Personal Jurisdiction – Judicial power over over the person or property involved in a lawsuit
1. Specific Jurisdiction
a. Establishing Specific Jurisdiction
i. Minimum Contacts
1. International Shoe –
a. Facts: Appellant (D) is a DE. corp. having its principal place of business in St. Louis. Appellant has no office in WA. and makes no contracts in the state. For a number of years maintained a sales force w/I WA who resided there and under direct supervision of the main office. The salesmen had no authority to enter into contracts or fix prices. The state of WA (P) is suing to collect unpaid contributions to the unemployment compensation fund. The trial court, superior court and Washington State Supreme Court all found in favor of the P, the D now appeals the USSC.
b. Issue: Whether the appellant had by its activities in Washington rendered itself amenable to proceedings in the courts of that state to recover unpaid contributions to WA unemployment compensation enacted by state statutes within the limitations of the 14th am. (Does the state have jurisdiction over the corp?)
c. Holding: The WA court does have jurisdiction over the corp. in accordance w/ the due process clause of the 14th am
d. The appellant had maintained a certain contact with in the state that the suit does not offend “traditional notions of fair play and substantial justice”.
1. The appellant maintain regular contact within the state, doing business regularly in the state.
2. Due process requires that D have certain “minimum contacts” with forum state such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice”.
2. Shaffer –
a. Facts: Heitner (P), a nonresident of DE, filed a shareholder’s derivative suit in DE against the Greyhound Corp., a DE corp. with its principal place of business in Phoenix, AZ and 28 shareholders (D). P owns one share of stock in Greyhound. D’s wrongful act took place in OR. DE courts took quasi in rem jurisdiction by sequestering property (stock) located within the state, by a stop transfer order, per DE statute. D’s challenged the order on the grounds that minimum contact did not exist. DE courts ruled that international shoe’s constitutional tests were not applicable. D’s appealed.
b. Issue: Does the De statute violated the due process clause b/c it permits the state courts to exercise jurisdiction despite the absence of sufficient contacts? (Does the International shoe standard apply to quasi in rem jurisdiction?)
c. Holding: The DE statute is in violation of the 14th am, the standards set forth in international shoe do apply to quasi in rem as well as personam jurisdiction. The Appellants did not meet the standards for sufficient contact and therefore De courts can not assert jurisdiction as such.
i. DE courts exercise of jurisdiction violated due process because D’s did not have minimum contacts with forum state. All assertions of state court jurisdiction must be executed according to the international Shoe standard.
1. In Rem (where the suit involves the property): Usually minimum contacts relates to the claim exist.
2. Quasi In Rem (where property was attached solely to establish jurisdiction): pretty much abolished by Shaffer
ii. The constitutional test (fair play and substantial justice) and analysis are the same for all types of personal jurisdiction cases. Shaffer eliminated In Rem and held all cases to the minimum contracts standard.
ii. Stream of Commerce – Application of International Shoe
1. Purposeful Availment
a. McGee –
i. Beneficiary of the decedent’s life insurance policy sued the out-of-state insurance company for nonpayment. D refused to pay on the grounds that the decedent committed suicide, policy exclusion. D’s only contact in the state was the premium notices that it sent to the descendent who was a resident of the state. The state court exercised jurisdiction and D appealed on the grounds that the court did not have personal jurisdiction.
ii. Issue: Can a state court exercise jurisdiction over an out of state insurer?
iii. Holding: The due process clause did not preclude the California court from entering a judgment binding on the respondent.
1. It is sufficient for purposes of due process that the suit, brought against a Texas insurance Co. in California, (1) was based on contract which had substantial connection with the state of California. The contract was delivered in California, the premiums were mailed from California and the insured was a resident of California. (2) It cannot be denied that California has a manifest interest in providing effective means of redress for its residents when their insurers refuse to pay claims. (3) There was no contention that the defendant did not have adequate notice of the suit or sufficient time to defend itself.
b. Denckla –
i. The case arose from a family dispute over the assets of Mrs. Donner, a deceased mother who est. a trust in De and some year later moved to FL, where she later died.
ii. Issue: Does the Florida court constitutionally have the power to exercise jurisdiction over a trust out of state trust company?
iii. Holding: The trust company does not meet the minimum contact standard and therefore Florida does not have personal jurisdiction over the company.
