Personal Jurisdiction

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← Concerns circumstances under which a court has authority to make decisions binding on

parties. The existence of personal jurisdiction depends upon a sufficient connection between the D and

the forum state to make it fair to require defense of the action in the forum.

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← TYPES OF JURISDICTION

GENERAL JURISDICTION = continuous and substantial activities (Helicopteros)

o Gives the court authority to hear cases related or unrelated to the contacts with

the state

1. physical presence (includes principal place of business & state of

incorporation)

2. domicile

3. consent

SPECIFIC JURISDICTION = minimal contacts and reasonableness, the dispute ‘arises out

of’ or is ‘related to’ the D’s forum ties

o Gives authority to hear cases arising out of the activities related to contacts with

the state

Minimum contacts

Consent

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In PERSONAM = gives the court jurisdiction over the D’s person, gives the court power to

issue a judgment against him personally.

o All of the D’s assets may be seized to satisfy the judgment (suit against the person

for obligation arising out of tort)

In REM = suit against the thing.. gives the court power to adjudicate a claim made about

a piece of property or about a status.

o Limited to value of the thing

QUASI In REM = action is begun be seizing property owned by the D within the state

o ATTACHMENT of property owned.

o You can bring an unrelated suit and then enforce it up to the value of the property

Difference between quasi in rem and in rem;

Action is not really about the thing, instead the thing seized is a

pretext for the court to decide the case without having jurisdiction

over the D’s person

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← LONG ARM STATUTE

← A reference to the authorization to ‘reach out’ beyond the borders of a state

Statutes that predicate jurisdiction over nonresidents upon a variety of contacts with the

forum, including the transaction of business in the state, the commission of certain acts

within the state (commission of a tort, ownership of property, entering into a contract)

Cal. Long arm statute is short and simple, yet it authorizes the exercise of personal

jurisdiction to the broadest extent that due process will permit as set forth in the

International Shoe

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← WAYS TO GAIN PERSONAL JURISDICTION

← DOMICILE (general jurisdiction)

A person’s domicile is the place of ’true, fixed, and permanent home and principal

establishment, and to which he has the intention of returning whenever he is

absent from there’

A change in the domicile has 2 requirements:

o Taking up residence in a different state (and)

o With the intention to remain there

Can only have one domicile at a time

Domicile in the state is alone sufficient to bring an absent D within the reach of the state’s

jurisdiction

o MILIKEN v. MEYER = a person may always be sued for all claims, regardless of

where they arise, in their state of permanent residence or in the case of

corporation, the state in which it is incorporated

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← CONSENT (general or specific based on type of consent)

voluntary appearance = P consents to personal jurisdiction by filing in the court, waiving

defense, or not raising personal jurisdiction issue

o D (non-resident) may consent to the personal jurisdiction of a state’s courts. The

party may volunteer to appear in an action even in advance of litigation

(Pennoyer)

o D can make an appearance in court and raise question of personal jurisdiction

without consenting to jurisdiction of the court

D’s only other option is to ignore service, take risk on jurisdictional validity

when he does not appear in court, because a default judgment will be

made against him (Pennoyer)

implied consent (after International Shoe there is no need for implied consent statutes)

o D can imply consent by their actions

o HESS v. PAWLOSKI

RULE = Some statutes state that by driving into the state a driver implied

consent to the appointment of the registrar of motor vehicles as her agent

of service of process, thus enabling the state’s jurisdiction (non resident

motorist statute)

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← PRESENCE = (physical.. general jurisdiction while present in the state)

A court may enter judgment against a non-resident if the party is personally served with

process while in the state (Pennoyer v. Neff)

Federal Court jurisdiction is based on state boundaries

o Transient jurisdiction

Service within the state

If a person (not applicable to corporations) is within a state’s territory, that

state can assert personal jurisdiction over the D

Regardless of how brief the D’s presence in contact with the forum state

Jurisdiction based on physical presence

RULE = traditional rule of transient jurisdiction is still good law. If

an individual is physically present in the forum state then the state

has jurisdiction over the individual (BURNHAM, divorce)

Presence must be knowing or voluntary

Presence of a person in a state can be satisfied if that person appoints an

agent of service within that state

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Has property within the state and that property is attached to the suit before

litigation begins

o IN REM (pennoyer)

Power over the thing. The thing has to be in the state, and you have to

seize it at the beginning of the lawsuit

Judgment is limited to the value of the property

True in rem cases is where we are adjudicating the rights to the property

against everybody in the world. D is the property, or the thing

o QUASI IN REM

Type 1

NOT suing the thing, suing the person

P sues the D to establish a prior superior interest in the thing

Only adjudicating the rights of the two parties in the case

Type 2

P sues D, attaches the property as a way to get jurisdiction, but the case

isn’t really about the property

Type 2 overruled by SCHAFFER v. HEITNER

P brought a derivative shareholder’s suit by attaching the stock of

a non-resident directors. Situs of stock was deemed to be in

Delaware. Companys PPB was in Arizona. D argued that this

assertion of QIR jurisdiction violated their DPC rights b/c no other

contacts w/ Del. SC struct down jurisdiction and ruled that all

actions, including in-rem and QIR ones, adjudicated interests in

people.

therefore, same test used for in personam jurisdiction must

be used for in rem or QIR jurisdiction, which is the

minimum contacts test of Shoe

o In rem cases are limited by the value of the property; in personam are not

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← MINIMUM CONTACTS

← A state court may exercise personal jurisdiction over a nonresident D only so long as there

exists ‘minimum contacts’ between the D and the forum.

Due process requires that the D have certain minimum contacts with the state and that

the maintenance of the suit does not offend the traditional notions of fair play and justice

(reasonableness)

Minimum contacts looks to the NATURE and QUALITY of the contacts, NOT the quantity

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← INTERNATIONAL SHOE = SC ruled that contacts (salesmen in the state) were systematic and

continious and resulted in a large volume of interstate business for the D.

4 PRINCIPLES OF INTERNATION SHOE

o jurisdiction is permissible when the D’s activity in the forum is continuous and

systematic and the cause of the action is related to that activity

o sporadic or casual activity of the D in the forum does not justify assertion of

jurisdiction on a cause of action unrelated to that forum activity

o a court may assert jurisdiction over a D whose continuous activities in the forum

are unrelated to the case of action sued upon when the D’s contacts are

sufficiently substantial and of such a nature as to make the state’s assertion of

jurisdiction reasonable

to be a relevant contact it must result from some act from which the D

purposely avails itself of the privilege of conducting activities within the

forum state

o even a D whose activity in the forum is sporadic, or consists only of a single act,

may be subject to the jurisdiction of the forum’s courts when the cause of action

arises out of the activity or act (specific jurisdiction)

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← Purposeful Availment -To be a relevant contact it must result from some act from which

the D purposely avails itself of the privilege of conducting activities within the forum state. Thus

invoking the benefits and protections of its laws.

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← To find out if there was purposeful availment…

(1) Were the contacts the result of the unilateral activity of the P?

o If it essential that there be some act by which the D purposefully avails himself of

the privilege of conducting activities within the forum state, thus invoking the

benefit and protection of its laws

o HANSON shows that a unilateral activity is NOT enough

o McGEE also shows that a single act is not enough

(2) Are the D’s conduct and connection with the forum state such that he should

reasonably anticipate being haled into court there?

o FORSEEABLILITY = ensures that D will not be haled into a jurisdiction based

solely as a result of ‘random, fortuitious, or attenuated contacts’ or of the

‘unilateral activity of another party or a third person’ BURGER KING

FUNCTION of PREDICTABILITY = gives a degree of predictability so the D

can structure their conduct with some assurance as to where that conduct

will and will not render them liable to suit (structuring of business)

WORLD WIDE VOLKSWAGON = P sued in OK for inuries suffered there in

a car accident (defective car). Purchased car and lived in NY. The D was a

distributor who sold in NY, NJ, CONN. If either of the D made efforts to

serve directly or indirectly the market its products in OK, then they would

be subject to suit in OK. UNILATERAL ACTIVITY of P

(3) Did D deliberately engage in significant activities within the forum state or has

he created continuing obligations between himself and resident of the forum state?

o Where a D deliberately engaged in significant activities within a state or has

created continuing obligations between himself and resident of the forum the D

has availed himself of the privilege of conducting business there and because the

activities are shielded by the benefits and protections of the forums laws it is

presumptively not unreasonable to require the D to submit to the burdens of

litigation in that forum as well (BURGER KING)

