Thread: Civil Procedures I

Code:

Dave McDonagh Feudaltimes.com

Civil Procedures I
8/26/97
Professor Susan Kuo





OUTLINE

CHOOSING A FORUM

I)PERSONAL JURISDICTION (Territorial Jurisdiction)

In what states can the Plaintiff sue the Defendant? How far can the state go in this area because of the due process clause of the constitution? IN order to exercise personal jurisdiction the 2 requirements are:
1)There must be a state statute basis for exercising personal jurisdiction
2)If there is a state statute, then the exercise must be constitutional. It must comport with the due process requirements of the constitution.
If the requirements are met then one of the following jurisdictions may apply:
1)In Personam: Court has power over the defendant
2)In Rem: Can’t get in personam of the person so the state had power over the defendant’s property
3)Quasi-in-rem: Same basis as In-Rem.
IN PERSONAM JURISDICTION
1)General: The forum has jurisdiction over the defendant for a claim that arose anywhere.
2)Specific: We only have jurisdiction over the defendant for a claim that arose in the forum.
Constitutional Standards of Personal Jurisdiction
1)Pennoyer v.Neff (1877): Stresses territoriality, and power of the state over people and things inside it’s boundaries. The traditional basis for in personam jurisdiction from Pennoyer are:
a)Presence Basis: If the D is served with process in state. This gives the state general jurisdiction.
b)Agent: We can have service of process to an agent of the D who is in state. This as just as good as service on the D.
c)Domicile: If the D is domiciled in the state the forum has general, in personam jurisdiction over him.
d)Consent: We can always consent to jurisdiction. This can be done be express consent (contract), waive the defense of no personal jurisdiction.
This case makes it tough to get personal jurisdiction. The rules of Pennoyer are very rigid.










Jurisdiction after Pennoyer

Due process requires
Type of JXN Bases for JXN Notice Required

1)In Personam a) Consent a) doesn’t matter
b) Presence in forum b) personal notice in forum
c) Citizenship in forum c) personal (can be
outside the forum)

2)In Rem a) Presence of property in forum a) publication or personal
b) Status to determine legal b) publication or personal
Status of rem

3)Quasi-in-rem a) Attachment of property a) publication
In forum
2)Hess v. Pawloski (1927 Case) Expanded the Traditional (Pennoyer) basis for jurisdiction
a) Implied Consent: Expands the traditional basis for in personam jurisdiction.
3)International Shoe (1945): Court does not expand traditional basis for jurisdiction. They formulate a new doctrinal basis for jurisdiction:
a)Minimum Contacts: If the D has such minimum contacts with the forum so that the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice.
i) We can get in personam jurisdiction over a defendant, even though he is not present in the state for service of process. But this does not overrule Pennoyer, instead it said that the minimum contact test is the test, only if the D is not present (implying that presence is still a basis for jurisdiction). This is intended to be more flexible than Pennoyer.
Two prongs of the minimum contacts doctrine are:
a)Contact
b)Fairness
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INTERNATIONAL SHOE
Application of Jurisdiction of Law (Minimum Contacts in State)
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Directly Related to 4) Specific Jurisdiction 1) Jurisdiction
Cause of Action

Unrelated to
Cause of Action 2) No Jurisdiction 3) General Jurisdiction
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Occasional Continuous
or or
Sporadic Systematic
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[IMG]file:///C:/Users/mike/AppData/Local/Temp/msohtml1/01/clip_image004.gif[/IMG][IMG]file:///C:/Users/mike/AppData/Local/Temp/msohtml1/01/clip_image004.gif[/IMG][IMG]file:///C:/Users/mike/AppData/Local/Temp/msohtml1/01/clip_image005.gif[/IMG] Jurisdiction after International Shoe

Court unlikely to Court likely to

find Jurisdiction find Jurisdiction


Contacts Contacts Contacts Contacts
No not related not related related to related to
Contact to cause of to cause of to cause of to cause of
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Sporadic Continuous Sporadic Continuous (General (Specific
(No Jurisdiction) Jurisdiction) Jurisdiction) (Jurisdiction)

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4)McGee v. International Life Insurance Company (1957) Texas insurance company did not have much of a contact with California (only sold 1 policy in California) Jurisdiction is OK because
a)Reaching into the Jurisdiction: The defendant solicited business in California
b)Relatedness: The relatedness to the D’s contact to the state and the specific cause of action (The lawsuit arose directly from the D’s contact with the state) This is a factor in favor of jurisdiction – and does not automatically call for jurisdiction.
c)Forum State’s Interest: The forum state has an interest in providing a forum for it’s people.
5)Hanson v. Denckla (1958) Hits the brakes on jurisdiction.
a)Purposeful Availment: Ties to the forum must be for purposeful availment of the benefits and protection of the forum. It’s not enough to have a tie with the forum. The tie must result from the defendant reaching out to the forum in some way. This is different from McGee, where the insurance company reached into California. This confirms Hess, where the use of roads would be purposeful availment.
6)Worldwide Volkswagen v. Woodson (1980)
a)Foreseeability: Foreseeability that the product will get to the state is not enough. The SC said that foreseeability is relevant, but it foreseeability that the defendant would get haled into court in that forum, not foreseeability that the product would get there. Is it foreseeable that we would be sued in that forum? This case also ties in Purposeful Availment of the forum as in Hanson, with foreseeability of the defendant being sued in the forum.

7)Burger King Corp. v. Rudzewicz (1985)
a)Minimum contact test w/ due process protection explained. The court makes the point with our due process protection, with the minimum contact test, the forum does not have to be the best place for trial. We have jurisdiction under the due process clause because it is not a gross unconstitutionally inconvenient forum. (Purposeful contacts – physical entry does not have to result – proximate actions can cause the injury to the P- Did the Ds deliberately engage in the contacts?)
b)Fairness: The SC said that the burden regarding fairness is on the Defendant to show that the forum is unfair. The burden is very tough to prove. You have to show that it is so gravely and inconvenient that the Defendant is at a severe disadvantage at the litigation. It is not shown by simple economic disparity between the parties. The keys of fairness from Brennan are:
i) Burden on the Defendant (or D’s interest)
ii) Forum states interest in the case
iii) Plaintiff’s interest in convenient and effective relief
iv) The interstates judicial systems interest in effective resolution of
controversies.
v) Shared interest of the states in furthering substantive social policies
c)The court suggested that there is a sliding scale: if the fairness factors balance strongly in favor of jurisdiction the courts may hold up jurisdiction based on a lower level of contacts. Still contact is needed..
1)IF FAIRPLAY AND SUBSTANTIAL JUSTICE CONSIDERATIONS STRONGLY POINT TO JURISDICTION, THEN FEWER MINIMUM CONTACTS ARE REQUIRED, BUT CONTACTS ARE STILL NEEDED.
2)IF FAIRPLAY AND SUBSTANTIAL JUSTICE POINT TOWARD NO JURISDICTION, THERE MAY BE NO JURISDICTION VEVN IF HAVE MINIMUM CONTACT
3)JURISDICTION MAY NOT BE GROUNDED ON A CONTRACT, WHOSE TERMS HAVE BEEN AGREED TO BASED ON FRAUD, ETC. (BRENNAN)
II)GENERAL JURISDICTION
Perkins v. Benguet Consolidated Mining (1952)
Rule: The Court said because Benquet had substantial continuous ties in Ohio, the could be sued there, although the business was based in another country.
Helicopteros Nacionales de Colombia, S.A. v. Hall (1984)
Rule: Substantial and continuous contacts are needed in order to establish general jurisdiction.
Domicile gives General Jurisdiction

III)NOTICE
IV)SUBJECT MATTER JURISDICTION
V)VENUE
CHALLENGING JURISDICTION

VI)CHALLENGING JURISDICTION
VII)ERIE DOCTRINE (WHAT LAW APPLIES BECAUSE OF THE FORUM)
LAWSUITS

VIII)PLEADINGS (START OF THE LAWSUIT)
IX)JOINDER (HOW BIG WILL IT BE?)
X)DISCOVERY (FINDING OUT ABOUT THE OTHER PERSONS CASE)
XI)PRETRIAL ADJUDICATION (DO WE HAVE TO GO TO TRIAL?)
XII)TRIAL & POSTTRIAL MOTIONS
XIII)APPEAL PROCESS
XIV)RES JUDICATA AND COLLATERAL ESTOPPEL (Claim Preclusion & Issue Preclusion)

CLASS NOTES

WEEK OF 8/25/97

Civil Procedure

Adversarial process not an inquisitorial process
Judge has the power of the state behind him
Rules are designed to protect from the abuse of that power
POWER TO DECIDE CASES: JURISDICTION

TRADITIONAL BASES FOR PERSONAL JURISDICTION (pp. 1-9 & 62-71 CB)
A)Sources of Jurisdictional Power: Statute or rules grant Jurisdiction but they are subjected to constitutional limitations.
B)Traditional Bases of Jurisdiction It was initially thought that a court could exercise jurisdiction only if the state could take the defendant or the defendant’s property into custody.
a)In Personam Jurisdiction: Permits the court to adjudicate the rights of person fully; it attaches when the defendant is personally served with process while physically within the territorial limits of the court.
b)In Rem Jurisdiction: Court may assert in rem to determine rights in property found within that state, court also may determine status that is within the territorial power of the state (i.e. divorce or child custody)
c)Quasi in Rem: Court may attach property owned by the defendant that is found within the state and take action against the D even if the dispute was unrelated to the property and the judgment will have no further effect
d)Blackmer principle: The jurisdiction of the US over its absent citizen, so far as the binding effect of its legislation is concerned, is a jurisdiction in personam, as he is personally bound to take notice of the laws that are applicable to him and to obey them..
C)Fairness, Affiliation with Forum, and Notice: Modern courts generally look to:
a)whether it is fair to require the D to defend in a particular state
b)whether that state has a reasonable nexus to the dispute
c)whether D has been given adequate notice and an opportunity to be heard
D)Effect of Lack of Jurisdiction: A judgement without jurisdiction is null.
E)Personal Jurisdiction: Does the court have power over the parties of the suit? Yes usually on the plaintiff. Real question: does the court have jurisdiction over the Defendant? Suppose A has an accident in Italy, and sues B in an Oklahoma court for the accident. Does B have to go to Oklahoma? Issues:
a)Practicality: How can Oklahoma force B to come to US
b)Sovereignty: US court no sovereignty over an accident or B in Italy
c)Fairness: Is it fair to make B come to US to litigate the case. This is different if it is in Oklahoma v. Ohio. Sovereignty is different here. Fairness is more important
F)Subject Matter Jurisdiction: Does the court have authority over the subject matter of the case? Some courts only over certain types of cases (no auto accidents in family court)
G)Federal Courts are limited Jurisdiction: When can you get into federal courts? For the most part most state rules mirror the federal court
H)Notice: What notice is required to get the D into Court? Making a publication in a newspaper is it notice or service. Service is personal service usually. Service can be done by publication (this is considered substituted service) The concept of notice encompasses service.
I)Venue: Where is the correct place to bring the case (Toledo or Cincinnati)
J)Erie Doctrine: What law applies? If you are in a federal court in Ohio, what law do you apply? Federal law or Ohio law? Hypo: Beasley driving a car struck Aiken. Beasley was working for Cecil at the time. Cecil has money. Aiken wants to sue Cecil for $80,00.
1)Selecting the Proper Court: Which court can adjudicate the lawsuit
2)Aiken must find out what to do
3)Venue: Must sue in the correct place
4)Choice of law: What law should be applied
5)What do you do once into court
K)Jurisdiction is power. If you do not participate in a lawsuit against you, you lose. Judgement could be entered against you, and the judge could hold you in contempt. Hypo #1 Joe a Calif. resident is visiting Ann in Toledo. He trips over Dan, punches him, and goes back to Calif. A notice is published in the Blade. The court would not have jurisdiction.
Pennoyer v. Neff (1877) (p. 62) About Power and Territoriality
Pennoyer there are 2 cases Mitchell v. Neff who tries to attach the property
The 2nd case Neff is trying to kick Pennoyer off the property and said that Oregon did not have any jurisdiction over him on the first case. The Supreme Court ruling was that the 1st case was invalid because it violated due process, because the state court did not have jurisdiction over Neff. The D (Neff) did not know he was being sued. The case is not really about Notice it is about personal jurisdiction. Page 65: The law assumes that the property is in the possession of the owner, and the possession. Court was concerned about it’s territorial power, not about notice. Under Pennoyer whether the court had personal jurisdiction merged with the notice. Personal Jurisdiction and Personal Notice were put into this case together, but there are problems with this.
Issues in Pennoyer: The court was not focused on either of these issues of Fairness or Convenience
Fairness and bias to the D: (local judge and a local jury) This can go both ways, it could also be against the P in the D’s jurisdiction. This is not as much of a concern in most areas. However, some small towns it could take place.
Courts Concerns were TERRITORIAL regarding State sovereignty:

Each state is sovereign and equal, and each should respect the sovereignty of the sister state and not try to have holdings over people in neighboring states. (This took place during the reconstruction period after the Civil War and 14th amendment was just put into place)
Pennoyer: State has jurisdiction over people in there territory. Oregon tried to invoke this same thought process with people who own property in their territory.
Neff did not initially have presence or property (he claimed it but did not have the property) at the time of the initial suit, therefore there wasn’t any jurisdiction.

How could Oregon have gotten jurisdiction over Neff?
If Neff had been personally served
If Neff had consented to the jurisdiction
If Mitchell had attached the property as a (the law assumes the owner has the property in his possession
Two Principles of International Law in Territorial Law

1)Every state possesses exclusive jurisdiction and sovereignty over persons and property within its physical boundaries.
2)No state can exercise jurisdiction and authority over persons outside their territory. (this was not good law)
Under Pennoyer is there any way a state can have personal jurisdiction over a person not in the state:
a)Taking property (There were damages and going after damages by taking property in the territory)
b)D could consent (I’m not guilty and I’m going to fight this)
c)D could come back into the territory and be picked up.
1)Under the full faith and credit clause of the constitution:
a)Applies even if the substantive law of state 1 is not the same as state 2. The state of Oregon can’t assert jurisdiction of an out of state D if only served by an in state publication
b) Sufficiency part of presence If you are in the court it is sufficient to have jurisdiction (personal service in the territory)
c)Necessity part of presence. Neff did not own the property at the time of the judgement.
2) Due process clause allows attack on personal jurisdiction on appeal.
a)Collateral attack attacks the judgment on jurisdiction.
b)Appeal is an direct attack on the judgments merits.
TERMS TO KNOW

Writ of certiorari: Permission to review the case.
Collateral Attack: Jurisdiction in a Civil Case
Ineffective Assistance of Council (IAC) in a Criminal Case
These is brought in the court of origin, and does not attack the merits, but by doing one of the above.
WEEK OF 9/1/97

Two Principles of International Law in Territorial Law

3)Every state possesses exclusive jurisdiction and sovereignty over persons and property within its physical boundaries.
No state can exercise jurisdiction and authority over persons outside their territory. (this was not good law)
Traditional Bases for Personal Jurisdiction (after Pennoyer)
1)Citizenship (Domicile): A court can exercise jurisdiction over a D based on citizenship even if they are not present in the state. (If you enjoy the benefits of the state, the are subject to its’ laws) Blackmer v. United States (p. 69)and Milliken v. Meyer (p. 70)
2)Presence: A can take jurisdiction over a person while you are in the state for personal service. (if you are in the state, they have power over you) Grace v. (in Rem and in Personam)
Exceptions:
a)Fraudulent Inducement
b)Child Support
3)Consent: D can always consent to personal jurisdiction. D can wave his/her rights. (Usually done with corporation by appointing an agent for the company) If you file an appearance for a case (unless you file a special appearance) this is consent. Adams v. Saenger (p. 70)
4)Status: A court can exercise jurisdiction over a non-citizen for purposes of determining the status of the citizen. (State interest of protecting their citizens)
Pennoyer looked at the states as independent from each other.
Components of Personal Jurisdiction

Physical power over the person or property is necessary in order
Presence is sufficient for constitutionality of Jurisdiction


Jurisdiction after Pennoyer

Due process requires
Type of JXN Bases for JXN Notice Required

4)In Personam a) Consent a) doesn’t matter
b) Presence in forum b) personal notice in forum
c) Citizenship in forum c) personal (can be
outside the forum)

5)In Rem a) Presence of property in forum a) publication or personal
b) Status to determine legal b) publication or personal
Status of rem

6)Quasi-in-rem a) Attachment of property a) publication
In forum
EXPANDING THE BASES OF PERSONAL JURISDICTION (pp. 71-74 CB)
Hess v. Pawloski (pp. 71-73)
Bases for Hess
State concern to protect its’ citizens
Society has become more industrialized and citizens of states are interacting more with each other.
Kane v. New Jersey: explicit consent
Hess v. Pawloski: Implied consent
Issue: Is a nonresident required to answer for his conduct, while in the state, in the state where a cause of action is alleged against him? (Is the Mass. law contrary to the due process clause of the 14th Amendment?)
Rule: A nonresident is required to answer for his conduct in the state where causes of action arise against him.
Analysis: Hess while driving a car in Mass. struck and injured the Pawloski. Hess was a resident of Pennsylvania. When the hearing on the accident took place in Mass., no personal service was made on him and no property attached (since he evidently had none in Mass.). Mass. relied on a state law that provides that if a nonresident operates a motor vehicle on Mass. public highways he implicitly has appointed the registrar of Mass. as his attorney. The registrar can be served all lawful processes in any action against the nonresident coming from any accident in which the nonresident may have been involved while operating a motor vehicle in Mass. Any service given in this manner has the same legal force as if he were served personally. This is only in effect “if notice of this type of service and a copy of the process are sent by registered mail by the P to the D, and the D’s return receipt and the P’s affidavit of compliance are attached to the writ and entered with the declaration.” P claims that because the service was not directly to him that he would be “deprived of his property without due process of law, in violation of the 14th amendment.” At the trial, he had brought this argument up and it was denied. The jury found for Pawloski. Process of a court of one state cannot go into another and summon a person domiciled there to respond to court action against him. Notice sent outside the state to a nonresident is not proper to give jurisdiction in an action against him personally for money recovery (Pennoyer). “In order to proceed in an action there must be actual service within the state of notice upon him or some one authorized to accept service for him.” “A personal judgment against a a nonresident, who has neither been served with process nor appeared in the suit, is without validity.” (McDonald) Also the S.C. found that “ mere transaction of business in a state by a nonresident person does not imply consent to be bound by the process of its courts.” (Flexner) The privilege and immunities clause of the Constitution (sec. 2 Art. 4) safeguards to the citizens of the state the right “to pass through, or to reside in any other state…” It stops states from discriminating against citizens of other states.
Conclusion: The court felt that motor vehicles are dangerous and can cause serious damage to people and property.
In the public interest, the state should be able to enforce traffic laws in order to minimize the danger, and these laws apply to residents and nonresidents alike. A nonresident is required to answer for his conduct in the state where causes of action arise against him.
This provides the claimant with a convenient way by which he may sue to enforce his rights.
The statute in this case provides that the implied consent is limited to proceedings growing out of accidents on a public highway in which the nonresident may be involved.
It required that the nonresident should actually receive and receipt for notice of the services and a copy of the process. It gives is not discriminatory toward the nonresident and allows the nonresident adequate time to mount a defense to the charges.
States have the power to regulate the use of their highways (Kane). In Kane, the state had the authority not to allow nonresidents the use of their highways until they formally appointed a state official as his agent.
The SC did not find substantial difference between implied and formal appointment that would concern the application of the due process clause of the 14th amendment.
Concerning notice the SC pointed out that the implied consent statute requires that a copy of the service by mailed by certified mail to the D and that a confirmation of receipt must be received.
As we move away from territory to fictional presence, the avenue for notice is not so clear in regards to personal jurisdiction.
Hypo: Buy a widget
Hess and Kane relied on Pennoyer but the new case stretched in International Shoe (this includes corporations)
Consent (requires corporations to name agents in the state)
Presence: Courts would evaluate if a corp. was doing business in the state, by looking at their activities (this was very subjective – what is doing business?)
A NEW THEORY OF JURISDICTION (pp. 74-80 CB)
International Shoe Co. v. Washington (pp. 75-80)
Issue:
1)Whether D, within the limitations of the due process clause of the 14th amendment, has by its activities in Washington made itself liable to the state for unpaid contributions to the states unemployment compensation fund, and
2)Whether the state can get this money consistently with the due process clause of the 14th Amendment?
Rule: A state may properly assert personal jurisdiction if D has minimum contacts with the jurisdiction such that maintenance of a suit there does not offend traditional notions of fair play and substantial justice.
1)Activities in question established between the State and the corporation sufficient contacts or ties to make it reasonable and just, and in conformity to the due process requirements for the 14th amendment, for the state to enforce against the corporation an obligation arising out of such activities.
2)The tax imposed by the state unemployment compensation statute, construed by the state court, in its application to the corporation, as a tax on the privilege of employing salesmen within the state does not violate the due process clause of the 14th amendment.
Analysis: The corporation was a Delaware Corp., having its principal place of business in St. Louis, Mo., and was engaged in the manufacture and sale of shoes. It maintained places of business in several states other than Washington, where it made shoes for distribution through sales centers located outside of Washington. The company had no office in Washington and made no contracts for the sale or purchase of merchandise there. It did not maintain a stock in the sate and made no deliveries of goods in intrastate commerce (commerce within the state, as opposed to commerce between states). From 1937 through 1940, the company employed 11 to 13 salespersons under direct supervision and control of sales managers in St. Louis. These salespersons lived in Washington; and their primary activity was confined to that state; and commissions based upon the amount of their sales compensated them. The commissions for each year totaled more than $31,000. The company supplied it sales force with a lime of samples each consisting of 1 shoe of a pair, which they displayed to customers. On occasion they rented permanent sample rooms, for showing samples, in business buildings, or rented rooms in hotels or office buildings temporarily for that purpose. The company reimbursed the costs of such rentals. The salespersons could only show their samples and solicit orders from customers, at prices fixed by the company. The salespersons sent the orders to the company’s office in St. Louis where orders were filled and shipped f.o.b. from outside Washington to customers in Washington. All invoices came from the place of shipment. No salesperson could enter into a contract or collect money. The Washington S.C. said that “the regular and systematic solicitation of orders in the state by the company’s salesmen, resulting in a continuous flow of product into the state was sufficient to constitute doing business in the state so as to make the company open to suit in its courts. It also said that there were enough other activities shown to bring the case within “the rule that solicitation within the state by the agents of a foreign corporation plus some additional activities there are sufficient to allow the state to sue for obligations arising out of the activities there.” The company argued that the statute imposed an unconstitutional burden on interstate commerce. However, 26 USC 1606 rebuts this argument. They also argue that their activities in Washington were not enough to manifest its “presence” there and that in its absence, the state court had no jurisdiction, and they were denied due process. The court did not agree with these arguments. Since a corporation is a fiction of sorts, the court said “ unlike an individual presence…can be manifested only by activities carried on in the corp. behalf by those who are authorized to act for it. A single or occasional act of the corporate agent in a state does not give the state authority, but continuous and systematic acts, as the company has directed, does give the state authority.
Conclusion: The rationale to this is that the territoriality principle is too inflexible and the fiction of implied consent does not sole the problem. The criteria for minimum contact are:
1)Did the cause of action arise out of the D’s activity within the state?
2)Was an out of state party engaged in continuous and systematic business within the state? Continuous and systematic means more than minimal contacts.
Minimum Contacts: fairplay, justice and reasonableness
9/4/97 Class
REVIEW SESSIONS: 10/18/97 9:00AM

1)Power to decide case: Jurisdiction
A)Jurisdiction over personal things
a)Traditional Bases Pennoyer
Domicile, in the area, consent,
Pennoyer territorial theory (relies on international law model)
b)Expansion of Bases Kane, Hess
(More contact between states the above is not adequate enough)
Jurisdiction was extended by implied consent, because of D’s activities in the state he has appointed (by implication) an official of the state.
The ability of the territorial theory was still limited (commerce has extended past what could be found under this expansion)
c)New Theory International Shoe
Theory shifted from power to fair (Is it there -- is it fair)
The holding required 1) minimum contacts (continuous, systematic, and related to the suit) not to offend our traditional ideas of 2) fair play and substantial justice (this is not defined). The reasoning in this case is that a corp. that benefits from the laws of the state, in re: notice: it was enough that I.S. had enough contacts in the state, that substitute service of notice is considered actual notice (even if it was not actual). The problem with the presence theory is how do you serve a corporation that is not actually present in the state and are not incorporated in that state.
International Shoe, (p. 78) focus is on fairness
Give guidance for what is enough for Jurisdiction
1)Given sufficient contacts it is unreasonable for the D to deny personal jurisdiction because the D derived benefit from the forums laws.
2)The amounts of contacts are fewer if the injury occurred in the Forum State.
3)The court focuses on how unfamiliar or inconvenient the Forum State is for the D.
d)[IMG]file:///C:/Users/mike/AppData/Local/Temp/msohtml1/01/clip_image011.gif[/IMG][IMG]file:///C:/Users/mike/AppData/Local/Temp/msohtml1/01/clip_image012.gif[/IMG]Specific Jurisdiction and Long Arm Statutes[IMG]file:///C:/Users/mike/AppData/Local/Temp/msohtml1/01/clip_image013.gif[/IMG]
INTERNATIONAL SHOE
Application of Jurisdiction of Law (Minimum Contacts in State)
[IMG]file:///C:/Users/mike/AppData/Local/Temp/msohtml1/01/clip_image014.gif[/IMG]

Directly Related to 4) Specific Jurisdiction 1) Jurisdiction
Cause of Action McGee (Y) Hanson (N)
Worldwide (N) Kulka (N)
Unrelated to BurgerKing (Y) Grey (Y)
Feathers (N) Asahi (N)

Cause of Action 2) No Jurisdiction 3) General Jurisdiction
[IMG]file:///C:/Users/mike/AppData/Local/Temp/msohtml1/01/clip_image003.gif[/IMG]

Occasional Continuous
or or
Sporadic Systematic
[IMG]file:///C:/Users/mike/AppData/Local/Temp/msohtml1/01/clip_image001.gif[/IMG]









[IMG]file:///C:/Users/mike/AppData/Local/Temp/msohtml1/01/clip_image004.gif[/IMG][IMG]file:///C:/Users/mike/AppData/Local/Temp/msohtml1/01/clip_image004.gif[/IMG][IMG]file:///C:/Users/mike/AppData/Local/Temp/msohtml1/01/clip_image005.gif[/IMG] Jurisdiction after International Shoe

Court unlikely to Court likely to

find Jurisdiction find Jurisdiction


Contacts Contacts Contacts Contacts
No not related not related related to related to
Contact to cause of to cause of to cause of to cause of
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Sporadic Continuous Sporadic Continuous (General (Specific
(No Jurisdiction) Jurisdiction) Jurisdiction) (Jurisdiction)

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SPECIFIC JURISDICTION AND STATE LONG ARM LAWS (pp. 80-91 CB)
Before International Shoe, most states had restrictive jurisdictional statutes geared to the earlier notion of territory. Since that decision, most states have seized upon the SC’s recognition of their broad constitutional power under the 14th Amendment and have enacted long-arm or single-act statutes that broaden the authority of their courts to assert jurisdiction in specific cases over Ds who are not subject to the territory power of the state.
This is based on the Ds actions in the forum. The D is subject to jurisdiction in casual contacts and the cause of action is related.