1. The D does not have an office in FL, nor does it conduct any transactions there, there is no solicitation of business. The unilateral activity of those who claim some relationship with a nonresident D cannot satisfy the requirement of contact within the forum state.
2. It is essential that there be by some act by which the D avails itself of the privilege of conducting business within the forum state.
c. Worldwide Volkswagen –
i. A corporation must purposely avail itself of the privilege of conducting activities with in the state. Releasing products into the stream of commerce without the expectation that it will purchase by consumer with in the forum state is not sufficient for establishing minimum contacts under the due process clause,
ii. OK courts could not exercise PJ over World-wide Volkswagen or Seaway in a products liability action stemming from an accident in that state b/c the D had no “contact, ties, or relations” with the State of OK.
iii. Foreseeability alone has never been a sufficient benchmark for PJ under the Due Process Clause
iv. Rather, PJ exists if the D “purposefully avails itself of the privilege of conducting activities in the forum state” or “ delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum state.”
d. Asahi –
i. Facts: Gary Zurcher lost control of his motorcycle on CA interstate, injuring himself and killing his passenger. Zurcher filed suit against Chen Shin in CA state court, a Taiwanese tire manufacturer, claiming that the accident was caused by faulty tires. Chen Shin filed a cross compliant against Asahi, a Japanese company, which manufactured the valves for the tires. Asahi manufactures tire valve assemblies in Japan and sells them to Chen Shin amongst others as components in tire tubes. Chen Shim alleges that approx. 20% of its sales in the US are in CA and that Representatives of Asahi were aware of their products use in the US. Asahi moved to quash Chen Shin’s service of summons arguing the state was exceeding its jurisdiction in violation of the 14th am
ii. Issue: Whether mere awareness on the part of a foreign defendant that the components it manufactured, sold and delivered outside the US would reach the forum state is sufficient to est. minimum contacts btw the D and the forum state.
iii. Holding: The facts of this case do not establish minimum contacts such that the exercise of personal jurisdiction would be consistent with fair play and substantial justice.
1. The “substantial connection” between the D and the forum state necessary for a finding of minimum contacts must come about by an action of the D purposefully directed towards the forum state
2. Minimum contacts = purposeful action by the D towards the forum state.
3. Personal Jurisdiction in this case would violate “traditional notions of fair play and substantial justice” because the exercise of jurisdiction would be unreasonable, even if there were minimum contacts
4. Factors
a. Burden on D
b. Interests of Forum State
c. Interests of P
d. Interests of Federal System (especially foreign nations)
2. Reasonably Foreseeable
a. Burger King -
i. Facts: D, MI resident, applied for Burger King Franchise with Birmingham office, which was forwarded to Miami office. Negotiation took place with people in the MI office, never actually went to FL. Business fell apart, rent was unpaid, and franchise was shut down. Burger King sued D in FL district court for falling behind on his payments (breach of contract), sued in federal courts due to diversity of citizenship. At trial Burger King won, Circuit court reversed on the grounds that FL district court did not have personal jurisdiction over D
ii. Issue: Did the district court exercise of personal jurisdiction over the defendant offend due process?
iii. Holding: The assertion of personal jurisdiction over Rudzewicz in FL for his alleged breach of his franchise agreement did not offend due process.
1. It was reasonably foreseeable that based on his contacts in the state that the D would b subject to litigation in FL
2. Minimum Contacts: Purpose of test is to provide individuals with fair warning that their activities within a forum may subject them to suit there. This “fair warning” requirement is satisfied if the D has “purposefully directed his activities at residents of the forum and the litigation results from alleged injuries that “arise out of or related to those activities.
3. Fair Play and Substantial Justice: Once it has been decided that a D purposefully est. min contacts with a forum state, those contact may be considered in light of other factors to determine whether personal jurisdiction would comport with “fair play and substantial justice.” This inquiry into “reasonableness” of a state’s exercise of personal jurisdiction may strengthen relatively weak contacts or eliminate jurisdiction despite the existence of min. contacts.
a. FL exercise of PJ did not violate due process b/c the D deliberately reached out beyond MI and negotiated with a FL corporation for the acquisition of a long term franchise (which anticipated future dealings btw the parties) and the benefits that would be derived from affiliation with a nationwide organization
b. Moreover, the franchise agreement contained a choice of law clause, which provided that any disputes would be governed by FL law.
c. Finally, it was reasonable to require a sophisticated business person to defend the lawsuit.
