Hanna v. Plummer

If there is a Federal Rule of Civil procedure (FRCP) on point that clashes with state law, the Federal rule governs.

Policy: The REA authorizes the Supreme Court to create the FRCP so the Supreme court would not overrule their own rules. 

World Wide Volkswagen

(PJ)

Under World Wide, Foreseeability as mere likelihood a product will contact a forum state does not satisfy purposeful availment BUT foreseeability that actions will bring the defendant into court in the forum state does. 

What section is diversity citizenship? List the elements of that diversity section. 

§1332

(1) Amount in controversy over $75,000

(2) Citizens of different states

(3) Citizens of a state and citizens of a foreign state

Transfer 1404 (a)

A district court may transfer a claim to another district court as long as it could have been brought there in the original claim. 

* When PJ & Venue is proper.

* Case-by-case discretion in deciding whether to transfer.

Transfer 1404(b)

Upon discretion of the court any civil action may be transferred from the division in the same district.

When PJ and Venue is proper. 

Forum Non Conveniens

(Piper Aircraft)

A district court may dismiss the case because there is a more appropriate venue. Transfer is not available because the more appropriate court is in a different judicial system. 

Rule in Piper: 5 Scottish people were killed in airplane, CA was inappropriate forum. 

Quasi In Rem

Action against the nature of attachment.

(1) Interest/claims to a property against a finite group of individuals.

(2) Claims against a defendant through the defendant’s property in the forum state 

* This is only useful if you can’t get PJ over defendant. 

Where an object or piece of land is the subject of the law suit. Over real property.

(Real Property is the subject of the lawsuit.)

(1) Physical Presence in the state (Pennoyer)

(2) International Shoe

(a) Minimum contacts with the state

(b) fair play and substantial justice

(3) Waiver

(4) Consent

(5) Necessity (Shaffer) 

(1) Burden to the Defendant

(2) Interest to the Plaintiff

(3) Forum state’s interest

3 Prong Test for Purposeful Availment

(1) Defendant acts intentionally

(2) the act is expressly aimed at the forum state (Hanson)

(3) Causes harm, brunt of harm which is suffered and D knows or should have known about the likelihood of harm (World Wide)

Rule for Hanson v. Denckla?

(PJ)

The defendant must do something to purposefully avail himself of the laws and protection of the state.

*Unilateral activity cannot be a contact

* Choice of law does not determine PJ alone. 

Pennoyer v. Neff

Four Traditional Bases to get PJ:

(1) Physical Presence in the State when served 

(2) Domicile/Residence

(3) Property (Attached properly)

(4) Voluntary appearance (Consent)

International Shoe

(basic rule of law)

A person must have such minimum contacts with the state that requiring him to appear would not offend fair play and substantial justice.

No contacts or casual/isolated contacts and not related to cause of action

Personal Jurisdiction?

No Personal Jurisdiction

Sufficient Single Act or Continuous Acts related to the cause of action

Personal Jurisdiction?

Specific Jurisidiction

Specific Jurisdiction is when jurisdiction can only be exercised over causes of action stemming from the particular contact in question.  

Continuous and Substantial Acts not related to the cause of action. 

Personal Jurisdiction?

General Jurisdiction

General Jurisdiction is when the contacts are continuous and substantial but do not stem from the cause of action in the claim. 

Majority view: O’Connor- Purposefully direct/design its product to the forum state. [goes beyond mere “awareness”] 

Minority view: Brennan- mere awareness that the product might end up in the forum state is enough as long as it comports with fair play and substantial justice. 

How does a Corporation establish General Jurisdiction?

(part of PJ)

Nerve Center and State of Incorporation

Nerve Center is where the corporation main people are located & where they make their major decisions.

Burger King Rule?

(PJ)

Two Part test:

(1) Minimum contacts and (2) Fair Play and Substantial Justice

Defendant has to show that defending the case is so gravely difficult and inconvenient that they are at a severe disadvantage in the litigation. 

28 U.S.C. §1367(a)

(Supplemental Jurisdiction)

If Plaintiff has both State and Federal claims, the federal court has the discretion to combine them and hear them all at once as long as they don’t fall under b & c of this statute. 