Questions for Long-Arm Statutes

1)Statutory Analysis: How far does the state legislature intend the statute to go?
2)Due Process (Constitutional) Analysis: Does the Long-Arm statute go so far, to violate due process?

Notice = Jurisdiction under the long-arm statutes.

1)The Long-Arm Laws: A state may asset personal jurisdiction if:
a)the D has minimum contacts with the forum
b)the acts fall within the state’s long-arm statute, and
c)the D is given reasonable notice and an opportunity to defend.
Many states limit long-arm jurisdiction to particular categories of contacts: a few others allow assertion of long-arm jurisdiction over any action unless that assertion of jurisdiction would violate a provision of the state or federal constitution.



Gray v. American Radiator & Standard Sanitary Corp. (pp. 82-87)
Issue: Does the Illinois statute that provides that “summons may be personally served on any party outside the State; and that as to nonresidents who have submitted to the jurisdiction of the courts, such service has the force and effect of personal service in Illinois.” …a nonresident who, either in person or through an agent, commits a tortious act in the state submits to jurisdiction” violate due process of law?
Rule: The place of a tortious act is where the injury occurs. The injury occurred in Illinois. Long Arm statute of Illinois applies if the injury occurred in the state, although the D’s negligence occurred elsewhere. The fallacy of this thinking is that the long-arm statute is enough to get personal jurisdiction. The real reasoning should be whether exercising the jurisdiction granted by the legislature is constitutional because the company did purposely benefit from activities in the state where the suit is brought. (The level of the contacts was enough because Titan benefited (to a degree) from the laws of Illinois for marketing of valves in hot water heaters. They also found its was convenient for Titan to travel to Illinois.
Analysis: An Illinois suit was brought against the Titan valve Mfg. Co., on the ground that a water heater had exploded and injured P. The complaint charged the company, a foreign corp., had negligently mfg. the safety valve; and that the injuries were suffered as a proximate result. A summons was issued and served on the company’s registered agent in Cleveland, Ohio. The corp. filed to stop the action on the ground that it had not committed a tortious act in Illinois. It stated that it does no business in Illinois; that it had no agent physically present in the state; and that it sells the completed valves to D, outside of Illinois. D set up a cross claim against Titan, alleging Titan made certain warranties to them, and that if the latter is held liable to the P it should be indemnified and held harmless by Titan. The court granted Titan’s motion, dismissing the complaint and cross complaint. The law of Illinois states that “summons may be personally served on any party outside the State; and that as to nonresidents who have submitted to the jurisdiction of the courts, such service has the force and effect of personal service in Illinois.” “…a nonresident who, either in person or through an agent, commits a tortious act in the state submits to jurisdiction. The courts said “it is well established that in law the place of a wrong is where the last event takes place which is necessary to render the action liable. It is clear that the alleged negligence in mfg. the valve cannot be separated from he resulting injury; and that for present purposes, the tort was committed in Illinois.”
D argues on constitutionality that if the injury is their only contact with the State, then the Illinois statute exceeds the limits of due process. The D’s only contact with Illinois is from the fact that a sub part made in Ohio and put into a hot water heater in Pennsylvania which was sold to an Illinois consumer. There is no record that the D had done any other business in Illinois, either directly or indirectly. The D argues that no “minimum contacts” are shown sufficient to support jurisdiction. The court disagreed and said that since International Shoe, it has been found that doing volume of business is not the only way in which nonresidents can form the required connection with the state. McGee (p. 84) Insurance Policy was cited; Smyth (p. 84) cited; Nelson (p. 84) cited: “the commission of a single tort within this State was held sufficient to sustain jurisdiction under the present statute.”
Conclusion: The court interpreted the language of the Long Arm statute of Illinois to apply if the injury occurred in the state, although the D’s negligence occurred elsewhere. The fallacy of this thinking is that the long-arm statute is enough to get personal jurisdiction. The real reasoning should be whether exercising the jurisdiction granted by the legislature is constitutional. (If the company does not purposely benefit from conducting activities in the state where the suit is brought).
a)The Development of the Long Arm Statutes (SUPP 287-292) Nothing requires a state to exercise all of its constitutionally permissible jurisdiction. Many long-arm statutes have a limited scope. They particularize the categories of contacts with the state that gives rise to personal jurisdiction. Statutes in a few states (i.e. California & Rhode Island) simply provide that their courts can assert jurisdiction over any action unless the assertion would violated either the state or federal constitution. They are easy to apply to changes in the law and are easy to draft. However, they don’t give guidance to the courts re: jurisdictional policies of the state. This can make every jurisdictional question a constitutional issue.
i)New York
ii)North Carolina
iii)Rhode Island
Week of 9/8/97
Due Process and the Long Arm Statutes (pp. 91-131)
9/09/97 Class
McGee v. International Life Insurance Co. (p. 91)
Issue: Can a state court finding of jurisdiction over the foreign Company be upheld by the SC under the Long-Arm statute despite a constitutional challenge under the 14th amendment?
Rule: In an action in a state court, jurisdiction over a foreign company should be upheld under the Long-Arm statute despite a constitutional challenge under the 14th amendment. This would be true even if the defendant sold only one policy in the state
Analysis: The P was the beneficiary of a life insurance policy issued by Empire Mutual Insurance, an Arizona corp., to Lowell Franklin, a resident of California. In 1948, the D assumed Empire Mutual insurance obligations. Franklin and the D continued to do business by mail until Franklin’s death in 1950. Neither Empire nor International Life ever had any office or agent in California. As far as the record disclosed, D had never solicited or done any insurance business in California other than the policy with Franklin. A Kansas Insurance company solicited and sold an insurance policy to a citizen of Louisiana. Premiums were paid by the insured for several years. After the insured’s death, her heirs, who also were citizens of Louisiana sought to recover the proceeds of the policy. International refused to pay McGee upon Franklin’s death and she sued in a California court, basing jurisdiction on the California Unauthorized Insurer’s Process Act. The Act subjects foreign corporations to suit on insurance contracts with in-state residents. After recovering a judgment in California, McGee sought to enforce the judgement in Texas. The Texas court refused to enforce the judgement, holding it to be void under the 14th amendment. On the ground that the California courts, could not assume jurisdiction over International Life w/o proper service within its boundaries. The California court finding of jurisdiction over the Texas Company was upheld by the SC under the Long-Arm statute despite a constitutional challenge under the 14th amendment. This would be true even if the defendant sold only one policy in the state.
Conclusion: One of the vital considerations in this situation is the Forum State’s interest in protecting its citizen’s against insurance companies, a policy typically manifested by the enactment of extensive regulatory legislation.
Hanson v. Denckla (p. 93) Territorial Test
Issue: Can a defendant be called upon to defend in a foreign tribunal if he has not had the “minimal contacts” with that State?
Rule: A defendant may not be called upon to defend in a foreign tribunal unless he has had the “minimal contacts” with that State that are a prerequisite to its exercise of power over him.
Analysis: Dora Donner, a resident of Pennsylvania, established a trust in Delaware, naming a Delaware bank as trustee. The trust stated that during here lifetime the income from the trust would go to her and, upon her death, the remainder would pas to whomever she had appointed as beneficiaries. Mrs. Donner retained the power to change the appointed beneficiaries at any time.
Mrs. Donner moved to Florida, and several years before her death, she executed her last will and testament, leaving most of her estate to two of her daughters. On the same day she executed (for the last time) her power to change the appointed beneficiaries under the trust, and designated two of her 3rd daughters children (her granddaughters) as beneficiaries. Of a significant porting of the trust’s assets, with the remainder going to her estate.
After Mrs. Donner died, the 2 daughters named in the will brought actin in Florida claiming that the appointment of their sister’s children as beneficiaries of the trust was ineffective. The D’s argued that the suit could not go forward because the Florida court could not assert jurisdiction over the Delaware trustee, an indispensable party under Florida law.
The Florida court found that it had jurisdiction over the trustee for the purpose of the action, concluding that the trust was invalid and hat the exercise of the power to appointment was ineffective to pass title, and held that the trust property therefore passed under the will (to the daughters). Before the Florida judgement was rendered, an action was commenced in Delaware to determine who was entitled to share the trust assets, which were situated in Delaware. With minor exceptions, the parties were the same as in the Florida action. When the Florida judgment was rendered, the legatees under the will unsuccessfully urged it as res Judicata of the Delaware action. (This would have had the effect that once the Florida court has rendered a final judgement, that judgement would be conclusive on all parties to the case and prevent them from engaging in any other litigation (even in Delaware) on the points and issues that were determined). The Delaware court held the trust and the exercise of the pwer to appointment valid under Delaware law.
Conclusion: A divided Supreme Court found that because the trustee’s contacts with Florida had been less than minimal, that state could not assert personal jurisdiction. Therefore, Delaware was justified in refusing full faith and credit to the Florida decree. A defendant may not be called upon to defend in a foreign tribunal unless he has had the “minimal contacts” with that State that are a prerequisite to its exercise of power over him.
9/11/97 Class
World Wide Volkswagen Corp. v. Woodson (p. 97) Rejects that injury within the forum is not necessarily enough without foreseeability of being haled into court.
Issue: Is foreseeability that a product will get to a forum enough to invoke personal jurisdiction?
Rule: Foreseeability that the product will get to the state is not enough. The SC said that foreseeability is relevant, but it foreseeability that the defendant would get haled into court in that forum, not foreseeability that the product would get there. Is it foreseeable that we would be sued in that forum?
Analysis: The Robinsons’ live in NY but are moving to Arizona. They are going to change their domicile to Arizona. They buy an Audi in NY for the trip. In Tulsa, OK their car is rear-ended by an uninsured, drunk driver and there are horrible personal injuries to Mrs. Robinson and their 2 children. The Robinson’s sue in Oklahoma and allege that the car is defective. They sue Volkswagen, the mfg. of the car (who does business everywhere and are subject to jurisdiction in Oklahoma), and they sue the importer as well (Volkswagen of North America for the same reason). They also tried to sue the regional distributor of the car they bought, who only did business in NY, NJ, and Connecticut: World Wide Volkswagen. They also sued the dealership, Seaway, in upstate NY. They sued in Oklahoma and the SC said that there was no jurisdiction over World Wide or Seaway in Oklahoma. The Robinson’s argued that when they sold them the car in NY it is foreseeable that the car will get to places like Oklahoma.
Conclusion: The SC rejects this idea as a basis of jurisdiction. Foreseeability that the product will get to the state is not enough. The SC said that foreseeability is relevant, but it foreseeability that the defendant would get haled into court in that forum, not foreseeability that the product would get there. Is it foreseeable that we would be sued in that forum? The SC said that it wasn’t foreseeable, because the car got to Oklahoma through the unilateral act of a 3rd party. The Ps had taken the car to Oklahoma, the D’s had not directed the car to Oklahoma at all. So there was no purposeful availment or foreseeability. In Hanson and World Wide the SC said that there was no relevant contact between the D and the forum.
Dissent (Brennan): In the dissent he discussed the fact that the essential key inquiry should be whether the particular exercise of jurisdiction offends “ traditional notions of fair play and substantial justice.” Did the forum have a strong interest in the forum (burden on the P)? Is it fair or not? Minimum contacts have nothing to do with it. Both parties were included in this suit so they could claim a diversity suit.
Keeton v. Hustler Magazine Inc. (p. 107)
Issue: Does the sale of thousands of magazines in NH satisfy the requirement of the Due Process Clause that a State’s assertion of personal jurisdiction over a nonresident D be predicated on “minimum contacts” between the D and the state?
Rule: The Supreme Court said that “the sale of thousands of magazines in NH could satisfy the requirement of the Due Process Clause that a State’s assertion of personal jurisdiction over a nonresident D be predicated on “minimum contacts” between the D and the state.” NH had adopted a “long-arm” statute authorizing service of process on nonresident corporations whenever permitted by the Due Process Clause
Analysis: Kathy Keeton, a resident of NY, brought a libel suit against Hustler Magazine, an Ohio Corp., in federal court in New Hampshire. P chose New Hampshire because the New Hampshire was the only state where the action was not time-barred when it was filed. She argued that jurisdiction existed under NH’s long-arm statute because Hustler sold 10,000 to 15,000 magazines a month in the state. Keeton herself had only one connection to NH: a magazine she helped to produce was circulated there. The district court dismissed Keeton’s suit for lack of jurisdiction, and the 1st Circuit court affirmed, holding that Keeton’s lack of contacts w/ NH rendered the state’s interest in redressing the libel to the P too attenuated to support jurisdiction over a suit necessarily involving nation-wide damages. The court said, “ the NH tail is too small to wag so large an out-of-state dog.”
Conclusion: The Supreme Court reversed, saying that “the sale of thousands of magazines in NH could satisfy the requirement of the Due Process Clause that a State’s assertion of personal jurisdiction over a nonresident D be predicated on “minimum contacts” between the D and the state.” NH had adopted a “long-arm” statute authorizing service of process on nonresident corporations whenever permitted by the Due Process Clause. All the requisites for personal jurisdiction over Hustler Magazine, Inc. in NH were present. The issue was jurisdiction, not conflicts of law.
SUBSTANTIVE LIMITS ON LONG-ARM STATUTES
Kulko v. Superior Court (p. 109)
Issue: Can a state rely on the “effects” tests because of the activity affecting state residents by foreign residents?
Rule: A state court’s reliance on the “effects” tests is misplaced because the test applies only to wrongful activity w/o the state causing injury within it or to commercial activity affecting state residents. Merely causing an effect within the Forum State without purposeful availment will not support jurisdiction. The basic consideration of fairness point is the deciding factor. The State of domicile is the proper forum for adjudication of a case such as this, whatever the merit of the underlying claim. If the appellant remains in the State of domicile and the appellee who moves across continent, exercising jurisdiction in the new state would impose an unreasonable burden and be wholly unjustified by the “quality and nature” of appellant’s activities in or relating to the State.
Analysis: This was a suit for modification of a child support agreement by a Californian against her ex-husband in NY. The couple’s 2 children live with their father in NY under the original separation agreement. When the daughter told D that she wanted to live with her mother, he assented and bought her a 1-way plane ticket to California. The other child also joined his mother in California, after receiving a 1-way ticket for her, w/o D’s knowledge. The California SC upheld jurisdiction over the D husband under the California long-arm statute, which authorized the exercise of jurisdiction “ on any basis not inconsistent w/ the constitution.” The court concluded that it was “fair and reasonable” for the NY D o be subject to personal jurisdiction in California because by purchasing his daughter’s airline ticket, he had committed a ”purposeful act” outside the state that caused an effect within the state. The US Supreme Court reversed.
Conclusion: The SC concluded that “A father who agrees, in the interests of family harmony and his children’s preference, to allow them to spend more time in California, than was required under a separation agreement can hardly be said to have “purposefully availed himself” of the “benefits and protections” of California’s laws.” The court noted that the California court’s reliance on the “effects” tests was misplaced because that approach applies only to wrongful activity w/o the state causing injury within it or to commercial activity affecting state residents, when that application would not be “unreasonable.” Merely causing an effect within the Forum State without purposeful availment will not support jurisdiction. The basic consideration of fairness point decisively in favor of appellant’s State of domicile as the proper forum for adjudication of the case, whatever the merit of the underlying claim. It was the appellant who remained in NY (the State of the marital domicile) and it was the appellee who moved across continent. Exercising jurisdiction would impose an unreasonable burden on family relations, and one wholly unjustified by the “quality and nature” of appellant’s activities in or relating to the State of California.
Calder v. Jones (p. 110)
Rule: Consideration of 1st amendment terms would confuse the issue. Jurisdiction is OK in California, because of minimum contacts.
Burger King Corp. v. Rudzewicz (p. 111)
Issue:
Rule: It is inconvenient for them to come to Florida, but not unconstitutionally so. The court makes the point with our due process protection, with the minimum contact test, the forum does not have to be the best place for trial. We have jurisdiction under the due process clause because it is not a gross unconstitutionally inconvenient forum. The SC said that the burden regarding fairness is on the Defendant to show that the forum is unfair. The burden is very tough to prove. You have to show that it is so gravely and inconvenient that the Defendant is at a severe disadvantage at the litigation. It is not shown by simple economic disparity between the parties.
Analysis: Contract case. The franchisees of Michigan had reached out to Florida to enter a franchise agreement. It was a 20-year deal involving more than a Million Dollars. Florida law was going to apply to govern the relationship, Florida had an interest. When Burger King sued the franchisees in Miami, there was definitely a contact between the defendants in Michigan and the state of Florida. Florida has jurisdiction. Burger King gives an explication of the fairness factors. There is a contact in this case, but the D said that exercise of jurisdiction in Florida wasn’t fair based on the facts of the case. It seemed like they had a good argument: They were little people, they were individuals in Michigan being hauled into a court in Miami to sue with the hometown advantage of Burger King. It looks like this might be unfair. Supreme Court Justice Brennan didn’t agree. It is inconvenient for them to come to Florida, but not unconstitutionally so. The court makes the point with our due process protection, with the minimum contact test, the forum does not have to be the best place for trial. We have jurisdiction under the due process clause because it is not a gross unconstitutionally inconvenient forum. The SC said that the burden regarding fairness is on the Defendant to show that the forum is unfair. The burden is very tough to prove. You have to show that it is so gravely and inconvenient that the Defendant is at a severe disadvantage at the litigation. It is not shown by simple economic disparity between the parties.
Conclusion: This helps to clarify the two prongs from the International Shoe case. The contact prong and the fairness prong. It is clear in this case that you must have a relevant contact or there is not jurisdiction. The court suggested that there is a sliding scale: if the fairness factors balance strongly in favor of jurisdiction the courts may hold up jurisdiction based on a lower level of contacts. Still contact is needed.

Week of 9/15/97
No Class on 11/6/97

GENERAL JURISDICTION & the LONG ARM STATUTE
9/17/97 (pp. 119-131)
Hasenfus v. Corporate Air Services (p. 119)
Issue:
Rule:
Analysis:
Conclusion:

Alchemie International Inc. v. Metal World Inc. (p. 120)
Issue:
Rule:
Analysis:
Conclusion:






Main Claim: Plaintiff v. Defendant

Counter Claim: Defendant v. Plaintiff
Cross Claims: Defendant v. 3rd Party


Asahi Metal Industry Co. v. Superior Court (p. 121)
Issue:
Rule: The SC further limited the exercise of long-arm jurisdiction. Although Worldwide VW barred jurisdiction when D’s product entered the forum through the unilateral activity of a consumer, it left open the possibility of jurisdiction when D had a clear-cut, advance knowledge or intention that the product would reach the forum through the distribution chain. Asahi (a Japanese manufacturer) engaged in regular and extensive sales of tire valves to Cheng Shin (a Taiwanese manufacturer). Asahi knew that Cheng Shin in California would sell some valves incorporated into the tire tubes in Taiwan. When Cheng Shin sought indemnification from Asahi in a product liability action in California, Asahi claimed lack of jurisdiction.
1)Justice O’Connor understood that in WorldWide Volkswagen that a manufacturer’s contacts must be “more purposefully directed at the forum State than the mere act of placing a product in the stream of commerce.” Asahi ‘s mere awareness that the valves sold to Cheng Shin would eventually end up in California was not sufficiently purposeful, in her opinion, to establish minimum contacts. The D must indicate intent to serve the market in a forum state, as by designing the product specifically or advertising there.
2)Justice Brennan in his opinion found no requirements in Worldwide Volkswagen for any “additional conduct” beyond the placement of a product into “the regular and anticipated flow of products from manufacture to distribution to retail sale.” The question of what is the appropriate standard to be used to determine whether a manufacturer has established sufficient “minimum contacts” with a forum state has not been fully settled.
3)Eight justices agreed that, even assuming that minimum contacts existed, the California state court’s exercise of jurisdiction over Asahi was unreasonable and would offend notions of fair play and substantial justice, considering the minimal interests of California in litigating the lawsuit between two foreign companies, the insignificant interest of the P in litigating in California, the international context of the dispute, and the high burden of California litigation on the D (Asahi)
Analysis: Stream of commerce problem. Overseas corporation, valve manufacturer was Japanese, the tire manufacturer that incorporated the valves into their tires was located in Taiwan. The case was brought in California, and all 9 Justices agreed that the case should have been dismissed because California had no interest. The local person who had brought the case, had settled the case (that claim was gone), and the fight between the 2 overseas corporations should not go on in California. On the fairness side of things, the Court dismissed the case. The interesting part of this case is whether there is a contact. Does the stream of commerce give us a contact. The Supreme Court did not come up with a rule because of a split.
1)4 Justices lead by Brennan said that “if you put a product in the stream of commerce and you reasonably anticipate it will get to the forum, then that is a contact. (If you make a valve in state A and send it to state B, and know it will eventually get to states CDFG that is a contact with CDFG.
2)4 other Justices lead by O’Connor said no, that is not enough. Just putting it in the stream, even with the knowledge or anticipation that it was going to get to the other states is not enough. We need a purpose or intent to serve those other markets (CDEFG). Maybe we have to advertise there, or solicit business there, market there, or provide an 800-phone number for questions there, but you need something more.
Conclusion: On the facts of Asahi and the facts that we come up with in class, the fact that you sell from state A to state B and that the product ends up in CDEFG, is not enough to be a contact with CDEFG under this theory because I did nothing else there, I didn’t show a purpose or intent to market there. This was not a helpful decision. It only tells us that there are 2 competing schools of thought and these aren’t the only schools of thought on the streams of commerce. It would be nice if we had direction from this case. Justice Stevens would not take a position on this, saying, “I kind of agree with both of them.”