2. General Jurisdiction
a. Service of Process
i. Burnham – Presence in the state at the time of service in sufficient to establish jurisdiction
1. 4- Scalia -
a. Even though he was a non-resident, he was in the state at the time he was served, therefore it does not violate the precedent in International Shoe.
b. In Pennoyer personal jurisdiction could be by service in the state or by attaching property, in rem. International Shoe relies on minimum contacts, presence in the state is no longer necessary but it is sufficient. In regards to Shaffer, when property is the substitute for physical presence the property just like the minimum contact must be related to the claim.
c. Property is just a substitute for physical presence.
2. 4 – Justice Brennan – Agrees with the result. Not because of the traditional rule but because the Petitioner knowingly and voluntarily entered in to the state. The due process clause generally permits exercise of personal jurisdiction over someone who voluntarily enters into the state but it must be fair.
b. Corporation
1. State of Incorporation, Headquarters
a. Continuous and systematic contact with the state that jurisdiction over them for any law suit is permissible
3. Consent
a. “Real” consent: A specific agreement to submit to jurisdiction; a clause in a contract that determines forum for proceeding would be an example
b. Carnival Cruises v. Shute:
i. It would be entirely unreasonable for the court to assume that respondents would negotiate w/ the petitioner the terms of a forum-selection clause in an ordinary commercial cruise ticket. Common sense dictates that a ticket of this kind will form a contract of which the terms are not subject to negotiation
1. Why are forum limiting clauses allowable?
a. A cruise line has a special interest in limiting the forum in which it potentially could be subject to suit.
b. Dispels confusion about where suits may be brought and defended
c. Benefits passengers by keeping fares low, the cruise line saves money by having all cases heard in FL.
2. Forum selection Clauses are subject to judicial scrutiny for fundamental fairness
4. Procedure for Challenging Jurisdiction
a. Direct Attack – Challenge to the jurisdiction ruling is made on appeal, either interlocutory or after final judgment
b. Collateral Attack – Challenge to the jurisdiction ruling is made in a sister state court
c. State Court – Special Appearance – The defendant appears in court for the sole purpose of challenging the court’s personal jurisdiction over her
i. The jurisdictional challenge must be the first an only legal action the D takes in court
ii. If the D makes a general appearance which means she consents to jurisdiction
d. Federal Court – First Appearance – The D first legal action must be to challenge jurisdiction but may raise other issues at the same time
5. Notice – Rule 4 of the Federal Rules of Civil Procedure
a. Mullane
i. Traditional ways of giving notice:
1. Personal Service – always sufficient
2. Publication and Attachment of Property – Caretaker, in Mullane the caretaker has conflicting interests with the beneficiaries
ii. Unknown Beneficiaries – no Due Process violation: if the interest of the unknown are adequately represented by the Known Beneficiaries.
1. Publication is not only the best but also the only means possible of notifying the unknown beneficiaries. I.e. Beneficiaries whose interests in the trust are remote or whose names or whereabouts cannot be ascertained through reasonable efforts
iii. Known Beneficiaries – At least by ordinary mail for due process to be sustained
1. Publication falls short of the goal with respect to know beneficiaries. i.e. beneficiaries whose names and residency are known and most of whom are resident of the forum state.
2. Notification by mail is the best possible means for known beneficiaries.
iv. Due process requires “notice reasonably calculated under the circumstances, to apprise interested parties of the action and provide them w/ an opportunity to respond
6. Restraint on Judicial Power
a. Long Arm Statutes: Jurisdiction in a forum must be authorized by statute as well as constitutional.
i. Gibbons v. Brown:
1. The P did not allege sufficient jurisdictional facts to brings D w/I the coverage of the FL long arm statute
2. Evening assuming arguendo that bringing an action in FL court can constitute a “substantial and not isolated activity” in some instances, P did not show that D “is engaged” in any activity in FL other than defending the present lawsuit
3. Two Prong Test for Personal Jurisdiction:
a. The P must allege sufficient jurisdictional facts to bring the D w/I the coverage of the states long arm statutes
b. If the first prong is met then the second inquiry is whether the exercise of personal jurisdiction over the D would comport with the requirements of due process
ii. Rule 4K
b. Venue:
i. Determines where litigation will take place. Unlike personal jurisdiction, it locates litigation to a particular venue within a state.