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← REASONABLENESS of JURISDICTION

Once it has been decided that a D purposefully established minimum contacts with the

forum state, these contacts must be considered in light of other factors to determine

whether the assertion of personal jurisdiction would comport with fair play and substantial

justice

Protects D against the burden of litigating in a distant or inconvenient forum.

o Acts to ensure that the states, through their courts, do not reach out beyond the

limits imposed on them by their status as coequal sovereigns in a federal system

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Court may evaluate;

o (1) Burden on the D (primary concern)

o (2) Forum state’s interest in adjudicating the dispute

o (3) P’s interest in obtaining convenient and effective relief

o (4) Interstate judicial system’s interest in obtaining the most efficient resolution of

controversies

o (5) Shared interest of the several States in furthering fundamental substantive

social policies

a D may defeat personal jurisdiction by presenting a compelling case that

in presence of these factors of fair play and substantial justice would be

unreasonable (BURGER KING)

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← CONTRACTS & MINIMUM CONTACTS

← Contract as purposeful availment – usually a contract alone cannot establish minimum

contacts- need to have ‘contract plus’ (BURGER KING)

What is the nature of contractual relationship?

o Prior obligations, future considerations, establishing a long-term nexus with

residents in state, choice of law provisions

CHOICE OF LAW & FORUM CLAUSES

Law- pick which state law will apply

Forum- pick which state will host the case

Not sufficient in itself, but when taken with the

circumstances show a deliberate affiliation with a certain

state

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← STREAM OF COMMERCE

← ASAHI v. CALIFORNIA = Gary Zurcher was seriously injured when he lost control of his

Honda motorcycle. Z alleged that the accident was caused by a defective rear tire which suddenly lost

air. Z sued several D including Cheng Shin, Taiwanese manufacturer of tire tube. Cheng Shin then sued

Asahi for indemnification.

Asahi manufactures tire valve assemblies in Japan and sells the assemblies to Cheng Shin

and to several other manufacturers, for use as components of finished tire tubes. The tire

tubes with Asahi’s tire valves ended up in Cal for sale

← O’CONNOR (applied WW VW)

RULE = minimum contacts: ‘substantial connection between the D and the forum state

necessary for finding of minimum contacts must come about by an action of the D

purposefully directed toward the forum state. The placement of a product into the stream

of commerce, without more (marketing, distribution, channels of service), is not an act of

the D purposefully directed to the state

REASONABLENESS = When minimum contacts is established, often interests of the P and

the forum in the exercise of jurisdiction will justify even the serious burdens placed on the

D. In the present case, however, the interests of the P and the forum in Cal. Assertion of

jurisdiction over Ashahi are slight

A consideration for the factors concerning fair play and substantial justice clearly reveal

the unreasonableness of the assertion of jurisdiction over Asahi, even apart from the

question of the placement of goods into the stream of commerce.

← BRENNAN (distinguished between WW VW and GRAY)

RULE – This is one of the rare cases in which the minimum requirements inherent in the

concept of fair play and substantial justice defeat the reasonableness of jurisdiction even

though the D has purposefully engaged in forum activity

The stream of commerce refers not to unpredictable currents, but to the regular and

anticipated flow of products from manufacturer to distribution to retail sale. As long as a

participant in this process is aware that the final product is being marketed in the forum

state, the possibility of a lawsuit there cannot come as a surprise. A D who has placed

goods in the stream of commerce benefits economically from the retail sale of the final

product in the forum state and indirectly benefits from the State’s laws that regulate and

facilitate commercial activity.

Big difference between goods that reach a state by chain of distribution and goods that

reach a state because customer takes them there.

← STEVENS

RULE = no need to establish minimum contacts. Jurisdiction over Asahi is unreasonable

due to fair play and substantial justice requirements.

← ALL justices agree on one plurality or the other- even if minimum contacts exists, the burden

on D is unreasonable

DCP doesn’t allow jurisdiction that offends fair play and substantial justice. Consider

burden on D, P’s interest to get relief, the most efficient resolution, the state’s interest,

and furthering fundamental social policies. Based on these factors, unreasonable to hold

that CA has jurisdiction- the burden on Japanese P is sever- distance and foreign judicial

system. No demonstration that it is more convenient to litigate abroad. P is not a Cal.

Resident, so Cal. Interest is diminished. Fed. Gov has interest in maintaining foreign

relations.

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← INTERNET

← REVELL v. LIDOV = Oliver Buck Revell sued Lidov and Columbia University for defamation

arising out of D’s authorship of an article that he posted on an internet bulletin board hosted by

Columbia. D was not a student at Columbia, however, posted his article on a website maintained by

Columbia’s school of journalism. Article was visible to the public over the internet

P was a resident of Texas, sued the Board of Trustees of Columbia University (principal

offices in NYC) and Lidov (resident of Mass) in the northern district of texas

o Both moved for 12(b)(2) motion to dismiss for lack of personal jurisdiction

o TC granted both and appellate court affirmed

← RULE = Zippo Sliding Scale Rule: measures an internet sites connections to a forum state.

Passive website = one that merely allows the owner to post information on the internet

o Will not be sufficient to establish personal jurisdiction

Other end are sites whose owners engage in repeated online contacts with forum residents

over the internet.

o Personal jurisdiction may be proper

In between are those sites with some interactive elements, through which a site allows for

bilateral information exchange with its visitors

o May be enough for personal jurisdiction

← CALDER TEST = personal jurisdiction is justified if;

The D expressly aimed their conduct toward the forum state and

o More than just make it available to state

The D knew that harm of the alleged tortuous activity would be felt there

o Often satisfaction of the first requirement will provide sufficient evidence to satisfy

the second

← Here there is NO indication that the article written by D was intended to be aimed at Texas

nor did he have knowledge that the harm of the tortuous activity would effect Texas in particular.

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Notice

← Due Process Clause of the 5th & 14th Amendment impose additional requirements beyond

personal jurisdiction to exercise authority over a party.

The Due Process Clause requires that deprivations of life, liberty, or property by

adjudication be preceded by notice and opportunity for hearing appropriate to the

nature of the case.

Service of process is the ceremonial method in which the sovereign right to exercise

personal jurisdiction is validated.

Mullane set out the constitutional minimum standards for notice.

o In addition, all courts have rules or statutes that spell out in detail the mechanics

and form for giving notice.

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← Notice = constitutional minimums + any additional statutory or rule requirements

← Service of process = Summons + Complaint (Notice)

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← Reasonable Notice← CONSTITUTIONAL REQUIREMENTS

TEST SET FORTH IN MULLANE:

o Notice must be of such a nature that it reasonably conveys the required

information, and must afford reasonable time for those interested to make their

appearance; but, with due regard for practicalities and particularities of the case

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A requirement of Due Process in any proceeding which is to be accorded to finality is

notice reasonably calculated, under all the circumstances, to apprise the interested parties

of the pendency of the action and afford them an opportunity to present their objections.

o Notice must be of such nature as to reasonably convey the required information,

and it must afford a reasonable time for those interested to make their

appearance.

The reasonableness or constitutionality of notice of any chosen method may be defended

on the grounds that

o It is in itself reasonably certain to inform those affected

o Where conditions do not reasonably permit such notice that the form chosen is

substantially less likely to bring home notice than other feasible and customary

substitutes

A futile means of notification such as notice by publication is warranted, when:

o It is supplementary to other methods of notice that may be reasonable expected to

convey warning (such as attachment of property)

Only if notice cannot be done in a way that is just as easy but more likely

to provide notice

o Where is is not reasonably possible or practicable to give more adequate warning

Two situations include:

Where person’s whereabouts are unknown and they cannot be

located without undue burden

The interests of beneficiaries are unknown or do not in the due

course of business come to knowledge of the trustee

More notice is required and notice by publications is NOT enough when:

o The people who have a known interest are easily able to be located, it is required

that they receive notice at least by ordinary mail

o Statutory notice to known beneficiaries is inadequate, not because in fact it fails to

erach everyone, but because under the circumstances it is not reasonably

calculated to reach those who could easily be informed by other means

that are feasible and customary

Not required that notice actually be received, it must be reasonably

calculated to be received

Mental Capacity = is it unconstitutional to deliver to a person who you know is mentally

incompetent, but you are not required to investigate into a person’s mental capacity

Language = English is adequate, even for parties who do not speak English

Additional Cases:

o Reasonable to assume that a property owner will maintain superintendence of his

property, so secure posting on their property is sufficient warning (GREENE v.