28 U.S.C §1367(b)

Exceptions to §1367(a) for diversity cases include any case involving:

(1) Rule 14- 3rd party Impleader

(2) Rule 19- Compulsory Joinder

(3) Rule 20- Permissive Joinder

(4) Rule 24 of FRCP

(No supplemental Jurisdiction for these types of cases)

28 U.S.C §1367(c)

(Supplemental Jurisdiction)

No supplemental Jurisdiction over:

(1) claims that raise a novel or complex state issue

(2) Claims that substantially predominate Federal claims

(3) No original federal claim still alive after dismissal

(4) exceptional circumstances

United Mines v. Gibbs

(SMJ)

(1) Federal claim must qualify for original federal SMJ

(2) Federal and State claim must derive from CNOF  (Common Nucleus of Operative Fact [CNOF]).

What is the Strawbridge Rule?

Complete Diversity- each of the Plaintiff’s are diverse from each of the Defendant’s.

Constitutional diversity (Minimum diversity)- one Plaintiff must be diverse from one defendant

Congress can bypass complete diversity via statute.

Policy: Complete diversity limits federal jurisdiction

Long Arm Statutes? What kind of Actions are typical in Long Arm Statutes?

A long arm statute is a statute that grants PJ over persons not physically present within the state at the time of service.

(Think of as a remedy when states can’t get PJ through constitutional limits.)

Usually include:

(1) Presence in the Forum State when service was made (Burnham)

(2) Domicile/Residence 

(3) Tortious Acts within the State 

(4) Consent to be Sued in the State

(5) Driving a Car in the State

(6) Out of State Acts with in State Consequences (Gray v. American Radiator)

(7) Conducting Business in Forum State

(8) Domestic Relations (Kulko)

Asahi Metal v. Superior Court

(PJ)

When the minimum contacts test is satisfied, but at an arguably low threshold, and unfairness is very high then we have a demonstration of the Fairness and Substantial Justice prong out weighing the minimum contacts prong. 

Policy: This holding creates a distorted incentive to prevent injuries. Product manufacturers are not held responsible since the product was sold to several “middle man” manufacturers and had multiple avenues of reaching the U.S. 

Helicopteros

(PJ)

If a cause of action does not arise out of, or is not related to, the defendant’s contacts with the forum state, general jurisdiction is not warranted. 

What is Personal Jurisdiction? What are the 3 types of Personal Jurisdiction?

Personal Jurisdiction is the assertion of power over a non-resident defendant to defend a lawsuit within the boundaries of the forum state. A state cannot assert judicial power over a non resident outside its boundaries w/o PJ. 

Three Types of PJ:

(1) In personam Jurisdiction- deals with rights of individuals

(2) quasi in rem jurisdiction- property as a basis fro jurisdiction in an in personam action (recovery limited to value of property)

(3) in rem jurisdiction- determination of the status of property

What is the 14th Amendment Due Process Clause?

The due process clause of the 14th amendment forbids states from depriving any person of their right to life, liberty, and property, without due process of law. 

Service of Notice is one way to allow that every person gets there due process rights. What does Service of Notice include for in state citizens opposed to Out of state citizens?

Service of Notice (In state citizens):

(1) Notice by Publication

(2) Delivery in Person

(3) Attachment of Property (properly attached)

Non resident individuals:

(1) voluntary appearance

(2) proper attachment of land

(3) Presence in State (and delivery in person) - still good law

What is a direct attack?

A direct attack is an appeal to judgement in the same proceeding as the one in which the judgement was made. 

What is an collateral attack?

A collateral attack is when a judgement entered in one jurisdiction may generally be enforced in another. 

Ex. If State 1 enters a judgement against D, D’s property in State 2 (or wages owed him in State 2) may be seized to satisfy the earlier State 1 judgment. 

Hess v. Palowski

(PJ expanding the bases of PJ)

State may legislate that the use of its highways, by any non-resident motorist, automatically assigns a pre-appointed agent (usually the DMV) within the state to receive notice for suits arising out of the use of cars on its highways. 

Basically: If a non-resident drives in the forum state then that state can impose a rule that says the motorist agent is the DMV and it can be served on the non-resdient motorist behalf. 

