Civil Procedure II FALL 2010 (Stravitz)

Chapter 1 - INTRODUCTION 1) Remedies a) Equitable Relief b) Monetary Relief c) Injunction 2) Judicial System Triangle a) TOP U.S. Supreme Court i) STATE SIDE (1) State Supreme Court (a) S.C. Supreme Court (2) Intermediate Appellate Court (a) S.C. Court of Appeals (3) General Trial Court (a) Circuit Courts (4) Inferior/Specialized Courts (a) Municipal Court, Justice of the Peace/Magistrate ii) FEDERAL SIDE (1) U.S. Court of Appeals th (a) 4 Circuit Court of Appeals (2) U.S. District Court (a) South Carolina District Court (3) Inferior/Specialized Courts (a) Bankruptcy Court, Magistrate Court 3) CASES a) Capron v. Van Norden (1804) i) Trespass on the case common law action seeking damages ii) Capron sued VN in circuit court of North Carolina iii) Defendant (VN) won initial case iv) Plaintiff (Capron) appealed (1) On grounds of subject matter jurisdiction (a) Personal jurisdiction is able to waived (b) Subject matter jurisdiction cannot be waived (2) Why is it fair to allow the plaintiff to appeal when he brought the case in that specific court in the first place? (a) Even though he was in error bringing the case to that court, the specific court did not have the power to review the case in the first place b) Tickle v. Barton i) Tickle (minor) is suing Barton (car owner) and Coleman (car driver) due to a personal injury resultant from an automobile accident occurring on private property (in West Virginia) ii) Attempt to serve process originally under an older statute based on non-resident motor vehicle drivers (1) Served process through inducement to come into WV (a) In response, D attempts plea and abatement Similar to 12(b) motions point out a deficiency (b) Process was invalid since he was tricked into coming into West Virginia (c) Alleged that plaintiffs attorney called him twice and invited him to a football banquet gets into WV and is served process (d) P files a demurrer 12(b)(6) motion (i) even if what you say is true, you will not be entitled to the remedy which you seek (2) Overruled the demurrer (a) Assumed all the facts to which it addresses Chapter 2 PERSONAL JURISDICTION 1) Traditional Bases for Jurisdiction a) Pennoyer v. Neff (1877) i) State Ct. (1) Mitchell v. Neff

(a) Mitchell was an attorney for Neff in Oregon, working to get land for Neff (b) Neff owed money for services performed by Neff ($300) (c) Mitchell serves process by putting notice in publication (news paper) (i) Can only occur with an in rem action (ii) Cannot occur with an in personam action (d) Default of property, sheriff seizes property, Mitchell buys then conveys property (e) Neff comes to claim his land, asserts federal deed, Pennoyer asserts sheriffs deed ii) Federal Ct. (1) Neff v. Pennoyer (a) Three bases to serve process for in personam cases (i) Personally served with process within the state (ii) Citizen of the state (iii) Voluntarily appear (b) Neff does not satisfy any of the bases (c) In personam case should not have proceeded (d) Why not a proper in rem case? (i) Property was not attached (brought within the control of the court) (ii) If attachment was processed, there is a presumption that notice would be served iii) In Rem v. In Personam (1) In rem only acts against the property (a) if a property is worth $5,000, you can only receive that amount in an action (2) Full faith and credit clause (in personam cases) (a) When the forum state has proper jurisdiction, the action may be moved to any other state where the D has property th (3) Due Process Clause (14 Amendment) (a) Did it apply in the case? (i) No, the action/injury occurred before the amendment was ratified (1866 v. 1868) (4) Neff did not even have the property at the start of the action since he did not have the property at the start of the case (so attachment was impossible) iv) Court says that plaintiff cannot send process server into foreign state (California) (1) Modern law has changed this stance b) Three Types of Judgements/Cases i) Judgments in personam are those that determine the rights and duties of the parties with respect to the matter in issue. An ordinary case in tort or contract seeking damages is such an action in personam. Before a court may adjudicate an action seeking such a judgment, the court must have jurisdiction over the parties. ii) Judgments in rem are those that determine ownership of property. A judgment in a true in rem action determines the claimants ownership against all the world, such as in an action to obtain title registration to real property iii) A judgment quasi in rem determines interests in property as between named parties, such as in a mortgage foreclosure (1) Type 1 (a) Property is located within the state (2) Type 2 2) Expanding Personal Jurisdiction a) Kane v. New Jersey (1916) i) Must sign an appointment of a New Jersey agent to receive process to drive on NJ roads b) Hess v. Pawloski (1927) i) Implied consent to appointment of an agent to serve process ii) Motor vehicles are dangerous vehicles, thus a special case iii) Supreme Court finds that this case is no different than the Kane case 3) A New Theory of Jurisdiction a) Consent Theory moves to Presence Theory i) A foreign corporationis amenable to process if it is doing business within the State in such manner and to such extent as to warrant the inference that it is present there b) International Shoe Co. v. Washington (1945) i) Minimum contacts or presence in territory ii) Presence in the state has never been doubted when the activities of the corporation there have not only been continuous and systematic

(1) But also give rise to the liabilities sued on, even though no consent to be sued or authorization to an agent to accept service of process has been given iii) Minimum contacts test (1) Have to have certain minimum contacts so that the suit does not offend traditional notions of fair play and substantial justice MINIMUM CONTACTS TESTS (USE AS A REFERENCE ONLY) Plaintiffs cause of action arises out of defendants activity in the forum state Defendants activity in the forum state is continuous and systematic Defendants activity in the forum state is casual or occasional Almost always minimum contacts Plaintiffs cause of action does not arise out of the defendants activity in the forum state Maybe minimum contacts

Maybe minimum contacts

Almost never minimum contacts

4) Specific Jurisdiction & Long-Arm Laws a) Development of Long-Arm Statutes i) After rulings over jurisdiction, states expanded their jurisdictional reach and led to efforts on the part of many state legislature to conform their statutory pattern to the Supreme Courts latest vire as to when personal jurisdiction could be asserted consistently with the Constitution ii) Long-arm seek to provide personal jurisdiction over nonresidents who cannot be found and served in the forum state iii) Gray v. American Radiator & Standard Sanitary Corp. (1961) (1) Parties (a) P Illinois (b) D1 Penn (c) D2 Ohio (2) D2 has no direct contact with the forum state, besides their valve being used on D1s product iv) Green v. Advance Ross (1) Illinois company wishes to sue former employee (worked in TX) in Illinois (a) Different than Gray case because injury occurred in TX, not Illinois (2) Illinois updated their long-arm statute in response to this case b) Due Process and Long-Arm Statutes i) McGee v. International Life Insurance Co. (1957) (1) Texas court reverting back to Pennoyer standard (a) In contrast to more modern cases (2) Supreme Court Texas must give full faith and credit to California decisions (3) Forum state interest (4) Convenience/protections to state citizens (a) Have concerns with insurance companies receiving benefits (premiums) (5) Case falls under box 2 in matrix analysis used in International Shoe case (6) Two part test (a) Defendants Connection to the state (b) Balancing forum states, plaintiffs and defendants interests ii) Hanson v. Denckla (1958) (1) Donner set up a trust in Delaware (a) Retained the power of appointment (2) Subsequently moves to Florida (a) Executes a will in Florida (3) Issue is whether she had too much power in retaining power with the will (4) Two sisters file suit to challenge appointment power (FLORIDA) (a) Florida court invalidates appointments (5) Other sister files suit to uphold the assignment (DELAWARE) (a) Delaware states that assignment should stand (6) Case moves to U.S. Supreme Court

