Civil Procedure Professor Martin, Fall 2005 Personal Jurisdiction I. Traditional Bases for Jurisdiction A. Pennoyer v. Neff 1.

Rule: Every state possesses exclusive jurisdiction and sovereignty over persons and property within its territory; therefore, the courts of that state may enter a binding judgment against a non-resident only if he is personally served with process while within the state, or, if he has property within the state, if that property is attached before litigation begins 2. Reasoning: In a quasi in rem action such as this, you must attach land at the beginning of the lawsuit, usually on the same day you file, because you need to establish jurisdiction before the suit can go on. B. Overview of Two Types of Jurisdiction 1. Subject matter jurisdiction: The ability of the court to hear a particular type of case. 2. Personal jurisdiction: The ability of the court having subject matter jurisdiction to exercise power over a particular defendant or piece of property. The plaintiff seeks to assert PJ through service of process on defendant (D). Service of process is means by which court symbolically tags the defendant or his or her property. C. Three Type of Personal Jurisdiction 1. In Rem: This action is against the actual property, real or personal, and is solely about who has ownership over that property. Is a suit of person against the world, to gain power over property. The property must be located within the physical borders of the forum. 2. Quasi In Rem: This action is against the land in order to establish jurisdiction where cause of action is related to property between specific parties (i.e. not a person against the world) or where cause of action not related to the property, but property is used to enforce judgment. a) Note: The basis of the courts power to exercise in rem and quasi in rem jurisdiction is the property within the state. The judgment does not bind the D personally and cannot be enforced against any other property belonging to the D. 3. In Personam: This action is against the person and the awards are not limited, and the judgment can be enforced anywhere that the person has property. D. What is general jurisdiction? 1. Situation where the suit is unrelated to the in-state activities. 2. Continuous and systematic activities in forum state are required. E. What is specific jurisdiction? 1. Situation where the suit concerns Ds in-state activities. 2. Minimum contacts are needed. F. Ways to get jurisdiction over an individual: 1. Domicile: Jurisdiction may be exercised over a person who is domiciled within the forum state, even if the person is temporarily absent 1

II.

from the state. A person is considered to be domiciled in the place where he has his current dwelling place, if he also has the intention to remain in that place for an indefinite period. 2. Residence: Some states allow jurisdiction to be exercised on the basis of residence in the forum state, even though he is absent from the state. A person may have several residences simultaneously. 3. Physical Presence: Jurisdiction may be exercised over an individual by virtue of his presence within the forum state. That is, even if the individual is an out-of-state resident who comes into the forum state only briefly, personal jurisdiction over him may be gotten as long as service was made on him while he was in the forum state. (Burnham) 4. Property: Many states exercise jurisdiction over owners of in-state property in causes of action arising from that property. 5. Consent: Jurisdiction can be exercised by virtue of her consent, even if she has no contacts whatsoever with the forum state. Consent can either be implied (Hess) or explicit (Kane). 6. Tortious acts committed in state: Many states have statutes allowing their courts jurisdiction over persons committing tortious acts within the state. Some of these in-state tortious acts long-arm clauses have been interpreted to include acts done outside the state which produce tortious consequences within the state. (Gray) 7. Conducting business: States often exercise jurisdiction over nonresidents who conduct business within the state. Since states may regulate an individuals business conduct within the state, they may constitutionally exercise jurisdiction relating to that doing of business. 8. Domestic relations cases: Courts sometimes try to take personal jurisdiction over a non-resident party to a domestic relations case. However, the requirement of minimum contacts applies here (as in every personal jurisdiction situation) and that requirement may bar the state from taking jurisdiction. (Kulko) G. The Role of the Constitution in Establishing Jurisdiction 1. Full Faith and Credit Clause Full faith and credit shall be given in each state to the public acts, records and judicial proceedings of every other state. Once congress authenticates such acts, records, and proceedings, they should have such faith and credit given to them in every court within in United States as they have by law, or usage, in the courts of the state from which they are or shall be taken. 2. 14th Amendment Due Process Proceedings in a court of justice to determine the personal rights and obligations of parties over whom that court has no jurisdiction do not constitute due process of law. Expanding the Bases of Personal Jurisdiction

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A. Express Consent - Kane v. New Jersey 1. Expressed consent to jurisdiction over matters arising from a partys activity within the state by requiring an out-of-state motorist to file a formal instrument appointing a New Jersey agent to receive process prior to using the states highways. B. Implied Consent - Hess v. Pawloski 1. Rule: State has the power to declare that all non-residents who use its highways have impliedly consented to submit to the states jurisdiction for all actions arising from that highway usage 2. Policy reason: Motor vehicles are dangerous machines, and, even when skillfully and carefully operated, their use is attended by serious dangers to persons and property. In the public interest, the state may make and enforce regulations reasonably calculated to promote care on the part of all, residents and non-residents alike, who use its highways. A New Theory of Jurisdiction A. International Shoe Co. v. Washington 1. Rule: A corporation will be subject to the jurisdiction of any state with which it has minimum contacts that make the exercise of jurisdiction consistent with traditional notions of fair play and substantial justice. 2. Reasoning: State has jurisdiction based on location. First, location is presence in general, asking whether or not corporation does a fair amount of business in the state. Minimum contacts with the forum state is sufficient to sue corporation so long as it is fair and reasonable. Second, presence at the time of the tort, asking whether or not the corporation was receiving benefits from the forum state at the time of the tort. Corporation receiving benefits from laws of forum state should be subject to that states jurisdiction. Specific Jurisdiction and State Long-Arm Laws A. The Development of Long-Arm Laws 1. Long-arm statutes seek to provide personal jurisdiction over nonresidents who cannot be found and served in the forum. a) Substitute service: Long-arms typically provide for substitute means of service, since in-state personal service is not possible. 2. Long-arm statutes allow jurisdiction on the basis of certain links between the defendant and the forum state, such as domicile, ownership of property, commission of a tortious act, etc. 3. Out-of-state acts with in-state consequences: Many states long-arms explicitly cover acts done outside the state with in-state consequences, and where they do not, courts can interpret the statute to be read as such. 4. Unlimited long-arm statutes: A few states, such as California, have long-arm statutes that given their courts power over any person or property which the state can constitutionally exercise jurisdiction. 5. Long-Arm Statute Test: a) Is there a long-arm statute? b) Is it constitutional? Analyzing Personal Jurisdiction Problems A. Was D present in the forum state when process was served on him? 3

1. Burnham v. Superior Court a) Rule: The DPC does not deny a state jurisdiction over a person personally served with process while temporarily in a state, in a suit unrelated to his activities in the state. (Need to show minimum contacts to get 8 judges) (1) 3 Justices (Scalia, Kennedy, Chief Justice) say a state can have jurisdiction over persons physically present in state. (2) 4 Justices (Brennan, Marshall, Blackmun AND OConnor) say there must also be minimum contacts per Shaffer. (Concurred with judgment because thought there was minimum contacts) (3) 1 Justice (White) says it doesnt matter because the rule is service alone is sufficient to gain personal jurisdiction. (4) 1 Justice (Stevens) is on the fence because the parties didnt introduce the issue. 2. Note Case: Quill v. North Dakota a) Holding: DPC did not prohibit a state court from asserting personal jurisdiction in a suit brought by the state to enforce its use tax against an out of state mail order house with no outlets or sales reps in the State. Contacts with instate consumers and mail were sufficient because the goods were used in the state b) Rule: DPC does not require physical presence in the forum state to collect tax. B. Does the forum states long arm statute provide for jurisdiction over D? 1. Substantial connection? a) Yes - Gray v. American Radiator & Standard Sanitary Corp. (S. Ct. of Illinois, 1961) (1) Holding/Rule of Law: D manufactures valves in State A and sells them to a heater manufacturer in State B. The heater manufacturer incorporates Bs valves into its heaters and sells in States C, D, and E. Valve explodes and injures P in State E. D is held liable because it knew that some of the valves it manufactured would go to State E and expected to be protected by the laws of State E. The International Shoe minimum contacts requirement is satisfied even when a corporation conducts no business within a state, so long as the act giving rise to the lawsuit has a substantial connection to the state b) No - Note Case: Green v. Advance Ross (1981) - Illinois long-arm statute that said an out-of-state resident submits to the jurisdiction of Illinois when he commits a tort that cause a diminution of the funds of a Illinois corporation was unconstitutional because it would allow corporations to bring people in to Illinois courts no matter how remote their connection with the forum. IL Supreme Court distinguishes itself from Gray C. Is any of the following true? 4

1. D is domiciled in the forum state. 2. D has consented to be sued in the forum state. See Another Base of Jurisdiction: Consent 3. D owns property in the forum state. See Jurisdiction Over Property 4. D regularly transacts business in the forum state. (These contacts are so completely voluntary and unambiguous that they automatically constitute minimum contacts and entitle the state to exercise personal jurisdiction over D, whether the claim relates to Ds in-state activities or not.) D. Are at least some of Ds contacts with the forum state voluntary? E. Does the cause of action arise out of or relate to Ds contacts with the forum state? 1. If yes, go to F. 2. If no, are Ds contacts with the forum state systematic and continuous? 3. Yes - Perkins v. Benguet Consolidated a) Holding: The mining company presidents in-state activities were held to be extensive enough so that Constitutional due process neither prohibited nor compelled Ohios jurisdiction over the mining company; the matter was left to the courts. b) Rule: The court held that where the cause of action does not arise from business done within the forum state, Constitutional due process requires that the in-state business actually conducted be so systematic and continuous as to make it not unjust that the corporation be forced to defend a suit there. 4. No - Helicopteros Nacionales v. Hall a) Rule: Negotiations and purchasing in the forum state do not constitute continuous and systematic contacts sufficient to satisfy the requirements for general in personam jurisdiction. b) Reasoning: Sending the CEO for contract negotiations, accepting checks drawn on Houston bank, purchasing helicopters equipment and training services in Fort Worth, and sending personnel there for training are insufficient for general jurisdiction. c) Dissent: Brennan believes Helicols purposeful availment of the benefits and obligations of Texas constitute sufficient minimum contacts to make it fair and reasonable for the State to assert jurisdiction over Helicol. The undisputed contacts between Helicol and Texas are sufficiently related to the underlying cause of action, and jurisdiction does not offend traditional notions of fair play and substantial justice. Because of their participation in interstate and foreign commerce, Helicol should reasonably expect to be called into Texas for litigation, based on the doctrine of general jurisdiction. Also, he believes that the wrongful-death claim is sufficiently related to the contacts between Helicol and Texas to warrant specific jurisdiction. 5. No 15,000 Magazines Per Month Not Enough To Be Systematic and Continuous - Note Case: Keeton v. Hustler Magazine 5

a) Hustler sold 15,000 copies of a magazine a month to the forum state, but the court would only hold that thisthough continuous and systematicGENERAL jurisdiction would not occur-only specific. 6. No Contacts Must Be Overwhelming - Note Case: Fisher Governor Co. v. Superior Court a) Similar to Keeton - Sales and sales promotion to a state by independent, no exclusive representatives are not enough to assert general jurisdiction. This case makes clear that there needs to be an overwhelming number of contacts for general jurisdiction. 7. Yes Note Case: Frummer v. Hilton Hotels Intl, Inc. a) When two corporations are interlocked in ownership thereby creating an agency relationship between the two, but are in different countries, either company can be sued in either country. 8. No Note Case: Ratliff v. Cooper Laboratories, Inc. a) Drug manufacturer case. When the plaintiffs are non-resident of the state, the defendants have their principal places of business outside of that state and are incorporated outside that state, the action arises outside of that state, general jurisdiction cannot be obtained. F. Are Ds contacts with the forum state sufficiently great that they should be deemed minimum contacts? 1. Minimum Contacts Rule: 2 part analysis 2. Purposeful Availment & Foreseeability a) Ds contact with the forum must result from his or her purposeful availment with that forum. Contact cannot be accidental. D must reach out to the forum in some way, such as to make money or use roads. b) Contacts that exist only through unilateral acts of 3rd parties are insufficient. c) Rationale: It is unfair to non-resident D to defend in forum state unless, given his purposeful activities, he could reasonably foresee being haled into that states courts. d) D must have purposefully availed self of privileges of conducting activities in forum state, thus invoking the benefits and protections of its laws. e) Among the facts considered significant in analyzing purposeful availment are (1) Soliciting business in the forum state (2) Having offices and/or employees in forum state (3) Visiting the forum state in connection with the events leading to the litigation (4) Entering into a contract (a) With a party in the forum state; and/or (b) That calls for some aspect of its performance in the forum state; and/or (c) That calls for application of the forum states law; and/or 6

(d) That contemplates long-term relationship with someone in forum state (e) Owning/renting property in forum state (f) Deriving revenue from forum state (g) Sending/receiving mail, email, calls, or faxes to/from forum state (h) Engaging in intentional and harmful conduct, the effects of which are felt (targeted toward?) the forum state f) No - Because Unilateral Act by Third Party - Hanson v. Denckla (1) Holding/Rule of Law: The Delaware trust company has no office in Florida, and transacts no business there . . . The record discloses no solicitation of business in that State either in person or by mail. The unilateral activity of those who claim some relationship with a nonresident cannot satisfy the requirement of contact with the forum state. There must be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws. g) Yes When Contract Ties Parties Business Activities to Forum State Will Tend To Show Minimum Contacts- Burger King v. Rudzewicz (1) Holding/Rule of Law: This franchise dispute grew directly out of "a contact that had a substantial connection w/ that State." The parties' repeated course of dealing confirmed that decision-making authority vested in Miami. The court held that by signing the contract with the provision regarding Florida law, the defendant had purposefully availed himself of the benefits and protections of the forum states laws. A party who establishes purposeful minimum contacts with a state is subject to that states exercise of personal jurisdiction over him. Further, choice-of-law provision D signed means that in an agreement, the parties agree to apply the law of a forum state. Standing alone, the provision would not be sufficient to establish jurisdiction to bring suit in that state. However, because the agreement is accompanied by a relationship and contacts within that state, there would be jurisdiction in the forum state. h) Yes If Manufacturer Knows Product Will Eventually Be Sold In Forum State, Should be Enough for Minimum Contacts -Asahi Metal Industry Co. v. Superior Court (HOWEVER, SEE FAIRNESS SECTION) (1) Rule: The defendant must purposefully avail himself of the forum by more than just putting a product into the stream of commerce with the expectation that it will reach 7

the forum state, however, such conduct is enough to satisfy the minimum contacts requirement. Nonetheless, once it has been established that minimum contacts exist, the fairness requirement must still be met as well, which will be much harder to do in the case of a non-U.S. resident. (2) Reasoning: (a) OConnors 4 require knowledge that the stream of commerce will move the product into the forum states market plus additional conduct such as advertising or marketing in that state or deliberately designing product for that state. Although there are minimum contacts, exerting jurisdiction over Asahi would offend traditional notions of fair play and substantial justice such that jurisdiction is improper. (b) Brennans 4 disagree with OConnor that additional conduct is needed. Knowledge that the product with end up in the forum state is enough to exert jurisdiction over defendant. However, they agree with OConnor that jurisdiction is improper in this case because it would offend traditional notions of fair play and substantial justice. (c) Stevens: I would be inclined to conclude that a regular course of dealing that results in deliveries of over 100,000 units annually over a period of several years would constitute purposeful availment even though the item delivered to the forum State was a standard product marketed throughout the world. i) No - Adopted OConnors Purposeful Availment Test Note Case: Rodriguez v. Fullerton Tires Corp. v. Custom Metal Spinning Corp. (1) Even assuming D had specific knowledge that the stream of commerce would move its tire rims into Puerto Rico, this awareness alone would not be enough to constitute the purposeful availment that is necessary for a showing of minimum contacts. j) Misapplication of Asahi Note Case: Parry v. Ernst Home Center Corp. (1) Japanese co. makes a maul, given to CA corporation, goes to Idaho retailer (D), where Linda buys it, takes it to Utah to give to dad, who lets friend borrow it & friend (P) is injured in Utah while splitting logs. Court found that there was no jurisdiction here, because as in Asahi, company didnt have the additional conduct necessary to sell product in Utah or Idaho. k) Yes Phone and Mail Contacts Enough - Alchemie International, Inc. v. Metal World, Inc.

(1) Mail and telephone contacts, seen as significant contacts with plaintiff, were enough to establish jurisdiction when those contacts had solicited, executed, and allegedly breached a substantial commercial contract. l) Yes - One Act Specific Jurisdiction - McGee v. International Life Insurance Co. (1) Rule: A state may exercise jurisdiction over a defendant whose contacts with that state consist of only a single act, provided that that act is what gave rise to the claim for which jurisdiction is being sought, and was deliberately directed toward the state. (2) Reasoning: Commerce has become more nationalized and contracts are increasingly between states. Given the nature of the insurance business, small policy holders would be denied justice if forced to file suit in a foreign jurisdiction. Also, the fairness factor of the insurance company having to come out to California is outweighed by Californias interest to protect its citizens. And, because the company had a policy in CA and because they communicated with the policyholder in California, they could foresee being haled into court there. m) No Simply Causing an Effect in FS Not Enough - Kulko v. Superior Court (1) Rule: A state may not exercise jurisdiction over a defendant who has not purposefully availed himself of the benefits of that state, even if the state has a strong interest in the litigation. (2) Reasoning: Merely causing an effect within the forum state without purposeful availment will not support jurisdiction. There is no claim that the defendant has visited physical injury on either property or persons within the state of California. The cause of action here asserted arises from personal relations, not business relations. n) Effects Test Note Case: Harris Rutsky Co. Insurance Services v. Bell & Clements Ltd. (1) D must have 1) committed an intentional act, 2) expressly aimed at the forum state, 3) causing harm, the brunt of which is suffered and D knows is likely to be suffered in the forum state. o) Yes First Amendment No Protection Note Case: Calder v. Jones (1) P was entertainer defamed by National Enquirer. NE claimed no personal jurisdiction and Superior Court agreed on the ground that First Amendment concerns outweighed jurisdictional concerns. Supreme Court disagreed and said there was no trouble finding NE could foresee being haled into court in CA.

