Rule 23(b)(2)—involves claims for injunctive or declaratory relief—
because there is no requirement of notice to individual members of such a class, or to find and distribute damages
to individuals, courts require relatively less specificity in defining a class in such cases.
Can a class include future members? That is, can a C-Action seek recovery on behalf of those who, while not yet
injured, will be injured in the future?
The answer is yes, but in limited circumstances. Inclusion of future members is possible but somewhat rare; it is
proper only when the group is well defined, relatively small, and discrete.
B. The Four Express Prerequisites
Assuming the existence of a "class," Rule 23(a) sets forth four prerequisites, usually referred to, respectively, as
"numerosity," commonality, typicality, and adequacy of representation.
Though all four should be addressed in any case, they are not hermetically sealed from one another.
Indeed, there is a good argument that the four can be collapsed into two: numerosity and adequacy of
representation.
The party seeking certification has the burden of persuading the court that all requirements are satisfied.
1) Rule 23(a)(1): Numerosity
This word (if it is one) does not appear in Rule 23; courts made it up to cover the requirement in Rule 23(a)(l) that
the class be "so numerous that joinder of all members is impracticable."
This requirement ensures that the C-Action is necessary—if the number of class members involved is low
enough that joinder would be practicable, a C-Action simply is not needed; the affected persons can join as co-Ps
under Rule 20(a)(1).
Whether a proposed class satisfies Rule 23(a)(1) involves a case-by-case analysis.
One factor, of course, is the sheer number of putative class members.
Some classes are so large that numerosity is obvious—for example, some classes have many hundreds or
thousands (or even millions) of members—such large groups generally pose no numerosity problems.
When is numerosity not obvious'? Most courts agree that there are no automatic rules and there is no magic
number.
Some, however, have espoused this rule of thumb: Generally, fewer than 50 members is insufficient, more than
100 members is sufficient, and the range in between varies depending upon other factors.
Again, however, this is at best a general rule, and there are cases in which courts have certified classes with
fewer than 21 members and cases in which courts have denied certification of classes with scores of putative
members.
Such cases often demonstrate the importance of factors other than the raw numbers.
For instance, geographic dispersion of class members is relevant—in one case, the court rejected class status
for 350 political subdivisions of a state because the members were not geographically dispersed and could join
in a single case in which a state officer could represent them all.
OTOH a relatively small group might be seen as numerous if the members are geographically wide spread,
since joinder would be relatively more difficult.
We see below that, for DJRX purposes, the court looks only to the citizenship of the class representative, not all
the class members.
If joinder of the individual members would make it impossible to satisfy the complete diversity rule, joinder is
arguably impracticable.
Another relevant factor is the ability of members to pursue individual litigation.
If individual claims are so small that members would not be expected to pursue them, joinder may be seen as
impracticable.
The Supreme Court recogrnized this possibility in Phillips Petroleum Co. v. Shutts, a case involving a class of
claimants whose claim averaged $100; the Court explained "most of the Ps would have no realistic day in court
if a C-Action were not available
The court may consider other issues that affect an individual's incentive or ability to pursue individual litigation.
In one case, for instance, the court concluded that a class of 19 was proper, in part because the individuals
would be too intimidated to bring individual discrimination claims.
Similarly, factors such as limited financial resources, mental disability, or inability to speak English may
render joinder impracticable."'''
2) Rule 23(a)(2): Commonality
Rule 23(aX2) requires that there be "questions of law or fact . . . common to the class."
Though the rule uses the plural word "questions," courts have long agreed that a single common question is
sufficient.
In Wal Mart Stores v. Dukes the Court reversed the Ninth Circuit, which had upheld a class of potentially 1.5
million members. The class consisted of female employees of Wal-Mart, and alleged gen der discrimination in
violation of Title VII. Wal-Mart gives managers great discretion in setting pay (within ranges) and awarding
promotion. Ps asserted that this discretion is exercised disproportionately in favor of men, which causes an
unlawful disparate impact on women employees. They sought injunctive and declaratory relief, punitive
damages, and back pay. The Court held, five-to-four, that the class failed to satisfy the commonality
requirement of Rule 23(a)(2). (The Court also held (unanimously) that the class could not be certified under
Rule 23(bl(2), which we discuss in §13.3.4.)
The majority in Dukes recognized that Rule 23(a)(2) requires only a single question of law or fact in common to
the class, but held that there was none—saying that all Ps suffered a violation of federal employment law was
insufficient, because that law can be violated in different ways. Rather, the members must have suffered the
same injury, so "their claims can productively be litigated at once."
The substantive law required a showing of a general policy of discrimination.
Though the Ps alleged such a policy, the Court concluded that they had no proof to justify certification.
Ps presented the "social framework" analysis of a sociologist, who concluded that Wal-Mart's structure and
corporate culture made it "vulnerable" to "gender bias."
The expert conceded, however, that he could not calculate what percentage of employment decisions might be
affected by "stereotyped thinking."
Accordingly, the majority concluded, a court "can safely disregard what he has to say.”
Note, then, that the Court required evidence supporting the Ps' contention that they satisfied the prerequisites
of Rule 23(a).
Indeed, the Court held, a party seeking class certification must proffer "convincing proof" that the
requirements are met.
Ps likewise failed in their attack on the Wal-Mart policy of allowing local managers to exercise discretion over
pay and promotion—here, they failed to identify a "common mode of exercising discretion that pervades the
entire company."
Because they could not show an employment practice that "ties all their 1.5 million claims together," Ps failed
to demonstrate the existence of a common question under Rule 23(a)(2). "Without some glue holding the
alleged reasons for all those decisions together, it will be impossible to say that examination of all the class
members' claims will produce a common answer to the crucial question why was I disfavored."
Anecdotal evidence did not suffice; Ps provided only one affidavit for every 12,500 class members, relating to
only 235 of the 3,400 Wal-Mart stores. "[A] few anecdotes selected from literally millions of employment
decisions proves nothing at all.""'
Dukes is an important case—while its holding that a Rule 23(b)(2) class was inappropriate (discussed in §13.3.4)
was unanimous and seems unexceptional, its five-to-four holding that the class failed to meet Rule 23(a)(2) is a
blockbuster.
Again, very few cases ever discussed this requirement in any detail. Dukes is destined to lead to increased
litigation over the issue of simple commonality.
3) Rule 23(a)(3): Typicality
Rule 23(a)(3) mandates that the representative's claims be typical of those of the class.
This factor is closely related to the next, which is that the representative fairly and adequately represent the
class.
Both requirements focus on the relationship between the class members and their representative.
The function and goal of the C-Action is to bind the entire class to the judgment obtained by the representative.
As discussed in §13.3.2, this cannot be accomplished, as a matter of due process, unless the representative
adequately represents the interests of the class members.
The requirement that the representative's claim be typical of the claims of class members helps to ensure
adequate representation.
If the representative has suffered a similar harm—if she can "feel the pain" of the class members—it is more
likely that her representation will be adequate. Stated another way, without a typical claim, it is difficult to see
what incentive the representative would have to assert the class claims vigorously.
Rule 23(a)(3) does not require that the representative's claims be exactly the same in all particulars as those of
class members.
