complex litigation - transgrud - fall 2004

7/31/2019 Complex Litigation - Transgrud - Fall 2004

1/72

COMPLEX LITIGATION

Dean Trangsrud

Fall 2004

A. Levin

INTRODUCTION

Intro to Complex Litigation

What is Complex Litigation?o First Manual on Complex Litigation (MCL) defined it as protracted or big cases requiring extraordinary treatment.

o Third edition of MCL: need for judicial management of a case

o ALI definition limited to: multi-forum, multi-party cases

o Tidmarshs definition: cases where one of actors in a case cant perform the role usually assigned (lawyers, judges

juries, parties, etc.)

Complex case is where that dysfunction can be corrected, but only when judge takes on a non-traditional role.

As a result, procedures used in case differ from procedures in other cases.

Examples of Complex Cases

o Ortiz v. Fibreboard Corp. (Supp 50)

o Bradley Milliken (1389)

Manual on Complex Litigation

o First published in 1979

o Set of guidelines / advisory text

o Judges read and follow it.

Our system of Transubstantive Rule One set of rules for all cases, regardless of substantive law.

Normative Limits to Procedural Choices

Complex Litigation tests outer boundaries of our adversarial system

Normative Rules / Categorical imperatives / Essential Aspects

o Are there certain characteristics of justice that are essentialto a system of justice? That transcend culture and national

boundaries?

Equal treatment of similarly situated litigants

This is because people will have NOTICE of the rules, and know whats expected.

Neutral, rational decision-maker

Notice Rules must be knowable and able to be followed.

Decision based on relevant evidence

Therefore, reasoned opinions are assuring

Adherence to the rules

o Other things that we may consider:

Opportunity to be heard / Right of participation

Speedy

Justice delayed is justice denied.

Finality / Repose

With regard to the Facts:

Cross Examination

Equal access to discovery

Decision-maker will attempt to determine the material truth

Transparency / Trials should be open

Align task with incentive

A. Levin Page 1/72 Last Revised: 10/25/2012


2/72

People will do a better job at the task if they have an incentive

This makes it easier for a judgment to be accepted by the losing party

Equal treatment of like cases is still fundamental.o BUT alike how?

Similar transactions? (i.e. slip & fall)

Similar legal theories/substantive law? (i.e. antitrust)

Same for all claims arising out of one transaction?

Same treatment of all parties?

What is the relationship between substance and procedure?

There are procedural values that sometimes conflict with substantive purposes.o Well-designed procedural system effectuates the substantive law / enforces it (Procedure is the handmaiden of justice)

ORo There are independent procedural values that trump substantive rights (this one is more true than the first)

Trans-substantive Procedureo This is the intention of the FRCP

o FRCP 2 There shall be one form of action known as a civil action.

This rule rejects historical procedure, where procedure was based on substantive law.

The amount of procedure afforded toa litigant depends on how much is at stake in the lawsuit; the more thats at stake, then themore procedural DP is required. (Matthews v. Eldredge)

o Matthews v. Eldredge

Supreme Court says DP means different things in different contexts.

Makes cost/benefit analysis

Lays out test that is essentially economic, and ignores range of other procedural meanings that are sometimesunderstood to inhere in the notion of DP, including the notion of individual, adversarial participation at trial.

Normative Principles of Adversary Procedure

Various theorists:

o Posner

Cost/benefit analysis But doesnt help us quantify certain things

o Bush

Gives us certain goals of system, but doesnt tell us what happens when those goals come into conflicto Positivists

Skeptical of natural law

Laws we should follow are those legally passed by those with authority to do so.

(This is where most of us fall, according to T)

Basic Characteristics of our adversary system:

o Participation / Attorney Control

Fuller emphasizes participation of the party as well as the lawyer

Participation has value of aligning task with incentive, and also promotes acceptability of outcome. Hazard points out that participation respects autonomy

NOTE - In mandatory class actions, members of the class are given no choice not to participate, andhave no control over lawyers.

As cases are aggregated and more Class Actions filed, individual plaintiffs lose autonomy and control.o Party Initiation

Lawyers serve gatekeeping functionkeeping frivolous claims out

(Although class actions are exception)o Notice Pleading

o Strict evidentiary rules

o Parties pay own costs



3/72

So, access to courts is confined to those who can pay.o Judges are passive umpires

(Although this is changes in complex settlements, i.e. Agent Orange, where Judge suggested settlement)

o Climactic trial

Everyone has to show up and stay

Contrasts with Europe, where there are sequential hearings, and things are handled in more business-like way.o Civil Juries

o Appellate Review

o Group Litigation is possible

o Polycentric

Some disputes are not resolvable through adjudication

i.e. setting wages and prices or running a public school system

FRCP offers lots of discretion, which permits flexibility and adaptability.o Consequences of discretion: procedure may vary case to case based on the judge.

o Procedure varies from judge to judge

o These choices are largely unreviewable.

Interlocutory orders (discovery, etc) are not reviewable until the end of the case, and even then, standard ofreview is abuse of discretion.

District judges have enormous power (especially pre-trial)

FRCP assumed judges would remain passive umpires, however that isnt true in all cases now.

State courts now largely follow FRCP, with minor variations.

Lots of discretion in the FRCP, which permits:o Flexibility

o Adaptability

Consequence of discretion:o Procedure may vary from case to case depending on the judge.

o These choices are largely unreviewable.

Interlocutory orders (re: discovery, etc) are not reviewable until the end of the case, and even then the standardof review is abuse of discretion.

When cases settle, theyre not reviewable at all.o District judges have ENORMOUS power, especially pre-trial.

Adversarial v. Inquisitorial Civil Procedure

Inquisitorial Procedure Dominant in Europe, Pacific, etc. (French, Swiss, etc)

Differences Between Adversarial and Inquisitorial Procedure

ADVERSARIAL PROCEDURE INQUISITORIAL PROCEDURE

Pleading Makes no difference Makes no difference

Fact-Gathering Private counsel Inquisitorial magistrate

Pre-Trial Control Private counsel, but some judicial controlfrom pretrial orders

Inquisitorial magistrate

Evidence Rules Strict (to protect jury from certain evidencewe dont want them to hear

Little evidence rules (because magistrate hearseverything)

Attorneys Fees American Rule Each side pays its ownattorneys fees

Losing party pays the fees (powerful incentive tosettle)

Judicial Role Passive (although thats more true in somecases than others; some cases judges havemore active roles.

Active (in conducting cases; not creating newlaw)

Trials Climactic (try cases twice during discoveryand trial)

Series of sequential hearings (logical and orderlyinvestigation of facts)

Juries Civil jury is part of the federal and many stateconstitutions

Ni civil jury

Judiciary Appointed (its not necessary to be veryfamiliar with trials to become a judge; just

Career judiciary (decide while in school to bejudge or private attorney)



4/72

have to know the right people)

Appellate Review De novo review on law; deferential review onfacts (only overturn if no rational jury couldhave found that way and clearly erroneousstandard if it is a bench trial)

1st Round review of law and facts2nd Round law only; can introduce new evidenceon appeal

Group Litigation Class actions and large consolidations arepossible

No group litigation; only individual litigants cansue.

Our adversarial procedure is more expensive and cumbersome.

o

Everyone sues everyoneo All lawyers investigate everything for years

o Lots of experts

o Lots of time

o We try cases twice at discovery and trial

o Values individual autonomy; ability to control own lawsuit

o With the guaranteed right to a jury trial (7th amend), cant change parts of our system

Cant have sequential set of hearings, because thats not possible with juries.

Which system can produce the most satisfactory outcomes?

FACT-FINDING

o Our system:

With partisan fact-finding, advocate will work hardest for his client; lawyers are motivated by $.

Ps lawyer has incentive to spend lots of money finding facts, although P may restrain this.

Lawyers must vigorously defend/represent client, and if fails to do something properly, can be liablefor malpractice.

Stringing out discovery means more $.

Strange set of incentives in our system.

Client supervision is rather limited.o German System:

Magistrates have no financial incentives to draw out discovery.

But magistrate isnt alone in the process; Langbein points out that lawyers are at magistrates elbows.

COUNSELING WITNESSES

o Our system: horse-shedding a W counseling/signaling a W

Cross-exam is a protection against horse-shedding; but not very protective tool.

T thinks this is the most problematic aspect of our system.o Eurpeans:

Dont allow horse-shedding

If it happens, credibility of W is seriously questioned.

Europeans think our system is crazy that we allow lawyers to talk to Ws outside presence of judge.

TRIAL PROCESS

o Our system:

Climactic trial

Only one trial if you forget something, cant go back.o Europeans:

Series of hearings/meetings just like business transactions are made.