Burger King said in dicta that minimum contact, fair play and substantial justice may point to jurisdiction. What Asahi did is that it followed it’s dicta and created it into new law.
A problem with the case is that California had an interest in deterring the flow of defective products into the state. The Supreme Court felt this was too speculative, and this was between 2 foreign companies.
The O’Connor holding said that if the claim is not settled in this country, you might have to settle in a foreign forum. This is different from the forum that the initial settlement was made to the man whose wife was killed. O’Connor has screwed this up.

Parry v. Ernst Home Center Corp. (p. 128)
Issue:
Rule:
Analysis: P in Utah is injured by a maul (combo of a hammer & ax). The manufacturer is Japanese (Okada) and the Hirota (is the importer), who sell it to the
Conclusion: Tried to apply O’Connor’s point of view. Said that the D has no minimum contacts and no jurisdiction.

Nelson by Carson v. Park Indus. Inc. (p. 129)
Issue:
Rule:
Analysis: A minor is burned when her cotton shirt ignites. The Mfg. and Purchasing agent have no contacts with Ill. However, sell to Woolworth’s in Ill. The court followed the Brennan train of thought.
Conclusion:


Contacts must be
1)Purposeful
2)D must have reasonably foreseen that he’d be in court
3)One contact is enough if it is directly related to the case
4)foreseeability

How do Courts look at general jurisdiction?
Lesnick v. Hollingsworth (p. 129)
Issue:
Rule:
Analysis:
Conclusion:


9/19/97 (pp. 131-142)
GENERAL JURISDICION

Contacts have to be continuous and systematic, and the contacts are not related to the cause of action.
Perkins v. Benguet Consolidated Mining Co. (p. 131)
Issue:
Rule: Upheld general jurisdiction.
Analysis: The corporation could not do business in the Philippines during WWII, because the Japanese occupied it. They moved to Ohio, were sued in Ohio from a cause of action that arose in the Philippines. The court there was general jurisdiction in Ohio (they could be sued there for any cause of action) because of the substantial continuous tie there.
Conclusion: The court found that systematic and continuous contacts in the state the state may have general jurisdiction. On remand the state court agreed.

Fisher Governor Co. v. Superior Court (p. 132)
This wrongful death suit about an injury in Iowa. The D was a Mfg. in Iowa. The D’s agent was served notice in California. The court was in California. California SC said that there weren’t enough contacts to support General Jurisdiction.

Frummer v. Hilton Hotels International Inc. (p. 133)
Ratliff v. Cooper Laboratories (p. 133)



Helicopteros Nacionales de Colombia, S.A. v. Hall (p. 133)
Issue:
Rule: Continuous and systematic contact narrowly defined: Continuos and systematic contact, as a basis for jurisdiction by a state over a non-resident defendant when the cause of action is unrelated to the defendant’s activities in the forum state, has been somewhat circumscribed. The Supreme Court has held that purchases and related trips alone are not a sufficient basis for a state court to assert jurisdiction over a non-resident D in a cause of action unrelated to the purchased. Even purchase at regular intervals may be an insufficient contact. The Court suggests that minimal contact even if systematic and continuous do not meet the “minimal contact” tests.
Analysis:
Helico owned a Helicopter Service that operated out of Columbia. One of their helicopters crashed in Peru killing 4 U.S. citizens. The descendents were employees of a Peruvian corporation that was part of a Consorcio. Their descendants sued in a wrongfully death suit. Helico contracted in the (Texas) Forum State with Bell Helicopter. D occasionally sent pilots to be trained in state Y. D also bought some spare parts for planes there. After an accident in State X, P sues D in Texas. D’s contacts with Texas are probably too minimal for D to subject to the jurisdiction of Texas.
1984 case. The court said there was not enough contact to justify general jurisdiction over the Columbia Corporation. The court agreed that the corporation did some things in Texas, but it was not enough to be substantial and continuous. It is a long drawing exercise in which reasonable people can disagree on when it becomes substantial and continuous. There are many easy cases.
Example: Ohioan flies to Columbia loaning money to Helico to make a purchase. If Helico goes belly up can the Ohioan sue in Ohio? Probably not.
The decision has harsh results. The burden in a Peruvian or Colombian court may be too difficult for descendents.
The Court zoomed over the Personal Jurisdiction portion of this case. “But for” Helico buying the Helicopter in Texas, or training their pilots in Texas, there would not have been an accident.
Brennan’s Dissent: Said there was a “general jurisdiction”
Relating too or
This case falls between General and Specific Jurisdiction
1)Helco has Texas contacts but not enough
2)The P’s claim was not good enough to make
Brennan:

Note #1: Page 140

Conclusion: If you go on vacation in South America and rent a car which was manufactured by one of the Big 3, and something goes wrong with the car and you are hurt, Can you Sue the Auto manufacturer in Detroit? Yes. They have substantial and continuous ties with Mich. and are subject to personal jurisdiction. Same thing with domicile of an individual. Pennoyer talked about this and so did the Supreme Court in Miliken.
De Reyes v. Marine Management & Consulting, Ltd. (p. 141)

Cresswell v. Walt Disney Production (p. 142)

Approach to In Personam Jurisdiction Questions
(CONSTITUTIONAL ANALYSIS)
Don’t write a history lesson on the answer
Apply factors from cases, and come to a reasonable conclusion
1)Look for a contact(Unless there is a relevant contact, all the fairness in the world won’t make up for that (Burger King). A contact must be between the D and the forum. If a contact is established is it relevant? This can be shown by:
a)Purposeful Availment: The D must reach out to the state in someway (make money, use the roads) Not the unilateral act of a 3rd party (WW Volkswagen)
b)Foreseeability: Is it foreseeable that the D would be sued in the forum? Not just foreseeable that the product might get there.
ØIf the product is dangerous, and it is foreseeable that the product get to the forum and is used there, cases could arise where it is foreseeable that the D could be sued in that forum.
2)Assuming a relevant contact, review the fairness factors. Even if it is arguable that there may not be minimum contacts, remember Burger King. “ If the factors on fairness are overwhelming, then we know we can get by with a lesser showing of contact.” The fairness factors are:
a)Relatedness: The idea from McGee asks does this lawsuit arise from the D’s contact with the forum? This is always met with Long-Arm Statutes and Non-Residents motorist act. These statutes always require relatedness.
b)Convenience: The D is always going to say the place isn’t convenient. The SC usually says, tough, you can travel (Burger King). It is very tough for the D to make this showing, and the burden is on the D to show that the forum is unfair. Remember, it has got to be so “gravely inconvenient that the D is at a severe disadvantage in the litigation.” Economic difference between the P and D is not enough. The forum does not have to be the best, just has to be acceptable under due process.
c)Forum States Interest: (McGee) The forum has an interest to provide a forum for it’s citizens who are hurt by out of staters. States always have this interest. Can be in a statute, but does not have to be in any statute.
3)Special Problems:
a)Stream of Commerce: There is no clear law on what constitutes a contact. If I’m in state A making valves and send them to state B where they are using them to make water heaters going to states CDEFG, Brennan and O’Connor took opposite positions on whether there was a contact between the valve mfg. in State A and the consumers of the water heaters in states CDEFG.
i)The are other arguments that says, you don’t have jurisdiction over company in state A because they didn’t reach out to states CDEFG. The valves got there through the unilateral act of a 3rd party. It was the company in state B, who made the water heaters who sent them there. Therefore, there was no purposeful availment.
j)or the argument could be that: there is purposeful availment because the valve company makes money off of those sales. Every time that water heater company sells into states CDEFG, there is a greater demand for the valves, and the valve company sells more valves, therefore the valve company makes money off of the fact that they send them into those other states. Maybe this is purposeful availment.
b)Pure Presence: Is presence alone a basis for jurisdiction? Even without minimum contact analysis, there was a split on the SC. 4 Justices said yes, the other 4 said no, you had to go through the minimum contacts, although usually presence in the forum when you are served is going to be enough.
STATUTORY ANALYSIS
Most states have statutes that give jurisdiction over the classical forms.
1)Presence when served: Every state has a statute that says they have general jurisdiction over people who are served while in the forum. Is it constitutional? Usually there is no problem.
a) Exception:
2)Domicile: Courts have jurisdiction if domiciled and have a substantial and continuous tie with the state (Helicoptoros)
3)Consent: Someone can always consent to personal jurisdiction by entering into a contract that states that, waive the defense of no personal jurisdiction, and there are statutes that use an implied consent (i.e. nonresidents motorist act) Nonresident motorists acts are a specific jurisdiction statute – a person can only be sued for the specific accident they were involved in, nothing else. This is because the D has minimum contacts with the forum as well as purposeful availment, and it would be foreseeable to be sued in the state.
4)Long-Arm Statutes: There are 2 varieties of these:
a)California Variety: We have the right to reach fully of the constitution. If that is what the statute says, there is no statutory issue, and you go right to the constitution.
b)Specific Jurisdiction because of the defendant’s actions in the state. The cause of action arises out of the D’s actions in the state. The statutes list the specific actions required for the long-arm statute to operate (i.e. transact business in the forum; breach of contract in the forum; tortious act committed while in the forum; insuring a risk in the forum; owning, using or possessing real property in the forum; a matrimonial domicile in the forum)
States interpret the same long-arm statutes differently. (i.e. stream of
commerce or not? Valve mfg. case)

9/22/97 Class Notes Review Pennoyer (pp. 62-71) and pp. 142-158)
Jurisdiction Based On Property In rem and quasi in rem jurisdiction may be based on the presence within the forum of any form of property right – real, personal, or intangible. The forum can’t get in personam so they go after in rem or quasi in rem.
The long-arm may not have reached the D for in personam purposes. Example: Many long-arms don’t reach defamation cases.
Difference between in rem and quasi-in-rem.
In-Rem: case is about the property itself. We are worried about who owns it. Not just real property. Exists when there is property in the state that is the subject of the suit. (Land title registration, eminent domain, admiralty, etc.) All persons involved must receive adequate notice.
Quasi-In-Rem: case has nothing to do with the property itself. This would be an in personam case if we could get in-personam jurisdiction. This exists when property in the forum is attached in order to get jurisdiction over the person. This can be freezing assets in an account, or attach property or attach assets somehow.
In Personam is preferred courts with this kind of judgement the D can satisfy
Pennoyer v. Neff
Rule: For a quasi in rem jurisdiction to succeed the property has to be attached at the outset of the case. Mitchell’s title was no good, the sheriff’s deed sale to him was no good, and that means that Pennoyer got no title from Mitchell, so Neff got the land back.
Analysis: The underlying dispute was by John Mitchell against Marcus Neff. The lawsuit was a breach of contract case, Mitchell said that Neff owed him $300 for attorney fees and Neff hadn’t paid him. If Mitchell had in personam jurisdiction he could have sued him in personam, but he didn’t. Neff was not around, he was in California. Therefore, Mitchell sued quasi in rem, because Neff had some property in Oregon. Mitchell, in theory tried to use that as a jurisdictional basis. Conclusion: What happened was that the sheriff, because there was a default (the default occurred because the only notice given was a publication notice and Neff didn’t get it so he defaults), sells the property at public auction and the proceeds (at least the 1st $300 goes to Mitchell to pay his contract claim – his attorney fee). The rest of the money would be saved for Neff. It would earn interest at the minimum legal rate, and he would get the money when he showed up. In fact, Mitchell bought the property himself and sold it to Pennoyer. Neff comes back later, and wants to know who Pennoyer was and why he was on his (Neff’s) ranch. Pennoyer told Neff he bought the land from Mitchell, and Neff said he owned the land. The court held for Neff in this case because Mitchell’s quasi-in-rem judgment was defective. Mitchell had failed to have the property attached at the outset of the case. For a quasi in rem jurisdiction to succeed the property has to be attached at the outset of the case. This wasn’t done, and it meant that Mitchell’s title was no good, the sheriff’s deed sale to him was no good, and that means that Pennoyer got no title from Mitchell, so Neff got the land back.
It is a case that would have normally been brought in personam. The court couldn’t so property that the D left behind was used and attached quasi-in rem.
Is in rem and quasi in rem jurisdiction constitutional? The Pennoyer case says yes, because the state has power over the property. It is important to attach the property at the outset of the case, and this is what gives the forum quasi in rem jurisdiction.

The following cases (Tyler, Pennington, Harris, & Shaffer) follow the Pennoyer Principe Allows a court to adjudicate a personal claim against the Defendant even though they didn’t have personal jurisdictions as long as the court attaches property at the outset of the case.

Tyler v. Judges of the Court of Registration (pp. 142)
The P sought a writ of prohibition against the court, because the court is about to enforce a statute against them. A quiet title suit has started this. The P claimed that the quiet title provision re: service of process deprived him due process. This is because the original Plaintiff did not try to contact Tyler, and the statute did not require him to contact Tyler. (Those who are not known don’t have to contact them personally). The court said to be constitutional it should said that you have actual notice must be given. The court said the statute was constitutional and it said that if it was not constitutional then no property could ever get clear title. (Quiet Title action is brought to quash any cloud on the title and that you want the title clear.)
Pennington v. Fourth National Bank (pp. 143)
The court said that if a P attaches property, substitute service is OK, the P does not have to get actual notice. Also Intangibles as well as tangibles can be attached. Whether there is an admitted indebtedness or a contested debt it does not make a difference. The only requirements the property must be present in the forum, the property is attached at the commencement of the proceeding, and the owner has an opportunity to be heard, then jurisdiction is OK
Harris v. Balk (pp. 144) Debts OVERRULED: DID NOT MEET MINIMUM CONTACTS RULE
The court said that quasi in rem jurisdiction can be used to attach not only tangible property but intangible property as well. It can be used to attach a debt.
This was a huge expansion of the quasi in rem power. Debt is seen as property owned by the debtor, and wherever the debtor goes, so goes the debt.
In this case, it was decided that the situs of a debt is wherever the debtor is located. Thus a party’s interest in a debt is attachable, and quasi in rem jurisdiction may be asserted wherever a person who owes the D money can be found. If a party’s interest is garnished, the debtor is obliged to give notice of the action to the creditor so as to insure the latter of the right and the opportunity to defend the claim against the debt by the garnishing P. If notice is not given, the debtor will not be exonerated of the obligation to pay the creditor.
1)A creditor can enforce a claim against a debtor’s debtor.
2)A natural person is subject to jurisdiction wherever they’re present.
9/24/97 Class
II) Power to decide case è Jurisdiction
A)Jurisdiction over persons & things
Jurisdiction based on property
Shaffer
Another look at traditional property
Burnham
Another Basis Consent
a)General Appearance
b)Special Appearance
c)Doing business
d)Contract

Shaffer v. Heitner (pp. 146) In Rem Revolution
Analysis: This overruled Harris v. Balk. The SC said from now on all assertions of personal jurisdiction (in personam, in rem, and quasi in rem) have to meet the International Shoe test (1) minimum contacts (continuous, systematic, and related to the suit) not to offend our traditional ideas of 2) fair play and substantial justice (this is not defined)). In this case, it was against the officers and directors of a corporation. The case was brought in Delaware, where the officers and directors had no in personam contacts with Delaware, they hadn’t even visited the state. The activity they were being sued for took place in Oregon. All of the officers and directors lived in the Western part of the U.S. It was a quasi-in rem case. The P attached the stock that the officers and directors owned. Those are intangibles and it looked OK from the Harris v. Balk case. Under Delaware law, stock is present where the corporation is incorporated, and the company was incorporated in Delaware. The stock was attached in Delaware and the P tried to go quasi-in-rem. SC said no. Quasi-in-rem is OK, but presence of the property in the state alone is not the test, even if it is attached at the beginning of the case. In order to have quasi-in-rem jurisdiction the minimum contacts test must be met. In other words, there is no quasi-in-rem jurisdiction because the officers and directors did not meet the minimum contacts test in Delaware. They had no minimum contacts in Delaware. The constitutional test for quasi-in rem is the same as it is for in personam. That is why Harris v. Balk was overruled. The only way to attach property, tangible or intangible, is if we could have met the minimum contact test with the Defendants.
Presence of the property alone is not enough
We must have minimum contacts between the Ds and the forum
We know that 4 justices don’t think the minimum contacts test applies to everything (Scalia in the Burnham case) For presence, in personam jurisdiction is OK and presence is it’s own basis. Also there is no doubt that with in rem cases presence of the property in the forum alone will satisfy International Shoe.
In rem jurisdiction in fact hasn’t changed much.
Conclusion: The supreme court rejected quasi in rem jurisdiction in a case involving the Delaware sequestration of shares of stock of a corporation incorporated in Delaware but having its headquarters in Arizona. The D’s, corporate officers, directors, were not from Delaware, and the cause of action was unrelated to the stock and arose in Oregon. The Court, in a broadly worded opinion, held that the minimum contact-voluntary affiliation of International Shoe and Hanson v. Denckla, (A defendant may not be called upon to defend in a foreign tribunal unless he has had the “minimal contacts” with that State that are a prerequisite to its exercise of power over him.) was to be applied in quasi rem actions. The precise application of this decision is unclear in several respects, especially since 2 justices wrote concurring opinions suggesting that when real property was attached, the Shoe-Denckla test might be met. There is no question, however, that Shaffer significantly limits the availability of quasi in rem jurisdiction. In states that have very embracive long-arm statutes, quasi in rem jurisdiction no longer may have any independent significance.
In personam seizure of property v. quasi-in-rem jurisdiction
An in personam judgement creates a personal obligation against the D. How do we get our money? What if the D does not pay us? We can grab a hold of property the D has in the state and have it sold at public auction to satisfy our claim. This is not the same as seizure at the outset of the case for quasi in rem. That is a jurisdictional issue, here all you do is after getting a judgement, we are seizing the property to satisfy the judgement. If the property sale does not satisfy the judgment, and the D has property in another state, the judgement can be completely satisfied by selling the property in that state to pay the personal obligation. This can be done because the 2nd state must give full faith and credit to the finding of the 1st state. Because it is an in personam judgment, it creates a personal obligation of the D to pay. So if only $40,000 is gotten in Missouri for a $100,000 obligation, property in Minnesota, New York, etc. can also be claimed until the $100,000 is paid.
In a quasi-in-rem jurisdiction where a settlement is made, this can only be enforced to the extent we have jurisdiction (where the property is).

Special Appearance:
Limited Appearance: Come in and fight on the merits of your case, without being subject to personal jurisdiction

Improper Extension of the Nature of Property interest in Debt
Seidler v. Roth (pp. 157) In this case a Canadian citizen insured by a New York company was involved in an accident in Vermont with New York residents. The NY residents were allowed to sue in NY based on quasi in rem jurisdiction by attaching the insurance company’s contractual obligation to defend and indemnify the Canadian insured. The decision in this case was different from other quasi in rem cases because the very existence of the debt that was attached depended on the outcome of the case. If fully extended, the Seidler principle would have allowed quasi in rem jurisdiction in any case in which the substance of the action involves a dispute over title to the attached property. This “boot strap” jurisdiction was rejected by a number of courts in other states even before the decision in Shaffer v. Heitner. The logic in Shaffer seemed to destroy the constitutionality of Seidler. Some NY state and federal courts continued to uphold Seidler on the ground that the “true defendant” was the insurance company and the attachment procedure was merely a means of asserting jurisdiction over the company wherever it was doing business.

O’Connor v. Lee-Hy Paving (pp. 157)
Elimination of the Improper Extension
Rush v. Savchuck (pp. 158) In this case the Supreme Court ended any suspense as to the continuing validity of the Seidler principle by holding it unconstitutional under the reason in Shaffer v. Heitner. States are free to enact statutes making insurance companies directly liable to injured plaintiffs, but they cannot achieve the result through an artificial application of quasi in rem jurisdiction.
Amoco Overseas Oil v. Compagnie Nationale Algerienne de Navigation (p. 158)
Banco Ambrosiano S.p.A. v. Artoc Bank & Trust Ltd. (p. 158)


Jurisprudence Based Upon Physical Presence
Burnham v. Superior Court (p. 159)
Issue: Does the Due Process Clause of the 14th Amendment deny courts jurisdiction over a nonresident, who is personally served with process while temporarily in that forum, in a suit unrelated to his activities in the State?
Rule:
Scalia: the traditional theory of transient jurisdiction is a viable basis for assertion of in personam jurisdiction (Personal service within the forum state traditionally has been fully effective to confer personal jurisdiction even when the D is a transient and has no connection with the forum other than physical presence within it at the time of service process.)
Brennan: argued that personal service usually is sufficient to establish personal jurisdiction but that all assertions of state-court jurisdiction must undergo a “minimum contacts” analysis.
Analysis: Dennis Burnham and his wife decided to separate in 1987, while residents of NJ. They agreed that Mrs. B, who intended to move to Calif., wold take custody of their 2 children. They also agreed that she would file for divorce on the grounds of “irreconcilable differences.”
Later that year Dennis filed for divorce in NJ on the grounds of desertion. He didn’t have a summons issued against his wife and didn’t try to serve her with process. Mrs. B. tried to get Dennis to adhere to their original agreement, but was unsuccessful, and she sued for divorce in California in January 1988.
Later in Jan. 1988, Dennis visited southern Calif. on business and then went to the San Francisco Bay area to visit his children. He took his oldest child to San Francisco for the weekend, when he returned the child to Mrs. B’s house he was served with a Calif. summons and a copy of Mrs. B’s divorce petition. He returned to NJ.
Procedural History: Later in 1988, Dennis made a special appearance in the Calif. court, moving to quash the service of process on the ground that the court lacked personal jurisdiction over him because his only contacts with Calif. were a few visits to the forum to conduct business and visit his children. The Court denied the motion and the Calif. Court of Appeal denied mandamus relief (a writ that is issued from a court of superior jurisdiction which commands that a lesser court restore the rights to the complainant that have been previously denied). This denial rejected Dennis’ contention that the Due Process Clause prohibited Calif. form asserting jurisdiction over him because he lacked “minimum contacts” with the state. The court held it to be a valid “in personam jurisdiction” because the D was present in the forum and personally served with process.
Conclusion: Justices all agree that allowing jurisdiction over a nonresident by personal service in a forum state is widely accepted and does not deny due process of law. This meets the “traditional notions of fair play and substantial justice.”
Scalia: For presence, in personam jurisdiction is OK and presence is it’s own basis. Also there is no doubt that with in rem cases presence of the property in the forum alone will satisfy International Shoe. In rem jurisdiction in fact hasn’t changed much.
Brennan: 4 justices do not think the minimum contacts test applies to everything Brennan feels that the “notions of fair play and substantial justice” should become more “contemporary.” Minimum contacts allow the non-resident to purposefully avail him/herself to the benefits of the forum (i.e. police, health care, free travel on the roads, etc.).

Quill Corp. v. North Dakota (p. 169) The SC held that the Due Process Clause does not prohibit a ND state court from asserting personal jurisdiction in a suit brought by the State to enforce its use tax against an out-of-state mail-order house with neither outlets nor sales reps in the State. The court found that the company’s contacts with in-state customers through the mails were sufficient to support jurisdiction with respect to goods purchased for use in the State.

9/30/97 Class

Another Basis for Jurisdiction: Consent Unlike subject matter jurisdiction, the D may consent to the personal jurisdiction of the court. Consent may be given either before or after the action is begun and may be express (by agreement or stipulation) or implied (by conduct). Consent given after an action has been initiated usually takes the form of a waiver of the jurisdictional issue.

Challenging Jurisdiction: Choose to 1) Appeal and defend; 2) Default and make a collateral attack (risky but cheaper); 3) Make a Special Appearance (less risky).
Special Appearance:
Implied Consent: Filing a suit, D’s appearance, or non-resident motorists statute.
or doing business in a forum (the company impliedly appointed the secretary of state as its agent).
Insurance Corp of Ireland v. Compagnie des Bauxites de Guinee (p. 169): Compagnie a bauxite producer incorp. In Delaware but does business only in the Republic of Guinea, purchased business-interruption insurance for a US insurer in Penn. In addition, from a group of foreign Insurance companies through a London firm. When a mechanical failure forced production to stop, the company filed a multi-million dollar claim, which was refused by the insurers. The company sued in federal court in Penn. However, most of the foreign insurers contested personal jurisdiction. The company tried to use discovery to establish the jurisdictional facts. After the company failed to comply with the court’s orders for production of the requested info and after repeated warnings, the district court imposed a sanction consisting of presumptive finding that the insurers were subject to jurisdiction of the court because of their business contacts in Penn. The SC upheld. Plaintiff attempted discovery for A defendant can waive an objection to personal jurisdiction by failing to comply to discovery. There was then a presumptive finding that by submitting to a court by challenging the courts jurisdiction, you have 1) agreed to abide by the courts findings, and 2) to assist the court in the discovery process. (This is seen as the defendant’s silence once they have submitted to the courts jurisdiction.)
1)A foreign corporation who registers to do business in most states has submitted to the jurisdiction in the state. (consent by doing business)
2)Consent by contract.
3)One federal court says that consent in doing business in a state is enough.