(a) Donner moved to Florida and got money FROM the Delaware bank (b) It is a unilateral action (7) Take-aways (a) Unilateral action by someone other than the Defendant does not count (b) Defendant must invoke the benefits and protections of the forum state iii) For a States substantive law to be selected in a constitutionally permissible manner, that state must have a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair iv) Choice of law (1) Consistently evolving v) World-wide Volkswagen Corp. v. Woodson (1) Parties: (a) Plaintiff: (i) Robinsons (b) Defendants: (i) Audi AG (ii) Volkswagen of America (iii) World-wide Volkswagen (iv) Seaway (2) You retain your state citizenship until you establish a new one (a) Adding world-wide and seaway prevents case moving into federal court no federal (3) Mrs. Robinson injured while in Oklahoma on trip from New York to Arizona; sue in OK (4) HOLDING (a) The court held that there was a total absence of circumstances that are necessary to permit an exercise of personal jurisdiction (b) Although it was foreseeable that one of their cars could be involved in an accident in Oklahoma, foreseeability alone is not sufficient for personal jurisdiction under the Due Process Clause (i) The degree of foreseeability that must exist is not the mere likelihood that a product will find its way into the state, but that the defendants conduct and connection with the state are such that he should reasonably anticipate being hauled into court there (5) DISSENT (a) States may exercise jurisdiction over a defendant even if that party has not deliberately or purposefully sought contact with the state, it would be difficult to believe that the defendants truly believed that none of the cars they sold would ever leave the New York area, their contacts with Oklahoma were not extensive but it was reasonable for them to be subjected to jurisdiction, and fairness dictates that the sale of a mobile item such as a car should satisfy the minimum contacts necessary for jurisdiction c) Burger King v. Rudzewicz i) Two branches to jurisdiction (HANDOUT) (1) Traditional Minimum Contacts (a) Defendant purposely direct activities or contact with forum state (b) Invoke benefits and protections of forum state (c) Reasonably anticipate litigation in forum state (2) Fair Play and Substantial Justice (a) Burden on nonresident (b) Adjudicative interest of forum (c) Plaintiffs interest in obtaining convenient and effective relief (d) Systematic interest of the national judicial system in obtaining the most efficient resolution of the controversy (e) Systemic interest of the states in furthering substantive social policies ii) Analysis (1) To find jurisdiction, you must have a positive finding under the first branch, but you must have a neutral or positive finding under the second (2) To find no jurisdiction, either branch can fail d) Asahi Metal Industry v. Superior Court i) Stream of commerce analysis (1) Component part sent to assembler, who manufactures final product (a) Consumer injured while using product (b) Plaintiff (Zercher) sues (i) Cheng Shin

(ii) Distributors (iii) Retailers (2) Cheng Shin files an impleader to bring Asahi into case ii) Case rises to U.S. Supreme Court iii) Part II-A Traditional Minimum Contacts (1) Stream of commerce argument is not sufficient to satisfy the minimum contacts test (4 justices) (2) As long as product goes to an anticipated place and used in an anticipated matter, steam of commerce is sufficient (4 justices) (3) Justice Stevens: Minimum contacts is not necessary to find jurisdiction iv) Part II-B Fair Play and Substantial Justice (1) Five factors tests (a) Burden on nonresident SEVERE (b) Adjudicative interest of forum state SLIGHT (c) Plaintiffs interest in obtaining convenient and effective relief SLIGHT (not even a Cali resident) (d) Systematic interest of the national judicial system in obtaining the most efficient resolution of the controversy great care and reserve should be exercised (e) Systemic interest of the states in furthering substantive social policies v) The two branches of jurisdiction are interrelated (1) If one side is strong, it can make up for the other side being weaker vi) Things to indicate/aid minimum contacts with forum state (1) Advertising in forum state (2) Agent for distribution in forum state (3) Marketing in the forum state (4) Special design for the forum state vii) HYPOTHETICAL Zercher sues Cheng Shin, Asahi, CA distributor, CA retailer (1) Burden on nonresident (a) Still severe (2) Adjudicative interest of forum (a) Increased interest (3) Plaintiffs interest in obtaining convenient and effective relief (a) Very high, only place they can sue (4) Systematic interest of the national judicial system in obtaining the most efficient resolution of the controversy (a) High, claim is on tort law (5) Systemic interest of the states in furthering substantive social policies (a) Ensure safety in the state viii) Jurisdiction should be decided at the beginning of the case and on the facts at the beginning of the case and not what is found later ix) Brennan intended to make it so that the second branch is the decisive, more important branch in the analysis e) Overview i) Current Specific Jurisdiction reference #1 5) General Jurisdiction and State Long-Arm Laws a) Perkins v. Benguet Consolidated Mining Co. i) Basics: (1) Sued in Ohio (2) Philippines Company (a) Moved back to Ohio during WWII (b) Maintained bank accounts, other operations in Ohio ii) General Jurisdiction (1) Must add sufficiently substantial to the systematic and continuous requirement b) Helicopteros v. Hall i) Basics: (1) Oil pipeline project (2) Peru requires a Peru corporation (a) US companies, together with a Peruvian co, form a joint venture (3) Injury while working (4) Sue Helicopteros in Texas (a) Breach of duty occurred in Columbia ii) Texas long arm statute covers due process

iii) Texas connections (1) Contacts with Texas, purchased and trained in Texas (2) Checks drawn from a Texas account (a) Generally of little consequence (3) Actions were not systematic and continuous nature (a) Mere purchases are not enough (b) Distinction between non-resident sellers and non-resident buyers c) Disney World Hypothetical i) Injured on trip to Disney World ii) Sue in South Carolina (1) Ties to SC (a) Extensive solicitation/advertising (b) Nothing else (2) Is activity in soliciting business systematic and continuous? (3) Case is emerging from specific jurisdiction 6) Internet and Other Technological Contacts a) Pebble Beach v. Caddy (2006) i) Pebble Beach Resort in California sued Caddy for operating a website using the Pebble Beach name ii) Issue of personal jurisdiction for Caddy in California (1) Did Defendant meet minimum contacts? (a) No, he did not purport himself to the benefits and protections of California (b) The similarities in name does not equal B&P iii) Caddy operated a passive website (1) Not functional, solely for information only iv) Utilizes the three part minimum contacts test (1) Defendant has performed some act or consummated some transaction within the forum or otherwise purposefully availed himself of the privileges of conducting activities in the forum, (2) The claim arises out of or results from the defendants forum-related activities, AND (3) The exercise of jurisdiction is reasonable (a) Essentially the same thing as the two-pronged test for specific jurisdiction v) No purposeful availment (1) No identifiable conduct by Caddy that took place in California that adequately supports the availment concept (2) To show purposeful direction of action toward a forum state, must show (a) Defendant committed an intentional act, which was expressly aimed at the forum state, and caused harm, the brunt of which is suffered in the forum state vi) Holding: Caddys actions were not aimed at California and, regardless of foreseeable effect, are insufficient to establish jurisdiction b) Zippo case i) Sliding scale test (1) At one of the scale active websites that business use to carry out transactions with residents of forum states (2) At the other end passive websites that do little more than make information available to those who choose to visit the website c) Bellino v. Simon i) Telephone call resulted from several e-mail communications which began when the buyer took advantage of a visitor form on the companys website allowing readers to contact the business owner directly. (1) Owner solicited the communication ii) Defendant purposefully established minimum contacts with Louisiana such that he could reasonably anticipate being haled into court there. 7) Jurisdiction Based Upon Power Over Property a) Tyler v. Judges of the Court of Registration i) A quiet title claim an in rem action (1) Need to give actual notice to everyone you know and might have an interest (2) Publication to provide general notice to unknown interest holders ii) Judicial Jurisdiction (1) In Personam (2) In Rem (a) Classic (b) Quasi-in-rem

(i) Type I (ii) Type II b) Pennington v. Fourth National Bank i) Jurisdiction extends to tangible and intangible property (1) Garnishment or foreign attachment is a proceeding quasi in rem ii) The only essentials to the exercise of the states power are presence of the res within its borders, its seizure at the commencement of proceedings, and the opportunity of the owner to be heard c) Harris v. Balk i) Harris owes Balk $180, Balk owes Epstein $344 (1) When Harris goes to MD, Epstein brings a garnishment action against Harris to receive the $180 that he owes Balk, who in turn owes $344 to Epstein (2) Harris pays the money to Epstein (a) Balk does get notice of this action, does not contest the action ii) Supreme Court rules that NC must give full faith and credit to the MD proceeding (1) Power over the person of the garnishee confers jurisdiction on the court of the state where the writ is issued (a) The obligation of the debtor to pay his debt clings to and accompanies him wherever he goes (2) Intangible property like physical property may be seized for court actions (3) Debt is where the debtor is located iii) Could Epstein sue Balk in personam today? (1) Long-arm statute probably confers jurisdiction onto Balk (2) Minimum contacts test / touch and concern (a) Purchases alone do not subject people to jurisdiction d) Shaffer v. Heitner i) Shareholders derivative suit (1) Shareholder is suing Greyhound and its officers and directors (2) Breaches their fiduciary duty (3) 21 of 28 officers do not have stocks or options no property in Delaware (a) Those 7 should not be subject to jurisdiction (b) Delaware law determined all stock and options to be present in Delaware (4) 21 officers challenge jurisdiction through a special appearance ii) Property cannot be subjected to a courts judgment unless reasonable and appropriate efforts have been made to give the property owners actual notice of the action iii) States strong interests in assuring the marketability of property within its borders and in providing a procedure for peaceful resolution of disputes about the possession of that property would also jurisdiction, as would that important records and witnesses will be found within the state iv) Minimum contacts were not satisfied in the current case (1) Defendants did not avail themselves to the privilege of conducting activities within the forum State v) Powell and Stevens concurring: Quasi-in-rem type 2 decision 8) Jurisdiction Based Upon Physical Presence a) Burnham v. Superior Court i) Facts: The Burnhams were getting divorced. Mrs. Burnham sued for divorce in California. While Mr. Burnham, the appellant, was in California briefly he was served process. ii) Procedural Posture: Burnham made a special appearance in California to try to quash service of process on the grounds that California did not have personal jurisdiction over him due to insufficient contacts. The Superior Court denied his motion, and the California Court of Appeal agreed. Burnham appealed to the United States Supreme Court. iii) Issue: If a defendant is served process within a states borders, does due process require a connection between the lawsuit and the defendants contacts within the state? iv) Rule: NO MAJORITY RULE. Scalias bunch says that it is sufficient that the defendant be physically present for California to have personal jurisdiction. Brennans bunch agrees that California has jurisdiction, but in deciding this you must consider minimum contacts and fair play factors. (1) The Court found that California had personal jurisdiction over Burnham. v) Scalia Holding: The court must determination the jurisdiction for an actually physically present defendant. (1) Courts have essentially always had jurisdiction over physically present defendants and ought to continue to have such jurisdiction (2) Rejects the argument that Shaffer says that all questions of personal jurisdiction should be evaluated according to Shoe