EXPERTS

o Our system:

Each side has expert, and experts give opposite opinions

Jury, with no knowledge, decides which expert is right.

Expert Ws like saxophones will play the tune of the person who hires them.

Its possible for judges to hire experts, but not usual for it to occur.o German System:



5/72

Judge hires expert.

No lawyer can talk to the expert.

Expert more likely to be credible.

GERMAN SYSTEMo Advantages:

Cheaper

Faster

Less susceptible to W abuse

Guards against dramatic disparities between lawyerso Disadvantages:

Judges are not independent source of law or protectors of individual rights.

Judges are career civil servants; our justices are justice-seeking demi-gods. (ha)

Process is in the hands of govt bureaucrats (although not entirely, because counsel for both sides is at the elbowof the magistrate.

Easier for govt to control/corrupt than our more independent and objective judiciary.

Fullers concern about pre-judgment of the facts (although that concern is muted because lawyers are co-ppts).

Quality of entire process rests on the quality of the judges (which can be extremely variable).

OUR SYSTEMo Advantages

Partisan advocates will vigorously represent clients.

o Disadvantages

No protection provided for those who choose council poorly.

Rest fact-finding in the hands of largely unsupervised partisan advocates, out of presence of the courts.

Experts and Ws not as credible because of the partisan nature of the procedure and horseshedding.

Equal treatment of like cases is still fundamental.

JOINDER COMPLEXITY

Cases can be aggregated in 2 ways:o Aggregation (joinder)

o Consolidation (judge combines cases filed separately)

TRIAL JOINDER & LITIGANT AUTONOMY

JOINDER UNDER FRCP:

o Rule 18 Joinder of Claims

FR 18(a) A party asserting a claim against any other party (original claim, counterclaim, cross-claim, or third-

party claim) may join as many claims as that party has against an opposing party.

Any claims can be joined against the same party.

No requirement that you join all claims as a matter of joinder rules, but claim preclusion (CL doctrine) requiresthat certain claims be joined.

Legal definition of a claim same T/O (transaction or occurrence) If 2 claims arise out of the same T/O, rule 18 may not require both claims to be brought at the sametime, but the doctrine of claim preclusion operates as a strong incentive to so do (like an unwritten rule ofcompulsory joinder)

o Rule 13(a) Compulsory Counterclaims

FR 13(a) Any claim that D has involving same transaction or occurrence (T/O) that is subject matter of

opposing partys claim, and that doesnt require 3rd parties must be included as a counterclaim during pleading.

Exception Need not state claim if it is already pending in another action.

Asks what claims are so related to the Ps anchor claim that it would be manifestly inefficient or unfair not toadjudicate them together. These must be brought at the same time.



6/72

These claims are usually transactionally related.

Rule 13(b) Permissive Counterclaims

o FR 13(b) a pleading may state as a counterclaim any claim not arising from same T/O that is subject matter of

opposing partys claim.

Rule 19(a) Joinder of Parties Needed for Just Adjudication

o FR 19(a) Persons to be joined if feasible (NECESSARY PARTIES)

A person who is subject to service of process and whose joinder wont deprive court of SMJ shall be joined as a

party if:

In persons absence complete relief cant be given to those already parties

Person claims an interest in the subject of the action and disposition of the case without them would:

o As a practical matter impede that persons ability to protect that interest

o Leave any persons already party to the action subject to multiple or inconsistent obligations

Court can order such a person to be made a party

If joinder of that party would render venue improper, that party will be dismissed from action.

o FR 19(b) Determination by Court when Joinder not Feasible (INDISPENSABLE PARTIES)

When person describes in FR 19(a) cannot be made a party, judge has discretion to determine if lawsuit shouldcontinue without them.

If action is dismissed, it is because absent person is regarded as indispensable.

Rule 20 Permissive Joinder of Parties

o Parties can be joined when there is the same T/O and same common question of fact or law.

(the second commonality requirement is superfluous).

o Rule 20 joinder ispermissive.

Plaintiffs with related claims MAY (but dont have to) join together.

Plaintiffs MAY join multiple defendants (but dont have to).

No person can be made a P against her will.

No person can be made a D against will of Ps.o Covered by Rule 20:

P D P D

P2 D2

Rule 21Misjoinder / Nonjoinder

o Misjoinder is not ground for dismissal.

o Parties may be dropped or added by order of the court on motion of any party or its own initiative at any stage in the

action on such terms as are just.

o Any claim against a party can be severed and proceeded with separately.

Rule 24 - Intervention

Purpose of rule To entitle an absentee, purportedly represented by a party (trustee, beneficiary) to intervene if

he could establish that representation was inadequate.

o FR 24(a) Intervention of Right Anyone can intervene when:

Statute gives unconditional right to intervene, OR

Applicant claims an interest in property or transaction and wants to protect that interest, which is notadequately represented by existing parties.

Application must be timely.o FR 24(b) Permissive Intervention

Anyone can intervene when:

Statute gives conditional right to intervene, OR

Applicants claim or defense have question of law or fact in common,



7/72

o Courts exercise discretion, considering undue delay and/or prejudice to rights of original

parties.o When party relies on statute, executive order, regulation, etc, officer or agency is permitted to

intervene.

Rule 42 Consolidation & Severance

o Allows court to sever properly joined claims

When actions involving a common question of law or fact are pending before the court, it may order a jointhearing or trial of any or all of the matters in issue in the actions; it may order all the actions consolidated; and it

may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.o Permits courts wide discretion to consolidate cases. (Johnson v. Celotex)

(Mosely decisions doesnt guarantee that all claims will actually be tried together.)

o Factors courts use in deciding whether to consolidate under FR 42:

1. Whether consolidation would promote judicial economy and convenience (Katz v. RealtyEquities Corp.)

a. Risk of inconsistent adjudications of common factual and legal issuesb. Burden on partiesc. Length of time required to conclude multiple suits as against a single suit.d. Relative expense of consolidated suit and unconsolidated suit.

2. Fair and impartial triala. Specific risks of prejudice and possible confusion if consolidation allowed.

o

Decision whether to consolidate is very fact specific.

Traditional Joinder

P is master of the complaint; have primary power to decide how case will be handled.o Name who you want

o Bring suit where you want (venue privilege)

o Dont have to sue everyone for every claim; you can pick

o Free to choose legal and factual theories.

Ds have limited opportunity to change the package of the case.

P is master of the complaint, and is permitted to change mind about what claims to bring and Ds to sue, even if that causes greaterexpense to D. (Balty v. Berkely Farms)

If P files in state court and Ds remove to federal court, P can change the complaint (changing claims and Ds) to return to statecourt. (Balty v. Berkely Farms)

o Balty v. Berkely Farms

Facts:

Union member sued union, claiming violation of federal laws in state court.

Ds removed to federal court.

Ps dropped some Ds, added others, and relied purely on state law claims, so it could no longer be infederal court.

Ps ordered by district court to pay legal fees for making the changes.

Held, Ps had prerogative to do what it wanted, and thats OK even if it causes greater expense to others.



8/72

LIMITATIONS on exercise of P autonomy:

o 12(b)(6)

If you assert a legal claim with no basis, it can be dismissed. Limits factual/legal theorieso Rule 11

Limits what you can allege, legally and factuallyo Forum non-conveniens

Can dismiss case if forum is very inconveniento SMJ

D can remove to federal court if it would have SMJ.

Cant remove without SMJ Limits where P can sueo PJ

Minimum contactso Rule 21

Prohibits misjoinder

Limits packaging of certain claimso Venue Transfers (1401, 1406, 1407)

o Erie Doctrine

Intended to avoid outcome determinative effects of bringing suit in either federal or state court

Limits significance of where suit is brought

Litigant Autonomy according to William Rubenstein: (121)o Guarantee of litigant autonomy follows the day in court model

o Benefits:

Each individual can control the legal decisions that govern her life

Can exercise control as sees fit.

Cant be coerced into case she doesnt want to join.

Valuable means of self-definitiono Problems:

Hard to determine its limits

Outcome of initial actions, though not preclusive of future litigations, will be authoritative precedent governingthem.

day in court for one litigant could be denial of others their days in court; only a scrap left for future litigants.

Rewards those who have access to attorneys and courts. Fails to provide satisfactory framework for addressing group disputes.

FR 20 can be interpreted broadly to encompass claims arising from the same T/O. (Mosley v. General Motors although thiscase is at the extreme of FR 20).