M/S Bremen v. Zapata Off-Shore Co. (p. 172)
Analysis: Plaintiff Zapata, a Houston-based American Corporation, contracted with Unterweser, a German corporation, to tow Zapata’s drilling rig from Louisiana to Italy. The K contained a provision that all disputes were to be litigated before the “London Court of Justice.” The Bremen (Unterweser used) was the ship used to tow the drilling rig. In the course of the towing, the rig was damaged in a storm off Florida, and was towed to Tampa. Zapata sued Unterweser in federal court in Florida. Unterweser, citing the forum-selection clause in the K, moved to dismiss, or, alternatively, to stay the action pending the submission of the dispute to the High Court of Justice in London. At the same time, Unterweser sued Zapata for breach of K in the English court.
Conclusion: The District Court refused to dismiss or stay the American action and the Court of Appeals affirmed. The Supreme Court reversed by saying:
“…too little weight and effect were given to the forum clause in resolving the controversy…” Unless the party’s can show that the clause was unreasonable, unjust or it was agreed to by fraud.


Carnival Cruise Lines Inc. v. Shute (p. 172)
Analysis: P’s (Shute) purchased passage for a 7-day cruise on D’s ship through a Washington state travel agent. P paid the fare to the agent who forwarded the payment to D’s headquarters in Florida. D then prepared the tickets and sent them to Ps in Washington. The tickets included a provision that “all disputes and matters…shall be litigated in…the State of Florida…” Ps boarded the ship in LA and sailed to Puerto Vallarta, Mexico. Ps sued in Federal District Court in Washington claiming that the negligence of D and its employees had caused an injury to Mrs. Shute. The District Court held that D’s K with Washington were constitutionally insufficient to exercise personal jurisdiction. They said that “but for” D’s solicitation of business in Washington, Ps would not have taken the cruise and would not have been injured. The 9th Circuit Court of Appeals said that the D did have sufficient contacts with Washington and reversed the lower court.
Conclusion: The Supreme Court did not consider D’s “minimum contacts” argument; instead, it addressed the enforceability of the forum selection clause. Rejecting the argument that Zapata was limited to contracts between 2 business corporations, the Court held that: “…including a reasonable forum clause…may be permissible for several reasons…”
(Do not look at the minimum contact rule if there is a foreign choice clause in the contract, unless it is unfair. The reason for this the cruise ship carries passengers from many forums, and pretrial jurisdiction saves time and money in the courts, and saves the passengers time and money in their ticket costs.)

Special Problems of Applying the 5th Amendment to Personal Jurisdiction
Jurisdictional Reach of the Federal District Court (p. 174) The federal courts have the same jurisdictional reach that is available to the local courts in the same state. Under certain circumstances, the federal courts have additional jurisdictional powers.
To Assert Jurisdiction:
1)Basis for jurisdiction
2)Give adequate notice
3)Personal service outside the state is OK as long as we have an adequate long arm statute.
4)Federal Court authorizes services on a D
a)in the state where the action is brought
b)serve the D anywhere else if:
1)authorized by the federal rules
a)If you have a state statute authorizes
b)Actual federal rule authorizes
2)authorized by federal statute





Omni Capital International v. Rudolf Wolff & Co. (1987) (p.175) The Supreme Court held that in a federal question case in which the statute sued upon did not provide for nationwide service of process, the federal court had to adhere to the forum state’s law regarding the exercise of jurisdiction over non-resident defendants. Federal Rule 4 (k)(1) in 1993 addressed this case by authorizing the exercise in federal question cases of extraterritorial jurisdiction over the person of any D against who a claim is made arising under any federal law if that person is subject to personal jurisdiction in no state. This exercise of jurisdiction still subject to 5th amendment limitations with respect to the D’s affiliating contacts and the due process requirements of fair play and substantial justice.

Example: if there was a suit where P is Alaskan and D is Ohioian and D is sued in Alaska Federal court, this would only fly if some of the same due process tests of fairness and minimum contacts apply in most cases. The exercise of jurisdiction is constitutional if the person has contacts in the US. If this is correct, then why is the analysis in Federal Courts the same as State Courts? More than constitutional capacity is needed to assert jurisdiction. They need a statutory authorization. The constitutional limit is nationwide services.

Stafford v. Briggs (1980) (p. 175) In this case Justice Stewart’s dissent, expressly approved the theory of “national contacts” under the Due Process Clause of the 5th Amendment to give Congress the constitutional authority to provide for nationwide in personam jurisdiction.

Oxford First Corp. v. PNC Liquidating Corp (1974) (p. 176) This case tried to identify the factors relevant in the “fairness” equation of International Shoe, they were:
1)the extent of the D’s contacts with the place where the action was brought
2)the inconvenience of defending in a distant forum
3)judicial economy
4)the probable locus of discovery, and
5)the interstate character and impact of D’s activities.

Federal Rule (4(k)(1):(p.176) This rule allowed the federal court to use the forum state’s long-arm statute only to reach those parties whom a court of the state would also reach. This rule broadened the reach of federal judicial process.
Rule 4 (k)(1)(A) provides that in actions other than federal question and interpleader cases, the federal court may assert jurisdiction over a D only when the forum state would be empowered to do so. (Contacts must be enough and there must be a specific statute) The 3 exceptions to this are:
1)Rule 4(k)(1)(B): permits service outside the forum state (but within 100 miles of the court where the action is commenced or is to be tried) if such service is necessary to add a 3rd party under Rule 14, or to join, under Rule 19, an indispensable party to an action or a counterclaim or cross-claim. (Bulge Rule – Allows the federal court to serve jurisdiction over 3rd parties within 100 miles – even if state law does not allow this.)
2)Rule 4(k)(1)(C) permits service on a D who is subject to federal interpleader jurisdiction under 28 USC§1335 (Federal statute where there has been property deposited in the courts until ownership can be found)
3)Rule 4(k)(1)(D) recognized that Congress in some instances expressly has authorized nationwide or even worldwide service of process. (When a federal statute gives the Federal Court Jurisdictional Power)
4)Rule 4(k)(2): is in the nature of a general federal long-arm provision. This allows federal courts to exercise jurisdiction over all Ds against whom federal law claims are made in cased in which the D is not subject to the jurisdiction of any single state by the Constitution of the United States would permit jurisdiction.
Interpleader: A legal proceeding hat enables a person holding money or property to compel the claimants to litigate the matter among themselves. When a person who possesses property in which he has no interest but to which two or more parties lay claim and he does not know which party has a right to he property, but is himself sued or expecting to be sued by one or all of the parties, he obtains relief through a court order to interplead: i.e. to have plaintiffs try their claims among themselves to determine who is entitled to the property. This is an equitable remedy provided for in Federal Rule of Civil Procedure 22.

Texas Trading & Milling Corp. v. Federal Republic of Nigeria (1982) (p. 176) The growth of international commerce and how the American courts would handle jurisdiction was the focus of this case. The two points of law from this case were that:
1)If a federal statute authorizes worldwide service of process, a federal court apparently may exercise in personam jurisdiction based on the alien’s aggregate contracts with the United States.
2)But if the federal court must rely on a state long-arm statute, it can exercise in personam jurisdiction base only on the alien’s contracts with the United States as a whole and would satisfy due process requirements of the 5th Amendment.

10/2/97 Class Notes

Challenging a Courts Jurisdiction (p. 177)
Tactical reasons for taking one tactic over another

1)Special Appearance: occurs when the D files a S A to challenge jurisdiction
1)Limited Appearance: occurs when P gets jurisdiction by attaching D property. D can file a limited appearance and challenge the courts jurisdiction to that attached property. D does not subject himself to that courts jurisdiction the value of the D’s property attached.
A)Direct Attack
1) Special Appearance
2)Motions to Dismiss for lack of personal jurisdiction (no answer just motion to dismiss) Don’t answer the complaint
3)Limited Appearance
4)Collateral Attack: D does not appear and allows the default judgement, and challenges the courts jurisdiction.
Default and Collateral Attack are risky. If you don’t win, then you

Steps that a D can go through to challenge Merits of the case or

Jurisdiction in the case

1)Go to court and submit to courts jurisdiction
Pro: D is there, knows what took place, and can defend themselves
Con: Waves jurisdiction protection (if defense stinks and she may lose)
2)Decide not to go to court and default, and hope that court does not find jurisdiction over the D.
Pro: Judge will not find that D consented
Con: Judge may find that they have jurisdiction and D lose the case
She can collaterally attack the judgement in the court or
Go to the enforcing court and collaterally attack so the judgment will
not be enforced.
3)Go into court and file special appearance for lack of jurisdiction or file for dismisses because of lack of jurisdiction.
Pro: If she is in court, she gets a hearing on the jurisdictional issue and it
never gets in on the merits.
If you lose on the jurisdictional, you can still argue the merits
Con: You are submitting to the court power of jurisdiction over you.
If a court decides against you, you have to litigate the merits
Immediately
4) File a limited appearance and discuss the merits of attachment of property only. (This is not allowed in some forums – there could be some restrictions re: this)


II)Jurisdiction
A)Jurisdiction over persons and things
Challenging Jursidiction
B) Notice - Mullane
Providing Adequate Notice and Opportunity to be Heard (p. 182) Constitutional requirements of due process require that reasonable notice and an opportunity to be heard must be given to the D before any type of jurisdiction over his or her person or property, to which he or she has a claim, properly may be exercised. A judgement rendered without reasonable notice to a person will be unenforceable against that party. Appropriate notice and an opportunity to be heard are additional requirements rather than a substitute for jurisdiction. Because jurisdiction based on minimum contacts requires many more people to defend lawsuits far from their domiciles, courts have become much more cognizant of the importance of these two elements.
The Requirement of Reasonable Notice (p. 182) To meet the constitutional test of reasonable notice, the statutes or rules relating to service should require the plaintiff to make a bona fide attempt to give actual notice to every D. This means delivery of the papers, in person or by some appropriate alternative procedure such as registered or certified mail, to every defendant whose name and address can be ascertained after diligent efforts.
If reasonable investigation fails to reveal the address of a potentially interested party will it be proper to give that party notice by the publication of announcements in a newspaper or general circulation. When proper, notice by publication is binding on anyone to whom it is directed, even if that person does not actually learn of the action until it is too late to defend against it.
Hypo #1: P brings suit against D whose name and address are not known by P, at the time the action is instituted but which can readily be ascertained since P knows D is a county employee. Service is made by publication in a newspaper of general circulation in the county where D works. Process will be held invalid as not being reasonable under the circumstances.
Hypo #2: In a proceeding for a trustee’s settlement of accounts, service is made by ordinary mail on the 10,000 beneficiaries of the trust whose addresses are known. D argues that each beneficiary should have been personally handed notice or at least that registered mail should have been used. The argument is rejected because the notice is reasonable under the circumstances. It will reach the vast majority of the beneficiaries interested in the proceeding and those who do receive notice will protect the interest of those not reached presumptively. The additional factor of the costs of D’s proposed methods for giving notice would have been prohibitive because of the number of beneficiaries involved.
Interest of the Plaintiff and Forum State: When determining whether the exercise of personal jurisdiction over a non-resident defendant is fair and reasonable, courts consider the interest of the plaintiff in litigating in the forum and the interest of the state in providing a forum for the litigation at issue. Efficient resolution of the controversy is also an important factor.

Mullane v. Central Hanover Bank & Trust (1950) (p. 182)
Issue:
Rule: The means employed (to give notice) must be such as one desirous of actually informing the absentee, might reasonable adopt to accomplish it.
1)How much effort is a P required to put forth to give notice to the D.
2)What happens if the P has no idea where to find the D. Should that bar the P from recovering from the D?
3)Is it fair to allow P get judgment against D, even if D didn’t know that a judgement was given against him? There are situations where the courts must be able to rule on disposition of D, when he does not have notice.
Analysis: Involves an action where trying to get a judicial settlement of accounts by a trustee on a common trust fund. (This is similar to a mutual fund). Each participant has an equal share, and some of the beneficiaries don’t live in NY where it was established. The trustee of the common fund presents periodically, for judicial approval for settlement. All, who have interest in the Trust fund, must jointly, but cannot individually, sue for mismanagement. The trustee wanted the court to say that the beneficiaries cannot sue individually. Some of the trustees were not happy with the trustee. Mullane was the guardian of some of the beneficiaries of the trusts and raised challenges to jurisdiction and notice. The case is famous on the notice branch. Mullane said it was an in personam, non rem action, therefore personal service is required. This was a proper action because it followed Pennoyer. It was property the subject of the suit. The res is the contact with the courts.
Conclusion: Jurisdiction by Necessity: The Supreme Court held that the state in which a common trust fund had been established pursuant to a local regulatory scheme has a compelling interest in entertaining periodic suits to settle the trustee’s accounts and determining its liability for malfeasance and its right to fees. This result was reach even though some potentially interested beneficiaries of the trust whose rights against the trustee would be foreclosed could not be identified or located, some were holders of contingent interests, and many did not live in the forum state and were beyond the territorial power of the court under traditional jurisdiction principles. This case is a precursor to. Shaffer
Note: In subsequent cases, the Supreme Court expressly declined to decide whether the jurisdiction by necessity doctrine existed.

Personal Service is not required:
1)State has to keep the right
2)It would be too expensive to require personal service on all D’s and diminish the value of the trust
3)Because the trust presuppose that a majority of the people would act as all the people would.

Notice that is required is what would reasonably be the best under the circumstances. (Notice reasonably calculated)

10/7/97 Class Starts Here
“Notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.”

1)Notice by publication when accompanied by attachment
2)Notice by mail
3)Notice by publication

If a defendant shows up within a year after a default judgement, Federal Rule 60? May allow the defendant to reopen the case.

McDonald v. Mabee (1917) (p. 188) Mabee who had been domiciled in Texas was sued for money owed to McDonald. Mabee was in the process of changing his domicile and had family in Texas at the time. Service of Process was attempted through publication in a local newspaper once a week for 4 weeks after Mabee left the state. Mabee never appeared in the action. The Supreme Court reversed the Texas judgement because it was void under the 14th amendment. “…an advertisement in a local newspaper is not sufficient notice to bind a person who has left a state intending not to return…to dispense with personal service the substitute that is most likely to reach the D is the least that ought to be required if substantial justice is to be done…”

Wuchter v. Pizutti (1928) (p. 189) The Supreme Court said that a New Jersey nonresident-motorist statute similar to Hess, because it did not expressly require the Secretary of State to communicate notice of the commencement of the action to the nonresident. “…Every statute…should require the P bringing the suit to show in the summons to served the post office address or residence of the defendant being sued, and should impose either on the P or the official receiving service or some other, the duty of communication by mail or other wise with the D…”

Mennonite Board of Missions v. Adams (1983) (p. 189) In this case, the Supreme Court required notice reasonably calculated to apprise all interested parties, stating that constructive notice by publication was not enough. The Court also appeared to be insisting upon a certain amount of diligence on the P’s part in locating the D.
Tulsa Professional Collection Services Inc. v. Pope (1988) (p. 190)

Greene v. Lindsey (1982) (p. 190)

Dobkin v. Chapman (1968) (p. 192)

Covey v. Town of Somers (1956) (p. 192) SC held that notice by mail is insufficient if it is known that the D is in an insane asylum. It seems that the focus is on the P’s good faith effort. Did the good faith effort let them know that the D was in an insane asylum?

EXAM: She does not require us to know all of the case, know the ideas of the general rules and convey them in the exam.

Aguchak v. Montgomery Ward Co. (1974) (p. 192) The method for communicating notice is not the only concern regarding due process. It also concerns what the notice said. The summons should include information as to how the D can respond to notice.

Notice is an additional hurtle for the P to jump over to meet the due process clause.

Constitutional Importance of Notice

In addition to a process of jurisdiction, due process requires that the D is given notice and an opportunity to be heard.
Notice is provided by service of process
Opportunity to be heard is provided by the procedural rules that allow the D to file an answer or respond in other ways to the P’s allegations and to go to trial.

Mechanics of Giving Notice (p. 193) Defendant’s must normally receive a summons (and frequently the complaint) in person or by mail.
RULE 4 (Federal Rules)
A)Service Of Process
1)Serve Process: This consists of 2 documents:
a)Summons: Formal Court Document. From Clerk of the Court and gives notice to the D, that they are being sued and they have 20 days to respond and what the consequences are if they do not respond. This is the government reaching out, a symbol of the government’s power. (in the old days the D was arrested).
b)Copy of the Complaint:
Under the Federal Rule 4:Process can be served by any non-party who is at least 18 years old.
4E(2): Ways to serve process
1)Who Serves Process: Permissible persons usually include the sheriff or marshall, a court appointed agent, and sometimes anyone of mature years who is not a party to the action.(only in some states)
2)Return of Service: An affidavit of service regarding the basic facts of service is strong but not conclusive evidence of proper service
3)Methods of Service: Varies depending on the statute applicable to the action or the facts of a given situation.
a)Personal Service: Personal delivery to defendant (or to officer of corporate defendant) is the most common method of service. (Walk up to the D and hand it to him. This is good anywhere. Where ever the D is found in the state. )
b)Substituted Service: Leaving process at the defendant’s residence, sending by the mail or publication. Abode Service: (Substituted Service): This is OK if you can show:
1)It is D’s usual abode or dwelling house (you can have more than one dwelling house)
2)Serve someone of suitable age and discretion who resides there. (Babysitter won’t work)
c)Leaving at Defendant’s Residence: As effective as personal service if left with a person of suitable age and discretion.
d)Registered or Certified Mail: Often permitted to serve a defendant subject to jurisdiction but residing outside the forum (return receipt provides proof of receipt of service) 1st Class Mail
e)Publication: No violation of due process if the defendant cannot reasonably be served by any other methods of service.
f)Service in Federal Courts: Many use state procedures under applicable federal statutes. Rule 4E(1): The Federal Court can also use methods of service that are allowed by the state court of the state in which they sit. They can also use any methods allowed by the state court in which the defendant is served.
g)Serving a corporation: Rule 4H: You can serve an agent, officer, or manager of a corporation in the forum.
h)Must serve process by the rules listed above. Substantial compliance is not enough. Courts are more lenient about this is D is trying to evade process.
1)Territorial Range of Service: Service may be made anywhere within the forum state or outside the forum according to the state long-arm statute.
Rule 4K: Where can Process be Served: Anywhere in the state. Glitch: Can
a Federal Court Serve process outside the state line where it sits? Only if
state law allows. (This incorporates state long arm statutes.)
Federal Courts could have nationwide service of process. (As long as
someone is in the US, the courts could serve them, but the courts have
chosen not to. As a matter of comity, they have said they would follow the
rules of the state courts where the Federal court sits.)
a)Service outside of State: Mere service of process is inadequate to vest court with personal jurisdiction.
b)Special Provisions for Federal Courts: Federal Rule 4(f) permits service on 3rd party defendants or parties to a compulsory counterclaim within 100 mile radius of situs of action.
2)Timing of Service: Federal Rule 4(m) requires that service be made within 120 days after filing of the complaint.
3)Immunity from Process: Commonly granted to witnesses, attorneys, and parties to other actions to further the efficient operation of the courts.
a)Limitation on Immunity: Plaintiff is not immune from other service in the forum, immunity granted to other persons expires after a reasonable time.
b)Impact of Long-Arm Statute: Long-arm statutes have led to a decline in importance of immunity doctrine.
4)Fraud in Procuring Service: If defendant’s presence in the jurisdiction is procured by fraud, service of process is null and void.
a)Defendant in Hiding: One who is present in the forum but is attempting to evade process cannot complain of any non-criminal conduct necessary to effect service.

Specific Applications of the Service Provisions (p. 196)
A)Waiver of Service (p. 196)
Rule 4D: Request for Waiver of Formal Service
Waiver of Formal Service: Mail the process to the D, and the D can return a waiver form within 30 days of when it was sent. All the D is waiving is Formal Service of Process, she is not waiving any other defense, personal jurisdiction, or venue or anything else. We do not have to serve her formally.
If she chooses not to return the waiver form then we have to serve her personally or by the abode service. The only penalty to her is that she will have to pay the cost of the service. (She has to pick up the tab for us having to hire a process server).

Maryland State Firemen’s Association v. Chaves (p. 196) (1996)
Issue: Is a service of process by 1st class mail effective?
Rule: Federal Rule 4(d): “…a plaintiff is authorized to send a defendant notice of the action and a request for waiver of service. If the P chooses this path, the D has a duty to avoid unnecessary cost of serving the summons. (Unless the addressee consents, receipt of the request under the revised rule does not give rise to any obligation to answer the lawsuit [and] does not provide a basis for default judgement.
Maryland Rule of Procedure 2-121: Under federal rules, a P may serve process “pursuant to the law of the state in which the district court is located, or in which service is effected…” The Maryland Rule allows service of process by certified mail.
Analysis: The Maryland State Fireman’s Association (MSFA) sued John Chaves, President of the FireFighters Association of America (FFA), alleging that Chaves illegally solicited charitable contributions that MSFA has the right to recover. The Complaint was filed 1/2/96. On 3/4/96 MSFA filed a Motion for Judgement by Default.. On 3/11/96, based on MSFA’s attorney’s affidavit of service, the Clerk entered default against Chaves for failure to plead.
On 4/9/96, the Court sent a letter to MSFA’s counsel questioning the validity of the service and requesting a more detailed affidavit describing the type of service employed and a brief legal memo indicating why counsel believed service was effective.
MSFA served Chaves with the summons and complaint by 1st class mail on or about 1/3/96. These were sent to the address on Chave’s letterhead, which MSFA’s attorney was in possession of by reason of prior correspondence with Chaves. Between 1/9/96 and 1/15/96 MSFA’s attorney received 3 phone calls from Mtichell Gold, purportedly speaking on behalf of the FFA. No other communications took place after that.
MSFA contends that service was effective under Federal Rule 4(c) (2)(C) (ii), however the rule was superseded by Rule 4(d) via a 1993 amendment.
Conclusion: MSFA sent the complaint and summons to Chaves by 1st class mail, not certified mail (according to Maryland law). MSFA cited that Maryland also allows services by posting or publication, but only in in rem or quasi in rem proceedings and then only upon court order. The rule has no bearing on the case. Since service of process was invalid, the Clerk’s Entry of Default was improper and the Court set it aside.

Audio Enterprises v. B&W Loudspeakers (p. 198) (1992) The court rejected service by private delivery reasoning that Federal Rules specify 1st class mail, postage prepaid, and that Federal Express is not 1st class mail.


B) Personal Delivery on Natural Persons (p. 198)
C) Service on a Person Residing in Defendant’s Dwelling House or Usual Place of Abode (P. 201) Rule 4(e) (2) allows service of process to be made upon an individual by leaving a copy of the summons and complaint at his “dwelling house or usual place of abode with some person of suitable age and discretion then residing therein.”
Rovinski v. Rowe (p. 201) 1st case was under the non-resident motorist statute and Rovinski lived in Michigan. 2nd case the service was to Rovinski’s mother at the house he listed to be his domicile. The court upheld service in the 2nd case, because the rule should be liberally construed to the facts in this case.
This was similar to Skidmore v. Green, where a person used his brother’s address as his home address and was served there.

First Nat. Bank of Tulsa v. Ingerton (p. 202) The D’s moved from racetrack to racetrack, and service was made at a house that their daughter lived in and they had lived in for only one month. The 6th circuit quashed service, the 10th circuit upheld..

10/9/97 Class
Delivery to an agent Authorized by Appointment (p. 203) Rule 4 (d)(1) allows delivering a copy of the summons and complaint to an agent of the defendant.

National Equipment Rental, Ltd. v. Szukhent (p. 203) (1964)
Issue: Challenge was the notice, not the basis of process. The argument was the appointment of Florence was invalid because she never expressly agreed to service.
Rule: A Defendant may appoint (or in some circumstances be required by law to appoint) an agent who is empowered to accept process for him or her with regard to either a specific transaction or on any cause of action. Service on the appointed agent is effective to give the court personal jurisdiction over the defendant.
Analysis: As one of the terms of a standard printed lease agreement covering farm equipment being rented from a New York Company, Szukhent, a resident of Michigan, appointed a New York resident with who he was not acquainted (and who actually was affiliated with the company) as his agent for the receipt of process in that state for any legal dispute that might arise under the lease. Alleging that Szukhent had defaulted in payment, the company served process on the designated agent, who then forwarded a copy to Szukhent. Absent any proof that Szukhent had not actually received notice, the New York court was found to have personal jurisdiction over him.
Conclusion: Majority said that this was OK. Federal law controlled the meaning of agent.
Dissent: Black: Allowing personal jurisdiction allows companies to boilerplate clause like this into all of their contracts. This is a far-reaching, burdensome, and unjust result.
Brennan: Federal standards should define who is an “agent authorized by appointment.” In formulating this definition under Rule 4 (e)(2) the courts should
1)deny validity to the appointment of an agent whose interests conflict with those of his supposed principal
2)require that the appointment include an explicit condition that the agent after the service transmit the process to the principal immediately.
3)Since the corporate plaintiff designed the contract, the individual purchaser is not bound by the appointment without proof, in addition to his signature, that he understandingly consented to be sued in a State not that of his residence.