ii. Dee – K Enterprises
1. Personal Jurisdiction over an Indonesian Manufacturer
a. Long-Arm statutory authority was established by the Clayton Act, which provides for world-wide service of process to corporations, and service of process was properly carried out pursuant to rule 4(f)(2)(C)(ii). Statutory authority was alos provided by Rule 4(k)(2)
b. Personal Jurisdiction was constitutionally permissible under International Shoe based on D appointment of exclusive US sales agents and its customizing of products for the US market
2. Venue over foreign D: was proper under 28 USC § 1391 (d), which provides that aliens may be sued in any federal judicial district
3. Venue over domestic defendants: It was unclear whether venue was proper for the American D; 28 USC §§ 1391 (b)(1) and (2) were inapplicable and there was insufficient evidence to establish that “any D” engaged in sufficient activities to be “found” in the district under § 1391 (b)(3).
iii. Other features of Venue:
1. State Venue Rules
a. State judicial systems have their own venue rules, which have no applicability in federal court. Venue in state court is fixed by one or more of many factors, including the same factors relevant to federal venue. The most important factor is the D’s residence
2. Local Action Rule:
a. Actions involving title to land shall be tried by courts in the state which land is located (not really a venue rule but has the same effect)
c. Forum Non Conveniens and Federal Question Jurisdiction
i. Proper but inconvenient venue:
1. When venue is proper but inconvenient, the correct response is a motion to transfer pursuant to section 1404
2. The court will transfer if the conditions of 1404 (a) are fulfilled – namely:
a. transfer must be for “the convenience of parties and witnesses’ and “in the interest of justice.”
3. The transferee forum must have personal and subject matter jurisdiction
ii. Improper Venue:
1. When venue is improper the D may move to dismiss the action pursuant to Rule (b)(3) or section 1406(a), or may move to transfer pursuant to section 1406(a)
a. 1406(a) allows transfer only if the transferee forum have personal and subject matter jurisdiction, as well as proper forum
iii. Proper venue but improper jurisdiction:
1. When venue is proper but the court lacks jurisdiction , 1631 allows for transfer to a court of proper venue and jurisdiction
iv. Forum non conveniens:
1. Provides for dismissal of the action when venue is inconvenient
2. 1404 does not provide for dismissal for inconvenient forums unless the proper forum is state court or the court of another country.
v. Piper Aircraft
1. The possibility of a change in substantive law should not be given substantial weight unless the remedy provided by the alternative forum is so clearly inadequate or unsatisfactory that it is no remedy at all.
2. The district court did not abuse its discretion as it properly looked to”
a. Convenience of the forum
b. Access to proof and ability to implead potential 3rd party defendants
c. Federalism and the conflict of laws consideration
Federal Subject Matter Jurisdiction:
1. Federal Question Jurisdiction:
a. Louisville and Nashville Railroad v. Mottley:
i. Mottleys were issued a lifetime railway pass. Congress later made free railroad passes unlawful. The railroad refused to honor the Mottleys pass citing the new federal legislation. Mottleys sued for specific performance
ii. A suit arises under the constitution and the laws of the United States for the purposes of 28 USC§ 1331 only when the P’s statement of her own cause of action shows that is based upon federal law.
iii. There was no federal subject matter jurisdiction b/c issues of federal law would likely arise only as an affirmative defense and in addressing P’s reply to that defense, not in P original claim (which was for breach of contract under state law).
1. The P’s claim has to be about the federal law, i.e. the railroad violated the pass regulation
b. Challenging Federal Subject Matter Jurisdiction: P. 225
i. How do you get a court to dismiss the case when you believe there is a lack of federal subject matter jurisdiction?
2. Diversity Jurisdiction:
a. Mas v. Perry:
i. Jean Paul Mas, a citizen of France, and his wife Judy Mas, a citizen of Mississippi, brought suit against their landlord, a citizen of Louisiana. Mas brought suit in federal court under state privacy laws due to diversity of citizenship. Perry appealed for lack of diversity jurisdiction.
ii. Complete diversity existed when the lawsuit was filed because while D was domiciled in LA, Mr. Mas was still a citizen and subject of France. Mrs. Mas continued to be domiciled in Miss – she had no subjective intent to remain in LA.
iii. Diversity jurisdiction existed on two legs:
1. an action against a citizen by an Alien
2. an action between citizens of different states.