Instead, courts focus on the "essential characteristics" of the claims and recognize that minor factual differences,
even as to damages, will not make class treatment improper.
Obviously, though, if the class members' claims will require a high degree of individualized proof, class treatment
is not appropriate, and the representative's claim will not be typical of those of the group.
o Retail Store engages door-to-door salespeople to sell refrigerators. Fifty salespeople go to various
neighborhoods and enter into discussions with residents, during which they offer to sell the refrigerator on
discount if the person agrees on the spot. About 200 people agree to buy and make the require payment, and
Retail Store never delivers the refrigerators. In a C-Action for common law fraud, one serious problem will be
the substantive requirement of showing a misrepresentation of fact by the defendant. If each representation by
a salesperson to a prospective purchaser was unique, a C-Action would seem impossible, because nobody's
claim would be typical of anyone else's claim. But if Retail Store provided its sail's force with a standard sales
pitch to be memorized and delivered to each person, a C-Action might be possible. In such a situation, the
misrepresentations would have been identical, even though each conversation was slightly different.""
Beyond this, it is important that the representative suffer the same general kind of harm suffered by the class.
o The class consists of Mexican American persons who applied for employment with D. They claim that D refused to
hire them on the basis of their national origin. Representative is a Mexican American who is employed by D, but
who claims that D refused to promote him because of his national origin. Representative cannot represent the
class, because be did not suffer the same harm. While both he and the class assert that they were hurt by D's
discriminatory behavior, they were hurt in different ways. The class members were never hired. Representative
was hired (but not promoted), and thus his claim could not be typical of those of the class members.
Moreover, the fact that a representative is subject to a defense that class members generally are not may preclude a
finding of typicality (or adequacy of representation).
1) The existence of such a defense will require litigation unrelated to class interest, and may distract the
representative from prosecuting the class claim.
2) For example, in one case, the fact that the representative bought certificates of deposit from the D after the
alleged fraud was uncovered subjected it to a unique defense and defeated typicality. Similarly, the fact that the
representative of a class of prostitutes was subject to deportation (and other class members were not) defeated
typicality.''"
3) It is also important that the representative suffered a typical harm at the hands of the same Ds as the class
members.
o Hypo: The class consists of persons in a city who did business with pawn shops that allegedly violated federal truth-in-
lending laws. There are five defendant pawn shops, joined under Rule 20(a). The representative, however, dealt only
with one of the Ds. The fact that she was not harmed by the other four pawn shop Ds means that her claim is not typical
of the class members, who dealt with the other four. She did not suffer at the hands of those other four and cannot
represent persons who did.
There are three ways around this problem:
i. The case may be structured with multiple representatives, one having dealt with each of the Ds. Then the
representative who dealt with D 1 has a claim typical of all class members who dealt with D 1, the
representative who dealt with D 2 has a claim typical of all class members who dealt with D 2, and so forth. This
solution will not work, however, if there are too many Ds for practicable joinder. In such a situation, however,
the case might be structured with a D class; if certified, the representative D will represent all Ds, who will then
be bound by the judgment Gust as P class members are bound by the judgment).
ii. If the Ds had engaged in a conspiracy to violate the truth-in-lending laws, the representative need not have had
deal ings with each D. The idea here is that each class member, including the representative, was harmed by the
concerted efforts of the Ds; thus, one person so harmed can speak for others so harmed."'
iii. It is possible that members of a class have a juridical relationship that enables the court to conclude that one
may speak for and bind the others. The term is not well defined, and seems limited to persons who occupy
coordinate governmental positions. For example, in one case, Ps sued a class of D jailers, who allegedly
segregated prisoners unconstitutionally. Though the Ps had not dealt with each jailer, all the D class members
were officers of a single state. Their juridical relationship meant, in essence, that a P who had deal t with one
could assert a claim against all.
4) Rule 23(a)(4) (and Rule 23(g)); Protecting the Class Interests
Rule 23(a)(4) requires that the representative "fairly and adequately protect the interests of the class.”
This is the linchpin for assuring that the class members can be bound consistent with due process.
This factor overlaps greatly with the Rule 23(a)(3) requirement of typicality—indeed, some courts treat the two as
virtually interchangeable.
While recognizing overlap between the two, it is important to see, however, that certain factors must be addressed
under Rule 23(a)(4). Though that Rule refers only to adequacy of the representative, we will see in §13.3.5 that the
court must appoint class counsel (under Rule 23(g)), who is also charged with providing fair and adequate
representation for class members' interests.
In contrast to class counsel—who, under Rule 23(g)(2), must be the applicant "best able to represent the interests of
the class"—there is no requirement that the class representative be ''the best" available.
Rule 23(a)(4J requires "adequate" protection of the class interests—the representative owes a fiduciary duty of loyalty
to the class.
At a minimum, her interests cannot be antagonistic to those of the class.
Mere differences of opinion concerning litigation strategy will not defeat class certification—rather, a disqualifying
conflict is one that relates to the core subject of the case and is immediate, not speculative.
As we noted above in discussing typicality, a representative may not be adequate if she is subject to a unique defense,
one not avail able against class members generally.
Similarly, if the representative's credibility is subject to legitimate attack, the court may find her inadequate.
In addition, some courts have found a representative inadequate if she has a close personal, business, or familial
relationship with the class lawyer
In such a case, the representative might be tempted to approve settlement on terms favorable to the lawyer and
relatively less favorable to the class members.
The class representative must litigate with vigor.
Courts generally recognize, however, that the representative is rarely a lawyer, and cannot be expected to have
detailed knowledge of the law.
At some level, however, the representative must have at least some rudimentary understanding of the nature of
the dispute—otherwise, she cannot serve as a brake on the actions of the class counsel.
If the representative is wholly clueless on such things, the class is essentially "headless."—this robs members of a
measure of representation and essentially permits suit by the lawyer, who lacks standing to bring the claim.
Ds also often challenge a class representative by pointing to her lack of financial ability to prosecute the litigation.
Many lawyers take P C-Actions on a contingent fee basis, so the representative need not pay attorney’s fees as the
litigation proceeds.
But the representative must pay various costs of the litigation as they are incurred. For example, there are filing
fees, witness fees, and costs of discovery.
In a C-Action under Rule 23(b)(3), as we see in §13.3.4, the representative must pay to give the required notice to
class members. If the litigation is successful, the losing side generally will have to pay the prevailing party's costs.
In the interim, however, the representative must bear the expenses as they are incurred. The court must be
convinced that the representative can finance this aspect of the litigation.
Can the class counsel advance money to the representative to pay these expenses? Historically, the answer was yes, so
long as the rep resentative agreed to reimburse the lawyer if the class lost the litigation. More recently, led by Rule
l.8(e) of the American Bar Association Model Rule of Professional Responsibility, some states permit the lawyer to
advance expenses on a contingent basis.
That means that the client repays the lawyer for these costs only if the class recovers some remedy. C-Action Ps'
lawyers like this provision because it makes it easier for them to enlist representatives. On the other hand, there is
a concern that absence of a requirement that the client reimburse the lawyer for these costs allows the lawyer to
"buy" a class claim.
Of course, Ds cannot get lawyrs to work on a contingent fee. They pay their lawyers by the hour.