D)Service on Artificial Entities: Corporations, Partnerships, and Unincorporated Associations (p. 207) Rule 4 (h) authorizes service upon corporations, partnerships, and unincorporated associations that are subject to suit under a common name. The most frequently used part of the rule is the part permitting service by delivery of process to an officer, managing agent, or a general agent.
Return of Service (p. 209) After the process-server has delivered the papers, she must file a return, which should disclose enough facts to demonstrate that D actually has been served and given notice that he is required to appear in court. Although actual service of process and not the proof of that act is a prerequisite to the court assuming jurisdiction, it has been held that a proper return ordinarily is necessary in order for the trial court to conclude it has jurisdiction. The specific form that proof of service must take varies from state to state. Usually an affidavit executed by the person who performed the acts constituting service or the sworn statement of the officer who made the service is the usual proof. This is presumptive and the D can rebut. D will need to show strong proof that the service was not actually served.

“Sewer” Service (p. 210) This is where the process server throws away the service and then says he served the D. The court said that there is a duty of good faith on the P’s attorney that the service was fair and in good faith.

Service of Process and Statutes of Limitation (p. 211) In some states, an action is not deemed “commenced” until process is served on the defendant. In these states, a defect in service can be fatal to the plaintiff’s claim, because the statute of limitations may have run before the plaintiff has a chance to correct his error.
Some jurisdictions allow a “saving doctrine” which permits additional time to reinstate the action that was timely when originally commenced and was terminated other than on the merits.

Tickle v. Barton (p. 22) (1956)
Issue:
Rule: If a person resident outside the jurisdiction of the court and the reach of its process is inveigled, enticed, or induced, b any false representation, deceitful contrivance, or wrongful device for which the plaintiff is responsible, to come within the jurisdiction of the court for the purpose of obtaining service of process on him in an action brought against him in such court, process served upon him through such improper means is invalid, and upon proof of such fact the court will, on motion set aside.
Analysis: Richard Tickle sued instituted the action of trespass on the case to recover damages from the Ds (Barton & Coleman) for personal injuries from an auto, owned by the D and operated by Coleman.
Dissent:

10/14/97 Class
Immunity From Process and Etiquette of Service (p. 212) Immunity from Service: Federal Courts will recognize:
1)If you are present in the state in another case, then you are immune from process. (No detours, only do related trial business)
2)Force and fraud exception: If the D is present in the state when served, but it is because he is tricked into the state or defrauded into the state, most courts won’t recognize service
3)Immunity from process on the Sabbath (only in some states)

State Ex Rel. Sivinksty v. Duffield (p. 213) (1952)
Issue: Was the service proper since the D was in jail?
Rule: If a D voluntarily answers a criminal indictment, he can’t be served for a separate action. If the D is involuntarily brought into the jurisdiction, the D is immune from service. If the D is involuntarily in jail, but is voluntarily in the jurisdiction, he is not immune from service.
Analysis: The D was visiting West Virginia on a fishing vacation and he arrived 6/30 was involved in an accident and put in jail. While in jail he was served with process for the civil action. The D could have been served, even out of state, because of the long arm statute or the motor vehicle statute.
Conclusion: “A person confined in jail on a criminal charge or imprisoned on conviction for such charge is subject to service of civil process, irrespective of the question of residence, at least if he was voluntarily in the jurisdiction at the time of the arrest and confinement.” The D did not come and was not brought into Gilmer County under criminal process, the reason for the application immunity rule is not present, and he is not entitled to the writ of prohibition.
Dissent: There is no statute dealing with the subject of immunity from service of judicial process to a person to whom the rule applies. The law for this was found in the Whited case. The specific question not answered here is “May a D in a criminal charge, confined in jail on such charge and unable to furnish bail bond, be served with process commencing a civil action based on the same facts as those involved in the criminal prosecution? Whether Sivnksty came into Gilmer County voluntarily or not has no pertinence to the question presented. Under the rule of the majority opinion, the luckless motorists, who has the misfortune to have an accident in a county or sate far from his home, may be arrested and put in jail on criminal charges…and while in jail the person suffering injury would immediately commence an action in his own home county for the recovery of alleged damages. This could lead to widespread abuse of the judicial process.

Which case present’s a better case for quash of service, Tickle or Newhouse?
Etiquette of Service (p. 216) Rule 4K (1)(b): Does not apply to serving process on an original D. It is about necessary parties and impleaded parties (This is called the Bulge Rule).

Wyman v. Newhouse (p. 216) (1937)
Rule: A judgement obtained fraudulently, as here, lacks jurisdiction and is invalid. A fraud affecting the jurisdiction is equivalent to a lack of jurisdiction.
Analysis: Wyman and Newhouse were both married, but Newhouse’s husband had died. They had been seeing each other for quite sometime, even while married. Wyman was a resident of New York, and never lived in Florida. On 10/25/35 he received a message from Newhouse saying she must see him and planned to leave the country because her mother was ill, and she wanted to discuss her affairs with him. After he received her telegram, they spoke by telephone, which she sounded hysterical and distress, and he promised to visit her in Florida, and let her know when he was coming. Wyman let her know a few days later that he was leaving New York to visit her in Miami and suggested she make reservations for them to stay together. She let him know that she had reservations for them, while he was en route. Wyman arrived at the Miami airport and saw Newhouse and her sister when a deputy sheriff, served him with process in a suit for $500,000 for recovery for money loaned, money advanced, and seduction upon promise of marriage. A photographer tried to take his picture at the airport, and a stranger introduced himself to Wyman who offered to take him to his home, telling him that he knew an attorney who knew Newhouse’s attorney. The attorney knew about the case, and the lawyers for Newhouse were present. Wyman did not hire the Florida attorney and left immediately to return to New York where he sought counsel. The New York attorney advised him to ignore the summons served in Florida, and he did. A default judgement was found against him.
Conclusion: The reasonable deduction from the facts were that Wyman was induced to enter the jurisdiction of Florida by a fraud perpetrated on him by Newhouse in falsely representing her mother’s illness, her intention to leave the US, and her love and affection for him, when her sole purpose and apparent thought was to induce him to come within Florida so he could be served in an action for damages. A judgement procured fraudulently, as here, lacks jurisdiction and is null and void. A fraud affecting the jurisdiction is equivalent to a lack of jurisdiction. Wyman was not required to make out a defense on the merits to the suit in Florida. The complaint was properly dismissed.

RULES TO REVIEW ON FRAUDULENT INDUCEMENT

1)Service of process is invalid where the D was induced to enter the jurisdiction of the court by fraud, compulsion, or force by P or P’s agent.
2)If a D is covered by the long-arm statute of the jurisdiction, this duplicity would not be necessary, since, if a state’s long-arm statute permits it (and such jurisdiction is constitutional), service of process is possible out-of-state.
3)If a D comes into the state voluntarily, then goes into hiding to avoid service of process, then deception could be used to “flush” him out – it’s just that the D can’t be fraudulently lured into the state.

Opportunity to be Heard (p. 219) The Due Process Clause of the 14th Amendment of the United States Constitution requires that a defendant be given an opportunity to appear and present his or her defense to the action.

NORMALLY this is not a problem. Because when we serve process it tells the D that she has 20 days in which to respond and how she can respond. She has a right to discovery and a right to go to trial. All kinds of things happen giving her the opportunity to be heard and putting forth defenses.

CLASS OF CASES WHERE THIS IS A POTENTIAL PROBLEM:
Example: Snadach, Fuentes v. Chevron, Mitchell, Connecticut v. Door: A prehearing seizure of property.

Repleving statute is an example of this. A replevin statute gives a seller a right to sue to get property back if the buyer has defaulted. Get the property back or its cash equivalent. Something like an installment contract would allow the creditor to get it back. In the old days, the seller would go to the sheriff and get an order to get the property back. This was done where the D had no opportunity to pay the P or to be heard. No chance to raise a defense like I paid for it or the property was defective, or I cured the payment. In this series of case, the SC has given a series of safeguards to make sure this does not happen. It is not clear that all of these are required to make a statute OK, but these are the safeguards they look at:
1)They require a seller to give an affidavit (sworn statement under penalty of perjury) and that sworn statement has to be specific, it must show facts that she is entitled to possession.
2)You have to get the writ from a judge (a judicial officer), not the sheriff.
3)Often you may be required to post a bond. Some statutes require this to protect the buyer from the fact that you should not have seized the stuff.
4)The buyer, the person with the property, (the one whose property is being seized) is entitled to notice and a hearing on the merits.

Fuentes v. Shevin (p. 219) (1972)
Issue: Whether it comports with due process to permit the seller, pending final judgement, to take possession of the property through a writ of replevin served by the sheriff without affording the buyer opportunity to insist that the seller establish at a hearing that there is reasonable basis for his claim
Rule:
Facts: There are two case in different states that brought this action to the Supreme Court. In Florida, Fuentes purchased merchandise and service contracts on 2 different occasions from Firestone. She paid $400 of the total owed and when she disputed Firestone’s servicing of the merchandise (with $200 still owed), the company instituted an action in small claims court to repossess the merchandise. While D received the summons to answer the complaint, Firestone obtained a writ of replevin ordering the sheriff to seize the disputed goods. Mrs. Fuentes challenged the constitutionality of the Florida replevin under the Due Process clause of the 14th Amendment.
In Pa. a similar situation occurred to Rosa Washington.
Analysis: Florida Replevin statutes allow that any person whose goods of chattels are wrongfully detained by any person…may have a writ of replevin to recover. There is no requirement that the applicant make a convincing showing before the seizure that the goods are, in fact, “wrongfully detained.” The law requires only that the applicant file a complaint, initiating a court action for repossession and say with some authority that he is “lawfully entitled to the possession” of the property, and that he file a security bond. There is no opportunity for a prior hearing and no prior notice to the other party. Pennsylvania law is different though, it does not require that there ever be an opportunity to be heard on the merits of the conflicting claim to the possession of the replevied property. In Pennsylvania the party who loses the property through a replevin, seizure must initiate a lawsuit in order to be heard.
Conclusion: The constitutional right to be heard is the basic aspect of the duty of government to follow a fair process of decision making when it acts to deprive a person of his possessions. “Fairness can rarely be obtained by secret, one-sided determination of facts decisive of rights.” If the fight to notice and a hearing is to serve its full purpose, then it is clear that it must be granted at a time when the deprivation can still be prevented. The Fla. and Pa. prejudgment replevin statutes fly in the face of this principle.
The appellants who signed conditional sales contracts lacked full legal title to the replevied goods. The 14th amendment still protects this type of property. The appellants were deprived of such an interest in the replevied goods – the interests in continue possession and use of the goods. They had acquired these interests under the conditional sales contract.
There are only a few limited situations that outright seizure is allowed:
a)The seizure has been directly necessary to secure an important governmental or general public interest
b)There has been a special need for very prompt action
c)The State has kept strict control over it’s monopoly of legitimate force; the person initiating the seizure has been a government official responsible for determining, under the standards of a narrowly drawn statute, that it was necessary and justified under the particular instance.
The court held that the prejudgment replevin provisions work as a deprivation of property without due process of law.
Dissent: The real issue is whether it comports with due process to permit the seller, pending final judgement, to take possession of the property through a writ of replevin served by the sheriff without affording the buyer opportunity to insist that the seller establish at a hearing that there is reasonable basis for his claim.
The interests of the buyer and seller are antagonistic during this period. The Fla. and Pa. statute intent and purpose placed custody of the property in the hands of the government during this time. The buyer does lose the utility of the property, temporarily, but is protected against total loss. The seller is protected against deterioration of the property but must undertake a bond to make the buyer whole in case of a mistake. This gives to practical considerations of a situation like these. It is done to prevent unfair and mistaken deprivation of the property, and at the same time allows the creditors to repossess, when this is appropriate. This type of statute protects the respective rights of both parties in situations like this.

Mitchell v. W.T. Grant (p. 229) (1974)
In Snadach v. Family Finance Corp. (1969), the Supreme Court struck down a state statute that provided for prejudgment, garnishment of a wage earner’s income.
In Fuentes v. Shevin (1972), the Snadach principle was extended to an ex parte prejudgment replevin procedure.
In a more recent case of significance, Mitchell v. Grant (1974), a divided court held that a Louisiana prejudgment replevin procedure satisfied the due process requirement and seemed to retreat from, if not overrule, Fuentes.
In North Georgia Finishing Inc. v. Di-Chem, Inc. (1975), the Court indicated that Fuentes has survived Mitchell by striking down a Georgia garnishment procedure in a commercial and non-consumer setting. (Mitchell decision probably had no effect on Snadach since the deprivation of a wage earner’s livelihood is a substantially greater significance than the deprivation of chattels.)

The Mitchell court distinguished Fuentes on the grounds that:
a)the replevin order in Mitchell was granted by a judge, whereas in Fuentes the writ was issued by the court clerk;
b)the application inn Fuentes was not required to make a convincing showing of need for the prejudgment seizure, whereas in Mitchell the grounds for the seizure had to be set forth in a verified affidavit;
c)the statute struck down in Fuentes as best afforded the defendant a delayed opportunity for a hearing on the issues involved in the seizure, whereas an immediate post-seizure hearing was available under the statute involved in Mitchell, and
d)in Mitchell the admissible facts for determining the propriety of granting the replevin were issues susceptible of documentary proof, whereas in Fuentes a broad and less objective “fault” standard was the ground or replevin.
Mitchell, as a result of Louisiana law, the “vendor privilege” (the right to repossess) ceased upon the vendee’s transfer of property to a 3rd person, thereby creating a greater risk to the creditor than was present in Fuentes. Taking the cases together, the test seemed to be whether the deprivation of the debtor’s right to possession prejudgment outweighed:
a)the debtor’s possible inability to make the creditor whole for wrongful possession,
b)the risk of destruction and alienation if notice and a prior hearing are granted, and
c)the protections provided by the statute against wrongful seizure by creditors.
An important question that remains somewhat in doubt due to this line of cases is whether pre-judgment attachment for purposes of asserting quasi – in – rem jurisdiction can survive constitutional scrutiny.

Subject Matter Jurisdiction (p. 245) Up to this point we have personal jurisdiction (we can sue the D in a particular state) and we have given proper notice to the D. Now we are trying to determine what court in that state are we going to proceed. In the state court or the federal court.
Subject matter: Means that we have a court that has the power to hear this kind of dispute. This has nothing to do with personal jurisdiction. We need both, but here we have personal jurisdiction. Our basic choice is between federal and state court.
Federal Courts can only hear certain kinds of cases. They are of limited jurisdiction. If we do not fit, we cannot go to Federal court, even if the parties want to. Even if they would consent. Because the constitution says so.
(Article 3 Section 2): gives the outer limits of federal court subject matter jurisdiction. If we do not fall within one of those, we can not go to a Federal Court. Remember. The entire federal government is a government of seeded powers. The state government gave these powers to the national government. The entire Federal government is one of limited power.
The fact that the case falls constitutionally into Federal Subject matter jurisdiction is not enough. You must also have a statute that gives jurisdiction as well. That jurisdiction in Art. 3 Section 2 does not automatically allow the federal courts to step in. It must be granted in a jurisdictional statute by congress. Even though Art. 3 Sec. 2 lists several kinds of case that can go to Federal Court in Civil Procedure the main 2 kinds of cases are:

1)Diversity of Citizenship Cases 28 USC §1332: A ground used to invoke the jurisdiction of the federal courts when parties on different sides of a controversy involving more than $75,000 live in different states, or when one party is an alien. (or between a state, citizens of the state or a citizen of a foreign state, or an alien.)
2)Federal Question Cases 28 USC §1331: Issues of law that involve the construction of the United States Constitution, federal laws, or treaties.

In every state, we have 2 separate court systems. State and Federal. Federal courts can only hear two kinds of cases. State courts have general subject matter jurisdiction. They can hear any claim in the world.

Should ask for Federal Questions:
1)Does the Constitution allow jurisdiction?
2)Does Congress allow jurisdiction?

SMJ is important because it goes on the court’s ability to rule on a case.

Capron v. Van Noorden (p. 21) (1804)
Issue:
Rule: You must state a basis for jurisdiction as an element of any complaint filed in federal court.
Analysis: Cause of action was trespass in Federal court in North Carolina. Capron lost, and he appealed on Subject Matter Jurisdiction. The complaint did not state any basis for jurisdiction.
Conclusion: Capron drafted the complaint and filed it in North Carolina. Van Noorden did not show up for the appeal. You must state a basis for jurisdiction as an element of any complaint filed in federal court.



Subject Matter Jurisdiction of the State Courts
a)State v. Federal, Concurrent and Exclusive Jurisdiction: Generally state courts can find on federal laws. The Congress decides if this is allowable. ERESA, many circuit courts and state courts are not being preempted. The reason that state courts can do this are that in the constitution, it is stated that Supreme law of the land can.

b)Division of Subject Matter Jurisdiction Among Courts of a State (pp. 246-249)
Hypo #1: Laura from Oklahoma sues Mark from Ohio in a Federal court in Ohio for $75,000. There is SMJ
Hypo #2: Laura from Oklahoma sues Mark from Ohio in a Federal court in Oklahoma for $75,000. There is SMJ. American Law Institute would eliminate jurisdiction.
Arguments for Diversity Jurisdiction:
Arguments against Diversity Jurisdiction:
1)Too many cases
2)Fairness. Why should one plaintiff get to go to court, vs. another.
3)Federal Court interpretation of state law is not authoritative. (They don’t see the state law the same way as the state courts)
Courts will strictly interpret diversity requirements because of this.
BAR likes to go to federal court, therefore they are pro-diversity requirements.
10/16/97 Class
Lacks v. Lacks (p. 246) (1976)
Issue:
Rule:
Analysis: Cause of action is a divorce.
Conclusion:

Hughes v. Fetter (p. 248) The Supreme Court held that the Full Faith and Credit Clause of the U.S. Const. Art. IV, §1, precluded Wisc. From closing its courts toa suit under the Illinois wrongful-death act in the absence of a valid Wisc. Policy to weigh against the national interest favoring the availability of a Wisc. Forum.

Wells v. Simonds Abrasive Co. (p. 248) A state cannot escape constitutional obligation to enforce the rights and duties validly created under the laws of other states by the simple device of removing jurisdiction from courts otherwise competent.
Sun Oil v. Wortman (p. 248) A state may apply its own longer statutes of limitations even though the claim would have been time-barred under the law of the state under which the cause of action arose.

Tafflin v. Levitt (p. 249) Unless Congress has made federal jurisdiction exclusive, a state court may entertain an action even though it is based entirely on Federal Law.

Howlett v. Rose (p. 249)

Subject Matter Jurisdiction of the Federal Courts
a)Article III of the US Constitution: The power of the federal courts derives from Article III, Section11 of the Constitution, which describes the types of cases over which the federal courts can be given jurisdiction by Congress. The most important of these are:
1)cases between citizens of different states
2)cases involving the United States
3)cases arising under the Constitution, laws, and treaties of the United States
4)cases involving admiralty and maritime jurisdiction, and
5)Cases between a state and citizens of another state.

b)Diversity Jurisdiction (pp. 249-260) Congress has exercises the power to confer jurisdiction on federal courts over controversies between citizens of different state or between a citizen of a state and a foreign nation or subject thereof.
Rationale: This protects out of state litigants from local prejudice in state courts.
ØDebate over continued Justification: Is this desirable or are the limited resources of the federal courts wasted.
ØAmount in controversy: $75,000 exclusive of interest and costs

Bank of the United States v. Deveaux (p. 250) “…the states will administer justice as impartially as those of the nation…it is not less true that the constitution itself either entertains apprehensions on this subject or views with such indulgence the possible fears and apprehensions of suitors, that it has established national tribunals for the decision of controversies.

1)Determining Citizenship (p. 254)
a)Natural Persons: Citizenship follows domicile.
ØAmerican Citizens: An individual must be both a US citizen and a citizen of a particular state
ØAlien: a citizen or subject of a foreign nation
ØWhen a suit is brought by a representative (i.e. trustee), the citizenship of the representative controls.
ØCitizenship of a class is determined by the citizenship of the class representative (Class Action)
ØSpecial cases: minors have same domicile as parents, a married woman’s domicile has historically been treated as that of her husband’s; members of armed forces and prisoners maintain pre-induction or preincarceration domicile; out of state students retain their pre-school domicile.
b)Citizenship of Corporations: A corporation is a citizen of both its state of incorporation and the state in which it maintains its principal place of business.
ØPrinciple place of business: Can be where administrative functions are carried out, or where manufacturing or service activities are centered.
ØDirect Actions against Insurers: If a citizen is allowed to sue an Insurance company, by statute, the insurance company is deemed to be a citizen of he same state as the insured as well as a citizen of its state of incorporation and the state where it has its principal place of business.
c)Unincorporated Associations: Citizenship is determined by the citizenship of each member of the association (the place of the assoc. activities is irrelevant); suit as a class may facilitate obtaining diversity jurisdiction.
d)Time of Determining Citizenship: The relevant date on which the action is commenced, subsequent changes do not affect diversity jurisdiction.
ØChange in Citizenship: a person may change his citizenship merely by changing domicile
e)Devices to Create Diversity: A federal court does not have diversity jurisdiction when a party has been “improperly made or joined”
ØAssigned Claims: Diversity jurisdiction will be created when the assignee whose citizenship differs from that of the debtor has a substantial interest in the claim, but not if the assignee is merely a collection agent with no bona fide stake in the claim.
ØAppointment of Representative: Absent an independent justification for appointing someone other than the P’s natural rep., diversity jurisdiction will not be created by appointment of an out of state rep.
ØDevices to Destroy Diversity Jurisdiction: Some federal courts have struck down assignments and appointments designed solely to destroy diversity jurisdiction.
f)Amount of controversy: is designed to avoid burdening courts with claims that are thought to be insubstantial.

Mas v. Perry (p. 254) (1974)
Issue:
Rule:
Analysis:
Conclusion:

Singh v. Daimler-Benz (p. 256) (1993) 3rd Cir. Held that the amendment authorizing jurisdiction over a suit between an alien plaintiff and an alien defendant allows a permanent resident alien to file a diveristy of citizenship claim against another alien when in the U.S.

Blair Holding Corp. v. Rubenstein (p. 257) (1955)

White v. Halstead (p. 257) (1990)

Carden v. Arkoma Associates (p. 257) (1990)

Kramer v. Caribbean Mills Inc. (p. 258) (1969)

Rose v. Giamatti (p. 258) (1989)

Abels v. State Farm Fire & Cas. (p. 259) (1985)


Rule: A trial court can dismiss if either the court finds
a)the P’s claim is not in good faith or (D has to show with legal certainty that P cannot justify the amount claim)
b)P can not prove the amount of damages.

October 21, 1997 Class
Diversity Jurisdiction (contd)
2)Amount in Controversy (p. 260)
AFA Tours, In. v. Whitchurch (p. 260) (1991)
Rule: Where the matter in controversy exceeds the sum of $50,000, exclusive of interest and cost, the district court has jurisdiction. The rule governing dismissal for want of jurisdiction in cased brought in the federal court is that, unless the law gives a different, the sum claimed by the P controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify a dismissal.
Analysis: Whitechurch was a tour operator from 1972 to 1989, employed by AFA. HE quit in 1989 to start his own tour business. AFA complained that he misappropriated confidential information known to him, and used this (a customer list) to organize his own tour company. He has solicited or intends to solicit customers from AFA’s customer list. AFA sued in district court for misappropriation of its trade secrets. They stated that the damages were “in an amount which was not presently ascertainable, but which was believed to exceed the sum of $50,000. It also sought punitive damages of “no less than $250,000. Whitechurch denied this and moved for summary judgement on the ground that the AFA information possessed by Whitechurch was not confidential. He opposed the present lawsuit because he remained interested in conducting tours.
Conclusion: Where the matter in controversy exceeds the sum of $50,000, exclusive of interest and cost, the district court has jurisdiction. The rule governing dismissal for want of jurisdiction in cased brought in the federal court is that, unless the law gives a different, the sum claimed by the P controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify a dismissal.
If punitive damages are permitted under controlling law, the demand for such damages may be included in determining whether the jurisdictional amount is satisfied. NY law controlled and allows for such recovery.
The Supreme Court concluded that the record as it existed in the district court did not permit the court to find with legal certainty that the value of AFA’s claims did not exceed $50,000.