Court defers ENORMOUSLY to decisions of Ps lawyer about how to frame the case. (Mosley v. General Motors)

o Mosley v. General Motors (8th Cir 1974) (93)

Facts:

10 individuals suing GM and Union (UAW), claiming violations of civil rights laws, including Title 7& 1981, alleging race and sex discrimination.

Ps claim of discrim in promotion, hiring, termination, etc on part of GM and also claims of failure topursue grievances against UAW.

Ps didnt work together, injured in different ways by different conduct at different locations.

Ps want to certify a class of black and female employees, divided into 2 groups based on the divisionswithin GM (Chevy workers & body workers)

Joinder complexity in this case is due to the fact that the rights and remedies of all parties may not be protectedif not litigated separately (risk of substantive unfairness)

This is because there are significant differences between Ps:

o Race & sex

o Location

o Conduct complained of

If not joined, then no risk of substantive unfairness.



9/72

Held,

Joinder is proper herebecause if there is a company-wide conspiracy, as alleged, than that is the

same T/O. (Despite differences among Ps and differences in conduct of GM and UAW).o Key was that all of the Ps alleged that the discrim arose from same set of discriminatory

policies that had a common genesis and purpose.

Bottom line: Court defers ENORMOUSLY to decisions of Ps lawyer about how to frame the case.

Some issues here:

Conflicts of Interest/not all interests represented:o The union would be as affected by changes to the companys structure as the company would,

so it makes sense to include both parties in the case.o BUT white males and others in the company, who arent included in the suit as parties, may

not have their interests represented (although union is mostly made up of white men, so mayprotect their interests as well).

o I youre the company, it doesnt cost money to agree with an aggressive affirmative action

plan, but it MAY cost if the court orders compensatory damages. Company wants tominimize the payout, but white men want to protect their own promotions. So at the remedystage, white men are not included by any of the parties.

There were a lot of factual differences between Ps claims, so this was prob not the best case forjoinder.

NOTE: Rule 42 allows court to sever properly joined claims, so this decision doesnt guarantee that all claimswill actually be joined together.

In determining whether a particular factual situation constitutes a single T/O for purposes of Rule 20, courts usually pursue a cas-

by-case approach. (Mosley; Greyson v. K-Mart)

o Greyson v. K-Mart (N.D.GA 1994) (97)

Facts:

Ps from different states are suing K-Mart for age discrimination (Fed law) and IIED (state law).

No request for a company-wide injunction, but allegation of company-wide policy of discrim.

District court says there was misjoinder, and severs the claims.

Held,

Joinder not proper under these circumstances, because there was no common Q of law or fact anddoesnt involve the same T/O.

o Because each demotion decision was a discrete act by D; and therefore no common T/O or

common Q.

Because no company-wide injunction sought here, not the same issue of joinder complexity as in Mosley, whereinjunctive relief was sought. Case for joinder here not as strong.

FR 21 permits the court discretion to drop parties that are misjoined under FR 20. (Aaberg v. Acands)

o Aaberg v. Acands (D. Md. 1994) (101)

Facts:

Asbestos case (mass tort) with 1000 Ps joined under Rule 20.

Ps oppose Ds motion to dismiss on grounds that FR21 precludes dismissal on account of misjoinder ofparties.

Held,

That FR 21 permits the court on its own initiative to drop parties that are misjoined on such terms asare just.

This case presents such a situation where dropping (without prejudice) all but the first named P isappropriate.

Joinder would have created efficiencies, however it wasnt necessary because of potentially conflicting

remedies as in Mosley. (unless insolvency would have been an issue).

Rule 20 decisions often come out differently in different cases, as exemplified between Mosley and Grayson.

o The relief requested adds to the potential complexity and need for joinder:



10/72


11/72

Note: 9th Cirs notion at that time was that the judge should have no role in the packaging of a lawsuit. This haschanged.

CONSOLIDATION

FR 42 - Consolidation


When actions involving a common question of law or fact are pending before the court, it may

order a joint hearing or trial of any or all of the matters in issue in the actions; it may order all the

actions consolidated; and it may make such orders concerning proceedings therein as may tend toavoid unnecessary costs or delay.

o Permits courts wide discretion to consolidate cases. (Johnson v. Celotex)

(Mosely decisions doesnt guarantee that all claims will actually be tried together.)


1. Whether consolidation would promote judicial economy and convenience (Katz v. RealtyEquities Corp.)

a. Risk of inconsistent adjudications of common factual and legal issuesb. Burden on partiesc. Length of time required to conclude multiple suits as against a single suit.d. Relative expense of consolidated suit and unconsolidated suit.

2. Fair and impartial trial

a. Specific risks of prejudice and possible confusion if consolidation allowed.


A judge can order a single complaint to be filed in consolidated actions. (Katz v. Realty Equities Corp of NY).

o Katz v. Realty Equities Corp of NY

Judge ordered single complaint to be filed in consolidated actions.

Appeals court found no abuse of discretion in consolidation for pretrial purposes of 12 securitiesactions that arose out of a series of actions allegedly designed to defraud the public.

Not all facts of cases must be the same in order to be consolidated. (Johnson v. Celotex)

o Johnson v. Celotex

Facts: Cases of 2 asbestos workers who worked at same jobsite, both had asbestosis, andrepresented by the same lawyer.

Exposure happened at different times, different occupations, one alive and one dead.

Held,

Consolidation for trial was allowed, despite the factual differences between the 2 Ps.

When commonalities between claims are too attenuated, consolidation will not be allowed. (In re: Repetitive Stress

Injury Litigation)o In re: Repetitive Stress Injury Litigation

Court granted writs of mandamus against pretrial consolidation of 44 cases against Ds that madeor distributed products that allegedly caused array of repetitive stress injuries.

Commonality of the facts found to be very general.

Case law on consolidation is mixed, as evidenced by Katz v. Realty Equities Corp of NY and Johnson v. Celotex

contrasted with In re: Repetitive Stress Injury Litigation.

INTERVENTION

FR 24 Intervention

Purpose of rule To entitle an absentee, purportedly represented by a party (trustee, beneficiary) to

intervene if he could establish that representation was inadequate.



12/72

o FR 24(a) Intervention of Right


Statute gives unconditional right to intervene, OR

Applicant claims an interest in property or transaction and wants to protect that interest, whichis not adequately represented by existing parties.

Application must be timely.

Once this is granted, intervenor has all the same rights as original party.

Courts usually look at FR 24(a) in terms of 4 elements:1. Timeliness

i. Length of delay before seeking to interveneii. Reason for delay

iii. Prejudice to various ppts created by the intervention ornonintervention.

2. Protectable Interest3. Impairment of the interest

4. Lack of adequate representationi. Fulfilled when intervenor shows that representation of his interest

may be inadequate. (Trbovich v. United Mine Workers, S.Ct.)

ii. Burden of making that showing is minimal. (Trbovich v. UnitedMine Workers, S. Ct.)

o Most elements read in flexible way, to achieve as much joinder as possible that is

compatible with efficiency and DP.o Timeliness and adequacy of representation elements are not high hurdles

o FR 24(b) Permissive Intervention


Statute gives conditional right to intervene, OR

Applicants claim or defense have question of law or fact in common,o Courts exercise discretion, considering undue delay and/or prejudice to rights of

original parties.

o When party relies on statute, executive order, regulation, etc, officer or agency is

permitted to intervene.

Judge has discretion; can:

Deny application to intervene if it appears undesirable Can limit participation to something less than the full rights accorded to other parties.

o FR 24(c) Procedure

Intervention by motion

FR 24 shares common phrasing with FR 19.

Federal courts are generally liberal in allowing intervention of parties.o However, when intervenors motion is opposed by existing party of comes late in lawsuit, this becomes more

difficult.

o Intervenor could prolong case by introducing more issues or disturbing existing issues and progress.

Intervener, in order to intervene, must have a right of such direct and immediate character that intervener will either gain

or lose by direct legal operation of judgment.

Mandatory Joinder (Rule 19 Indispensable Parties Rule)

FR 19 defines the boundary of permissible joinder (when a party must be joined, or else the case must be dismissed).

Rule 19(a) Joinder of Parties Needed for Just Adjudication

o FR 19(a) Persons to be joined if feasible (NECESSARY PARTIES)

A person who is subject to service of process and whose joinder wont deprive court of SMJ shall be joined as aparty if:

In persons absence complete relief cant be given to those already parties



13/72

Person claims an interest in the subject of the action and disposition of the case without them would:

o As a practical matter impede that persons ability to protect that interest

o Leave any persons already party to the action subject to multiple or inconsistent obligations

Court can order such a person to be made a party

If joinder of that party would render venue improper, that party will be dismissed from action.

o FR 19(b) Determination by Court when Joinder not Feasible (INDISPENSABLE PARTIES)

When person describes in FR 19(a) cannot be made a party, judge has discretion to determine if lawsuit shouldcontinue without them.