LINDSAY)

o Mortgage holders are entitled to notice in foreclosure cases. Notice to property

owner alone is not enough (MENNONITE BOARD of MISSIONS v. ADAMS)

o Right to notice and hearing are waivable. Even extreme forms of waiver are not

per se unconstitutional (D.H. OVERMYER CO. v. FRICK)

Justification by the Court for not personally serving each individual whose right

may be affected (MULLANE)

o The rights of each in the integrity of the und and the fidelity of the trustee are

shared by many other beneficiaries. Therefore notice reasonably certain to each

most of those interested in objecting is likely to safeguard the interests of all, since

any objections sustained would insure the benefit of all.

RULE 49(e) governs rules for service: Allows for service in compliance with the rules of the state OR

personally delivering the summons or leaving copies of the summons at the

person’s dwelling house or place of abode and leaving it with a person of

suitable age and discretion who dwells within

o To determine a dwelling house: (NATIONAL DEV. CO. v. TRIAD HOLDING

CORP.)

Look for indicia of permanence to see if a place is a usual place of abode-

but a person can have more than one dwelling house

Where a party has several residences which he permanently maintains,

occupying one at one period of the year and another at another period,

service is valid when made at the dwelling house in which the party is then

living

Dwelling house can be a hotel room (FIRST NATIONAL BANK v.

INGERTON)

Brother’s house where person keeps a room while they frequently travel

could be used as a dwelling place (CAPITAL LIFE v. ROSEN)

After summons is served, subsequent motions, pleadings, and other papers

can be served by mailing a copy to the party or their attorney [RULE 5(b)]

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SERVICE upon a CORPORATION

o RULE 4(h) covers this- providing for service in the same manner as to individuals

by delivering copy of the summons and complaint to an officer, managing or

general agent, or any other agent authorized by appointment or by law to receive

serice and mailing a copy to D

o who constitutes a managing or general agent?

Serving a company’s director of sales (Depending on how large and how

important that job title is)

Serving the secretary to the CEO (some state laws permit service to any

employee, which will likely meet Rule 4 requirements, otherwise will not be

meet requirements

Attempting to serve papers on the CEO who, when informed of the nature

of the papers, refuses them and leaving them on the CEO’s desk, Courts

have held that leaving the papers in the close proximity to an appropriate

person who knows what they are is sufficient service

o waiver of process is encouraged under the rules

if service is waived, under RULE 12(a)(1)(B), D gets 60 days to respond

as aopposed to 20 under RULE 12(a)(1)(A)

D who doesn’t waive service without a legitimate reason must pay the cost

of service

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A D’s opportunity to be heard is required by the 5th and 14th amendments. This means that

D must have time to respond and prepare a defense prior to any proceeding

o This does not necessarily mean that they are entitled to a full trial

Subject Matter Jurisdiction

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← P must file suit in court permitted by relevant law to entertain the type of claim asserted.

Personal jurisdiction is established within the state

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← Question is: What court does the P go to in that state?

Subject matter jurisdiction cannot be conferred by consent of the 3rd parties

A federal court’s lack of subject-matter jurisdiction cannot be waived 12(b)(1)

o Any party or the court can raise the issue at any time even when the court has

entered judgment

Rule 8(a)(1) – Presumption against subject matter jurisdiction

o Requires a short and plain statement on the grounds for the court’s jurisdiction

If the D challenges the allegations the P assumes the burden of proving

that jurisdiction exists

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← LIMITED JURISDICTION ← Diversity of Citizenship 1332(a)(1)

← Constitutional Grant – diversity of citizenship gives a forum for citizens of different states

Neutral forum free from local political influence

Only changes the judge presiding over the case-still uses laws & jury pool

←

← (a) Requirements:

(1) Exceed 75,000 (and) diversity of citizenship and alienage require the amount in controversy to be

above $75,000 (at least $75000.01)

article III of the constitution contains no amount in controversy limitations. Such limitations

are established in jurisdictional statutes and traditionally have served 2 functions:

o reflect notion that a federal tribunal should not be a small claims court

o method of docket control

HYPO: Citizens of claims are diverse. P files cause of action for 100,000 and only receives

judgment of 10,000. Should the court grant a motion to dismiss based on lack of smj

because it hasn’t met the diversity of citizenship requirements?

o NO, the sum claimed by the P controls if the claim is apparently made in good faith

o It must appear to a legal certainty that the claim is really for less than the

jurisdictional amount to justify dismissal. The inability of the P to recover an

amount adequate to give the court jurisdiction does not show his bad faith to oust

the jurisdiction

o Good faith in choosing the federal forum is open to challenge not only by resort to

the face of the complaint, but by facts disclosed at trial, and if from either source it

is clear that his claim never could have amounted to the sum necessary to give

jurisdiction there is no injustice in dismissing the suit

Must be done early

o If D challenges whether a claim of over 75,000 is made in good faith the P must

show that it is not clear to a legal certainty that the jurisdictional amount is not

met

o A P who recovers less than 75,000 may be ordered to pay the D’s costs *not

including attorney’s fees)

Aggregation of Claims to Exceed $75,000 Minimum

o If one P has multiple claims against one D then the P can aggregate sums to

exceed $75,000 minimum

Even if unrelated transactionally

o However, (1) if 2 P have claims of 45,000 and 50,000 respectively against 1 D, (2)

1 P has such claims against 2 D or (3) 2 P have such claims against 2 D.

Claims CANNOT be aggregated to exceed the $75,000 minimum

requirement

o However, if 1 P suffers one injury at the hands of 2 D that P can sue both D for over

75,000 because this represents joint liability on the D behalf and the P only

suffered one injury and only has 1 claim

Equitable Claims – 2 approaches to meeting amount in controversy requirements:

o (a) ask if the D’s alleged acts have harmed the P by more than 75,000 (traditional

view)

o look at whether complying with the injunction would cost the D more than $75,000

(non traditional view)

Class Action = class action with representative only uses the representatives citizenship;

however, required each persons claim within the class to meet the amount in controversy

requirement (generally)

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←

← (b) Citizen of Different States

STRAWBRIDGE established the complete diversity rule = diversity jurisdiction only

exists if all P are of diverse citizenship from all D. No party on one side may be a citizen of

the same state as any party on the other side for complete diversity

o Federal Interpleader Acts – Supreme Court upheld in State Farm

Statute grants federal subject matter jurisdiction based upon minimal

diversity, that is based upon having one adverse claimant of diverse

citizenship from another

Applies in only a very specialized type of litigation

Proves that the Strawbridge complete diversity rule is NOT

constitutional requirement

What is a citizen?

o (1) To be considered a citizen of state; must be citizen of US and domiciled in the

state

Citizenship means domicile; mere residence in state is insufficient

A person’s domicile is the place of ‘true, fixed, and permanent home and

principal establishment, and to which he has the intention of returning

whenever he is absent there from. A change in domicile has 2

requirements:

(1) taking up residence in a different state AND

(2) with the intention to remain there

CAN ONLY HAVE ONE DOMICILE AT A TIME – Mas

o (2) The question of whether one forms the intent to establish a new domicile raised

potentially difficult problems of proof

The subjective intent to make that person their domicile can be assessed

by objective factors such as voter registration, purchase of new house,

payment of taxes and of in-state college tuition

o (3) Federal Rule 21 gives district courts the right to dismiss non-diverse

parties for the suit

to the contrary the SC held: Exxon Mobile v. Allaptah

consistently interpreted §1332 as requiring complete diversity in a

case with multiple P and multiple D as the presence in the action of

single P from the same state as a single D deprives the DC of

original jurisdiction over the entire action. Incomplete diversity

destroys original jurisdiction with respect to all claims

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Citizenship is determined at the time the action is filed

o Change in domicile after action is filed does not effect litigations

o There is presumption favoring established domicile over newly acquired one

o When a person recently changes residence courts look to indicia of permanence

(place of employment, etc.) to determine intent for establishment of domicile

(c) Corporations as Citizens §1332(c)

A corporation has dual citizenship. For diversity purposes, a corporation is a resident of the

place of its corporation AND the place where it has it’s principal

business. BOTH of these places must be diverse from the P’s residency in order to

establish diversity jurisdiction. In this case, the P failed to provide sufficient information to

establish SMJ

o EXAMPLE = lets assume that Yahoo Inc. is incorporated in Delaware and it has its

principal place of business in California. A P from De or from Ca CANNOT sue Yahoo

in federal court based on diversity jurisdiction

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Determining Principal Place of Business (J.A. Olsen)

o TOTAL ACTIVITY TEST: incorporates 2 tests:

Nerve center: place from which it radiates out to its constitutes parts and

from which its officers direct, control, and coordinate all activities

Place of Activity: Most activities = principal place of business

Does NOT require that a majority of the activities be in one state.