p) No - Foreseeability Alone Not Enough Must Be Effort As Well - World-Wide Volkswagen Corp. v. Woodson (1) Rule: In order to be subject to a states jurisdiction, a defendant must have chosen to come contact with that state; considerations of fairness, convenience, and the interests of the state in overseeing the litigation are otherwise irrelevant. (2) Reason: The unilateral activity of bringing a product into a state is not enough for that state to have jurisdiction. Foreseeability alone has never been enough under the Due Process Clause; what is critical to due process is rather the foreseeability of being sued in the forum state. Minimum contacts must be based on some act committed by the defendant and the defendant must have chosen to purposefully avail itself of the forum state. The Court is trying to protect people from being pulled into court in a forum state where they had absolutely no contact and purposely chose to have no contact. If we ignored the minimum contacts rule, WWV could be sued anywhere because a car they sold in NY might have foreseeably be driven in another state, even if WWV made a conscious decision not to sell in that state and never had any contact whatsoever with that state. (3) Policy reason: If foreseeability alone is enough, then the defendant can be sued everywhere. (4) Dissent: Brennan. The defendant need not deliberately seek contacts with the state if defendant has some contacts with the state, especially with regards to cars and its mobile nature. Considering factors other than extensiveness of defendants contacts, such as fairness and convenience of the plaintiff, it is reasonable to subject the defendant to the forum states jurisdiction. Fairness factors include efficiency of forum court, location of evidence in forum state, plaintiffs hospitalization in forum state, the minimal inconvenience suffered by defendants in being required to defend themselves in the forum state. 3. Internet Cases Active v. Passive Websites a) Yes Sending Tortious Emails to FS Bellino v. Simon (1) Personal jurisdiction is not exercised on Spence based on one unsolicited telephone call from forum state to nonresident Spence. Although allegedly defamatory comment made by Simon first occurred during the telephone call made by Aubert, this phone call resulted from several email communications which, in a broad sense, Simon initiated through his website. Simon affirmatively directed the allegedly tortious emails to Louisiana. Although FDS (Simons company) and Bellino do not live in LA and would therefore have to defend suit 10

there, the principal witness Aubert is in Louisiana and the effect of the tortious activity was felt in Louisiana. Therefore, this does not offend traditional notions of fair play and substantial justice. b) Yes - Note Case: Inset Systems, Inc v. Instruction Set, Inc. (1) Internet website advertisement operated by non-resident sufficient to establish personal jurisdiction under purposeful availment test. Since then, courts have been reluctant to find jurisdiction based solely on the existence of website advertisements. c) No - Note Case: Cybersell, Inc. v. Cybersell, Inc. (1) Need something more than maintenance of website to show that defendant purposefully directed activities at the forum. d) Sliding Scale Test - Note Case: Zippo Mfg. Go v. Zippo Dot Com, Inc. (1) The court articulated what has become known as the sliding scale test, under which the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet. (2) Active websites: If defendants conduct business over the Internet with residents of a particular forum through these websites, the assertion of jurisdiction is almost always proper. (3) Interactive websites: The sliding scale becomes relevant in these cases where a user is permitted to exchange information with a host computer; the debate is over this middle ground. The Supreme Court has yet to consider the issue of personal jurisdiction based upon Internet contacts. (4) Passive websites: If defendants do little more than make information available to those who are interested, there are rarely grounds for the assertion of personal jurisdiction. e) No - Note case: Hycite Corp v. Badbusinessbureau.com, L.L.C (1) Court didnt follow test articulated in Zippo. They stated cannot determine whether P.J. is appropriate by deciding what type of website it is (passive or active). Contacts through the website must be so substantial that they may be considered continuous and systematic for the purpose of general jurisdiction. f) Yes Online Contracts are Purposeful Availment Note Case: Compuserve, Inc. v. Patterson (1) Court held that D purposefully perpetuated a relationship with Compuserve via repeated 11

communications with its system in Ohio by entering into a written contract with Compuserve and choosing to transmit his software to Compuserves system in Ohio so that others gained access to his software via that system. G. Is jurisdiction fair and reasonable? 1. Fairness Factors (as spelled out in Burger King) a) Burden on the D multiple concerns including relative health and/or wealth of the D. Forum easily reached? Will case come to trial quickly in this forum? Almost any factor that can be argued. b) Forum states interest The forum state may have a legitimate interest in providing redress for its residents. c) Plaintiffs interest similar to Burden on D lack of truly available alternative forum, lack of adequate discovery or other procedural benefits in another forum or unfavorable choice of law. d) Convenience The forum is constitutionally acceptable unless it is so gravely difficult and inconvenient that a party is unfairly put at a severe disadvantage in comparison to his opponent. This is a very difficult standard to meet and D will usually not be able to meet it simply by showing that P has superior economic resources. e) Shared interests of several states directs concern to the risk of arbitrariness in allowing one forum to advance its public policies by adjudicating a case touching many states and implicating their public policies also. f) From Asahi foreign policy unique burdens placed upon one who must defend oneself in a foreign legal system 2. Qualifications to fairness factors: a) If minimum contacts are clearly found then D must present a compelling case that the presence of [these factors] would render jurisdiction unreasonable. Burger King b) If fairness factors are found, then the court is willing to fudge a bit on the minimum contacts. They can be REALLY LOW. These considerations sometimes serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required. Burger King 3. No The More Burdensome It Is For Defendant & the Slimmer the Contacts, More Likely It Is To Be Unreasonable -Asahi Metal Industry Co. v. Superior Court a) Rule: The defendant must purposefully avail himself of the forum by more than just putting a product into the stream of commerce with the expectation that it will reach the forum state, however, such conduct is enough to satisfy the minimum contacts requirement. Nonetheless, once it has been established that minimum contacts exist, the fairness requirement must still be met as well, which will be much harder to do in the case of a non-U.S. resident. b) Rationale: A consideration of the facts reveals the unreasonableness of an assertion of jurisdiction over Asahi, even apart from the question of the placement of goods in the stream of 12

commerce. Considering the international context, the heavy burden on the alien defendant, the slight interests of the plaintiff and the forum state, the exercise of personal jurisdiction by a CA court over Asahi would be unreasonable and unfair. 4. Yes - Burger King Corp. v. Rudzewicz a) Rule: Once it has been established that the defendant has minimum contacts with a state, it is up to the defendant to prove that being required to defend a suit there would be fundamentally unfair. b) Reasoning: Minimum contacts give the presumption of jurisdiction unless the fairness factors are so overwhelmingly in opposition to jurisdiction. c) Dissent: Stevens stresses due process concerns of the defendant rather than the forum states interest in the litigation. 5. Are Fairness Factors Applicable in Cases of General Jurisdiction? Note Case: Metropolitan Life Insurance Co. v. Robertson-CECO Corp. a) The Second Circuit held that the exercise of general jurisdiction was unreasonable in light of the five-factor Asahi test, but other courts have not consistently applied this approach. H. Another Basis of Jurisdiction: Consent 1. Waiver - Failing to raise an objection regarding jurisdiction either in your answer or to make a 12(h)(1) motion at the appropriate time. a) Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee (1) Rule: Failure to comply with jurisdiction related discovery may constitute implied consent to jurisdiction. (2) Rationale: By submitting to the jurisdiction of the court for the limited purpose of challenging jurisdiction, D agrees to abide by that courts determination on the issue. P was seeking through discovery to respond to Ds contention that there was no personal jurisdiction. Having put the issue in question, D did not have the option of blocking reasonable attempt of P to meet its burden of proof. 2. General Appearance If D appears and presents defenses or objections other than those regarding jurisdiction, he has consented to personal jurisdiction. 3. Counter-claim If non-resident plaintiff is hit w/ counter claim he has consented to personal jurisdiction. 4. Implied a) In doing business with the forum state, there is implied consent to personal jurisdiction in that state through the states long-arm statutes. This fiction of consenting to jurisdiction through business requires that the business have minimum contacts with the forum state (International Shoe). The states long-arm statute might authorize jurisdiction, however, the jurisdiction must also be Constitutional.

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b) Ratliff v. Cooper Labs., Inc. Applying for the privilege of doing business is one thing, but the actual exercise of that privilege is quite another. The principles of due process require a firmer foundation than mere compliance with state domestication statutes. 5. Express (Does not hold if contract is unconscionable or party under duress) a) M/S Bremen v. Zapata Off-Shore Co. (1) Rule: The United States courts should enforce reasonable forum selection clauses even if the clause mandates jurisdiction in a foreign court. (2) Rationale: The expansion of American business and industry will hardly be encouraged if, notwithstanding solemn contracts, we insist on a parochial concept that all disputes must be resolved under our laws and in our courts. We cannot have trade and commerce in world markets and international waters exclusively on our terms, governed by our laws, and resolved in our courts. b) Carnival Cruise Lines, Inc. v. Shute (1) Rule: Reasonable forum selection clauses are effective in imposing jurisdiction. (2) Rationale: 1) Cruise line has a special interest in limiting the for a in which it potentially could be subject; 2) the clause dispels any confusion about where suits arising from the contract must be brought and defended; 3) passengers benefit in the form of reduced fares reflecting the savings that the cruise line enjoys by limiting the for a in which it may be sued. It will be valid as long as the clause is reasonable. The clause is reasonable when it is fair. It is fair because the plaintiffs benefited from lower prices resulting from decreased litigation. Jurisdiction Over Property A. Two types of jurisdiction 1. Quasi in rem: Cause of action isnt necessarily about property. The property is attached to get jurisdiction. Requirements of quasi in rem jurisdiction are: a) Notice to person that you are taking property b) In the forum state c) That was attached at beginning of lawsuit 2. In rem: Cause of action is about property. a) Has to deal with property. b) Has to be within the state. c) Against the universe (I exercise dominion over the chalk anybody who wants to challenge the ownership of the chalk can come into the lawsuit. Anybody with interest in the chalk.) 3. Tyler v. Judges of the Court of Registration a) Rule: Personal notice to all adverse claimants is not required in a motion in rem to quiet title to property. 14

b) Rationale: In rem jurisdiction is secured by the power of the court over the property. Otherwise, the judicial proceeding to clear title against all the world would not be possible, for the very nature of the proceeding is to rid the property of any known or unknown claimants. 4. Pennington v. Fourth National Bank a) In rem proceedings require seizure of the property within the forum states jurisdiction as well as an opportunity for the owner to be heard. Applies to both tangible and intangible property. 5. Harris v. Balk a) Rule: Courts may assert jurisdiction over debts provided personal jurisdiction over the debtor can be attained. b) Rationale: The situs of the debt travels with the debtor for jurisdictional purposes. The original situs of the debt is irrelevant. Debt is an item of intangible personal property and the typical rules for in rem jurisdiction should apply. c) Note: After Shaffer, the attachment of a third partys debt to D or attachment of an insurance companys obligation to defend and pay a claim, are largely wiped out as bases for jurisdiction. 6. No Minimum Contacts, Therefore No Quasi In Rem Jurisdiction Shaffer v. Heitner a) Rule: Minimum contacts must exist in order for in rem jurisdiction to attach. b) Rationale: Since jurisdiction over property involves jurisdiction over a persons interest in the property, the proper standard is the minimum contacts standard elucidated in International Shoe (due process requires that minimum contacts exist for in personam. jurisdiction). If a direct assertion of personal jurisdiction over the defendant would violate the Constitution, it would seem that an indirect assertion should be equally impermissible. c) Reasons against using the minimum contacts test (or to put it another way, reasons for allowing automatic quasi in rem jurisdiction) (1) A wrongdoer should not be able to avoid payment of his obligations by the expedient of removing his assets to a place where he is not subject to an in personam suit. Rebuttal by court: You can still sue where the money isnt and use the Full Faith and Credit Clause to take your judgment to the state where the money is and execute the judgment. (2) Traditional in rem jurisdiction avoids the uncertainty in the International Shoe standard and assure a plaintiff a forum. Rebuttal by court: The test is rather easy to apply. And, simplifying the question of jurisdiction is not more important than fair play and substantial justice

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(3) This is the way it has always been, why change the tradition? Rebuttal by court: Just because it is the way it has always been doesnt mean that it is fair. (4) Sometimes this may be the only forum available this was not raised nor discussed in court. d) Effects of Shaffer (1) Pure In Rem Actions Shaffer had almost no effect on in rem suits. Jurisdiction is permissible where the presence of property within the state is itself the subject matter of the disputewhere tangible or intangibleand is directly related to Ps cause of action. (2) Quasi In Rem Actions Quasi in rem will rarely be advantageous. Jurisdiction permissible where the Ps claims relate to rights and obligations arising out of the defendants ownership of property within forum state provided D has minimum contacts. The one situation where it might be useful is where minimum contacts are present, but the states long-arm statute for personal jurisdiction is too narrow to reach D. 7. Owning Land Satisfies Minimum Contacts Note Case: Rhoades v. Wright a) Court considered the presence of the land (as distinguished from the intangible prop. in Shaffer) together with the fact that the Colorado D actively used the land as sufficient 8. Exception Admiralty Cases Note Case: Amoco Overseas Oil Co. v. Compagnie Nationale Algerienne de Navigation a) A federal admiralty court after Shaffer can exercise jurisdiction based on an attachment of property (foreign bank account) in the district when the defendant otherwise lacks contacts with the forum. This tradition suggests not only that jurisdiction by attachment of property should be accorded special deference in the admiralty context, but also that maritime actors must reasonably expect to be sued where their property may be found. 9. Note Case: Feder v. Turkish Airlines a) Quasi in rem jurisdiction okay when attaching bank account that is only contact with forum. Decision not consistent with Shaffer. 10. Note Case: Rush v. Savchuk a) Insurance obligation could not be attached to get quasi in rem jurisdiction because there were not enough contacts. 11. Cybersquatting Note Case: Harrods Ltd. V. Sixty Internet Domain Names a) Registering a domain name can expose D to an in rem action wherever the name is registered because states have a sovereign interest in protecting property registered within its borders if dispute is directly related to the property itself.

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(i) Jurisdictional Reach of the Federal District Courts B. Rule 4(k)(1)(A): If the state court has jurisdiction, the federal court has jurisdiction. The federal court borrows the long-arm statute of the state court. Personal jurisdiction is valid in state court, and therefore federal court, when the states long-arm statute authorizes it and when it is constitutional. C. Rule 4(k)(1)(B): Personal jurisdiction valid over a third party in a lawsuit when that third party was served within a 100 mile radius (even across state lines) of the courthouse. D. Rule 4(k)(1)(C) and Rule 4(k)(1)(D): other long-arm statutes 1. Because the federal courts are federal, it is not about the state, it is about you being a citizen of the US in some instances, you can be served anywhere. (Quote from Ben) For unusual cases: a) National Residence Theory: if you are a resident of the US, then it is up to the federal court where you are sued. It is automatically fair because you are a resident of the US, so the fairness factors are not considered b) National Contacts Theory: if you have contacts with the nation, then the federal court is going to be concerned with minimum contacts with the US and they will apply fairness factors. E. Rule 4(k)(2): allows federal courts to exercise jurisdiction over a defendant against whom federal law claims are asserted in a case in which the defendant is not subject to the jurisdiction of any single state but the Constitution of the US would permit jurisdiction (almost always because D is a foreigner). 1. Rule 4(k)(2) promulgated partly in response to Omni Capital International v. Rudolf Wolff & Co. Foreign defendants doing business in the US might not be amenable to service of process in any particular state if long arm-statute could not reach them and thus would be unaccountable in the US for alleged violations of federal law, but Supreme Court held that it was for legislature, not courts, to fashion a rule authorizing service of process in this situation. F. Which party has burden of proving the amenability or lack of amenability of the defendant to suit? 1. Note Case: BP Chemicals v. Formosa Chemical Corp. a) Burden stays with plaintiff 2. Note Case: US v Swiss American Bank a) Once P makes prima facie case for application of the rule, the burden shifts to defendant 3. Note Case: ISI International v. Borden Ladner Gervais LLP a) Defendant who wants to stop Rule only has to name some other state. Naming a state would amount to consent to PJ. If defendant says he cant be sued anywhere and doesnt say where he can be sued, then Rule can be applied. G. How is nationwide in personam jurisdiction justified? 1. Note Case: Stafford v. Briggs a) Justice Stewart-dissent: Theory of national contacts: Due Process Claus requires minimum contacts between defendant and sovereign that has created court. 17

2. Note Case: Oxford First Corp. v. PNC Liquidating Corp. Federal statutes authorizing extra-district service of process are limited by the fundamental notions of fairness derived from the Due Process Clause of the Fifth Amendment. The factors relevant to the fairness inquiry were: 1) the extent of the defendants contracts with the place where the action was brought, 2) the inconvenience of defending in a distant forum, 3) judicial economy, 4) the probably locus of discovery, 5) the interstate character and impact of defendants activities. a) Most courts have declined to adopt the Oxford factors as a test of whether an assertion of personal jurisdiction by a federal court complies with due process. VII. Challenging A Courts Exercise Of Jurisdiction Over The Person Or Property A. Raising the Jurisdictional Issue Directly 1. In federal court and half of the states, if you defend on the merits, you do not waive personal jurisdiction. You can defend the lawsuit in federal court and half of the states on the merits and then on appeal, you can raise whatever issue you want, including lack of personal jurisdiction. 2. The other half of the states have special and general appearances 3. Special appearances: D is appearing just to contest personal jurisdiction. If he loses, he can appeal. If the court decides that they do have jurisdiction, D can defend on the merits or default. If you defend on the merits and therefore make a general appearance and lose, you can appeal but not on the grounds that the court lacked jurisdiction. 4. General appearances: D consents to personal jurisdiction. If D defaults but does not make a general appearance, judgment will be entered against him and he can then collaterally attack. 5. Trial Courts Have Broad Leeway In Determining Procedures Data Disc, Inc. v. Systems Technology Associates, Inc. A defendant may move, prior to trial, to dismiss the complaint for lack of personal jurisdictionThe limits which the district judge imposes on pre-trial proceedings will affect the burden which the plaintiff is required to meetAccordingly, if a plaintiffs proof is limited to written materials, it is necessary only for these materials to demonstrate facts which support a finding of jurisdiction in order to avoid a motion to dismiss. If a plaintiff makes such a showing, however, it does not necessarily mean that he may then go to trial on the meritswhere the jurisdictional facts are enmeshed with the merits, the district court may decide that the plaintiff should not be required in a Rule 12(d) preliminary proceeding to meet the higher burden of proof which is associated with the presentation of evidence at a hearing, but rather should be required only to establish a prima facie showing of jurisdictional facts(P) must still prove the jurisdictional facts at trial by a preponderance of the evidence. B. Collateral Attack on Personal Jurisdiction 1. When P tries to enforce the judgment, D can contest that the judgment was made without jurisdiction. The court does not have to give judgment full faith and credit. D can file lawsuit arguing that there is an invalid

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judgment based on lack of jurisdiction. The court can then invalidate the judgment. 2. D cant defend on the merits in State X and then collaterally attack in State Y - Baldwin v. Iowa State Traveling Mens Assn If defendant appears specially to contest personal jurisdiction in federal court, defendant cannot collaterally attack; he can only appeal or had he wanted to collaterally attack, he should not have shown up at all. Public policy dictates that there be an end of litigation; that those who have contested an issue shall be bound by the result of that contest; and that matters once tried shall be considered forever settled as between parties [this] opinion repeats the established rule that a defendant who makes no appearance whatsoever remains free to challenge a default judgment for want of personal jurisdiction. The principle that a court has power to determine its own personal jurisdiction is limited to defendants who submit the question for resolution in that court. C. The Limited-Appearance Problem 1. Limited appearance: Allows D in an action commenced on a quasi-in rem basis to appear for the limited purpose of defending his interest in the attached property without submitting to the full in personam jurisdiction of the court. a) If D appears to defend in QIR action, then PJ - U.S. Industries, Inc. v. Gregg FL resident whose property had been sequestered in DE was refused the right to make a limited appearance and told that any judgment the court might enter in favor of P would be an in personam one.

