Subject Matter Jurisdiction

A) Introduction1) Federal (Non-State) Civil (Non-Criminal) Procedure (Non-Substantive)

(a) Article III – creates Supreme court and option to create fed courts(b) 10th (federalism, delegating power to the states), 5th (due process with fed

cts), 14th Amendment (due process with states) – Due process(c) 28 USC – fed statute(d) FRCP – rules created as prescribed by 28 USC Section 2072

(i) SMJ - Rule 8 of FRCP(ii) Goals – allocation decision authority, generate legally correct outcomes,

efficiency, and fairness2) Adversarial system is method of adjudication characterized by

(a) Impartial tribunal of defined jurisdiction(b) Formal procedural rules

3) Assignment to the parties responsibility to present their own cases and challenge their opponents (“American Rule”)

4) Law v. Equity – Abolished by FRCP Rule 2 (a) Law – damages, jury, common law, kings bench(b) Equity – injunction, judge, decrees, no witnesses, chancery

5) Rules v. Standards(a) Rules - Specifies results in advance +, determinant outcomes +, low decision

costs (less facts/measuring) +, Judicial constraint/Judges have less discretion +, Promotes predictability +, Over-and-under inclusive -, May not match up with overall purpose -, creates exceptions which turn into standards

(b) Standards - Hard to specify all outcomes in advanced -, Less determinant outcomes -, greater decisions costs -, judicial activism/discretion, Less predictable -, matches up with underlying principle +, when further defined turn into rules

B) Constitutional Overview1) Subject Matter Jurisdiction – Article III + Statue for all Fed courts, but USSC

Reasons for SMJ – (1) No authority without it, (2) Ex ante effects incentive to pay attention to details(a) Capron - From the onset, Fed Ct. must state/affirm SMJ, Plaintiff can take

advantage of its own error, A party cannot consent to jurisdiction in Fed. Ct. if no actual diversity exists, Challenges to SMJ may be raised at any time. Limitation is set by Const. and cannot be waived by the parties.(i) Current law – 28 USC §1653 – allows raising defective jurisdiction at any

time by any party (including sua sponte)(b) Types of SMJ

(i) Limited v. General Jurisdictiono Limited – All federal courts, must be positively affirmed via statute &

article IIIo General – trial for state, district for federal

(ii) Original v. Appellate(iii)Exclusive v. Concurrent

o Exclusive - Created by federal statutes or generally cases of state law

(iv)Discretionary – USSC2) Application of the law – diff than jurisdiction

(a) State courts – state law & federal law under Article 6 of Const.(b) Federal courts – federal law & state law bc of diversity jurisdiction

3) Constitutional Overview(a) Article III & Judiciary Act of 1789

(i) Art. III - Creates Supreme Courto Sect 1. Independence for Fed judges (life tenure)o Sect 2. Topics of judicial power

“Cases and Controversies” requirement – no extrajudicial or advisory opinions

Subject matter (3)a. Federal questions, federal lawb. Ambassadors – original jurisdictionc. Admiralty – element of int’l law

Party structures (6)a. US as a partyb. Controversy between statesc. State and citizen of another state (original jurisdiction)d. Citizens of different states (diversity jurisdiction)e. Citizens of same state involving land grantsf. Alien diversity

o Federal courts have limited jurisdiction Must be affirmatively authorized by a statute (28 USC) and

consistent with Article III, Section 2a. 10th Amendment creates enumerated power structure in

Constitution – powers not delegated via Const. are reserved to the States

(b) Marbury(i) SMJ defect: original jurisdiction to issue a writ of mandamus was not

authorized by Art. III § 2(ii) Article III: creates a list that Congress cannot modify because of

separation of powers, defines the outer limits of SMJ(iii)Marbury had statutory jursidction but statuture conflicted with Article

III4) Key features:

(a) In fed crt. requires statutory and constitutional affirmation (Marbury)(b) Parties cannot consent (Capron)(c) Cannot waiver SMJ – Rule 12h(3)(d) Can be sua sponte – Marbury, Mottley, FRCP 12(h)(3)(e) Brought on appeal – Capron, Marbury(f) Raised by plaintiff – Capron

C) Diversity Jurisdiction: designed to give neutral forum to out-of-staters1) citizenship nationality, Domicile resident with the intent to remain

indefinite or legal headquarters, Residence where you are living, Present current existence

2) Complete diversity rule – (28 USC § 1332(a)) To be proper diversity, no plaintiff can be a citizen of the same state as any defendant (implicitly must be citizen of the USA)

(a) Strawbridge – Complete diversity is necessary (via statute not Const.), Const. requires min. diversity;

(b) Mas v. Perry – example of “domicile” v citizen of state, must be both US citizen and domiciled in a state

(c) Usually applying state law – Erie3) Alien jurisdiction – (28 USC § 1332 (a)) – allows for fed jurisdiction in cases

between state citizens and foreign citizens (but maintaining complete diversity)4) Statutory Diversity: 28 USC § 1332 (a)(1)+(2)

(a) In Generalo (1) Citzens of different stateso (2) Citizens of a state and citizens of a foreign stateo (3) Citizens of different statas and in which sibjects of a foreign state

are additional parties(b) Alien diversity (No Alien v Alien)

o Domicile doesn’t matter except for permanent residents of the USo Exception – 28 USC § 1350 for Alien’s action vs. tort using the “law of

nations clause” for Human Rights Cases, No diversity statute, but there is SMJ because of Fed Ques. re int’l/US treaty

o Alien diversity Examples: P(MA)+P(FL) v. ∆ (UK) + ∆ (CT) Yes P(MA) v. ∆ (FR) Yes P(MA)+P(FR) v. ∆ (MA) Yes P(FR) v. ∆ (UK) No P(FR) v. ∆ (UK) + ∆ (CT) No, b/c no alien complete P(MA) + P(FR) v. ∆ (UK) + ∆ (CT) Yes b/c exception via 28 USC

1332(a)(3) P(FR) v. ∆(CT) ??

o Alien considered aliens for purposes of diversity Alien v. Alien is not allowed under 1332 (c)

(c) Permanent Resident amendment – 28 USC § 1332(a)(2)(i) P(FR) but permanent resident of LA v ∆ (LA) NO

5) Determining Citizenship and Rules of Domcile(a) Everyone has one domicile(b) Children assume domicile of parents(c) Retain domicile until you establish a new one(d) Test for new domicile: residence + intent to remain indefinitely (Mas)

(i) Question becomes is moving to another state, not knowing where you are going next, enough to establish intent to remain indefinitely? (Goldsmith says YES)

(e) for foreign citizens, domicile is irrelevant(f) Americans who are domiciled abroad cannont bring diversity action against

US citizens in US because they’re not State “citizens” w/in meaning of §1332(a)(1) – Elizabeth Taylor case

(g) Aliens admitted to the US for permanent resident are citizens of state where domiciled (INSERT STATUTE)

6) Corporations and Citizenship(a) Citizens of the state in which it is incorporated – 28 USC § 1332(c)(1)

(i) P(MA) v. ∆ Corp. (Del +NY) Yes (ii) P(MA) v. ∆ Corp. (Del +MA) No

(b) “Nerve center test” – Hertz Corp. v Friend – established headquarters as domicicile of a corporation(i) for textualism “principal place”, administrative simplicity (mainly

effieciency), Conssitent with legilative history and rejected an “intitial half of gross income” test

(c) Limited partnerships & unicproated assocications – considered individual citizens of multiple states of their members

7) Perfecting diversity – ordering a non-diverse defendant or plaintiff to be dropped from a lawsuite to create complet diversity (Caterpillar Inc)

8) Amount-in-Controversy requirement (only for diversity) – 28 USCC §1332 (Diefenthal)(a) threshold is at the time of filing (b) Each plaintiff must have a claim of more than $75,000 for each defendant

(i) Rare exception via ‘common undivided interests’(ii) INSERT SUPPLIMENTAL JURISDICTION EXCEPTION LATER

(c) A single plaintiff may aggregate separate claims against a single defendant to meet the AIC requirement (the exception is for tag-along and class actions see supplemental jurisdiction)

(d) St. Paul Mercury “good faith” measure except if legal or factual reason for no recovery/damages.(i) Must assume all facts are true and then judged on the merits

o 28 USC §1332(b) – small disincentive to win for more than $75k9) Foresign Sovereign Immunities Acts (FSIA) – When to sue a foreign country 28

§ 1332 (a)(4)

D) Federal Question Jurisdiction (FQJ) 1) est. 1875 for Fed District Courts to ensure rigorous enforcement & review of

federal law2) FQJ is concurrent jurisdiction (federal or state)3) Constitutional Scope of FQJ – federal ingredient - Art III Sec 2

(a) Osborn (1824) – federal ingredient in the action – plaintiff or defense4) Mottley Rule (1908) – 28 USC § 1331 “arise under”

(a) Well-pleaded complaint rule = only look to the part of the complain/pleading surrounding the cause of action and claim for relief

(b) Counterclaim doesn’t count (The Holmes Group) – appears as part of the defendants answer, Rat. = would allow defendants to forum shop via federal counterclaims.

(c) FRCP Rule 11 – pleadings must be in good faith on law and fact5) Appellate Jurisdiction (Mottley II)– case w/in constitutional scope of FQJ b/c

“federal ingredient” and federal statute (now 28 USC §1257)6) Other grants of FQJ

(a) 28 USC 1338 – Exclusive, original jurisdiction re patents/copyrights. No state SMJ for patents.