iv. There must be complete diversity between the P and the D at the time the complaint is filed. Subsequent event do not describe jurisdiction
v. TO be a citizen of a state within the meaning of § 1332 (a)(1) a natural person must be a citizen of the US and a domiciliary of that state
vi. A wife does not have her domicile changed solely by reason of marriage to an alien
vii. Section 1332(a)(2) gives federal courts diversity jurisdiction over disputes over a citizen of a foreign country (an alien) and a citizen of a state
b. Saadeh v. Farouki:
i. There was no diversity jurisdiction over a dispute between a foreign citizen and an alien who was residing permanently in MD. Ct rejected plain meaning of amended § 1332 because it would be contrary to congress’s intent to narrow diversity jurisdiction and would raise constitutional difficulties.
c. Amount in Controversy:
i. § 1331 requires in addition to diversity that the amount in controversy be greater than 75,000$
3. Supplemental Jurisdiction: Broadens Federal Jurisdiction (pendant and ancillary jurisdiction)
a. Pendant Jurisdiction – allows a P to join a state claim to a federal question in her claim. Both claims must be asserted against the same D. The district court had pendant subject matter jurisdiction over the nonfederal claim
b. Ancillary Jurisdiction – Jurisdiction exists where a P asserts a federal question or diversity claim in her complaint and another party or nonparty asserts a counterclaim over which the district court would lack original federal question or diversity jurisdiction.
c. General Rule of Supplemental Jurisdiction:
i. In any lawsuit for which the court has federal question or diversity jurisdiction, the court shall have supplemental jurisdiction over all claims that are so related to the federal question or diversity claim that they form part of the same case or controversy under Art. III. This means that all claims must derive from “a common nucleus of operative facts”
d. United Mine Workers v. Gibbs:
i. State law claims are appropriate for federal court determination if they form a separate but parallel ground for relief also sought in a substantial claim based on federal law
ii. Pendent Jurisdiction: Whenever there is a claim “ arising under the constitution, the Laws of the United States and the treaties made, or which shall be made under their authority…” and the relationship between that claim (federal) and the state permits the conclusion that the entire action before the court compromises but one constitutional “case”.
iii. “The state and federal claims arose from the same nucleus of operative fact…”
4. Removal: The P files the lawsuit in State Court; 30 days to Remove to Federal Court; P if it thinks the removal was wrong or inappropriate will file a motion to remand to state court.
a. Removal in diversity cases: If the state action is within the federal court’s diversity jurisdiction, all D must be non-citizens of that state (28 USC §1441 (b))
b. Removal in federal question cases: If the lawsuit filed in state court arises under a federal statute or other federal law, removal is allowed only if such federal question appears in the P’s complaint. The federal question cannot arise from a defense the defendant makes (28 USC § 1441 (b)) – The Well Pleaded Complaint Rule
c. Removal jurisdiction not derivative of state court jurisdiction: Since 1986, the federal court is permitted to retain an action removed from state court even though the state court lacked jurisdiction (28 USC § 1441 (e)).
d. Removal when lawsuit involves multiple claims: When a separate and independent claim that falls within federal question jurisdiction is joined with a non-removable claim, the entire case may be removed to federal court and the judge may in her discretion remand all matter in which state law predominates (28 USC § 1441 (c)).
e. Caterpillar, Inc v. Lewis
i. Personal injury claim arising under state law. The case was removed to a federal court at a time when … complete diversity of citizenship did not exist among the parties. Promptly after the removal, the P moved to remand the case to the state court, but the district court denied that motion. Before trial of the case, however, all claims involving the nondiverse D were settled, and that D was dismissed as a party to the action. Complete diversity thereafter existed. The case proceeded to trial and judgment was entered for the removing D. The court of Appeals vacated the judgment concluding that, absent complete diversity at the time of removal, the District Court lacked subject-matter jurisdiction.
ii. Whether the absence of complete diversity at the time of removal is fatal to federal-court adjudication?
iii. We hold that a district court’s error in failing to remand a case improperly is not fatal to the ensuing adjudication if federal jurisdictional requirements are met at the time judgment is entered.