If action is dismissed, it is because absent person is regarded as indispensable.

Rule 19 should focus on practical effects of joinder and nonjoinder, and not be inflexible.

Joint tortfeasors are not indispensable parties without which a lawsuit should be dismissed. (Temple v. Synthes)

o Temple v. Synthes (US 1990) (116)

Facts:

P had surgical procedure, but screws ended up floating in his spine.

P sued manufacturers of plate in federal court, and Dr. and hospital in state court.

Lower court found that Dr. and hospital should be joined as FR 19(b) indispensable parties, withoutwhich lawsuit should not proceed.

Held,

Joint tortfeasors dont have to be joint defendants, and are NOT 19(b) indispensable parties.

Joint tortfeasors arent 19(a) parties, because in their absence, complete relief can still be obtained.o And rights of nonparties wont be affected by the case.

This leads to inefficient outcome, but seems to be correct application of the rule (according to Trangsrud).

2 inquiries under Rule 19: (1) Can complete relief be accorded among existing parties? & (2) Any risk of prejudice to those

absent persons or existing parties? (Eldredge)

o Eldredge v. Carpenters 46 Northern CA Counties JATC (9th Cir 1982) (117)

Facts:

JTAC alleges violations of Title 7 for sex discrim because of the system they use to select applicants toapprenticeship training program. (unrestricted hunting license system)

District court held that the 4500 employees and 60 union locals were indispensable parties under 19(b)but joinder of all of them was impossible.

Held,

The 4500 employees and 60 union locals were NOT indispensable parties.

Although it might be desirable to join all parties in order to eradicate sex discrim in the industry, reliefcould be accorded without them.

There is no prejudice to the absent employers if not joined.

(Trangsrud thinks that this is a badly decided case.)

Rule 19 concept of mandatory joinder forces us to confront the value of litigant autonomy and the rights of litigants (usuallypotential plaintiffs) to control their own day in court.

The only player with an incentive to seek Rule 18 joinder of additional plaintiffs in order to avoid joinder complexity or

inefficiency is the judge. Defendants may want to join additional defendants when:

o Additional defendants could not be brought into the suit (because of jurisdictional factors) and D thinks there is good

chance of convincing the court that they are indispensable.

o D thought the presence of an additional D would reduce or eliminate his own responsible P

Tactical advantages of Rule 19(b) dismissal often drives the use of the rule, rather than the desire to achieve appropriate 19(a)joinder.

In practice, Rule 19 is narrowly construed and infrequently used.



14/72

Focus of a Rule 19 inquiry is on the harm to the existing or absent parties, and NOT to harm of inefficiency on the judicialsystem. (Provident Tradesmens Bank)

4 interests served by the indispensable parties rule (Provident Tradesmens Bank):

1. P has interest in having a forum.2. D may properly wish to avoid multiple litigation or inconsistent relief

3. Interest of the outsider whom it would be desirable to join.4. Interest of the courts and the public in complete, consistent, and efficient settlement of controversies.

o Provident Tradesmens Bank(US 1968)

Facts:

Owner of car involved in fatal crash.

Some of victims of crash failed to sue the owner, whose presence would destroy federal jurisdiction.

Held,

Owner was not indispensable.

Focus was on harm to the absent party, not the systemic harm of duplicative litigation.

Dicta in this case seen as highwater mark for more broad interpretation.

PRECLUSION

Claim Preclusion (res judicata)

o Claims are precluded when they were, or should have been asserted previously. Issue Preclusion (collateral estoppel)

o Issues are precluded only when they were litigated and actually decided.

o Party cannot contest certain factual issues that were actually decided and necessary to the outcome of the first case.

It is a principle of general application in Anglo-American jurisprudence that one is not bound by a judgment in personam in anlitigation in which he is not designated as a party or to which he has not been made a party by service of process. (Hansberry)

CLAIM PRECLUSION

FEDERAL COURT judgment (where jurisdiction based on federal question) is preclusive when:

o (1) Claim was or should have been asserted in first action

Most courts give claim a broad transactional definition.

Legal theories related in time, space, or motivation are regarded as part of same transaction, andtherefore part of same claim.

Phrase should have been brought is generally understood to mean might have filed.

o (2) Same Parties Parties to the 2nd action are same as parties to the 1st (or in privity)

Exceptions to this requirement:o Non-party controlled partys prosecution or defense

o Nonparty who contractually agreed to be bound by the outcome of the litigation

o Nonparty has legal relationship with party (i.e. vicarious liability, survivorship, assignor and

assignee in K claims)o Party acts as fiduciary to represent interest of others; beneficiary is bound.

i.e. class members are bound by judgment involving class rep.

o (3) There was a final judgment in the first action

Limits effectiveness of preclusion as limit on future litigation because most cases settle.

o (4) Judgment in first action was on the merits (including default judgments)

Does NOT include cases dismissed for lack of PJ or SMJ, SOL, or settlements.

Courts cannot give claim-preclusive effect to class action judgments seeking to bind absent classmembers where the original court had no PJ, at least without giving them an opt-out right. (Shutts)

STATE COURT judgment is preclusive:

o According to the law of the RENDERING forum.

There is a split in the circuits as to what law to apply when the judgment is based on a diversity action in federalcourt.



15/72

Claim preclusion cant bind class members when the class representative was inadequate.

Claim preclusion cant bind class members regarding issues beyond the scope of the representation. (Cooper v

Federal Reserve Bank)

Exception to claim preclusion rules: Where Ps have some class-wide and some individual claims that wouldnormally be subject to claim preclusion, but the individual claims would make the class action unmanageable, then theclass action judgment does NOT have preclusive effect. (Cooper v. Federal Reserve Bank)

o Cooper v. Federal Reserve Bank

Facts:

Alleged victims of employment discrim brought class action on behalf ofsimilarly situated employees.

District court found pattern and practice of discrimination in certain paygrades and not others.

Some class mem also brought claims of intentional discrimination.

Other class mem brought separate suit alleging intentional discrim.

D argued that prior class action was precluded based on standard claimpreclusion.

Held:

The class mem subsequent suits for intentional discrim were not barred byclaim preclusion.

Created exception to the general claim preclusion rules for class actions. Reasoning: concern that a preclusion requirement would result in

inundation of the class action with the related individual claims of classmembers, and it would be completely unmanageable.

Result: Class action proceeds on issues that can be tried as a class, and thenlets individual Ps proceed on their individual claims separately.

o This allows certification of class-wide claims without requiring Ps

to forfeit their individual claims.

(Trangsrud think that this is sensible.)

As nonparty preclusive effects of a case expand, impairment of nonparty interests expand.

ISSUE PRECLUSION

o Applies when:

(1) Issue of fact or law is the same in 2nd action as in 1st.

No identity of issues when the legal standard in cases is different.

No identity of issues if there are differences in burdens of proof between the 2 cases.

(2) Issue of fact or law was actually and necessarily decided in the first action.

If there is some ambiguity as to what the jury actually decided then no issue preclusion on any of thetheories.

(3) Same Parties - the target of preclusion was a party to the first action.

Requirement of mutuality abandoned.

Replaced with defensive collateral estoppel (see below)

(4) The issue was essential to the final judgment in the first action

(5) Judgment on the merits (default judgment does not give rise to issue preclusion) (6) Target had a full and fair opportunity to litigate the issue (Parklane Hoisery)

o Issue must be ACTUALLY decided.

Sometimes this is an issue when jury decided the first case

Hypo:

Case goes to jury with three separate theories: strict liability, negligence, and warranty theories.

Jury comes back with a general verdict that D is liable.

None of the three issues (SL, negligence, warranty) are precluded by issue preclusion, because no wayto know which one was actually decided.



16/72

o Defensive Collateral Estoppel

A nonparty to the first case can defend himself with the actually determined facts necessary to the firsjudgment.

Allows a new defendant to use findings from a prior judgment as a shield against the unrelenting P.

Only occasionally useful in complex lit.

o Offensive Collateral Estoppel

Much more controversial; allowed sparingly

Can encourage the wait and see approach of certain Ps.

Hypo to illustrate: S brings negligence claim against Albertsons.

Issue of negligence is actually determined and necessary to the judgment.

G can now use this as a sword against Albertsons; not having to re-prove negligence if that is acommon issue.