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Providing Notice and An Opportunity to Be Heard I. The Requirement of Reasonable Notice A. In order to have personal jurisdiction, it has to be authorized under the long arm statute, constitutional, and triggered by the service of process. B. Reasonableness test: In order for D to have received adequate notice, it is not necessary that he actually have learned of the suit. Rather, the procedures used to alert him must have been reasonably likely to inform him, even if they actually failed to do so. C. Due Process Requires Notice Be Reasonably Calculated Under All The Circumstances. 1. Publication Fails When Addresses Known - Mullane v. Central Hanover Bank & Trust Co. a) Rule: Notice by publication fails to comply with due process where the names and addresses of the parties are known. b) Rationale: Whenever legal proceedings affect life, liberty, or property interest of the parties, parties must be provided with notice under due process clause. Due process requires that notice be reasonably calculated, under the circumstances, to appraise interested parties of the pendency of the action and afford them the opportunity to be heard. Personal service of written notice always complies with due process; notice by publication fails as a reasonable method depending on the circumstances. However, parties residing outside of the forum state do not necessarily have to be provided with written notice, as this would place impossible obstacles in the instant action where the number of interested beneficiaries is numerous. P had previously mailed information to a number of beneficiaries and likewise should have mailed notice of the legal proceedings to these beneficiaries, as this would not seriously burden the trust. The New York statute providing for service by publication in such circumstances is unconstitutional, failing to comply with due process. With regard to the beneficiaries whose addresses were unknown or interests uncertain, notice by publication did comply with due process. 2. Publication In Last Known Abode Not Good Enough Note Case: McDonald v. Mabee a) There is no dispute that service by publication does not warrant a personal judgment against a nonresidentan advertisement in a local newspaper is not sufficient notice to bind a person who has left a state intending not to return. To dispense with personal service the substitute that is most likely to reach the defendant is the least that ought to be required if substantial justice is to be done. 3. Notice of Implied Consent Laws Expressly Required To NonResidents Note Case: Wuchter v. Pizzutti a) Every implied consent statute should require the plaintiff to have the duty of communication by mail or otherwise with the 20

defendant that he has been served. If the statute does not require the plaintiff the duty of communicating to defendant service, then even if defendant is given communication of service, jurisdiction may not be established. 4. Posting On Property Not Good Enough (Mail Or Personal Service Required) Note Case: Mennonite Board of Missions v. Adams a) Notice by publication and posting does not provide a mortgagee of real property with adequate notice of a proceeding to sell the mortgaged property for nonpayment of taxes. Publication and mail is needed unless mortgagee is not reasonable identifiable. 5. For Probate If Creditors Are Known/Ascertainable Mail Required Note Case: Tulsa Professional Collection Services, Inc. v. Pope a) US Supreme Court held that if Tulsas identity as a creditor was known or reasonably ascertainable by executrix Pope, due process required that the collection agency be given notice by mail or other such means as is certain to ensure actual notice. 6. Notice On Door of Tennant for Eviction Not Enough Note Case: Greene v. Lindsey a) Supreme Court, in an opinion by Brennan, found notice in the form of posting summons on door of a tenants apartment in forcible entry and detainer actions (provided for by Kentucky statute) insufficient to satisfy due process. In circumstances of this case, merely posting notice on apartment door does not satisfy minimum standards of due process because in a significant number of instances, the statute allowing service of process in this manner failed to provide actual notice to tenant concerned. Due process clause required that the posting be supplemented by notice through mail. Notice posted upon property is adequate to alert owner or occupant of legal proceedings where notice is posted at a residence but when there are circumstances different from those in the instant case. b) Dissent: Since mailboxes are subject to plunder, at least posting on door gets it as far as the tenants door. 7. For Impossible/Impractical Personal Service Then Mail To Last Known Enough Note Case: Dobkin v. Chapman a) Regarding personal service that is impossible or impractical, New York Court of Appeals upheld service by ordinary mail to defendants last known address and publication in a local newspaper. 8. Mail To Insane Or Committed Not Enough Note Case: Covey v. Town of Somers a) US Supreme Court held that notice by mail, ordinarily sufficient, does not satisfy due process when it is mailed to someone known to be insane and committed to a hospital, or to someone who is without the protection of a guardian. 9. Actual Notice Not Required To Prisoner From Fed Gov Note Case: Dusenberry v. United States

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a) Supreme Court held that certified mail is sufficient in those circumstances when the federal government is the plaintiff and the defendant is incarcerated in federal prison. b) Ginsburg, Stevens, Souter, and Breyer dissented because the Court condones a procedure too lax to reliably ensure that a prisoner will receive a legal notice sent to him. 10. On Small Claims, Summons Must Include Option Of Written Pleading Note Case: Aguchak v. Montgomery Ward Co. a) On small claims cases, summons must include notification that defendant has option to appear by written pleading or that defendant had a right to request change of venue otherwise jurisdiction is improper. This case distinguishes between what methods for communicating notice are acceptable (see cases above) and what the content of the notice should be. 11. Notice of Garnishment Must Contain Detailed Individualized Explanation of Reasons For Action Being Taken Note Case: Finberg v. Sullivan a) Third Circuit struck down rules allowing creditors to seize bank accounts containing Social Security benefits without giving notice containing a detailed, individualized explanation of the reason(s) for the action being taken. The Mechanics of Giving Notice A. Ways to Serve 1. Serve pursuant to law of forum state, or pursuant to law of state where service is effected (state where served) / Rule 4(e)(1) 2. Personal service place and leave papers with defendant a) Place and Leave With - Personal Delivery on Natural Persons: McKelway, Profiles Place and Leave With, New Yorker (1) Place and leave with is the legal phrase for what a process-server must do with a summons when goes out to serve papers on a defendant, but the courts never have explained precisely what that means. Where the processserver must place the papers is still a nice legal question. 3. Service on defendants dwelling or usual place of abode / Rule 4(e) (2) if papers are left with person residing there of suitable age and ability to accept service a) Service To One Of Many Homes Note Case: National Development Co. v. Triad Holding Corp. (1) Service to apartment of wealthy businessman who testified it was one of 12 residences he maintained around the world was upheld because he was living there at the time and serving him there was the most likely method of ensuring that he received the summons and complaint. b) Service To Home Youve Just Left - Note Case: Karlsson v. Rabinowitz (1) Fourth circuit validated service that was left with the defendants wife in Maryland even though the family was 22

in the process of moving and the defendant had already left for Arizona, with no intent ever to return. c) Service to Estranged Wife Not Valid Note Case: Williams v. Capital Transit Co. (1) On facts similar to Karlsson, District of Columbia Circuit held that service was invalid because the papers were left with Ds estranged wife and he did not receive the papers until three years after judgment was entered against him. 4. Service via registered mail or regular first class mail only allowed when forum state allows pursuant to Rule 4(e)(1) 5. Waiver of service / Rule 4(d) a) Plaintiff sends defendant waiver; defendant accepts or refuses waiving formal service b) Receiving request to waive does not create obligation to respond or basis for default c) If defendant refuses waiver (without good reason), must pay cost of personal service financial incentive to waive service. (1) Reasons why defendant may refuse to sign waiver of service: (2) Statute of limitations Sometimes the statute of limitations does not run until the defendant is served. (3) If the defendant thinks that he can constantly evade service, then the plaintiff cannot effectively serve defendant and will be unable to sue defendant. (4) The defendant may just want to make it difficult on the plaintiff. (5) The defendant may be rich and therefore willing to pay for alternative form of service in hopes that plaintiff will be unable to carry them out. d) If defendant accepts waiver, Rule 4(d)(3) allows 60 days to file answer Rule 12(a) allows 20 days to answer if defendant does not waive service e) P Must Strictly Comply With Service Provisions, Even If D Knows Of Suit - Maryland State Firemens Association v. Chaves (1) Rule: The plaintiff must strictly comply with the service provisions, even if the defendant has actual notice of the lawsuit. (2) Rationale: For cases pending after December 1, 1993, Rule 4(d) replaces Federal Rule 4(c)(2)(C)(ii). The new rule authorizes the defendant to send notice of the action and a request for waiver of service. If the defendant does not consent to waiving, the rule does not provide a basis for default judgment. Maryland rules do not even help their case because Maryland Rule of Procedure 2-121 requires service by process of certified mail, not first class.

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f) Private Delivery (FedEx) Is NOT First Class Mail Note Case: Audio Enterprises v. B & W Loudspeakers (1) Seventh Circuit district court rejected service by private delivery, reasoning that Rule 4(d) specifies first class mail, postage prepaid. 6. Service by posting on property or publication only constitutional when no good alternatives exist; may be sufficient is do both or supplement either with mailing to last known address 7. Service pursuant to some international treaty / Rule 4(f) Hague convention prevails if a country has signed it 8. Service via authorized agent. Agent may be authorized by appointment or by law. There must be evidence that defendant himself intended to confer such authority upon the agent. a) National Equipment Rental, Ltd. v. Szukhent (1) Rule: Service upon an expressly designated agent is proper, even if the agent is not required to deliver notice to the defendant. An express contractual appointment of an agent for service of process, and the subsequent transmittal of notice to the defendant, satisfies the requirements of Rule 4(e)(2). (2) Rationale: Parties to a contract may agree in advance to submit to the jurisdiction of a given court through a forum selection clause, expressly designating an agent in New York for the purpose of accepting service of process. Although the agent in this case was not known to the defendant, her prompt acceptance and transmittal of the summons and complaint was itself sufficient to validate agency, even though there was no explicit promise on her part to do so. A failure to deliver service may have invalidated the agency, but that is not the case here. Since prompt notice was given to the defendant, the agent was his agent authorized by appointment to receive process. It is because Florence, the fake agent (because defendant did not have subjective intent to make Florence the agent), acted like an agent that she is authorized as being the agent. The Supreme Court considers form contracts as valid, even if there may be a conflict of interest, if the agency is validated. (3) Dissent: 4 justices say that she was not authorized, including Black and Brennan. They do not like that Florence had a conflict of interest in being appointed through contract clause; they would bar agents who have conflict of interest as a matter of law and who are therefore not really authorized by appointment. The only time they would accept someone like Florence as an agent is if she was required to validate the agency by mailing a copy, but she was not required to so by either federal or state law.

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They do not like form contracts, believing that it is not real authorization. b) Cognovit Notes Should be Decided On Case-by-Case Basis - Note Case: D.H. Overmeyer Co. v. Frick Co. (1) The Supreme Court considered the constitutionality of cognovit provisions (provisions where debtor may agree to waive objections to jurisdiction, notice, and service of process) and ruled that they were not per se violative of the Due Process Clause. Such agreements must be judged on a case-by-case basis, with particular sensitivity to whether there was inequality of bargaining power or lack of consideration. (2) Most state courts have invalidated cognovit notes and other consent judgment provisions. They are rarely employed outside of Pennsylvania, Delaware, Ohio, and Illinois. 9. Rule 4(h) authorizes service upon corporations, partnerships, and unincorporated associations that are subject to suit under a common name, with the most frequently invoked portion of the rule being the part that permits service by delivery of process to an officer, managing agent, or general agent. a) Delivery to Someone NOT Authorized by Company Insurance Co. of North America v. S/S Hellenic Challenger (1) Rule: Federal Rule 4(h)(1) has been liberally construed to allow service upon any representative of a corporation when delivered to one so integrated with the organization that he knows what to do with the papers. (2) Rationale: Service of process upon a corporation does not necessarily have to be made upon an expressly designated employee. Service is generally sufficient when made upon an individual who stands in such a position to render it fair to imply the authority on his part to receive service. In this case, the service was reasonably calculated to alert the defendant to the initiation of the suit because the claims adjuster who was served was well integrated into the organization and was familiar with the formalities associated with service, as he had accepted service on behalf of the defendant on at least two previous occasions. The adjusters loss of summons and complaint is a mistake in the ordinary course of business and does not merit remedial relief. b) Service to Secretary Can Be OK - Note Case: Fashion Page, Ltd. v. Zurich Ins. Co. (1) A corporation may assign the task of accepting process and may establish procedures for insuring that the papers are directed to those ultimately responsible for defending its interests. The corporation however cannot escape the consequences of establishing alternative procedures which 25

it may prefer. Reliance may be based on the corporate employees to identify the proper person to accept service. In this case, an executive secretary who had regularly accepted summonses whenever the vice president was not in his office was considered an agent authorized by appointment. 10. If Ds identity or residence is unknown, some states allow service by newspaper publication. But this may only be used where D truly cannot be found by reasonable effort. B. Return of Service 1. After serving, server must file proof of service (affidavit detailing service and signed by server) to establish jurisdiction. 2. Return of service can be rebutted if there is not absolute proof that service occurred. 3. Sheriff Made a False Return of Summons - Miedreich v. Lauenstein a) The sheriff had made a false return of summons that resulted in judgment against plaintiff in this case. The Supreme Court upheld the judgment, stating that the plaintiff in the prior suit that the current plaintiff lost did all that the law required in the issue of and attempt to serve process; and, without fraud or collusion, the sheriff made a return to the court that service had been duly madethe court was justified in acting upon such return as upon a true return. If the return is false the law of the state permitted a recovery against the sheriff upon his bond. (Quote from Civ Pro book, p. 219) 4. The return of service is considered strong evidence of facts stated, but it is not conclusive and may be controverted by proof that return is inaccurate. However, Ds testimony generally will not be sufficient to impeach the return unless other evidence corroborates it. 5. Sewer Service - United States v. Brand Jewelers, Inc. a) The US had standing to seek an injunction preventing defendant from systematically obtaining default judgments against economically disadvantaged people by utilizing so-called sewer service techniques, by which process-server simply disposes of the papers and makes a false affidavit of service. C. Service of Process and Statutes of Limitations 1. Statutes of limitations fix specific times within which actions must be brought. A suit is commenced for purposes of a statute of limitations, in some states, when process is served on the defendant. a) Accrue & Toll: Causes of actions are said to accrue when the limitation clock begins to run on an action. If a plaintiff has been prevented from timely asserting her rights, the running of the clock is suspended or tolled. 2. Statutes are generally deemed procedural but their impact is substantive plaintiff loses the opportunity to invoke the assistance of the courts to obtain relief for an otherwise valid claim.

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3. Defect in Service: A defect in service can be fatal to a plaintiffs claim, because the statute of limitations may have run before the plaintiff has a chance to correct his error. 4. In federal court, Rule 3 governs when the action is commenced. a) The suit is commenced when a copy of the complaint is filed with the district court. b) When the underlying cause of action is based on state law, state law will govern when the action is commenced. 5. Rule 4(m) requires federal court to dismiss without prejudice an action when the defendant has not been served within 120 days of the filing of the complaint, if the plaintiff fails to show good cause for not completing service within that time. a) Prompt, but Improper Service in Federal Court: If service of process is promptly attempted but improperly made, the federal court has discretion over whether or not they will dismiss the action without prejudice or merely quash service and order the plaintiff to re-serve. Courts dismiss when plaintiff has little likelihood of effecting proper service. When plaintiff can make proper service quickly, courts generally quash the faulty service without prejudice to the plaintiff to serve again. Immunity from Process and Etiquette of Service A. Immunity from Process 1. A court will sometimes immunize a party from service of process, despite the fact that the constitutional and statutory conditions governing personal jurisdiction and service of process have been met. In such cases, the grant of immunity usually is justified as promoting the administration of justice. a) Parties who are usually immune include witnesses, parties, and lawyers who come to state to participate in suit in order to alleviate fear of coming in state for suit b) Non-residents incarcerated for criminal charges are not immune from service for civil charges c) State ex rel. Sivnksty v. Duffield (1) Rule: Nonresidents confined in jail on criminal charges are not immune from service of process for civil actions. (2) Rationale: When the intended recipient of civil process has been charged with a crime, immunity furthers public policy to ensure that a nonresident charged with a crime will not be deterred from appearing before the criminal court by the threat of civil process. (Chill of Appearance) A nonresident who voluntarily submits himself to jurisdiction, in an answer to an indictment against him, is privileged while attending court from service of process in a civil suit. In the instant case, the defendant entered the jurisdiction on his own volition rather than in response to criminal process and at the time of entry, he had not yet committed a crime. In such instances, the court follows the rule that a person confined in jail on a 27

criminal charge or imprisoned on conviction for such charge is subject to service of civil process if he was voluntarily in the jurisdiction at the time of the arrest and confinement. (3) Dissent: Whether defendant came into jurisdiction voluntarily or not is irrelevant. His presence became involuntary when he was confined in jail and because of the majority opinion, he will be forced to trial in a county far from his residence. The holding in this case subjects to civil jurisdiction an unfortunate motorist who is arrested on real or fanciful criminal charges, potentially leading to widespread abuse of judicial process. d) Immunity From Service Confined to United Nations Headquarters District - Note Case: Kadic v. Karadzic (1) President of breakaway Bosnian-Serb republic was served for federal court action on charges of genocide while he was in US as an invitee of the United Nations. Court upheld service and found that immunity from service is confined to the headquarters district of the United Nations and D was served in the lobby of a hotel, outside that district. The court also declined to treat D as an accredited diplomatic envoy because he was not a designated representative, only an invitee, of the United Nations. 2. Today, immunity serves little purpose as long-arm statutes allow out of state service B. Etiquette of Service 1. Service Gained By Fraud And Deceit Not Valid - Wyman v. Newhouse a) Rule: Service of process procured through trickery renders jurisdiction invalid. A judgment that is procured through fraud is void. b) Rationale: Defendant was fraudulently induced to enter jurisdiction of state of Florida to be served in an action for damages. Any judgment, procured fraudulently, lacks jurisdiction and is null and void. A fraud affecting the jurisdiction is equivalent to a lack of jurisdiction. Defendant did not have to make out a defense on the merits to the suit in Florida and any error made in entering judgment against a party over whom a court had no jurisdiction permits the defendant to attack the judgment collaterally. 2. Service Gained By Trickery, But D In FS Voluntarily Is OK Gumperz v. Hofmann a) The court distinguished between actions designed to induce a party into a jurisdiction and actions calculated to facilitate service on a party already in the jurisdiction, upholding service obtained by trickery on party who was voluntarily in New York. The

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trickery did not leave to quashing of service because it was only used to enforce the duty of the party to accept service of process. 3. Today, issues of trickery are rare as long-arm statutes allow out of state service. Opportunity to Be Heard A. Due Process allows all parties the right to present their side of the case B. Sometimes a hearing is sufficient. Sometimes there is need for a full trial. It is usually something in between. C. Defendant must be given adequate time to prepare defense against charges in complaint 1. Rule 12(a) provides 20 days / Rule 4(d) provides 60 days if accept waiver 2. 5 Days Was NOT Enough Time - Roller v. Holly a) One common requirement for a defendant to have adequate opportunity to be heard (when she is able to develop facts and legal issues in the case) is that the defendant must be informed of the action (that is, must receive notice) long enough in advance of the time when she is required to respond so as to allow her to obtain counsel and prepare a defense. D. Provisional remedies - a generic term for any temporary order of a court to protect a party from irreparable damage while a lawsuit or petition is pending. 1. Due Process limits provisional remedies because they do not provide adequate opportunity to be heard. 2. In general, seizure of property must be preceded by notice and opportunity to be heard. 3. Must Consider Nature of Ps Interest Note Case: Goldberg v. Kelly a) Court held that a pre-termination hearing is required for termination of welfare benefits because "termination of aid pending resolution of a controversy over eligibility may deprive an eligible recipient of the very means by which to live while he waits." 4. Cant Garnish Wages W/out Hearing Note Case: Sniadach v. Family Finance Corp. a) Struck down a Wisconsin prejudgment wage garnishment procedure as violative of due process guarantees. Where the taking of ones property is so obvious, it needs no extended argument to conclude that absent notice and a prior hearing, this prejudgment garnishment procedure violates the fundamental principles of due process. 5. Fuentes v. Shevin a) Rule: Absent extraordinary circumstances, notice and an opportunity to be heard must be provided PRIOR to depriving a party of a protected property interest. Consistent with procedural due process, we have repeatedly held that, prior to depriving a party of a property interest, an opportunity to be heard must be granted in a meaningful time.