1. Basic Rule for Appellate jurisdiction – Final Judgment Rule
Erie Problem:
1. State Courts as Lawmakers in a Federal System
a. The Issue in historical Context28 USC § 1652 – Rules of Decision Act:
i. The laws of the several states, except where the Constitution or Acts of Congress otherwise require or provide, shall be regarded as rules of decisions in civil actions in the courts of the United States, in cases where they apply
1. Positive Law – constitution, statutes, administration and regulation, etc… Federal Courts follow in diversity
2. Rules of Evidence or Procedure – How state courts operate, Federal Courts Generally do not follow in diversity cases
3. Common Law?
a. Swift v. Tyson – Federal Courts do not need to follow state common law
b. Erie – Federal Courts should follow state common law
b. Constitutionalizing the Issue
i. Erie Railroad v. Tompkins:
1. Holding: General federal common law may not displace that of the states in areas in which the Constitution grants lawmaking power to the states.
a. “that the purpose of the section (28 USC § 1652) was merely to make certain that, in all matters except those in which some federal law is controlling, the federal courts exercising jurisdiction in diversity of citizenship cases would apply as their rules of decision the law of the state, unwritten as well as written.”
2. The Limits of State Power in Federal Courts:
a. Interpreting the Constitutional Command of Erie:
i. Guaranty Trust Co. v. York:
1. Whether when no recovery could be had in state court because the action is barred by the state statute of limitations, a federal court in equity can take cognizance of the suit because there is diversity of citizenship between the parties?
2. Does it significantly affect the result of litigation for a federal court to disregard a law of a state that would be controlling in an action upon the same claim by the same parties in a state court?
3. Holding: That in diversity cases the federal courts must follow the law of the state as to statute of limitations.
a. The outcome of litigation in state and federal court should be substantial the same.
ii. Byrd v. Blue Ridge Rural Electric Cooperative:
1. Whether the federal policy favoring jury decision of disputed fact questions should yield to the state rule in the interest of furthering the objective that the litigation should not come out one way in the federal court and another in the state court?
2. In the circumstance of this case the federal court should not follow the state rule. There is a strong federal policy against allowing states rules to disrupt the judge-jury relationship in the federal courts
3. De-Constitutionalizing Erie:
a. Hanna v. Plumer:
i. The question to be decided is whether, in a civil action where the jurisdiction of the United States district court is based on diversity of citizenship between parties, service of process shall be made in the manner proscribed by state law or that set forth in Rule 4(d) (1) of the Federal rules of Civil Procedure.
ii. Holding: The adoption of Rule 4(d) (1), designed to control service of process in diversity actions, neither exceeded the congressional mandate embodied in the Rules Enabling Act nor transgressed constitutional bounds, and that the standard against which the district court should have measured the adequacy of service. Accordingly the decision of the Court of Appeals is reversed.
b. Analysis following Byrd and Hanna:
i. Substantive rules of state law apply under Erie. If, however, state-law rule or practice is “rationally capable of classification as either” substantive or procedural, then
ii. Does the FRCP or statute govern the situation and conflict with the state law? Yes.
1. Is the FRCP permissible under the Rules Enabling Act
2. If so, is FRCP or statute constitutional?
a. If answers to a and b are yes federal rules or statute applies (Hanna)
iii. If federal practice differs from state rule, ct. should…
1. Balance importance of federal practice against likelihood of different outcome in state ct (Byrd) and/or,
2. Analyze whether disregarding state rule would,
a. encourage forum shopping
b. lead to inequitable administration of laws.
4. Determining the Scope of Federal Law: Avoiding and Accommodating Erie
a. Burlington Northern Railroad v. Woods
i. An AL statute, which required a D who lost an appeal of monetary judgment to pay an additional ten percent damages, was applicable in federal court because the state law conflicted with rule 38 of the federal rules of civil procedure. Rule 38 provided that the federal court may only “award just damages and single or double costs to the appellee” if the appeal was deemed “frivolous.”
ii. Burlington Northern had lost on appeal in a diversity case. The successful P, woods, asked for the statutory bonus under Alabama law.
iii. F.R.C.P 38 controlled. Rule 38 did not conflict with the state statute b/c a court could award the mandatory 10% penalty for an unsuccessful appeal and as a matter of discretion, additional damages and costs if it believed the appeal was frivolous.
b. Stewart Organization, Inc. v. Ricoh
i. AL state court decisions holding forum-selection clauses unenforceable were not controlling in a federal diversity case because they conflicted with the federal transfer statute, which provides that a federal court may exercise its discretion to transfer a case “for the convenience of the parties, in the interests of justice.” In applying the federal transfer statute, the district court could consider, but was not bound, by the state court decisions.
ii. P filed a lawsuit against D its national organization. The contract between the two contained a forum selection clause which deemed that litigation be brought in Manhattan. The P pointed out that Alabama where it had filed the suit had refused to honor forum selection clauses in previous suits and argued that the federal district court sitting in diversity was bound to honor that state law.
iii. Supreme Court held that the federal law governs the parties forum selection clause and transferred the case to Manhattan.