Specific Jurisdiction

(part of PJ)

Forum state may exercise PJ over non-resdient individuals over suits that arise out of in state activities.

What are the two types of Long Arm Statutes?

(PJ)

(1) Enumerated Acts- deals with specific types of contacts (tortious acts in state,business contacts…etc) 

(2) Constitutional Max Statutes- allows state courts power up to the limits of the due process clause.

Gray v. American Radiator (tortious act in forum state)

(PJ)

RULE: Indirect contact of the defendant’s product with the forum state via 3rd party or middle man may be required to defend in the state through minimum contacts test. (stream of commerce)

McGee v. International Life (old man in CA life insurance case)

(PJ)

A sufficient single contact with the forum state can make the nonresident defendant required to defend in the forum state arising from that activity.

Kulko v. Superior Court

(personal jurisdiction)

Merely causing an effect in the forum state without purposeful availment will NOT support PJ. 

Perkins v. Benguet

(personal jurisdiction)

 Continuous and systematic contacts within the forum state which are sufficiently substantial but are not related to the cause of action will make PJ. (General Jurisdiction)

Policy: The continuous and systematic contacts create a “defacto" presence in the forum state and make it fair to hold the nonresident defendant accountable in the forum state. 

Continuous and systematic contacts = defacto presence in the state and make it fair (Policy) sp & sj

Shaffer v. Heitner

(Personal Jurisdiction)

Quasi in rem jurisdiction over a defendant may not be exercised unless the defendant has such minimum contacts with the forum state that in personam jurisdiction could be exercised over him. 

Due process, FP & SJ , & minimum contacts = Shaffer

Harris v. Balk- (case before this one)- allowed garnishment-based actions that are no longer allowed post-Shaffer. 

Burnham v. Superior Court (ex wife served ex husband while he was visiting kids in CA)

Personal Jurisdiction

Assertions of PJ over a defendant voluntarily present in the forum state, via service of process, is constitutionally acceptable method of exerting PJ for all causes of action w/o regard to the minimum contacts test. 

Rule 4(k)(a)?

(personal jurisdiction)

a federal court can establish PJ only to the extent the state court can. 

What is Subject Matter Jurisdiction (SMJ)?

Types of SMJ

(1) Federal SMJ - Party Based Jurisdiction (Diversity) v. Claim Based Jurisdiction (Federal Question)

(a) Article III created the Supreme Court and gave congress the power to create lower federal courts and their SMJ.

(2) State SMJ- constitutionally granted; have the power to hear federal claims unless the claim is exclusive to federal court

What is the “deeming clause” under §1332?

An alien admitted into the U.S. as a permanent resident is considered a citizen of the state they are domiciled in for diversity purposes. 

Explain the general rule of “aggregation of claims” (when more than one claim exists) in order to meet the amount in controversy requirement. 

(1) Single Plaintiff CAN aggregate against a single defendant.

(2) Single Plaintiff CANNOT aggregate against multiple defendant’s, UNLESS the defendant’s are alleged to be jointly liable. 

(3) Multiple plaintiff’s CAN aggregate claims only if they are based on common undivided interest.

(4) Multiple plaintiff’s CANNOT aggregate separate and distinct claims, even if the claims are factually related. 

§1441 (Removal Rule)

1441(a): Defendant is able to remove a suit from State court to Federal court IF Federal court would have had original SMJ over the claim. 

1441(b): cannot remove as a defendant when the suit is in the state in which the defendant is a citizen.

§1359

(Diversity)

Prevents the creation of diversity where any party has been improperly or collusively made or joined to invoke diversity jurisdiction in Federal Court.  

Corp. Plaintiff (DE) w/ Place Business (NY) contracts defendant of NY. Defendant breaches contract. Plaintiff assigns interest to Corp. P (DE) & PB (DE). Corp P is really a subsidiary for legal claims and pays most of the settlement to Plaintiff and keeps enough to pay plaintiffs employees for suit. Diversity?

Mas v. Perry

Complete Diversity is required in order to bring a Diversity SMJ case into Federal court. No party on one side of the V may be a citizen of the same state as any party on the other side of the V. 