(b) 28 USC 1345 – USA as plaintiff (usually civil rights cases)(c) 28 USC 1350 – Alien torts statute

E) Removal Jurisdiction – 28 USC § 14411) Must have original SMJ at time of removal (Avitts), assumes concurrent

jurisdiction2) Similar to Capron, disover SMJ defect, can be raised at any time

3) 28 USC §1441(a) – allows defenedt to choose afederal forum (w/in original federal SMJ) if plaintif chose state P cannot remove afterwards

4) All dfendants must agree to removal – USC §1446(b)(2)(a)5) EXCEPTION – If instate via USC §1332(a), cannot remove to Fed

(a) ie: P(NY) (diverse, >75k, state law) v ∆ (MA) and in MA state court cannot remove to Fed bc P(NY) is fine with MA courts

(b) If above was Federal law with FQJ, could be removed6) Tactical choices to prevent removal to Fed

(a) Keep AIC under $75k by lowering damages(b) Add a defendant from P’s state(c) Sue the defendant only on state claims

7) Note about timing: If fed court has jurisdiction as of the date of filing (or date of removal), jurisdiction will continue even if the fed claim drops out. Fed court can choose to remand.

F) SMJ of the Supreme Court (Smyczyk v Genesis) 1) Basics

(a) Appellate jd in fed courts over final judgments(b) entirely discretionary(c) Standard of review is de novo (fresh) for questions of law. For questions of

fact, defernc to the lower courts. Findings of fact must be clearly erroneous.

2) 28 USC §1254 – allows cases from the Ct of Appeals to be reviewed vua writ of certiorari(a) No appellate jurisdiction of state law issues in the S.Ct. – The Sc. Ct. will not

hear a federal case sitting in diversity in order to decide a question of sbstnativr state law.

3) Standard of Review – Rule 10(a) Certiorari from appeals where there is

(i) Circuit splits on important issues(ii) Conflict with appellate decision and state court of last resort decision(iii)Something “far departed from the accepted and usual course of judicial

proceedings”(b) (b) “A state of last resort has decided an important federal question in a way

that conflicts with the dcision of another state court of last resort or US Ct. of Appeals”

(c) (c) State or appellate court has decided an important question that should be settled by the S.Ct. or is in conflict with the S.Ct.

4) Additional Criteria (a) If circuit split, SG filing amicus brief asking S. Ct. to review(b) Criteria from Smyczyk example

(i) ‘entrenched’ circuit split(ii) important & reoccurring question(iii)Case is a clean/perfect vehicle with no fact disputes

Personal Jurisdiction: Needs Statutory (via long-arm) and Constitutional via DP

A) Constitutional Foundations: Full faith v. Due Process1) About power of court to call a defendant into jurisdiction2) Fundamental fairness to hale a defendant into court3) About the power to issue a default judgment against the defendant

(a) Only appealable claim on default judgment is lack of personal jurisdiction4) Full faith (Historically)

(a) Before 14th Amendment DP, remedy under Full Faith & Credit Clause(b) Full faith required judgments rendered in one state to be enforced in

another(c) The only exception to enforcing in another state is if original judgment was

not based on correct personal jurisdiction5) Due Process (NOW)

(a) Pennoyer (1887), PJ tied to Due process under 14th Amend (state), 5th Amend (gov)

(b) Ever case involving personal jurisdiction involves due process(c) 14th Am. DP Clause:

(i) Requires (1) power over ∆ & (2) notice(ii) If absent, judgment not enforceable via Full Faith & Credit (Article IV §1)

B) Pennoyer1) Court conveys concept of sovereignty incl. PJ; States sovereign w/in its borders

Field’s Theory of PJ via Pennoyer

In Personam In Rem Quasi-in-Rem (Pennoyer)

Power Person must be in state

Property in state Property in state

Notice (minimum) Personal service in State

Attach & Constructive notice by publication

Attach & Constructive notice by publication

(a) In personam: power to render judgment over a person by virtue of a person’s presence within a state or his citizenship there(i) personal service cannot be delivered outside of a state

(b) In rem: classic dispute over a status of property, courts control is over property(c) Quasi-in-rem: Jurisdiction using the property re an unrelated lawsuit

(i) Land must be attached from the beginning (Pennoyer)(ii) Judgment can only be enforced against the land – no other assets outside of

the state2) Problems with Pennoyer

(a) Transportation & communication revolution breaks down state borders(b) Growth of corporations (a constructive entity)

3) Fictional Consent was early response (Hess)(a) Hess injured P in car accident(b) Service via the DMV under Mass law, in response to Pennoyer scheme

In PersonamPower Implied ConsentNotice DMV = agent of ∆, sends

the actual notice

4) ∆ can always concet to PJ (not SMJ) b/c individual right under 14th Am.

C) Post-Pennoyer – the shift to standards for Power of the state1) International Shoe : DE corp. headquartered in MO employed a dozen salespeople in WA,

who were authorized only to solicit orders that could be accepted or rejected only by home office. Although it had no permanent office in WA, the sales efforts there generated commissions of at least $31K/yr. WA claimed that the corp. was obligated to contribute to the state’s unemployment compensation fund. Held: WA can exercise personal jurisdiction over corp. b/c of the continuous and systematic nature of its contacts with the forum state. Due Process requires only that “he have certain minimum contacts with [the forum] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’”(a) IntShoe Rejects in personam prong of Pennoyer(b) Establishes idea of Minimum Contacts test (NECESSARY for Due Process)

(i) Extent of contacts: systematic/continuous vs. casual/isolated(ii) Benefits/Burdens: to the extent that a ∆ takes advantage of its activities in a state

and profits from state’s laws/facilities, then it’s fair to impose reciprocal burdens on that ∆.

(iii) Relatedness of contacts to cause of action: contacts must be related to this specific c/o/a

(iv) Service may be presented instate upon an agent whose activities establish a company’s presence—as long as the suit arises out of his activities there.

2) Long-Arm Laws

(a) Legislative response to IntShoe: process from courts of one state may run into others.(b) Jurisdiction over nonresidents is based on general activity in a state—or even an act

outside of the state with effects within.(c) Usually, actions must be committed within the jurisdiction for them to apply.(d) Two forms of long arm statute

(i) Enumeratedo Like Volkswagen or Illinois statuteo Lists all specific situations under which out of state jurisdiction exists. Thus,

one must ask: is statute satisfied and then is constitution satisfied? Supreme court usually only interprets constitutional issue because the statutory issue is state law and should be resolved by state court

(ii) Unenumeratedo jurisdiction extended to full extent of Constitutiono This is only a constitutional question

(iii)first test – long arm statute satisfied?a. state law defines Fed. Ct. power for out of state defendents, but

See Rule 4(e)(1) – some fed. laws have their own long-arm(e) Does the plaintiff’s c/a arise of or relate to ∆ contacts with the forum?(f) Specific Jurisdiction

(i) minimum contacts (Shoe, WWVW, Asahi, McEntyre) via o purposeful availmento Asahi = two tests Is the mere awareness that a product may reach a

remote jurisdiction when put into a “stream of commerce” sufficient to satisfy purposeful availment? (unanswered)

o O’Connor Availment (Majority Rule) – Directing action:(a) substantial connection between ∆ and forum state requires “an action of the

defendant purposefully directed toward the forum state”(b) Placement of product into stream of commerce, without more, is not an act

purposefully directed at a forum state. (i) Placement +:

a. Designing a product for the marketb. Advertising in statec. Establishing channels for advice to customersd. Marketing through distributor

(c) But awareness that the stream of commerce may or will sweep the product into the forum state does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum state.

o Brennan Availment (Minority rule) stream & knowledge is enough bc knowledge = control:(a) Stream of commerce refers not to unpredictable currents but to regular and

anticipated flow of products to retail sale(b) As long as participant is aware that the final product is being marketed in a

forum state, the possibility of a lawsuit is not a surprise.(c) Once goods are placed in stream of commerce, the seller benefits from a

state’s laws regulating and facilitating commercial activity. (d) Benefits accrue regardless of whether conduct is directly in state or

whether additional activities are present.i. See WWV – Stream of commerce but needs intent is

sufficient:ii. Dealer did not purposefully avail itself even though they

could forsee that others could take their cars there, lack of control

iii. Qualifications: dealer would have needed to regularly sold cars to OK, seek to serve – “delivers its products into the stream of commerce with the expectation that they would be purchased by consumers in the forum state”

o Burger King defined jurisdictional analysis for cases arising from contracts ∆ reached “out beyond Michigan and negotiated with a FL

corporation for the purchase of a long-term franchise and the manifold benefits that would derive from affiliation with nationwide organization”

Contract plus analysis: look at all the communications/transactions between the parties before, during, after the K to determine the degree and type of contacts ∆ has w/ forum, apart from the K alonea. Significance of K to PJ: negotiations, post contractual

relationship; consequences; terms; course of dealing; training, signing, negotiations, governing law, who makes major decisions

b. More than the K itself to find purposeful availment and PJ, so forum-selection/choice-of-law clause alone won’t be enough (but it’s a factor)

(ii) reasonableness test (Asahi & Burger King)o 1)burden on the ∆o 2) interests of the stateo 3) interest in obtaining reliefπo 4) federal interests in Int’l relations

esp. when weighing the /state’s interests against Fed. interestsπo 5) state’s interest in effective social policy

More evidence of purposeful availment, easier to satisfy reasonableness

(e) General Jurisdiction(i) six ways

o domicileo place of incorporationo consent

Hess - ∆ can always consent to PJ bc individual right via 14th amendment

consent can be implied – Hess (had in-state agent when crossing borders via statute)

o principle place of business (Perkins) Phillipine corp. moved HQ to OH temporarily. Sued for problems in

Asia is okay.o continuous and systematic (Goodyear & Helicopterous)

Helicopteros - No GJ bc 1) purchases, 2) contract negotiation, 3) payments 4) employee traning is not enough to give rise to continuous and systematic contacts – & unilateral activity of a 3rd person (payments drawn on TX bank) not appropriate for ∆s sufficient contacts to support jurisdiction

(Goodyear)a. Stream of Commerce is limited/inadequate, not continuous and

systematic; only credible for bolstering claims of SJb. Random tires = sporadic, similar to Helicopteros purchasing

i. backed by policy = don’t want to hail int’l companies into the Ct. who just make purchases

ii. precedent = Rosenberg “makes clear that purchases and related trips, standing alone, are not a sufficient basis for a State’s assertion of jurisdiction.”

c. No more quasi in rem for GJ (Cokely)o TAG jurisdiction if you are in the state, TAG Youre it! (Burnham)

Jurisdiction based on physical presence constitutes due process. Keeps alive in personam wing of Pennoyer – all assertionsa. Scalia – Shoe framework was about hauling someone into the

state, and making proxies from presence in the stateb. Brennan - ∆ satisfies minimum contacts b/c he was in the state

and he received the benefits of the state

Notice

1) Consitutional Requirements – requires that reasonable efforts to provide notice be made with regard to persons whose interests are to be determined.