(3) Scalia points to the language in Shaffer and says it only applied to absent defendants. (4) Scalia counters Brennans argument by saying that the benefits which Brennan mentions are too cheap, or else could be plausibly cheap in such a way that you couldnt draw a clear line (a) Scalia finally says that if people want physical presence not to constitute jurisdiction anymore, the legislature should pass a law, and the judiciary shouldnt meddle vi) Brennan concurrence: Says that just because something has been the law for a long time doesnt mean its just or right. Brennan interprets the ruling in Shaffer to mean that really all personal jurisdiction rules must be evaluated according to minimum contacts and fair play, even ancient rules. (1) The fact that physical presence has been sufficient for personal jurisdiction for so long, Brennan argues, means that someone who goes to California has clear notice that they can be served process there (2) Brennan further says that by being in a state at all, you get some benefit from the protection of its laws, and its clear that it was convenient for you to travel there at least once. (3) Thus, its only fair that you be subject to its jurisdiction vii) Stevens concurrence: Basically suggests that he wouldnt have granted cert because it is such an easy case 9) Consent a) Types of consent i) Actual Consent (1) Agreeing to jurisdiction ii) Implied Consent (1) Traveling through a state on its roads iii) Constructive Consent (1) Waiving the right to objection through not raising it at the earliest possible time b) Insurance Corp of Ireland v. CBG c) Ratliff v. Cooper Labs i) A foreign corporation that had qualified to do business in South Carolina and regularly sent salesmen into the state could not be sued in South Carolina by plaintiffs from other states who had purchased and consumed in their home states drugs manufactured by the defendant, and who sued in South Carolina due to the states relatively long statute of limitations. 10) Federal District Courts a) A federal court can exercise personal jurisdiction over a defendant only if that power is authorized by statute and comports with due process b) Rule 4(k)(2) federal long-arm statute i) Establishes personal jurisdiction for a claim that arises under federal law if the defendant is not subject to jurisdiction in any states courts of general jurisdiction and exercising jurisdiction is consistent with the United States Constitution and laws 11) Challenging a Courts Jurisdiction a) Civil Procedure Rule 12(b), (g) and (h) b) Three Aspects i) Challenging Jurisdiction Issue Directly (1) Special Appearance (a) Defendant presented a challenge to the courts exercise of personal jurisdiction without submitting to the courts jurisdiction for any other purpose (2) No special appearance for federal or SC courts (3) There are multiple opportunities to attack jurisdiction (a) Before and during the case (i) Before prima facie (ii) During preponderance of the evidence ii) Collateral Attack on Personal Jurisdiction (1) A defendant may make a collateral attack on a judgment entered against him or her in some instances. If a default judgment is entered against the person, he or she may collaterally attack the authority of the issuing court to render it, claiming that there was a lack of Personal Jurisdiction

(2) Only possible when the defendant does not appear in any sense and has simply allowed a default judgment to be entered for the case (a) Risky, if wrong on jurisdiction, there is no way to challenge on the merits iii) Limited-Appearance Problem (1) Limited appearance allows a defendant in an action commenced on a quasi-in-rem basis to appear for the limited purpose of defending his interest in the attached property without submitting to the full in personam jurisdiction of the court (2) Otherwise, a defendant would be required to choose between not appearing and suffering forfeiture of his property or appearing and risking the possibility of in personam jurisdiction Chapter 3 NOTICE 1) Requirement of Reasonable Notice a) Mullane v. Central Hanover Bank &Trust Co. i) The common trust fund at issue in this case was established on January 17, 1946, and 100-c provided for an accounting of each fund to be undertaken twelve to fifteen months after the establishment of a fund, and then for every three years thereafter ii) The beneficiaries property rights were at stake here, and without proper notice, the right to be heard provided by the Fourteenth Amendment was of no practical consequence iii) Constructive service via newspaper publication was an unreliable method of giving notice, because newspapers have limited circulation and even then, many people do not examine the legal notices, which are usually in small typeface on the back pages. (1) In this case, the legal notice at issue did not even mention the names of the beneficiaries. (2) Furthermore, under normal circumstances, property holders are directly aware of legal proceedings regarding their property, either directly or through a caretaker. (3) But in this case, the caretaker was the beneficiaries adversary - the trustee itself - which could not be expected to give them reasonable notice, and the special guardian was also not required to give notice. iv) Jackson held that notice must be reasonably calculated to inform known parties affected by the proceedings. (1) Notice by publication was acceptable for missing or unknown parties, for those whose whereabouts could not be ascertained by due diligence, and for those whose future interests were too conjectural to be known with any certainty v) Holding: Notice of judicial proceedings must be reasonably calculated to reach those who are known to be affected by such proceedings b) McDonald v. Mabee i) To disperse with personal service the substitute that is most likely to reach the defendant is the least that ought to be required if substantial justice is to be done c) Wuchter v. Pizzutti i) Every statute of this kind should require the plaintiff bringing the suit to show in the summons to be served the post office address or residence of the defendant being sued, and should impose either on the plaintiff himself or upon the official reviewing service or some other, the duty of communication by mail or otherwise with the defendant d) Constructive Notice does not satisfy Mullanes due process mandate if the name and address of the defendant is known or available from public records 2) Mechanics of Giving Notice a) Introduction i) Notice of a suit is given by the service of process upon the defendant ii) In 1983, Congress rejected service by certified mail (1) Someone has to sign for it (a) Is signature valid? iii) In 1983, Congress instead chose to adapt a model where summons and complaint could be sent by ordinary mail, along with a form for acknowledging receipt of service b) Specific Applications of the Service Provisions i) Modern Rule 4 ii) Federal Rule 4(d): waiving service (1) Rule 4(d) If a defendant located within the United States fails, without good cause, to sign and return a waiver requested by a plaintiff located within the United States, the court must impose on the defendant:(A) the expenses later incurred in making service; and (B) the reasonable expenses, including attorneys fees, of any motion required to collect those service expenses. (2) Maryland State Firemens Association v. Chaves (1996)