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b) Reasoning of Majority 4 (2 new judges on sidelines who had just been confirmed and that did not vote): Stewart: If notice and a hearing is to serve its full purpose, then the hearing must be granted at a time when the deprivation can still be prevented. Florida statute requires a post-seizure hearing in which the aggrieved party can argue her right to the goods. Pennsylvania allows for the aggrieved party to institute a lawsuit for the return of wrongfully seized goods. Pursuant to both statutes, the creditor seeking replevin (modern action allowing the title holder to repossess goods or chattels from a person who has wrongfully there must be a special need for prompt action, and the statute must be narrowly drawn. c) Dissent of Minority 3: Both the Florida and Pennsylvania statutes that allow for seizure of goods without providing opportunity to be heard prior to seizure are constitutionally valid methods of reconciling conflicting interests of the debtor and the creditor in an installment sales contract. 6. Cognovit Notes Still OK Note Case: D.H. Overmeyer Co. v. Frick a) Court held that a clause authorizing a creditor upon default to use a confession-of-judgment procedure (cognovit note) and secure the entry of judgment against a debtor without service of process or notice was not per se violative of the Fourteenth Amendment requirements of prejudgment notice and a hearing. 7. Unequal Bargaining Leads to Invalid Waivers of Pre-seizure Hearings Note Case: Kosches v. Nichols a) In contracts of adhesion where buyer has no alternative but to purchase on credit, the parties are not in equal bargaining position the clauses giving the seller the right to enter a debtors residence and seize the goods without a court order are unconscionable. 8. Safeguards Make Seizures OK - Mitchell v. W.T. Grant Co. a) Rule: Statutes allowing for attachment or sequestration without a prior adversarial hearing do not violate procedural due process, if procedural safeguards exist. The Louisiana sequestration statute does not violate due process. b) Rationale (2 new judges in!) Majority 5 (White, who dissented in Fuentes wrote majority opinion here): The Louisiana sequestration statute provides that a writ of execution could issue ex parte, but only when the nature of the claim clearly appears from a 1) verified petition. The statute required the clear showing to be 2) made to a judge and 3) allowed the debtor to seek dissolution of the writ, and then placed the burden on the creditor to prove that the writ was proper. 4) The debtor could regain possession by filing his own bond to protect the creditor against interim damage to the property. Sniadach and Fuentes differentiated from instant case, those cases involving a creditor with no prior interest in the property (not the case here with installment sales contract) and a sufficiently different factual and 30

legal background from the instant case (not really!), respectively. Also, different from Fuentes, the statute in question here is narrowly confined. Based on the procedural safeguards of the Louisiana statute, there is far less danger here that the seizure will be mistaken, thus the sequestration standards are constitutional. Note that according to Martin, the majority does not overrule Fuentes the distinguishing characteristics noted in Mitchell matter to the court. c) Dissent 4 (the same 4 that were in the majority in Fuentes): The Louisiana affidavit requirement was little more than a standardized form that only tested the creditor-applicants own belief in his rights. Replacing the court clerk with a judge would have no effect on the assessment of the affidavit or the issuance of the writ. The factual issues in the instant case were no different from those in Fuentes. The majority unjustifiably disregarded stare decisis in overruling Fuentes 9. Property May Not Be Attached W/out Notice/Hearing W/out Procedural Safeguards - North Georgia Finishing, Inc. v. Di-Chem, Inc. a) Rule: In order to comply with procedural due process, attachment by garnishment requires a prior adversarial hearing or certain procedural safeguards. The Georgia garnishment statute violates due process. b) Reasoning Majority 6 (White, who handed down opinion of Mitchell one year before): The Georgia garnishment statute at issue provided for attachment of property upon filing an affidavit, without need to specify clear proof of need for attachment, with a court clerk (not a judge) and posting a bond equal to twice the amount alleged to be due. No provision for early hearing at which the creditor would be required to demonstrate probable cause for the garnishment. A writ of garnishment issued by a court clerk without notice or opportunity for an early hearing violates due process (Fuentes). The Georgia statute has none of the procedural safeguards necessary to make it constitutional (Mitchell). Although the property here (bank account) is different from that of the two preceding cases, the court does not distinguish among different kinds of property in apply the due process clause. 10. Balancing Test - Connecticut v. Doehr a) Rule: Where the risk of erroneous attachment and the harm to the aggrieved party outweighs the interests of the party seeking attachment, property cannot be attached without notice and a hearing. Connecticuts prejudgment attachment statute violates due process. b) Rationale (White again delivers this opinion and all justices agree!): The court relies on the form of the balancing test adopted in Mathew v. Eldridge threefold inquiry to determine if government conduct comports with due process. The relevant inquiries in the instant case are as follows: 31

c) Consideration of the private interest that will be affected by attachment (1) The private property interests are significant, for attachment may cloud title, impair the ability to alienate the property, taint credit rating, and even place existing mortgage on default. d) Examination of the risk of erroneous deprivation through the statutory procedures and the value of additional alternative safeguards. (1) There is a substantial risk of erroneous deprivation (2) The Connecticut statute requires only a minimal showing of probable cause (3) Judge could not make a realistic assessment of the merits of the action based solely on one-sided, conclusory assertions by defendant in an assault and battery action (4) The statute does not provide sufficient additional safeguards (5) It does provide for a prompt post-attachment hearing, but this would not cure the temporary deprivation of property that would have already occurred e) The interest of the party seeking the prejudgment remedy (1) The interests of the defendant are too minimal to support the prejudgment attachment (2) No indication that plaintiff was about to transfer his property or otherwise render his estate unavailable to satisfy a future judgment (3) The court also provided an analysis of whether due process requires the party seeking attachment to post a bond. The bond, despite its use as remedy, does not excuse the need for a hearing or other safeguards prior to attachment. The bond cannot undo what hearings can prevent. 11. Fed Cant Evict Drug Dealers W/out Notice/Heard - Note Case: Richmond Tenants Organization, Inc. v. Kemp a) The court concluded that, in the absence of exigent circumstances, the Due Process Clause of the Fifth Amendment requires the federal government to provide notice and an opportunity to be heard before a tenant may be evicted, even when evicting drug offenders. 12. Owners Interest In Property May Be Forfeited Even If She Did Not Know It Was Being Used For Illegal Purpose - Note Case: Bennis v. Michigan a) Court forfeited a familys automobile following husbands use of the car for sex acts with a prostitute. Wife tried to contest forfeiture on grounds of her joint ownership in the property, but court rejected that argument, holding that a long and unbroken line of cases holds that an owners interest in property may be

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forfeited by reason of the use to which the property is put even though the owner did not know that it was put to such use. 13. Your Car Can Be Booted Note Case: Patterson v. Cronin a) Denver boot case. Court applied Mathews factors and found that the governmental interest in enforcing parking ordinances was important enough that a hearing prior to immobilization was not constitutionally mandated provided that a hearing procedure was available after the immobilization. Denver failed to provide such a post-deprivation hearing and, as a result, the court concluded that the immobilization of plaintiffs vehicle violated his due process rights. 14. Note Case: Shaumyan v. ONeill a) Involved a challenge to the same statute at issue in Doehr, but in the context of a contract action, not an international tort case. It concerned a dispute between a homeowner and a repair contractor. Owner was not happy with quality of work and refused to pay, so contractor obtained an ex parte judgment attachment writ against their home. Owners sued to enjoin application of the attachment statute. Relying on the Mathews test, the court found that although the private interest in a family home is strong, the likelihood of erroneous deprivation is low and the contractor had a substantial interest in the property that resulted from his labor and the use of material that could not be reclaimed. 15. Note Case: Peralta v. Heights Medical Center, Inc. a) Supreme Court held that requiring a party seeking to vacate a judgment to show a meritorious defense violated the Due Process Clause. Had defendant known of the lawsuit before default judgment entered against him (failure to personally serve him), might have turned out differently. Also, the entry of judgment against him had serious consequences, as it became a lien on his property, which was promptly sold. The judgment against him and the ensuing consequences occurred without notice and notice at a meaningful time and in a meaningful manner would have given him the opportunity to be heard. E. Temporary Restraining Orders Dont Need Notice/Hearing - Federal Rule 65(b) authorizes issuance of temporary restraining orders without notice or hearing, effective for 10 days during which time a hearing may be held to determine whether or not a preliminary injunction should issue. If a preliminary injunction is granted, it remains in effect until final judgment is rendered.

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Subject Matter Jurisdiction I. Subject Matter Jurisdiction in State Courts A. State courts are courts of general jurisdiction (open to hear all types of disputes). State courts often have different branches (probate, family law, criminal...civil (superior, municipal < $25,000, small claims court, etc.)). B. State Courts hears four different types of disputes: 1. Lawsuits according to the law of the forum state. 2. Lawsuits that arise under and are decided according to the law of a different state. (State cannot decline to hear violations of other states' laws because of Article IV of the Constitution (Full Faith and Credit Clause).) 3. Lawsuits that apply Federal law. (Can preempt state law.) 4. Lawsuits that are decided according to the law of a different nation. (Not very common.) Subject Matter Jurisdiction in Federal Courts - Diversity Jurisdiction A. Article III, 2 and 28 U.S.C. 1332, 1359 in the Supplement: Federal courts can only hear the following types of cases according to 2: 1. Cases that arise under the Constitution because you are claiming that a state statute is unconstitutional 2. Cases that arise under the law of the US or any treatise made under their authority federal laws or federal treatise a) 1 and 2 are arising under jurisdiction 3. Cases involving the following: ambassador, maritime, admiralty, controversy to which US is a party, neutral forum - controversies between two or more states, controversies between a state and citizens of another state, controversies between citizens of different states, between state citizens and foreign country or foreign countrys citizen 4. Lawsuits missing from federal court are those between citizens of one state and citizens of that same state. These suits cannot be heard in federal court even if Congress wants them to (unconstitutional grant of subject matter jurisdiction) a) Strawbridge v. Curtiss complete diversity needed b) Bank of the United States v. Deveaux diversity jurisdiction to protect out of state litigants against local prejudice and to help speed economic growth 5. Arguments Diversity Jurisdiction a) The congestion diversity cases allegedly causes in the federal courts b) Rule of Erie Railroad Co. v. Tompkins which requires the application of state law to substantive issues in diversity cases, has been thought by many to make handling of diversity cases by federal judges unnecessary, wasteful, and inappropriate (1) Reasoning: only the state courts are considered to be authoritative on matters of substantive law and the federal courts therefore are unable to exercise their creative function and are performing an unneeded service in avowedly aiming to follow state-court decisions

II.

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c) Judicial and legislative authority should be coextensive, and for federal courts to decide cases arising under state law is an undesirable interference with state autonomy d) The effect that diversion of litigation to federal courts may have in retarding the development of state law e) The continuation of diversity jurisdiction diminishes the incentives for state court reform by those influential professional groups who, by virtue of diversity jurisdiction, are able to avoid litigation in the state courts 6. Defense of Diversity Jurisdiction a) Fear that state courts would be prejudiced against out-of-state parties b) Diversity jurisdiction is necessary in order to implement the constitutional guarantee that the citizens of each state shall be entitled to all the privileges and immunities of citizens of the several states c) The federal courts qualitatively are so superior to the state courts that it is desirable to channel as many cases as possible to the federal courts, or at least that out-of-state litigants, who have no opportunity to work for the improvement of the state courts, should be spared exposure to them; federal judges are appointed not as susceptible to political pressure and local biases as state judges d) The existence of concurrent state and federal jurisdiction creates a competition between the two that acts as a spur to higher standards of justice in each court system e) The choice of forum undoubtedly will be utilized for tactical purposes but it is more an abuse of concurrent jurisdiction than an argument for the retention of diversity jurisdiction f) Interaction between state and federal courts that results from the existence of concurrent jurisdiction in areas of substantive law practiced by substantial segments of the bar has resulted in improvements in the procedures followed by both state and federal courts g) A fear on the part of investors that local prejudice may exist provides a justification for diversity jurisdiction 7. New Developments a) The current debate about diversity jurisdiction focuses on whether a federal forum should be available to hear complex, multi-claim lawsuits that are based on state law but involve national concerns and multiple parties who reside in multiple states. b) Others see a shift of tort cases from the state to federal courts, where they will be decided by unelected judges, as posing a dilemma of federalization that raises important issues of federalism and separation of powers.

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c) Still others see a change in jurisdictional rules as a smokescreen for substantive choices that are likely to disadvantage plaintiffs. d) Yet another group recognizes special problems of multi-state class actions, in which the law of a single state can bind the nation. e) Finally, some critics emphasize the fact that enlarging the scope of diversity jurisdiction will generate increased costs to both the state and federal systems. f) In 2002 and 2005, Congress enacted two statutes that expand the reach of diversity jurisdiction and make a federal forum available for particular kinds of large scale, state law tort actions. (1) 28 U.S.C. 1369 authorizes original federal jurisdiction in any civil action arising from a single accident, where at least 75 natural persons have died in the accident at a discrete location provided minimal diversity exists between adverse parties. (2) 28 U.S.C. 1332 makes federal district courts available for any class action in which the amount in controversy exceeds $5 million and in which any defendant is a citizen of a State different from any defendant. B. Determining Citizenship 1. US Citizen Domicile - Mas v. Perry a) Rule: For purposes of federal diversity jurisdiction, a party changes domicile only by taking up residence in another state with the intention to remain there, and a wifes domicile is not necessarily deemed to be that of her husband. b) Rationale: The court equates citizenship with domicile for purposes of diversity jurisdiction but distinguishes domicile from residence. c) In 1988, Congress amended Section 1332(a) to provide that for the purpose of diversity jurisdiction an alien admitted to the US for permanent residence shall be deemed a citizen of the State in which such alien is domiciled. 2. Person Descended From African Slaves Cannot be US Citizen Note Case: Dred Scott v. Sanford a) Supreme Court held that an individual challenging his enslavement could not invoke diversity jurisdiction because a person descended from African slaves could not be a US citizen. b) Citizenship Clause of the 14th Amendment overrules this holding. 3. Corporation Can Be A Citizen Of More Than One State - Note Case: White v. Halstead Industries, Inc. a) The state(s) in which it is incorporated b) The state in which it has its principal place of business c) The Circuit Courts of Appeals uses three different tests to determine a corporations principal place of business:

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(1) The nerve center test the locus of corporate decision-making authority and overall control constitutes a corporations principal place of business for diversity purposes. (2) The corporate activities or operating assets test greater weight is attached to the location of a corporations production or service activities in determining the principal place of business for diversity purposes. (3) The total activity test hybrid of the nerve center and corporate activities tests and considers all the circumstances surrounding a corporations business to discern its principal place of business. This test provides a realistic, flexible and non-formalistic approach to determining a corporations principal place of business through a balancing of all relevant factors. (4) Partnerships - An incorporated association is not treated as a citizen for purposes of federal diversity jurisdiction, but instead courts consider the citizen of each of its members. They are deemed to be citizens in every state in which they have a member. See Carden v. Arkoma Associates (1990). 4. Courts disagree on whether Section 1332(a) authorizes jurisdiction over a suit between an alien plaintiff and an alien defendant. a) Note Case: Singh v. Daimler-Benz (1) Court of Appeals held that jurisdiction under Section 1332 was available in a state-law action by a permanent resident alien residing in VA against a non-resident alien and citizen of state other than VA, reading the 1988 amendment to apply to actions under Section 1332(a)(3). b) Note Case: China Nuclear Energy Indus. Corp. v. Andersen, LLP (1) District Court held that Section 1332(a) does not permit an alien corporation to sue a partnership made up of both US citizens and permanent resident aliens; a partnerships citizenship is determined by the citizenship of each of its individual partners. The court interpreted Section 1332(a) to adhere to the longstanding rule that there must be complete diversity between each plaintiff and each defendant, even in alienage cases. c) Diversity is Not Destroyed By Presence of Aliens on Both Sides of Controversy From Same Foreign Nation Note Case: Tango Music, LLC v. Deadquick Music, Inc. (1) Court gave Section 1332(a) a literal reading and said it would make no difference to a court whether both parties were from the same foreign nation because diversity would be unaffected. An Illinois court would be biased in favor of an Illinois plaintiff and it would hardly matter to that court whether there was a French co-plaintiff and French co37

defendant, since their citizenship would not weigh with that court. 5. Citizens of Overseas Territories are Citizens of a Foreign State Under 1332(a)(2) Note Case: JPMorgan Chase Bank v. Traffic Stream Infrastructure Limited a) The Supreme Court explained that alienage jurisdiction was enacted in order to deal with the penchant of the state courts to disrupt international relations and to discourage foreign investment. (1) Alienage jurisdiction exists where there is a suit between citizens of a state, on one side, and foreign states or citizens thereof, on the other. 6. No Diversity for Stateless Alien Note Case: Blair Holdings Corp. v. Rubinstein a) The court interpreted Section 1332(a)(2) to require a showing that the defendant was a citizen of a foreign state. 7. You Cant Improperly Create Diversity Note Case: Kramer v. Caribbean Mills, Inc. a) Plaintiff attempted to create diversity of citizenship to have case heard in federal court. The Supreme Court affirmed the Court of Appeals holding that diversity was improperly or collusively made within the meaning of Section 1359. Section 1359 prohibits only the creation of diversity jurisdiction and says nothing about its destruction. 8. Guardians and Executors In 1988, Congress added to Section 1332(c) a provision that the legal representative of the estate of a decedent shall be deemed to be a citizen only of the same State as the decedent, and the legal representative of an infant or incompetent shall be deemed to be a citizen only of the same State as the infant or incompetent. This is a rule that prevented the appoint of administrators to create (or destroy) diversity. 9. Real v. Nominal Parties Note Case: Rose v. Giamatti a) P attempted to destroy diversity of citizenship to make removal to federal court impossible for the D. The District Court noted that a federal court in its determination of whether there is diversity of citizenship between the parties must disregard nominal or formal parties to the action, and determine jurisdiction based solely upon the citizenship of the real parties to the controversy. A real party in interest defendant is one who, by the substantive law, has the duty sought to be enforced or enjoined. A formal or nominal party is one who, in a genuine legal sense, has no interest in the result of the suit or no actual interest or control over the subject matter of the litigation. C. Amount in Controversy 1. Good Faith Estimate Is Sufficient - A.F.A. Tours, Inc. v. Whitchurch a) Rule: The amount-in-controversy requirement for federal diversity jurisdiction is satisfied if the plaintiff makes a good-faith 38

estimate that the value of the claims, including actual and punitive damages and the value of injunctive relief, meets the required amount. b) Rationale: Dismissal for failure to meet the amount is warranted only where it appears to a legal certainty that the claim is really for less than the jurisdictional amount. The amount may be measured either by a plaintiffs losses or by profits unjustly received by the defendant. The demand for appropriate punitive damages may be included as well. Where an injunction is sought, the value of the claim is assessed by measuring the extent of impairment, including both past losses and future harm, to be prevented by the injunction. 2. Test For Determining Whether P Has Met Amount In Controversy Requirement Note Case: St. Paul Mercury Indemnity Co. v. Red Cab Co. a) The rule is that the sum claimed by P controls if it is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal. 3. Eventual recovery irrelevant: The fact that P eventually recovers far less than the jurisdictional amount does not be itself render the verdict subject to reversal and dismissal on appeal for lack of jurisdiction. 4. Post Filing Events Relevant - Note Case: Hall v. Earthlink Network, Inc. a) Court said that it will look to post-filing events when they suggest that the amount in controversy allegation in the complaint was made in bad faith or that the complaint contained a mistake. 5. Aggregation doctrine Note Case: Arnold v. Troccoli a) The rule that precludes a party from totaling all claims for purposes of meeting the minimum amount necessary to give rise to federal diversity jurisdiction under the amount-in-controversy rule. 6. In general, single plaintiffs can aggregate claims against single defendants. However, a single plaintiff who has aggregated his claim against a particular defendant usually may not join claims against other defendants for less than the jurisdictional amount. 7. Two plaintiffs may not aggregate if they have separate and distinct claims. If there is a single indivisible harm, plaintiffs may aggregate, which is usually done through supplemental jurisdiction. 8. In class actions, until recently there has been an especially stringent and clear rule: every member of the class had to satisfy the jurisdictional amount. However, some courts have recently ruled that as long as the named class representatives meet the amount, the supplemental jurisdiction doctrine applies, so that the unnamed members need not meet the jurisdictional amount. a) Old Rule on Class Action Lawsuits - Note Case: Zahn v. International Paper Co. (1) Four owners of VT lakefront property brought a diversity action on behalf of themselves and 200 other 39

III.