2) Mullane (NY trust company) – “Notice reasonably calculated to inform”(a) NY statute w/ publication in a local newspaper, not enough, when they knew the

names/addresses of many of the beneficiaries. Statute violated beneficiaries Due Process bc it did not provide for means to contact those who could easily be informed by other means.

(b) Although it could have been considered an in rem decision about property, it also dealt with individual rights. Under Pennoyer, in rem PJ was satisfied in MUllane bc property was attached and some notice by publication was given. Court says in rem is really like in personam & higher standard is required. Notice must reasonably alert the other person. Mullane rejects the notion that people should be expected to keep track of property.

(c) “The means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it”

(d) Tension b/n efficiency and notice3) Methods of delivery

(a) First class mail – “recognized as an efficient and inexpensive means of communication”

(b) OK to leave at usual place of abode with a person of suitable age and discretion(c) OK to leave it w/ person authorized by law to receive it (sheriff, registrar, …) (d) posted notice on ∆’s residence – may not be sufficient in all instances.

(i) Jones – “someone who actually wanted to alert…would do more” when you know notice wasn’t received (returned letter)

4) FRCP 4: Service of Processo (a) The summons + the complaint. It states the time within which ∆ must appear and

notifies ∆ that failure to appear will result in default judgment.o (c) parties can’t serve their own complaints; have to get a disinterested partyo (d) waiver of service—carrot and stick to encourage ∆’s to waive service of process

carrot—extra time if you waive stick—pay costs if you don’t waive

o (e) the federal courts get their long arms statutes from the states w/in which the fed’l district court sits (unless otherwise provided for by fed’l law). Alternatively, you can do same service as state in which service is affected. Thus, fed’l courts borrow state long arm statutes.

o FRCP 4(k)(1)(A): federal district court has jurisdiction over the person of a ∆ “who could be subjected to the jurisdiction of a court of general jurisdiction in the state in which the district court is located”; permits a court to borrow for extraterritorial service of process

o

Venue – SMJ? PJ? Venue? need all 3

1) Statutory limitation on the geographic location of litigation to prevent a from suing where πit would be burdensome for the ∆ to appear and defend

2) Venue is not jurisdictional:(a) Statutory rules or common law rules; no constitutional basis(b) Venue is not about court’s power over ∆(c) It is a rule of convenience and may be waived or lost by default(d) It may be agreed in advance (Carnival Cruise)(e) Different from 1441 removal (state fed); 1441 is about fed. gov. saying that it would

rather have fed. than state hear the case(i) removal under this is simple ∆ can only remove if case could have originally been

brough in fed ct.; all ∆s must consent to removal(ii) 1441 (b)(2) – removal exception: no removal when case is based on diversity of

citizenship and ∆ is in their home state (no bias bc home state)3) §1391 (a/b) – choosing the proper judicial district

(a) §1391(b)(1) – if ∆ resides in a district and all ∆s are residents in state, can bring case in that district

(b) §1391(b)(2) – if dustrict related to events In “substantial” and “giving rise to” way = wishy washy

(c) §1391(b)(3) – collapses into PJ if can’t get another venue by other two rules4) §1404: Change of venue

(a) Transfer is only from federal court to federal court(b) Either party may file a motion to transfer(c) §1404a: The court can transfer the action “for the convenience of the parties and

witnesses to any other district or division where it might have been brought”(i) Balance of conveniences must weigh heavily in favor of transferor

o Access to proofo Witnesso another court’s specialtyo Look at forum selection clauses

5) § 1406 – Problem with venue, shall (1) dismiss or (2) transfer6) Proper transferee court: can only transfer to a district in which the action “might have been

brought”—including proper venue and valid personal jurisdiction. The moving party’s willingness to waive objections to venue/personal jurisdiction not enough.

7) Van Dusen v. Barrack Rule: in diversity cases, applicable substantive law in transferor forum follows transfer—regardless of who files transfer.(a) But if venue/jurisdiction was improper in the transferor court (and that’s why the case

was transferred), the substantive law of the transferee court will apply instead.(i) Does Van Dusen apply in federal question as well as diversity—circuit split?

(ii) Transfer does not affect governing law and the choice of law ruls that the original state would have applied

(iii) Ex. John Deere

o Statue of limitations runs out in PA; P files suit in MS with 6 year limitations. P transfers to PA on §1404 because MS was inconvenient place. By going to PA, MS law applied and statute of limitations did not.

o Is this fair? Sure, because if he failed to transfer, the result still would have been the same, it just would have been more difficult for the plaintiff.

(iv) If choice of law is the transferor court under Dusen Rule, then venue in Blaski is purely a question of convenience and plaintiff/defendant does not matter.o But, if we want transfer to be a way to even the field for defendants, then

same result should be relaxed.o Not upholding Dusen Rule in federal questions will help legal

experimentation by testing out different courts interpretations

Forum Non Conveniens1) Unlike transfer of venue, forum non conveniens is an actual

dismissal of the suit and a reassignment in another court via common law (From state→state; state→foreign; fed→foreign; fed to state?)(a) The new forum has the option of taking the case. If

other forum does not take the case, it could come back and claim no alternative forum.

(b) Thus, determine jurisdictional questions before considering FNC motion.

2) FNC arises from common law and predates constitution. The point is to ensure that the trial is convenient

3) ∆ must show that another forum is available—that another forum has subject matter/personal jurisdiction

4) Unlike in §1404 transfer motion where ∆’s consent to venue was irrelevant, in a forum non conveniens motion, ∆ is presumed to consent to venue in alternative forum. Problems of personal jurisdiction in the alternative forum can be solved by stipulation by the moving party to submit to jurisdiction there

5) Gilbert analysis for FNC transfer:(a) Private interest of the litigant

(i) relative ease of access to sources of proof(ii) availability of compulsory process for attendance of unwilling witnesses(iii) Cost of obtaining witnesses(iv) Possibility to view premises(v) Enforceability of judgment(vi) Other considerations that make trial easy, fast, and cheap

(b) Public Interest(i) administrative difficulties(ii) Don’t make jury sit when they have no relation to the case(iii) If the case touches many people, hold it in their view.(iv) Have trial where there is a local interest(v) Have trial where law governs rather than untangle foreign law

6) Piper Aircraft ( Plane crash in Scotland) pg 388(a) Suit in CA state ct. Case removed to CA district Court under §1441. §1404 venue

transfer to Penn. ∆s move for Forum non conveniens on grounds that most evidence is in Scotland, all parties/witnesses in Scotland, wreckage in Scotland. s do not want to πgo to Scotland because the law is very unfavorable there.

(b) Held: the cause could go back to Scotland. The possibility of a change in substantive law should ordinarily not be given conclusive or even substantial weight in the forum non conveniens inquiry; rather, the Gilbert analysis should be conducted and the trial court’s determination is reviewed only upon an abuse of discretion standard

Key take-aways from Piper:1. Alternative available forum?

(SMJ & PJ can be via consent)2. Change in substantive law by

itself is not importanta. exception for NO

remedy AT all3. Presumption in favor of ’s π

choice of forum, but it is weakened for foreign ’s (ties πinto balancing test)

4. Gilbert balancing factors testa. standard of review if

abuse of discretion

(c) Change in substantive law is usually irrelevant for FNC(i) In §1404 transfer, change is between fed to fed court. Thus, Supreme Court can

force second court to apply first’s rule. But FNC is between state court to state court or fed court to foreign country. Thus, US court cannot tell Scottish court which law to apply. Thus, FNC does not involve same law like in §1404.

(ii) Only if the “remedy provided by the alternative forum is so clearly inadequate or unsatisfactory that it is no remedy at all, can the unfavorable change in law be given substantial weight.” (e.g. death, no codified legal remedy, etc.)

(iii) Given that plaintiffs usually choose the best place to litigate, any FNC transfer would involve a detrimental change in law. American courts are always more favorable to foreign courts. Plus, We do not want district courts to conduct choice of law analysis every time.

(d) The point of forum non conveniens is to avoid complex exercises in comparative law. The public interest factors point towards dismissal where the court would be required to untangle problems in conflict of laws and in law foreign to itself.(i) In Piper, if PA district court were to weigh laws, it would have to look at Scotland

laws and then at CA state laws because claim was begun in CA district court and raised to CA fed and then 1404 transfered to PA. This is very inconvenient.