(a) Plaintiff sued Defendant and mailed the complaint and summons via first class mail. Defendant did not respond to the complaint and the clerk entered a judgment of default against Defendant. (b) Issue: Is service of process effective under Rule 4 of the Federal Rules of Civil Procedure if the plaintiff mails the defendant the complaint and summons via first class mail and the defendant has actual notice of the lawsuit? (c) Holding: Judgment of default vacated. Under the old Rule 4, service could be effective only if the complaint was mailed and the defendant replied to the summons. If the defendant did not reply, the plaintiff had to find another way to serve Defendant. The Fourth Circuit held in [Armco, Inc. v. Penrod-Stauffer Bldg. Sys., Inc., 733 F.2d 1087 (4th Cir. 1984),] that the validity of service by mail is dependent on an appropriate response from the plaintiff. In addition, the Fourth Circuit has a policy of strict compliance with Rule 4s requirements. (d) Under the new Rule 4, if the defendant does not reply, there is no basis for defaulted judgment, except that the defendant has to pay for normal service. (e) Although the Fourth Circuit has not interpreted Rule 4 yet, they still follow the strict compliance rule. This rule invalidates the service here, even though the defendant had actual notice. Under Maryland rules, service is effective by certified mail, not first class mail. (i) The plaintiff must attempt to have the defendant waive service or accept personal service. Only then should service by mail be attempted. iii) Rule 4(e): Personal Delivery on Natural Persons iv) Rule 4(e)(2)(B): Service on a Person Residing In Defendants Dwelling or Usual Place of Abode (1) Service of process allowed to be made upon an individual by leaving a copy of the summons and complaint at his dwelling or place of abode with someone of suitable age and discretion who resides there v) Rule 4(e)(2)(c): Delivery To An Agent Authorized By Appointment or Matter of Law (1) Delivering a copy of the summons and complaint to an agent of the defendant who is authorized by appointment or by law to receive process (2) National Equipment Rental, LTD v. Szukhent (1964) (a) Issue is whether the person upon whom the summons and complaint were served was an agent authorized by appointment to receive the same, so as to subject the respondents to the jurisdiction of the federal court in New York (b) A party to a private contract may appoint an agent to receive service of process, and that service will be valid if that party promptly accepts and transmits notice of service (c) D received timely and complete notice. This satisfies the requirements of Rule 4(d)(1) (i) Weinbergs prompt acceptance and transmittal of the summons to D was sufficient to validate the agency (ii) Weinbergs sole role was to receive process and that interest does not conflict with the interests of D 1. The fact that D did not know Weinberg is irrelevant (d) Dissent (Black): The holding gives a green light to every company to contrive contracts which declare that when such a company wants to sue someone, that individual must go and try to defend himself in some place no matter how distant or else suffer a default of judgment (i) This ruling will allow such clauses to become boiler plate in most contracts (ii) This service of process raises serious questions in Due Process (e) Dissent (Brennan): Federal standards and state law must define who is an agent authorized by appointment within the meaning of Rule 4(d)(1) (i) It offends common sense to treat a printed form which closes an installment sale as embodying terms to all of which the individual knowingly assented. There should be an explicit condition that the agent transmits actual notice to the principal and the non-drafting party must be shown to have understood and consented to the appointment. vi) Rule 4(h): Serving a Corporation, Partnership, or Association (1) Authorizes service upon corporations, partnerships, and unincorporated associations that are subject to suit under a common name (a) Rules governing service of process are to be construed in a manner reasonably calculated to effectuate their primary purpose: to give the defendant adequate notice that an action is pending vii) Rule 4(f): Serving an Individual in a Foreign Country (1) Any internationally agreed means of service that is reasonably calculated to give notice may be used to effect service on those outside of the United States c) Return of Service (1) After serving, process-server must file a return, which should disclose enough facts to demonstrate that defendant actually has been served and given notice that he is required to appear in court d) Service of Process and Statutes of Limitations

All states have statutes of limitations that fix specific time limits within which various categories of actions must be brought 3) Immunity from Process and Etiquette of Service a) Immunity from process i) State v. Duffield b) Etiquette of Service i) Wyman v. Newhouse Chapter 4 SUBJECT MATTER JURISDICTION
1441(c) Article 3, Section 2 1335 1332(d) 1369 1331, 1332 1332(d) 1367(a)

i)

1) Introduction a) A non-waivable concept b) Basic authority is Article 3, Section 2 c) Two specific types of courts i) Special domestic courts (family court) ii) Special estate courts (probate courts) 2) Subject-Matter Jurisdiction in State Courts a) Lacks v. Lacks i) Marriage/divorce case (1) Contention of husbands residency requirement in New York ii) Issue: If an error is discovered that does not involve jurisdiction but involves substantive elements of a cause for relief, would a final judgment be void for lack of subject matter jurisdiction if that court had mistakenly found that all the elements of a cause of action had been met? iii) Holding: No. If an error is discovered that does not involve jurisdiction but involves substantive elements of a cause for relief, a final judgment would not be void for lack of subject matter jurisdiction iv) This courts subject matter jurisdiction is statutory and there is no jurisdictional question v) Mrs. Lacks only raises substantive issues and not issues related to subject matter jurisdiction b) Arbaugh v. Y & H Corp. i) Employment discrimination claim, court rules that employee-numerosity requirement is an element of the claim, rather than as jurisdictional c) Gravel v. United States i) The limitations period served a broader system-related goal, such as facilitating the administration of claims, limiting the scope of governmental waiver of sovereign immunity, or promoting judicial efficiency and so was more absolute than a timeliness provision that bars the defense of stale claims and may be waiver d) A state cannot escape its 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 e) A state may apply its own statute of limitations even though the claim would have been time-barred under the law of the state under which the cause of action arose f) Supreme Court v. Other Courts i) Supreme Court Article III, Section 2 (1) Original and appellate jurisdictions ii) 28 USC 1251 (1) Supreme Court has original and exclusive jurisdiction of all controversies between two or more States (2) Supreme Court has original but not exclusive jurisdiction (traditionally goes to lower courts first) for all other cases iii) Unless Congress allocates jurisdiction to hear a claim exclusively to the federal courts, a state court is presumed to have concurrent jurisdiction and may entertain the action even though it is based entirely on federal law iv) Any court, other than the Supreme Court, exists not as the result of the Constitution but as the result of a Congressional action (28 USC)

(1) Congress able to determine specific jurisdictions for lower courts (up to the same jurisdiction of the Supreme Court) g) 28 USC 1338 i) District courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks (1) Such jurisdiction shall be exclusive of the courts of the states in patent, plant variety protection and copyright cases h) Howlett v. Rose i) A state policy that permits actions against state agencies for the failure of their officials to adequately police a parking lot and for the negligence of such officers in arresting a person on a roadside, but yet declines jurisdiction over federal actions for constitutional violations by the same persons can be based only on the rationale that such persons should not be liable for sec. 1983 violations in the courts of the State 3) Subject-Matter Jurisdiction, Diversity of Citizenship a) Introduction i) Article 3, section 2 (1) 1-3 all cases (2) 4-9 controversies (3) Extends the judicial power of the US to controversies between citizens of different states and between a state, or citizens of thereof, and foreign states, citizens or subjects ii) 28 USC (1) 1331 federal questions (2) 1332 diversity cases iii) Diversity jurisdiction allows the federal courts to hear cases in which the claims arise solely under state law, so long as constitutional and statutory requirements are met (1) Rationale behind diversity jurisdiction is the desire to avoid discrimination against out-of-state residents in state courts and the protection of investors and financial instruments through federal means iv) Since Congress created jurisdiction for lower courts, they can also remove said jurisdiction v) Complete Jurisdiction (1) Provides in effect that there is no diversity jurisdiction if any plaintiff is a citizen of the same state as any defendant, no matter how many parties are involved in the litigation vi) Summary Judgment (1) Federal courts are much more likely to grant SJ (2) Federal court rule against SJ if reasonable jury could find (3) State court rule against if lowest possible standard of evidence is proven b) Determining Citizenship i) Mas v. Perry (1) Test of domicile (a) Mental (b) Physical (c) A persons domicile is the place of his true, fixed and permanent home and principal establishment, and to which he has the intention of returning whenever he is absent therefrom (i) Change of domicile may take effect only when 1. Taking up residence in a different domicile 2. Intention to remain there (2) Retain your domicile when marrying a person of foreign nationality (a) Foreign domiciled people are not able to sue through diversity jurisdiction ii) Corporations (1) A corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business (2) Direct Action States (a) An action against an insurance company takes into account the state citizenship of the insured party and the insurance company is considered a resident of that state for litigation purposes (3) Tests to locate a corporations principal place of business (a) Nerve Center (i) The locus of corporate decision-making authority and overall control constitutes a corporations principle place of business (b) Principal Place of Business (Muscle)

c)