1. § 1404(a) governs the district court’s decision. The courts are free to take into account the state’s antipathy to forum selection clauses – but only as one factor and perhaps not a dispositive one.
c. Gaspirini v. Center for Humanities
i. NY law empowered appellate courts to review the size of jury verdicts and to order new trials when the juries’ award is unreasonable. The 7th am, which governs federal proceedings, does not allow for reexamination of jury verdicts other than by rules of the common law.
ii. The supreme court held: that the reexamination clause barred a federal appellate court from directly applying the statute, but the district court could initially apply the statute, the appellate court could then review the court’s application of the statute for abuse of discretion.
d. Addition to Erie after Byrd and Hanna:
i. 3(c) alternatively, the fed courts could adopt a compromise between the application of state and federal law under Gaspirini, in which the states dominate interest is respected without disrupting the federal system.
5. Determining the Scope of State Law: An Entailment of Erie:
a. Certification – allows the federal court to ask the state court about the state law for clarification on what the state supreme court would do in the situation
b. The Federal Court can abstain under England v. Louisiana Board of Medical Examiners – The court would refuse to exercise its jurisdiction because the state law in unresolved and the litigation should go forward in state court.
Incentives to Litigate:
1. Litigation in the United States at the end of the 20th Century:
2. Substitutionary Remedies
a. Compensatory Damages
i. United States v. Hatahley
1. The fundamental principle of damages is to restore the injured party, as nearly as possible, to the position he would have been in had it not been for the wrong of the party.
2. Applying this rule, the P were entitled to FMV or replacement cost plus the use value during the interim btw taking and the time they could have prudently replaced the horses and burros
3. The court should consider all elements that make up FMV including difficulty of replacement.
b. Liquidated, Statutory and Punitive Damages
i. Honda Motor Co. v. Oberg
1. Judicial review of the amount awarded was one of the few procedural safeguards which common law provided against that danger.
2. Oregon’s removal of the safeguard of judicial review w/o providing a substitute procedure and w/o any indication that the danger of arbitrary awards has in any way subsidized over time is in violation of the 14th am Due process clause
ii. BMW of North America v. Gore
1. An award of $2 million in punitive damages for failing to disclose minor damage to a new car was “grossly excessive” punishment in violation of the Due Process Clause of the 14th Amendment
2. Federalism Concerns: The Award, insofar as it sought to impose punitive damages on BMW for cars sold out that state, was unconstitutional
3. Notions of fundamental fairness: Elementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject her to punishment, but also the severity of that punishment that a state may impose.
4. Punitive Damages may properly be imposed to further a state’s legitimate interests in punishing unlawful conduct and deterring it repetition. But by attempting to alter BMW’s nationwide policy, Alabama would be infringing on the policy choices of other states
5. Three guideposts that lead to the decision that the award was unmerited
a. the degree of reprehensibility defendant’s conduct (i.e. economic harm v. safety)
b. the disparity between the compensatory damages suffered by the P and the punitive damages awarded
c. The difference between this remedy and the civil penalties authorized or imposed in comparable case
3. Specific Remedies
a. Sigma Chemical v. Harris
i. The P was entitled to permanent injunctive relief to enforce a non-competition agreement in an employment contract. The agreement itself was reasonable, the balance of hardships weighed in favor of the P, and P was facing an injury for which it had no adequate legal remedy.
4. Declaratory Relief
5. Financing Litigation
a. Fee Shifting and Settlement
i. Rule 68: The rule provides that if defendant makes a Rule 68 offer and the P rejects the offer and then recovers less than offer amount,
1. The P may not collect his own costs incurred after the offer and
2. P must pay D’s costs incurred after the offer.
ii. Evans v. Jeff D
1. P was a class of emotionally handicap kids, D was the State. P was represented by legal aid. D offer almost complete injunctive relief, without any fees. Legal aide expect to get paid off the statutory attorney’s fee under statue for attorney’s in civil rights cases
2. Whether the District Court had a duty to reject the proposed settlement because it included a waiver of statutorily authorized attorney fees? Did the district court abuse its discretion by approving a settlement which included a complete fee waiver?