Arnold v. Troccoli (p. 264) P’s personal injury action for $25,000 that originally had been brought for $6,000 in a state court was dismissed as a colorable claim asserted for the sole purpose o getting federal jurisdiction. There appeared to be no justification for the increase in claimed damages, and the P’s attorney admitted that the switch from state to federal court was made because of the congested condition of the state courts.

Zahn v. International Paper Co. (p. 264) According to the Supreme Court, each class member must be able to assert a claim that satisfies the amount in controversy requirement except when the claims of the class members are to enforce a single title or right in which they have a common and undivided interest. Only in that limited situation may the class members aggregate their claims to meet the amount in controversy.

McCarty v. Amoco Pipeline Co (p. 265) In this case to determine the amount in controversy, for jurisdictional purposes the court described the task.

Injunctive Relief: When you order a D to act or not act in some way, to stop injury. Does not request damages. Valuing injunctions for specific performance in determining the amount in controversy.
1)some courts determine the value of the relief to the value
2)some courts determine the cost of the burden on the defendant
3)some courts determine the value to who ever invokes the jurisdiction
4)some courts determine either test 1 or test 2 to be met.

Generally, the jurisdictional amount is tested to the value of the plaintiff.
Courts have made to exceptions to diversity jurisdiction, they will not hear cases in:
1)probate
2)Domestic relations.

The Subject-Matter Jurisdiction of the Federal Courts
Federal Questions (p. 266) Congress may give the federal district courts subject matter jurisdiction over all cases arising under the Constitution and laws and treaties of the United States.
1)Rationale: Federal courts are more likely to have the needed expertise regarding federal issues and provide a more hospitable environment for federal interests and policies
2)Statutory Basis: Since 1875, federal district courts have original jurisdiction over all civil actions in which the matter in controversy “arise(es) under the Constitution, laws or treaties of the United States.
3)Meaning of “Arises Under”: If P’s rights will be supported by one construction of a federal law and defeated if another construction is given.
4)Pleading Determines Jurisdiction: The federal question must appear on the face of a well pleaded complaint
a)There is no federal question merely because P expects the defendant to raise a defense under federal law.
b)Even if the entire defense is based on federal law, there is no federal question jurisdiction.
c)Criticism of Rule: Excludes many controversies involving federal questions that should be decided by federal courts; also, the practice may involve a substantial waste of judicial resources
d)Defense of Rule: Use of pleading rules provides ease and certainty of applications; also, a court should have the power to determine the existence of jurisdiction at the outset of litigation; finally, federal courts were meant to be courts of limited jurisdiction
e)Declaratory Judgement: The effect of the “arising under” requirement on declaratory judgement actions is not clear, jurisdictional sufficiency might be tested in terms of the P’s actual complaint or court may examine in view of how the case would appear had the dispute been allowed to mature into an affirmative action.
5)Federal Laws: Includes the Constitution, treaties, federal statutes, federal common law, and federal administrative regulations.
a)Federal Statutes: Numerous federal statutes (i.e. patent, copyright, antitrust law) create substantive rights enforceable in federal courts
b)Federal Common Law: Federal courts create substantive common law principles when the issue bears directly on a matter of concern to the national government or when it is necessary to fill substantive or procedural gaps left by Congress
6)No Amount In Controversy Requirement: Previously federal courts had jurisdiction only if the matter in controversy exceeded $50,000 exclusive of interest and costs; however, in 1981 Congress amended 1331 to abolish the general requirement
7)Actions Involving the United States: The federal government is involved in approx. 1/3 of all actions brought into federal courts.
a)U.S. as P: Federal government may bring suit in a federal court to protect proprietary, pecuniary, or general welfare interests.
b)U.S. as D: Suits against the federal government are subject to the doctrine of sovereign immunity
ØDecline of Sovereign Immunity: Sovereign immunity has bee recently viewed with disfavor so that waivers of immunity are more reasliy found to have been granted.
c)Non-Tort Claims: The Court of Claims was established to adjudicate money claims against the United States that are based on:
Øthe United States Constitution,
Øa federal statute,
Øa regulation of an executive department
Øa contract to which the government s a party, or
Øany other damage claim not sounding in tort; the federal district courts have concurrent jurisdiction over these claims if the claims do not exceed $50,000
d)Federal Tort Claims Act: Gives the district court exclusive jurisdiction over claims against the U.S. for money damages based on negligence of government employees to the same extent hat a private person would be liable

Determining if this is a Federal Law
1)What doe Article III of the constitution allow? (Restricted by federal law)
2)What does Congress intend? We assume that Congress did not intend cases that are not under federal law)

Osborn v. Bank of the United States (p. 267) (1824) Ohio claimed the Bank owed back taxes. Bank refused to pay, so Ohio State auditor forcibly entered the bank and took the money. The court ordered the state officials to return the money that had been taken for the bank. The officials appealed because the federal court lacked SMJ over the case. “Arising under” gave the court SMJ.
Bank sued to enjoin the state from taxing it, Bank also claims that the state trying to tax the Bank is unconstitutional.
KEY CONCEPTS: Supreme Court said that the act of Congress confers federal jurisdiction on any case that the Bank files. Bank was created by federal law, therefore the federal law created the federal bank, and anything the bank does is federal in nature. Once a federal court has jurisdiction over part of an action, it has jurisdiction over an entire action.
This sets a constitutional requirement for jurisdiction: Anytime there is any federal ingredient in a case, you have federal question jurisdiction under the constitution.

A federal ingredient under 28 USC §1331 is not enough for a federal question (only applies to lower federal courts)

“Arising under” federal jurisdiction power comes from 2 areas:
1)Constitution (Osborn case) Extends to all cases that have a federal question that have a federal ingredient in it.
2)Statutory (based on congressional intent) 28 USC §1331 (Motley) construed the statutory grant of arising under jurisdiction as a more limited
Must have a well-pleaded complaint rule: The federal question must be obvious from the complaint.
How much of a case must include federal law?

Bank of the United States v. Planters’ Bank of Georgia (p. 268) (1824) Bank bought notes issued by Planters. , Which then refused to honor them. The Bank sued for payment, and Planters (state bank) contested the federal court jurisdiction. The Supreme Court held that the question had been fully considered in Osborn, and that it was unnecessary to repeat the reasoning used in the case.




Louisville & Nashville R. Co. v. Mottley (p. 269) (1908)
Rule: Well Pleaded Complaint law
Federal SMJ only if you have a federal question on the face of a well pleaded complaint. (An anticipated federal defense is not enough to get you into the federal court)
Analysis: In a settlement of a dispute the Louisville and Nashville railroad agreed to give the Mottleys a free, lifetime pass on all of its lines. Congress later enacted a statute prohibiting such passes and therefore the pass to the Mottleys was not renewed by the railroad. Mottleys brought suit in a federal district court for specific performance of the settlement agreement, alleging that the federal statute did not apply to him and alternatively, if it was construed to apply to him, it would violate the 5th amendment of the U.S. Constitution. The case was dismissed for lack of subject matter jurisdiction because the P’s cause of action was based on a claimed breach of contract, which is a purely state-created right. The references in the compliant to the federal statute simply anticipated a potential defense under federal law. Even if the railroad actually raised the defense under the federal statute, it was not part of the P’s claim and the federal question would not be part of a well-pleaded complaint.
Conclusion: Neither party had questioned the jurisdiction of the circuit court, which is defined and limited by statute, is not exceeded. There was no diversity
of citizenship, and it is not an cannot be suggested that there was any ground of jurisdiction, except that the case was a “suite.” Arising under the Constitution or laws of the United States.
A well pleaded complaint will only state what it is going to prove, it will not bring up the anticipated defense. Bringing up the anticipated defense will not get you federal jurisdiction.
An element of a federal law in defense of a complaint is not enough to get federal jurisdiction.
This was based on §1331 statutory granting federal jurisdiction. That is why the outcome was different than Osborn (constitutional). There was a federal ingredient, so the Supreme Court would look at this case.

October 23, 1997 Class

Aggregation: The purpose is to meet the amount in controversy claim.
Injunctive Relief: You are not filing for damages. The federal court will determine what the value of damages should be.

28 USC §1331 you must approach by:

1)Holme’s Rule: Focuses on what law created the cause of action. “A suit arises under the law that creates a cause of action. (If your suit is filed under a federal statute, you have federal jurisdiction)
2)Whether the claim turns on state or federal law: This means that if a suit is filed under state law, but the vindication of this suit turns on construction of or interpretation of federal law, then you have federal jurisdiction

Skelly Oil Co. v. Phillips Petroleum Co. (p. 271) (1950) Suit brought for declaratory judgement suit, that contracts had been terminated due to an order by the federal government. Supreme Court said that this did not give federal jurisdiction.
Franchise Tax Board v. Construction Laborers Vacation Trust (p. 272) (1983)
1)A state tax board sued in Federal Court claiming that the trust had “failed to comply with 3 tax levies issued under Calif. law.” (like Motley the federal question only comes up in an affirmative defense, even though it is the only issue)
2)Calif. seeks to make the trust pay. Calif. seeks a declaratory judgement that the trust was obliged to pay the tax levies. (Say they have to pay) (The federal question is a necessary element in the complaint. “Let us know that the trust has to pay.”)

No Federal jurisdiction if, but for, the declaratory judgment procedure the federal claim would arise only as a defense to a state created action, no federal question jurisdiction.
Motley did not bring a declaratory judgement, only a contract action.

Bright v. Bechtel Petroleum (p. 272) (1986) P brought suit against his employer in state court alleging that the employer had breached his employment contract by paying him less than the K required because the employer withheld state & federal income taxes. The employer removed the case to federal court arguing that the P had artfully pleaded what really was a challenge to the employer’s compliance with federal law. 9th cir. Found that a federal question existed because of the well-pleaded complaint.

TB Harms Co. v. Eliscu (p. 273) (1964)
Issue:
Rule:
PH: The purported sole owner of a copyright alleged that person claiming partial ownership had recorded their claim in the Copyright Office and had warned his licensee against disregarding their interest was not one “arising under any act of Congress relating to…copyrights” over which 28 USC §1338 gives the federal courts exclusive jurisdiction. Yet, precedents going back for more than a century teach that lesson and led the Court of Appeals to affirm the trial court judges dismissal of the complaint.
Analysis: The case involves 4 copyrighted songs. Vincent Youmans composed the music for the songs for the use in the movie, “Flying Down to Rio,” which he had contracted with RKO in 1933 to do. He agreed to assign to RKO the recordation (?) and other specific rights relating toe the picture during the existence of the copyrights. RKO was to have one of their writers write the lyrics and to get the publishing rights I these for Youmans, who was “to pay the lyric writer the usual and customary royalties on sheet music and mechanical records.” Subject to this Youmans could assign the publication and small performance rights to the music and lyrics as he saw fit. RKO employed 2 lyric writers (Gus Kahn and Edward Eliscu (D), who agreed to assign to RKO certain rights described in a K dated 5/25/33. Max Dreyfus, the principal stockholder of the P Harms, which had succeeded to his rights, acquired Youmans’ reserved rights to the music and was his designee for the assignment with respect to the lyrics. Allegedly -–and his denial of this is a prima facie subject of dispute – Eliscu then entered into an agreement dated 6/30/33, assigning his rights to the existing and renewal copyrights to Dreyfus in return for certain royalties.
When the copyrights were about to expire, the children of Youmans, by the widow Kahn, and Eliscu made proper renewal applications. The first two groups executed assignment of their rights in the renal copyrights to Harms. Eliscu, by instrument dated 2/19/62 recorded in the copyright Office,
Conclusion: Appeal from an order of the District Court for the Southern District of NY dismissing, for want of federal jurisdiction, an action by a copyright owner against persons claiming partial ownership. The court of appeals, held that action by purported sole owner of renewal copyrights against assignor and assignee under instruments recorded in Copyright Office purporting to be assignment of rights in renewal copyrights, presenting critical issue of whether the defendant assignor had made prior assignment to P’s principal stock holder and not revealing any issue requiring interpretation of Copyright Act, was not one “arising under any Act of Congress relating to copyrights,” and there was no federal jurisdiction over it in absence of diversity of citizenship.
This was affirmed by the US Court of Appeals 2d Cir.
ØAllegation by purported sole owner of copyright that persons claiming partial ownership have recorded their claims in Copyright Office and have warned P’s licensees against disregarding their interests does not cause action to be on “arising under any Act of Congress relating to …copyrights” within statute giving federal courts exclusive jurisdiction in such actions.
ØPleading of pivotal question of federal law may suffice to give federal jurisdiction even for “state-created claims.” 339 F2d 823
ØEven in absence of express statute, federal law may govern what might seem issue of local law because federal interest is dominant.
ØAn issue arises under the Copyright Act under federal statute granting exclusive jurisdiction to federal courts in such cases only if complaint is for remedy expressly granted by the Act

Smith v. Kansas City Title & Trust Co. (p. 275) (1921) A shareholder of the D corporation brought suit in the federal court to enjoin the D from investing corporate funds in bonds issued under the authority of the Federal Farm Loan Act. The P alleged that Missouri law imposed a fiduciary duty on the corporation to invest only in bonds that were authorized by a valid law and argued that because the Farm Loan Act was unconstitutional, the D could not purchase bonds issued under its authority. Although the cause of action was wholly state created, the Court held that there was original federal jurisdiction over the case:
“ The general rule is that where it appears from the bill or statement of the P that the right to relief depends upon the construction or application of the Constitution or laws of the United States, and that such federal claim is not merely colorable, and rests upon reasonable foundation, the District Court has jurisdiction under the statute granting federal question jurisdiction.” 255 US at 199

If the P has to plead and prove a federal question, then you have a federal question jurisdiction.

Moore v. Chesapeake & Ohio RY. Co (p. 276) (1934)

There is no Federal question jurisdiction when state law merely incorporates a federal standard.

Shoshone Mining Co. v. Rutter (p. 276) (1900) Congress creates an agency, to deal with adverse claims of mines. There is federally created law that is structured to be evaluated by state law. The Supreme Court found no federal question jurisdiction. Before the court can have jurisdiction, on the pleading, the dispute must have a really and substantially involve a controversy as to a right that arises under federal law. The statute that authorizes a right is different than one that creates a right. (i.e. US expands the west in the late 19th century. A suit to enforce a right under the constitution does not necessarily rise out of federal law).
No federal SMJ if the federally created cause of action turns on issues of state law.

There is no modern following to this case.

Bivens v. 6 Unknown Named Agents of the Federal Bureau of Narcotics (p. 277) (1971)

Luckett v. Delpark, Inc. (p. 278) (1926)

October 28, 1997 Class (pp. 287-298 (Tues.))

12/6/97 for Review (9:00AM)

Moltley Smith Supp. Jurisdiction
Count I Count I Count I
Change violated Change violated Change violated state
State law state law, so law
Count II
Change violated federal law
Count I: change violated §303 (Fed)
Count II: change conspired to interfere w/ employment (state)
Count III: change interfered with employment (state)

Court v. Ash: A statute can setup rights for private citizens, but not give the citizen a right to sue.

Merrell Dow Pharmaceuticals Inc. v. Thompson (p. 279) (1986)
The cause of action cannot arise under federal law when there is no implied right to sue under the law.

To invoke diversity, you must be a US citizen, and domiciled in the US.
If no connection to the US (US citizen domiciled in France) cannot
The only way to get under Federal Jurisdiction is to bring it in as a well pleaded complaint.

Issue: Whether the incorporation of a federal standard in a state-law private action, when Congress has intended that there not be a federal private action for violation of that federal standard, makes the action one “arising under the Constitution, laws or treaties of the United States.”
Rule: I’m injured because of a violation of the FDCA? If a state law incorporates a federal standard, you do not have federal question jurisdiction.
Analysis: Thompson respondents are residents of Canada, and MacTavishes reside in Scotland. They filed separate complaints in an Ohio state court against D an Ohio corporation, the manufacturer and distributor of the drug Bendectin, alleging that children were born with deformities as a result of their mothers’ ingestion of the drug during pregnancy. Damages were sought on common-law theories of negligence, breach of warranty, strict liability, fraud, and gross negligence, and also on the ground that the alleged “misbranding” of the drug in violation of the Federal Food, Drug, and Cosmetic Act (FDCA) represented a “rebuttable presumption” of negligence and the “proximate cause” of the injuries. P filed a petition for removal of the actions to Federal District Court, alleging that they were founded, in part, on a claim “arising under the laws of the United States.” After removal, the cases were consolidated, and the Federal District Court denied D’s motion to remand to the state court and granted P’s motion to dismiss on forum non-conveniens grounds. (Doctrine that allows a court that has jurisdiction over a case to decline to hear the case out of fairness to the parties if there is another court available which would be more convenient.) The Court of Appeals reversed. Noting that the FDCA does not create or imply a private right of action, the court held that the cause of action did not arise under federal law and therefore were improperly removed to federal court.
Thompson and others brought an action against Merrill, seeking damages for defective births caused by taking one for Merril’s drugs. Although Thompson alleges violation of the Federal Food, Drug, and Cosmetic Act (FDCA) as an element of its state law claim, the majority opinion of the Supreme Court said that there would be no federal cause of action for FDCA violations.
Conclusion: A violation of a federal statute as an element of a state cause of action, when Congress has determined that there should be no private, federal cause of action for the violation, does not state a claim “arising under the Constitution, laws, or treaties of the United States” within the meaning of 28 USC §1331. Determining the question of removal of jurisdiction by reference to the “well-pleaded complaint” and assuming that there is no federal cause of action for FDCA violations, the cases were improperly removed to the Federal District Court. The assumed congressional determination to preclude federal private remedies for violations of the FDCA is tantamount to a congressional conclusion that a claimed violation of the statute as an element of a state cause of action is insufficiently “substantial” to confer federal-question jurisdiction. The asserted federal interest in federal review and the novelty of the question whether the FDCA applies to sales in Canada and Scotland are not sufficient to give a state-based FDCA claim status as a jurisdiction-triggering federal question.
Dissent: (Brennan/White/Marshall/Blackmun)

Pleading of pivotal question of federal law may suffice to give federal jurisdiction even for “state-created claims.” TB Harms Company v. Eliscu, 339 F2d 823 (1964)

Constitution (Osborn case) extends to all cases that have a federal question that have a federal ingredient in it.
Statutory (based on congressional intent) 28 USC §1331 (Motley) construed the statutory grant of arising under jurisdiction as a more limited

Smith, you might have federal question jurisdiction that must be pleaded and proved.
Moore, probably do not have Federal Question, because it is still a state case.

Distinguish Smith and Merrill by arguing the direct connection ot federal law. Smith there was a federal law, Merrill Dow, there was an action for state law.

Merrill Dow limits cases where there is no allowance for private action under federal law.

Must have a well-pleaded complaint rule: The federal question must be obvious from the complaint. How much of a case must include federal law?

Summary:

Holmes Rule: A suit arises under the law that creates the cause of action. (This is a good law to see if it should be included, not the entire law) State created claims can arise under federal law.
If a P states a claim
When the P has a state law claim that includes elements of Federal Law. It is not clear when a state created action could arise under Federal law.
Look to the essence of the case:
1)If the essence is the construction of a constitutional issue: Federal Question Jurisdiction
2)If the Federal Law Issue is one where there is no private right of action, No Federal Question Jurisdiction.
Beyond these two general rules depends on whom you are arguing for
Want Federal Question Jurisdiction: Smith
Don’t want Federal Question Jurisdiction: Merrill Dow


October 30, 1997 Class
The Subject Matter Jurisdiction of the Federal Courts
Supplemental Claims and Parties (p. 287)
KEY QUESTION: When can a federal court assert jurisdiction over a claim, when there is no independent basis over that claim, but that claim is in the same suit with a claim for which the federal court does have a basis for jurisdiction?

In 1990 Congress enacted §1367 and essentially codified the common law doctrines of ancillary and pendent jurisdiction under the collective name “supplemental jurisdiction.” This provides the federal courts with the power to exercise supplemental jurisdiction “over all claims that are so related to claims in the actin within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” The constitutional analysis for this jurisdiction is found in the following cases and the courts require:

ANCILLARY JURISDICTION: The Court established the test that a secondary claim arising from the same “transaction” or “series of occurrences” that is the subject matter of the original controversy falls within the federal court’s supplemental/ancillary jurisdiction. Moore v. NY Cotton Exchange (1926)
PENDENT CLAIM JURISDICTION: Federal courts may hear a jurisdictional insufficient claim as an adjunct to its determination of a sufficient federal question.
SCOPE: Federal court may exercise pendent jurisdiction to resolve
Jurisdictionally insufficient claims arising from the same nucleus of
Operative facts as the jurisdictionally sufficient claim when both claims
Ordinarily would be tried together and when the sufficient claim is
Substantial.

PENDENT –PARTY JURISDICTION: Generally is not available to add new parties when subject matter jurisdiction would be lacking.

The pendent claims are such that the P ordinarily would try them together in one proceeding. The Gibbs opinion also required that:
a)the pendent claim be so related to the main claim that there is a single constitutional “case” and that
b)The main claim is “substantial.
Gibbs also directed the trial court to consider a number of discretionary factors designed to indicate whether the federal court ought to exercise jurisdiction, despite a finding that the court had the power under the constitution to do so.
A court may exercise its discretion and decline to exercise supplemental jurisdiction over a claim by 4 factors. The Gibbs discretionary factors were:
a)if the claim raises a novel or complex issue of state law;
b)if the claim substantially predominates over the claim(s) over with the court has original jurisdiction
c)if the district court has dismissed all the claims over which it has original jurisdiction, or
d)If there are exceptional circumstances presenting compelling reasons for declining jurisdiction.

Negative aspects of Supplemental Jurisdiction:
1)It represents an expansion of federal court jurisdiction at the expense of the state courts and therefore raises a serious issue concerning the distribution of judicial power between the federal and state courts.
2)The inclusion of supplemental claims may produce a very complex lawsuit that might confuse a jury or create procedural unfairness to one or more of the parties.
3)A single trial, even when more efficient, might well result in more prolonged and more costly litigation than contemplated by the original parties.