lakefront property owners. Supreme Court held that only Ps who individually met $10,000 jurisdictional amount could be members of the class. (2) However, Class Action Fairness Act allows for aggregation of individual class member claims to determine whether the statutes $5 million amount in controversy requirement is met. 9. Injunctive Relief Note Case: McCarty v. Amoco Pipeline Co. (Approaches for determining amount in controversy for jurisdictional purposes in diversity cases seeking injunctive relief): a) Plaintiff viewpoint rule: only the value of the plaintiff may be used to determine the jurisdictional amount. Jurisdiction is present if the value to the plaintiff exceeds the required amount regardless of the value to the defendant. b) From the point of view of the party seeking to invoke federal jurisdiction, the court will look to the plaintiffs viewpoint in a case brought originally in federal court and to the defendants viewpoint in a case removed to federal court from state court. c) Either viewpoint rule: In determining the matter in controversy, we may look to the object sought to be accomplished by the plaintiffs complaint; the test for determining the amount in controversy is the pecuniary result to either party which the judgment would directly produce. D. Note on Judicially Created Exceptions to Diversity Jurisdiction 1. Federal courts will not act even though diversity is present in the areas of probate and domestic relations. These are areas of the law in which the states have an especially strong interest and a well-developed competence for dealing with them. a) Ankenbrandt v. Richards (1) Domestic-relations exception; the Supreme Court found that a domestic relations exception does exist as a matter of statutory construction, but that it is not mandated by the Constitution. The Court, however, limited the exception to cases involving the issuance of a divorce, alimony, or child custody decree. Subject Matter Jurisdiction in Federal Courts - Federal Questions A. The Constitution gives federal courts the authority to hear federal question cases in 28 U.S.C. 1331, which states, The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States. B. Overbroad interpretation of Congress power to authorize SM jurisdiction - Osborne v. Bank of the United States 1. Rule: Congress has a broad power to confer subject matter jurisdiction over all cases that conceivably involve federal questions. 2. Rationale: The bank was started by federal statute. In order for the case to be heard in federal court, it must be both authorized by Congress and the authorization must be Constitutional. It is authorized because it said in the congressional act that chartered the bank can sue and be sued in 40

any Circuit Court of the US. Federal law is a necessary ingredient for the lawsuit. The act is constitutional, as any such lawsuit could conceivably involve a question of federal law and thus arise under the Constitution or laws of the US. 3. Note Case: Bank of the United States v. Planters Bank of Georgia a) The BoUS had purchased notes issued by a state bank, which refused to honor them. The BoUS sued and the state bank contested the federal courts jurisdiction. Supreme Court held that the question had been fully considered in Osborn and that it was unnecessary to repeat the reasoning used in that case. C. Plaintiffs COA Must Involve a Federal Question Louisville & Nashville R. Co. v. Mottley 1. Rule: In order to obtain federal question jurisdiction, a plaintiffs cause of action must involve a federal question, rather than anticipating that a defendants defense will raise a federal question. 2. Rationale: The plaintiffs complaint must itself raise the federal questions in order to obtain subject matter jurisdiction. D. FC Cannot Hear Issues Raised by Counterclaim - Note Case: Holmes Group, Inc. v. Vornado Circulation Systems, Inc. 1. Court rejected argument that Federal Circuit Court, which has exclusive jurisdiction over patent claims, could hear an appeal in which the patent issue was raised by counterclaim and not on the face of the well-pleaded complaint. E. Cant Just Anticipate A Federal Defense Note Case: Skelly Oil v. Phillips Petroleum Co. 1. Anticipating a defense based on federal law would contravene the whole trend of jurisdictional legislation by Congress, disregard the effective functioning of the federal judicial system and distort the limited procedural purposes of the Declaratory Judgment Act, which states that even when a defendant uses federal law as his defense in seeking declaratory judgment, courts must still look to see if action brought by the plaintiff arises under federal law. F. No Artful Pleading Note Case: Bright v. Bechtel Petroleum, Inc. 1. When a federal question complaint is written to seem like it involves a state law, it may still be removed to federal court because it is seen as artful pleading. G. COA Only Arises Under Federal Act If Complaint Has Remedy Expressly Granted by Act - T.B. Harms Co. v. Eliscu 1. Rule: A cause of action alleging assignments of copyrights does not arise under the Copyright Act for purposes of federal question jurisdiction. 2. Rationale: An action arises under the Copyright Act, for purposes of federal jurisdiction under 1338, only if the complaint is for a remedy expressly granted by the Act, asserts a claim requiring construction of the Act, or presents a case where a distinctive policy of the Act requires that federal principles control the disposition of the claim. The claim can also disclose a need for determining the application of the Act or there may be a distinctive policy of the Act which requires federal principle govern this claim. 41

a) TB Harms Test (is an appeals court case, so it is not binding everywhere) (1) When there is a remedy expressly granted by that law. (2) When the case asserts a claim that requiring construction of federal law. (3) Not as sure, but if it presents a case where there is some policy of federal law that might require the case to be heard in federal court. H. Yes, Arises Under US Law Note Case: Smith v. Kansas City Title & Trust Co. 1. Example of a claim that, although created by state law, arises under a law of the US by virtue of requiring a determination of the meaning or application of such law. The general rule is that where it appears from the bill or statement of the plaintiff that the right to relief depends upon the construction or application of the Constitution or laws of the US, and that such federal claim is not merely colorable, and rests upon a reasonable foundation, the District Court has jurisdiction. I. Not Arising Under US Law Note Case: Moore v. Chesapeake & Ohio Ry. Co. 1. (Appears to contradict Smith) - A suit that arises from a state law that incorporates a federal law is not regarded as a suit arising under federal law. J. Not arising under Note Case: Shoshone Mining Co. v. Rutter 1. (Reverse situation of Smith) - The claim arose from a federally created cause of action that turned on issues of state law and was not considered as one which necessarily arises under the Constitution and laws of the US. K. Patent infringement v. breach of contract - Luckett v. Delpark, Inc. 1. The patentee apparently could have sued for infringement of his patent but chose instead to sue for breach of contract. The Supreme Court affirmed the District Courts dismissal because the patentee did not give the federal district court jurisdiction of the cause as one arising under the patent laws. L. Requirements to dismiss a Federal Claim - A federal court must dismiss a claim arising under federal law for want of subject-matter jurisdiction if the claim is so attenuated and unsubstantial as to be absolutely devoid of merit. It must also dismiss for want of jurisdiction if the claim clearly is foreclosed by prior decisions of the Supreme Court. The test for dismissal is rigorous and, if there is any foundation of plausibility to the claim, federal jurisdiction exists. M. Requiring The Interpretation Of Federal Law Is Not Good Enough To Be Heard In Federal Court - Merrell Dow Pharmaceuticals Inc. v. Thompson 1. Rule: A state-law private action, which alleges a violation of a federal statute, arises under the laws of the US only if Congress intended to provide a federal remedy for the statutory violation. 2. Rationale (5/4 Decision): A complaint alleging a violation of a federal statute as an element of a state cause of action, when Congress has determined that there should be no private, federal cause of action for the violation, does not state a claim arising under the laws of the US. A case may arise under the Constitution or laws of the US, for purposes of 42

1331, in two ways. First, and most commonly, federal law itself creates a cause of action. Second, a cause may arise under federal law where the vindication of a right under state law necessarily turns on some construction of federal law. The mere presence of a federal issue as an element of a state tort does not warrant federal jurisdiction. 3. Dissent: Brennan: There may be federal-question jurisdiction, even though both the right asserted and the remedy sought by the plaintiff, are state-created. The Ps right to relief depended upon a construction of the Constitution or the laws of the US. Although Congress did not create a federal cause of action or federal remedy under the Act, it does not follow that Congress precluded federal jurisdiction over state-law claims involving violations of the Act. If Congresss decision not to provide a private federal remedy does not pre-empt such a state remedy, then it also should not foreclose federal jurisdiction over the state remedy. Federal courts are better able to interpret federal laws, and the necessity of uniformity of decisions warrants federal jurisdiction. a) After Merrell: The factors used in determining whether there is a federal cause of action are: (1) Whether the statute was passed for the benefit of individuals like Plaintiffs; (2) Whether there was a congressional purpose that there be a private cause of action; (3) Whether the federal cause of action would further the purposes of the statutory/regulatory scheme; and (4) Whether the cause of action is usually under state law. N. If National Interest In Providing Federal Forum Is Sufficient, Might Support Exercise of Federal Question Jurisdiction - Note Case: Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing 1. Supreme Court resolved the Merrell Dow split and held that the absence of a federal cause of action is not inevitably fatal to federal jurisdiction. IV. The Subject Matter Jurisdiction of The Federal Courts - Supplemental Claims and Parties A. You have to have diversity/amount in controversy or a federal question to be heard in federal court. However, these can just be ways to get your foot in the door. Once that foot is in the door, supplemental claims allow the parties to attempt to bring up other claims that otherwise wouldn't have been good enough to get them to federal court. B. Supplemental Jurisdiction Statute 1367 1. 1367(a) states except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties.

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2. 1367(b) states in any civil action of which the district courts have original jurisdiction founded solely on section 1332 of this title, the district courts shall not have supplemental jurisdiction under subsection (a) over claims by plaintiffs 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 plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332. 3. 1367(c) states the district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if a) The claim raises a novel or complex issue of State law, b) The claim substantially predominates over the claim or claims over which the district court has original jurisdiction, c) The district court has dismissed all claims over which it has original jurisdiction, or d) In exceptional circumstances, there are other compelling reasons for declining jurisdiction. 4. 1367 (b) "over claims by plaintiff against persons made parties by the following rules (we'll learn later)" in confliction with the diversity statute (1332) - so if P sues D and D brings in another D from the same state as P, then it would still have diversity because of 1367(b). However, D2 would only have to pay D1 because there is no claim from P. C. Under the doctrine of supplemental jurisdiction, new parties and new claims may not have to independently satisfy subject-matter jurisdiction they can in effect be tacked on to the core controversy. Replaces two older judge made doctrines, pendant and ancillary jurisdiction. 1. Pendent Jurisdiction has been used when the plaintiff, in her complaint, appends a claim possessing such a basis. 2. Ancillary Jurisdiction has been used when either a plaintiff or a defendant injects a claim lacking an independent basis for jurisdiction by way of a counterclaim, cross-claim, or third party complaint. D. Yes If State and Federal Claim From Common Nucleus of Facts United Mine Workers of America v. Gibbs 1. Rule: Under the doctrine of pendent jurisdiction, if the federal claim and the state claim arise from the same "case or controversy," the federal court can exercise jurisdiction over the state claim as well. If the federal and state claims arise from a "common nucleus of operative fact," then they comprise the same case or controversy. The court should not exercise jurisdiction if there would be high risk of jury confusion, the federal claims are dismissed, or it would otherwise preserve judicial expenses. 2. Rationale: Pendent jurisdiction exists whenever the state and federal claims are so closely related as to comprise one constitutional case. It is a doctrine of discretion, based on considerations of judicial economy, convenience, and fairness to litigants. A federal court should not exercise pendent jurisdiction if the state issues predominate. It is unwarranted if there is a substantial likelihood of a jury confusing the legal theories of the

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federal and state claims. Dismissal of the pendent state law claims would be warranted only if the federal claims were dismissed before trial. 3. Three Factors Must be Considered: a) Judicial economy b) Convenience c) Fairness to the litigants. 4. The exercise of pendent jurisdiction must be judged by whether it furthers some federal policy. Pendent jurisdiction serves two purposes: 1) it ensures that litigants will not be dissuaded from maintaining their federal rights in a federal court solely because they can dispose of all claims by one litigation in the state but not the federal form and 2) assuming that the litigants are in a federal forum, pendent jurisdiction serves the interest of avoiding piecemeal litigation, thus promoting judicial economy and greater expedition for litigants. E. Pendant Party Jurisdiction is Sometimes OK - Aldinger v. Howard 1. Rule: A federal court may grant pendent party jurisdiction to a state claim against a defendant which is derived from a common nucleus of operative fact with a federal claim against a separate defendant, if the statutory grant of subject-matter jurisdiction did not expressly or impliedly negate such joinder or if judicial efficiency warrants such joinder. 2. Rationale: The Supreme Court refused to apply pendent jurisdiction to an additional party with respect to whom no independent basis of federal jurisdiction existed. Gibbs was distinguished on two grounds: 1) The addition of a completely new party would run counter to the wellestablished principle that federal courts, as opposed to state trial courts of general jurisdiction, are courts of limited jurisdiction marked out by Congress and 2) by virtue of the statutory grant of subject-matter jurisdiction, Congress has addressed itself to the party as to whom jurisdiction pendent to the principal claim is sought. F. Diversity When A Pendant Party Destroys Complete Diversity Then No Federal Jurisdiction- Owen Equipment & Erection Co. v. Kroger 1. Rule: A federal court does not retain jurisdiction over an action, based on diversity of citizenship, when the plaintiff adds a pendent party defendant who destroys complete diversity. 2. Rationale: Beyond the constitutional minimum, there must be an examination of the posture in which the nonfederal claim is asserted and of the specific statute that confers jurisdiction over the federal claim, in order to determine whether Congress in the statutes conferring jurisdiction has not expressly or by implication negated the exercise of jurisdiction over the particular nonfederal claim. 1332(a)(1) requires complete diversity of citizenship and diversity jurisdiction is not to be available when any plaintiff is a citizen of the same State as any defendant. Complete diversity was destroyed; the statutory requirement of complete diversity cannot be defeated by the simply expedient of suing only those defendants who were of diverse citizenship and waiting for them to implead nondiverse defendants. G. Congress Must Specifically Authorize Pendant Party Jurisdiction - Finley v. United States 45

1. Rule: In order to obtain pendent party jurisdiction, the statute conferring federal jurisdiction must expressly authorize pendent party jurisdiction. 2. Reasoning: Two things are necessary to create jurisdiction, whether original or appellate The Constitution must have given to the court the capacity to take it, and an act of Congress must have supplied it. This case was distinguished from Gibbs in that it brings into question pendent party jurisdiction or jurisdiction over parties not named in any claim that is independently cognizable by the federal court. With respect to the addition of parties, as opposed to the addition of only claims, the court will not assume that the full constitutional power has been congressionally authorized, and will not read jurisdictional statutes broadly. H. Finley prompts Congress to pass 1367 because the court held in Aldinger that before a federal court may exercise pendent party jurisdiction it must satisfy itself that Congress has not "expressly or by implication negated its existence" and then instructed that "a grant of jurisdiction over claims involving particular parties does not itself confer jurisdiction over additional claims by or against different parties." 1. Supplemental Claims and Parties are OK 1367 (a) Except for the exceptions in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the US Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties. a) This includes additional claims asserted by plaintiff as well as cross-claims and counter claims. 2. Limits on Supplemental Jurisdiction - 1367(b) A federal court does not retain jurisdiction over an action, based on diversity of citizenship, when the plaintiff adds a pendent party defendant who destroys complete diversity- fully implements the Kroger rationale by prohibiting the district courts, in actions founded solely on the diversity statute, from exercising supplemental jurisdiction over claims by plaintiffs against persons made parties through any of several of the joinder devices of the Federal Rules when doing so would be inconsistent with the jurisdictional requirements of section 1332. It also prohibits the exercise of supplemental jurisdiction in connection with the joinder or intervention of persons as plaintiffs when it would be inconsistent with section 1332 3. Courts Discretion - 1367(c): provides federal courts with discretion in some circumstances to decline to exercise supplemental jurisdiction. It codifies those factors that the Supreme Court in Gibbs recognized as providing a sound basis for a lower courts discretionary decision to decline supplemental jurisdiction. It also accommodates exceptional circumstances, not defined, in which grounds for dismissal of the supplemental claim may be compelling. In each of these circumstances, the district court in exercising its discretion must undertake a case-specific analysis. 46

a) The claim raises a novel or complex issue of state law. b) The state claim substantially predominates over the claim or claims over which the court has original jurisdiction. c) The district court has dismissed all claims over which is had original jurisdiction. d) In exceptional circumstances, there are other compelling reasons for declining jurisdiction. 4. 1367(d): providing a period of tolling of statutes of limitations for any supplemental claim that is dismissed and for any other claims voluntarily dismissed at the same time or thereafter. 5. P Couldnt Implead A Non-Diverse Party In Defense Against A Counterclaim Note Case: Guaranteed Systems, Inc. v. American National Can Co. a) The defendant, after removing the action on the ground of diversity, asserted a counterclaim against the plaintiff. The plaintiffs motion to implead a non-diverse third-party in defense against the counterclaim was denied by the court. b) Critic of 1367(b) states that the section states: 1) if a claim is asserted against diversity plaintiff, she cannot implead a nondiverse third-party defendant who may owe her indemnity or contribution; 2) if a claim is asserted against diversity plaintiff, she cannot assert a cross-claim against a nondiverse co-plaintiff; 3) a nondiverse third-party defendant may assert a claim against the diversity plaintiff, but the diversity plaintiff cannot assert a compulsory counterclaim in response; 4) diversity plaintiff cannot assert a claim against a nondiverse intervenor or necessary party, even though their claims against her will invoke supplemental jurisdiction. 6. Court Can Exercise Supplemental Jurisdiction Over Joined Plaintiff Not Meeting Amount In Controversy Requirement - Note Case: Exxon Mobil Corp. v. Allapattah Services, Inc. a) In 5/4 decision, Supreme Court held that a federal court in a diversity action may exercise supplemental jurisdiction over additional plaintiffs whose claims do not satisfy the minimum amount-in-controversy requirement, provided the claims are part of the same case or controversy as the claims of plaintiffs who do allege a sufficient amount in controversy. 7. When Federal Basis For Action Disappears, Court May Decide Whether to Assert Jurisdiction Over Remaining Claims - Note Case: Shanaghan v. Cahill a) The Fourth Circuit ruled that, when the federal basis for an action disappears, a district court is free to decide whether to assert jurisdiction over the remaining claims, in accordance with section 1367. 8. Executive Software North America, Inc. v. US District Court For the Central District of California a) Rule: In order for a court to decline to exercise jurisdiction over supplemental state law claims pursuant to 28 U.S.C. 1367, 47

the district court must find that one of the circumstances under 28 U.S.C. 1367(c) exist and articulate the circumstances in the order declining jurisdiction. b) Rationale: This case illustrates that if a District Court declines to exercise supplemental jurisdiction over state law claims that arise from the common nucleus of operative fact of the federal law claims, there must be articulated reasons that are mentioned in the statute in order to remand to state court. In enacting 28 U.S.C. 1367(c), Congress has delineated specific circumstances in which a federal court can decline to exercise jurisdiction over state law claims. Under Section (c)(1)-(3), the District Court can use these exceptions so long as it agrees with the policies of "economy, convenience, fairness and comity." Under Section (c)(4), the District Court must use these exceptions only in exceptional circumstances and must articulate what the compelling reasons for declining jurisdiction are. V. Removal A. Basic Rules of 1441. 1. D can remove to federal court if its a federal question claim. 2. D can remove to federal court on diversity if hes sued in another state. 3. D can remove separate and independent claims that joined w/ unremovable claims in one group. 4. P can never remove (shouldve filed it in federal court if that is where P wanted lawsuit heard) 5. Same rules of Federal Question, Diversity, and Amount in Controversy apply. 6. Section 1446(b) requires the notice of removal to be filed by the defendant within 30 days of receipt of the initial pleading or service of summons. The Supreme Court ruled that only formal service of process initiates the removal period. 7. A plaintiff may choose to avoid federal jurisdiction by pleading only state law claims or joining parties who will destroy diversity jurisdiction. There are three exceptions: a) A plaintiff may not defeat diversity jurisdiction by fraudulently joining a defendant against whom the plaintiff has no cause of action. b) The plaintiff may not disguise federal causes of action that would make the case removable (artful pleading). c) A version of artful pleading mandates that certain causes of action are so exclusively federal in character that even if the plaintiff does not plead them, they will completely preempt any state cause of action and make any cause of action the plaintiff attempts to plead federal, and, therefore, removable. 8. 1445 Non-removable claims a) Plaintiff cannot remove b) Railroad c) A carrier unless over $10k d) State workers compensation claim 48

e) Federal Violence Against Women Act 9. 1446 Time Line for Removal a) When a claim is filed, anytime after that it becomes removable within thirty days (1) If it is a diversity claim and a party drops out or settles, if it has been over a year, the case cannot be removed. If it is within one year, the case can be removed within 30 days. 10. Remand a judges decision to remand a case back to state court is not appealable. 11. Date of removal filing is when the case is analyzed. 12. A case can be amended to include Federal Jurisdiction, but not amended by the P to defeat it. a) Exception Diversity cases present an exception to the rule that removability is determined as of the time when the notice of removal is filed. It must exist at the time of filing and at notice of removal. B. P Cant Remove to State Court if D brings up Federal Counterclaim Shamrock Oil & Gas Corp. v. Sheets 1. Rule: A plaintiff may not remove a state-court action to the federal courts, even if a defendant brings a counterclaim that satisfies the requirements for federal jurisdiction. 2. Rationale: The court mentions that while the act of 1875 allowed for a suit to be removed by either party, the act of 1887 changed the wording to include only defendants. C. Third Party D May Not Remove to Federal Court Note Case: First National Bank of Pulaski v. Curry 1. Court held that third party defendants may not remove an action to federal court. They explained that although Shamrock Oil was not dispositive of the precise issue before them, it dictated that the phrase the defendant or the defendants as used in 1441(a) be interpreted narrowly, to refer to defendants in the traditional sense of parties against whom the plaintiff asserts claims. D. If a case is removed erroneously, a federal court must remand it to state court. See Section 1447(c). Section 1447(d) states that a remand order is not reviewable, except in civil rights cases pursuant to Section 1447. E. Under 1441(c), whenever a separate and independent claim or cause of action within the jurisdiction conferred by section 1331 is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters in which State law predominates. 1. Separate and Independent Claims must be TRULY Separate American Fire & Cas. Co. v. Finn a) Rule: A claim may not be removed pursuant to 1441(c) unless the claim is separate and independent from one or more otherwise non-removable claims. b) Rationale: The Finn Court concluded that where there is a single wrong to plaintiffs, for which relief is sought, arising from