3. Rule 23(e) requires court approval of any settlement of a class action
a. A fee waiver need not be approved when
i. D had “no realistic defense on the merits”
ii. Part of a “vindictive effort … to teach counsel that they had better not bring such cases.”
4. Why did Johnson think that there was an ethical dilemma?
a. Conflict of interest between legal aid and his clients
b. Duty as a lawyer is to clients, not to employer
6. Provisional Remedies
a. Preliminary Injunctions and Temporary Restraining Orders: The Basic Problem
i. William Inglis and Sons Baking Co v. ITT Continental Baking Co
1. Alternative Standards for a Preliminary Injunction:
a. A P is only entitled to a preliminary injunction if the court finds that:
i. the P will suffer irreparable injury if the injunction is not granted
ii. the P will probably prevail on the merits
iii. in balancing the equities, the D will not be harmed more than P is helped by the injunction, and
iv. granting the injunction is in the public interest
b. P must demonstrate either a combination of probable success and the possibility of irreparable injury or that “serious questions are raised” and the balance of hardships tip sharply in his favor. It is not necessary that the moving party be reasonably certain to succeed on the merits. If the harm that may occur to the P is sufficiently serious, it is only necessary that there be a “fair chance” of success on the merits.
b. Provisional Remedies and Due Process
i. Fuentes v. Shevin:
1. Due Process ordinarily requires that an individual be given notice and an opportunity for a hearing before s/he is deprived of a significant property interest
Pleading:
1. Rival Procedural Systems – NOT COVERED
2. Pleading in a Modern Regime:
a. Stating a Claim: General Principles
i. A legal Claim consists of two elements:
1. It invokes some body of law (contracts, civil rights, battery, negligence, etc…)
2. It relates a set of facts that fall under the umbrella of that body of law
ii. Claims fail for one of two reasons:
1. the law permits recovery on the underlying facts but the lawyer has stated those facts ineptly, or
2. the law does not afford any remedy on the underlying facts
iii. People ex rel. Department of Transportation v. Superior Court
1. “A complaint must contain whatever ultimate facts are essential to state a cause of action under existing statutes or case law.”
iv. Haddle v. Garrison:
1. The 11th circuit conclusion that P must suffer an injury to a “constitutionally protected property interest” to state a claim under §1985(2) is wrong because nothing in the statute establishes such a requirement. Instead, the statute is directed at intimidation or retaliation against witnesses in federal court proceedings.
2. The terms “injured in his person or property” defined the harm that the victim may suffer as a result of the conspiracy to intimidate or retaliate. Such harm can include interference with the interest in retaining a job
3. The fact that employment at will is not property under the Due Process Clause does not mean that loss of at-will employment may not injure a person or his property under §1985(2)
4. The sort of harm asserted by the P – essentially third party interference w/ at will employment relations – states a claim for relief under § 1985(2), and such harm has long compensable injury under tort law.
b. Ethical limitations and Disfavored Claims
i. Ethical Principles as a Limitation
1. Business Guides v. Chromatic Communications Enterprises
a. The law firm and Client violated Rule 11 (b)(3) by failing to conduct a reasonable inquiry to ensure that their allegations and other factual contentions had evidentiary support
2. Religious Technology Center v. Gerbode
a. The law firm violated Rule 11(b)(2) by filing a complaint without conducting reasonable legal research which would have disclosed that the party’s claim was foreclosed by binding precedent
ii. Disfavored Claims
1. Fraud – Heighten Pleading Requirement for Fraud (Fed R. Civ. 9(b)).
a. Olsen v. Pratt and Whitney Aircraft
i. Olsen did not specify the terms of the complaint as opposed to the mere gist, therefore the claim fell short of the heightened pleading requirement.
ii. Because P’s fraud claim failed to satisfy the heightened pleading requirement of rule 9(b) the court of appeals remanded the case to permit P an opportunity to file a well-pleaded complaint
2. Civil Rights: Right that encompass discrimination on race, religion, ethnicity, gender, age and disability
a. Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit
i. there is no heightened pleading requirement for civil rights cases
ii. A federal court may not apply a heightened pleading standard in a civil rights case alleging municipal liability under 42 USC § 1983
c. Allocating the Elements
i. Gomez v. Toledo
1. Since qualified immunity is an affirmative defense to an action against an individual government official under § 1983 burden of pleading rests with the D