C. Types of C-Actions Recognized Under Rule 23(b)
Assuming the party seeking certification convinces the court that the prerequisites of Rule 23(a) are satisfied, that party
then must demonstrate that the case fits within one of the types of classes recognized by Rule 23(b).
Thus, under Rule 23(b), there is a choice; the party seeking certification need satisfy only one of the types of
classes recognized.
On the other hand, nothing in Rule 23 precludes the representative from seeking certification under more than
one type of C-Action, and some parties do seek certification under more than one type.
1) Rule 23(b)(1): The "Prejudice" C-Action
Reading Rule 23(b)(1) will remind you of Rule 19(a)(1)(B)—the Rules Advisory Committee amended the two (along
with Rule 24(a)(2)) together in 1966 expressly to emphasize their similarities.
We saw that Rule 19(a)(1)(B) mandates the joinder of an absentee in either of two situations: (1) when
nonjoinder of an absentee might subject the absentee's interest to practical impairment or (2) when nonjoinder of
the absentee might subject the D to the risk of incurring multiple or inconsistent obligations. (In both instances,
the absentee must claim an interest in the litigation.)
Rule 23(b)(1) addresses the same potential harms, but in the class context, where there are so many absentees
that their joinder is not feasible.
Just as Rule 19(a)(1)(B) consists of two subparts, so does Rule 23(b)(1). Because the Rule is concerned with
avoiding potential prejudice (either to the absentees or to a party), we can refer to the Rule 23(b)(1) classes as
"prejudice" C-Actions.
These are "mandatory" classes, because members have no right to request exclusion.
Rule 23(b)(1)(A) permits a C-Action if individual suits "would create a risk of inconsistent or varying
adjudications with respect to individual class members that would establish incompatible standards of
conduct for the party opposing the class."—this is the class analog to Rule 19(a)(1)(B)(ii); the focus is on the
impact of nonclass litigation on the party opposing the class.
Assuming a P class, the focus thus is on the D.
The court asks this question: If the putative class members sue individually (not in a class), might it
subject the D to incompatible standards of conduct?
o Stockholders of a corporation claim that the corporation must convert their stock from one class to another. If the
stockholders sue individually, some may win and some may lose, which would leave the corporation uncertain as to
how to treat this class of stockholders. To avoid that potential uncertainty, a stockholder may sue on behalf of the
other stockholde'rs under Rule 23(b)(1)(A)
As we saw with Rule 19, inconsistent outcomes in damages claims will not satisfy Rule 23(h)(1)(A), because such
inconsistent claims do not constitute "incompatible standards of conduct."
o A train operated hy TrainCo crashes and injures 120 people. If the 120 people sue individually, some may win and
some may lose. This possibility does not satisfy Rule 23(b)(1)(A), however, because the individual cases against
TrainCo will not subject it to incompatible standards of conduct. There is nothing incompatible in this sense between
writing a check to one passenger and not to another.
The focus here as in Rule 19(a)(l)(B)(ii)-is on the effect of individual litigation on the ways in which the D must
do something in the real world.
In the first hypothetical above, for example, individual litigation might leave the corporation subject to orders
(1) that this class of stock be converted into another class of stock and (2) that this class of stock not be
converted into another class of stock.
The corporation could not satisfy one without violating the other.
In the TrainCo hypothetical, in contrast, there is no comparable inconsistency in having to pay a judgment to
one passenger but not to another.
Rule 23(b)(1)(B) provides for a C-Action if individual suits "would create a risk of adjudications with respect to
individual class members that, as a practical matter, would be dispositive of the interests of the other members not
parties to the individual adjudications or would substantially impair or impede their ability to protect their interests."
This is the class analog to Rule 19(a)(1)(B)(i); the focus is on the would-be class members.
The court asks this question: If the putative class members sue individually, might some be harmed as a practical
matter?
Such harm might be caused by the fact that there is a limited fund from which all class members can recover.
Individual actions might deplete the fund, leaving some essentially without a remedy.
Everyone seems to accept the theory behind these "limited fund" classes. Courts take different approaches,
however, about the degree of proof required to invoke Rule 23(b)(1)(B).
o Hypo: A fire raged through a crowded dinner theater and killed over 100 people. Based upon litigated claims for
wrongful death in the area. the judge estimated that the total liability, though not precisely subject to calculation
before trial, could exceed $16 million. In addition. Ds' lawyers estimated that the Ds had a net worth of
approximately $3 million. Based upon these estimates, the court certified a Rule 23(b)(l)(B) class, because it found
"good reason to believe" from these estimates "that total judgments might substantially exceed the ability of
defendants to respond."
Notice the reason for invoking Rule 23(b)(1)(B)—if the claimants sued separately, according to the court, they
would likely recover judgments totaling $16 million, but the pool of assets from which those judgments could be
satisfied totaled only $3 million.
If the litigations proceeded individually, the first few successful Ps would exhaust the $3 million13.
That scenario would prejudice those plaintiffs who were not first in the litigation line—those whose cases went to
trial later might win, but the victory would be hollow, because the Ds at that point would have no assets from
which the judgment could be satisfied.
To avoid that harm—to avoid the possibility that "individual actions would as a practical matter be dispositive of
the interests of the other[s] not parties . . . or substantially impair their ability to protect their interests"—the
group may proceed as a C-Action.
In that way, each member will receive a proportional part of what money there is. Instead of some Ps recovering
their full damages and many recovering nothing, this theory would allow all Ps to recover a percentage of their
damages.
*Remember the class is here is “mandatory”—meaning they can not opt out or request to be excluded w/an
opportunity to litigate an individual claim.
2) Rule 23(b)(2): Injunctive or Declaratory Relief
The Rule 23(b)(2) C-Action is appropriate when the party opposing the class (usuallv the D) "has acted or refused to act
on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is
appropriate respecting the class as a whole."
Thus, there are two requirements: one relating to the action or inaction of the party opposing the class and one relating
to the relief sought by the class.
It is a "mandatory" class, meaning that members have no right to request exclusion.
Typical C-Actions under Rule 23( b)(2) deal with employment discrimination or with claims to restructure public
institutions.
13 Not only that, but the net worth of the Ds would be eroded further by the attorneys’ fees and other litigation expenses from over 100 separate case. By the way, notice how this fact pattern could raise issue preclusion concerns. If the first plaintiff won, and established at trial that the defendants’ negligence caused the fire, could successive plaintiffs take advantage of that finding? The answer might be yes, if the applicable law adopted nonmutual offensive issue preclusion.
Each of the following examples would be appropriate under Rule 23(b)( 2).
o A group of workers claims that Employer has denied them promotion because of their national origin, in violation of
federal law. They seek an injunction compelling Employer to promote them (or a declaratory judgment that they are
entitled to such relief).
o A group of pretrial detainees ( persons charged with a crime and in cus tody while awaiting trial) claims that Sheriff
is denying them "contact" visits from family members, in violation of the Constitution. They seek an injunction
ordering Sheriff to permit such visits (or a similar declaratory judgment—judicial decree of the rights of the parties).
At this point, we might ask: Why go to the trouble of a C-Action in such cases? Why not just have one person from
the affected group sue? If she proves that Employer is discriminating against a group of workers on the basis of
national origin and wins an injunction against such discrimination, won't all the affected workers "win"?