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an interlocked series of transactions, there is no separate and independent claim or cause of action under 1441(c). 2. A District Courts Discretion To Remand Under 1441(C) Can Pertain Only To Those State Law Claims That The District Court Could Decline To Hear Under 1367. - Borough of West Mifflin v. Lancaster a) Rule: Remand of a case is governed exclusively by statute. Under 1441(c), "Whenever a separate and independent claim or cause of action within the jurisdiction of [Section] 1331 of this title is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters in which State law predominates." b) Rationale: Under 1367(c), a district court has discretion to decline to hear certain state law claims it would have supplemental jurisdiction to entertain. However, nothing in this section permits the district court to decline to hear claims it has original jurisdiction over, i.e. the federal civil rights claim. Therefore, remand of the entire case is inappropriate even if the state law claims were properly remanded. The state law claims were not even properly remanded to the state court. Section 1367(c) permits remand at the discretion of the district court. The key language for purposes of the present case is that the federal claim must be "separate and independent" from the state law claims. In other words, the entire case is not removable if the federal claim and the state claims arise out of the same transaction or series of events. Here, the federal civil rights claim does arise out of the same series of events as the state law claims, namely, the plaintiffs being accosted and arrested. Therefore, removal under 1441(c) was appropriate and remand of the case to state court is clearly forbidden. Challenging the Subject-Matter Jurisdiction of the Court A. Four ways to attack subject-matter jurisdiction: 1. 12(b)(1) Motion made over lack of jurisdiction (must be made 20 days after service) 2. 12(h)(3) If either party suggests lack of subject matter jurisdiction, court shall dismiss action. 3. 60(b)(4) Even after judgment is final, can move to vacate that judgment because the court lacks subject-matter jurisdiction. 4. Can argue on appeal. B. Direct Attack on a Courts Lack of Subject-Matter Jurisdiction 1. Federal Rules of Civil Procedure 8(a)(1), 12(b)(1), and (h)(3), 60(b) (4), and Official Form 2, and 1653 2. In the federal courts a lack of subject-matter jurisdiction may be asserted at any time by any interested party, either in the answer, or in the form of a suggestion to the court prior to final judgment or on appeal. Parties may not create the jurisdiction of a federal court by agreement or by consent. 50

3. No Need to Decide PJ before SJ Note Case: Ruhrgas Ag v. Marathon Oil Co. a) The Supreme Court held that since both subject matter and personal jurisdiction are required by the Constitution and affect a federal courts power to adjudicate a case, there is no reason to require a district court to decide one before the other. 4. Situation in Which Defects in Subject Matter Jurisdiction Should Be Immune From Direct Attack - Note Case: Di Frischia v. New York Central R. Co. a) D initially objected to jurisdiction, asserting lack of diversity, but then withdrew the objection. After the statute of limitations ran out, D then reasserted objection. District court dismissed action, but Third Circuit reversed, refusing to permit D to play fast and loose with judicial machinery and deceive the courts. (1) This case has been criticized and distinguished as limited to its facts. 5. Have to Follow Restraining Orders Even W/O SMJ Note Case: United States v. United Mine Workers a) Obedience to a temporary restraining order is required, even though the issuing court may lack subject-matter jurisdiction or otherwise may have based its decision on an incorrect view of the law, unless there is no opportunity for effective appellate review of the decree. 6. The Federal Court May Impose Sanctions Upon A Plaintiff Pursuant To Federal Rule 11 Even If It Lacks Subject-Matter Jurisdiction - Willy v. Coastal Corp. a) P brought a wrongful discharge action against employer, who removed to federal court. Court dismissed claim and imposed sanctions on P pursuant to Rule 11. P appealed, but Supreme Court upheld ability of District Court to impose sanctions because such an order implicates no constitutional concern and does not raise the issue of a district court adjudicating the merits of a case over which it lacks jurisdiction. C. Collateral Attack on a Judgment for Lack of Subject-Matter Jurisdiction 1. Collateral attacks are not usually permissible against federal courts. Can only do so if subject-matter jurisdiction was obviously lacking, allowing the judgment to stand would substantially infringe on the authority of another court, or a court lacking the capability to make an informed determination rendered the judgment. a) A judgment rendered by a court that lacked jurisdiction over the subject matter is void and a nullity. A collateral attack is not always an available technique for challenging a judgment on the ground that the rendering court lacked subject-matter jurisdiction. 2. The Restatement (Second) Judgments takes the approach that the judgment in a contested action, whether or not the question of subjectmatter jurisdiction actually was litigated, is beyond collateral attack unless there are no justifiable interests of reliance that must be protected, and:

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a) The subject matter of the action was so plainly beyond the courts jurisdiction that its entertaining the action was a manifest abuse of authority; or b) Allowing the judgment to stand would substantially infringe the authority of another tribunal or agency of government; or c) A court lacking capability to make an adequately informed determination of a question concerning its own jurisdiction rendered the judgment and as a matter of procedural fairness the party seeking to avoid the judgment should have opportunity belatedly to attack the courts subject-matter jurisdiction. 3. Supreme Court Refuses to Allow Collateral Act - Chicot County Drainage Dist. v. Baxter State Bank a) Parties who had notice chose not to appear in the original action then attempted to attack collaterally a judgment rendered by a district court. The Supreme Court refused to allow the attack saying, if the general principles governing the defense of res judicata are applicable, [respondents] having the opportunity to raise the question of invalidity, were not the less bound by the decree because they failed to raise it. 4. Supreme Court Allowed Collateral Attack - Kalb v. Feuerstein a) The Supreme Court stated that while it is generally true that a judgment by a court of competent jurisdiction bears a presumption of regularity and is not subject to collateral attack, Congress may create an exception to that principle and render judicial acts taken with respect to the person or property of a debtor whom the bankruptcy law protect nullities and vulnerable collaterally. 5. Collateral Attack Not Allowed When Questions Have Been Fairly Decided in Original Court - Durfee v. Duke a) A Missouri federal District Court allowed collateral attack on a Nebraska judgment quieting title to a tract of bottom land n the Missouri River, on the ground that considerations of territorial sovereignty outweighed policies of res judicata. The Supreme Court reversed on the grounds that a judgment is entitled to full faith and credit when the second courts inquiry discloses that those questions have been fully and fairly litigated and finally decided in the court that rendered the original judgment. 6. Recent Example of Supreme Courts Attitude Toward Collateral Attack - United States Catholic Conference v. Abortion Rights Mobilization, Inc. a) D sued to revoke the tax-exempt status of the Roman Catholic Church because of the churchs intervention in favor of political candidates who supported the churchs position on abortion. ARM served P with a subpoena seeking evidence to support its claims. P refused to comply with subpoena and was held in civil contempt with a fine of $50,000 per day for further noncompliance. The Supreme Court held that a nonparty witness, the Conference, could challenge the courts lack of subject matter jurisdiction in defense of a civil contempt citation. 52

Venue, Transfer, and Forum non Conveniens I. Venue A. General Principles 1. Venue means the place of the trial in an action within a state. 2. Venue has two parts: a) Mandatory - You cannot file a lawsuit in a place where venue is not proper (1406(a)) b) Discretionary - Sometimes even if the lawsuit is filed in the proper venue, it will end up being heard somewhere else (1404(a)) 3. A comparative study of contemporary venue provisions reveals some thirteen different fact situations upon which venue statutes are predicated. a) Where the subject of action or part thereof is situated. b) Where the cause of action, or part thereof, arose or accrued. c) Where some fact is present or happened. d) Where D resides. e) Where D is doing business. f) Where D has an office or place of business, or an agent, or representative, or when an agent or officer resides. g) Where P resides. h) Where P is doing business. i) Where D may be found. j) Where D may be summoned or served. k) In the county designated in Ps complaint. l) In any county. m) Where the seat of government is located. 4. Note Case: Burlington Northern R.R. Co. v. Ford a) D raised a challenge to Montanas venue rules on the ground that they violated the Equal Protection Clause of the 14th Amendment. The Supreme Court upheld the constitutionality of the states venue rules because the forum preferable to one party may be undesirable to another and the adjustment of such warring interests is a valid state concern. In striking the balance between them, a State may have a number of choices, any of which would survive scrutiny, each of them passable under the standard tolerating some play in the joins of governmental machinery. B. Local and Transitory Actions 1. The distinction between local and transitory actions: a) Local actions are cases involving a piece of local, real, nonmovable property. b) Transitory actions are cases that happen to anything movable and can arise anywhere. 2. Modern Trend in Local and Transitory Actions - Reasor-Hill Corp. v. Harrison a) Rule: A lawsuit is maintainable for injury to real property located outside the forum state as long as the forum state has personal jurisdiction over the defendant.

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b) Rationale: Although traditionally cases involving real property were considered local actions and could only be brought where the property was located, this case articulates the modern trend. Policies supporting the traditional rule are expressed in the dissenting opinion. c) Dissent: Justice McFadden: It is not simple to decide questions of title from other states. In addition, each state is its own sovereign and there are certain issues that certain states must decide. Finally, providing a haven for delinquent citizens is an issue for the legislature, not the courts. (1) Livingstone v. Jefferson is the leading case in the US. That suit was part of the famous litigation between Edward Livingstone and Thomas Jefferson. The case was heard by Marshall as circuit justice and Tyler as district judge. Both agreed that the suit, which was for a wrongful entry upon land in LA, could not be maintained in VA. American courts rely almost uniformly upon this case for the following three reasons: (a) First, the ground most frequently relied upon is that the courts are not in a position to pass upon the title to land outside the jurisdiction. (b) Second, it has been argued that since the tort must take place where the land is situated, P should pursue his remedy before D leaves the jurisdiction. (c) Third, there is an understandable reluctance to subject ones own citizens to suit by aliens, especially if the other jurisdiction would provide no redress if the situation were reversed. C. Venue in the Federal Courts 1. 28 U.S.C. 1391 The General Federal Venue Statute a) Diversity action must be brought only in (1) A judicial district where any D resides, and if there is more than one D, if all Ds from the same state (2) A judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is the subject of the action is situated (3) Escape Hatch: A judicial district in which any defendant is subject to personal jurisdiction at the time the action was commenced, if there is no district in which the action may otherwise be brought. b) Not solely on Diversity may be brought in (1) A judicial district where any defendant resides, if all Ds reside in the same state (2) A judicial district in which a substantial part of the events or omission giving rise to the claim occurred, or where the property is situated

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(3) Escape hatch: A judicial district in which any D may be found, if there is no district in which the action may otherwise be brought. c) Corporations are deemed to reside in any judicial district in which it is subject to personal jurisdiction. In a state w/ more than one district in which a D that is a corporation is subject to personal jurisdiction at the time an action is commenced if it had PJ in that district as if it were a state. If no venue qualifies, then the venue that it has the MOST contacts with. 2. Three methods of determining venue - 1391 gives three basic methods for determining whether there is venue in a particular district a) If any D resides in that district, and all the Ds reside in the state containing that district (good for Diversity and Federal Question cases) b) If a substantial part of the property that is the subject is situated in the district (applicable to both Diversity and Federal Question cases). c) If all Ds are in some sense reachable in the district and there is no district in which the action may otherwise be brought. 3. Debtors - Bates v. C & S Adjusters, Inc. a) Rule: Venue is proper in the district in which a debtor resides and to which a collection notice was forwarded. b) Rationale: 1391 allows an action to be brought in a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred. Receipt of a collection notice is a substantial part of events giving rise to a claim and the place where that notice was received constitutes proper venue. The events giving rise to the claim do not necessarily have to be intentional. 4. Where the claim for relief arose = Bates provided for venue in a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is the subject matter of the action is situated. 5. Unincorporated Associations Note Case: Denver & R.G.W.R. Co. v. Brotherhood of Railroad Trainmen a) Suit against multi-state, unincorporated associations is permitted wherever it is doing business, otherwise 1391(b) would seem to require holding the association not suable at all or holding that the association resides in any State in which any of its members reside, which might present problems of inconvenience to litigants and witnesses in conflict with the purpose of venue. Transfer of Venue in Federal Courts A. If P filed suit in improper venue: 1. In answer, D says that there is no venue and files for summary judgment. 2. Faster and more usual method: file 12(b)(3) motion asking that the lawsuit be dismissed without prejudice so that it can be re-filed in a proper venue. 55

3. 1406(a): Mandatory transfer requirement. a) Instead of dismissing the lawsuit, asking court to transfer lawsuit to proper venue, but this is discretionary on the court. b) This can be done if the statute of limitations expires while suit is in the improper venue. If the suit is transferred, rather than dismissed, it is considered filed before the expiration of the statute of limitations and the case can be heard in the new venue. 4. 1404(a): Discretionary transfer requirement a) Not saying that P filed in improper venue but that there is a better place to hear the suit b) It would be more convenient to witnesses or parties to have the case transferred. This is a very high burden to meet. Only if the convenience factors are overwhelming can the case be transferred. c) Must prove: 1) Ps choice of forum should not be respected because there is a more convenient venue and 2) (in both transfer statutes - 1406 and 1404(a)) the transferee court could have heard the lawsuit to begin with. 5. Hypo: If there is a lawsuit in VA, VA gets to decide what law applies. By contrast if lawsuit was heard in CA, CA law applies. If case is transferred from VA to CA under 1404(a), then VA law is still applied. The transfer is meant to be more convenient for witnesses, etc., but not necessarily to afford a change of law. If case was transferred under 1406 motion, then CA law would be applied because the venue was improper. a) Sometimes lawsuits are filed in one state to grab the law of that state and then transferred under 1404(a) motion with the law following. 6. In federal question cases, the law does not transfer across districts, so a federal question case filed in CA and transferred to VA transfers from 9th circuit to 4th circuit. Supreme Court does not want VA to pretend its in 9th circuit. Federal law, unlike state law, is supposed to be uniform. Sometimes laws will change because they have been transferred across circuits and that sometimes will result in injustice, but Supreme Court is willing to suck that up and allow cases to be transferred. 7. Transfers must be to a Ct. that the P could have initially filed in Hoffman v. Blaski a) Rule: A federal court in which suit was properly commenced was not entitled under 1404(a) to transfer a case to a district in which the plaintiff could not have properly commenced suit. b) Rationale: To allow the defendant that kind of power would grossly discriminate against plaintiffs. By promising not to object to the transferee venue, defendants would be able to transfer into any district convenient to them. Plaintiffs, on the other hand, would still be statutorily limited in their choices of venue and could not freely motion to transfer because the defendant would still retain the right to object to improper venue. c) Hoffman has been criticized and courts dont want to extend it unnecessarily.

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8. In Diversity Cases, The Law Applicable In The Transferor Forum Follows The Transfer Note Case: Van Dusen v. Barrack a) The Supreme Court held that, in diversity cases, the law applicable in the transferor forum follows the transfer. 9. Transferee forum must apply transferor forum law Note Case: Ferens v. John Deere Co. a) The Supreme Court held that, in a diversity suit, the transferee forum is required to apply the law of the transferor court, regardless of who initiates the transfer. 10. 1406(a) - permits the district court to dismiss or if it be in the interest of justice to transfer a case to any district in which it could have been brought when it was brought initially in a court in which venue was improper. The law of the transferor court cannot govern in the transferee court cannot benefit from filing in improper venue in diversity cases where state law governs the issue. The exception is federal question cases. If its federal law, it should be the same law across the US. Federal law, however, is not the same everywhere. So, the law may not be the same in the transferee court in federal question cases. a) This provision should be distinguished from 1404(a), which presupposes that venue in the district of commencement is proper. 11. The Federal Court Can Transfer Venue Even If It Lacks Personal Jurisdiction Over The Defendants Note Case: Goldlawr Inc. v. Heiman a) The Supreme Court held that Section 1406 authorizes a transfer even if the transferor court lacks personal jurisdiction. The court said the filing itself shows the proper diligence on the part of the P that such statutes were intended to insure. If by reason of uncertainties of proper venue a mistake is made, Congress, by the enactment of 1406(a), recognized that the interest of justice may require that the complaint not be dismissed but rather that it be transferred in order that P not be penalized. 12. 1407: provides for the temporary transfer to one district of related complex cases such as multidistrict antitrust actions. Transfer is appropriate when the cases involve common questions of fact and law and when it would be for the convenience of the parties and witnesses and in the interests of justice. This provision frequently has been used to take advantage of coordinated pretrial discovery. The statute authorizes consolidation of cases for pretrial purposes only. 13. Note Case: Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach a) The Supreme Court held that the language of 1407 requires the panel on multidistrict litigation to remand cases consolidated under 1407 to their original courts for trial. Prior to this ruling, it was common practice for transferee courts to transfer cases to themselves for trial under 1404(a). 14. Patents and copyrights, 28 U.S.C. 1400

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III.

a) Civil actions, suits, or proceedings arising under any Act of Congress relating to copyrights or exclusive rights in mask works or designs may be instituted in the district in which the defendant or his agent resides or may be found. b) Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business. Forum non Conveniens A. A court having jurisdiction over a particular case may use is discretion to decline that jurisdiction, if the court concludes that the action could be more appropriately tried in some other jurisdiction. Defendants usually raise, but a court can dismiss on FnC grounds itself. B. The test for FnC - Gulf Oil Corp. v. Gilbert A court may resist imposition upon its jurisdiction even when the letter of a general venue statute authorizes jurisdiction. Courts should consider: 1. The private interest of the litigants a) Ease of access to proof where is the evidence? What is the cost of witnesses to court? Is view of premises necessary? b) Enforceability of the judgment? c) Burden on the D? d) Residual factor anything else you can think of that affects the individual litigants themselves? e) Is the alternative forum (a foreign country) so bad that it wouldnt provide a remedy or if the court thought the remedy is monstrously lame either procedurally or substantively? 2. Factors of public interest. a) Are courts congested, juries without connection to litigants, want to make sure that each jury has some interest, the localized interest in having localized controversy decided at home, application of foreign law? If its a US P, the factors must be overwhelming. When its a foreign P, need only be slightly in favor of foreign tribunal. Dont want foreigners coming to US courts. The real parties in interest are foreigners. The overlying test depends on citizenship. C. Unfavorable Change in Law is Insufficient - Piper Aircraft Co. v. Reyno 1. Rule: The doctrine of forum non conveniens allows a court to dismiss a case that was brought in the wrong forum. When all or most of the significant events, witnesses and evidence are centered in one location, then a court must dismiss a case brought in another location under the doctrine of forum non conveniens unless the alternate forum provides the plaintiff with absolutely no remedy. Whether the law of the forum chosen by the plaintiff is more favorable to the plaintiff should not be given weight. 2. Rationale: Plaintiff doesn't want case to go to Scotland because they do not have strict liability laws, only negligence. Supreme Court doesn't care about this argument in applying Gulf Oil test because it would require courts to compare laws of various forums and this is what forum non 58

conveniens dismissals are meant to avoid. They also say that they do not mean it will never be a relevant consideration where the law of the alternative forum is inadequate or unsatisfactory, i.e. Scottish law said courts were not empowered to hear airplane crash cases, even when they occurred in Scotland or Scotland resolves cases by having a dance-off. It has to be barbaric or outlandish. Choosing a particular forum because the law is more favorable to the plaintiff cannot be given any substantial weight under a forum non conveniens analysis. Although the general rule is that a court should not dismiss a case on grounds of forum non conveniens unless there is an alternate forum in which the plaintiff can pursue a remedy, this rule only requires that the plaintiff be able to file a proper lawsuit in that alternate forum. D. There Must Exist Another More Convenient Forum Where P Can Obtain Relief - Note Case: Islamic Republic of Iran v. Pahlavi 1. Lawsuit filed against Shah of Iran to recover $35 billion in Iranian funds they had allegedly misappropriated was dismissed on grounds of forum non conveniens because Shah had no connection with forum state. Court of appeals affirmed even though id appeared from the record that no alternative forum was available to P because of the political situation in Iran. Court of Appeals held that courts are not required to entertain litigation that had no connection with the state, especially when the burden on the states courts would be tremendous and the availability of another forum is just a most important factor to be considered.