Domicile: (1) Presence in the state via residence, and (2) intent to stay for an indefinite period of time. 

Federal Question “Arising Under” Jurisdiction

Osborn v. United States 

Lower Federal Courts are granted Federal Question SMJ by congress via statute, but not necessarily up to the full scope of Article III. 

"Federal Ingredient”- one of the parties claims must rely on a federal law or raise a federal issue. 

This means that the federal law is an ingredient of the case. In order for federal law to be an ingredient of the of a case, one of the parties in the case would have to rely on federal law to establish either a claim or a defense in the lawsuit, or at least raise a federal issue in proving her case. 

Basically: Federal ingredient means that one of the parties original claim, defense, or proof of case must rely on federal law.

True or False?

Any case involving the Bank of the United States would arise under federal law.

True!

Osborn tells us that any case involving the Bank of the United States would arise under federal law because the Bank was incorporated under a federal statute. (thus creating a federal ingredient… get it?)

Traditional the courts have interpreted the reach of §1331 to be more narrow than the constitutional scope of arising under jurisidiction.

What have the cases consistently held about this statute?

What does 28 U.S.C. §1331 say?

Federal Question “must be determined from what necessarily appears in the plaintiff’s statement of his own claim from the beginning… not from any anticipated defenses the complaint alleges that the defendant will assert."

Policy: If it was the other way around the plaintiff might invoke federal jurisdiction simply by referring in their complaints to defenses they expected the defendant to raise-- or by speculating about ones the D could raise-- simply to create Federal SMJ. 

Louisville & Nashville R. Co v. Motley

Well Pleaded Complaint Rule: A suite “arises under” the constitution and laws of the United States as Federal Question SMJ, as granted by §1331, only when the Plaintiff’s complaint and cause of action turn on a federal question, and does not simply anticipate a Federal Question defense. 

NY v. Farmco are very concerned about capping funds in state funded plants. Farmco marketed its drugs for non medically necessary purposes. In violation of NY consumer protection laws. These laws create a cause of action that violates federal law. The FDA provides that marketing a prescription drug is limited to medically necessary uses. The D removes case to federal court. P moves to remand case back to NY state court because of lack of SMJ. 

Under Mottley is there Federal SMJ?

Yes, because the plaintiff’s complaint turns on a federal question (Farmco violated a federal law) and it is not simply anticipating a federal question defense. 

Yes, there is SMJ. Employer has violated federal law. 

Shoshone Mining v. Rutter (No Fed. Q. SMJ)

A cause of action that was created by federal law but has a state claim does NOT arise under the federal question. 

Policy: If a particular construction of the statute will dump thousands of cases into the federal courts and overburden the system, it should be construed so as to limit jurisdiction. 

Mr. Collins sues Mr. Darcy over breach of contract. Mr. Darcy’s claim is that federal law makes the subject unenforceable. Mr. Collins now sues Ms. Bennett for breach of contract on the same grounds and includes in the complaint that the contract is legally and constitutionally sound. Is there Federal Q. SMJ?

Smith v. Kansas City Title (Fed. Q. SMJ)

If the cause of action in the complaint arises out of State law, but the controversy concerns the constitutional/federal law, validity of an act of Congress which is directly drawn in question then there is SMJ.  

NOTE: Smith is an exception to the Holmes Test (says if a case meets the Holmes test, it does “arise under” federal law)

Basically: If cause of action is a state law and the controversy is a federal claim then there is Federal SMJ. 

Holmes Test

(federal question)

The federal law must create at least part of the cause of action by it’s own force.

NOTE: Holmes test is more inclusive than exclusive. 

Moore v. Chesapeake & Ohio Railway Co. 

(Federal Q)

Merrel Dow Pharmaceuticals v. Thompson (No Fed Q. SMJ) 

Grable & Sons Metal Products v. Darue Engineering (Fed Q. SMJ)

If the national interest of providing a federal forum for a state cause of action revolving on a federal question is sufficiently substantial to support exercise of federal question jurisdiction and does not distort any divisions of labor between the state and federal courts provided or assumed by congress then Fed Q. SMJ.

What are the elements needed for Fed Q. SMJ under Grable?