The answer may be no. Suppose one P brings the suit and wins. The result is an injunction ordering Employer to
promote P, including, let's say, some broad language about not discriminating against the group on the basis of
national origin.
Now Employer promotes P but continues to discriminate against the other members of that group. Can they sue to
enforce the injunction against the Employer?
Probably not, because they were not parties to that case, nor were they represented by P (because it was not a
C-Action).
Accordingly, those people cannot enforce the judgment.
A class judgment, in contrast, will permit any member of the class to enforce the injunction against Employer.
So if the class sues and wins, and Employer later continues to discriminate against a member of the class, the
member can ask the court to hold Employer in contempt for violating an injunction entered in favor of all class
members.
Rule 23(b)(2J speaks only of injunctive and declaratory relief, but through the years, some courts permitted Rule
23(b)(2) classes to recover money, at least in limited circumstances.
Specifically, these courts permitted recovery of damages if they (1) "flowed automatically" from the grant of injunctive
or declaratory relief and (2) were readily calculable.
The most common example was an award of back pay:
o Suppose the class being discriminated against on the basis of national origin, noted above, wins an injunction
requiring Employer to promote them. That order avoids future harm to the class members by ordering
Employer to do what the law requires.
But what about the past discrimination? After all, the class members were denied their rightful promotions
for some time and thus were underpaid over that period. Recovery of damages for the past discrimination
will remedy that harm. Some courts permitted such recovery in the Rule 23(b)(2) class.
1. The damages for past harm flow automatically from the injunction; the injunction puts the class
members at the proper pay level, but they were denied that pay level before the injunction.
2. The damages are easily calculated; the court can simply apply a formula based upon the difference
between the two pay grades and the length of time each was discrminated against.
This result is obviously efficient, allowing equitable and legal relief in a single case.
But the result is also worrisome. Why?
Rule 23(b)(3), which we see below, has always been seen as the primary vehicle for classes seeking
recovery of money, and Rule 23(b)(3) provides safeguards not provided in Rule 23(b)(2)—specifically,
members of a Rule 23(b)(3) class are entitled to notice that they are in the class and have a right to opt
out (and sue on their own).
Folding damages into a Rule 23(b)(2) class robs the class members of that protection, because 23(b)(2) is
a mandatory class—there is no right to opt out.
So most courts limited monetary recovery in 23(b)(2) classes to claims for back pay—courts routinely
spoke of back pay as an "equitable" remedy, to justify its recovery in a Rule 23(b)(2) class.
Some courts went beyond this, and permitted recovery of individual damages in a Rule 23(b)(2) class—they attempted
to justify the result by pointing out that the case was "predominately" about equitable relief.
The Supreme Court unanimously rejected this practice in WalMart u. Dukes. (Above)
In rejecting the Rule 23(b)(2) class, the Court emphasized two points.
1. The injunctive or declaratory relief sought must be the same for each class member—the Rule "does not
authorize class certification when each individual class member would be entitled to a different injunction or
declaratory judgment against the D.
In other words, a class action cannot be used to vindicate unique individual equitable claims.
2. Rule 23(b)(2) does not authorize a C-Action when "each class member would be entitled to an individualized
award of monetary damages. This is true even if the award is of back pay, notwithstanding that back pay may
be considered "equitable" relief. Rule
23(b)(2) does not speak of equitable relief, but of injunctive and declaratory relief.
Beyond this, the Court hinted that due process requires that class members be given notice and the right to opt out
of any class action seeking monetary relief.
After Dukes, then, it is difficult to imagine that a Rule 23(b)(2) class will be permitted to seek monetary relief
The Rule 23(b)(2) class must seek a single, class-wide injunctive or declaratory remedy.
Finally, most courts conclude that 23(b)(2) generally cannot be used for a D class. (based on the language of the
rule)
3) Rule 23(b)(3): Common Questions Predominate
A C-Action under Rule 23(b)(3) is appropriate when (1) common questions pre dominate over individual questions,
and (2) the C-Action is superior to other means of adjudicating the dispute.
Though the Rule does not require that the class seek any particular form of relief, Rule 23(b)(3) C-Actions usually (but
not always) involve claims for damages.
The Rule 23(b)(3) C-Action is more controversial than the others.
Classes certified under Rule 23(b)(1) and (b)(2) tend to involve fairly cohesive groups, simply because of the
nature of the actions.
Under Rule 23(b)(1), the class members are so closely related that adjudication of their claims individually will
subject someone—either the D or the other class members—to some sort of harm.
Classes under Rule 23(b)(2), by definition, involve members who have been subjected to the same treatment by
the D.
In contrast, the Rule 23(b)(3) class is held together only by common facts—frequently, the class members just
happened to be in the same place at the same time—perhaps travelers on an ill-fated flight or investors in an ill-
fated venture.
If they sued individually, the fact that some would win and others would lose would create none of the problems
that underlie the need for the class action under Rule 23(b)(1) or (b)(2).
Because the Rule 23(b)(3) class tends to be a disparate group, the drafters imposed special procedural protections,
which we address in §13.3.6
1. The court must give notice to all class members of the pendency of the C-Action, including individual notice to
those who can be identified with reasonable effort.
2. Class members have the right to "opt out"—to leave the C-Action and proceed on their own (or, perhaps, decide
not to sue).
These protections are required only in the Rule 23(b)(3) C-Action—in Wal-Mart v. Duke (discussed above
regarding the 23(b)(2) C-Action), the Court hinted that notice and the right to opt out are constitutionally
required in classes seeking monetary relief.
In this subsection, we focus on the two requirements for certifying a Rule 23(b)(3) class.
A. The Need for Predominant Common Questions
We know from Rule 23(a)(2) that all C-Actions have common questions; the existence of common questions
among all class members is part of the definition of the class itself.
In the Rule 23(b)(3) class, it is not enough simply to have common questions; instead, the "questions of law or
fact common to class members" must "predominate over any questions affecting only individual members."
This requirement does not mean that the class members must share every issue in the case—indeed, it is hard
to imagine a case in which every issue—of causation, harm, and damages, for instance—will be identical to all
class members.
In the 1980s, as courts became increasingly crowded with mass tort litigation, many judges demonstrated
creativity in adapting the Rule 23(b)(3) C-Action to mass tort situations—doing so was relatively easier in cases
involving a single cataclysmic event.
o An explosion of a gas main in an office building injures scores of people. All were hurt at the same time in the
same general locale by the same thing. Thus, litigation en masse of many issues-including causation and other
questions related to liability-would be economical. The individual damages suflcrcd by each class member—
which might vary radically—can be left to individual proceedings.
The requirement of predominant common questions seems more difficult to satisfy in toxic torts and other cases
involving harm suffered at different places and at different times. For instance, (full example on pg. 799)
B. Superiority of the C-Action
The second requirement for certification of a Rule 23(b)(3) class is that the C-Action be "superior to other
available methods for fairly and effectively adjudicating the controversy."
The Rule lists four nonexclusive factors to aid in the assessment. As a review of the factors reveals, the drafters
clearly intended to force the judge to consider whether any other tools—joinder, multidistrict litigation under
§1407, consolidation, etc.—might be more readily managed than the C-Action.