(e) Why sue in US federal court(i) Better substantive laws in fed than in Scotland(ii) No contingent lawyer fees in Scotland(iii) Much more discovery, leading corporation to settle(iv) Collection of damages(v) jury trials

Pleading

1. Purpose of FRCP 1938a. Simplify pleading

i. It’s really just about noticeii. Only need a short statement showing entitlement to relief together with a

certification that allegations are truthful.b. Liberality: let in everything upfront

i. Wide use of discovery makes pleading the facts unnecessaryc. Correct or bad claims with sanction, summary judgment

i. Rule 11 is used to deter fraudulent claims.ii. Rule 56 summary judgment is used to deter unworthy claims

d. Abolish law and equity distinction

2. Rule 1: Just, speedy, inexpensivea. The system does not promote the latter two

3. Rule 2: There shall be one form of action to be known as "civil action."4. Rule 3: Civil Action commences by filing a complaint with the court5. Rule 4: Service of process

a. (e)6. Rule 7: Types of pleadings

a. Complaint and answer; reply to counter claim; answer to cross claim; third party complaint; third party answer.

b. Rule 7b1 – request for court order = motion

7. Rule 8: General rules of Pleading (this is the essence of the new approach to pleading)a. (a) Claims for relief (regular; counterclaim; crossclaim…)

i. (a1) short plain statement of jurisdiction (must meet minimum amt. requirement)

ii. (a2) short, plain statement of the claim entitling relief

iii. Pre-Twombly-Iqbal1. Claim simply needs to entitle to relief. π The court will extract a

violation of law and find the claim from the facts; just throw facts at the court and it will pull out the law. Dioguardi (crazy Italian guy).

a. Survives 12b(6) (which is used to get rid of bad claims) – taking facts in the light most favorable to the , has stated a π πclaim upon which relief can be granted

2. Facts in pleading do not need to constitute a prima facie cause of action; and do not need to specify law. Pleading must only provide sufficient circumstances to give defendant notice of what the case is about. Dioguardi, Doe v. Smith

a. Conley (1955): No 12(B)(6) dismissal unless its “beyond doubt that the plaintiff can prove no set of facts.”

b. Hishon (1984): 12(b)(6) dismissal “only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.”

c. Leatherman (1993) rejects formal heightened pleading standard outside FRCP.

d. Swierkiewicz (2002): Rule 8(a) does not consider “whether a claim will succeed on the merits. . . . [I]t may appear on the face of the pleadings that a recovery is very remote and unlikely but that is not the test.”

e. (Doe v. Smith) - FRCP rejected fact pleading, lowers # of facts to only notice

iv. Twombly-Iqbal Standard– movement from possible/conceivable (Conley & Dioguardi) to plausible

a. Step 1: Accept the factual allegations as true except eliminate legal conclusions & allegations that track the elements

b. Step 2: Take facts, if true, could plausibly give rise to reliefi. context specific inquiry

ii. if facts are equally consistent with legal action and illegeal action, then dismiss

c. Moved from Notice pleading Discovery-worthy pleadingd. Standard gives judges tons of room for discretion before

moving to discoveryi. Policy: Iqbal possibly raises the bar to leap from

pleadings to discover. Summary judgment too late to weed out weak claims b/c discover is too costly. Worry that Conley was too easy and winning settlements.

ii. Normative issue: (1) Illegitimate way to change rule 8 via Supreme Court case decision. Change the rule w/out the formal process. (2) Gives ∆ power in settlement (3) w/ less docket pressure, some get πmore attention (4) are there alternatives to Twombly-Iqbal? (like fee-shifting schemes) (5) catch-22 for civil rights cases b/c can’t find intent until discovery

v. (a3) Demand for judgment (different types may go together); sufficient facts to support allegation.

b. (b) Defenses; deniali. State in short and plain terms defenses to each claim; admit, deny, or state lack

of knowledge of claims; denials should specify which parts of a claim are deniedc. (c) Affirmative defenses: arbitration and award; assumption of risk; contributory

negligence; discharge in bankruptcy; duress; estoppel; failure of consideration; fraud; illegality; laches; release; res judicata; statute of frauds; statute of limitations; waiver; any other matter constituting avoidance or affirmative defense

i. Definition of Affirmative Defense: pleadings that admit the allegations of the complaint but suggest some other reason why there is no right of recover (eg. Statute of limitations); or Pleadings that concern allegations outside of the plaintiff’s prima facie case and so could not be brought in the answer

ii. If not raised in the pleadings, you may not be able to raise later. The further into trial you go, the harder it is to amend later. You must give the plaintiff time to prepare for these defenses (Ingraham; Holds: ∆ cannot wait until judgment to raise statute of limitations/damages)

1. Rule 15 Amended Pleadings2. Rule 60: Relief from judgment for mistake, inadvertence, new

evidenceiii. 8c prevents unfair surprises and notifies the plaintiff of potential issues

that will arise in litigation (Due Process).

d. (d) Failure to deny: assertions in a pleading are admitted if not deniede. (e) Pleadings should be Concise, Direct, and Consistent

8. Rule 9: Pleading Special matters (For Pleadings with mistake and fraud)a. (b) Circumstances regarding fraud and mistake should be asserted with particularity

i. Provide who, what, when, where, why, how of ∆’s actsii. Give enough information to put ∆ on notice that fraud is an issue so that he

can prepare defense.iii. Rule 9 fits within easy requirements of Rule 8; just provide slightly more

information than 8.iv. Denny : Still, there must be more than vague allegations that a corporation’s true

financial picture was not so bright as its reports claimedb. Single out these claims for higher standard to protect reputation; deter frivolous suits;

defend completed transactions; provide adequate notice.

c. (Due Process) Is the cost of making defendants go through discovery too high? Should we require higher standards/more process for fraud allegations

i. Are there a lot of fraudulent fraud claims? It think that fraud is a pretty invidious crime (against most of what an open capitalist economy is about), and I do not think that we want to deter people from prosecuting it too much—especially if fraud is often perpetuated against the poor and uneducated who will not be able to investigate on their own.

9. Rule 11: Signing; Representations; Sanctions (Designed to deter frivolous activities)a. 9a) Signature

i. Pleadings must be signed by attorney; stricken if not signed promptlyb. (b) Representations to the court

i. Pleadings must not harass or cause unnecessary delay or increased costii. New theories should not be totally frivolous

iii. Allegations must have or be likely to have some evidentiary supportiv. Denials of fact must be reasonably warranted

c. (c) Sanctions for violation of (b)i. Either by motion or on court’s initiative

ii. Limited to deter future conduct 1. May include directives, payments to the court, or payments to the

movant for attorney fees2. Sliding scale; eg. circulate court’s opinion on Rule 11 violation to

members of his firm; suspension from practice; requiring him to take continuing education courses; often not money)

iii. Does not apply to discovery requests, disclosures, responses and objections.

Responding to a Complaint

1. Rule 55 (a) = default (doing nothing )a. Default = defendant’s failure to plead or defend in timely fashion. Rule 55(a).

i. Admission of facts pled by plaintiffb. Default judgment = enforceable judgment (Lacey –Mp3 downloading case)

i. Court typically assesses complaint’s sufficiency and damages under 55(b)(2) similar to 12(b)(6) review

1. assesses complaint’s sufficiency and damages under 55(b)(2) – just proving statutory (not actual) damages

c. Setting Aside Default or Judgment under Rules 55(c) & 60(b) i. Default is disfavored

ii. 60(b)(1) – excusable neglectiii. 60(b)(4) – judgment void (e.g. lack of notice or PJ) Pennoyer

2. Rule 12: Defenses and Objectionsa. (a) When presented: serve answer within 20 days after service of summons and

complaintb. (b) How presented (first line of attack to get rid of a case)

i. Every defense to a claim, counter, cross, etc. must be presented in responsive pleading

ii. EXCEPT the following may be made by motion before responsive pleading1. (1) lack of SMJ - Marbury2. (2) lack of personal jurisdiction – Pennoyer etc.3. (3) Improper venue (USC 1391)4. (4) insufficiency of process (defect in “the paper “ - summons and

complaint)5. (5) Insufficiency of service6. (6) failure to state a claim – Iqbal etc.

a. Is there a claim for which relief may be granted?i. Does NOT need to be prima facie claim with sufficient

facts; just needs to be a valid claim.ii. Just need facts sufficient to put ∆ on notice? (Dioguardi

—crazy guy)b. Interpret claim in favor of plaintiff; assume allegations are

truec. Just because insufficient facts may logically follow from

allegations, that is not reason to dismissd. If unsure about meaning of claim, ask for 12e rather than

dismissal. e. Federal Court may often postpone judgment until state court

decides; this is related to Erie7. (7) joinder - failure to join necessary 19a party.

Other Rule 12 motionsc. 12(c) Motion for judgment on the pleadings

i. Made after all pleadings in; a later 12(b)(6) d. 12(d) Converted summary judgment motion

i. Made when matters outside pleadings presentede. 12(e) Motion for more definite statement: if pleading is unclear, move for more notice.

i. Pleadings too vague to provide noticeii. Party must specify defects and desired clarification

f. 12(f) Motion to strikei. “redundant, immaterial, impertinent, scandalous”

ii. Allegations have no connection to controversyiii. Rarely granted

3. Rule 12 Waiver Trapa. Rule 12(h)(1) requires 12(b)(2)-(5) objections to be made in first responsive pleading

or in first motion. See also 12(g)(2).i. lack of PJ, improper venue, insufficiency of process, or insufficiency of

service of process is waived if not raised in pleadingsb. 12(h3) lack of SMJ may be dismissed at any time. .c. Post-answer exceptions for failure to state a claim and failure to join.d. Hunter – You cannot “reserve” a PJ defense to prevent waiver, the policy behind the rule

is not one of notice to the other litigants, but promoting judicial efficiency via consolidation

2. After pre-answer motion, 10 days (Rule 12(a)(4)(A) to:a. Assert the left over Rule 12(b) defensesb. Admit or deny the factual allegations of the complain) (Rule 8(b)(1)(b))c. Affirmative defenses (Rule 8(c))

i. Affirmative defenses in the rule or “any other matter constituting avoidance” that is not raised in the answer is waived. Court stops unfair suprises (Ingraham – cap on damages was an “avoidance”)

1. Court will give ∆ ability to amend complaintd. Counterclaims or crossclaims

3. Rule 12(f) “insufficient defense” = a Rule 12b(6) equivalent for answersa. Answer can be inadequately plead b/c answer is a Rule 8 pleadingb. Policy for possible Iqbal standard on affirmative defenses weighs equity for both π

and ∆ against ∆ only has 21 days to reply4. Rule 15: Amended Pleadings: Party may amend pleading once at any time before a responsive

pleading is served; Otherwise, a party may amend the pleading only by leave of court or consent of other party.