(i) Greater weight is attached to the location of a corporations production or service activities in determining the principal place (c) Total Activity test (i) Hybrid of the first two tests, considers all the circumstances surrounding a corporations business to discern ifs principal place of business (4) Hertz v. Friend (a) Plaintiffs, on behalf of a potential class of California citizens, brought action in state court against corporation alleging violations of California's wage and hour laws. Principal place of business is the place where a corporation's officers direct, control, and coordinate the corporation's activities (nerve center). (b) It should normally be the place where the corporation maintains its headquarters-provided that the headquarters is the actual center of direction, control, and coordination, and not simply an office where the corporation holds its board meetings (c) Three reasons (i) the statute's language supports the approach (ii) administrative simplicity is a major virtue in a jurisdictional statute (iii) the statute's legislative history offers a simplicity-related interpretive benchmark (5) Piercing the corporate veil (a) Legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders or directors. Usually a corporation is treated as a separate legal person, which is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed iii) Unincorporated Corporations (1) A limited partnership is not a citizen of the state under whose laws created it (2) RH Bouligny (3) Courts look to the citizenship of each of the associations members (a) Unincorporated associations partnerships, labor unions, and charitable organizations (4) 1332(d)(10) CAFA actions, an incorporated association shall be deemed to be a citizen of the state where it has principal place of business and the State under whose laws it is organized iv) Alienage Jurisdiction (1) 1332(a)(2) (a) Citizens of a state and citizens or subjects of a foreign state (2) 1332(a)(3) (a) Citizens of different states and in which citizens or subjects of a foreign state are additional parties (3) Enacted to deal with the penchant of the state courts to disrupt international relations and discourage foreign investment (4) Foreign parties on both sides are generally not ok, but foreign party(s) on one side are ok v) Stateless Aliens (1) Suits by stateless aliens are not able to be maintained vi) Permanent Aliens (1) An alien admitted to the US for permanent residence shall be deemed a citizen of the State in which such alien is domiciled vii) Creating Diversity (1) Assigning interests in a contract, etc (a) If federal jurisdiction could be created by assignments of this kind, which are easy to arrange and involve few disadvantages for the assignor, then a vast quantity of ordinary contract and tort litigation could be channeled into the federal courts at the will of one of the parties (2) Section 1359 only prohibits the creation of diversity jurisdiction (could possibly destroy jurisdiction by assignment) viii) Legal Representatives (1) The legal representative of the estate of a decedent shall be deemed to be a citizen only of the same state as the decedent, and the legal representative of an infant or incompetent shall be deemed to be a citizen only of the same State as the infant or incompetent ix) Destroying Diversity (1) Must determine jurisdiction based solely upon the citizenship of the real parties to the controversy (a) A real party in interest defendant is one who, by the substantive law, has the duty sought to be enforced or enjoined (b) A formal party is one who, in a genuine legal sense, has no interest in the result of the suit, or has no actual interest or control over the subject matter of the litigation Amount in Controversy

Amount-in-controversy requirement currently applies to diversity jurisdiction and to federal claims that arise under a federal statute that expressly imposes such a jurisdictional requirement (all other Federal Questions have no requirement) ii) AFA Tours v. Whitchurch (1) Misappropriation of trade secrets (2) Test for jurisdiction (a) The rules is that, unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith (b) It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify a dismissal iii) Determining the value of an injunction (1) Look at either party (a) Unjust enrichment of the defendant (b) Loss suffered by plaintiff iv) Aggregation Rules (1) One plaintiff can aggregate all of her claims against one defendant to meet the amount-in-controversy requirement (2) Multiple plaintiffs may aggregate together only when they seek to enforce a single title or right, in which they have a common and undivided interest (a) Common and undivided interest if one plaintiff were to fail to collect his share, the remaining plaintiffs would collect a larger share (3) Class Actions (a) When a named representative satisfies the amount-in-controversy requirement, a federal court in a diversity action may exercise supplemental jurisdiction over additional plaintiffs whose claims do not satisfy the minimum amount-in-controversy requirement, provided the claims are part of the same case or controversy as the claims of plaintiffs who do allege a sufficient amount in controversy (b) Class Action Fairness Act d) Judicially Created Exceptions to Diversity Jurisdiction i) Domestic relations (1) Divorce (2) Child Divorce (3) Alimony ii) Probate exception (1) Wills 4) Subject-Matter Jurisdiction, Federal Questions a) Ordain and establish clause means that congress can not only create inferior courts but also give or limit powers to the courts b) Federal Question jurisdiction (1875) i) Premised on the principle that the federal judiciary should have authority to interpret and apply federal law c) Section 1331 serves three purposes i) Promote the uniformity of federal law ii) Encourage judicial expertise in interpreting federal law iii) Protect against possible state-court hostility to claims arising under federal law d) Osborn Case i) Give a theoretical outside limit to Congress authority to shape lower court jurisdiction ii) Test (1) If a federal question exists, the whole case, including other questions, can go to federal court (2) A federal question may always be raised regardless of ripeness, likelihood, etc (3) In any case where a federal question may be raised, Congress has the power to vest the federal courts with power e) Louisville & Nashville v. Mottley i) Facts (1) A couple is injured in train wreck, given free passes for life (2) Congressional Act prohibits free passes (3) Couple sue for breach of contract (a) Allege 1905 statute does not apply and if it does, it violates ii) Issue (1) Does a federal question exist? iii) Holding

i)

(1) Only issue in the case is whether the defendants have a valid defense (a) Plaintiff included the defense in their cause of action (b) A suggestion of one party, that the other will or may set up a claim under the Constitution or laws of the United States, does not make the suit one arising under that Constitution or those laws f) Declaratory Judgment (Skelly Oil) i) Creation of remedy - 28 USC 2201 (1) In a case of actual controversy within its jurisdiction, any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal regulations of any interested party seeking such declaration, whether or not further relief is or could be sought ii) Declaratory Judgment Act (1) Allows the federal court to issue a declaration of rights and other legal relations to an interested party in a case of actual controversy within its jurisdiction iii) Artful Pleading (1) An attempt by the plaintiff to create federal question jurisdiction through the anticipation and inclusion of a federal defense on the face of its complaint in an action brought under the Declaratory Judgment Act (2) Two exceptions (a) Making an absurd claim against a federal statute g) T.B. Harms v. Eliscu (1964) i) Only issue in the case was whether an assignment was made or not, purely a contract action ii) Did not infringe on ones copyright iii) Holmes creation test (1) A suit arises under the law that creates the action whether it was a wrong or not depends upon the law of the State where the act is done iv) Holmes creation test explains the taking of federal jurisdiction (1) More useful for inclusion than for exclusion for which it was intended (a) A case may arise under a law of the United States if the complaint discloses a need for determining the meaning or application of such a law h) Two Branches of arising under tests i) Straight Forward Federal Question/Issue (1) Holmes Creation Test (Am. Well) (a) Jurisdiction exists under the entity that created the action ii) Embedded Federal Question Test (1) Smith (a) Where it appears from the bill or statement of the plaintiff that the right to relief depends upon the construction or application of the Constitution or laws of the United States, and rests upon a reasonable foundation, the District Court has jurisdiction (2) Moore (a) A suit brought under the state statute which defines liability to employees who are injured while engaged in intrastate commerce, and brings within the purview of the statute a breach of the duty imposed by the federal statute, should not be regarded as a suit arising under the laws of the United States cognizable in the federal court in the absence of diversity of citizenship iii) Well pleaded complaint rule applies to both (1) A rule of procedure that federal question jurisdiction cannot be acquired over a case unless an issue of federal law appears on the face of a properly pleaded complaint. The well-pleaded complaint rule is not satisfied by a defense based on federal law, including a defense of federal preemption, or by anticipation of such a defense in the complaint. iv) Cases (1) Smith state action with a federal issue embedded in it (YES, FED) (2) Shoshone federal action with a state issue embedded in it (NO, STATE) (3) Moore state action with a state defense and fed response (NO, STATE) i) Private Rights of Action i) Refers to suits brought by private litigants against private persons allegedly acting in violation of a statute ii) Congress must provide for a private right of action in a statute iii) Four part test for determining whether a private right of action should be implied from a federal statute that does not expressly provide for private remedy (Cort v. Ash) (1) Is the plaintiff one of the class for whose especial benefit the statute was enacted (does the statute create a federal right in favor of the plaintiff)? (2) Is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one?

j)

k)

l)