Rather, the business activites in one state must be much greater

than the activities in any other state

o What factors are more significant?

(1) when considering a corporation whose operations are far-flung, the sole

nerve center of that corporation is more significant in determining

principal place of business

(2) When a corporation has its sole operation in one state and executive

offices in another place the place of activity is regarded as more

significant

Otherwise, using the nerve center theory is simply saying that the

executive offices are more important in terms of determining

principal place of business than the operations

(3) When the activity of a corporation is passive and the brain is in another

state, the situs of the corporation’s brain is given greater significance

o Despite significance of factors must still balance al factors to determine principal

place of business

§1332(c)(1) – added principal place of business to the definition of

citizenship to reduce abuse of diversity jurisdiction

o EVERY CORPORATION HAS ONE & ONLY ONE PRINCIPAL PLACE OF

BUSINESS

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← (d) Non-Incorporated Business

Citizens where all its members are citizens (domiciled)

o (1) if a non-corporate association has members who were citizens of every

American Jurisdiction it could not sue or be sued under diversity jurisdiction

can still be sued in federal court if there is some other basis of federal SMJ

(fed. Question)

o (2) if a business is designated a corporation by the law of the state which it was

formed if citizenship is defined by §1332(c)(1). If the business is not designated a

corporation the court will treat it as a partnership and look to the citizenship

(domicile) of all its members

KUNTZ v. LAMAR CORP. = if a business is designated a corp. even if it

lacks many of the characteristics of a corp. such as stockholders and

voting membership. It will be considered a corp. for diversity of citizenship

purposes

HOAGLAND v. SANDBERG = the mechanical rule of designation is

preferable in matters of jurisdiction which clarity is of the upmost

importance

Subject matter jurisdiction must exist when the case is commenced.

GRUPO DATAFLUX v. ATLAS GLOBAL GROUP = Therefore, a

subsequent change of a party’s citizenship cannot affect jurisdiction in that

action. Whether there was or wasn’t SMJ to begin with

←

←

← ALIENAGE

← (1) Constitutional Grant under Article III §2

intent of alien jurisdiction

o gives aliens involved with litigation with American citizens a forum free from

political influence

o demonstrates to foreign countries that the US treats litigation with their citizens a

matter of such importance that it justifies a place on the federal docket

← (2) Alienage

Citizens of foreign countries - 28 USC § 1332(a)(2)

Aliens admitted for permanent residence to the US are deemed a citizen of the state where

they re domiciled - 28 USC §1332(a)

←

← GENERAL FEDERAL QUESTION - §1331

← (1) Constitutional = Article III requires only that a federal law merely be an ‘ingredient’ of the

case. The rest of the limitations on jurisdiction regarding the centrality of federal law to the issue are

based on statutes which may be changed by Congress (OSBORN v. UNITED STATES)

arising under = an ingredient of the claim

← (2) Statutory = §1331 arising under any federal law to be brought in federal court but

interpreted more narrowly.

← (3) Other statutes grant specific federal jurisdiction (ex. Antitrust claims, patent & trademark)

well pleaded complaint (MOTTLEY)

o well pleaded complaint rule provides that for the purposes of deciding federal

question the court will consider only those aspects of the complaint that are

essential to the complaint

o a well pleaded complaint is one that sets forth only a claim, unadorned by

anticipated defenses or other extraneous material. If the court determines

that a complaint contains matter beyond the claim itself, it ignores the surplus

language and looks only to what would have been included if the complaint had

been well-pleaded (looks to the essential elements of the claim)

(1) P’s statement of his own cause of action must show that the claim is

based upon those laws or that constitution

(2) it is NOT enough that the P alleges some anticipated defense to his

cause of action and asserts that the defense is invalidated by some

provision of the constitution of the US

(3) Although such allegations show that very likely, in the courts of the

litigation, a question under the constitution would arise, they do not show

that the suit, that is the P’s original cause of action, arises under the

constitution.

←

← (2) Federal law is substantial, direct, or central to the claim

the federal issues set forth in the well-pleaded complaint must be central enough to the

dispute

if a complaint is based on a federally created cause of action the federal issue is deemed

central to the argument and there is federal question jurisdiction

if the complaint is a state claim that has a federal issue embedded in it must go through

GRABLE test and consider MERRIL

MERRIL DOW = where there is no private right of action for a federal statute,

incorporation of that federal statute into a state law claim does not create federal question

jurisdiction

o (1) thus, if there is no private right of action for a federal law, then you do not get

into federal court even if you include that federal law as part of your complaint

o (2) reasoning = trying to reconcile Smith & Moore. A private right of action for a

federal statute is created when that statute gives private people, not just public

authorities, the right to enforce the statute through litigation

o (3) Following Merril Dow, courts were split as to whether there could be federal

question jurisdiction when there is was no private right of action

GRABLE = cleaned up all the confusion with Merrel Dow and Smith

o TEST = there is federal question jurisdiction if the federal issue in a state law claim

is: NECESSARY (to resolve the state law claim because it is..)

Disputed and substantial

Private right of action? Created when a statute gives to private

persons, not merely public authorities, the right to enforce the

statute through litigation

This happens in 1 of 2 ways:

Either the statute expressly provides for this right of action

Or the court may conclude that such a right is implied by

the statute, despite the absence of explicit congressional

language granting such a right

(1) private right of action being present federal interest is much

more substantial

(2) private right of action absent, is considered in whether federal

interest is substantial

And does not upset the Congressionally approved balance

between federal and state judicial responsibility

If hearing the claim upsets the balance, and overcomes the federal

interest, the claim will not achieve federal question

o Here, case involves a property claim to quiet title when the IRS failed to properly

notify GRABLE of the seizure of property in the exact manner provided for in the

federal tax law. The current owner wants to remove to federal court because the

claim depends on the interpretation of the notice statute in the federal tax law, but

Grable wants to remand to state court because there is no private right of action in

the federal law. Both lower courts AGREED that there was a significant question of

question of federal law to warrant federal question jurisdiction. SC AFFIRMED,

despite the lack of private right of action.

o REASONING = court interprets Merril Dow to say that the absence of a private

right of action is relevant to congressional intent, but not dispositive. Thus, a

private right of action is sufficient but not necessary (don’t expressly say, but

indicates that a private right of action should create federal question jurisdiction).

The court had to rule that there was no congressional intent in Merril Dow because

if they decided otherwise, cases would flood federal court. Moreover, expressing

concern over flooding federal court, the SC was doubtful that Congress would have

intended welcome any state tort claim that implicated federal law without

including a private right of action. MD’s holding firs the framework for the

congressionally approved balance between state and federal courts. THIS CASE is

very DIFFERENT, however, because there is a clear government interest in tax

related laws, the interpretation of a federal law is actually in dispute (federal laws

need to be interpreted, not merely applied), and allowing this case into federal

court would not open the flood gates (the way a tort cause would flood)

o AFTERMATH = Grable pushes cases to federal court, but only if the case is the

sort of claim that will not frequently arise because of the Grable prong 3 –

congressional balance between federal and state judicial responsibility

o NOTE

(1) because Grable doesn’t overrule MD, we still must consider whether

Congress creted an implied right of action

(2) BUT, growing uneasy with the subjectivity of the test has led to judicial

reforms to favor plain meaning over purposeful interpretation, despite not

officially overruling Cannon (applying Ash factors to private right of action

under Title IX for sex based exclusion from UChicago medical education

program)