5. Rule 16 Pretrial Conference: expedite the disposition of the action; establish early control fo discover; discourage wasteful pretrial activities; improve quality through preparation; facilitate settlement of case

a. make schedule only after conference

Summary JudgmentI) SJ in general

A) SJ is used to correct for simple pleading. SJ determines whether there is a material factual dispute and hence if there is a reason to go to trial. In SJ, the adverse party may not rest on mere allegations or denials of other party’s pleadings; it must set forth facts showing need for a trial

1) Judge does not weigh evidence for SJ; rather, viewing facts in light most favorable to the nonmoving party, he asks whether there a genuine issue of material fact

2) Rule 56(c): Grant SJ if pleadings show that “there is no issue of material fact” and therefore the only question is for the judge to apply the law to the facts.

Motions – pg1003

12(b)(6) – failure to state a claim – facts in the complaint

12(c) – motion for judgment on the pleadins – facts in complaint and answer

56 – motion for summary judgment – movant’s and non-movant’s materials (but must not be an issue of material fact)

50(a) – motion for judgment as a matter of law or direct verdict – basically post-trial after the evidence has been admitted

B) THREE Types of SJ1) Proof-of-elements SJ motion

(a) Moving party must establish material facts in support of each eement & show there is no disputed issue (can be for claim, counterclaim, ffirmative defense, etc.)

(b) Movant has burden of proof2) Disproof of elements (See Slaven v. City of Salem –Suicidal guy in jail )

(a) Disproving one element via evidence on the record(b) Negates an essential element of the claim(c) Movant does not have burden of proof

3) Absence of proof motion (See Duplantis v. Shell – π did not show any facts re ownership of the board, so ∆ pointing out the absence of evidence (no duty!) was enough)(a) Moving party shows there is no evidence in the record to support he elements of he

claim. Non-moving party then has duty to “show” there is no evidence(b) Movant does not have burden of proof

Ultimate burden

Sum Judge checklist1. ID Substantive law (incl. C-O-L options)2. ID Material fact3. ID proper record & evidence to be

considered (See 56(c))4. Examine if the evidence offered by the

moving party shows that there is no genuine dispute of material fact & is therefore entitled to judgment as matter of law

5. Consider if non-moving party has specific facts in the record that create a genuine dispute of material fact

6. Disposition of the case

o if files SJ motion of proof elements, then points out what has on the recordπ πo If ∆ files, can do either absence of proof or disproof of elements

C) Civil Trial1) Complaint: sets forth claims2) Answer: responds to the claims3) Rule 12b6: test the legal sufficiency of the complaint

(a) Taking facts most favorable to plaintiff, does the claim warrant relief.(b) Only defendant files

4) Discovery: collection of evidence5) Rule 56: summary Judgment:

(a) Test factual sufficiency of claims(b) Both parties file(c) Burden of proof/ production/persuasion

II) Rules 56, 50a, 50bA) Pretrial: Rule 56

1) look for material dispute of fact2) reasonable jury could reach different conclusions

B) Trial: Rule 50a – directed vierdictC) Post verdict: Rule 50b

1) My reject jury verdict because no reasonable jury could have reached that conclusion2) (7th amendent concern)

DiscoveryThreshold to get to discovery has been raised via Twombly & Iqbal

Key tools:1) Interrogatories - Rule 33

(a) Rule 33(b)(3) & (4)2) Request for production – Rule 343) Depositions – Rule 30

(a) corporation: Rule 30(b)(6) – must say what the subject matter will be(b) person: Rule 30(b)(1) – no notice of topic

4) Discovery outside the FRCP

Choice of Law

I) BasicsA) Now 3 Kinds of Law:

1) Substantive (ie Tort, K, Prop)2) Choice of law rule (meta-rules about selecting the governing substantive law)

(a) Modern rule interest analysisis(b) Traditional rule pace of tort

3) Procedural FRCP (court applies it’s own)Klaxon ? and removal – (See Piper)

B) Every court applies its own choice of law rules.1) But note the “renvoi” problem

(a) circular logic – choice of law may tell you to look at another state’s law re the issue, which might include choice of law analysis

II) Horizontal Choice of Law (b/n states)A) The Traditional Approach

1) Prevailed until 1940s, now followed in 10 or so states2) Vested rights territorialism

(a) Place of the wrong, place of the making of the contract, place of the celebration of the marriage, etc.

(b) Public policy exception when foreign law violates “some fundamental principle of justice, some prevalent conception of good morals, some deep-rooted tradition of the common weal.” (Cardozo)

3) Purports to be a rule-based, determinate system that promotes choice-of-law uniformity.

B) Problems with the Tradiational Approach1) Unattractive results

(a) Carroll (AL train case)(i) can’t recover because AL COL is place of injury (or where the right to π

sue, or the c/a arose) rule, applying MS law(ii) Characterization problem arises because this could have been seen as a

K case, and then would have applied different COL & therefore probably diff substantive law

2) “Escape Devices” and manipulation(a) – Characterization problems (tort v. contract, procedure v. substance, etc.) (b) –Public policy exception manipulable

3) Hoped-for uniformity never materialized.(a) –Characterization(b) –Different COL rules in different jurisdictions

C) Modern Approaches1) “Most significant relationship” test – extremely malleable

(a) Contacts-counting + policy analysis2) Phillips v. GM (kid w/o parents bc of blown-up engine case)

(a) judge manipulates the conflict using pubclic policy and renvoi proble to get the result that it wants

3) Paul v. National Life (WV residents; guest of driver case; accident in IN))(a) WV uses trad’l COL rules with public policy exception

(i) Ct. doesn’t use modern COL -- “[I]f we are going to manipulate conflicts doctrine to achieve substantive results, we might as well manipulate something we understand.”

(ii) BUT, Judge belives application of foreign law would have been repugnant to the court and Court applies local law because guest statute violates public policy

III) Vertical Choice of LawA) Pre-Erie & General Common Law (GCL)

1) “the laws of the several states” in the Rules of Decision Act §1652 (RDA) held not to include state common law. thus, federal courts followed their own view of what the “general” common law was or should be(a) Plain meaning argument: “laws” doesn’t mean court decisions because court

decisions aren’t laws but rather mere evidence of laws

(b) Policy argument: federal courts should derive general, uniformly applied commercial laws(i) Natural law view: the idea that there are a priori principles of law waiting to be

discovered by judges through “right” reasoning. Hence, the court states that the law is not what the NY Ct. of App. says, b/c they could have failed to use “right” reasoning. This view of the common law is, in Holmes’s anti-GCL view in Black & White Taxicab, a “brooding omnipresence in the sky.”

(ii) Practical aim = horizontal and vertical uniformity.o Swift v. Tyson regime guaranteed horizontal uniformity among the federal

courts: the USSC’s decision was binding on the lower federal courts (though not the state courts). The hope was that these decisions would be so persuasive that the state courts would follow federal court interpretation of the common law, thus fostering vertical uniformity.

B) Problems with the Pre-Erie Swift regime & GCL1) Changing attitudes toward law: shift from natural law to legal positivism/realism.2) Non-uniformity – what topics for GCL & problems w/ local customs3) Every Fed. Ct. applied GCL differently4) Failure to achieve uniformity: state courts didn’t follow the federal court interpretation

of the common law5) Practical difficulties and unfairness: Swift rule led to forum shopping. If you don’t like

state rule, get into federal court. Unfair b/c parties who are similarly situated except for litigating in different court systems within the same state can be governed by different substantive rules, which undermines the ends of state substantive policies and complicates private planning. (a) Black & White Taxicab : avoided state common law anti-monopoly rule by π

reincorporating in another state and then bringing a diversity action in federal court, which followed “Fed common law”

(b) Holmes dissent: Holmes takes issue here w/ the assumption that the Swift doctrine is Constitutional. Rather than fitting in with the natural law rubric embraced by the federal judiciary (and the Swift court), he is a legal positivist/realist; i.e., law is not found but made—by both judges and legislators. (i) The legal positivist critique is that there is no law except that enacted by a

sovereign; therefore, there was no “general” common law floating out there for courts to find.

(ii) The legal realist critique is that each state Supreme Court is a sovereign authority on the law of that particular state on the same plane as that state’s legislature, in that judges “make” law.

(iii) And to the extent that each state makes the common law w/in its borders, it is an unconstitutional assumption of the powers of the federal courts to decide cases in derogation of state Supreme Court decisions because it impinges on state sovereignty. Two pronged constitutional attack on Swift:o 10th amendment federalism problem (“powers not delegated”): Swift

doctrine tramples state sovereigntyo But even if no Fed problem, Separation of Powers problem: Lack of

affirmative grant of power in the constitution for federal courts to announce “general” common law

o 14th/5th Equal protection: two different laws in one state is against rule of law. Rights should not depend simply on what door you walk into.

o Article VI creates Fed law that USSC interprets and binds all courts, but GCL didn’t bind state courts

C) THE ERIE DOCTRINE1) Consitutionality:

(a) What is unconstitutional is the idea that federal courts could ever be free to interpret general law—even with Congressional authority. (10th Amend)

(b) Entire federal government, including Congress and the courts, lack the power to make law with respect to, say, torts (or other state law areas). This is the federalism holding (“Congress has no power to declare substantive rules of common law applicable in a State” (tort, Ks), therefore, that power is delegated to the states).(i) “Congress has no power to declare substantive rules of common law applicable

in a State” – RDA doesn’t do that (which is why Brandeis doesn’t strike the RDA down). Brandeis points out that there’s no affirmative grant in the Art. I of the Constitution for Congress to do this, and so this is a possible way of framing the constitutional holding of Erie. And if Congress doesn’t have power to do this under the legislative power, how can the courts do this under the judicial power.

(c) Federal courts (but not necessarily the entire federal gov’t, including Congress) lack the power to make law with respect to, e.g., torts (and other state law areas). I.e., even if Art. I gives Congress the power to create substantive rules in diversity cases, the courts don’t have that power. This is the separation of powers holding (i.e., that Congress has the power, but hadn’t delegated its powers to the courts).