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The Erie Doctrine I. State Law in the Federal Courts A. Analyzing Erie Problems 1. Is this strictly a diversity case? a) If yes, go to 2. b) If no, ignore Erie. 2. Is there a federal statute on point? a) If yes, ignore Erie. b) If no, go to 3. 3. Is there a Federal Rule of Civil Procedure on point? a) If yes, go to 4. b) If no, go to 5. 4. Can both the Federal Rule and state policy be followed simultaneously? a) If yes, follow both Federal Rule and state policy. b) If no, ignore Erie; ask only whether Federal Rule is valid under the Rules Enabling Act (Hanna). 5. Does the federal policy conflict with the state rule or policy? a) If yes, go to 6. b) If no, follow the federal policy. 6. Is the area one of the few areas suitable for federal common law (e.g., a defense raises a federal question)? a) If yes, use federal common law. b) If no, go to 7. 7. Is the state policy or rule basically procedural or basically substantive? a) If basically procedural, go to 8. b) If basically substantive, follow the state policy or rule, as required by Erie v. Tompkins. 8. Is the state policy weightier than the federal policy, viewed in the context of a federal diversity suit? Consider outcome-determinitiveness and forum shopping as non-dispositive factors in deciding this. a) If state policy is weightier, follow the state policy. (Example: Follow state statutes of limitations in Guaranty Trust v. York.) b) If federal policy is weightier, follow the federal policy. (Example: In deciding judge-jury allocation, follow federal, not state, principles. Byrd v. Blue Ridge.) 9. Always analyze policy factors a) Trying to discourage forum shopping b) Trying to create uniformity (equal remedies under state & federal law) B. The Rule of Swift v. Tyson 1. Rule: Federal courts must follow only state statutory laws, not state judge-made common law, in cases in which state law applies. There was a caveat, which was that federal courts had to follow state laws and a whole bunch of other local laws pertaining to real estate, etc. a) 1652 Rules of Decision Act: The laws of the several states, except where the Constitution or treatises of the United States or 60

Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply. 2. Rationale: Decisions are not laws within the meaning of the Rules of Decision Act. Common law is judge made law and doesnt count. C. The Erie Doctrine: The Rules of Decision Act and The Rules of Enabling Act 1. Reasons for overruling Swift v. Tyson: a) Swift interpreted Rules of Decision Act incorrectly. Professor Charles Warren published an article in the Harvard Law Review that found an older version of the RDA that said federal courts were supposed to apply state law, both written and unwritten. b) Swift failed at creating uniformity. The Court had hoped the states would see what the "enlightened" view of the federal courts were and apply them in state courts, but instead they kept applying their own laws. Also created some uncertainty of its own because it was difficult to determine what was local law and what had to be followed, etc. c) Swift created discrimination. At first it was just that diversity cases in federal court got a different result, but then it became an incentive for people to create or destroy diversity (Taxi cab case) and the Court thought that was sleazy. d) Swift is unconstitutional. There is no federal common law and Swift allowed federal courts to disregard state law and thus basically trounce state rights in violation of the 10th amendment. 2. Erie R. Co, v. Tompkins a) Rule: Federal courts are required to apply the substantive common law of the state in which they sit. b) Rationale: This case articulates what is known as the "Erie doctrine": a federal court sitting in diversity applies substantive state law. Erie expanded the definition of Section 34 of the Judiciary Act of 1789 to include state court decisions. The two policies emphasized in Erie: uniformity of state court decisions and prevention of discrimination between residents and non-residents, are mentioned frequently in subsequent decisions that support and refine Erie. c) Concurrence, Reed: The Swift doctrine should have been overturned without analyzing the constitutionality of that decision. The majority should have read laws to include judge-made law rather than addressing the constitutionality of Swifts interpretation. Also, procedure may not be a rule of decision (what law must get applied) so might not have to apply state law anyway. Can make up procedural laws but must follow state law when it is substantive laws. d) Dissent, Butler: No constitutional question was suggested or argued, and it was unnecessary in adjudicating this case. Congress requires that the court first certify the constitutional question to the 61

Attorney General so that the US might intervene as a party and be heard. 3. Outcome Determinative Test - Guaranty Trust Co. v. York a) Rule: In a diversity suit brought in equity, an equitable right created by a law of the state whose laws govern the case must be followed by a federal district court if applying the federal law would significantly affect the outcome of the case. b) Reasoning: If it is a substantive right, then the federal court must apply state law. If it of remedial character, such as enforcing the right, then the federal court need not follow state law. It is not about whether or not the rule is procedural but whether it is a means or a mode or a matter of substance. Another way of putting this test is to ask if applying federal v. state law would change the result of the suit. If it changes the result, then it is bound up in the state substantive right. If does not change the result or if it just marginally changes it, then its merely a means and mode of enforcing that right. c) Why this test? (1) Sovereignty apply state law but in federal court way (2) Practical federal court does not want results to be different depending on federal or state court no forum shopping or discrimination in results (outcome determinative test) (3) Since fed court gets to apply same means and mode, fairly uniform procedure in federal court d) Dissent: Rutledge doesn't like this outcome because he thinks that federal courts always did their own thing procedurally and he doesn't think they should be required to switch over to doing what state courts are doing simply because of Erie. He also points out that if this is what Congress wanted after Erie then they would've changed it in the 7 years since the Erie decision. He thinks they are making federal courts too much like state courts. 4. Use State Statute Of Limitation Rules Note Case: Ragan v. Merchants Transfer & Warehouse Co. a) P tried to use Rule 3 of the Federal Rules of Civil Procedure on statute of limitations, D wanted to use KS law. The Supreme Court held that Rule 3 of the Federal Rules was not intended to govern questions concerning the tolling of statutes of limitations, and, therefore, state law would determine in diversity when the statute was tolled. 5. Security For Expenses Bond Note Case: Cohen v. Beneficial Industrial Loan Corp. a) The Court held that a federal court must apply a New Jersey statute requiring a plaintiff in a shareholder derivative suit to post a security-for-expenses bond even though what is not Federal Rule 23.1, which ostensibly governs such cases, did not require a bond. The Court found that whether the New Jersey statute was classified as procedural or substantive, it created substantive liabilities for 62

expenses. Rule 23.1 did not contradict the New Jersey statute, but was addressed to independent concerns. 6. Cant Maintain A Diversity Case In A Forum State When That States Courts Are Closed To You Note Case: Woods v. Interstate Realty Co. a) The Court held that a TN corporation that had not qualified to do business in MI could not maintain a diversity action in a federal court in that state if, by virtue of its failure to qualify, the MI state courts were closed to it. 7. Substantive Right + Outcome Determinative + Federal Policy Byrd v. Blue Ridge Rural Electric Cooperative, Inc. a) Rule: Federal courts may apply federal rules, even if state rules are outcome-determinative, if federal policy in enacting the rules outweighs state policy. b) Rationale: Although the test for determining whether a state law should be applied under Erie is whether it is "outcome determinative," the court must weigh the state's interests in applying its own law against the federal interest in applying federal law. 8. Slight Federal Interest Not Enough - Note Case: Allstate Ins. Co. v. Charneski a) Federal interest involved in this case not enough (unlike in Byrd): slight federal interest consisted of general interest of the court controlling its own procedure, general policy evidenced by the federal Declaratory Judgment Act, federal government provides a fair and orderly forum in which to try the diversity case, relief under the Federal act is expressly discretionary (permissive and not absolute). (no right to jury trial involved here, WI law more connected with suit than federal government) create unnecessary federal-state conflict. 9. Pre-Byrd Case - Note Case: Bernhardt v. Polygraphic Co. of America, Inc. a) The Supreme Court held that a stay pending arbitration could be denied because VT law, which permitted revocation of an arbitration provision any time before an award was made, governed the arbitration provision. They stated that if a federal court allows arbitration where state court would disallow it, the outcome of litigation might depend on the courthouse where the suit is brought. 10. IS IT ARUGABLY PROCEDURAL? The New Test Is Follow The Federal Law Unless It Is Invalid Under REA Because It Modifies, Expands, Etc. A Substantive Right Or Is Unconstitutional - Hanna v. Plumer a) Rule: If the rule at issue is procedural and the federal rule is on point with the state rule, then the Federal Rule must be applied as long as it complies with the Rules Enabling Act, 28 U.S.C. 2071 and the U.S. Constitution. If there is no federal rule on point, then the Erie doctrine should apply. 63

Congress passed Rules Enabling Act 2072 in 1934: (2) The Supreme Court shall have the power to prescribe general rules of practice and procedure and rules of evidence for cases in the United States district courts (including proceedings before magistrates thereof) and courts of appeals. (3) Such rules shall not abridge, enlarge or modify any substantive right. All laws in conflict with such rules shall be of no further force or effect after such rules have taken effect. b) Rationale: Under Guaranty Trust Co., whether the state or federal law is to be applied is not just whether the law is substantive or procedural, or whether it is outcome determinative, but whether it complies with the policies underlying the Erie doctrine. Rule 4(d)(1) is not prohibited by the Constitution. Congress created the Federal Rules to create uniformity in the federal court system. The Erie doctrine and the extensions in York and Ragan were not meant to block the federal rules if they are "outcome determinative" or have "integral relations." Service of process is not a substantive right intended to be enforced by the Erie decision because the method of service here only "altered the mode of enforcing state-created rights" rather than changing the actual rights. The majority opinion illustrates that the federal interest in creating a uniform code of procedure for the federal court system is secondary to the state's procedural laws. In the event there is a direct conflict, the federal law must prevail so long as it complies with the Rules Enabling Act and the U.S. Constitution. c) Concurrence: Justice Harlan: The Court should focus on whether the rule applies to a situation that is normally one left to state regulation. 11. Helps in Determining Procedural/Substantive - Note Case: Sibbach v. Wilson & Co. a) State law had a rule against compulsory physical examinations. District Court ordered P to undergo such an examination pursuant to Federal Rule 35. Supreme Court affirmed that decision because it felt that Rule 35 does not abridge, enlarge, or modify substantive rights, in the guise of regulating procedure. The test must be whether a rule really regulates procedure the judicial process for enforcing rights and duties regulated by substantive law and for justly administering remedy and redress for disregard or infraction of them. (1) This is a good case that demonstrates how to determine if something is a means to an end (procedural) or the ends (substantive). Although poking and prodding seems like it would be a substantive right, it is the means to determine how much he would be owed if he were to prove his case. 12. Walker v. Armco Steel Corp.
(1)

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Rule: A state's provision tolling its statute of limitations should be analyzed under the Erie doctrine. Consequently, a state's tolling provisions must apply if it would have prevented the plaintiff from filing a suit in state court. In addition, Rule 3 does not conflict with tolling provisions because it only refers to the time a lawsuit commences under the Federal Rules. b) Rationale: Under Hanna, a federal procedural rule must directly conflict with the state law dealing with the same issue in order for the federal rule to apply. In this situation, Rule 3 was interpreted not to address the statute of limitations, and thus did not fall into "direct conflict" with the Oklahoma state tolling provisions. Since there was no federal rule, the old test would apply and it would have to be determined if it was means/mode or substantive and if it was outcome determinative (and if there is a federal interest). 13. Procedural Federal Rules Trump State Law - Note Case: Burlington Northern R. Co. v. Woods a) D had obtained a jury verdict against P in a PI action prosecuted in an AL federal district court. After verdict had been affirmed on appeal, court assessed penalty prescribed by AL law, but D objected because it felt Rule 38 of FRCP applied (penalty only applied if appeal was frivolous). The Supreme Court held that Rule 38 controlled because under Hanna, the rule must be applied if it represents a valid exercise of Congress rulemaking authority, which originates in the Constitution and has been bestowed upon this court by the Rules Enabling Act. Rule 38 regulates matters that can reasonably be classified as procedural, thereby satisfying the constitutional standard for validity. Its displacement of the AL statute also satisfies the statutory constraints of the REA. The choice made by the drafters of the FR in favor of a discretionary procedure affects only the process of enforcing litigants rights and not the rights themselves. 14. If There Is Federal Law On Point Follow It, Unless It Violates The REA Or Is Unconstitutional - Organization, Inc. v. Ricoh Corp. a) Rule: The federal policy of having district court judges consider interests Congress has enumerated in a statute prevails over a state policy disapproving certain means by which venue might be decided. b) Rationale: 1404(a) says if the balance of convenience favors it, you can transfer from one venue to another. Court says this is sufficiently broad because it allows judge to consider many different factors when determining if transfer is appropriate whereas state law says consider anything you want except forum selection clauses. It gives an answer to the question, so we are in new test land. The Alabama law articulated a clear policy against forum selection clauses. The federal statute, by contrast, required consideration of various factors such as bargaining power and convenience when evaluating the validity of the forum selection
a)

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clause. The laws conflict because the Alabama law does not require consideration of these additional factors. Therefore, federal law prevails. D. The Problem of Ascertaining State Law 1. Determining Which States Law Governs a) Choice-of-law Rules: Choice of law is a concept within the field of the conflict of laws, relating to relationships between individual states. Under certain circumstances, the courts of a particular legal jurisdiction will be called upon to apply the law of a different jurisdiction. This usually arises in the context of lawsuits arising from torts or contracts. b) Conflict of Laws Klaxon Co. v. Stentor Electric Mfg. Co. (1) The federal court must apply state law governing conflict of laws. In other words, the conflict-of-law rules of the state where the federal court sits must be followed. The proper function of a federal court is to ascertain what the state law is, not what it ought to be. c) States Given Significant Leeway In Establishing Choice-ofLaw Rules - Note Case: Allstate Ins. Co. v. Hague (1) The Supreme Court held that a state could apply its substantive law in a case, so long as the state had significant contacts or a significant aggregation of contacts with the parties and the transaction. d) If Case Is Transferred Under 1404(a), State Law Travels With Case - Note Case: Van Dusen v. Barrack (1) A change of venue under 1404(a) generally should be, with respect to state law, but a change of courtrooms. 2. Ascertaining The State Law a) Even when you figure out which states law to apply, discerning what the state law actually is often presents a problem. (1) Black Letter: Federal Court must apply the law of the state as that law is either declared by statute and interpreted by the highest ct of the state, or judicially declared by the highest ct of the state. (2) When decisions of the states highest court are very old or nonexistent, fed court may look to lower court decisions (if available) or try to declare state law as it would be declared by the highest state court if the issue were to be presently tried before it. b) Court Does Not Have to Apply State Law When Obvious That Highest Court Of That State Wouldnt Even Apply That Law - Mason v. American Emery Wheel Works (1) Rule: The District Court does not have to apply the state law to be applied pursuant to the Erie doctrine if it is clear that the highest court of that state would not follow the case precedent that addresses the issue.

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(2) Rationale: Federal district court applied state tort law as articulated in a 1928 Mississippi decision (no duty where no privity). Although that decision was never explicitly overruled, a much more recent decision talked about modern trends in the area and quoted with approval recent authorities in support of the modern doctrine (duty even w/o privity). On appeal, held that the Mississippi Supreme Court would undoubtedly agree w/the MacPherson decision were the issue put before it so case remanded to be decided under that standard. The majority's opinion demonstrates a situation where the federal court does not have to apply a state's case law under the Erie doctrine. However, the court as well as the concurring opinion, emphasize that the highest court of the state's intent not to follow the relevant case law must be clear. (3) Concurrence: It is clear that the dicta in E.I. Dupont implies that the Supreme Court of Mississippi no longer approves of the holding in Ford Motor Co. However, when the situation is less clear, applying the rule of this case will cause problems. c) If States Highest Court Has Not Addressed Issue, Look to All Relevant Sources of State Law, Including Decisions in Analogous Cases and Dicta Note Case: McKenna v. Ortho Pharmaceutical (1) Court of Appeals, trying to avoid speculative crystalball gazing, posited that the process of ascertaining the law requires an examination of all relevant sources of that states law in order to isolate those factors that would inform its decision. In the absence of authority directly on point, decisions by that court in analogous cases provide useful indications of the courts probable disposition of a particular question of law. Considered dicta by the states highest court may also provide a federal court with reliable indicia of how the state tribunal might rule on a particular question. d) It Is Never Appropriate For a Diversity Court to Decline to Exercise Jurisdiction When State Law Is Uncertain - Note Case: Meredith v. Winter Haven (1) In the absence of some recognized public policy or defined principle guiding the exercise of the jurisdiction conferred, which would in exceptional cases warrant its non-exercise, it has from the first been deemed to be the duty of the federal courts, if their jurisdiction is properly invoked, to decide questions of state law whenever necessary to the rendition of a judgment. Where such exceptional circumstances are not present, denial of the opportunity to afford suitors the opportunity to assert their rights in federal courts merely because the answers to the 67

questions of state law are difficult or uncertain or have not yet been given by the highest court of the state, would thwart the purpose of the jurisdictional act. e) Federal Court Can Stay Proceedings For Interpretation by States Highest Court - Note Case: Louisiana Power & Light Co. v. City of Thibodaux (1) A District Court, sitting in diversity, on its own motion, stayed its own proceedings to permit LAs highest court an opportunity to interpret a state expropriation statute. The Supreme Court upheld this exercise of equitable discretion as a wise and productive discharge of judicial duty. f) Court Can Decline Certification if Delay Would Harm Interests of One or Both Parties - Note Case: Tunick v. Safir (1) A photographer challenged a localitys refusal to grant him a permit to conduct an outdoor photo shoot in NY based on a NY statute that bans public nudity. Court of Appeals petitioned NYs highest court to resolve scope of ban, emphasizing the need for expedition given the important 1st Amendment rights at stake. Court declined to hear case because even with an expedited schedule, Courts decisional process would add months to the case. g) Most Courts Are Hesitant to Read Law Where There Is None - Note Case: Pomerantz v. Clark (1) In a diversity action by policyholders against an insurance company to retrieve for the company certain sums allegedly improvidently and illegally loaned, District Court held that no action was maintainable under MA law and stated that a federal judge sitting in a diversity jurisdiction case has not a roving commission to do justice or develop the laws according to his or what he believes to be the sounder, views. His task is to divine the views of the state court judges. The emphasis is on precedent and adherence to the older ways, not on creating new causes of action or encouraging the use of novel judicial remedies that have sprung up in less conservative communities. This basic philosophy permeates the Mass. Rules governing derivative suits. Therefore no action is maintainable under Mass. Law. h) District Court Required to Adhere to Circuit Decisions When No State Cases On Point - Note Case: Factors Etc., Inc. v. Pro Arts, Inc. (1) Federal court sitting in New York was required to apply TN law to the question of whether Elvis Presleys right to publicity survived his death. TN state courts had never addressed that issue, but the Sixth Circuit (which includes TN) had. The District Court was bound by the Sixth Circuits view of TN Law. Sixth Circuit was more familiar