Removal

← REMOVAL from STATE to FEDERAL COURT

P files in state court and D wants to be in federal court

Need to have originally had subject-matter jurisdiction in order to remove to federal court

o Removal does NOT create SJ

Civil action are generally removable to the federal court in the district division where the

case is pending only if the P could have brought the action in the federal court originally

o Must state grounds for removal to federal court

o The D has the burden to demonstrate that the P’s claim invokes SJ

o Removal based on diversity is only available if none of the D is a citizens where the

action is brought

o Cases involving federal question jurisdiction are removable regardless of diversity

of claimants

PROCESS for removal for federal court

o Although not stated in the rules it is generally accepted that all D must agree to

removal

o D added after a case is removed do no have a day on the issue

o Once a case is removed, id a P adds a new D who is a non-diverse party (under

diversity) the court can either refuse the joinder of the additional party or remand

to state court

The notice of removal shall be filed within 30 days after the receipt by the D (through

service or otherwise) of a copy of the initial pleading setting forth the claim for relief

sought (or after service of summons if initial pleading is filed with the court and not

required to be served to D). If the case stated by the initial pleading is not removable, a

notice of removal may be filed within 30 days of any amendment from which it may be first

ascertained that the case has become removable – except that a case may not be

removed more than one year after the commencement of the action

o 30 day period starts to run when the complaint is filed

o if an initial case is removable; however, the amendments do not reset the 30 day

timeframe (unless they represent a new cause for removal). Failure to remove

these cases within the original 30 days is deemed a waiver of right to removal and

is binging on subsequently added D

Where the only remaining non-diverse D is dismissed, courts distinguish between

o Cases where the P voluntarily dismisses a claim against a non-diverse D

(permitting the diverse D to remove)

o Cases where the court dismisses te claim against non-diverse D (not permitting the

diverse D to remove- since the dismissal may be overturned on appeal)

Parties do NOT need to seek permission to remove, they simply remove the case (28 USC

§1446(d)). Courts are required to remand an action to state court at any time prior to final

judgment if it appears that the district court lacks jurisdiction (28 USC §1447(c))

D are allowed to remove to federal courts. Courts interpret the word D narrowly not

allowing P to remove whom have counterclaims brought against them.

Venue - §1391

← VENUE

← (1) Which district (federal) or country (state) hears the claim

Establishes the connection between the action, parties, and court

o RESIDE – key venue term

means domiciled (does NOT mean citizens)- domicile is your true, fixed,

and permanent home where you have the intention of returning when you

are absent. You can only change your domicile by moving to a different

domicile and intending to stay there

← (2) You need personal jurisdiction (which state has jurisdiction), subject matter

jurisdiction (which court system can hear the case, AND venue to properly hear a claim

← (3) Purely statutory restrictions - §1391 and §1392

§1391- Venue Generally

o 1391(a) – when jurisdiction is ONLY found by DIVERSITY jurisdiction

(a)(1) = district where any D resides, if all Ds reside in same state

(a)(2) = district where a substantial part of the events or omissions giving

rise to the claim occurred OR substantial part of the property being sued

over is situation

(a)(3) = district where any D is subject to personal jurisdiction at the time

the action is brought, if there is no other district where the action could be

brought

o 1391(b) – when jurisdiction is NOT found SOLELY on DIVERSITY

(b)(1) a judicial district where any D resides, if all reside in the same state

(b)(2) district where a substantial part of the events or omissions giving

rise to the claim occurred OR substantial part of the property being sued

over is situation

(b)(3) = district in which D may be found if there is not district in which the

action may be brought

o 1391(c) = Corporations are deemed to reside in any district in which it is subject

to personal jurisdiction when the action commenced

where there is more than one judicial district in the state an in which D is

subject to personal jurisdiction when the action is brought, such

corporation is deemed to reside in any district in the state where its

contacts would be sufficient enough to subject it to personal jurisdiction in

that district

if there is no such district, a corporation is deemed to reside in the district

within which it has the most significant contacts

o 1391(d) = aliens can be sued in any district

o 1391(e) = if D is US employee or agency or the US

(e)(1) = district where D resides

(e)(2) = district where a substantial part of events or omissions giving rise

to the claim occurred OR substantial part of the property being sued over

is situation

(e)(3) = district where P resides if no real property is involved in the action

o 1391(f) = civil action against foreign state, defined in 1603(e)

o 1391(g) = civil action based on multiparty accidents

§1392 = any civil action involving property located in different districts in the same state

may be brought in any of those districts

Under Rule 12(b)(3) and 12(h)(1) you can waive your right to challenge venue if you fail to

file a timely motion

When cases are being removed from state to federal court the provisions of 1391 are

irrelevant. They have their own venue provisions

←

← BATES v. C&S ADJUSTERS, INC.

Issue = whether venue exists in a district in which the debtor resides and to which a bill

collector’s demand for payment was forwarded?

Facts = Bates alleged violations of the Fair Debt Collection Practices Act (FDCPA). Bates

incurred debt while residing in the Western District of PA. The creditor a corporation with

its principal place of business in that district, referred the account to C&S a local collection

agency which transacts no regular business in NY. Bates meanwhile moved to the Western

District of NY. When C&S mailed a collection notice to Bates at his PA address, the postal

service forwarded it to his NY address.

Rules = the court relied on 1391(b)(2) and determine whether NY was a place that gave

rise to a substantial aprt of the events giving rise to the claim

in adopting the federal debt collection practices act congress was concerned with the

harmful effect of abusive debt practices on consumers

this harm does not occur until the receipt of the collection notice. Thus, the court held that

the receipt of a collection notice is a substantial part of the event giving rise to a claim

under the FDCPA

Thus, venue was proper

←

← For venue to be proper, significant event or omissions material to the P’s claim must have

occurred in the district in question, even if material events occurred elsewhere. It would be error for

instance to treat the venue statute’s substantial part test as mirroring the minimum contacts test of

personal jurisdiction

←

← When different claims are combined in one suit, the general rule is that venue must be

established to each separate claim. In a venue where significant events occurred, the venue will likely

be proper in the district as to all claims related to those events

If D all reside in the same district, venue will be proper against all the D

Transfer of Venue

← (1) State courts transfer from one state to another and must do so using FNC

←

← (2) Transfer is federal to federal and county to county within state

28 § 1404(a) – Change of Venue: for the convenience of parties and witnesses, in the

interest of justice, a DC may transfer any civil action to any other district or division where

it might have been brought

What does where it might have been brought mean?

o HOFFMAN held it meant any court where P could have originally established proper

venue and jurisdiction.. this does NOT include where the case may now be re-

brought with the D’s consent

←

← (3) Also applies to §1406 because the statutory language is the same and both statutes were

enacted by the same Congress at the same time

Compare to similar language in 1631 – ‘brought at the time it was filed’

Counter-Argument = doesn’t ‘brought’ just mean ‘commence’ (the ability to file a

complaint) and cant a P filed a complaint in any DC- however, HOFFMAN is the law

←

← (4) Transfer Clauses

28 §1406(a)- Cure of Waiver or Defects = if a case is filed in the wrong DC, then DC

may dismiss, or if it be in the interest of justice, transfer the case to any district or division

in which it could have been brought

GOLDLAWR Held that even if a courts venue was improper AND had no personal

jurisdiction the court could transfer the case to a venue that was proper and had personal

jurisdiction.

Some contracts have forum selection clauses, specifying where litigation concerning the

contract is to occur. Stewart held that federal courts are not required to honor these

clauses. The courts will consider them as significant factors that figures in centrally in the

DC calculus; however, the clause is not dispositive.

28 §1631- Transfer to cure want of jurisdiction = if an action is filed and that court

finds that there is want of jurisdiction, the court shall, if it is in the interest of justice,

transfer such action or appeal to any other such court in which the action could have been

brought at the time it was filed or noticed

When the issue is transfer, rather than dismissal, the P’s choice of forum may

NOT be entitled to as much weight as it is under FNC (especially under §1406(a)

where the P chose the wrong forum)

Multidistrict litigation = in mass torts, like class action suits, courts may transfer all the

cases to one district for pretrial proceedings (under 28 USC §1407). These proceedings

need not meet other venue requirements, but the case shall be remanded back to the

districts where they came for trial

Under all 3 statutes, the decision to transfer is discretionary – however there seems to be

a presumption in favor of transfer over dismissal.

o 1404 Courts consider:

(1) convenience of parties

(2) convenience of witnesses

(3) interest of justice

o 1406 – prescribe NO such factors, providing that if the case is filed in an improper

venue the court shall dismiss or transfer

←

← (5) Choice of Law

Under a §1404(a) transfer, the receiving court should apply the law that the original court

would have applied

o VANDUSEN v. BARRACK covers D requested transfers

o DERENS v. JOHN DEERE covers P requested transfers

o P choose choice of law once when they pick the initial venue

Under a §1406(a) transfer, the laws of the receiving court apply

←

Forum Non Conveniens Doctrine

← (1) Reason for Forum Non Conveniens = burden on D or court and P cannot show why forum

is more convenient then will dismiss even if law is more favorable

a move from 1 sovereign system to another (ex. State to state or federal to foreign)

←

← (2) Definition = the power of the court to decline jurisdiction when convenience of parties and

justices is better served elsewhere. it is a dismissal of the case

since the central purpose of any forum non conveniens inquiry is to ensure that the trial is

convenient, a foreign P’s choice deserves less deference.