(1) Federal Issue

(2) Substantial and Disputed Issue

(3) Does not disrupt balance of labor between federal and state courts.

Can you get a original case to federal court using 28 U.S.C. §1367? 

No. 1367 is never available to get original case to federal court; it only applies to second claims.

NOTE: But Plaintiff must have an original federal SMJ claim to get additional claim into federal court. 

What was the common law before §1367 came around?

Pendant Claim: what Plaintiff can joint to an original SMJ case

Pendant Party: Who P can join to an original SMJ case.

Ancillary: After filing, joining claims via counter/cross claims

P from Michigan sues D from CA on a state law claim in federal ct on the basis of diversity then defendant joins T from Michigan under Rule 13H (permits joinder from additional parties under a cross claim). What happens when P wants to assert a claim against T. 

Owen Equipment v. Kroger 

(Fed Q)

The Common Nucelus of Operative Facts (CNOF) is the constitutional minimum an inquiry into whether, via statute, Congress specifically forbids Fed. SMJ is also required.  

Exxon Mobil Corp. v. Allapatthah Services, Inc. 

Well pleased complaint must contain at least one claim that satisfies the amount in controversy requirement, and when there are no other defienciaries, the district court has original jurisdiction over the claim.

(1) District courts have unlimited to deny S.J. regardless of §1367(a) & §1367©

(2) District courts are constrained by §1367(a) & §1367(c)

Plaintiff (IL) v. Defendant (IL)

Federal Civil Rights (Fed. Q.) & State Wrongful Discharge

(1) Is there Fed claim w/original SMJ?--> Yes

(2) Is there a 2nd claim for which there is no independent basis for Fed SMJ? --> Yes

(3) If so, does the 2nd claim meet the relatedness requirement? [Common Nucleus of Operative Fact]-->Yes

(4) If so, does §1367(b) or © override to take away Supplemental Jurisdiction? 1367(b) Ok as fed q & not diversity/1367© ok unless court decides against

Plaintiff (IL) v. Defendant (IL)

State Negligence Claim via car accident 

(Federal Question?)

(1) Is there a Fed claim w/original SMJ?--> Yes

(2) Is there a 2nd claim for which there is no independent basis for fed SMJ?--> Yes

(3) If so, does the 2nd claim meet the relatedness requirement? [Common Nucleus of Operative Fact]--> No, CNOF fails

Plaintiff (IL) v. Defendant (IL)

Federal Civil Rights (Fed Q.) & State Harassment ((∆2 via Rule 20)

(1) Is there a Fed claim w/original SMJ?--> Yes

(2) Is there a 2nd claim for which there is no independent basis for Federal SMJ?-->yes

(3) If so, does he 2nd claim meet the relatedness requirement?--> yes

(4) If so, does §1367(b) or © override to take away Supplemental Jurisdiction? --> yes, 1367(b) ok b/c original suit Federal Q

Plaintiff (IL) v. Defendant (WI)

Federal Diversity Case/75,000 (employment Contract) & State Employment Claim ((∆2 via Rule 20)

(1) Is there a Fed claim w/original SMJ? Yes

(2) Is there a 2nd claim for which there is no independent basis for Federal SMJ? Yes

(3) If so, does the 2nd claim meet the relatedness requirement? (CNOF) Yes

(4) If so, does §1367 b or c override to take away supp jurisdiction? §1367(b): No diversity & rule 20

Plaintiff (NY) v. Defendant (PA)

Federal Anti Trust/$100k (Fed Q) & Federal Securities (Fed Q) & State Contract (Diversity)

(4) No need for Supplemental Jurisdiction under §1367 (b) or (c)

§1441 © (Removal)

Tagging on cases which do not have original federal SMJ (Supplemental Jurisdiction) can allow for removal.

Federal Rule 13

§1441(b) Exceptions

Removal based on diversity only allowed if no defendant domiciled in the state. 

Venue 

Definition and Purpose 

Which court within a judicial system will hear an case.

Venue rules are meant to further the places where the plaintiff may choose to bring suit, to assure that suits are tried in a place that bears some sensible relationship to the claims or to parties to the action. 