Obviously, the C-Action will not always be easy to manage and administer—it just has to be better than the other
options. ,
Just as obviously, the two requirements for a Rule 23(b)(3) class are closely related.
If common questions do not predominate, manageability suffers; if the class can be defined with sufficient
narrowness so that the common questions predominate, it might be relatively easy to manage.
D. Filing and Certification of a C-Action (and Possible Appellate Review of the Certification Decision)
1.Putative and Certified Classes
Solid Review—We noted earlier that a C-Action is started by filing a complaint in which the representative purports
to sue on behalf of a class. At this point, though, it is merely a "putative" class. The case generally is not considered a C-
Action until the court "certifies" it. Under Rule 23(c)(1)(A), the court must make the certification determination "(a]t
an early practicable time." The parties may have to undertake discovery to determine whether the requirements for
class certification have been met. The representative may determine during this interval that the class definition set
forth in the complaint can be honed or refined in ways to increase the likelihood that the court will grant certification:
it is common for the class definition in the motion to certify to differ from that set forth in the complaint.
When the representative moves for class certification, she and the D will brief the certification issues for the court,
and the court undoubtedly will entertain oral argument on the motion.
The question for the court is whether the P has demonstrated that the case satisfies the prerequisites of Rule 23(a)
and fits one of the types of classes recognized in Rule 23(b).
The certification decision is usually the watershed event in the litigation—if the court certifies the class, the D's
incentive to settle the case will raise exponentially because the D now faces potentially enormous liability.
On the other hand, if the court denies certification, all that remains is the representative's individual claim.
If that claim is sizeable, that individual litigation will proceed.
If,however, the class was to have consisted of numerous persons who suffered relatively small harm (such as in a
typical consumer C-Action), the case will probably be dismissed voluntarily; nobody will litigate over a few
dollars.
Accordingly, the motion for certification usually is the real battleground in the litigation—the parties throw
significant resources into litigating the certification motion.
2.Possible Appellate Review of the Certification Decision
The court's determination of whether to certify the class is not a "final judgment," however, because it does not
conclude the trial court's assessments of the merits of the case—accordingly, there is no right to appeal that decision
Because the order is of such practical importance, however, courts of appeals long struggled to find some exception
to the "final judgment rule" to permit appellate review of the order.
Situation was remedied by Federal Rule 23(f), which grants courts of appeals the discretion to review orders
either granting or denying class certification.
When Rule 23(f) went into effect, observers assumed that federal appellate courts might be more willing to grant
review under Rule 23(f) to reverse orders certifying classes than to reverse denials of class certification.
Thus, in Fed. Court, the grant of a motion to certify may be a short-lived victory for the P.
Rule 23(f) allows the court of appeals to step in (if the D requests and the appellate court agrees to do so) and
reverse.
Because most states have not adopted Rule 23(f), class Ps may prefer to litigate in state court. (We will see in
§13.3.9, however, that Ds have been given a powerful new tool to remove state court C-Actions to Fed. Court.)
3.Definition of the Class and Appointment of Class Counsel
If the district court grants certification, it enters an order that, under Rule 23(c)(1)(B), must "define the class and the
class claims, issues, or defenses, and must appoint class counsel under Rule 23(g)."
The order certifying a class is not necessarily permanent—Rule 23(c)(1)(C) expressly recognizes that an order
regarding certification "may be altered or amended before final judgment."
Thus, the court is able to react as the litigation unfolds, perhaps to alter the definition of the class or perhaps to
"decertify" and forgo the C-Action altogether.
This fact emphasizes that the court constantly monitors the C-Action, both to ensure that the interests of class
members are adequately represented and to consider the continuing viability of C-Action status.
For instance, maybe discovery will reveal that there are so few members in the class that a C-Action is not
needed, and that each individual should sue on their own.
Unless a statute provides otherwise, the court certifying a C-Action must appoint class counsel.
One prerequisite of any C-Action (see above) is that the representative be able to provide fair and adequate
representation of the class interests.
For years, courts routinely also required that the lawyer for the class be an adequate representative—this
requirement is now "codified" in Rule 23(g)(4), which provides that "class counsel must fairly and adequately
represent the interests of the class."
Rule 23(g)(1)(A) lists various factors the court must consider in making the finding, including work undertaken
by the lawyer in identifying and investigating the class claims, her experience in handling complex litigation, her
knowledge of the applicable law, and the resources she will commit to representing the class.
Rule 23(b)(1)(B) counsels the court to look to any other facts pertinent to the lawyer's ability to represent the
class interests fairly and adequately.
Rule 23(g)(2) provides detailed procedures for the appointment of class counsel. 14
Obviously, lawyers will covet this appointment, because class counsel (1) gets to call the shots in the litigation
on behalf of the class and (2) will be paid—often a significant amount.
If more than one lawyer applies for the appointment as class counsel, Rule 23(g)(2)(B) provides that "the
court must appoint the applicant best able to represent the interests of the class.
Even if there is only one applicant, the court must ensure that she satisfies the Rue 23(g)(1) and 23(g)(4)
standard of fairly and adequately representing the interests of the class—the order of appointment may
include any relevant "provisions about the award of attorney's fees or nontaxable costs under Rule 23(h).15
4.Certification on Fewer Than All Issues; Subclasses
Not every issue in a class case must be litigated on a class basis—significant economy of scale can be realized if some
issues are determined en masse.
For instance, it might be possible to have a class determination of the D's liability—If successful, the court might
permit individual proof of damages.
Similarly, the court might employ subclasses. Suppose a class asserts a claim on which the standard of liability
varies slightly from state to state.
o A class seeks recovery of punitive damages. Each state is free to determine the kinds of behavior that will give rise
to a claim for punitive damages. In some, the P may have to show "willful misconduct." In others, perhaps the
standard is "reckless disregard of the consequences of her actions." How can there be a class action if different Ps
must satisfy different substantive standards?
o For starters, the court might have an overall determination of the facts applicable to everyone—for example,
whether the D in fact did certain things. If the court finds that the D did nothing of the sort alleged, the entire
class claim would fail on the merits.
14 Rule 23(g)(3) permits the court to appoint interim class counsel before determining whether to certify the class.15 Fed. R. Civ. P. 23(g)(l)(D). Rule 23(h) provides procedures for moving for an award of attorneys' fees and nontaxable costs. Importantly, it does not create any substantive rights to recover these things. Thus, for example, attorney’s fees are recoverable only if there is some exception to the general rule that each side bears her own attorneys fees
o On the other hand, if the court finds that the D did X, Y, and Z , the court might then divide the group into
subclasses.
For one, the litigation would focus on whether the D's actions constituted "willful misconduct.
For the other, the question would be whether the acts showed reckless disregard, and so forth.
5. Can the Court Look at the Merits?
In ruling on the motion to certify, can the judge consider the underlying merits of the case?
For example, how can the court know if the representative's claims are "typical" of those of the class without
looking at the merits of those claims?
How can the court determine whether common questions predominate over individual questions without
assessing the underlying facts of the dispute?
On the other hand, doing so is troublesome, because assessment of the merits should await the adjudication phase
of the litigation.16
It is now clear that the court may consider the merits of the underlying dispute in ruling on class certification—but
only as required to make that ruling.