Under GILBERT dismissal will ordinarily be appropriate where trial in the P’s chosen forum

imposes a heavy burden on the D or the court, and where the P is unable to offer any

specific reason of convenience supporting its choice

←

← (3) PIPER – airplane crash in Scotland. Manufactured in PA, parts made in OH, aircraft

registered in England and was operated by Scottish service. Administrtix was just a a legal secretary

who brought suit in CA. Piper moved to federal court and then transferred venue to PA. After suit

transferred, moved for forum non conveniens.

Generally, P’s choice of forum should rarely be disturbed, but when there is an alternative

forum that has jurisdiction and the chosen forum would be oppressive and vexatious to the

D OR chosen forum is inappropriate because of court’s own administrative or legal

problems, court will dismiss

To evaluate, consider the GILBERT FACTORS

o Private Interest of litigant to change the forum

Relative case of access to sources of proof

Availability of compulsory process for attendance of unwilling

Cost of obtaining attendance of willing witnesses

Possibility of view of premises, if view would be appropriate to the action

All other practical problems that make trial of a case easy, expeditious,

and inexpensive

o Public Interest

Administrative difficulties when litigation is piled up in a court

Jury duty is a burden not to be imposed on people of a community who

have no relation to the litigation

Hold trial in view of people which it touches the affairs of rather than in

remote parts of the country

Local interest in deciding localized controversies at home

Appropriateness in having the trial of a diversity case in a forum that is at

home with the state law that it must govern- rather than having a court in

another forum untangle problems with the law

o Analysis

Is there an alternative forum to hear the case?

Is the D amendable to the process?

If remedy is clearly unsatisfactory the alternative forum is not adequate

GENERALLY, do NOT consider change in law

Need to retain flexibility

If we considered change of law, then the doctrine would

become useless

Substantial practical problems to consider change of law-

such as need to interpret law of foreign jurisdictions.

Forced to conduct complex exercises of comparative law

Public interest factors

If could not dismiss under Forum Non Conveniens

whenever there was an American corporate D, the flow of

litigation into American courts would be increased

However, we do not hold that the possibility of an unfavorable

change in law should never be a relevant consideration in a forum

non conveniens inquiry. If the remedy provided by the alternative

is so clearly inadequate or unsatisfactory that it is no remedy at all,

the unfavorable change in law may be given substantial weight,

the DC may conclude that dismissal would not be in the interests

of justice

←

←

← A. Federal court to foreign court = forum non conveniens

← B. State court to another state = forum non conveniens

← C. State court to federal court = removal

← D. Federal court to federal court = transfer

← E. County to county = transfer

What Law Applies in a Diversity Case- Eric Doctrine

Pre Eric/Swift Doctrine = RULES DECISION ACT ‘laws of several states’ as applied to

diversity jurisdiction means that federal courts are bound to follow only state constitutions,

statutes, and state common law interpreting statutes. Federal court not otherwise bound by

state common law and a body of substantive federal law developed to address matters of

‘general’ concern.

BUT, criticisms..

o Federal common law favored businesses, encouraged forum shopping, and

denigrated the authority of the states

o Litigation between corporations and people was arbitrary and unstable,

often deciding cases on tactical reasons and not on their merits

Slowly, there were some changes

o 1934 RULES ENABLING ACT gave SC the power to create laws to govern

rules of procedure in federal courts- led to creation of Fed Rules of Civil

Procedure in 1938 which freed federal courts from state procedural rules

←

←

← ERIE DOCTRINE = declared Swift unconstitutional and thus overruled Swift by

holding that there is NO federal common law. Instead, federal courts must apply state

judicial decisions as the law of the state in which it sits in a diversity claim

(1) thus, now, state judicial decisions count as laws within RDA

(2) question of what law applied mattered because it would have determined if

Tompkins was a trespasser or licensee

o Tompkins wanted federal because it would have been easier for him to

win, Eric wanted state because he would be a trespasser

Thus, Tompkins is intra-state forum shopping because it wants

federal law and not state law so it can win its case

(3) Eric is decided on not only statutory interpretation of the RDA, but also on

Constitutional grounds, although it is unclear exactly how

o relies on recent scholarly article which said we’ve been interpreting the

RDA by the Swift Doctrine wrongly- we should be applying state law to

diversity claims unless some federal law is controlling

o there is no transcendental body of common law outside state laws

o Holmes called the Swift Doctrine an unconstitutional assumption of power

by the federal courts

Thus perhaps 10th amendment violation because the constitution

does not expressly grant federal courts the power to create federal

common law

Maybe an equal protection violation?

(4) Eric, thus stops intra-state forum shopping by requiring the same substantive

law to apply in both state and federal courts

(5) When taken together with the 1934 Rules Enabling Act, Eric now standards for

the proposition that FEDERAL COURTS apply FEDERAL PROCEDURAL LAW and

STATE SUBSTANTIVE LAW

←

←

← ERIC SUBSEQUENTLY EXTENDED & INTERPRETED BROADLY

← (1) in 1940, SC held federal courts bound not only by state supreme court decisions,

but also the state intermediate appellate courts and trial courts

← (2) KLAXON – in federal diversity cases, federal courts were bound to apply the

choice of law rules of the state in which they sit

thus choice of law is substantive law

← (3) GUARANTY – the OUTCOME DETERMINATIVE TEST

if a rule is outcome determinative, then it is substantive and governs as a state

law should be in diversity cases

← (4) AFTER GUARANTY, the following laws were all ruled SUBSTANTIVE

negligence laws

choice of law rules

statute of limitations

ability to bring a case

commencement of the action (rejects Rule 3)

← (5) But then came the BYRD BALANCING TEST

Guaranty was proving unworkable because almost any law could be considered

substantive

Issue came up in BYRD because federal law held the issue could be tried by jury,

but state law held the issue should be tried by judge

Under Guaranty, the issue would be outcome determinative, but there was really

no real reason why state law required the issue to be tried by a judge. Moreover,

other federal considerations were relevant such as the right by jury in federal

court

Thus, BYRD ultimately settled on a BALANCING TEST

o Ask how important the rule was to the state

If it is really important, then apply it in diversity cases

If not really important, then consider outcome determinative

If refusal to apply the state law would be outcome

determinative, then apply it to the state

UNLESS there is a COUNTERVAILING FEDERAL

POLICY/INTEREST that requires application of federal

law over state law

← (6) Then, the HANNA PRESUMPTION about the FEDERAL RULES

the issue in Hanna is whether the service of process to the executor of an estate

has to follow the state or the federal rule for a case sitting in diversity

this is a problem here because cases subsequent to Eric diverged from Erie’s

main proposition that federal courts apply federal procedural law and state

substantive law

The subsequent Outcome Determinative Test in Guaranty is a problem because

every procedural variation between state and federal law is outcome

determinative

o Here, whether the state or federal rule of service applies will determine

whether there is an immediate victory for one party, thus it is outcome

determinative and state law should apply

Therefore, the outcome determinative test should be read in light of the TWIN

AIMS OF ERIE

o To discourage forum shopping and ensure equitable administration of the

law

Here, in light of the new way to use the outcome determinative test, although

whether state or federal law would be outcome determinative in this case, the

choice of state or federal law would not discourage forum shopping nor would it

create inequitable administration of the law. It would only alter the way service

was processed.

Moreover, Eric does not void the federal rules of civil procedure. This case falls

under the Rules Enabling Act

o RULES ENABLING ACT = gave the SC the right to create procedural rules

for federal courts. Such rules should not abridge, enlarge, or modify any

substantive right.

o Analysis under REA

Is the rule constitutional?

Does it violate the Rules Enabling Act?

Does the rule regulate practice and procedure?

Does it enlarge, abridge, or modify any substantive right?