Permitting offensive collateral estoppel is based on judicial discretion in federal question cases brought infederal court. (Parklane Hoisery)

4 circumstances in which use of offensive collateral estoppel should be disfavored: (Parklane Hoisery)

o (1) When P seeking to preclude D had opportunity to join prior case but didnt

o (2) When D did not have same incentive in the first case to contest the issue

o (3) When there have been prior inconsistent judgments, some favoring D.o (4) When D did not have procedural opportunities or safeguards available in the first case that

were available in the 3nd case.

Parklane Hoisery (US)

Facts:o D found liable for securities violations in enforcement action by

the SEC.o Disappointed stockholders brought class action, and wanted to use

prior jmt by SEC to estop D from contending that D didnt violatesecurities laws.

Held,

o Offensive collateral estoppel allowed, because :

Stockholders could not join the prior SEC enforcemenaction.

D had every incentive in the SEC action to vigorouslycontest the issue of securities violation.

No prior inconsistent judgments existed.

No procedural opportunities open in the 2nd suit tha

werent available in the 1st.

Issue preclusion is only proper against a prior party if: it involves the same issue, and it was clearly decidedthere is no inconsistent verdict record, and there was a sufficient incentive to aggressively litigate the first timearound. (Hardy)

Hardy v. Johns-Mansville Sales Corp. (5th Cir 1982)

Facts:o Asbestos D lost judgment for $68K.

o At time of 1st jmt, D facing no other asbestos litigation.

o At time of Hardy, facing thousands of cases for millions each.

Held,o Offensive collateral estoppel NOT allowed, because:

Prior inconsistent verdicts

Ds relatively weak incentive to litigate liability becausedidnt foresee wave of catastrophic litigation coming.



17/72

o Court didnt discuss whether Ps trying to use offensive collatera

estoppel could have joined initial suit, although that could beindependent reason to deny it.

There might be a way to make use of issue preclusion in mass tort cases, even if there is a record of inconsistentverdicts. (Lynch-Merrell-National Labs)

Lynch-Merrell-National Labs (1st Cir 1987) (225)

Facts:o Bendectin taken by pregnant moms; allege product caused birth

defects.o MDL panel transferred cases to Judge Reuben in OH.

o Had trial to determine if bendectin is a teratogen (causes birth

defects)o Non-OH Ps had right to go back to other states for trial; some

didnt.o Jury found for D; bendectin not a teratogen.

o Record of inconsistent verdicts.

o Lynch, a P that decided to go back to original state for trial, and D

wants to use prior judgment to dismiss claim.

Held:o Defensive issue preclusion IS allowed, and therefore P loses.

This is despite the fact that there is a record oinconsistent verdicts.

Shows us that there is a way to make use of issue preclusion in mass tortcases, although it would cut against some of our other values.

o Where there are massive aggregations, it can produce differen

pretrial and trial procedures, which can be P or D friendly.o D usually opposed to aggregation; raises stakes and creates

enormous pressure to settle.

This case is among a small handful of cases that has bound a party to ajudgment or factual findings rendered in a case where the person was not aparty.

o Promotes efficiency, finality, and consistency.

o Flies in the face of litigant autonomy.

o Defensive and offensive collateral estoppel are limited in that:

Both can only be applied against a person that was a party to the prior litigation by a nonparty to that litigation.o If we allowed non-party preclusion, then it would create uncertainty.

Non-parties would have to decide if their interests were sufficiently congruent to join in the prior suit; wouldcreate a temptation for non-parties to sue.

o Our current preclusion rules dont create incentives for aggregating factually related claims.

o There is little in the joinder rules that REQUIRE aggregation of factually related claims.

o Our system is NOT designed to give consistency of outcome, but of opportunity and procedure.

o Nonparties to an action cannot, consistent with DP, generally be precluded from re-litigating issues that were decided

adversely to the partys interest in a prior similar suit.

o Nonmutual offensive issue preclusion:

Asymmetry of risk

i.e. multiple claimant anomaly

If you have lots of Ps, then each one can try again, but D cannot if loses in first suit.

o A non-party cannot be precluded by a judgment in suit where they were not a party. (Martin v. Wilks)

Martin v. Wilks (US 1989) (240)

Facts:



18/72

o NAACP suing the city and personnel board on behalf of black firefighters, alleging race

discrimination in hiring and promotion.o Black FF won; city agrees to consent decree with targets for hiring and promotion of black

FF.o White FF seek to intervene, but denied by trial court.

o Later white FF bring suit against city, claiming that consent decree in first suit violates Title 7

Held (Rehnquist),

o White FF are not bound by the earlier consent decree; rejects principle of limited collatera

attack. So they can attack the consent decreeo A non-party cannot be precluded by a judgment in a suit where they were not a party.o This principle comes from the notion of DP (5th am)

o Rehnquist also cite joinder rules 19 and 24; not clear as to whether opinion rests on FRCP or

constitution; could be significant difference.

19(a) analysis: Were white FF party that should be joined in first suit?

CPLT remedy in their absence? Yes

Present party injured by their absence? No

Non-party prejudiced? Yes, arguably. So this is the argument that theyshould have been joined under 19(b) in first suit.

o But were white FF interests adequately represented by the city?

Arguably yes, because city doesnt want to admit discrimagainst blacks. Also, many city officials are white.

BUT, city would be more willing to remedy throughconsent decree/AA program as opposed to damagesWhereas white FF would be more affected by consentdecree.

Dissent (Stevens)o Legal rights of white FF were not the subject of the first suit.

o Although their interests are possibly affected, that is not an adequate reason to join them.

Trangsrud thinks that this system created by the S.Ct. is crazy! (Not the way to run a RR.)o This means that we try Title 7 discrim cases twice.

o NAACP should be allowed to intervene in 2nd suit to defend the consent jmt.

Congress was unhappy with this case, and overruled it by statute.

o 1991 statute, which applies only to civil rights cases of the type in this case says: Whenever

consent decree issued, and non-party has actual notice and opportunity to intervene, the non-party IS bound. (apparently whether they intervene or not).

o Nonparties who choose not to intervene are still bound, so this statute seen as victory for civi

rights.o Statute keeps suit from being tried twice.

o Possible solution to complex joinder issues:

Give notice to interested parties and allow them to intervene; if they dont, they are bound/precluded from

litigating the issue. (This is ALI 1994 proposal)

Make joinder mandatory for interested non-parties. Give judge authority to give notice to interested

non-parties and allow them to intervene. And if they dont intervene, then they are bound.

Similar to Congress 1991 statute overruling Martin v. Wilkes.

If we did this, then non-parties would be bound to common issues, but they would be free toindependently litigate non-common issues, i.e. damages

There are tremendous efficiencies created by this system, and consistency of outcome. (As opposed toMartin v. Wilkes)

Major advantages of this proposal:o Consistency

o Efficiency

o Speed

Expenses of this proposal:o Litigant autonomy (foundational value of our system)



19/72

Ability of Ps to choose lawyer and method of conducting the case is lost.o Unfair forum? Choice of forums may vary

o Affects settlement leverage

Enormous variations among risk tolerance of Ps.

Class lawyers can force class members to accept settlements, but to settleaggregated cases each P must sign onto settlement individually.

o Produces conflicting incentives to settle

Much more at stake for Ds

Not as much $ will be spent litigating 1 case as to 150 (arguably)

o Outcome determinations in immature litigation. The focus here is on the process, not the outcome.

Pitfalls of the proposal:o May conflict with rule 19(a)(2)(i) seem to fit within parties that should be joined if feasible;

so may need to dismiss case if they cannot be joined.

o May not be constitutional underMartin v. Wilkes, because court was not clear whether the

decision was grounded in FRCP or constitutional DP.

Give judges sua sponte power to invoke the joinder rules in order to achieve optimal joinder.

Similar to sua sponte powers over pretrial and trial procedures.

The rules of joinder already provide great flexibility for judges in joinder matters.

Some support in the rules for this suggestion o

Rule 21 states that parties may be dropped or added by order of the court . . . of its owninitiative on such terms as are just.o Rule 7 joinder of real parties in interest

o Rule 19 judicial initiative

Argument against it:o If judges can simply override the joinder decisions of the parties, the fundamental value of

litigant autonomy will collapse.o Concerns of fairness forcing nonparties to obtain legal representation and consent in a case

in a distant forum would not be fairo SMJ, PJ, and venue are still hurdles that may prevent optimal joinder.

o May overstep bounds of judicial discretion, as in Pan Am.

In that case, Appeals Court said that the judges effort to notify all passengersfamilies of a suit arising out of airplane crash was an abuse of discretion.

Suggests there is a limit to judges power to amend parties chosen structure.