(3) Is it consistent with the underlying purposes of the legislative scheme to imply a remedy for the plaintiff? (4) Is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law? iv) Transamerica v. Lewis whether a statute creates a cause of action, either expressly or by implication, is basically a matter of statutory construction v) Bivens v. Six Unknown recognized a damage action against a federal official for a violation of the Fourth Amendment despite the absence of any congressional authorization of such a remedy Merrell Dow v. Thompson i) Issue is 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 violations of that federal standard, makes the action one arising under the Constitution, laws, or treaties of the United States ii) Parties (1) Plaintiffs from Canada and Scotland (2) Defendants a corporation incorporated in DE, principle place of business in OH iii) Claims (1) 6 counts (2) Count 4 the drug Bendectin was misbranded in violation in of the Federal Food, Drug, and Cosmetic Act because its labeling did not provide adequate warning that its use was potentially dangerous iv) Grounds for removal (1) Cannot be removed when in defendants home forum v) Holding: the FDCA did not explicitly create a cause of action, thus should not have federal jurisdiction vi) No Smith analysis unless there is a private right of action, but if you did have a private right of action, then you could use the Holmes test Grable & Sons Metal v. Darue Engineering i) The absence of a right of action is relevant evidence of congressional intent, but does not necessarily decide the question in all cases. ii) The IRS seized property owned by Grable and gave Grable notice by certified mail before selling the property to Darue. Grable sued in state court, claiming Darue's title was invalid because federal law required the IRS to give Grable notice of the sale by personal service, not certified mail. Darue removed the case to federal disctrict court, arguing that the case presented a federal question because Grable's claim depended on an interpretation of federal tax law. The district court agreed and ruled for Darue. The Sixth Circuit affirmed the decision. iii) Holding: A state created cause of action with an important embedded federal issue will give rise to 1331 jurisdiction even in the absence of a federal right of action, except for traditionally state based claims that would upset congressional judgment about the sound division of labor between state and federal courts governing the action iv) Therefore, under Grable, federal question jurisdiction exists over a state law claim if (1) State law claim necessarily raises a contested federal issue (2) Issue is actually disputed and substantial (3) Federal courts may entertain the claim without disturbing the congressionally approved balance of state and federal judicial responsibilities (4) Absence of a federal cause of action is some evidence militating against the assumption of federal jurisdiction, but is not dispositive Empire Healthchoice v. McVeigh i) In accordance with the Federal Employees Health Benefits Act of 1959 (FEHBA), the Office of Personnel Management has negotiated a health insurance plan for federal employees with the Blue Cross Blue Shield Association. The plan requires the administrator to make a reasonable effort to recoup amounts paid for medical care from beneficiaries if those beneficiaries receive recoveries from another source (for example, a law suit or settlement against a third party that caused injury). In New York State, the plan is administered by Empire Healthchoice Assurance (Empire). Empire brought suit in federal district court against the estate of Joseph McVeigh, a former federal employee who was injured in an accident and eventually won a settlement with the third party allegedly responsible for his injuries. Empire sought reimbursement for the money spent on McVeigh's medical care. Denise McVeigh, the administrator of Joseph McVeigh's estate, argued that the district court did not have jurisdiction to hear the case under FEHBA and that it should be heard instead by the state court. The district court and Second Circuit Court of Appeals agreed, dismissing the case for lack of jurisdiction. ii) Issue: Under the Federal Employees Health Benefits Act of 1959, are suits brought by insurers against beneficiaries to recoup medical expenses heard in federal or state court? iii) Holding: the Court held that jurisdiction for this case lay in state court. Justice Ginsburg pointed out that while FEHBA stated that any claims against the United States would be heard in federal district court, it made no provisions for suits brought by insurers seeking to recoup medical expenses from private beneficiaries. Absent that specific provision, a

significant conflict with an identifiable federal interest, or the need to resolve a substantial question of federal law in order to establish the insurer's right to recovery, there was no reason to depart from the ordinarily-governing state law. 5) Subject Matter Jurisdiction Supplemental Jurisdiction a) Intro i) Supplemental jurisdiction determines when a federal court may adjudicate a state law claim between citizens of the same state ii) 28 USC 1367 (1) If a federal district court has proper original jurisdiction, the court has supplemental jurisdiction over all other claims that form part of the same case or controversy under Article III of the United States Constitution, including claims of joinder or intervention of additional parof ties iii) Pendent, Ancillary, Supplemental jurisdiction (1) Pendent - the authority of a United States federal court to hear a closely related state law claim against a party already facing a federal claim, described by the Supreme Court as jurisdiction over nonfederal claims between parties litigating other matters properly before the court (2) Ancillary - allows a United States federal court to hear certain claims sufficiently related to the original claim that would otherwise defeat the court's jurisdiction. (a) Ancillary jurisdiction applies when the parties are in federal court because of diversity (i.e., each defendant is from a state different than each plaintiff) and one party wants to bring a claim against another party (possibly a third-party) which would otherwise defeat that diversity b) United Mine Workers v. Gibbs (1966) i) Plaintiff (Gibbs TN) sues UMW (Pitt & D.C.) (1) Two claims (a) 302 of LMR Act (b) TN common law ii) Not diversity of citizenship because UMW is a union, thus citizenship is in any and every state where members are iii) Common Nucleus of Operative Fact (1) The claims must derive from the same situation, such that a plaintiff would ordinarily expect to try them all in one judicial proceeding c) Aldinger v. Howard (1976) plaintiff cannot add a separate defendant, under a state claim, to be pendent, just because of a common nucleus of operative fact d) Own v. Kroger (1978) Judicial economy and convenience of litigants will never be enough to grant ancillary jurisdiction to a plaintiff against a citizen of the same state in a diversity case e) Finley v. United States (1989) Supreme Court found that a grant of jurisdiction over a claim involving certain parties did not extend to additional claims involving different parties f) 1367(b) i) No supplemental jurisdiction under subsection (a) over claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24; or over claims by persons proposed to be joined as plaintiffs under rule 19; or seeking to intervene as plaintiffs under rule 24 g) Maxims i) STRAVITZ MAXIM 1: Just because something is permissible under the rules, does not mean it is jurisdictionally proper ii) STRAVITZ MAXIM 2: Just because the jurisdiction statutes permit something, does not make it Constitutionally valid h) Supplemental Jurisdiction and Permissive Counterclaims i) Not transactionally related to plaintiffs claim and so probably does not share a common nucleus of operative fact ii) Only compulsive counterclaims can rely upon supplemental jurisdiction; permissive require their own jurisdictional basis i) Exxon Mobil Corp. v. Allapattah Services (2005) i) [see handout] ii) 1367(a) can be read to include both case scenarios iii) There are 6 express exceptions to (a) in (b), thus the assumption is that anything outside of those six is permitted iv) Indivisibility theory (1) Purpose of supp. Jurisdiction is to allow the supplementing of a federal claim v) Contamination theory j) Executive Software v. United States i) 2 Federal claims and 3 state claims (1) District court remanded state claims ii) Did the district court properly remand the state claims? iii) A court has discretion to hear supplemental jurisdiction claims. It balances the following in deciding:

(1) Reasons to decline hearing ( 1367(c)) (a) A novel state law issue (federal judiciary avoids making state law) (b) Federal claims are dismissed before trial (c) State issue predominates (d) Other exceptional circumstances with compelling reasons for declining k) Kokkenen v. Guardian Life Insurance i) Plaintiff sued in federal court to enforce a settlement agreement that resolved a prior federal action (1) Defendant challenged jurisdiction on the ground that the District Court lost jurisdiction after it entered an order dismissing the prior litigation ii) Federal courts have ancillary jurisdiction to enforce their decrees and orders, however, this court did not make compliance with the settlement agreement a condition to dismissal (1) Could instead bring a breach of contract case 6) Subject Matter Jurisdiction Removal a) Where the rubber meets the road in most litigation b) Gives a defendant who has been sued in a state court the right to veto plaintiffs forum choice by transferring the action to federal court, but generally only if the federal court would have had jurisdiction to entertain the case if the plaintiff had chosen to go there originally c) What motivates defendants to remove? What motivates plaintiffs to play games? i) To get favorable decisions ii) Plaintiffs view state courts as more favorable iii) Defendants view federal courts as more favorable d) Removal is used when the case could have started in federal court. i) 1441(a): Any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending. ii) 1441(b): Federal question cases are removable without regard to the citizenship of the parties, but any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought. iii) The argument is that the defendants are stuck in the place where they have been sued, but the plaintiffs may sue somewhere else. e) Shamrock v. Sheets i) Defendant means defendant. A plaintiff cannot remove, even if he is counterclaimed. Plaintiff chose the state court and is reasoned to be happy with the state court. f) ERISA employees cannot sue in state contract or tort law g) All defendants in a multi-defendant case must file some form of removal notice th (1) 4 Circuit each defendant gets 30 days after being served (2) Last served defendant rule 30 days after the last defendant is served h) 1441(c): Whenever a separate and independent claim or cause of action within the jurisdiction conferred by 1331 is joined with otherwise non-removable claims, the entire case may be removed or may remand all matters in which State law predominates. i) American Fire v. Finn i) Insurance dispute involving state law claims with multiple defendants (1) Some were diverse, while others were not (2) Two of the diverse defendants successfully removed to federal court (3) They lost and moved to vacate the judgment on the ground that the matter should not have been removed ii) Court found only a single wrong, thus removal was improper (1) Where there is a single wrong to plaintiffs, for which relief is sought, arising from an interlocked series of transactions, there is no separate and independent claim or cause of action under 1441(c) j) Borough of West Mifflin v. Lancaster i) Facts: Plaintiffs (PA) were arrested for disorderly conduct at a mall. Their pictures and names were posted in the mall and they were warned not to return. Ps sued for malicious prosecution under 42 USC 1983 against arresting officer Evans (D) and the borough of West Mifflin (D). (1) FED Q 1983 against Borough (PA) (2) FED Q 1983 against Officer Evan (PA) (3) STATE TORT Mall owner (PA) ii) History: Ds removed to federal court and Lancaster, the federal district court judge, granted Ps motion to remand the case back to state court, stating that state law predominated due to several other state law claims in the complaint. Ds filed a petition for a writ of mandamus to compel the district court to accept jurisdiction.