AFTER HANNA

o To argue for a federal rule that is procedural but not part of the Fed Rules

of Civil Procedure-

Emphasize the procedural characteristics of the rule, characterize

the rule as affecting fairness and efficiency of litigation (and not

human behavior of where to bring the suit- which is forum

shopping), stress the federal court interest in applying the rule, and

minimize concerns about forum shopping and outcome

determination

o Procedural Federal Laws (p. 812)

Standard of care

Conflict of laws

Statute of limitations

Burden of proof

Agreement to arbitrate

←

← (7) GASPERINI standard for determining if there is a federal rule or statute ON

POINT

whether there is a federal rule or statute on point is the most important question

in the analysis

ISSUE = whether state or federal standard applies to determining standard of

review for a jury’s damages award if the state standard is arguably substantive

but implicated strong federal interests

ANALYSIS =

o There is a diversity case

o There is a conflict between state and federal rules

o There IS a federal statute on point

BUT federal courts have interpreted the federal rules in

consideration of the state’s interest (its purposes and policies) as to

why it enacted the rule

By considering the state’s interest in deciding if a federal rule or

statute is on point, it funnels more analysis towards the NO

FEDERAL RULE ON POINT in light of the state’s interest and why

they created their rule. Thus, go to the RDA prong

Ex. Here we have 2 conflicting rules for jury review and we

know why the state enacted their rule- to reduce damages

and check the tort system. THUS, we can use the state’s

purpose/policy to determine if the state’s goals will be met

by the federal rule

On the exam- if you know the state’s interest, do both an

RDA and ReA analysis, but don’t do both when necessary

HOLDING

o The state’s standard for reviewing jury awards is substantive because

otherwise it would be too outcome determinative in light of the twin aims

of Erie

o There is not an overriding federal interest here because the state is

interested in the standard of review between trial division and appellate

division whereas the federal government is interested in the proper

allocation of functions between federal and state courts

Eric Flowchart

← Is the Court sitting in DIVERSITY JURISDICTION?

NO then it might be in federal question jurisdiction, thus federal rule or practice

applies

←

← YES is there a conflict or difference between state law and federal rule?

ex. RTC – state required an affidavit of merit, federal rule did not to survive a motion to

dismiss

NO apply BOTH federal and state law

←

← YES is there a federal rule or statute ON POINT? Does a federal rule or statute

address the issue directly? Is it sufficiently broad to control the issue before the court?

Under GASPERINI, analyze whether there is a federal rule or statute on point by

considering the federal rules in light of the state’s interest- its purpose and policy

behind enacting the rule. By considering the state’s interest in deciding if a

federal rule or statute is in point, it funnels more analysis towards the NO

FEDERAL RULE ON POINT in light of the state’s interest and hwy they created

their rule and pushes more analysis to RDA prong

NO RULES DECISION ACT ANALYSIS

o Is the state’s purpose for creating the rule substantive?

See Byrd Balancing Test

ex. RTC- state law requiring affidavit of merit an intentional

substantive effect on tort reform

o Is the rule outcome determinative in light of the twin aims of Erie?

discouraging forum shopping and avoiding inequitable administration of

the law

is the state’s purpose for creating the rule substantive?

(considered in outcome determinative test)

See Byrd Balancing Test

ex. RTC – state law requiring affidavit of merit an intentional

substantive effect on tort reform

NO state rules apply

YES apply state rules unless it fails the BYRD

BALANCING TEST – Is there an overriding federal

interest?

o NO state rule applies

o YES balance and/or accommodate the

rule- maybe apply the federal rule

Ex. Judge/jury in Hannah

o When trying to accommodate the state and

federal interest, really just think about what

the important part of the state rule is to the

state and the important part of the federal

practices is to the federal system and see if

there is a way to preserve the important part

of both. If that isn’t possible, then weigh the

interests and choose one!

YES RULES ENABLING ACT (see Hannah)

o Is it valid

Is the rule constitutional?

Must be rationally capable of classification as procedure

Does the rule regulate practice or procedure?

HARLAN TEST – if a reasonable person could say ‘that rule

is procedural”, then it is procedural

YES federal rule

NO state rule (see Sibbach below)

Does the rule abridge, enlarge, or modify a substantive right?

SIBBACH TEST- the 2 parts of the REA analysis are

interlinked, so if you answer one then you’ve answered the

other one

Thus, if it regulates practice or procedure, then it

DOES NOT enlarge, modify, or abridge a substantive

right

Preclusion

← STARE DECISIS = requires courts of a particular jurisdiction to follow the legal

pronouncements of a higher court in that jurisdiction

Different state or federal courts have to abide by claim preclusion unlike stare

decisis

Only precluded on a single claim

←

← Law of the Case = provides that issues decided in a suit will not be re-litigated later

in the same suit

Differs from issue preclusion because issue preclusion involves identical issues in

separate actions rather than in the same action and issue preclusion is more

binding because it is in the form of judgment

←

← Claim Preclusion = stands for the proposition that a claimant may sue on a single

claim or cause of action once (One bite of the apple)

Defining scope is key because one claim can encompass more than one right to

relief

ex. Personal injury and property damages

o Different outcomes based on test

Claimant has one chance to vindicate all rights to relief encompassed in a single

claim. Failure to do so means that she has lost the right to pursue other aspects

of relief encompassed in that claim

Must have litigated all claims that could have been litigated in the first place

o Cannot litigate a claim that could have been litigated if it wasn’t.

←

← CLAIM PRECLUSION APPLIES IF:

Case 1 and Case 2 have same parties or in privity in same configuration

There is a final, valid, judgment on the merits in case one

Case 1 and Case 2 involve the same claim

←

← CASE 1 & CASE 2 HAVE SAME PARTIES OR IN PRIVITY

← (1) Claim preclusion cannot apply unless the same party is asserting a claim in both

cases

← (2) Due process requires that one cannot be bound by a judgment unless he has the

opportunity to appear and litigate

no one can be precluded to their day in court

those in privity can be excluded in certain instances

2 categories of privity: (binds on non-parties)

o representative = a non-party is bound by a judgment if he was

represented by a party in another case. (ex. Class actions, trustee-

beneficiary, executor-estate)

o substantive legal relationship

successors in interest are bound by judgments affecting property

(cant sur over same object)

an action by a party to a contract regarding the contract rights

idemnitor may be bound by judgment against indemnitee

decedent’s estate bound by decedent

ex. Decedent sues personal injuries and loses and then dies,

family may be precluded from suing for wrongful death.

Judgments against land

Sue for easement losses, next owner cannot sue for

easement (privity)

A party can be bound by judgment even though he does not have

notice of the action. If that party is not represented by a litigant

o configuration of parties = parties must also have the same litigation

posture in both cases.

Ex. Is case 1 (A v. B) and case 2 (B v. A) and if B has never asserted

claim, case 2 will not be dismissed for CP

This may be dismissed per compulsive counterclaim rule:

A D must assert any and all transactionally related claims he

has against he P in pending case. Prevent A v. B, B v. A and

saves time

←

←

← THE FIRST CASE MUST HAVE ENDED in a VALID, FINAL JUDGMENT on the

MERITS

← (1) Validity = requires courts have SJ and PJ

← (2) Finality = preclusion attaches only to final judgments. Individual rulings during

the course of litigation are not intended to preclusive effect since they may be revisited by

the judge before decision as a final matter

IF VALID final judgment on the merits is entered, and the losing party appeals

in the interim before the case is decided the trial courts decision is entitled to

preclusive effect (majority rule)

Minority rule is that is is not entitled to preclusive effect until appeals decision is

rendered

← (3) On Merits = virtually any judgment in favor of the claimant is considered on

merits

does not require a trial, summary judgment, JMOL, default judgment, all on merits

regardless of who wins

RULE 41(b): A judgment is NOT on merits if it is dismissed for:

o Lack of SMJ or PJ

o Improper venue

o Failure to join an indispensable party

Any dismissal not provided for in this rule is on the merits

RULE 41(b) does NOT apply if the D loses

Dismiss without prejudice if not on merits- Dismiss with prejudice if it is on merits

←

←

← CASE 1 & 2 WERE BASED on SAME CLAIM

← (1) TESTS

Transactional Test (majority) = a claim encompasses all rights to relief or

injuries that result from the same transaction or series of transactions or

occurrences

o A transaction is a natural grouping of common nucleus of operative facts.

The approach focuses on fact that are closely related in time, space, and

orgin and whether the facts form a convenient unit for trial purposes

o Broadest test and represents modern trend to force claimants to package

cases more inclusively along transactional line- providing more efficiency

o Regardless of test claim is personal to each injured person no

matter what the relationship among them

Single Wrongful Act = different injuries occasioned by a single act are part of a

single claim (personal and property must be encompassed in same claim)

o Sameness of evidence test = do you need the same evidence to prove

liability. But is it evidence of liability or harm? Most courts lean towards

liability.