In other words, it should not make preliminary merits determinations unrelated to the Rule 23 inquiry.
In Wal-Mart v. Dukes, the Court made two important points in this regard—First, it held that a party seeking class
certification must proffer "convincing proof" that the requirements are met. Second, it hinted strongly that when
considering expert witness testimony in the context of a certification motion, the trial judge must apply the full
federal standard for admissibility.'"
E. Notice to Class Members and "Opting Out"
Rule 23 has three provisions about notice:
1) Found in Rule 23(c)(2)(B), is notice of the pendency of a C-Action, which applies only to Rule 23(b)(3) classes.
2) Found in Rule 23(c)(2)(A), permits the court to give notice of the pendency of C-Actions under Rule 23(b)(1) and
(b)(2).
We discuss both of these (the first of which is far more important ) in this subsection. The third, found in Rule
23(e)(1), concerns notice of a settlement or dismissal of a C-Action. It applies to all classes (not just Rule 23(b)
(3) classes) and is discussed below.
We saw in the preceding subsection that the Rule 23(b)(3) class is more controversial than the other types because the
group usually is bound only by common questions and not by any legal relationship—the claims of these members
generally are independent of one another.
As a result, the Rule 23(b)(3) class presents great stress between the desire for efficient resolution of numerous claims
and the requirements of due process.
To address this stress, the drafters imposed a notice requirement in Rule 23(b)(3) classes that simply does not exist
in the other C-Actions.
Under Rule 23(c)(2)(B), the court is required to direct notice to class members, "including individual notice to all
members who can be identified through reasonable effort." In Wal Mart v. Dukes, the Court hinted that notice and
the right to opt out are constitutionally required in classes seeking monetary relief.
The purpose of this notice is to protect the members' individual interests.
Rule 23(c)(2)(B) requires the notice to inform class members of these things: (1) the nature of the action; (2) the
definition of the class certified; (3) the class claims, issues, or defenses; (4) that a class member may enter an
appearance through her own counsel if she desires; (5) that a class member may request exclusion (and when and
how members may elect to be excluded); and (6) that the class judgment will bind class members who do not
properly request exclusion.
Requesting exclusion has traditionally been called "opting out" of the C-Action, though the Rule does not use that
phrase.
This notice affirms to each class member that she does not have to depend on the class representative and class
counsel to protect her interest—she can either request exclusion from the class and pursue her own remedy in a
separate action (either alone or with others) or she can stay in the class, but have her own lawyer act to represent
16 Moreover if there is a right to jury trial, a pretrial determination of the merits by the judge (in the certification motion) could raise a Seventh Amendment problem. Courts may avoid the problem by making clear that their findings made for purposes of the certification decision will not bind the jury if the case goes to trial.
her interests.
If she fails to request exclusion, she will be bound by the class judgment.
Rule 23(c)(2)(B) requires that this notice be "the best notice that is practicable under the circumstances," including, as
we said above, individual notice to those members who are identifiable with reasonable effort.
This provision is more stringent than the Constitution would require.
We saw earlier that due process, interpreted in Mullane v. Central Hanover Bank, requires notice "reasonably
calculated, under all the circumstances, to apprise the parties of the pendency of the action. . . . .”
In addition, the Court spoke of giving "the best notice practicable."—in an appropriate abundance of caution, the
drafters of Rule 23 require individual notice to those who can be identified reasonably.
Such notice is usually given by mail, though nothing in the Rule specifies the manner in which it is to be given.
It is not unusual to have some members who are reasonably identified and some who are not; in such a case,
individual notice is given to those in the former group and publication notice—perhaps in newspapers or on
television—is sufficient for the latter.
*In an effort to combat the sort of "legalese" that typifies notice sent to class members, Rule 23(c)(2)(B) requires that
the notice "clearly and concisely state (the required contents) in plain, easily understood language."
It is important to remember that the notice we are discussing here—of the pendency of the C-Action and of one's
membership in the class—is required only in the Rule 23(b)(3) C-Action.
For Rule 23(b)(1) and 23(b)(2) classes, no notice is required.
But Rule 23(c)(2)(A) does permit the court, in its discretion, to give notice in such cases.
In addition, Rule 23(d)(1) gives the court great discretion in handling class litigation, and though an opportunity
to opt out of class membership is only required in the 23(b)(3) class, courts have the discretion to permit opt outs
in 23(b)(1) and (2) cases.
Can the lack of required notice in 23(b)(1) and (b)(2) classes be constitutional?
Earlier, we noted that due process might be satisfied by providing notice or by ensuring adequate representation
for the interests of class members.
Rule 23 envisions a combination of these protections in the Rule 23(b)(3) class.
OTOH, the drafters apparently concluded—given the close relationship of most class members in Rule 23(b)(1)
and (b)(2) classes—that adequacy of representation (without notice) satisfies due process—no serious argument
to the contrary has been mounted.
As a practical matter, it is unthinkable that the Court would find the present provisions for binding members in
mandatory classes unconstitutional.
The Court showed its hand in this regard in WalMart v. Dukes—in rejecting the recovery of monetary relief in a Rule
23(b)(2) class (discussed above), the Court said:
[Rule] 23(b)(2) does not require that class members be given notice and opt-out rights, presumahly because it
is thought (rightly or wrongly) that notice has no purpose when the class is mandatory, and that depriving
people of their right to sue in this manner complies with the Due Process Clause. In the context of a C-Action
predominately for money damages, we have held that absence of notice and opt-out violates due process. While
we have never held that to be so where the monetarv claims do not predominate, the serious possibility that it
may be so provides n additional reason not to read rule 23(b)(2) to include monetarv claims here.
F. Judgment, Settlement, and Dismissal of a C-Action
A judgment inn a class action binds all class members, except those who properly requested exclusion from a Rule
23(b)(3J class.
Of course, it is this binding effect that makes the C-Action so efficient—the claims of numerous would-be Ps are
determined, and the determination is binding.
This binding effect has always been understood and is now expressly stated in Rule 23(c)(3).
Many C-Actions, however, do not go to judgment on the merits, either because they are settled or voluntarily
dismissed.
In most civil litigation, the parties are free to settle the dispute on whatever terms they consider appropriate, and any
P is free to dismiss her case voluntarily if she meets the requirements of Rule 41(a).
In neither situation—settlement or voluntary dismissal—does the court play any role in the usual case.
In the C-Action, however, things are different—because C-Actions are fraught with the potential for conflicts of
interest, as we discussed above, Rule 23 does not permit the parties to settle or to enter voluntary dismissal of a
certified C-Action.
Instead, Rule 23(e) requires court approval—importantly, Rule 23(e) applies only if the court has actually
certified the class, and only if the settlement, dismissal, or compromise affects class issues. 17
Most cases settle. Most C-Actions settle. Usually, counsel for the representative and for the Ds agree on terms of the
settlement and present them to the court.
The court then undertakes its first review of the terms, to determine whether they appear fair to the class members.
Courts should be especially wary of settlements that give class members little of value while lining the pockets of
the plaintiff's lawyer.
If the court feels that the settlement is not fair, it will send the lawyers back to the bargaining table, without
giving notice to class members.