Virtual Representation

This is the idea that a nonpartys claims or factual issues can be precluded by a prior jmt in which thenonparty was virtually represented by someone with identical interests.

This concept underlies class actions.

Example of this approach:

o Tyus v. Schoemehl

Facts:

Alderman challenge redistricting plan and lose.

When first suit pending, 2nd suit commenced with state legislators as new Ps

and some of the same Ps.

Ps who were parties to the prior case were claim precluded in second case. Held,

Claim preclusion also ran to the state legislators, on the theory of virtuarepresentation.

o Legislators had precisely the same interests as the alderman, so

they were virtually represented in the first suit.

Preclusion appropriate as long as the balance of equities in the particularcase favored its use.

Factors used to determine if there was a substantial relationship between

parties in first case and parties in 2nd were:o Identity of interests



20/72


21/72

PJ rules for class action Ds are no different than those in most other forms of aggregated lititgation.

PJ rules do apply to Ps as well as Ds. (Shutts)

In voluntary class action, non-resident Ps with actual notice who dont opt out are subject to PJ by consent. (Shutts)

o Phillips Petroleum v. Shutts (US 1985) (294)

Major S.Ct. decision about choice of law

Facts:

33K P class members owned gas leased in TX, OK, LA, KS.

P suing for additional interest owed on late royalty payments.

P sued in KS, because had most generous rates for interest on late royalty payments.

KS court certified a national class, even though most class mem had no min contacts with KS.

S.Ct. reverses and remands

Issues for the court:

Can KS state courts have PJ over P class?

Is it constitutional for KS to apply KS law to claims of non-KS Ps against non-KS Ds?

Held,

PJ rules apply to plaintiffs as well as Ds. (VERY IMPORTANT!)o KS can obtain PJ over absent class members as long as the class members had notice and opt-

out rights and didnt opt out.o If you are a non-rep class mem, have notice, and dont opt out, then that is consent to KS PJ.

In a voluntary class action, non-resident Ps with actual notice who dont opt out consented to KS PJ.

This case does NOT answer:

Whether the same rule applies to mandatory class actions (with no opportunity to opt out).

S. Ct. granted cert in 2 cases where this argument was raised, but dismissed cert as improvidentlygranted.

Trangsrud thinks that court will rule that mandatory nationwide class actions for damages areunconstitutional if no opportunity to opt out. For equitable claims, its more murky.

There is a strong argument for treating state courts and federal courts differently. Trangsrud thinks weshould distinguish between power of federal and state courts with regards to PJ over Ps.

o Limited power of state courts over non-resident Ps, because historically only have authority

over residents with min contacts.o Fed courts, exercising PJ over Ds are held to the same rule, but this could be changed to make

it a test of min contacts with the federal govt.

Diversity Jurisdiction in Complex Cases

1332 Diversity of Citizenship; Amount In Controversy; Costs

o (a) District courts have original jurisdiction over civil actions where the matter in controversy exceeds $75K and is

between:

(1) citizens of different states;

(2) citizens of state and citizens/subjects of foreign state;

(3) citizens of different states and in which citizens or subjects of foreign states are additional parties; and

(4) foreign state as P and citizens of a state(s)o For the purpose of this section, an alien admitted to the US for permanent residence is a citizen of the state where

domiciled.

o In determining amount of controversy, federal courts apply the legal certainty test Unless it can be determined to a

legal certainty that amt in controversy is NOT greater tan $75K, reqmt is satisfied.

1369 Multiparty, Multiforum Jurisdiction (direct quote; not paraphrase)

o (a) In general The district courts shall have original jurisdiction of any civil action involving minimal diversity

between adverse parties that arises from a single incident, where at least 75 natural persons have died in the accident at adiscrete location if



22/72

(1) a defendant resides in a state and a substantial part of the accident took place in another State or otherlocation, regardless of whether the defendant is also a resident of the State where a substantial part of theaccident took place;

(2) any two defendants reside in different States, regardless of whether such defendants are also residents of thesame State or States; or

(3) Substantial parts of the accident took place in different states.

o (b) Limitation of jurisdiction of district courts The district court shall abstain from hearing any civil action described

in subsection (a) in which

(1) the substantial majority of all plaintiffs are citizens of a single State of which the primary defendants are

also citizens; and (2) the claims asserted will be governed primarily by the laws of that state.

o (c) Special rules and definitions for the purpose of this section-

(1) Minimal diversity exists between adverse parties if any party is a citizen of a State and any adverse party is acitizen of another state, a citizen or subject of a foreign state, or a foreign state;

(2) a corporation is deemed to be a citizen of an State, and a citizen or subject of any foreign state, in shich it isincorporated or has its PPB, and id deemed to be a resident of any State in which it is incorporated or licensedto do business or is doing business;

(3) the term injury means

(A) physical harm to a natural person; and

(B) physical damage to or destruction of tangible property, but only if physical harm described insubparagraph (A) exists;

(4) the term accident means a sudden accident, or a natural event culminating in an accident, that results indeaeth incurred at a discrete location by at least 75 natural persons; and

(5) the term State includes the District of Columbia, the Commonwealth of Puerto Rico, and any territory orpossession of the United States.

o (d) Intervening parties In any action in a district court which is or could have been brought, in whole or n part, under

this section, any person with a claim arising from the accident described in subsection (a) shall be permitted to interveneas a party plaintiff in an action, even if that person could not have brought an action in a district court as an originalmatter.

o (e) Notification of judicial panel on multidistrict litigation A district court in which an action under this section is

pending shall promptly notify the judicial panel on multidistrict litigation of the pendency of the action.

1369

o Passed in 2002.

o Loosely based on law review article by Prof Rowe, who assumes that its a good idea to aggregare claims based on samefacts in federal court.

o Requirements under this rule

Minimum diversity

Must be a single accident (at discrete location)

At least 75 deaths

discrete location

Not all parties are citizens of the same state (multi-state component)

If almost everyone involved is from one state, this isnt available ( 1369(b))

Limitations of this rule o It wont solve the problem in product liability cases like Phen Phen, asbestos, etc.

o It will apply only to mass accidents:

Aviation disasters

Terrorism (maybe)

Construction disasters.o Claims based on state law are not always based on the same state law, so it could still be complicated.

Removal statute allows cases to be removed when original action could have been filed in federal court.o But under 1369, removal could be hard because if P chooses state forum, then removal may be impossible because of

no CPLT jurisdiction.o So some cases can be litigated in federal court and state court at the same time.

How to fix this?



23/72

Need flexibility in:o Joinder

o SMJ

o PJ

o Venue

However, to build in flexibility would open federal court up to all sorts of litigation.

This could be solved by building in discretion (as 1369 does in part).o Maybe have a panel of judges to decide these on case by case basis.

ALI has suggested Complex Litigation Panel:o Power to order cases to be transferred to federal district judge (from state court)o VERY powerful discretion, and extreme step.

o Takes autonomy from litigants to decide where to sue.

Obstacles to Aggregating state law claims in federal court:

o Strawbridge Rule

Must have CPLT diversity between all Ps and all Ds to be in federal court.

(This is because the case was NOT narrowly construed.)o Amount in controversy - $75K

This amount must be met for every P individually. (Zahn)

Amount excludes almost all consumer litigation from federal court.

This may also be an obstacle to class actions in federal court, because not all P class mem may meet the $75K

requirement.

Class members cannot aggregate their claims to reach the amount in controversy requirement. (Snyder v. Harris)

In a diversity case, each individual class member must meet amount in controversy requirements. (Zahn)

o This significantly affects the ability of Ps to get to federal court when bringing their class action claims under state law.

o Zahn (232)

Facts: Some property owners had claims more than $75K, and others did not.

Held, Each individual class member must meet amount in controversy requirements.

This rule makes no sense when these cases can be very big.

Prevents some class actions from reaching federal court.

Did 1367 overrule Zahn?o Legislative history of 1367 is perfectly clear that Zahn would NOT be disturbed by the statute.

o Circuits are split on this; most say Zahn not overruled.

o 5th Cir. said it did overrule Zahn. (Abbott Labs)

It isnt clear whether 1367 was in fact overruled; 5th Cir. said it did overrule Zahn. (Abbott Labs)

Abbott Labs (5th Cir. 1995) (349)

Facts:

o [add something here(?)]

Held,

o 1367 did overrule Zahn; and Rule 23 is not an exception in 1367.

How could we change the problems presented here and permit aggregation of state claims in federal court?

o Change the diversity rules

Congress has broad power to do this

i.e. overrule Strawbridge rule and change it to minimum diversity.

This would open up federal courts to state law claims.

Problem may be that it would flood the system with tons of claims.