§1391 (Federal Venue)

(1) Diversity

(2) Federal Q

(3.) (a)(3) v. (b)(3) = Fallback Provisions

28 U.S.C. §1391 (a) & (b)

§(a) & (b) of §1391 provide the basic options for venue in most federal cases.

(a) governs venue in diversity cases, authorizes venue in

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

(2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or

(3) a judicial district in which any defendant is subject to PJ at the time the action is commenced, if there is no district in which the action may otherwise be brought 

1391 (b) which provides that such cases may be brought in 

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

(2) a judicial district in which a substantial part of the events or omission giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or

(3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought

Burlington Northern R.R. v. F

(Venue)

State venue rules are generally Constitutional unless some gross imposition is placed on a party.

Reasor Hill Corp. v. Harrison

Local Actions regarding real property are only actionable in the state where the property is located. 

Minority Rule: Actions involving real property are actionable wherever PJ may be exercised over the defendant.

Bates v. C&S Adjusters, Inc.

What is the Leroy Test under Bates v. C&S Adjusters?

(Venue)

Leroy Test:

(1) Protect defendant’s against unfair and inconvenient trail locations

(2) locations of evidence and witnesses = a relevant factor

(3) familiarity of Federal judges w/applicable state law

(4) Plaintiff’s inconvenience irrelevant

(5) limit multiple venues as much as possible. 

Hoffman v. Blaski

(1) Venue like PJ., may be waived, but

(2) The power of a district court under 1404(a) to transfer an action to another district is made to depend not upon the wish or waiver of the defendant but, rather, upon whether the transferee district was one in which the action “might have been brought” by the Plaintiff. 

Policy: Defendant’s would otherwise be able to transfer any case to any district they so chose for convenience as long as they are willing to waive PJ and venue questions. 

Gulf Oil Corp v. Gilbert

(1) Forum Non Conveniens: a court may resist imposition upon it’s jurisdiction even when jurisdiction is authorized by the letter of a general venue statute. 

(2) Gilbert Test (Principles to guide transferee court in denial of transfer):

Private Interest of Litigant

(a) Access to sources of Proof

(b) Availability of compulsory process for attendance of unwilling witnesses.

© Necessity of view of location

(d) Enforceability of judgement if obtained

(e) Plaintiff may not harass the defendant by choice of forum which is expensive or troublesome for reasons not associated with his own right to pursue remedy.

(1) But unless the balance is strongly in favor of the defendant, the Plaintiff’s choice should rarely be disturbed.

(3) Factors of Public Interest

(1) Jury duty is a burden on a community not associated with the litigation

(2) Where litigation touches many people, trail should be held close to those affected so they can stay abreast with the action more easily.  

(3) Interest in having local interests decided at home.

(4) Diversity case should be where the state law governing the case is best adjudicated rather than having another court untangle problems in conflict of laws, and in law foreign to itself. 

Piper Aircraft Co. v. Reno

(Venue)

An alternative venue with less favorable substantive law is not a reason to reject a dismissal for forum non conveniens UNLESS the remedy provided by the alternative forum is so clearly inadequate that it is no remedy at all and dismissal on forum non conveniens would not be in the interests of justice.

(Basically: You can’t reject a dismissal of forum non convenience (forum not convenient to one party) because the alternate venue has a less favorable substantive law for your case UNLESS the other venues remedy is not a remedy at all and it is unjust to allow the case to move to that other venue.) 

NOTE: A district court has the authority to respond at once to a defendant’s forum non conveniens plea w/o first addressing other threshold issues/objections such as PJ. 

28 U.S.C. §1652 (Rules of Decision Act (RDA))

The laws of the several states, except where the constitution or treaties of the United States or Acts of Congress otherwise requires or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply.

Swift v. Tyson

Erie R.R. Co. v. Tompkins

Except in matters governed by the Constitution or federal laws, the law to be applied in any case is the law of the state, which includes both laws declared by the legislature in a statute and by its highest court in a decision.

Basically: Apply State if it’s not governed by the constitution or federal law.   

Matters of clearly substantive law mean?

“bound up with the rights and obligations” created by the state law 

Notte: if it’s substantive law apply state law under Erie. 