If, OTOH, the settlement appears fair to the court, it will direct notice under Rule 23(e)(1), which requires that
the court "must direct notice in a reasonable manner to all class members who would be bound by the [proposed
settlement, voluntary dismissal, or compromise]."18
Under Rule 23(e)(5), class members have the right to object to the proposed settlement, voluntary dismissal, or
compromise of the C-Action.
Rule 23(e)(2) says that "[t]he court may approve a settlement, voluntary dismissal, or compromise that would bind
class members only after a hearing and on finding that [it] is fair, reasonable, and adequate."
The court holds a "fairness hearing" to determine whether to approve the settlement.
Though the judge will consider the reaction of the class members to the proposal, the court retains the ultimate
authority whether to approve.
Under Rule 23(e)(4), the court may refuse to approve settlement of a certified Rule 23(b)(3) C-Action unless the
settlement "affords a new opportunity to request exclusion to individual class members who had an earlier opportunity
to request exclusion but did not do so."
In §13.3.4, we saw that members of a Rule 23(b)(3) class have a right to request exclusion from the class (and thus
to avoid being bound by class judgment)—The right is afforded by Rule 23(c)(2)(B), which gives notice of pendency
of the C-Action only in Rule 23(b)(3) classes.
Rule 23(e)(4) permits such members a second right to opt out, one that comes u p when the case is being settled.
Thus, members of a Rule 23(b)(3) class who do not like the terms of the settlement are not bound by it and may
request exclusion and sue on their own.
In addition, Rule 23(e)(3) requires the parties seeking approval to identify "any agreement made in connection with
the [proposed settlement, voluntary dismissal, or compromise.]"
This provision is intended to help the court determine whether the representative is being "bought off" in a "side
agreement," leaving the class members with less than appropriate relief.
As noted, the certification decision is the principal event in the litigation—if the class is certified, usually the case will
settle. If the case is certified under Rule 23(b)(3), as we saw in the preceding subsection, class members are entitled to
notice and the right to request exclusion.
Sometimes the lawyers will agree to settlement terms before that notice is sent out—in such a case, the class may
receive unified notice under Rule 23(c)(2)(B) and Rule 23(e), that is, they will be told that they are members of a Rule
23(b)(3) class and have the right to request exclusion, and that the case is provisionally settled on terms listed in the
notice.
Thus, each member can decide whether to request exclusion, to object to the terms of the settlement, or to accept
the terms of the settlement.
If a C-Action is destined to be settled, must the court go through the entire certification inquiry under Rule 23(a) and
23(b)?
After all, if the parties are going to agree to settlement terms, cannot the court simply proceed to assessment of
the fairness of the settlement terms?
17 For years, it was not clear whether Rule 23(e) applied to cases filed as C-Actions but which had not yet been certified as C-Actions. Rule 23(e) was amended in 2003 to bring welcome clarity. It provides, in Rule 23(e)(1), that "[t]he claims, issues, or defenses in a certified C-Action may be settled, voluntarily dismissed, or compromised only with the court's approval."18 Remember, the notice under Rule 23(e) applies in all C-Actions. The notice in Rule 23(c)(2), which is notice not of settlement but of the pendency of the C-Action) is required only in Rule 23(b)(3) classes .
The Supreme Court addressed these issues in Amchem Products, Inc. v. Windsor in which it held that the court must
certify the class before approving the settlement—the fact that the case will settle and thus not require a trial is
relevant to the manageability of the class, but does not justify wholesale ignorance of the requirements of Rule
23(a) and 23(b).
The holding in Amchem Products is salutary—without certification, the parties and the court are free to allow
settlement of massive disputes that do not fit within any recognized form of litigation.
By requiring certification, Amchem at least attempts to limit the court to acting within a properly constructed
litigative unit.
G. JRX & Related Issues
Generally Ps don’t have to be subject to personal JRX—they agree to JRX of the court by bringing suit in the given
location.
What about class actions though? Are members of the plaintiff class who are not there and would not be subject to suit
bound by the judgments?
Are they precluded from brining their own suits? We know under 23(b)(1) and (b)(2) jrx is mandatory—there is no
opt out.
Members of a rule 23(b)(3) plaintiff class need not have minimum contacts with the forum state—their choice,
after receiving notice, not to opt out constitutes their submission to the in personam JRX of the court.
Raises an interesting question—a class member will be bound by a class judgment unless she takes affirmative
steps to opt out, but how does a court have the power to command such an affirmative act unless the person being
commanded has minimum contacts with the forum? –Never been addressed.
Other unanswered questions:
1) Does the holding apply to Rule 23(b)(1) and (2) class actions? The court has limited its holding to a 23(b)(3)
class, and, as noted, it relied heavily upon the fact that the class members did not opt out of the class in
concluding that they had consented to in personam JRX.
No such opportunity to use consent as a pasis for PJRX under 23(b)(1) or (2)—these class actions are
mandatory (no opt out).
Perhaps this means that members of mandatory classes should not be bound unless they have minimum
contacts with the forum, but such a conclusion is contrary to the Court’s emphasis on the differences
between P class members and Ds.
Would also make class actions under these rules much more difficult to bring.
Moreover it is likely that due process is satisfied in (b)(1) and (2) cases by adequate representation w/out
notice or the right to opt out.
2) Must there be minimum contacts over members of a D class?
The D class members are not parties and may be “along for the ride” just as P class members are, they may
be held liable for a judgment in favor of the P.
Thus, it seems likely that only those D class members over whom the forum has in personam JRX may be
bound.
Some courts have permitted judgments involving defendant classes so long as there is in personam JRX over
the representative, even if the other class member were not subject to JRX.
These cases were decided long ago however, and seem of doubtful validity today.
What about the possibility that P class members might have to pay defense attorneys’ fees?—no court has
addressed the issue.
1) Choice of Law
The law of a state may apply only to parties who have some significant connection with that state.
Accordingly, even though a state might have JRX over all the members of the class, that state’s law might not be
appied to claims of the non-state members.—Raises the possibility of subclasses
2) SMJRX
A. FQJRX
Same rules regarding FQJRX cases with single P and D apply to class actions.
No AIC needed as long as the case arises under Federal Law.
B. DJRX
In determining citizenship and the AIC, to whom does the court look—to the representative or the class
members?
o The class’s citizenship: In one case SCOTUS established that only the representatives citizenship must be
diverse from that of the opposing party.
After judgment in that case, the in-state class members asserted that they were not under JRX of the forum
state since they were not diverse from the D.
Court rejected that argument—so long as the representative was of diverse citizzenship from the D, diversity
was established and the judgment bound all class members, including those who were in state citizens.
This holding is enormously helpful from a practical standpoint because it makes the class action more readily
available in federal court.
A requirement that each class member must be of diverse citizenship from the opposing party would make it
quite difficult to invoke DJRX in a class.
Thought the court in the above discussion did not discuss the holding in these terms, the case may well be
seen as a an example of SUPJRX
1. The representative’s claim against the diverse opposing party invokes DJRX
2. The claims of the class members seem sufficiently related to the representative’s claim to invoke SUPJRX
under “common nucleus of operative facts test”
The court never explained the decision in this way so perhaps its better to look at this case—in terms of
SMJRX—as the representative being the sole party on the one side that has to be diverse from D.
o The AIC: How should the court asses whether the AIC is satisfied in a DJRX class action?