2) Using Erie to Make Decisions:(a) An Erie guess – “supreme court predictive approach” appled by fed. ct. using

due care, but state trial court is not bound by the fed. ct.’s ruling only by state appellate/supreme cts OR

(b) Certify Q’s to state supreme ct.3) BASICS

(a) Fed law > state law when it governs, Fed interp of Fed Law > State law(b) State Cts. have last word on state law

D) Federal Specific Common Law1) United States v. Standard Oil Co. (Soldier hurt)

(a) USSC case power via the structure of the Const., but doesn’t want to use it. The issue is for Congress in creating laws to deal with behavior that leads to loss of $ for the US gov’t. Not USSC’s place to create law here

Erie Principles in Six Steps

1. The Constitution is supreme law. See Article VI; Marbury. In cases where it governs an issue, it trumps inconsistent state and federal law.

2. Federal courts must apply federal statutes and treaties in cases where they govern, unless they are unconstitutional. See Erie; Ricoh.

3. Federal courts must apply a legitimately promulgated Federal Rule of Civil Procedure that governs an issue. See Rules Enabling Act, 28 U.S.C. §2072; Hanna v. Plumer.

4. If there is no governing federal law (Constitution, statute, treaty, or Federal Rule) and the issue is clearly substantive, a federal court must apply state law, including state common law rules. This is the holding of Erie. See also Rules of Decision Act, 18 U.S.C. §1652; U.S. Const. Art. III & 10th Amendment.

a. Choice-of-law rules are substantive for Erie purposes; thus a federal court sitting in diversity must apply state choice-of-law rules. See Klaxon.

5. If there is no governing federal law (Constitution,, statute, treaty, or Federal ) and the issue is arguably procedural, use twin aims test

6. In certain limited contexts, federal courts maintain federal common law powers traceable to a governing federal law.

a. Three types: Interpretive, delegated, and structural federal common lawmaking.

b. Post-Erie federal common law differs from pre-Erie general common law in two ways:

i. i. It is ultimately grounded in a statute, treaty, or the Constitution (this is what makes it consistent with Erie);

ii. ii. Because its source is federal law, it is binding on the states under the Supremacy Clause, Article VI.

(b) Rule: Before applying a specific fed common law rule, court must find that a federal interest (via statute or constitution) requires application of federal law(i) Because statute or Const., no 10th Amendment issues, not reserved to the

states

E) Post-Erie “New” Federal Common Law1) Binding on states via supremacy clause:

(a) Interpretive Common law – implicit via fed statute - staturoy intepratation(b) Delegated Common Law – explicit via fed statute - ie FRCP etc(c) Structural Common Law – inferred via structure of Const. - based on

structural inferences from the Const. (ie Standard Oil Co.)

F) Horizontal and Vertical Choice of Law1) Klaxon (breach of K issue, K in NY, Assets & Biz in NY, DE corp., case in DE in Fed.

Ct.)(a) Fed. Ct. in diversity applies both the substantive & COL rules that would be

applied by the state courts in the state that the Fed Ct. sits(b) COL rules must conform to those prevailing in the state otherwise accident

of diversity would disturb equal protection clause b/n state courts & fed cts. that sit across the street from another

2) Ferens (a) Ferens injured in PA, sues in MS fed. ct. for longer state SOL, then seeks and

receives 1404 transfer to PA fed. ct. (i) Note that SOLs treated as substantive under Erie.

(b) Van Dusen held that transferor law applies when defendant seeks transfer.(c) Ferens extends Van Dusen to plaintiff transfers despite forum shopping

implications.(i) Forum shopping no matter what the rule.(ii) Real problem, if there is one, is general jurisdiction?

3) Ricoh (a) Stewart (AL) sues Ricoh (NY) in AL fed. ct. despite forum selection clause

(FSC) for NY; Under AL law FSC is invalid.(b) But remember, federal courts apply federal law when it “governs.”(c) Court holds that 1404 governs the interpretation of contracts in 1404

transfers.(i) FSC is part of 1404’s private interest calculus.

Joinder Rules

Combining defendants, claims, different types of damages, or plaintiffs

4 ways to join claims1. Compulsory counterclaim (13a)

a. All counterclaims arising from the common nucleus must be assertedb. Example: A sues B for injuries out of car accident. B not only thinks that he’s not

responsible, he thinks that A was the one who caused the accident. B has to bring his claim against A in the suit of A v. B.

c. NECESSARILY INVOLVES SAME NUCLEUS2. Permissive counterclaim (13b)

a. One may make a counterclaim that does not arise from same circumstanceb. Example: A sues B for injuries out of car accident. B thinks that A has breached an

unrelated contract. B may join his contract counterclaim to the tort suit, but doesn’t have to.

i. Note that if A has a claim related to B’s contract claim, and B brings the counterclaim, then A’s claim becomes a compulsory countercounterclaim, which he must bring or waive.

c. DOES NOT INVOLVE COMMON NUCLEUS (must have an independent basis for jurisdiction)

3. Cross claims (13g) a. Cross claims may be made against co-parties that arise from the same common

nucleus of either the main claim or a counterclaim.i. Example: A sues B and C for injuries in three way car accident. B and C can

sue each other over car accident, but can’t bring cross claims against each other in relation to unrelated contract dispute

b. NECESSARILY INVOLVES SAME NUCLEUS4. Joinder of claims (18)

a. If there is a valid original claim, counterclaim, cross-claim, or third-party claim, one may join other claims that do not arise from the common nucleus.

b. Once a valid claim is brought against a party, all others may be broughtc. DOES NOT INVOLVE COMMON NUCLEUS (must have an independent basis for

jurisdiction)

5. ∆ can add a non-party for Contribution – 14 a. Erkins v. Case Power - A ∆ may use rule 14 to implead a third party defendant where

the third party defendant is or may be liable to the defendant derivatively or secondarily, and not to join a person who is or may be liable solely to the plaintiff The basis for third party liability is generally contribution or indemnity.

Joinder of Parties1. Mandatory joinder of parties, according to necessity, availability, and

indispensability. Any other joinder is optional.2. Rule 20(a)(1) – Allows plfs to sue together if they assert claims that “aris[e] out of

the same transaction, occurrence, or series of transactions or occurrences; and [if their claims involve] any question of law or fact common to all plaintiffs….”

3. Rule 20(a)(2) – Allows ∆s to be sued together if any claim is asserted against them jointly under the same criteria as above.a. Hohlbein v. Heritage Mutual Insurance Co: involving 4 plfs asserting that ∆

made material misrepresentations to them during separate time periods in separate situations. However, the misrepresentations were the same, ct allowed the action to continue b/c there seemed to be a pattern of misrepresentation.

b. Rule 21 – Misjoinder of parties is not grounds for dismissal, but tests “same transaction or occurrence”. The court can sever a party, or sever any claims against a party, and can occur sua sponte. See rule 42 – court can do trial

severance for “convenience, to avoid prejudice, or to expedite and economize,” for any claim.

4. Note: Joinder rules do not confer SMJ or personal jurisdiction. Fed R Civ P 82.

A) “Leiendecker Rule” for compulsoru counterclaims – Rule 13(a)1) Must be able to bring the counterclaim for it to be waived via res judicata

B) Same transaction or occurrence1) focuses on the underlying events gigving rise to litigation2) NOT legal theory/type of relief3) Can be different state v. federal law pg 616-617

C) Rule 20(a)(1) & Rule 18(a), so if π1 + π2 v. ∆, then π2 can bring additional and unrelated claims against ∆

D) Compulsory counterclaims from Rule 13(a)(1)(A) that don’t meet AIC have SMJ via 28 USC 1367

Supplemental Jurisdiction

I) Gibbs TestA) United Mine Workers of Am. v. Gibbs

1) Both federal and state claims arose from the same series of actions by D. fed’l law claims dismissed.

2) Held: pendent jurisdiction is permissive over state law claims and Article III is not violated by supplemental claim that is unrelated to federal jurisdiction as long as there is a common nucleus of operative facts.(a) satisfies Mottley & Art. III § 2 Clause 1 because it deals w/ original “common

nucleus of operative fact” dealt with a federal statute3) “Same transaction or occurrence” in joinder rules is the same as common nucleus of

operative facts → same circumstances; same questions of law or fact.4) ct. has discretion not to exercise jurisdiction where values of economy, convenience,

fairness, and comity militate against exercising pendent jurisdiction.II) 28 USC §1367

A) Confers supplemental jurisdiction on all state law claims that arise out of the same “nucleus of operative facts” as the original claim that confers original jurisdiction on the federal court.

B) Where the case is founded solely on §1332, supplemental jurisdiction doesn’t extend to any claims by πs against a party joined under rule 14 (adding nonparty ∆ who is liable), 19 (required joinder), 20 (permissive joinder), or 24 (intervention), when supplemental jd “over such claims would be inconsistent with the jd requirements of §1332.” 1) π v. ∆ < 75 + ∆ < 75 is not allowed! (opposite of Gibbs)

C) A court can decline to hear a claim even though it has supplemental jurisdiction.1) Novel/complex state claim.2) Supplemental claim is dominate3) Ct has dismissed all clams over which it has original jd.4) other “compelling” reasons

D) Supplemental Jurisdiction Made Easy 1) If statutory jurisdiction exists over “civil action,” §1367 confers statutory

supplemental jurisdiction over claims that satisfy Gibbs.

2) Exception: If statutory jurisdiction over civil action is based on 28 USC §1332, then no supplemental jurisdiction under (a) over certain claims by (original) plaintiffs.

3) Discretion to dismiss supplemental claims. III) Kroger (no pendant parties when it would defeat complete diversity)

1) A sues B. B impleades C. A crossclaims on C. B drops out and C turns out non diverse. NOT ALLOWED via statute (make sure this is facts of Kroger)(a) Would have been constitutionally OK under Gibbs because the claim arose out of the

same nucleus.(b) But if jurisdiction were allowed, statutory requirement of complete diversity could

be defeated simply by suing only diverse parties and waiting for them to implead.(c) Held: 28 USC 1367(B) v. ∆π 2 via exception

IV) Exxon Mobile Corp. v. Allapattah Services1) Does “diversity case in which the claims of some plaintiffs satisfy the amount-in-

controversy requirement, but the claims of others plaintiffs do not, present[] a ‘civil action of which the district courts have original jurisdiction?’”