Policy behind Erie

Forum shopping permitted grave discriminates to defendants as Plaintiff’s abused Diversity Jurisdiction to forum shop. (Ex. Black and Yellow Taxi- in stater forum shopped to become an out of stater.)

Forum shopping as a constitutional issue under Erie?

Shopping based on discrepancies between state and federal laws. 

Black & White Taxicab v. Brown & Yellow Taxicab

High water mark for Diversity Jurisdiction manipulation. Issue over whether exclusivity contracts are enforceable. (State: unenforceable Federal: enforceable) 

Note: P change incorporation state in order to get diversity under §1332

28 U.S.C. §2072 (Rules Enabling Act)

REA authorizes the Supreme Court to “prescribe general rules of practice and procedure” for the federal courts and the Supreme Court drafted the Federal Rule thus there is both constitutional and statutory authority for adoption of the Federal Rules. 

Ragan v. Merchants Transfer & Warehouse

Facts: State tort law negligence Diversity suit

Rule: State law determinative of when the statute of limitation starts.

Guaranty Trust Co. v. York

Outcome-Determinative Test: If following a federal practice thats different from state procedure might “significantly affect the result of a litigation,” the court must apply the state rule instead, to prevent diverse parties from gaining unfair advantages simply because they can choose federal court.  

Note: This test dictated use of the state limitations statute, since this claim was barred under that statute but might have been allowed to proceed under the federal laches doctrine. 

Policy: Uniformity of outcomes in state and federal court is more important than following a separate federal rule whenever it is constitutionally allowed. 

Substantive Issues vs. Procedural Issues

Substantive: the things that would alter the way the individual would act in the world. Matters bound up with rights and obligations of parties (out of state); matters that are strictly outcome-dtereminative.

Procedural: matters that concern merely the manner and means by which a right to recover is enforced. 

Cohen v. Beneficial Industrial Loan Corp. 

Facts: Shareholder v. corporation Diversity suit

Rule: As the Federal rule did not contradict the State rule, and was addressed to independent concerns, the state rule applies. 

Woods v. Interstate Reality Co.

A TN corporation, not qualified to do business in MS, could not maintain a Diversity suit, in a Federal court in MS, if the MS courts were closed to it. 

Results of Guaranty Trust v. York

Almost any legal rule, whether procedural or substantive, has the potential to affect the outcome of litigation. 

Byrd v. Blue Ridge Rural Electric Cooperative

(Byrd Test)

The federal courts should follow state practices even of “form and mode” (procedural) if ignoring them would substantially affect the outcome of the litigation (outcome determinative test). 

Byrd Test:

(1) Apply the Erie constitutional test ("Bound up in rights and obligations”)

-Yes? [State Law] No?#2

(2) Apply York Outcome Determinative Test

-Yes? [Prob. State Law] No?#3

(3) Consider any countervailing federal policies (constitutional issues) which arise from the federal court’s status as an independent judicial system 

-Yes? [Prob. Federal Rule]

Matter of “form and mode” (procedure) should you apply state law or federal law?

Hanna Part 1: if the Federal Rule is an informal judicial practice not required by statute or Federal Rules of Civil Procedure: (what do you do?)

(1) Apply the Erie constitutional test in light of the twin goals: Prevent forum shopping & inequitable administration of laws. 

(2) Apply York Outcome Test

(3) Consider any countervailing federal policies which arise from the federal court’s status as an independent judicial system. 

Hanna Part II: If Federal Rules of Civil procedure conflicts w/a state law:

Federal Rule of Civil procedure Rule requiring bonds for a claim to be brought. Procedural in form, but substantive in practice. Prohibitive to claims. Substantive and not allowed.

Under Hanna, what is the “Arguable Procedure Test"?

Congress has the constitutional authority to enact statutes governing procedure in the federal courts if, “while falling in the uncertain areas between substance and procedure, [they] are rationally capable of classification as either. 

What are the 3 question you have to ask Post-Hanna?

(1) Is there a federal rule on point?

(2) Does it conflict with the state rule in terms of having contrary (unavoidable)?

(3) If rules do conflict, is the rule a proper exercise of power under the REA (i.e., does it really regulate procedure)

(4) If it does modify a substantive right then what does the question become after Hanna.