PENDENT CLAIM JURISDICTION
United Mine Workers of America v. Gibbs. (p. 288) (1966)
Issue: Did the district court properly entertain jurisdiction based on Tennessee law?
Rule: State law claims are appropriate for federal court determination if they form a separate but parallel ground for relief also sound in a substantial claim based on federal law.
Analysis: A coal company closed a mine in Tennessee and laid off miners belonging to one of the P’s local unions. The company then, through a subsidiary, attempted to open a new mine nearby with members of a rival union. Gibbs (D), was hired as mine superintendent and given a K to truck coal to the nearest rail loading point. On 8/15 & 8/16/60, armed members of P’s local forcibly prevented the opening of the mine, threatened D, and assaulted an organizer for the rival union. P’s area representative was away at a union board meeting when he learned of the violence. He returned late on 8/16 with instructions to establish a limited picket line, prevent further violence, and to see that neighboring mines were not struck. There was no further violence at the mine site; a picket line was maintained for 9 months; and no further effort was made to open the mine. D lost his job as superintendent, never performed his trucking K, and allegedly lost other trucking Ks and mine leases because of a converted union plan against him. Suing only the international union, he sought recovery under §303 of the Labor Management Relations Act and the common law of Tennessee. Jurisdiction was premised on allegations of secondary boycotts under §303; and state law claim, for which jurisdiction was based on the doctrine of pendent jurisdiction, asserted an unlawful conspiracy and boycott to interfere with D’s Ks of employment and trucking. The jury found that P had violated both §303 and state law and D was awarded actual and punitive damages. On motion, the trial court set aside the damages award with respect to the trucking K on the ground that damage was not proved. It also held that union pressure on D’s employer to discharge him would constitute only a primary dispute with the employer, not cognizable under §303. Interference with employment was cognizable as a state claim and a remitted award was sustained. The Court of Appeals affirmed.
Conclusion: 2-step analyses used in this case are:
1)POWER: It was held that the district court properly entertained jurisdiction of the claim based on state law.
a)The state law claim, based in part on violence and intimidation was not pre-empted by §303.
b)Pendent jurisdiction, in the sense of judicial power, exists whenever there is a substantial federal claim and the relationship between it and the asserted state claim permits the conclusion that the entire action before the court comprises one “case.”
c)Pendent jurisdiction is a doctrine of discretion, justified by judicial economy, convenience and fairness to litigants. (further comity and justice)
ØIf the federal claims are dismissed before trial, there is no longer a claim for the state claim can attach to.
ØAt any time the state claim is predominant over the federal claims, the federal court should release jurisdiction. (Federal claim must be substantial)
d)The District Court did not exceed its discretion in exercising jurisdiction over the state law claim.
2)DISCRETION: State law remedies against violence and threats of violence arising in labor disputes have been sustained against the challenge of pre-emption by federal labor legislation, but the scope of such remedies is confined to the direct consequences of such conduct.
3)Although petitioner conceded that violence which would justify application of such limited state tort law occurred during he first 2 days of the strike, it appeared that neither the pleading, arguments of counsel, nor the instructions to the jury adequately defined the area within which damages could be awarded under state law, where the tort claimed, essentially a “conspiracy” to interfere with D’s contractual arrangement, was not itself so limited.
4)Since P was not clearly proved to have participated in or authorized the 2 days’ violence, nor to have ratified it or built its picketing campaign on the fear of the violence engendered, the special proof requirement of §6 of the Norris-LaGuardia Act were not satisfied, and P cannot be held liable to D under state law.
a)While the Labor Management Relations Act expressly provides that for purposes of that Act, including §303, the union’s responsibility for acts of its embers and officers is to be measured by ordinary agency standards rather than §6’s more stringent standard of “clear Proof” it does not displace §6 for other purposes and §6 plainly applies to federal court hearings of state tort claims arising out of labor disputes.
b)The “clear proof” language of §6 is similar to “clear, unequivocal, and convincing proof,” unsaid elsewhere. Although under this standard the P in a civil suit does not have to satisfy the criminal standard of reasonable doubt, he is required to persuade by a substantial margin and to come forward with more than a bare preponderance of the evidence.
Reversed

§1367 (c): provides federal courts with discretion in some circumstances to decline to exercise supplemental jurisdiction. It codifies those factors that the Supreme Court found in United Mine Workers v. Gibbs recognized as providing sound basis for a lower courts discretionary decision to decline supplemental jurisdiction.
.
Note #1 (p. 292)
Note #2
Note #3
Note #4 (p. 293)

Pendent Party Jurisdiction

Aldinger v. Howard: Court said that 20 USC §1343 gave jurisdiction over “any civil action authorized by law to be commenced by any person” to redress the deprivation under color of state law, of federal constitutional right, and pendent jurisdiction was alleged to lie over a state-law claim against the county. This court held that “ a fair reading of the language used in §1343 (3), together with the scope of §1983, under which counties are excluded from the “person(s)” answerable to the P “in an action at law suit in equity” ….is without the District Court’s statutory jurisdiction. Brennan dissented and fell back on the Gibbs arguments.
After constitutional test is satisfied, then legislative intent (Congress’) either expressly or implicitly was supplemental jurisdiction negated (The assumption is that there was supplemental jurisdiction)
Tests in this case are did Congress expressly or implicitly negate the supplemental jurisdiction.

Aldinger Applied

Owen Equipment & Erection Co. v. Kroger (p. 294) The court held in this case that the use of supplemental jurisdiction when the P and 3rd party D are co-citizens would violate the complete diversity requirement in federal cases.
There is constitutional power (do the claims arise from a common nucleus of facts – Statutory: To allow jurisdiction would go against congressional intent for §1332 which required complete diversity and the pendent party must be diverse from the plaintiff)

ALDINGER REWORKED

Finley v. United States (p. 296) P’s spouse and kids were killed when their plane struck electric power wires on an approach to San Diego airport. Suit was filed in federal district court under Federal Tort Claims Act alleging FAA had been negligent in operating and maintaining the run way lights and air traffic controls. P later amended her complaint to included state tort claims against the city and Power Company. Appeals court reversed district court’s decision to allow the amendment. Supreme Court affirmed. They said that the constitution must have given to the court the capacity to take it, and an act of Congress must have supplied it.
You cannot amend a complaint to include pendent parties. The test used

1)Constitutional Power: Does the constitution give the power to the court? Do we have power under the Constitution?
2)Congressional Power: Did Congress give power to the court?
a)Statutory Power: Per Scalia, there is no pendent party jurisdiction, unless the statute grants it expressly. (No Subject Matter Jurisdiction)
The idea is that if Congress wants SMJ they should write legislature to that effect. §1367 was written in response to this.

Federal Question Jurisdiction

Smith: statute authorizing bonds is illegal

Moore: employee not contributing negligence b/c employer violated federal law
Merrill Dow: negligence per se b/c/ D violated federal law

All 3: if win on federal issue, win on state issue
But: if lose in federal issue = lose on state issueèFQJ (Smith)
If lose on federal issue =/= lose on state issue èno FQJ (Moore, MD)
Also, if no private right of action under the federal issue è no FQJ (Merrill Dow)


Supplementary Jurisdiction Questions When can a federal court assert jurisdiction over claims which there is no independent basis federal court (state court claim) jurisdiction, when that claim is brought in the same suit where there is a claim that the federal court has jurisdiction over it?


Pendent Ancillary Counter
Claim Jurisdiction Claim
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3p D NJ




Pendent Cross

Party Claim
J J
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[IMG]file:///C:/Users/mike/AppData/Local/Temp/msohtml1/01/clip_image017.gif[/IMG]NJ D2 J
D2


Scott (Mass) sues Laura from Oklahoma for over the amount of controversy. Laura impleads Mike (3rd driver from Oklahoma) saying Mike was really at fault.
The only way to get federal jurisdiction over Mike for Laura is ancillary jurisdiction.
November 4, 1997 Class

Readings:
(pp. 298-310/ 310-325)
November 11, 1997 Class (Review started here)
Mengler, Burbank & Rowe (p. 298) 28 USC §1367 reaffirms the authority of federal courts to hear pendent and ancillary claims.
1)Justice Scalia: (in Finley) said, “ whatever we (the court) say regarding jurisdiction can of course be changed by Congress. What is if paramount importance is that Congress be able to legislate against a background of clear interpretive rules, so that it may know the effect of the language it adopts.”
2)§1367 (a): authorizes the district courts to exercise jurisdiction over a supplemental claim whenever it forms part of the same constitutional case or controversy as the claim that provides the basis of the district court’s original jurisdiction.
3)Codified the settled law that impleader claims against nondiverse 3rd party defendants are authorized, as well as compulsory counter claims and cross claims involving additional parties.
4)§1367 (b): Restricts the federal courts’ exercise of supplemental jurisdiction in diversity cases by, codifying he principal rationale of Owen Equipment & Erection v. Kroger. In that case the Supreme Court held that no supplemental jurisdiction existed against a nondiverse 3rd party when jurisdiction rested solely on the general diversity statute. To allow supplemental jurisdiction in this circumstance, the Supreme Court explained, would encourage Ps to evade the complete diversity requirement.
5)§1367 (b): fully implements the Kroger rationale by prohibiting the district courts from exercising supplemental jurisdiction over claims by Ps against persons made parties through any of several of the joinder devices used under Rule 14, Rule 19, Rule 20, Rule 24, when doing so would be inconsistent with the jurisdictional requirements of §1332.
6)§1367 also prohibits the exercise of supplemental jurisdiction about the joinder or intervention of persons as Ps when it would be inconsistent with §1332.
7)§1367 (c): provides federal courts with discretion in some circumstances to decline to exercise supplemental jurisdiction. It codifies those factors that the Supreme Court found in United Mine Workers v. Gibbs recognized as providing sound basis for a lower courts discretionary decision to decline supplemental jurisdiction.
8)A district court may dismiss a supplemental claim if it raise a novel or complex issue of state law, substantially predominance over the claim or claims over which the district court has original jurisdiction, or if the district court has dismissed all claims over which it has original jurisdiction and judicial efficiency does not clearly favor adjudicating the supplemental claim,
9)§1367 (d) provides a period of tolling of statutes of limitations for any supplemental claim that is dismissed and for any other claims voluntarily dismissed at the same time or after. The purpose is to prevent the loss of claims to statutes of limitations where state law fails to toll the running of its limitations period while a supplemental claim is pending in federal court. This also eliminates disincentives to parties who want to litigate their entire action in a state court after their supplemental claims have been dismissed.
28 USC §1367. Supplemental jurisdiction
(a)Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties.
(b)In any civil action of which the district courts have original jurisdiction founded solely on §1332 of this title, the district courts shall not have supplemental jurisdiction under subsection (a) over claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure, or over claims by persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of §1332.
(c)The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if - (1) the claim raises a novel or complex issue of State law, (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.
(d)The period of limitations for any claim asserted under subsection (a), and for any other claim in the same action that is voluntarily dismissed at the same time as or after the dismissal of the claim under subsection (a), shall be tolled while the claim is pending and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period.
(e)As used in this section, the term "State" includes the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession of the United States.

Note #1 (p. 301)
Note #2 (p. 301)
Note #3 (p. 302)
Note #4 (p. 302)

Executive Software North America Inc. v. U.S. District Court (p. 302) (1994)
Issue: Can a court decline to assert supplemental jurisdiction in exercising its discretion to decline pendent claims?
Rule: Unless court properly invokes statutory category for declining to assert supplemental jurisdiction in exercising its discretion to decline to entertain pendent claims, supplemental jurisdiction must be asserted over pendent claim. > 28 U.S.C.A. S 1367(c).
Analysis: Employee brought employment discrimination action against employer under federal and state law. After action was removed to federal court, the United States District Court for the Central District of California. The Court of Appeals, D.W. Nelson, Circuit Judge, held that: (1) district court could not decline to exercise supplemental jurisdiction over pendent state claims on ground that retention of state claims would require expenditure of substantial judicial time and effort; (2) district court committed clear error in declining to exercise supplemental jurisdiction over pendent state law claims without providing written reasons so as to allow Court of Appeals to determine whether district court relied on statutorily permissible factors in declining to exercise such jurisdiction; and (3) district court's application of incorrect legal standard warranted mandamus relief.
District court's order remanding pendent state law claims on discretionary grounds is not considered one made on basis of defect in removal procedure so as to bar review of remand order by Court of Appeals
Conclusion: Unless court properly invokes statutory category for declining to assert supplemental jurisdiction in exercising its discretion to decline to entertain pendent claims, supplemental jurisdiction must be asserted over pendent claim. > 28 U.S.C.A. S 1367(c). Once factual predicate under statute is identified so as to trigger court's exercise of discretion as to whether to exercise supplemental jurisdiction over pendent claim, court's exercise of discretion is informed by whether remanding pendent state claims to state court comports with underlying objective of most sensibly accommodating values of economy, convenience, fairness, and comity. > 28 U.S.C.A. S 1367(c). When declining to exercise supplemental jurisdiction over pendent claim under supplemental jurisdiction statute's catchall provision, which permits court to decline supplemental jurisdiction only when in exceptional circumstances there are other compelling reasons for declining jurisdiction, court must articulate why circumstances of case are exceptional in addition to inquiring whether other values provide compelling reasons for declining jurisdiction in such circumstances. > 28 U.S.C.A. S 1367(c)(4). District court could not decline to exercise supplemental jurisdiction over pendent state claims in an employment discrimination action on ground that retention of state claims would require expenditure of substantial judicial time and effort. > 28 U.S.C.A. S 1367(c)(4). District court may not decline to exercise supplemental jurisdiction over pendent state law claims solely to ease docket congestion. > 28 U.S.C.A. S 1367(c)(4). District court committed clear error in declining to exercise supplemental jurisdiction over pendent state law claims without providing written reasons so as to allow Court of Appeals to determine whether district court relied on statutorily permissible factors in declining to exercise such jurisdiction. > 28 U.S.C.A. S 1367(c). For purposes of determining whether employee was entitled to mandamus relief, district court's application of incorrect legal standard in determining to remand pendent state claims to state court in unemployment discrimination case could not be rectified on appeal, where remand order would result in splitting adjudication of employee's claim between state and federal systems and, by the time appeal after final judgment could be heard in either proceeding, matters might have proceeded to point that parties and courts had experienced significant burdens. > 28 U.S.C.A. S 1367(c). Mandamus is particularly appropriate when court is called upon to determine construction of federal procedural rule in new context.
District court's application of incorrect legal standard in determining whether to remand pendent state claims to state court under supplemental jurisdiction statute warranted mandamus relief in employment discrimination action. > 28 U.S.C.A. S 1367(c). In determining whether to exercise supplemental jurisdiction over pendent state claims, it is duty of district court to consider propriety of pendent jurisdiction at every stage of litigation, after proper consideration of supplemental jurisdiction statute. > 28 U.S.C.A. S 1367.
Holding: Held that the district court erred by failing to recognized that §1367(c ) provides the exclusive means by which supplemental jurisdiction over pendent claims may be declined if its assertion is permitted by §1367 (a) and (b). The court failed to articulated how the “exceptional circumstances” and “compelling reasons” required by §1367 (c ) (4) were present. The district court failed to provide reasons for its decision to decline supplemental jurisdiction, and the basis is not apparent form the record, the supreme court was unable to determine whether the court relied on permissible grounds when it remanded the pendent claims.
The remand order by the district court was vacated.
Dissent: I agree with the majority that unless the district court's order is clearly erroneous as a matter of law the writ of mandamus should not issue. I cannot agree with the majority that this court should conclude that the district court clearly erred because we cannot determine the exact ground upon which the court relied. The district court's order to show cause said in part:
Federal court jurisdiction over the state claims depends upon whether this Court exercises its discretion to retain supplemental claims. Accordingly, the Removing Party(ies) is hereby ordered to show cause in writing no later than June 14, 1993 why the Court should not exercise its discretion to remand the state claims to state court.
In its response to this Order, the Removing Party(ies) should take into account that the Supreme Court defined the parameters of a federal court's supplemental jurisdiction in > United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). Under > Gibbs, a federal court may exercise supplemental jurisdiction over state law claims only if
(1)the state and federal claims derive from a common nucleus of operative fact
(2)and are the types of claims the Court would ordinarily be expected to try together in one proceeding.
Even if these two conditions are met, however, a federal court has discretion to decline jurisdiction over the state law claims if, for instance, the state claims substantially predominate, the state claims involve novel or complex issues of state law, trial of the state and federal claims together is likely to result in jury confusion, or retention of the state claims requires the expenditure of substantial additional judicial time and effort. The Removing Party(ies) should also be aware that this Court does not interpret the 1990 enactment of §1367 as restricting the discretionary factors set forth in > Gibbs. Rather, this Court interprets §1367 as merely allowing this Court, at its discretion, to exercise jurisdiction over supplemental parties, which was previously foreclosed by > Finley v. United States.
The order to show cause included a discussion of the court's discretion to decline jurisdiction, which included the following possible grounds:
1.The state claims substantially predominate.
2.The state claims involve novel or complex issues of state law.
3.Trial of the state and federal claims together is likely to result in jury confusion, or
4.Retention of the state claims requires the expenditure of substantial additional judicial time and effort.
The record does not suggest that the court relied on any ground or factor not mentioned in its order to show cause. Because the court made no findings, we do not know which one or more of the grounds it relied on. On that basis alone, however, the majority concludes that the district court may have relied on a ground not enumerated in §1367(c); that this was in error, and not only error, but clear error for the purpose of mandamus. I cannot join the majority's reasoning to the effect that our inability to find that the court did not err puts it in clear error.
Grounds one and two, suggested in the order to show cause, are mentioned in §1367(c)(1) and (2). Ground three, jury confusion, in my view would be a sufficiently compelling reason for remand, as would the fourth ground, "the expenditure of substantial additional judicial time and effort."
The district court committed no error unless it relied on an unauthorized ground in exercising its discretion to remand. The court did not say that it relied on an unauthorized ground nor does the record tell us that it did, unless the majority means to hold that likely jury confusion or the expenditure of substantial additional judicial time are not exceptional circumstances in which compelling reasons for declining jurisdiction can be found. The fact that the district court does not interpret the 1990 enactment of §1367 as restricting the discretionary factors set forth in > Gibbs is of no moment unless we can say that the trial court exceeded its lawful authority wherever it may be found.
As for pendent jurisdiction in the sense of judicial power, the court in > Gibbs said it need not be exercised in every case. "It has consistently been recognized that pendent jurisdiction is a doctrine of discretion, not of plaintiff's right. According to > Gibbs, the justification for pendent jurisdiction lies in considerations of judicial economy, convenience, and fairness to litigants. Congress chose to except from §1367(a) those cases that were to be remanded under §1367(c). In (a) it said, "Except as provided in subsection (b) and (c) ... in any civil action in which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims...." The sentence that Congress used to confer jurisdiction excepts from its scope those claims over which the district court may decline to exercise jurisdiction. The statute does not say that the court shall "exercise" jurisdiction. I find the majority's resort to footnote fourteen in > Growth Horizons, Inc. v. Delaware County, 983 F.2d 1277 (3d Cir.1993) puzzling at best. The footnote says, "The language in S> 1367 expressly ... states that federal courts shall exercise supplemental jurisdiction over pendent claims arising out of the same case or controversy and may decline to exercise jurisdiction [as provided by S> 1367(c) ]." (emphasis in original). I cannot find the words "shall exercise jurisdiction" in the statute. I find only "shall have supplemental jurisdiction," and that phrase is further clarified by the exceptions in subsection (c).
Just as the doctrine of supplemental jurisdiction itself is justified by considerations of judicial economy, convenience, and fairness to litigants, > Gibbs, 383 U.S. at 726, 86 S.Ct. at 1139, so should a federal court "consider and weigh in each case, and at every stage of the litigation, the values of judicial economy, convenience, fairness, and comity in order to decide whether to exercise jurisdiction over a case brought in that court involving pendent state-law claims." > Carnegie-Mellon Univ., Congress did not use the word "discretion" in §1367, but the Federal Courts Study Committee appointed by the Chief Justice at the direction of Congress in advocating the legislation said: These supplemental forms of jurisdiction which may be exercised in the discretion of the federal courts, enable them to take full advantage of the rules on claim and party joinder to deal economically--in single rather than multiple litigation--with matters arising from the same transaction or occurrence. Pendent and ancillary jurisdiction may be used with respect either to additional claims between parties already before the courts (as with compulsory counterclaims) or to claims bringing in new parties (as with impleader of a third-party defendant).
Report of the Federal Court Study Committee, The House Report that accompanied the final version of the statute explains the goal of §1367(c):
§1367(c) ] codifies the factors that the Supreme Court has recognized as providing legitimate bases upon which a district court may decline jurisdiction over a supplemental claim. Subsection (c)(1)-(3) codifies the factors recognized as relevant under current law. Subsection (c)(4) acknowledges that occasionally there may exist other compelling reasons for a district court to decline supplemental jurisdiction, which the subsection does not foreclose a court from considering in exceptional circumstances.
H.R. No. 734, 101st Cong., 2d Sess. 29 (1990), reprinted in 1990 U.S.C.A.A.N. 6860, 6875. Thus, the majority puts us in conflict with other circuits. See > Brazinski v. Amoco Petroleum Additives Co ("[T]he new statute is intended to codify rather than to alter the judge-made principles of pendent and pendent party jurisdiction [.]"); > Growth Horizons, Inc ("In making its determination [whether to remand pursuant to §1367(c) ], the district court should take into account generally accepted principles of 'judicial economy, convenience, and fairness to the litigants.' ") (quoting > Gibbs,; > Hays County Guardian v. Supple, (finding exceptional circumstances" and "compelling reasons" under §1367(c)(4) where "adjudicating state-law claims in federal court while identical claims are pending in state court would be a pointless waste of judicial resources").
Remanding the state claims is only one step beyond bifurcation of the trial which we so readily leave to the discretion of the trial court. See, e.g., > Hirst v. Gertzen, (bifurcation to avoid unnecessary jury confusion is within the sound discretion of the trial court). It may be that the effect of today's ruling will be less damaging than I fear because the district courts can achieve the goals of judicial economy, convenience, and fairness to litigants by bifurcation of the state claims when necessary.
Finally, I am concerned about the effect of granting a petition for a writ of mandamus in this case. If a district court decides that under the standards arrived at by the majority, it is bound to refuse remand, it may be subject to mandamus for failure to exercise its discretion if it wrongly decided that it
had no discretion. If it remands, as in this case, it will be subject to mandamus if it is wrong in concluding that it has discretion. In any event, it will be subject to mandamus if it fails to make adequate findings or give sufficient reasons. My hope is that the > Bauman factors will restrain us in granting petitions for a writ of mandamus. See > Bauman v. United States. At least future remand orders will not raise new and important problems or issues of law of first impression and therefore, we will have good reasons not to issue the writ.
Because the > Gibbs standards survived the enactment of §1367, > I cannot say that the district court clearly erred in remanding the plaintiff's state law claims by applying the > Gibbs standards. Under the clearly erroneous standard, we should not require the district court to persuade us that it is correct. Because I cannot conclude that the district court is wrong, I would deny the petition.

Note #1 (p. 308) §1367 (c ) provides the only valid basis upon which the district court may decline jurisdiction and remand pendent claims, Executive Software
Note #2 (p. 308) §1367 allows a federal court discretion to retain or dismiss state law claims when the federal basis for an action drops away.
Shanaghan v. Cahill (1995) P brought a diversity action to recover from D 3 separate debts for $40K, $23.696K, and $14.7K. The district court granted summary judgement of the $40K, but dismissed the others saying the amount in controversy was not met. On appeal, the 4th Cir. Court that when the basis for federal jurisdiction disappears the District Court has the freedom to decide whether to assert jurisdiction or not over the remaining claims.

Shanaghan v. Cahill
Issue: Whether the district court can dismiss a case for lack of jurisdiction because the amount in controversy is insufficient when part of the original claim is dismissed.
Rule:
Analysis: I 1993 Kathleen Shanaghan (P) brought a diversity action in Virginia against John Cahill (D) and his company seeking to recover on 3 separate debts. Her complaint alleged that in 1987 and 1988 she made 3 loans to D in the amounts of $40,000, $23,696, and $14,700. She further alleged that the D had refused payment despite repeated demands, and were in default on all 3 debts.
The D answered and during discovery, the P produced 2 promissory notes for the loans of $23,696 and $14,700. She was unable to provide a writing for the $40,000 loan, although she maintained one existed. The D filed for a summary judgment in 3/94, arguing that the Statute of Frauds, and Statute of Limitations in Virginia barred the claim on the $40,000 loan.
The district court agreed and granted summary judgement on the $40,000 claim. It then noted that the amount in controversy had fallen below the $50,000, and the court dismissed the remaining claim for lack of subject matter jurisdiction. P appealed, challenging the dismissal of her 2 smaller claims.