2) Yes! “If the court has original jurisdiction over a single claim in the complaint, it has original jurisdiction over a ‘civil action’ within the meaning of §1367(a), even if the civil action over which it has jurisdiction comprises fewer claims than were included in the complaint.”

3) Because court has original jurisdiction over P (PR, >75k) v. D (PA, DE), it has original jurisdiction over a “civil action and §1367(a) is satisfied.

4) Rule: Where the court has original jd over at least one claim in a diversity suit, §1367 extends supplemental jurisdiction to claims of other plfs in the same Art. III case or controversy, whether or not they meet the amount-in-controversy requirement. – Exxon Mobile

5) Court doesn’t kill complete diversity requirement.(a) “Incomplete diversity destroys original jurisdiction with respect to all

claims, so there is nothing to which supplemental jurisdiction can adhere.”(b) “A failure of complete diversity, unlike the failure of some claims to meet the

requisite amount in controversy, contaminates every claim in the action.”

FinalityPocedural system is tradeoff b/n: legal & factual accuracy, fairness, and finality

A) Claim Preclusion – Res Judicata1) If C2 involves

(a) the same parties as in C1 (or their privies), -- side of the “v” doesn’t matter(b) the same c/a as in C1 [i.e. claim in C2 arises from same operative fact, or

same transaction or occurrence, as claim in C 1], and if (c) judgment in C1 was final, valid, and on merits,

then All legal claims that were raised in C1, or that could have been raised in C1, are precluded from relitigation in C2.

2) River Park - “transaction test”

(a) River Park Inc. alleges that Highland Park undermined efforts to develop country club property.

(b) C1: RP v. HP, federal court, federal claim, RP loses on merits(c) C2: RP v. HP, state ct., state law claims.

(i) –Does C1 preclude C2? (d) Court adopts “transaction test” for claim preclusion, and dismisses.

(i) “assertion of different kinds of theories of relief still constitutes a single cause of action if a single group of operative facts give rise to the assertion of relief.”

(ii) Transaction test promotes efficient resolution in C1.(iii)Similar to Cf. FRCP 13(a) – compulsory countrerclaim, and Gibbs test.

3) On the merits(a) 12(b)(6) usually not on the merits (unless legally insufficient, dismissed

with prejudice)B) Same parties?

1) Rule Against Non-Party Preclusion (a) “[O]ne is not bound by a judgment in personam in a litigation in which he is

not designated as a party or to which he has not been made a party by service of process.”

2) Taylor v. Sturgell : Supreme Court rejected virtual representation as a new exception to general rule against precluding nonparties.(a) FOIA lawsuit seeking certain documents from Federal Aviation

Administration. Greg, his friend, had previously brought unsuccessful suit seeking same records.

(b) 3 reasons for rejecting virtual representation: (i) General rule is a powerful presumption against binding non-parties(ii) Would create common law class actions (based on some relationship

b/w the parties), without procedural safeguards in Rule 23(iii) Too open-ended, would involve a multi-factor balancing test to

determine whether an “identity of interests” actually exists. Would create administrative difficulties, when the goal of claim preclusion is to promote efficiency (undermines efficiency).

(c) Friendship/“close associates” not enough to establish non-party preclusion.

(d) Virtual representation differs from the other 7 exceptions because those involve either an express or implied legal relationship between nonparty and party who litigated original case, whereas virtual representation subjects a nonparty to preclusion in the absence of such a relationship.

(e) Closest is proxy (representative agent); court remands to assess whether C2’s plaintiff is C1 plaintiff’s agent

(f) Six exceptions (all some form of legal relationship between party and non-party):(i) Contract(ii) Privy(iii)Representative suits (e.g. class actions)(iv)Assumed control of litigation in C1(v) Relitigation through proxy (agency etc.)(vi) Special statutory scheme

3) Same cause of action? (a) Three tests:

(1) Transactional test (harsher): Separate claims are considered the same cause of action if they arise from a single group of operative facts

Followed in River Park v. City of Highland Park:o C1: federal claim against City for deprivation of property

rights, because engaged in conspiracy to delay permit process so that the bank would foreclose on property and city could purchase cheaply.

o C2: state law claims arising out of same facts Tortious interference with business expectancy Breach of implied k Abuse of government power

o Parties disagreed on which test to use (Transactional/Evidence)

o Irrelevant that the claims rested on different theories of relief (focus is on factual basis) doesn’t matter that plaintiff initially asserted federal claim

of relief (due process), then asserted state claims - both claims rest on same set of operative facts. (“substitution of labels”).

Similar to “common nucleus of operative fact” concept from Supp. J.

Could you establish the second claim without using any facts of the first claim?

Most commonly used test. a. Best serves efficiency (poses greatest risk that claim

will be precluded later, incentivizing plaintiff to assert all claims at once)

b. Most likely to reduce conflicting results c. Most effective at avoiding serial lawsuits (protects

defendant)d. But also puts plaintiff at greatest risk of inadvertently

losing a legitimate cause of action Similar to test for joinder of claims, and to the Gibbs test for

Article III casea. 13(a) (Compulsory counterclaim: same transaction or

occurrence), Gibbs, and transactional share common backdrop: claims arise from groupings of commonality

(2) Same evidence test:o If the evidence needed to sustain the second action is the same

as the evidence needed in C1, then barred. o If different theories of liability, often need different evidenceo Fewer claims are barred when this test is used (less

preclusion)

Problem with the same evidence test: Difficulty: in many cases, some of the evidence

will be identical, so it is difficult to determine whether the evidence is sufficiently similar to consider the claims to be the “same.”

Not a determinative test (subjective) Permits successive litigation Need to spend a lot of time to see if same evidence-

not efficient(3) Primary rights test:

Plaintiff has a separate claim for each right that the defendant has violated.

Hypo: Car accident. Claims (1) negligence (2) battery. 1. Transactional: 1 claim because both claims

arise from a single set of operative facts, from the same event.

2. Evidence: 2 claims, different evidence to prove negligence & battery

3. Primary Rights: 3 claims - personal injury, property damage, lost profits.

2. 3) Final, valid and on the merits? a. Final: pragmatic; most important-trumps all other considerations

Final once a trial court enters a judgment Even if the losing party might subsequently file a post-trial

motion (eg for new trial) or appeal In practice:

If the judgment in C1 is on appeal and C2 is brought in another court, the court in C2 will typically wait until the appeal is complete before determining whether res judicata applies.

Rule 60(b)(5): If C2 is dismissed under res judicata while C1 is on appeal, and then the appellate court reverses or vacates C1, the party can set aside the dismissal of C2. (relief from the judgment)

If law changes while on appeal, the court will apply the new law

b. Valid “Invalid” judgment and not entitled to claim preclusion if the

court issuing the judgment lacked SMJ or PJ, or if defendant didn’t receive proper notice of the lawsuit.

Exceptions: If parties litigated without raising SMJ or PJ, the

judgment is valid.

1. Res judicata applies even where the court in C1 lacked subject matter jurisdiction, unless the district court’s decision to hear the case was a “manifest abuse of authority” or would “substantially infringe the authority of another tribunal.”

c. On the merits Generally: whether the parties had opportunity to litigate on

the merits. Excludes: dismissals for failure to state a claim (12(b)(6)), or

dismissals for lack of subject matter jurisdiction, personal jurisdiction or improper venue (12(b)(1)-(3))

Includes: jury verdicts, summary judgments, judgments as a matter of law, default judgments, arbitrations, settlements (parties had opportunity to litigate but chose settle).

Gray area: statute of limitations dismissals. Trend is to give them preclusive effect.

Increasingly widespread view that claimants should have fewer opportunities to relitigate claims; courts have interpreted “on the merits” to include wide range of dispositions

3. Relationship with compulsory counterclaim:a. For claim preclusion to apply, the plaintiff from the first case needs to

be the plaintiff in the second case, and the defendant from the first case needs to be the defendant in the second case.

Thus, claim preclusion doesn’t apply when original defendant is now the claimant and the claimant in the original case is now the defendant.

b. However, while claim preclusion doesn’t bar the case, compulsory counterclaim rule 13(a) does.

4. Exceptions to claim preclusion (Courts can refuse to apply the doctrine when):

a. Parties have agreed that the plaintiff can split his claim b. Court has expressly reserved plaintiff’s right to bring a second action c. Plaintiff unable to rely on a legal theory or seek a certain remedy

because of subject matter jurisdiction limitations (Plaintiff did not allege cause of action because it would’ve been jurisdictionally improper to do so).

River Park, Inc. v. City of Highland Park tried to use this defense. Plaintiff said federal courts lacked SMJ over state claims therefore claim preclusion doesn’t apply (that they’d dismiss the federal claim & therefore not be able to litigate state claim). Court held this wasn’t true because of supplemental jurisdiction. They never even filed the state claim, not to mention that under 1367 courts have discretion whether or not to keep state claim, and previously have.

d. Judgment in first action was plainly inconsistent with the fair and equitable implementation of a statutory or constitutional scheme

e. Continuing or recurrent harm, and plaintiff given option to sue from time to time for damages

f. Clearly and convincingly shown that the policies favoring preclusion are overcome for an extraordinary reason

B. ISSUE PRECLUSION/COLLATERAL ESTOPPEL 1. Test for issue preclusion:

a. If C2 involves: an issue of fact or law that was actually litigated in C1 (i.e. parties had full and fair

opportunity and incentive to litigate) and actually decided necessary to judgment in C1 in a judgment that was final, valid and on the merits

b. Then the determination in C1 has preclusive effect in C2 between the same parties or their privies (mutuality) even if C2 involves a different claim (unless an exception applies)

c. In some jurisdictions, can be non-mutual (parties do not need to be the same in C1 and C2)

2. Effect of issue preclusion: if collateral estoppel applies, that issue has the effect of being taken as established in C2. No need to introduce further evidence on the issue.

a. But case is not over, as there are still other issues to litigate

3. Difference between claim and issue preclusiona. Claim preclusion applies to entire claims; issues are “smaller pieces

of lawsuits” (eg some legal or factual element of a claim: ownership of property, validity of a contract, family relationship – sometimes broader elements like a party’s negligence or contributory negligence).

b. Claim preclusion bars claims that could have been raised but were not in C1. Issue preclusion bars only issues that were actually litigated.

c. Claim preclusion requires same parties. Non-mutual issue preclusion does not.

d. Claim preclusion can only be used defensively, when a defendant fends off liability by pointing to a finding from a prior action. Issue preclusion can be used both defensively and offensively, when a plaintiff invokes issue preclusion to establish facts to prove its claim (Panniel).

e. Felger v. Nichols (difference between collateral estoppel and res judicata)

C1: Nichols (attorney) sues Felger for unpaid legal fees. Felger says fee unreasonable; legal services bad. Nichol wins.