Federal Rule 20

authorizes the permissive joinder of P’s if their claims are transactionally related and share common question of law or fact.

Full Faith and Credit Clause 

The Full Faith and Credit Clause prevents the courts from reexamining issues that have already been settled-- even by default-- in another state’s court. 

P, a resident of Las Vegas (in the District Court of Nevada) wishes to bring a federal-court suit against D1, a resident of Los Angeles (in the Central District of CA) and D2 a resident of San Francisco (In the Northern District of CA). The suit would be based on diversity, and concerns an auto accident which occurred in San Diego (in the Southern District of CA). In which federal jurisdiction district(s) may the suit be brought? 

Central, Northern and Southern Districts of CA 

In both diversity and federal question cases, venue lies in any district where any defendant resides, so long as, if there is more than one defendant, all the defendants reside in the state containing that district. §1391(a)(1) Also, under §1391(a)(2) diversity and federal question cases, venue lies in an judicial district “in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated." This would be the Southern District of CA (where the accident took place).  

Federal Rule 18(a)

Allows a party “asserting a claim, counterclaim, crossclaim, or 3rd party claim” to join “as many claims as it has against an opposing party."

Federal Court Removal 

(Most Important Rule for Diversity Cases and Removal)

What is the principal difference between removal jurisdiction in federal-question actions and removal in diversity suits?

State law claim, accident took place in AZ, (CA has a law that says any P who is a citizen of CA and gets into a car accident must use CA law even if the accident happened in another state); Issue: whether CA state substantive law (under which contributory negligence is not a defense) should be applied or AZ law (where contributory neg. is a defense). The judge believes that the CA law is a better law and it should be applied. Which law should be applied?

The federal judge must apply the law of the state where the federal court sits. (Erie) This principal includes the forum state’s conflict-of-laws principals as well as its substantive principals. Therefore, the federal judge must apply CA’ conflict rules. Since CA’s conflicts rules would make CA rather than AZ law applicable, the court must follow CA’s substantive rules as well.

General rule: The general principle is that the federal court must reach the same underlying decision as the court of the state where the federal judge sits. (i.e. if it’s in FL the FL federal judge has to make the same decision that the FL state judge would make!) 

NOTE: This means that if CA was like most states and allowed it’s citizens who get into an auto accident in another state to use that states laws it would not really apply AZ laws, the federal judge (in CA) would have to apply what the CA courts would THINK that AZ laws are! (Klaxon co v. Stentor Electric Mfg.)

Phillips Petroleum Co. v. Shutts

Says that an “absent” member of the P class (i.e. one who does not participate in the suit, but who also does not opt out) will nonetheless be bound by the results of the case, even if the absent member does not have minimum contacts with the state where the class action is pending. 

Outcome Determinative Test

If applying the federal rule that differed from the state rule would “significantly affect the litigation,” the court must apply the state rule to avoid forum shopping (diverse parties choosing forums with the best law) and to make sure there is a uniformity of outcomes between federal and state courts sitting in the same state.(Policy)

A person’s domicile is the last place they were a residence and had the intent to stay indefinitely.

Holmes Test

A suit arises “under the law that creates the cause of action."

Rule 20

Governs joinder of multiple defendant’s, only authorizes joinder if P’s claims against both D’s arise out of the same transaction or occurrence.

Special Appearance

A procedure that allows a defendant to challenge a court’s exercise of personal jurisdiction without submitting to the court’s power for any other purpose

Collateral Attack

A challenge to the enforcement of a judgement typically arguing that the rendering court lack jurisdiction.

Limited Appearance

a procedure that allows a defendant in an acton commenced on a quasi-in-rem basis to appear for the limited purpose of defending his interest in the attached property without submitting to the court’s exercise of full PJ

Federal Rule 13(b)

D may choose a plead a counterclaim “that is not compulsory,” i.e. that does not arise out of the transaction or occurrence that is the subject matter of the opposing party’s claim. 

Federal Rule 14(a)(1)

"A defending party” to join “a non-party who is or may be liable to it for all or part of the claim against it.” but must obtain the court’s permission “if it files the 3rd party complaint more than 10 days after serving it’s original answer."