To remedy that potential problem include a provision about number of parties say you only need min

diversity if there are a certain min number of parties.



24/72

This is the approach Congress took in passing 1335 (Statutory Interpleader), where all that is required to getinto federal court is minimal diversity and $500 amt in controversy.

Interpleader that is not diverse cannot destroy diversity of an action already in federal court.

o Tashire

Facts: Crash suit involving passengers (and survivors, bus driver, truck owner, truck

driver; State Farm=insurance co of truck driver (interpleader in this case), sueseveryone; policy lmts here wld make 1st passenger potentially collect all; SF giveentire policy to ct so ct can equitably divide

I: Ct raises diversity issue sua sponte

H: Ct construes 1335 to require minimal diversity (diversity btwn two or moreclaimants w/o regard to any other rival claimants); any two adverse ptys may not beco-citizens; Const. establishes minimal j/d; cgrs has extended

or restricted this over timeo Pass a specific jurisdictional rule.

Allow all class actions of a certain type in federal court.o Make certain areas of law federal claims (under the commerce clause).

i.e. make asbestos claims federal.

Problem with this is that tort law has historically been left to the states, so it would be very controversial.

o Judicial action to create exceptions to the current rules; change current interpretations. (as S. Ct. suggested in Merrel

Dow)

Federal Q jurisdiction:o BROAD under Article III, which holds that arising under jurisdiction exists as long as a federal question forms an

ingredient of the original cause. (Osborn v. Bank of the US)

o Narrower under 1331, which requires the federal Q to appear on the face of a well-pleaded complaint.

Merrell Dow S. Ct. acknowledged the scope of 1331 should be flexibly interpreted.

o Mass tort case

o Courts should consider a welter of issues regarding the interrelation of federal and state authority and the proper

management of the federal judicial system.

o BUT, opinion did not mention the issue of optimal aggregation or suggest that optimal aggregation should enter into the

equation to calculate 1331 jurisdiction (although it didnt reject this idea, either).

o AND, Merrell Dow can be distinguished, because it didnt involve a case where non-aggregation threatened to create n

inequitable distribution of a remedy among similarly situated tort victims.

Supplemental Jurisdiction

1367 Supplemental Jurisdiction

o (a) In federal Q cases, court have supplemental jurisdiction over all other claims that are so related to the anchor claim

that they form part of the same case/controversy under Art III of the constitution. Such supplemental jurisdiction shalinclude claims that involve joinder or intervention of additional parties.

o (b) In diversity cases, courts shall not have supplemental jurisdiction over claims by Ps made against parties under Rule

14 (3rd Party), 19 (necessary and indispensable), 20 (Joinder of parties), or 24 (Intervention).

This leaves out Rules 20 and 23.o (c) The district judge has discretion to decline to exercise supplemental jurisdiction over a claim if:

(1) claim raises a novel or complex issue of state law

(2) the supplemental claim substantially predominates over the claim or claims over which the court has originajurisdiction.

(3) district court has dismissed all claims over which it had original jurisdiction

(4) in exceptional circumstances where there are other compelling reasons for declining jurisdiction

1367(a) Federal jurisdiction extends to state law claims not otherwise within federal jurisdiction as long as the state lawclaims form part of the same constitutional case as claims with federal Q jurisdiction.

o This has been interpreted as the Gibbs common nucleus of operative fact.



25/72

1367(b) But in diversity cases, supplemental jurisdiction doesnt extend to ppl made parties under certain rules (but excludingRule 23).

o This section limits power of 1367(a); tries to preserve the CPLT diversity and amt in controversy requirements in

1332 on claims based entirely on state law.

o Suggests that state law class actions are still subject to holding in Zahn.

o EXCEPT, Rule 23 is absent from the list of rules included, which would be interpreted to mean that class actions can fall

under 1367(a), and dont need to meet amount in controversy requirements; only minimal diversity and commonnucleus of operative fact.

o EXCEPT again, the legislative history indicates that 1367 not intended to change the jurisdictional requirements of

1332.o Courts have split on this issue.

The only reason that a federal claim would stay in state court is if a D doesnt remove it to federal court.

In federal Q cases, ( 1367(a)), supplemental jurisdiction is as broad as possible under the constitution.

o (Gibbs Anything arising from the same nucleus of operative fact)

This is different when claims are in state court based on state law; there are more obstacles to getting claims aggregated in federalcourt.

[How much do we have to know about abstentions(?) CL 55-58]



26/72

ALTERING THE PLAINTIFFS FORUM & PACKAGING

Factors leading to strategic choice of where to file best combo of:o Substantive law

o Procedural law

o Convenience

o Practical considerations

Docket speed

Judicial attitude

Jury sympathy

Venue Rules & Consolidation

1391 Venue Generally

Diversity Only Not Diversity

(a)(1) (b)(1) Judicial district where and D resides if all D reside in the same state

(a)(2) (b)(2) Judicial district where substantial part of the events giving rise to the claimoccurred.

(a)(3) (b)(3) If neither of the first 2 criteria apply, then venue is proper in any district inwhich any D is subject to PJ at the time the action commenced.(If the events took place outside the US, thats the only time these provisionswould apply.)

o 1391(c) Defines corporate residence as wherever a corporation is subject to PJ

So there are very BROAD venue options for corporate Ds.

Venue Statutory restriction on location of lawsuits; not based on DP.

Its appropriate to allow venue in a place where a substantial part of the events giving rise to a claim occurred.o The Ws are found there, documents there, etc.

Venue statute interacts with aggregation in complex cases.o In mass accidents, it is easy venue approp where the accident took place.

o Harder in cases like asbestos.

All Ds may not reside in same state (so not (a)(1) or (b)(1))

Claims of different Ps may have substantial events in different states (so no (b)(1) or (b)(2))

1404 Venue Change (Proper Proper)

o Allows federal district judge to TFER case from one proper venue to another proper venue upon showing o

convenience.o Should be used infrequently

D bears heavy burden when urging transfer.

P choice of forum given a lot of deference.

1404(a) Ps venue privilege

One justification for Ps venue privilege is to reduce fighting/litigation over non-substantive issues likelocation of suit.

Standard for when court can dismiss case on grounds of forum non conveniens:

o A Ps choice of forum should rarely be disturbed, only when there exists eithe

oppressiveness or vexation to a D . . . out of all proportion to Ps convenience, oconsiderations affecting the courts own administrative and legal problems. (Gulf Oil Corpv. Gilbert)

Factors to decide whether to dismiss under forum non conveniens:

Private factors:o Ease of obtaining evidence in the 2 forums

o Availability and costs of W in the 2 forums

o Other practical problems that make trial of a case easy

expeditious, and inexpensive

Public factors:o Court congestion



27/72

o Local interest in having localized controversies decided at home

o Desirability of having trial in a forum show law will apply o

which avoids unnecessary choice of law problemso Unfairness of burdening citizens of a disinterested state with jury

duty.

o Why so much litigation under 1404? Why do parties want to change?

Diff judges

Who your trial judge is makes a HUGE difference. May never get to the jury, but will get to the judge

Diff local rules Diff jury pool

Diff docket timing

Geographic bias of parties themselves

Possibly different circuits may affect law if split in the circuits; different local precedentso Interesting study:

In cases not transferred, Ps won 58% of time.

In cases transferred, Ps won 29% of time.

1406 Venue Change (Improper Proper)

o Allows federal district judge to TFER case from an improper venue to a proper venue.

1407 Multidistrict Litigationo Allows MDL panel (created in 1978) to transfer case from a proper venue to ANY venue for pretrial purposes.

This is used in cases like Title 7, asbestos, etc.

Powers of federal judge to repackage a lawsuit (formal and informal)

o Rule 17(a)

Permits realignment of parties based on real interest

Allows court to realign parties if they were originally mischaracterized.o Informal power of federal / state coordination

i.e. MGM hotel fire most cases filed in federal court, but some in state court.

Cant bring them into same courthouse

Federal judge calls state judge, and informally coordinate management of claims.o i.e. orders in each proceeding are the same, same timing, etc.

This avoids unnecessary discovery, motions, etc.

This could increase the chance of global settlement.

When a federal case is transferred, transferee judge must use transferor choice of law rules (Van Dusen rule).

o This rule allows P to choose the law applied, as master of the complaint.

A case can be transferred only to a district in which venue would have been proper when case was first filed. ( Hoffman v. Blaski(US 1960) (489)

Literal reading of 1404(a).