Again here we discuss only “regular” DJRX case under §1332(a)(1), and not quite different standards under
the CAFA (below)
Aggregation rules applicable in DJRX cases generally also apply in class action context—multiple Ps
generally may not aggregate their claims to meet AIC.
o Hypo: The class consists of 100 member. Each class member has a claim of $760. The aggregate value of
the claims is $75,000. This cannot satisfy AIC, however, because class claims cannot the aggregated.
This is still the rule under §1332(a)(1)
o What about when class rep alone meets AIC but class members told does not?—one court held
that the entire class’s damages aggregated needed to meet AIC
§1367 undermines this result and the drafters later added commentary that it was not their
intent to affect the result.
Remember §1367(a) grants SUPJRX to the full extent permitted by Constitution, which SCOTUS
determined to include claims sharing a common nucleus of operative fact with a claim that invokes
FSMJRX—So if class rep’s claim meets AIC, §1367(a) grants SUPJRX to all appropriately
related claims by class members even if those claims don’t exceed 75k.
§1367(b) cuts back by removing it over certain listed claims, but on in DJRX cases—nowhere in the
catalogue of §1367(b), however, did congress mention claims asserted pursuant to Rule 23.
Thus, by its terms, §1367 does what the court would not even address: grant SUPJRX over claims by
class members that do not satisfy AIC (just as long as class rep’s does.)
In the end, some courts allow DJRX based on class rep meeting AIC and some don’t based on the seemingly
erroneous holding by the court in the former case (and the added commentary in §1367).
Those that do allow do so based on fundamental tenets of statutory construction:
1.Court consults the language of the statute
2.Only if the language is ambiguous or would lead to an absurd result does the court look to legislative
history—here §1367 unambiguously grants SUPJRX and the result of that language is not absurd.
The holding that DJRX cannot be invoke unless all class members meet AIC is still good law in class action
cases, but it has been noted that the class rep’s claim can get the process in federal court moving, and then
the class members can join via SUPJRX.
o Representative sues on behalf of a class of purchasers of a product, alleging violation of state antitrust laws. By
statute, each class member’s claim is limited to $20K. Representative however, is entitled to seek recovery of
attorney’s feed, so her claim exceeds $75k. Representative’s citizenship is diverse from that of D. Can this class
action proceed in Fed. Court?
Reading §1367 as it is read for any other case aside from class action, rep’s claim invokes DJRX—she meets
AIC and is diverse.
Claims by class memebrs do not satisfy requirement of DJRX because they don’t exceed 75K
Claims by the class members invoke SUPJRX under 1367(a) because they arise from a common nucleus of
operative fact w/rep’s claim
Though §1367(b) applies in cases that invoke DJRX, like this one, it does not remove SUPJRX over claims
asserted under rule 23. –It was not addressed in Abbott Labs (facts this hypois based on)
Another issue lurks, §1367 only permits SUPJRX in cases involving a single D and removes SUPJRX when
parties are added via rule 20—so when a class action is asserted against multiple Ds (joined obviously under
rule 20), this provision would seem to deprive the court of SUPJRX over claims by class members.—No
definitive interpretation of the rule, so no resolution.
3) Venue
No special venue provision for C-actions; thus, unless the case involves a special venue provision, the general venue
statute, 28 U.S.C. §1391, applies.
Remember: general choices for venue are any district where all Ds reside or in which a substantial part of the
claim arose.
H. Class Action Fairness Act (CAFA)
1) Background
CAFA allows the channeling of large interstate class action from state to federal court by relaxing FSMJRX and by
providing Ds w/liberal rights to remove class action from state to federal court.
Various factors of rule 23 may impel a plaintiff class lawyer to file in state court:
1) In Amchem the supreme court imposed the rule 23 requirements w/particular strictness—state courts aren’t
bound to interpret their class rule in the same way
2) In federal court, Rule 23(f) permits immediate appellate review of class certification decisions—this rule has
been used primarily to reverse class certifications; it is thus seen as the antiplaintiff—few states have adopted
23(f)
3) Federal court pleading under Twiqbal may be more rigorous than state court pleading
4) There is a sense that summary judgment is more readily available in fed. court than in state court, based in
large measure o cases decided by the Supreme Court in 1986.
5) Fifth, as a matter of proof at trial, in cases involving expert evidence (which includes many class actions),
federal courts appear less hospitable to Ps than some state courts.
After Wal-Mart v. Dukes the federal requirements for admission of expert witness testimony at trial
apparently apply at the class certification stage in fed. court.
Proponents: of the rule praise it as a vehicle to have fed. court take over large interstate disputes and assure fairer
outcomes for class members & defendants.
Critics: Expresses lack of faith in state courts and allows ate court Ds to get class actions funneled into federal
court, where it is often more difficult to for Ps to prevail.
Thus, critics assert CAFA is seen not as providing a mere change of forum for class suits, but as a means of
effectively denying access to the class device.
Regardless of what anybody says, CAFA works a profound reallocation of judicial authority in large interstate cases
and ensures that state courts will play a less important role in such disputes than they have historically.
2) Statutory Provisions
Provisions of CAFA are in 28 U.S.C §§1711 (definitions for the act), 1712, 1713, 1714, 1715, 1332(d)
§1712—defines coupon settlements, and requires that when a proposed settlement of a C-action in fed court
provides coupons for class members, the attorneys’ fee attributable to the award of coupons must be based upon
the actual value of the coupons to the class members.
This provision, §1712(a), is intended to avoid the award of large counsel fees to lawyers who procure for the
class coupons that are essentially worthless.—the remainder of the section deals with other matters of
attorneys’ fees and judicial scrutiny of coupon settlements.
§1713—addresses settlements in which a class member is required to pay class counsel, resulting in a net loss to
the class member.
§1714 prohibits approval of a settlement that discriminates in favor of class members geographically situated
closer to the court than others.
§1715 aimed at requiring notification of a federal officer (usually the attorney general) and a state officer of a
proposed settlement of a cases—purpose to allow governmental input on the desirability of the settlement.
§1332(d) is most important—(d)(1): defines various terms (class action); (d)(2): grant of SMJRX—AIC is $5 million
exclusive of interests and costs, and citizenship is determined by any of (d)(2)(A), (B), or (C); (d)(6): $5mill is
determined by aggregating all members claims
(d)(2)(A): single member of the class be of diverse citizenship from any D (very broad), and it does not have to
be the rep (rep and D do not have to be diverse)
For issues relating to SMJRX and how broad it is, look in the book at 829-831
Federal Question
Basic Diversity: Only citizenship of named parties counts and at least one class representative must meet the AIC.
C-Action Fairness Act (CAFA)- Minimal diversity and over $5 million aggregate AIC (All Ps combined).
Court Monitors class counsel and shape class counsel’s fees.
Remedies
Test:
Short answer: # of them. Narrow area of law, get far through analysis
Issue Spotter:
Policy: New rule—1) Tell me how different, 2) Argue for it, 3) argue against it
.
12/15/14 5:58 PM