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with TN law since it frequently was required to interpret TN law. (2) Dissenting Opinion: There was no reason to follow the 6th Circuit views when they were not derived from the laws or decisions of the state. Considering the physical size of the circuit, and the relatively small number of diversity cases, 6th Circuit was unlikely to have any special familiarity with TN law. E. Federal Common Law 1. Three Perspectives on the Scope and Legitimacy of Federal Common Law Making Powers a) Meltzer, State Court Forfeitures of Federal Rights (1) In a variety of subject matter jurisdictions, there may be federal common law: US as party, strong federal interest, interstate disputes, etc. (2) Lawmaking power of federal courts is far more limited than Congress for 2 reasons: 1. Ideas of separation of power and supremacy of Congress. 2. Federal law is and should be interstitial, operating against a background of existing bodies of state law. (3) Court has recognized that federal common law may be necessary expedient. (4) Fed. Common law fits most easily when it supplements federal constitutional or statutory provisions, providing rules of decision that implement or safeguard norms embodied in such provisions. b) Field, Sources of Law: The Scope of Federal Common Law (1) The received academic tradition on common law assumes that there are particular enclaves in which federal common law is in fact appropriate, but that after Erie federal common law power is the exception, not the rule. (2) He suggests that judicial power to act is not limited to particular enclaves and that it is much broader than the usual references to judicial power would suggest. (3) He also suggests the only limitation on courts power to create federal common law is that the court must point to a federal enactment, constitutional or statutory, that it interprets as authorizing the federal common law rule. c) Kramer, The Lawmaking Power of the Federal Courts (1) Defines federal common law as any rule articulated by a court that is not easily found on the face of an applicable statute. (2) Asks: Why let courts make common law in a representative democracy? (3) Answers: Because judge-made law is unavoidable. (4) Federal common law has developed in several broad situations: in cases involving important federal interests, in

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admiralty context, and in cases implicating international relations of the United States. 2. Two reasons we need federal common law a) Gap cases - In a perfect world when Congress passed a statute, it would tell everything that needed to be known. However, we do not live in a perfect world and when Congress passes a statute they usually do so with broad, general terms. It is then up to the courts to fill those gaps using federal law or state law. (Usually federal question cases) b) Federal interest cases - Cases where we aren't necessarily suing under a federal statute (maybe on diversity grounds) but there is some federal ingredient involved (area of federal interest) and there is no law on point. (Usually cases that have failed Erie test) 3. The Traditional Bases of Federal Common Law a) Erie Doctrine Does Not Apply In Cases Involving Legal Activities of US - Clearfield Trust v. US (1) Rule: When application of the law requires a determination of the rights and obligations of the United States arising from a federal source of law, the Erie doctrine does not apply. Federal courts must interpret federal law to determine the legal and factual issues of the case. (2) Rationale: This case illustrates that there is still a federal common law in a situation where the United States is a party and the issues involve rights and obligations of the United States that come from federal law. In this case, the Court must use case precedent to interpret the United States' right as drawee to collect on a forged check. The Court's creation of a general rule regarding commercial paper demonstrates the Court's ability to create federal common law when circumstances warrant. (3) Test: (4) First we must ask if the court has the power to displace state law, which we do by asking if there is some necessary federal ingredient. (5) The next question is should the court exercise that power. (6) If there is a federal interest and a state law, should ask if state law is inconsistent with that interest. b) Even When Federal Law Controls, State Law Might Be Adopted Instead of Creating Federal Common Law - Note Case: United States v. Kimbell Foods, Inc. (1) Court broadly interpreted Clearfield as permitting federal courts to develop federal law for questions involving the rights of the US arising under nationwide federal programs. Having decided that federal law controlled, the Court turned to the second and more 70

challenging task of determining the content of the federal law. After weighing facts of federal interests with respect to priority rules for the SBA and FHA loans, the Court held that there was no need for an independent federal rule. Thus, the court chose to adopt the state rule as federal law rather than to develop a separate federal rule. c) No Need For Common Law In Every Case Involving Commercial Paper and US, Especially When Is Two Private Parties - Note Case: Bank of America National Trust & Savings Association v. Parnell (1) Court declined to endorse a federal common-law rule of liability and held that securities issued by the Government generate immediate interests of the Government, but they also radiate interests in transactions between private parties and does not touch the rights and duties of US (in this case). d) Decision That May Remotely Affect the US' Interests Is Not A Strong Enough Reason To Warrant Application Of Federal Common Law - Miree v. DeKalb County (1) Rule: Federal common law does not apply in diversity cases unless the United States' rights and obligations would be substantially affected by the outcome of the case. A decision that may remotely or upon speculation, affect the United States' interests is not a strong enough reason to warrant application of federal common law. (2) Rationale: The opinion shows that the rule articulated in Clearfield Trust Co., infra, requires a determination of the rights and obligations of the United States, not other parties affected. In addition, even though federal law specifically states that a contract does not allow for a federal cause of action, this does not foreclose the possibility of a state cause of action pursuant to the federal law. This is why standing was analyzed under state law, to determine if Georgia law would allow such a cause of action. e) Government Contractor Defense - Boyle v. United Technologies Corp. (1) Rule: The Supreme Court came up with the government contractor defense, which states that if a manufacturer makes a product in compliance with the government's design and production requirements, but it was defective and caused injury, the victim cannot sue the manufacturer. (2) Rationale: In a 5-to4 decision, the Court held that despite the absence of specific legislation immunizing government contractors from liability for design flaws, questions of their liability are of unique federal concern. As such, to the extent that it holds military contractors liable 71

for design flaws, state law may significantly conflict with federal interests thereby requiring its displacement. The Court added that in the instant case, such displacement is appropriate since the United States approved the helicopter's specifications, the equipment met those specifications, and Sikorsky warned the government of possible dangers in the helicopter's use. Finally, since the Court of Appeals' use of the "military contractor defense" failed to specify if a reasonable jury could have found for Boyle, the Court vacated its judgment and remanded. (3) Dissent: Justice Brennan writes: There is no more reason for federal common law to shield contractors now that the Government is liable for some torts than there was when the Government was liable for none. The discretionary function exception does not support an immunity for the discretionary acts of Government contractors any more than the exception for "[a]ny claim [against the Government] arising out of assault," supports a personal immunity for Government employees who commit assaults. In short, while the Court purports to divine whether Congress would object to this suit, it inexplicably begins and ends its sortilege with an exception to a statute that is itself inapplicable and whose repeal would leave unchanged every relationship remotely relevant to the accident underlying this suit. The tort system is premised on the assumption that the imposition of liability encourages actors to prevent any injury whose expected cost exceeds the cost of prevention. If the system is working as it should, Government contractors will design equipment to avoid certain injuries (like the deaths of soldiers or Government employees), which would be certain to burden the Government. The Court therefore has no basis for its assumption that tort liability will result in a net burden on the Government (let alone a clearly excessive net burden) rather than a net gain. f) Note Case: In Re Agent Orange Product Liability Litigation (1) The court considered the problem of a nationwide class action involving veterans from all over the country who alleged injury resulting from the use of toxic defoliants in Vietnam. It concluded that every state court that would have adjudicated an Agent Orange class action would have decided that a national rule of decision would have been adopted by all other state courts adjudicating this type of case. The need for a uniform rule of decision, the unique relationship between the US and its servicemen, and the special relationship between the US and its defense would have compelled such an adoption. 72

g) Note on Federal Common Law and Federal Rules of Preclusion (1) The preclusive effect (prevents two bites at the apple) of a federal judgment, even when the federal court sits in diversity, is governed by federal common law. In determining the content of the federal rule of preclusion, the federal court may choose to borrow a state rule. 4. Federal Law in the State Courts a) State courts are often called upon to construe and apply federal law. (1) Federal question cases: Plaintiff can sue for federal statutes in state or federal courts (state courts have concurrent jurisdiction over almost all federal actions) b) When a state attempts to adjudicate such a right, the Supremacy Clause of the Constitution requires the application of federal law. c) A federally created right also may become germane to a statecourt action when it is interposed as a defense to a claim based on state law. d) Federal Law is Supreme in State Court When Action Is Brought Pursuant to Federal Right - Dice v. Akron, Canton & Youngstown R. Co. (1) Rule: In cases brought under the Federal Employers Liability Act (FELA), federal law determines issues pertaining to the employees ability to enforce his federal right. Fact issues to be decided under FELA are determined by a jury in order to comply with FELA and the Seventh Amendment to the U.S. Constitution. (2) Rationale: The majority illustrates the supremacy of federal law in state court action when the action is brought pursuant to a federal right, such as under FELA. In order to reach its decision, the Court had to determine that the Ohio rule permitting state court judges to determine if fraud had occurred was a substantive rule affecting the claim of the Plaintiff based on federal law. Because the effect of the application of the state court rule regarding judicial finding of fraud is to, in its application to the facts presented here, preclude the Plaintiff's federal law claim, the state court rule may not be applied. (3) Concurrence: Justice Frankfurter found that the majority's decision that the validity of the release is determined by federal law to be correct. However, the requirement by the Court that state courts in FELA cases have juries determine issues of fraud is contrary to the policy of allowing states to govern their own court systems. There is no case or statute requiring that states give jury trials for FELA cases so long as the state court does not have jury trials for negligence cases. The majority opinion 73

requires Ohio to treat its FELA cases differently than other negligence cases. This is undue interference with the state court system and because it is not required by any precedent or statute, it should not be imposed on the state courts. e) Local Rules Cannot Defeat Federal Rights - Note Case: Brown v. Western Ry. Of Alabama (1) The Supreme Court held that a log series of cases previously decided, from which it sees no reason to depart, makes it their duty to construe the allegations of this complaint in order to determine whether petitioner has been denied a right granted to him by Congress. This federal right cannot be defeated by the forms of local practice. Strict local rules of pleading cannot be used to impose unnecessary burdens upon rights of recovery authorized by federal law. f) Note Case: Federal Energy Regulatory Commission v. Mississippi (1) The Supreme Court upheld provisions of the Public Utilities Regulatory Policies Act of 1978, which required state public utility commissions to observer certain federal procedures in regulating energy usage. The Court held that the state commissions could be required to enforce federal standards. It upheld the mandatory consideration requirement on the ground that Congress, having power to preempt state regulation entirely, could adopt the less intrusive scheme of PURPA.

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Modern Pleading I. Pleadings A. Traditionally, pleading rules served four functions: 1. Providing notice of the nature of a claim or defense 2. Identifying baseless claims 3. Setting each partys view of the facts 4. Narrowing the issues B. Modern pleading rules are generally not calculated to perform the last three of these functions. C. The Complaint 1. Detail Required Under the Codes a) Although a majority of states have adopted the federal pleading rules, a number still follow all or part of the codes. b) Not Sufficient Complaint - Gillispie v. Goodyear Services Stores (1) Under NC code then in force, P was required to make a plain and concise statement of the facts constituting a cause of action. NC cases interpreting the pleading standards had stated that the complaint must disclose the issuable facts and allege the material, essential, ultimate facts upon which Ps right of action is based. The court held that the allegations in Ps pleading were insufficient, noting that the pleading was necessary not only to enable the opposing party to respond, but also to enable the court to declare the law upon the facts stated. The court could not do so if a mere legal conclusion such as assault or trespass is stated. c) Yes Sufficient Complaint - Note Case: Robinson v. Board of County Commissioners (1) P alleged that D did then and there falsely, maliciously, and without just cause arrest P on charges of disorderly conduct and resisting arrest and take him to the police station where he was forcibly imprisoned, kept, detained, and restrained of his liberty. Court held that this passage stated facts sufficient to constitute a cause of action. 2. Detail Required Under the Federal Rules a) Federal Rule 8(a): Pleading must contain short and plain statement showing entitlement to relief. b) Complaint Need Only State a Claim Upon Which Relief Can Be Granted - Dioguardi v. Durning (1) Rule: A complaint need only state a claim upon which relief can be granted. It does not necessarily have to contain facts that can support a cause of action. (2) Rationale: This case illustrates the standard for evaluating a complaint against a motion to dismiss under Federal Rules of Civil Procedure 12(b)(6) (failure to state a 75

claim upon which relief can be granted). This standard is known as "notice pleading." A complaint need only state grounds that would entitle the plaintiff to relief. It need not contain specific allegations of facts that would constitute some specific cause of action. A complaint can be vague and incoherent, but if there is a discernable ground for relief, the complaint should not be dismissed for failure to state a claim. c) Complaint Shouldnt Be Too Specific - Note Case: Conley v. Gibson (1) The FRCP does not require a claimant to set out in detail the facts upon which he bases his claims. To the contrary, all the Rules require is a short and plain statement of the claim. This is made possible by the liberal opportunity for discovery and other pretrial procedures. d) Key is Short and Plain - Note Case: Deyo v. Internal Revenue Service (1) District Court conditionally dismissed a pro se complaint for being neither short nor plain. Rather it consisted of 43 pages of verbatim dialogue from telephone conversations and is replete with legal argument. 3. Pleading the Right to Relief a) Rule 8(a)(2) requires a short and plain statement of the claim showing that the pleader is entitled to relief b) Complaint Is Construed In Light Most Favorable to Plaintiff - Garcia v. Hilton Hotels International, Inc. (1) Rule: When considering a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, all inferences drawn and allegations construed are in the light most favorable to the plaintiff. If there is some basis that the plaintiff can prove at trial that would entitle him/her to relief, then the motion to dismiss must be denied. Alternative relief for the defendant for a vague complaint is to require the plaintiff to make a more definite statement to strike certain allegations that cannot contribute to a cause of action. (2) Rationale: The court's analysis shows that dismissal of a case pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure should not be ordered unless there is no basis for relief. Vagueness or superfluous allegations will not defeat a complaint. c) In current practice, Rule 12(e) motions are disfavored (motion for more definite statement) d) The burden of pleading an issue usually is assigned to the party who ahs the burden of producing evidence of that issue at trial, although the burden of pleading need not coincide with the burden of producing evidence.

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(1) P must plead those matters he must prove. If P cannot legitimately allege the existence of each of the basic elements of his claim, it may be assumed that he could not introduce evidence on them at trial. (2) Burden is then placed on D to answer. (3) Once D has established a defense, P will then have a second burden to introduce evidence as to facts that will avoid Ds defense. 4. Pleading Special Matters Rule 9- Pleading Special Matters a) Capacity (1) It is not necessary to aver the capacity of a party to sue or be sued or the authority of a party to sue or be sued in a representative capacity or the legal existence of an organized association of persons that is made a party, except to the extent required to show the jurisdiction of the court. When a party desires to raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued or the authority of a party to sue or be sued in a representative capacity, the party desiring to raise the issue shall do so by specific negative averment, which shall include such supporting particulars as are peculiarly within the pleader's knowledge. b) Fraud, Mistake, Condition of the Mind. (1) In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally. (a) Heightened pleading requirements c) (g) Special Damages (1) When items of special damage are claimed, they shall be specifically stated. d) Under Rule 9(b), Complaints With Heightened Requirements Should Be Construed As To Whether D Can Respond - Denny v. Carey (1) Rule: Rule 9(b) of the Federal Rules of Civil Procedure only requires that the plaintiff allege the circumstances of fraud such that the defendant will be able to sufficiently answer the allegations. (2) Rationale: This case notes that although allegations of fraud require greater particularity, the complaint should be construed as to whether the defendant is able to respond. The court did not focus on whether the defendant was being falsely accused or whether this was a "nuisance" suit. e) Case Similar to Above Is Thrown Out For Not Adhering to Heightened Requirements - Note Case: Denny v. Barber (1) In case brought by same P as above with virtually identical pleading, court held that Rule 9(b) had not been 77

satisfied because the admission of Ps counsel that he could provide no further facts in the absence of discovery is exactly what courts are trying to avoid. The Supreme Court has admonished that to the extent that such discovery permits a P with a largely groundless claim to simply take up the time of a number of other people, with the right to do so representing an in terrorem increment of the settlement value, rather than a reasonably founded hope that the process will reveal relevant evidence, it is a social cost rather than a benefit. f) Dissatisfied with the judiciarys uneven approach under Federal Rule 9(b) to securities-fraud cases (and the fact that too many lawyers were filing such cases), Congress imposed a superheightened pleading standard on such lawsuits in the Private Securities Litigation Reform Act. (1) The statute requires that the complaint specify each statement alleged to have been misleading and give the reasons why each is misleading. In addition, if an allegation is made on information and belief, all facts on which that belief is formed must be stated with particularity. Finally, facts giving rise to a strong inference that D acted with scienter must be stated with particularity. g) Pleadings on Fraud Need Lots of Info Which P Who Has Suffered Great Economic Loss Should Be Able to Provide Note Case: Dura Pharmaceuticals, Inc. v. Broudo (1) The Supreme Court dismissed a securities fraud action when the complaint alleged that the price of the stock on the day of purchase was inflated because of the misrepresentation because the Private Securities Litigation Reform Act of 1995 makes clear Congress intent to permit private securities fraud actions for recovery where, but only where, P can adequately allege and prove the traditional elements of causation and loss. The Court conceded that ordinary pleading rules are not meant to impose a great burden upon P, but stated that it should not prove burdensome for a P who has suffered a great economic loss to provide D with some indication of the loss and the causal connection that P has in mind. h) Pleadings Are Not Supposed to Contain Facts Necessary to Establish a Prima Facie Case - Swierkiewicz v. Sorema N.A. (1) Rule: Requirements for establishing a prima facie case for employment discrimination force P to prove more facts than necessary to pass muster under FRCP 12(b)(6). (2) Rationale: This is a case that should turn merely on the facts supporting an allegation of employment discrimination. Here, the lower court used the standard for evidence, not for pleading. All P had to do here was establish at the very least a possibility that D was guilty of 78

the charge in the plea. Court held that no one should have to plead more facts than they might even use at trial to survive a motion to dismiss. There is also a conflict with FRCP 8(a), which states the simplified pleas standard is true for all civil rights cases. All P had to do under 8(a) was give respondent fair notice of the basis for the claim because this is a notice pleading system. The court compares the complaint to Form 9 and says it is sufficient. The fact that the claim may not survive at trial is another story, and not for this Court to decide. i) Supreme Court says Lower Courts Can Only Apply Heightened Pleading Requirements In Cases Specifically Stated in Rule 8 or 9 - Note Case: Leatherman v. Tarrant County Narcotics Intelligence & Coordination Unit (1) A unanimous Supreme Court held that a federal court may not apply a more stringent pleading standard in civil rights cases alleging municipal liability under 42 U.S.C. 1983. Cant apply heightened requirements in cases not specifically listed in Rule 8 or 9 or some federal statute. These rules are designed to be exclusive. j) Note Case: Bautista v. Los Angeles County (1) In a federal civil rights action, the trial court dismissed Ps second amended complaint with prejudice. Each judge on Court of Appeals wrote separate opinion. (a) Judge Schwarzer, writing for the court, found the complaints to be lacking, but reversed the trial court on the ground that it had abused its discretion by failing to give P guidance as to how the defects in the complaint couldve been cured and a chance to cure them. (b) Judge Reinhardt concurred on the entirely different ground that the complaint met the requirements of Rule 8. (c) Judge OScannlain dissented because while he agreed that the complaint was insufficient, he rejected the notion that the trial judge abused his discretion in failing to provide P with guidance on how to plead his case. k) Courts Dont Like to Seek Info More Appropriate to Discovery - Note Case: Pelman v. McDonalds Corp. (1) The Second Circuit reversed the dismissal of a lawsuit against a fast-food company for deceptive business acts in inducing children to buy food that causes obesity, declining to endorse a heightened pleading requirement that the District Court had imposed because the information the DC sought was the sort of information that is more appropriate to the subject of discovery. 5. Alternative and Inconsistent Allegations 79

a) Under the original common-law rules, pleadings were not allowed to contain alternative and hypothetical allegations because they would have made the search for the single issue impossible. b) Under Rule 8(e)(2) c) Under Rule 10(b), each claim founded upon a separate transaction or occurrence and each defense other than denials shall be stated in a separate count or defense whenever a separation facilitates the clear presentation of the matters set forth. (1) If party violates this requirement, he will be allowed to amend his pleading to conform to the rules. (2) Hypo: Paragraph 6 of a complaint might say that B hit A because he hated her or because he didnt see her and was negligent. It then goes to the jury to decide. Can do it in federal court, but not in most state courts.

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