Transfer cannot be made to a district that lacks PJ over a D. (Foster-Milburn Co. v. Knight)

CONSOLIDATION

FR 42 - Consolidation


When actions involving a common question of law or fact are pending before the court, it mayorder a joint hearing or trial of any or all of the matters in issue in the actions; it may order all theactions consolidated; and it may make such orders concerning proceedings therein as may tend toavoid unnecessary costs or delay.

o Permits courts wide discretion to consolidate cases. (Johnson v. Celotex)

o Consolidation permitted if there is a single question of fact or law.



28/72

So, asbestos claims in theory can be consolidated based on P of whether asbestos caninjure lungs.

Mosely decision doesnt guarantee that all claims will actually be tried together.


Whether consolidation would promote judicial economy and convenience (Katz v. Realty

Equities Corp.)

Risk of inconsistent adjudications of common factual and legal issues

Burden on parties

Length of time required to conclude multiple suits as against a single suit.

Relative expense of consolidated suit and unconsolidated suit.

Fair and impartial trial

Specific risks of prejudice and possible confusion if consolidation allowed.

Other considerations specific to consolidation of asbestos (or other PL cases) (Johnson v.Celotex; Malcom v. National Gypsum):

Common worksite

Similar occupation

Similar time of exposure

Type of disease

Whether P is living or deceased

Status of discovery in each case

Whether all Ps were represented by same counsel Type of cancer alleged

Difference between joinder and consolidation:

o JOINDER: Covered by Rule 20:

P D P DP2 D2

o CONSOLIDATION: Covered by Rule 42:

P1 D1

P2 D2

o Here, the cases remain separate, although they are generally handled and managed as if the same.

o The difference is important with regard to when certain decisions can be appealed.

Unintended cost of consolidation Interests of some parties may be affected by expanded case.


Under Rule 42, consolidation is an efficient way to handle factually related claims.

Enormous power here.

Largely unreviewable (for the most part) by appellate courts.

When reviewed, it is deferential.

Most often used vehicle for aggregating factually related claims.

A judge can order a single complaint to be filed in consolidated actions. (Katz v. Realty Equities Corp of NY).

o Katz v. Realty Equities Corp of NY (2d Cir 1993) (476)

Facts:

o MDL transfers cases to same judge, who ordered single complaint to be filed in consolidated

actions.o Not all Ps sues all Ds, so judge said that in amended complaint, all Ps should sue all Ds, and

orders every D to cross claim against every other D, and assumes that all answers weredenials.

Held,



29/72

o Appeals court found no abuse of discretion in consolidation forpretrial purposes of 12

securities actions that arose out of a series of actions allegedly designed to defraud the public.

It is typical for appeals courts to be VERY deferential to Rule 42 consolidation decisions. (Johnson v. Celotex)

Not all facts of cases must be the same in order to be consolidated. (Johnson v. Celotex)

o Johnson v. Celotex (2d Cir 1990) (473)

Facts:

Cases of 2 asbestos workers who worked at same jobsite, both had asbestosis, andrepresented by the same lawyer.

Exposure happened at different times, different occupations, one alive and one dead.

Held,

Consolidation for trial was allowed, despite the factual differences between the 2 Ps.

This is typical of many Rule 42 cases, where appeals courts are very deferential to trialcourts.

Considerations:

Common worksite

Similar occupation

Similar time of exposure

Type of disease

Whether P is living or deceased

Status of discovery in each case

Whether all Ps were represented by same counsel Type of cancer alleged

o Although, sometimes appeals courts are not so deferential. (Malcolm)

Malcolm v. National Gypsum (2d Cir 1993) (476)

Facts:o Asbestos case

o 48 Ps v. 28 Ds v. 200 3rd party Ds

o Almost everyone settles, except for 2 Ps

Held,o Court says risk of jury confusion and prejudice between the 2 Ps, and therefore no

consolidation.o Benefits of efficiency can never be weighed against concerns of fairness

BUT court still looks at and balances efficiency and fairness, so which is it?

And how do we measure these things?

o Used same considerations from Celotex above.

This opinion itself is confused; sometimes suggests a balancing test of efficiency and fairness, andother times not.

When commonalities between claims are too attenuated, consolidation will not be allowed. (In re: Repetitive StressInjury Litigation)

o In re: Repetitive Stress Injury Litigation (2d Cir 1993) (482)

Facts:o Consolidation order for 44 cases against multiple Ds for trial and pretrial.

Held,

o Consolidation was improper; Court granted writs of mandamus against pretrial consolidation

of 44 cases against Ds that made or distributed products that allegedly caused array ofrepetitive stress injuries.

o Commonality of the facts found to be very general.

Injuries occurred at different places, jobs, training, devices, mfgs, etc.

Different medical histories of all Ps.

After this decision, MDL panel reiterated that consolidation not approp here for trial because too many

evidentiary differences. (But OK for pretrial).



30/72

Decision to consolidate is fact-specific, and often focuses on factors like judicial economy. (In re Joint E & S Asbestos

Litigation)

o In re Joint E & S Dist. Asbestos Litigation (487)

Facts:

Asbestos claims consolidated between 2 district courts.

2 judges think transferring is OK because of consolidation.

This has little to do with discussion about venue privilege, and more to do with judicial economy.

Held,

Transfer is proper in this case, because of:o Burden of asbestos cases in the courts

o Ps need for prompt recovery

o Ds need to reduce transaction costs

o It will avoid needless duplication in proof and decrease wasteful expenditures of time, energy

and money.Note When private parties try to disturb venue privilege, they face an uphill fight. When judges do it, much less burden.

Case law on consolidation is mixed, as evidenced by Katz v. Realty Equities Corp of NY and Johnson v. Celotex

contrasted with In re: Repetitive Stress Injury Litigation.

A judge may have broad power to consolidate, but can only do that for claims pending in his judicial district.

Issues regarding consolidation:

o What is the justification for giving 2 different sets of process for isolated tort claims and tort claim involving lots of other

people?

Judges are under pressure to go through docket quickly, so they have an incentive to consolidate.o Added expense of consolidation imposes unfair costs.

Full consolidation means that all lawyers have to participate in all aspects of discovery.o Limit to consolidation - Cant consolidate pending claims with unfiled claims.

Applies in cases like asbestos where some injuries not yet realized or when SOL has not run.

CLAIM DISPERSION

o Temporal dispersion

Extending across time

No immediate injury

Used over many years

i.e. asbestos, Ortiz, MGM

Cant consolidate pending claims with unfiled claims.

No procedural device to deal with this.o Geographic dispersion

Claims filed in different states

Some claims in fed ct, some in state ct

There is no way to move cases from state to state or state to federal court, or federal court to statecourt.

Possibilities for moving cases:

o State State : NO

o State Fed: NO

o Fed State: NO

o Foreign State/Fed: NO

o Fed Fed: YES

Forum non-conveniens has some impact, but ltd.

Venue Transfers and the MDL Panel

1407 Multidistrict Litigation



31/72

o Allows MDL panel (created in 1978) to transfer case from a proper venue to ANY venue for pretrial purposes.

This is used in cases like Title 7, asbestos, etc.o Standard under which transfers should occur:

Transfers . . . will be for the convenience of the parties and witnesses and will promote the just and efficientconduct of such actions.

o Panel can act either sua sponte or on motion of a party.

o 3 Prerequisites for transfer under 1407(a):

At least one common question of fact

Commonality requirement not much of a hurdle. Suggestions that common facts must predominate over individual ones.

Conveniences of the parties and witnesses

Convenience-related factors:o Elimination of duplicative litigation

o Reduction of repetitive discovery costs

o Conservation of parties resources

Promotion of just and efficient conduct of the action

Factors:o Number of cases involved

o Reduction of costs

o Ability to coordinate overlapping class actions

o Elimination of conflicting pretrial rulingso Readiness of some or all cases for trial

o Availability and efficacy of other mechanisms for coordinate handling of cases

o Voluntary cooperation

o Unanimous consent or opposition to transfer

Details about MDL panel and procedures:o After pretrial, cases are sent back to original venue for trial.

o Between 800-1000 cases transfered per year.

o 7 judges on MDL panel; appointed by CJ of S.Ct.

Judges rotate on and off the panel.

Judges usually have experience with complex cases, to tend to be pro-aggregation.o No set courthouse.

o Panel decides:

Whether to transfer

Transferee venue

Who transferee judge will be

Usually, someone with experience in complex litigation.o Not much explanation for panel orders issued.

o Panel never decides case, but has enormous power

There is no appeal of an order by the MDL panel; decisions effectively unreviewable.

o Only appeal available is mandamus to the circuit in which the panel sat when it issued the order.

o BUT, appeal has never

complex litigation - transgrud - fall 2004

Documents