Primary Rights (minority) (CARTER) = different injuries constitute different

causes of action, even when occasion by a single act of the D. (Injuries and

property represent 2 claims)

o argument for:

is that efficiency sacrificed in order to do the correct thing and

vindicate P’s rights. Further, proponents argue that is it best for

insurance cases because when insurance company subrogated

after paying for property damage of insured, it wont be able to sue

D if precluded. This is usually made an exception in other tests.

Statute of limitations are different, assign liability of rights are

different and survivability are different

o problem with primary rights:

what about the D? being sued twice for the same accident

promotes duplicative litigation, increased burden on judicial

recourses; difficulty in determining what rights are overall simply

too burdensome. No repose for D.

← (2)Contract Cases = each contract gives rise to separate claim. All amount owed

under a single contract must be sought at time suit is filed under the contract, any amount

sought is precluded

← (3) Separate people bring separate claims no matter what relationship when dealing

with personal injury.

←

←

← ISSUE PRECLUSION APPLIES IF:

Was the issue litigated and determined in 1st case?

Was the issue essential to the judgment in the 1st case?

A valid final judgment on the merits?

Against whom may preclusion be asserted?

Whom can assert issue preclusion?

←

← WAS THE ISSUE LITIGATED & DETERMINED in 1ST CASE?

← (1) Issue preclusion stops a claimant from re-litigating issue he ACTUALLY DID litigate

before

Claim preclusion stops something that could have been litigated. In ISSUE

PRECLUSION, it had to actually have been litigated in order to be precluded

POLICY = so people don’t spend too much time and money litigating small cases

o 3 requirements:

issue must have been litigated in case 1

trial with evidence

summary judgment

must have been determined

claimant may provide alternative theories and D alternative

defenses

if jury determines that one such theory is established it may

ignore others

must be speaking of same issues in both cases

different courts have different ways of interpreting issues

o IF 1st case ends in default judgment or in dismissal claim

preclusion applies. Issue preclusion does NOT, because no

litigation on issues –even though on merits.

Summary judgment presumes consideration of evidence therefore

issue preclusion does apply

CROMWELL v. SAC = 2nd action is different claim or demand judgment in prior

demand only precludes issues or points actually controverted. (BONDS CASE)

o Sally and Joe Hypos

←

← ISSUE was ESSENTAL to JUDGMENT in CASE 1

← (1) An issue is NOT essential and will be precluded when:

the findings of the issue could have come out the other way and the judgment

stays the same

the issue was founded in favor of the party against whom the judgment was

rendered

o because the issue was favored for the party against the judgment was

rendered the winning party would not appeal the judgment. Thus it is NOT

preclusion

← (2) Alternative Determinations = when either special verdict would have rendered

the case the way it was rendered. So neither issue is technically essential. Either one could

have rendered that decision.

Split on issues: some say both have preclusive effect and end in automatic win,

other say that neither issue has preclusive effect until affirmed on appeal

Majority is the 2nd restatement (affirmed on appeal)

← (3) RIOS v. DAVIS = car crash, only essential if needed to render judgment the way

it was rendered

sally and joe hypos

←

←

THE 1ST CASE MUST have ENDED in a VALID, FINAL JUDGMENT on the MERITS

(1) Validity = requires court have SJ and PJ

(2) Finality = preclusion attaches only to final judgments. Individual rulings during the

course of litigation are not intended to preclusive effect since they may be revisited by the

judge before decision as a final matter

IF VALID final judgment on merits is entered, and the losing party appeals in

the interim before the case is decided, the trial courts decision is entitled to

preclusive effect (majority rule)

Minority rule is that it is not entitled to preclusive effect until appeals decision is

rendered

← (3) On Merits = virtually any judgment in favor of the claimant is considered on

merits

does not require a trial, summary judgment, JMOL, default judgment, all on merits

regardless of who wins

RULE 41(b) does NOT apply if the D loses

Dismiss without prejudice if NOT on merits; Dismiss with prejudice if it is ON the

merits

←

←

← WHO CAN ISSUE PRECLUSION be ASSERTED AGAINST

← (1) Can only be asserted against those who were parties to the 1st case. (or those in

privity with them)

distinguished from mutuality = mutuality concerns the questions of who can

assert preclusion.

o Against whom is concerned with making sure that everyone ahs their day

in court.

← (2) Privity Relationships

representative = a non-party is bound by a judgment if he was represented by

a party in another case (ex. Class actions, trustee-beneficiary, executor-estate,

guardian- ward)

substantive legal relationship =

o successors in interest are bound by judgments affecting property

o an action by a party to a contract regarding the contracts rights

o idemnitor may be bound by judgment against indemnitee

o decedent’s estate bound by decedent

ex. Decedent sues for personal injuries and loses and then dies,

family may be precluded from suing for wrongful death

o judgments against land

A party can be bound by judgment even though he does not have notice of the

action. If that party is not represented by a litigant.

← (3) HARDY = Asbestos, can only be asserted against same party or those in privity

←

←

← WHO CAN ASSERT ISSUE PRECLUSION; MUTUALITY

← (1) Mutuality Rule = the only person who can use issue preclusion is someone who

is a party or in privity with party is the first case

doctrine has been eroding in this country

← (2) Non-Mutual Issue Preclusion = assertion of issue preclusion by someone who

was not a party to the 1st case

defensive non-mutual issue preclusion is ALWAYS available

offensive non-mutual issue preclusion is usually available except when it would

be unfair (parklane factors)

o DEF NM IP

When issue preclusion is asserted by a D or non-claimant

Defensive issue preclusion can always be used as long as the P had

a full and fair opportunity to litigate

Some courts reject mutuality altogether when people want

to assert issue preclusion for defensive purposes

That is, some courts allow people who were not

parties (or in privity with a party) in the 1st case to

assert issue preclusion when they are D’s in the 2nd

case

POLICY = this rejections encourage P to pack all D into one case-

which encourages efficiency because subsequent D’s can assert

issue preclusion even if they were parties or in privity with the 1st

case

BERNHARD v. BANK of AMERICA

Old lady’s estate v. Mr. Cook and Old Lady Estate v. Bank

Bank used issue preclusion against estate even though not

part of litigation in 1st case

BLONDER TONGUE

Patent holder v. D1 loses

Patent holder v. D2 (not in privity)

D2 successfully uses issue preclusion against the

patent holder because patent holder has had a full

and fair opportunity to litigate

NM Def IP = promotes efficiency in the court systems, fairness to

D’s and deters misallocation of resources

o OFF NM IP

PARKLANE v. SHORE = SC says that NM OFF IP is ok as long as

it is fair to the D. Gives Courts broad discretion to determine

whether it is allowed or not

Facts = case involving securites fraud. Parkland alleged lied

in proxy statemtns. First case brought by SEC, SEC wins and

hold that Parklane die lie. Know class action of individual P

that sue on a private action on the same claim. Class want

issue preclusion

Rule = NM OFF IP is OK, but subject to SOME regulations

(fairness factors)

Easy Joinder in 1st Case:

o To reduce the incentive to sue separately, the

court will not let a P who could have easily

joined in the first case us Off. IP in a

subsequent suit

Geography can be a factor

Incentive to litigate vigorously/forseeability for future

litigation:

o D did not litigate vigorously in the 1st case

then the court would not allow subsequent Ps

to use NM Off IP against the D

Inconsistent Judgments:

o Will not let Ps ride a judgment. P1 thru P56

loses, P57 wins, P58+ should not be allowed

to use issue preclusion

Different Procedures:

o The court would not permit the use of NM Off

IP if the P in the 2nd case could take

advantage of procedural opportunities that

were unavailable in the 1st case (of a kind that

could lead to a different result than the first

suit)

Effect of NM Off. IP: The courts are hesitant about NM Off

IP because it has a P have nothing to lose and everything to

gain by taking a wait and see approach since they can ride

the victory of another P. NM Off IP can increase the amount

of litigation

NM Off IP leads to P shopping

← (3) Merger = if judgment is in favor of the claimant in the 1st case, the judgment is

said to have merged with the claimants claim and therefore precludes further litigation on

that claim

← (4) Bar = if judgment is against the claimant and for the D, the claimant who lost is

barred from making that claim in a 2nd litigation

←

←

← DIFFERNCES BETWEEN CLAIM PRECLUSION & ISSUE PRECLUSION

Claim preclusion precludes claims that have already been brought and claims

that could have been brought in the 1st action

Issue preclusion only prevents parties from re-litigating particular issues

(questions of law or fact) that have been ACTUALLY litigated in a previous

proceeding (not issues that COULD have been brought)

Unlike claim preclusion, issue preclusion does NOT require that the parties in the

1st and 2nd cases be identical