Conclusion: Federal district courts possess jurisdiction over cases in diversity when “the matter in controversy exceeds the sum or value of $50,000.” 28 USC §1332 (a) (1988). A plaintiff may aggregate smaller claims in order to reach this threshold. After Shanaghan’s (P) claim for $40,000 was dismissed, the district court concluded it was bound by §1332 to dismiss her remaining aggregated claims of $38,669. The court apparently believed it had no discretion in the matter, but rather was faced with a mandatory obligation to dismiss the case in its entirety, despite the possibility of a statute of limitations bar to re-filing in state court, and regardless of the potential merit of the remaining claim.
The basis for district court discretion in this area is found in 28 USC §1367. The doctrine of supplemental jurisdiction indicates that federal courts generally have discretion to retain or dismiss state law claims when the federal basis for an action drops away. §1367 (a) provides that in ay civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all claims that are so related to claims in the action within such original jurisdiction that they form part of the same controversy under Article III of the Constitution.
The statute goes on to provide that courts “may decline” to exercise supplemental jurisdiction in certain circumstances §1367 (c). In particular, a court has discretion to dismiss or keep a case when it “has dismissed all claims over which it has original jurisdiction 1367 (c) (3). Courts have a wide latitude in determining whether or not to retain jurisdiction over state claims when all federal claims have been extinguished.
The factors that inform this discretionary determination are convenience and fairness to the parties, the existence of any underlying issues of federal policy comity, and considerations of judicial economy. The doctrine of supplemental jurisdiction “thus is a doctrine of flexibility, designed to allow courts to deal with cases involving pendent claims in the manner that most sensibly accommodates a range of concerns and values.” Cahill, 484 US at 350.
The reasons that supplemental jurisdiction should apply when the amount in controversy falls below $50,000 are:
1)The jurisdictional basis of the action fads away and the court is left with what would otherwise be a state law case. The factors applicable in this type of pendent jurisdiction case are equally applicable here – comity, the existence of a state limitation bar, and consideration of judicial economy. §1367 (c ) (3) provides on its own terms for supplemental jurisdiction over an inadequate amount in controversy if the claim that is dismissed is in excess of $50,000. In such a case the remaining smaller claims would have been “pendent” to the larger dismissed claim, and thus the court could choose to exercise jurisdiction over them. Here…no single claim by itself carried plaintiff into federal court, and so she was forced to aggregate her various smaller claims to reach the jurisdictional threshold. A reduction of the amount in controversy below the $50,000 limit simply does not affect the existence of discretion to either retain or dismiss the remaining claims.
2)When §1332 (diversity jurisdiction) and §1367 (supplemental jurisdiction) are read together, the natural conclusion is that the discretionary model may be applied in the context of jurisdictional amounts in liquidated damages cases. Case law on jurisdictional amounts predates §1367 is in some tension with the statute. St. Paul Mercury Indemnity Co. v. Red Cab Co. required retention of jurisdiction over cases falling below the jurisdictional amount threshold so long as the amount alleged in the complaint was made in good faith. This case also held that a claim of good faith is negated only if it was a legal certainty that , at the time of the complaint, the plaintiff could not recover the requisite amount. A rigid rule requiring dismissal once the jurisdictional amount falls below the statutory standard would work a serious injustice. It might result in valid claims going unheard or in significant wastes of judicial resources. These were the same concerns that motivated the creation of pendent jurisdiction in the first place. A rule of automatically dismissal would encourage defendants in attempts to bootstrap a win on a single liquidated claim into an overall victory. If district courts lacked discretion they would be unable to combat such manipulations.
The application of §1367 in jurisdictional amount cases is quite straightforward:
1)The court should look to the face of the complaint itself to determine whether it is a legal certainty that plaintiff’s claim do not reach the required amount. In this case it appears from the face of the complaint that Shanaghan had alleged claims totaling well over the $50,000 limit.
2)If some event subsequent to the complaint reduces the amount in controversy, such as the dismissal of one count based on the defendant’s answer, the court must then decide in its discretion whether to retain jurisdiction over the remainder of the case. It is critical to consider f the amount claimed in the complaint was made in good faith, or whether plaintiff was consciously relying on flimsy grounds to get into federal court.
3)If a critical equitable factor is the existence of any state limitations bars to re-filing in state court, as in this case, a plaintiff might suffer serious prejudice from the dismissal of her action, courts should be more willing to retain the case despite the smaller amount in controversy.
4)Courts should also account for the amount f time and energy that has already been expended, and decide whether it might be more efficient to solely retain jurisdiction.
In sum, the appeals court left it to the judgement of the district court to decide whether to exercise jurisdiction over residual liquidated claims under $50,000, so long as it was not a legal certainty from the outset that the plaintiff had no business being in federal court.
The judgement of the district court was reversed, and the matter was remanded with instruction.
The instruction were:
It is unclear whether the savings provisions in §1367(d), which tolls state statutes of limitations for state claims brought under §1367(a), strictly applies to smaller aggregated claims which reach federal court through §1332. District courts therefore should make an effort to determine whether the presence of state savings or tolling statute would permit plaintiffs to proceed in state court free from any limitations bar. Whether the court, in its discretion, should maintain jurisdiction over plaintiff’s liquidated damages claims of $23,969 and $14,700 . REVERSED AND REMANDED

Note #3 (p. 309) Later courts said that under §1367 only the named reps of a class must meet the jurisdictional amount. The statuses of pendent parties were added in the Zahn case as class members.

The Subject Matter Jurisdiction of Federal Courts (Removal) (p. 310)
28 USC §1441 (Supplement) The removal jurisdiction of the federal court permits Ds in certain state court actions to substitute a federal forum for the state tribunal originally selected by the P. Although the right to remove a case from a state to a federal court is strictly statutory, there being no provision for it in the Constitution, the validity of the practice is now undisputed.
1)Purpose of Removal: Extends the policies underlying the grant of original federal court subject matter jurisdiction
a)Only from State to Federal Court: Cases may be removed only from a state to a federal curt; there is no procedure for shifting a case in a federal court to a state court.

2)Requirements for Removal:
a)Existence of Subject Matter Jurisdiction: Removal is proper only if state court action could have been initiated in a federal court.
b)Only Defendant May Remove: Only defendant has the right to seek removal from a state to a federal court; in a diversity action, only a non-citizen defendant may remove.
c)Plaintiff’s Claim Controls: The basis for removal must appear as part of the plaintiff’s claim.
d)Plaintiff Can Limit Defendant’s Ability to Remove: Plaintiff may prevent removal by not asserting a federal claim, joining a non-diverse party, or suing for less than the jurisdictional amount required in federal court.

Note #1 (p. 311)
Note #2 (p. 311)
Note #3 (p. 312)
Note #4 (p. 312)
Note #5 (p. 312)
Note #6 (p. 312)
28 USC §1441 (c)
1)Separate and Independent Claim or Cause of Action: A separate and independent claim or cause of action that would be removable if sued on alone may be removed even though plaintiff joins it with an other wise non-removable claim.
a)Court’s Discretion to Remand Portion of Case: The federal court has discretion to decide all issues in the action or to remand some or all of the matters to the state court.
b)Rationale of Section 1441 (c): To promote judicial economy and to avoid deterring exercise of removal rights.
3)State Court Need Not Have Jurisdiction: A federal court may acquire jurisdiction by removal only if the state court had original subject matter jurisdiction. §1441 was amended in 1986 to provide that a federal court is not barred from acquiring jurisdiction byway of removal merely because the state court did not have jurisdiction over the claim.
4)Venue in Removed Actions: Venue is proper in the federal district embracing the place where the state action is currently pending.
5)Special Statutory Removal Provisions: In addition to the general removal statute, other federal statutes authorize removal in special circumstances.
a)Non-Removable Claims: In some cases, Congress has expressly prohibited the right to removal.
6)Procedure for Seeking Removal: Defendant has 30 days from receipt of complaint to file a petition in the federal court: defendant then notifies P and the state court; thereafter, the state court is prohibited from proceeding with the case.
a) Delayed Removal:
7)Remand: If removal is challenged, the federal court must determine whether it can proceed with the action or must remand it to the state court.
a)Who May Seek Remand: Either party or the court may secure remand before the entry of final judgement.

Review §1446 Procedure for removal

Roe v. Little Company of Mary Hospital (p. 314) (1992)
Issue:
1)Can the federal court assert jurisdiction over the non-Red Cross defendants in a pendent case involving the Red Cross and non-diverse defendants?
2)If it can, should the Federal Court exercise its jurisdiction under the removal statute to remand the case back to the state court in which it was first filed?
Rule:
Analysis: In 1984 Richard Roe (P) underwent a surgical procedure at the Little Company of Mary hospital (D) for treatment and removal of an enlarged spleen. Before and after the surgery, P received transfusions of several units of blood, and some were contaminated with the HIV virus. P filed a lawsuit in the Circuit Court. He asserted negligence claims against the Drs. Involved in the surgery, the hospital and the suppliers of the blood that he received. One of the blood suppliers was the American Red Cross, remove the case to federal court. P filed an objection to the removal of the case to federal court. He said that the federal court did not have SMJ over the state negligence claims between the non-diverse parties. P also said that the simple fact that the Red Cross was created by federal statute did not mean that the case presented a question “arising under” federal law, which would confer original jurisdiction to the federal court. The Red Cross countered by saying that the statutory charter granting it the power to “sue or be sued in courts of law, and equity, State or Federal, within the jurisdiction of the United States” gives original SMJ in the federal courts. This counter was determined by the Supreme Court in American National Red Cross v. S.G. in 1992. This was found to be a statutory grant of SMJ in the federal courts “separate and independent” from jurisdiction based on 28 USC §1331.
Roe admits that in the claim against the Red Cross the federal court has SMJ. He claims that the court does not have jurisdiction over the non-Red Cross defendants and must remand the case back to state court as it relates to them. Roe also insists that in order to avoid what he termed “piecemeal litigation” that the federal court should transfer the case against the Red Cross as well, using it’s discretionary powers.
Conclusion: Roe states that the entire action should be tried together before one court. In support of this position to remand the entire case, he alleges that the claims between Roe and the different defendants are so “factually interrelated” that concurrent litigation in the state court and federal court would be impractical, and burdensome on all parties. In the interest of judicial efficiency, Roe asked that the entire case be returned to the Circuit Court of Cook County.
A)Supplemental Jurisdiction: Roe asserts that the case should be remanded because the Federal court does not have adequate jurisdiction over the negligence claims filed. The assertion may not be accurate because:
a)If the claim against non-Red Cross Ds form part of the “same case or controversy” as the claim against the Red Cross, then the statute directs the Court to exercise supplemental jurisdiction over the claims.
b)In order to exert supplemental jurisdiction the Court needs to find that the facts leading to the claims of liability and the other claims against non-Red Cross Ds are part of the “same case or controversy” as Roe’s claim against the Red Cross.
In this case, Roe’s complaint is for separate negligence claims against each D. All of these claims are factually and logically intertwined. P asserts a single injury – an HIV infection – resulting from the negligent conduct of some or all of the Ds.
ØWhere there is a single wrong alleged by a P “arising out of an interlocked series of transactions and giving rise to the relief sought, the Court should find that the claims against all Ds form part of the “same case or controversy.”
B)Discretion to Decline Jurisdiction or Removal:
1)Declining Supplemental Jurisdiction under §1367: There are 4 circumstances in which a federal court can contemplating supplemental jurisdiction can return the entire case to the state court. One that applies here is where the “state” claims predominate over the federal claims. The Court, in this case, must determine whether the state claims so predominate, over the federal claims that the failure to remand the entire case would be an abuse of discretion.
In this case, the claim against the Red Cross is for negligence, an ordinary tort claim, just like the P’s claims against the other Ds. This is a state law claim and does predominate over the claim against the Red Cross, which gives rise to federal jurisdiction.
2)Remand Pursuant to § 1441: The statute authorizes the Court to either hear the entire case or exercise its discretion and remand back to the state court those matters in which state laws predominate. Because the court has determined that state law predominates, it is clear that the Court does have discretion to remand those claims that apply to the non-Red Cross Ds. The Court sill has to decide whether it cam remand the claim against the Red Cross.
a)Remanding the Claim Against the Red Cross: The federal court jurisdiction over claims made against the Red Cross are based on the “separate and independent jurisdictional grant” of jurisdiction found in the Red Cross’s “sue or be sued” clause 36 USC §2 (1991) and not under the “arising under jurisdiction of 28 USC §1331. Given this, the Supreme Court has determined that the removal of the case is proper pursuant 36 USC §2 jurisdiction. The Court does not have the discretion under 28 USC §1441 (c) to remand the claim that applies to the Red Cross. This portion of Roe’s motion was denied.
b)Remanding the Claim Against Non-Red Cross Defendants: The tort claims are state law claims against non-Red Cross Ds are properly before the Federal Court as of result of the Court’s assertion of supplemental jurisdiction over the claims under 28 USC §1441, the Court “may determine all issues…or in its discretion, remand all matters in which State law predominates…”
P asserted that “his claims against the Ds are factually interrelated to such a degree that concurrent litigation in the state court and federal court would be impractical and unduly burdensome on all parties.” It is clear that the Federal Court does have the discretion to remand the claims against the non-Red Cross Ds back to state court, doing so would only frustrate Roe’s preference to have th entire case heard in on proceeding. The prospects that the case being heard in two different courts are:
1)the possibility of potentially inconsistent rulings;
2)the Red Cross would be subject to 3rd party discovery in state court thus subjecting it to 2 different discovery schedules;
3)the possibility that state court Ds may seek cross-claims for contribution from the Red Cross;
4)the additional costs Roe may have to incur as a result of the litigation in 2 forums.
The court asserted supplemental jurisdiction pursuant to 28 USC §1367 (a) over the non-Red Cross claims.

Note #1 (p. 319)
Note #2
Note #3
Note #4
Note #5
Note #6
Note #7 (p. 320)
Challenging the Subject Matter Jurisdiction of the Court (p. 320)
(1)Supplemental Jurisdiction: The usefulness of §1441(c) is questionable in that the supplemental jurisdiction statute (see a) presumably would permit a federal court to hear the entire case that §1441 (c) makes removable. One meaningful difference is that, while the supplemental jurisdiction statute requires “closely related” claims forming a constitutional case (see b), §1441 (c) provides for removal of a “separate and independent” claim. If “separate and independent” is taken to permit removal of entirely unrelated claims under §1441(c ) there are clear constitutional difficulties, as the limited nature of federal subject matter jurisdiction mandated by the Constitution cannot be overridden by legislative enactment.
(a)§1367 The doctrines in this section are premised on the notion that a federal court acquires jurisdiction over a case or controversy in its entirety.
(b)§1367 (a) provides federal courts with the power to exercise supplemental jurisdiction “over all claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.“ The statute is silent on what comprises the constitutional limits on the power of the federal courts, but the constitutional analysis of United Mine Workers v. Gibbs, which required that:
·the claims must be so related to the main claim that the is a single constitutional case. (Interlocked claims – American Fire and Casualty v. Finn – pursuant to 1331 (c))
·And that the main claim be “substantial.”
established were:
·if the claim raises a novel or complex issue of state law,
·if the claim substantially predominates over the claim (s) over which the court has original jurisdiction
·if the district court has dismissed all the claims over which it has original jurisdiction
·or, if there are exceptional circumstances presenting compelling reasons for declining jurisdiction.

Challenging the Court’s Jurisdiction

Federal Practice: Federal Rule 12(b) provides a defense of lack of jurisdiction over the person may be asserted in a pre-answer motion under Rule 12 or in the answer. The distinction between the general and special appearance has been eliminated from federal practice, and a properly raised objection to personal jurisdiction is preserved for appeal even if D proceeds to a defense on the merits. If the objection is not asserted by motion or in answer, it is waived.
1)Direct Attack on a Court’s Lack of Subject Matter (p. 320)

You cannot waive SMJ so you can challenge it anytime during or after the proceedings – There is a trend against allowing collateral attacks against it

Note #1 (p. 320) D initially objected to the jurisdiction of the court, asserting lack of diversity, but then file a stipulation withdrawing the objection. After the statute of limitations had run out for a state action, the D reasserted his jurisdictional objection. The District Court dismissed, but he 3rd Circuit Court reversed, refusing to allow the D to “deceive” the courts.
Note #2 (p. 321) The obedience to a temporary restraining order is required, even though the issuing court may lack SMJ or otherwise may have based its decision on an incorrect view of the law, unless there is no opportunity for effective appellate review of the decree.
Note #3 (p. 321)
2)Collateral Attack on Judgement for Lack of Subject Matter Jurisdiction (p. 322)
§10 Restatement of Judgements: says that if the court in the original action determined that it had subject matter jurisdiction, the permissibility of collateral attack depended on weighing a non-exclusive list of factors:
a)the lack of jurisdiction over the subject matter was clear;
b)the determination as to jurisdiction depended on a question of law rather than of fact;
c)the court was one of limited and not general jurisdiction;
d)the policy against the court’s acting beyond it’s jurisdiction is strong.
§§12, 69 Restatement of Judgements (1982): says that unless there is a justifiable interest of reliance that must be protected the question of SMJ once litigated is OK.

November 18, 1997 Class
pp. 326-343 (skip notes after Bates)

Venue, Transfer, and Forum non Conveniens (p. 326)
A)Venue (p. 326) Determines the allocation of case to particular courts within a judicial system.
1)General Principles (p. 326)
PURPOSE: To insure that an action is brought in a court located in a place that has some relationship to the litigants or the subject matter of the action.
a)Venue Distinguished from Jurisdiction: Jurisdiction questions involve a court’s constitutional power to adjudicate; venue deals with identifying an appropriate place to decide a dispute and is essentially base on notions of convenience.
b)Waiver: Lack of venue will be waived unless it is raised very early in the action.
Determining Venue:
a)Factors: Where the plaintiff or defendant resides, where the cause of action arose; where the defendant is doing business or has an office or representative; where the defendant may be found, served, or summoned; and where the seat of the government is located (used primarily in actions by or against the government).
Local Actions: Generally include actions concerning real property and must be brought in the jurisdiction in which the property is located.
a)Analysis of Concept: Livingston v. Jefferson: The concept is premised on notions of honoring the sovereignty of a state over matters relating to land within its boundaries.
Venue in Federal Court:
a)Individuals: Diversity of Citizenship Cases: Venue is proper in any district where all the plaintiffs reside, all the defendants reside, or the claim arose.
b)Individuals: Federal Question Cases: Venue is proper in any district where all the defendants reside or where the claim arose.
c)Residence of individuals: In contrast to the diversity of citizenship statute, which turns on citizenship, the venue statute speaks of residence of the plaintiff and defendant.
d)Corporations: For venue purposes, a corporation may be sued in any judicial district in which it is incorporated, doing business or licensed to do business; unincorporated associations are considered corporations for venue purposes.
e)Aliens: An alien may be sued in any district; when an alien is the plaintiff, suit is proper only in the district in which all the defendants reside or in which the claim arose.
f)United States as Defendant: An action against the United States or one o its employees may be brought where a defendant resides, where cause of action arose, where any real property involved is located, or where plaintiff resides if no real property is involved.
g)Defendants in Different Districts: When the defendants reside in different judicial districts in the same state and the action is not local, venue is proper in any of those districts.
h)Local Actions: The common law rule regarding local actions is applicable to the federal courts.
i)Special Venue Provisions: Some federal statutes have special venue provisions that override the general provisions discussed.
REMEDIES for IMPROPER VENUE: A case may be transferred to a court within the same judicial system where venue is proper.
a)Federal Courts: may avoid dismissal by making an interstate venue transfer.
CHANGE OF VENUE: Even when venue is proper, the court has the discretion to transfer the case to a more appropriate forum
a)Within the State: Transfers by one court of a state to another court in the same state are freely granted.
b)Outside the State: Forum Non Conveniens: A court may dismiss a case when there is another forum that is significantly more convenient for the parties (state courts are reluctant to resort to a forum non conveniens dismissal if there are any contacts between the parties and the initially chosen forum).
(1)Availability of Alternative Forum: The better rule is that dismissal for forum non-conveniens should be granted only if it is clear that an alternative forum is available.
c)Within the Federal System: A federal court may transfer an action to any district or division where that action might have been brought originally.
(1)Factors Considered: The convenience of the parties, the convenience of witnesses, and the interest of justice.
(2)Where Action Might Have Been Brought: Transfer is permitted only to a district in which the requirements of personal jurisdiction and venue could have been satisfied (without reference to the possibility of waiver).
(3)Forum Non Conveniens: Federal court will dismiss only when the alternative forum is a state court or a court in another country.
MULTIDISTRICT LITIGATION: Multiple civil actions involving a common question of fact may be temporarily transferred to a single district for consolidated pretrial proceedings.
a)Statute Applied: Consolidated multi-district litigation occurs most commonly when the number of instituted actions is significant or the pending cases are extremely large or complex.
b)Retention of Case by Transferee Court: Although §1407 clearly provides that any transferred action “shall be remanded” to the original district in which it arose, actual practice under the statute is that transferee courts frequently retain the coordinated cases for purposes of a consolidated trial after pretrial proceedings have been completed.

Stevens, Venue Statutes: Diagnosis and Proposed Cure (p. 326)
Note #1 (p. 329)
Note #2 (p. 329)
2)Local and Transitory Actions (p. 330)
Reasor-Hill Corp v. Harrison (p. 330) (1952)
Issue:
Rule: Arkansas courts can entertain a suit for injuires to realty situated in amother state.
Analysis: The suit was brought by the Planters Flying Service to collect an account for having sprayed insecticide on Barton’s cotton crop in Missouri. In his answer Barton charged that the flying service had damaged his growing crop by using an adulterated insecticide, and by cross complaint he sought damages from the petitioner for its negilgence in putting on the market a chemical unsuited to sprayiing cotton. The petitioner is an Arkansas corporation engaged in the mfg. insecticides and is not authorized to do business in Missouri. The question to answer is: May the arkansas courts entertain a suit for injuries to real property situatied in another State? The repondent points out that if the suit is not maintainable Barton has no remedy at all. The petitioner cannot be served with summons in Missouri; so unless it is subject to suit in Arkasas it can escape liability entirely by styin out of Missouri until the statute of limitations has run. The Petitioner showed that almost every court (except Minnesota’s SC) has passed on the question and has held that jurisdiction does not exist. The court agreed that the weight of authority showed this, but decided that it should examine the statutes enacted in some states and criticized in others that have changed this outlook.
Conclusion: The distinction between local and transitory actions was recognized as early as the 14th centurty in England. Prior to that all actioins had to be brought wher the cause of action arose. When a case involed separate incidents occurring in different communities the reasof ro lcal actions disappeared . Consequently the courts developed a distinction between the two and called the latter transitory.
The courts in the US have almost uniformally relied on the Livingston case in applying the rule. The 3 reasons for justifying the rule are:
1)The courts are not in a position to pass upon the title to land outside the jurisdition.
2)Since the tort must take place where the land is situated the P should pursue his remedy before the D leave sthe jurisdiction. In this case the poison was spread by ariplane and Barton could hardly be expected to discover the damages and file an attachemtn suuit before thepilot retruned to his landing fieel in Arkasas.
3)There is an understandable reluctance to subject one’s own citiznes to suits by aliens, especially if the other jurisdiction would provide no redress if the situation were reveresd.
The truth is that the majority rule has no basis or logic or equity and rests solely on English cases that wer decided before America was discovered and in circumstances that are not even comparable to those in this country. Baisc priciples of justice demand that wrongs should be redressed. The Bill of Rights puts the matter right “Every person is entitled to a certain remedy in the laws for all injuiries or wrongs he may receive in his person, property or character. The court prefered to give the litigant his day in court. Wrti was denied.
Dissent: The problem is that in Barton’s cross complaint against Reasor-Holl. Barton claimed that RH sold the insenctivide to Planter Flyng Service – not to Barton. An insecticied that damaged Barton’s cotoon corp The complaint against RH for damaes is a new casue of action ans was a claom for damages to crops on lond in Missouri. The dissent mentions a acose where thei Arkansas court held that damge to a growing corp was a damage to real proeprty and that an acito for damages to realty must be brought in the Couty in which theland is situated.
Comment: Local action Concept Analyzed: The famouse case of Livingston v. Jefferson, held that na acti in a Virginai federal court for tespass to land in Lousiana against Tomas Jefferson, a Virginia citizen, was a local action and could be maintained only in Louisiana. The concept is premised on notions of honoring the soverieignty of a state over matters relating to land within its borders and the reality that the state in which land is located is in the best position to interpret and apply the governing property law. The potential harshness of thelocal action rule is amply illustrtated in this case because a Louisiana court could not have acquired personal jurisdiction over Jefferson, unless he chose to come into the state. The P was lefte with a right but no available remedy. This situation is significantly ameliorated today because of the development of expanded notionos of personal jurisdiction, which would allow th esitus court to assert jurisdictin basd on the out ot state defendant’s involvement with local land.
3)Venue in the Federal Courts (p. 333)
Bates v. C & S Adjusters, Inc. (p. 333) (1992)
Issue:
Rule:
Analysis: Debtor brought action under Fair Debt Collection Practices Act.
Conclusion:The judgement of the District Court was reversed and the matter remaned for further proceedings consistent with the decision.
Note #1 (p. 336)
Note #2 (p. 337)
Note #3 (p. 337)
Note #4 (p. 337)
Note #5 (p. 338)
Note #6 (p. 338)
Note #7 (p. 338)
Note #8 (p. 338)

B)Transfer of Venue in Federal Courts (p. 339)
Hoffman v. Blaski (p. 339) (1960)
Issue:
Rule: 28 USC §1404 Chagne of Venue: (a) For the convenience of parties and witnesses in the interest of justice a distict court may treansfer any civil action to anyother ditrict or division where it mught have been borught.
Analysis:
Conclusion:
Dissent: The part of §1404(a0 that is of concern is “any other district or division where it [the actin] might have been brought.” The significance of hteis is that even though a
Comment: The Supreme Court in this case construed the qualification in §1404(a) -- “where it might have been brought” – to restrict transfer to those courts in which the plaintiff could have instituted the action as an original matter. Therefore, transfer is permitted only to a district in which the requirements of personal jurisdiction and venue would have been satisfied without reference to the possibility that defendant might have waived them. The same considerations are applicable to the construction of §1406 (a) when an action is transferred from a place of improper venue.
Note #1 (p. 343)
Note #2 (p. 343)
Note #3 (p. 343)