iii) Issue: What is required under 42 USC 1441(c) for removal or remand of a case in which there are both federal question claims and claims arising under state law? iv) Holding: 42 USC 1441(c) provides for removal or remand only where the federal question claims are separate and independent from the state law claims with which they are joined in the complaint. (1) However, where there is a single injury to plaintiff for which relief is sought, arising from an interrelated series of events or transactions, there is no separate or independent claim or cause of action under 1441(c). (2) Pendent state claims that derive from a common nucleus of operative fact as the federal claims are not separate and independent and therefore do not fall within the scope of 42 USC 1441(c). (3) P relied upon the same series of events for all counts of their complaint, and therefore the district court had subject matter jurisdiction over the 42 USC 1983 claim and supplemental jurisdiction over the other claims. (4) The federal and state claims were not separate and independent and the district court had no authority under 42 USC 1441(c) to remand either part or all of the case. The court also held that its ruling did not preclude analysis under 1367(c)(2) if the state claim constituted the real body of the case and the federal claim was merely an appendage. k) Removal Process i) 1446: The notice of removal of a civil action shall be filed within thirty days after the receipt by the defendant of a copy of the initial pleading or service of summons. ii) Murphy Bros. v Michetti Pipe (1999) ruled that removal time began with official service, and a copy of the claim was insufficient. In the absence of service of process, a court may ordinarily not exercise power over a party named as a defendant. iii) 1446(c)(2): A failure to state grounds which exist at the time of the filing of the notice shall constitute a waiver of such grounds, and a second notice may be filed only on grounds not existing at the time of the original notice 7) Challenging Subject-Matter Jurisdiction a) Direct Attack on Subject-Matter Jurisdiction i) A lack of subject matter jurisdiction may be asserted at any time by any interested party, either in the answer, or in the form of a suggestion to the court prior to final judgment, or on appeal, and also may be raised by the court sua sponte ii) Ruhrgas v. Marathon Oil Co. (1) Defendant removed the case to federal court and the plaintiff moved to remand for lack of subject-matter jurisdiction (a) Defendant moved to dismiss for lack of personal jurisdiction (b) Court dismissed for lack of personal jurisdiction before ruling on subject-matter jurisdiction iii) 12(b)(6) is a judgment on the merits (1) Cannot give judgment on the merits before jurisdiction is determined iv) Obedience to a temporary restraining order is required even though the issuing court may lack subject-matter jurisdiction b) Collateral Attack on Subject-Matter Jurisdiction i) If both parties and the court fail to notice the absence of subject-matter jurisdiction at any time during the original proceeding Venue 1) General Principles a) The location where a case is heard

b) Today, most all venue issues arise from forum selection clauses
c) Current venue statute is very liberal and broad 2) Local and Transitory Actions a) Reasor-Hill Corp v. Harrison i) Planters Flying Service sued Defendant for failure to pay Planters for spraying insecticide on Defendants crops located in Missouri. Defendant answered that the insecticide had damaged his crop and by cross-complaint sued Plaintiff, the manufacturer of the insecticide. (1) Plaintiff filed a motion to dismiss the cross-complaint, arguing that it pertained to real property located in Missouri and consequently could not be sustained in Arkansas. ii) Can Defendant maintain a cross-complaint against Plaintiff even though the cause of action is based on injury to real property located outside of Arkansas? iii) Yes. Although the general rule is that a party cannot sue another party in a state when the suit relates to injury to property outside of the state, this rule is antiquated and should no longer be followed.

(1) The ease of ascertaining foreign jurisdictions law of titles, the ability for citizens to freely pass from one state to another and also the danger of providing a haven for Arkansas citizens who have destroyed property in other states show that the old venue law should not be applied here. iv) A lawsuit is maintainable for injury to real property located outside the forum state as long as the forum state has personal jurisdiction over the defendant. b) TIME CHANGES i) Pre-1966 (1) Diversity Where plaintiff or defendant resided (2) Fed Q Where defendant resided ii) 1966 1990 (1) Where the cause of action arose iii) Post-1990 (1) Current 1391 (a) In any district where a defendant resides (if all D are in same state) (b) In a judicial district in which a substantial part of the events or omissions give rise to the claim occurred (c) In a judicial district in which any defendant is subject to personal jurisdiction at the time the action commenced if there is no other district in which the action may otherwise be brought (occur normally only when events occur outside the jurisdiction of the united States) c) Venue in the Federal Courts i) Bates v. C&S Adjusters Inc. (1) P defaulted on his debt and D, a NY collection agency, sent letter to P. P incurred the debt in Pennsylvania, but later moved to NY. Ds letter addressed to Ps Pennsylvanias residence but from there, redirected to Ps NY residence. P brought claim against D under federal Fair Debt Collection Practices Act. (2) Under 28 U.S.C. 1391 (b)(2), venue is proper in a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred. In this case, P resided in NY when he received the letter and the letter was redirected to NY. D intended P to receive the letter and therefore, a substantial part of the events giving rise to the claim occurred in NY. Therefore, the district court erred for dismissing the Ps lawsuit. (3) As a general rule, in a federal diversity or federal question case, venue is proper in a jurisdiction where: 1. all defendants reside, or 2. where a substantial part of the claim arose. But if there is no district anywhere in the U.S. that meets either of these two, then venue is proper : 1. in a federal question case, in any district where any defendant is found; or 2. in a diversity case, in any district where any defendant is subject to personal jurisdiction. ii) Unincorporated Associations (1) Determined by looking to the residence of the association itself rather than of its individual members 3) Transfer a) 1404 Change in Venue i) A district court may transfer any civil action to any other district or division where it might have been brought b) 1406 Cure or Waiver of Defects i) The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or it be in the interest of justice, transfer such case to any district or division in which it could have been brought (1) Nothing in this chapter shall impair the jurisdiction of a district court of any matter involving a party who does not interpose timely and sufficient objection to the venue c) Hoffman v. Blaski i) Facts: brought an action against , and successfully moved to transfer to a more convenient district. However, the transferee district was not a place where the defendant was previously subject to service, and did not have proper venue at the time the brought the action. ii) Holding: 1404(a) clearly states that the transfer may only be to a more convenient forum where it might have been brought, not where it may now be rebrought with the defendants consent. Thus, the conduct of the defendant after the commencement of the suit may not add to the permissible forums. Otherwise, the defendant would then have more power over the forum than the plaintiff. Thus, the action may only be transferred to a location where the had an unqualified right to bring it in the first place. iii) Dissent: There is more than one possible interpretation of the words where it might have been brought. The phrase may refer to venue, amenability to service, period of limitations, or any number of other things. To restrict the number of places where the action can be transferred to is to restrict the number of situations where 1404(a) may serve the interests of justice. d) 1404 & 1406 Comparisons i) 1404 when venue was proper (transfer) (1) The law applicable in the transferor forum follows the transfer ii) 1406 when venue was improper (transfer or dismiss)