C2: Felger sues Nichols for malpractice. Nichols claims collateral estoppels. Not barred by res judicata because no compulsory counterclaim rule in Maryland.

C2 malpractice claim barred by collateral estoppel: evidence in case 1 on inadequacy of representation = same issue actually litigated and decided

4. 1) Same issue of fact or law? a. Need to look back at the record to determine which issues were

litigated b. Look out for different states – where different law would apply

5. 2) Actually litigated? a. Not satisfied if:

Not raised in C1 If raised but the litigant did not have a full and fair opportunity

and incentive to litigate the issue Involved a small amount of damages

1. But see Felger v. Nichols: plaintiff barred from suing for legal malpractice, because the issue had been fully litigated in a prior action for unpaid legal fees. Even though the damages were only $345, found that Felger had litigated the facts (produced evidence) of Nichols’ malpractice and lost. But Glannon says might be unfair to preclude Felger from litigating the issue in a lawsuit with greater stakes.

Inconvenient forum b. Admissions are not actually litigatedc. Does not matter for the purposes of collateral estoppel whether the

decision in C1 was correct. Promote finality, not accuracy

d. Can be litigated: In arbitration (a consensual process of private dispute

resolution) (Panniel v. Diaz) Evidentiary hearing

Rule 12(b)(6) motion, summary judgment, judgment on the pleadings, judgment as a matter of law

6. 3) Necessary to the judgment? a. The finding must be legally necessary to the decision. Look out for

general verdicts. b. In cases where only a general verdict is reported, but the plaintiff

asserted two claims, such that we cannot determine which one was necessary to the judgment no preclusion

Or if general verdict for the defendant on a negligence claim in a state that allows contributory negligence as a total bar to recovery cannot determine whether the jury found (a) that the defendant was not negligent, (b) that plaintiff was contributorily negligent, or (c) both

If a court grants SJ or JMOL on a defense before the verdict is rendered, then that defense is not necessary to the judgment

c. Rationale: Want to preclude only issues that the judge has fully, carefully

consideredd. Cambria v. Jeffery : in Massachusetts when contributory negligence

was a bar to recovery C1: J sues C for negligence. Court finds both negligent.

Judgment for C. C2: C sues J for property damage. Cambria is not precluded from litigating the claim that he was

not contributorily negligent. C1 was decided solely on the basis that Jeffery had been contributorily negligent. The finding that Cambria was negligent was unnecessary for the judgment.

Whether or not Cambria was negligent, Jeffery was going to lose because he was contributorily negligent.

Apply a but-for test: If Cambria had not been found negligent, would

Jeffery have won? No. e. Hypotheticals:

J is non-negligent, C is negligent C1: J sues C. J wins.

1. So both the finding that C was negligent and that J was non-negligent were necessary to the judgment

C2: C sues J. Precluded. J is non-negligent, C is non-negligent.

C1: J sues C. C wins. 1. For C to win, she had to have been non-

negligent. So this is essential, and is precluded in C2.

2. Finding that J was non-negligent is not essential.

C2: C sues J p. 1241 hypothetical

f. Alternative holdings: no clear rule Restatement says issue preclusion should not apply to either of

the alternative reasons for deciding an issue May not have been as carefully reasoned as necessary Losing party ordinarily would be unlikely to appeal

(would most likely lose, since there are two bases for the decision against him), but now would have an incentive to appeal in order to avoid issue preclusion effects.

g. In a situation of a default judgment: personal jurisdiction finding will be necessary to the judgment, because a court will only enter a default judgment if it would have PJ

7. 4) Final, valid and on the merits? (see above)

8. 5) In the case of mutual collateral estoppel: same parties or their privies?

a. As in claim preclusion, there is a presumptive rule against precluding non-parties

b. Panniel v. Diaz : C1: Panniel vs. NJM insurance company

Panniel wins on the finding of causation At this point, suing NJM as her insurer

C2: Panniel vs. Diaz and RWJ (also insured by NJM) Presumptively not precluded, since the parties (Diaz

and RWJ) were not parties in C1. Court says Diaz and RJW are in privity with NJM

Exception in Taylor where the nonparty “assumes control” of the suit.

Here, NJM 1. will pay the damages that result2. is effectively in control of C2

a. plaintiff is seeking damages only up to the limit that NJM will pay (identity of interests)

3. if NJM had won in C1, would have been able to use that judgment defensively in C2

But court exercises its discretion not to apply collateral estoppel: exceptions

May have an adverse impact on the public interest

1. Arbitrations will turn into litigations, when their purpose is to make the profess of settling claims more efficient

Unfair to the defendant 1. Diaz and RJW’s insurance premiums might

go up if court allows judgment against them

2. Also not clear that Diaz and RJW would not have litigated the lawsuit more aggressively than NJM did

9. Non-Mutual Collateral Estoppela. Most jurisdictions, including the federal courts, have eliminated the

mutuality requirement in the context of collateral estoppel to some degree.

Non-mutual: a new party can invoke collateral estoppel in C2 against a party who litigated and lost an issue in C1: parties in C2 are not both able to use the C1 judgment to establish an issue in C2.

b. Non-Mutual Defensive Collateral Estoppel Permits a new party in C2 (stranger in C1) to prevent a repeat

party from relitigating an issue on which it litigated against another party in C1.

The new party uses preclusion as a shield. When the party being estopped had fully and fairly litigated

the common issue in the earlier litigation (one bite at the apple)

Blonder-Tongue v. University of Illinois Foundation : Supreme Court endorsed non-mutual collateral estoppel. University “switched adversaries,” sued for infringement of the same patent.

C1: University sues different lab for patent infringement patent found invalid.

C2: University sues Blonder-Tongue for patent infringement collateral estoppel prevents University from relitigating patent’s validity, even though BT was not party to C1 (non-mutual defensive)

Not allowed by some states Winner of an issue in a previous litigation cannot invoke

collateral estoppel affirmatively – cannot deprive a new party of its bite at the apple.

C1: X sues Y, X wins C2: X sues Z: X cannot invoke collateral estoppel

affirmatively on an issue on which it litigated and won. Cannot deprive Z of its bite at the apple.

c. Non-Mutual Offensive Collateral Estoppel Permits a plaintiff to prevent the defendant from relitigating an

issue that the defendant has previously lost in an action with another party.

The new party uses preclusion as a sword (cannot deny something that was found in a previous action – like negligence)

Can also be used by defendants: can avoid liability by preventing the plaintiff from relitigating an issue on which she has previously litigated and lost

Again, collateral estoppel cannot be used against a party that has not previously had an opportunity to litigate the issue (due process issue)

Most states do not allow non-mutual offensive collateral estoppel.

Parklane Hosiery Co. v. Shore : C1: SEC sued Parklane and Parklane lost: proxy

statement found to be materially false and misleading. C2: Shore sued Parklane. Parklane precluded from

relitigating the issue of whether proxy statement is false and misleading. Shore used the finding “offensively” to prevent Parklane from relitigating.

1. Factors in favor of allowing offensive collateral estoppel here:

a. Shore could not have joined C1, because brought by a non-private party. Thus, the court is not promoting “wait and see” by plaintiffs. (if plaintiff could have easily joined the lawsuit, is a reason not to allow offensive CE)

b. Parklane had a strong incentive to litigate the issue in C1, because it was a serious allegation and subsequent lawsuits were likely.

c. Not inconsistent with any prior judgment.

d. No procedural devices were available in C2 that were not available in C1.

Trial courts have broad discretion over when to allow non-mutual offensive collateral estoppel: Rule from Parklane: “in cases where a plaintiff could easily have joined in the earlier action or where, either for the reasons discussed above or for other reasons, the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive collateral estoppel.”

Objections to offensive collateral estoppel: Anti-efficiency: gives plaintiffs an incentive to “wait

and see.” 1. If the second plaintiff had joined the first,

might have lost. 2. But if the second plaintiff waits for the

judgment in the first suit: a. If the plaintiff in C1 wins: can use

that judgment to her favorb. If the plaintiff in C1 loses: not

bound by that judgment, can try a different tactic in her suit

Might be unfair to defendant if didn’t have as strong an incentive to litigate in C1

Problem of inconsistent judgments 1. If a train wreck occurs and there are many

victims: the first 25 judgments, the railroad company wins. On the 26th, the railroad company loses. Next plaintiffs should not be able to use the 26th judgment to estop the railroad company from relitigating.

a. Defendant in this case has a huge incentive to settle, to avoid the collateral estoppel consequences of a judgment

b. Also could promote unfair strategy/manipulation by plaintiffs as to which should go first

d. For a non-mutual collateral estoppel problem: First: does it meet the prerequisites for collateral estoppel

(same issue, actually litigated, necessary to the judgment, final, valid and on the merits)?

4) Then: should court allow (wait and see problems, fairness to defendant/whether had full incentive to litigate, inconsistency with prior judgments, procedural devices available in C2 that weren’t available in C1)?