(1) The law applicable in the transferor forum does not follow the transfer 1407 provides for the temporary transfer to one district related complex cases such as multidistrict antitrust actions i) Transfer is appropriate when the cases involve common questions of fact and in the interest of justice ii) Used frequently to take advantage of coordinated pretrial discovery 4) Stewart Organization v. Ricoh Corp. (1988) a) Facts: Plaintiff and Defendant had a problem with a contractual dealership agreement. The agreement contained a forum selection clause providing that any dispute arising out of the contract could be brought only in a court located in Manhattan. P brought a complaint in the district court of NDAL. Relying on the forum selection clause, D moved the district court to either transfer the case to SDNY under 1404(a) or dismiss under 1406. b) Issue: What analysis should a district court use in deciding whether to apply a federal statute over a state law in a diversity case? c) Holding: When a federal law to be applied in a diversity action is a congressional statute, there are two questions the court must answer: i) Whether the statute is sufficiently broad to control the issue before the court. ii) If so, whether the statute represents a valid exercise of Congress' authority under the Constitution d) If Congress intended to reach the issue before the court, and if it enacted its intention into law in a manner that abides with the Constitution, that is the end of the matter; federal courts are bound to apply laws enacted by Congress with respect to matters over which it has legislative power. e) Section 1404 is sufficiently broad to cover the issue. e) 5) Forum Non Conveniens a) A court may resist imposition upon its jurisdiction even when jurisdiction is authorized by the letter of a general venue statute b) Gulf Oil Corp. v. Gilbert i) Facts: Negligence action for allowing s warehouse in Virignia to burn. is a Virginia resident. is a Pennsylvania corporation qualified to do business in both Virginia and New York. ii) Issue: Whether the action should be dismissed from the New York federal district court under the doctrine of forum non conveniens given the facts of the case, even though in personam jurisdiction and venue are proper. iii) Reasoning: The doctrine is one of discretion of the court. However, the interests of the plaintiff, the defendant and the forum state in the litigation need to be considered. Here there is no strong interest for any party to have the litigation in New York. In fact, the interests weigh against it. The may not choose an inconvenient forum to harrass the . Also, the state has an interest in avoiding overcrowding of its own courts and subjecting its citizens to jury duty in a case having no ties to their state. iv) Notes: In 1948, Congress enacted 28 U.S.C. 1404(a) which changed the remedy from dismissal to transfer to a convenient forum. Note that a plaintiff may also invoke 1404(a) to transfer if the only place he could get venue and jurisdiction was inconvenient. c) Piper v. Reyno i) Facts: A plane manufactured by Piper Aircraft (D1), a Pennsylvania corporation, crashed in Scotland. Parts of the airplane were manufactured by Hartzell (D2), an Ohio corporation. Reyno (P) was appointed administrator for the families of five UK citizens involved in a plane crash in their suit against the defendants for negligence and strict liability. The families of the dead passengers sued Air Navigation, the operator of the plane (McDonald), and the estate of the deceased pilot in a separate action in the UK. ii) The complaint was filed in California by Reyno. The defendants removed to federal district court in California and then successfully sought transfer to Pennsylvania district court. The defendants motion to dismiss on forum non conveniens grounds was granted and Reyno appealed. The court of appeals reversed and remanded. iii) Holding: When an alternative forum has jurisdiction to hear a case and when trial in the chosen forum would establish oppressiveness and vexation to a defendant out of proportion to the plaintiffs convenience, or when the chosen forum is inappropriate because of considerations affecting the courts own administrative and legal concerns, the court may in the exercise of sound discretion dismiss the case by applying the list of private and public interest factors. (1) In a motion to dismiss for forum non conveniens, a court should consider both private and public interest factors. (a) Private factors include the relative ease of access to sources of proof, availability of compulsory process for the attendance of unwilling witnesses, the cost of attendance of witnesses, the possibility of viewing the scene if appropriate to the action, and other practical matters related to making the trial easy, expeditious, and inexpensive. (b) Public factors include administrative difficulties of the courts, interest in having local controversies adjudicated at home, the interest in having the trial in a forum that is familiar with the law governing the action, the avoidance of unnecessary problems in conflict of laws or the application of foreign law, and the unfairness of burdening citizens in an unrelated forum with jury duty.

Erie Doctrine 1) In many circumstances, federal courts are required to hear state law disputes rather than federal law disputes, and are faced with the choice of whether to apply state or federal law. This choice-of-law problem arises most commonly when the federal courts jurisdiction is based on diversity of citizenship or supplemental jurisdiction. 2) Three Step Approach to Solving Erie Problems a) Rules Enabling Act (28 USC 2072) i) If there is a federal rule or statute governing the procedural issue in point, then there are two questions: (1) Is the federal rule or statute broad enough to cover the point in issue? AND (2) Does the rule or statute represent a valid exercise of Congress authority under the Constitution? ii) If the answer to both questions is YES, the federal rule or statute must be applied b) The Rules of Decision Act (RDA) i) If there is no valid federal rule or statute broad enough to control the issue, then application of a conflicting federal practice is analyzed under the TWIN AIMS OF ERIE: (1) Discouragement of forum shopping, AND (2) Avoidance of inequitable administration of the laws ii) If the outcome is the same whether the state or federal practice is followed, federal law is applied iii) If application of the federal practice would change the outcome, the twin aims of Erie will be violated and state law must be applied iv) When to apply federal law: Under the RDA, applicable provisions of the federal Constitution, treaties, and constitutional statutes enacted by Congress always take precedence over state law. v) When to apply state law: In the absence of on-point federal constitutional or statutory law, federal courts must apply relevant state law. vi) Common law: The RDA made no specific mention of which body of law would be applicable if there were neither federal nor state law on point. This led to many federal judges applying, on a case by case, ad hoc basis, their own precedent (federal common law). c) Balancing Interests Approach: Byrd v. Blue Ridge Rural Electric Cooperative i) If state law is outcome determinative, courts then ask the question posed in Byrd: (1) Is there an overriding federal interest justifying application of federal law in the face of contrary, outcome determinative state law? (a) If there is no countervailing federal interest, then state law must be applied 3) Erie Railroad Co. v. Tompkins a) Rule: Erie abolished federal common law and directs federal courts hearing state causes of action to apply state substantive law when there is no controlling federal statute. In effect, this has resulted in federal courts having to apply state substantive law (including state judge-made or common law) in diversity cases. Federal courts, however, are free to use their own procedural law, even in diversity cases. b) Steps to determine whether state or federal procedural law applies: i) If the source of the federal procedure is federal case law, the federal court must identify and weigh the purpose behind the states procedure, the purpose behind the federal procedure, and the prospect that application of federal law might encourage forum shopping. If applying the federal case law would lead to forum shopping or inequitable administration of the laws, state law should be used. If, however, the state interest is weak and the federal interest strong, the court may apply federal case law instead. ii) If the source of the federal procedure is the FRCP, or another rule, promulgated under the Rules Enabling Act (REA), federal rules trump state law if: (1) the federal rule at issue is a constitutional rule of procedure within the scope of the REA; and (2) if federal rule and state procedure conflict (Hanna v. Plumer). Note: To date, no federal rule has been found to violate the REA. iii) If the source of the federal procedure is a federal statute, federal procedure applies if: (1) the federal statute is on point; and (2) it is a Constitutional exercise of power by Congress. c) Options for the federal court applying state law: If the federal court determines that it should apply state law, but the state law itself is uncertain, the court may: i) Abstain from deciding the issue; ii) Certify the question to the state supreme court (if possible); or iii) Try, from all the available and relevant sources, to predict how the state supreme court would decide the matter. d) Choice of law issues: When a federal court determines it must use state law, the issue then becomes: which states law should be applied? Federal courts are bound by state conflict of law rules. In other words, in a situation where two states may have different rules and the court is not sure which states laws apply, the conflict of law rules of the state in which the federal court sits must be followed to make this determination. i) If there is ever a conflict between an outcome in federal court and state court, the state court prevails even if it appears to be procedural on its face.

4) Hanna v. Plumer (1965) a) Hanna (OH), was involved in an automobile accident in SC with Osgood (MA). Hanna brought an action in diversity in MA federal district court against Plumer, the executor of the estate of Osgood. Plumer was served with process according to FRCP 4(d)(1) by leaving copies of the summons with his wife at his residence. Under Massachusetts rules however, service upon an executor must be handed personally to the executor within one year. Plumer moved for summary judgment on the grounds that the state law rule regarding service should be used. i) Citing Guaranty Trust Co. v. York, Plumer argued that the Erie doctrine applies when the issue is outcome determinative; in this case if Massachusetts rules applied the case would be dismissed because Plumer had not been served within the statute of limitations and the court would therefore not have personal jurisdiction over him. On the other hand, if the federal rules applied, Hanna would have an opportunity to have the case tried on the merits. ii) The trial court granted Plumers motion and Hanna appealed, arguing that the rule established in Erie Railroad Co. v. Tompkins applies only to issues of substantive law and not procedural rules. The First Circuit affirmed and the United States Supreme Court granted cert. b) Does the Erie doctrine apply to rules of procedure pertaining to service of process? i) No. The Erie doctrine does not apply to rules of procedure pertaining to service of process. c) Do the Federal Rules of Civil Procedure apply, irrespective of the source of subject matter jurisdiction, and irrespective of whether state or federal substantive law applies? i) Yes. The Federal Rules of Civil Procedure apply irrespective of the source of subject matter jurisdiction, and irrespective of whether state or federal substantive law applies. d) The court held that the question in this case only goes to procedural requirements. A dismissal for improper service under these facts would not alter the substantive right of Hanna to serve Plumer personally and refile or affect the substantive law of negligence in the case. i) Article III and the Necessary and Proper Clause provides that the Congress has a right to provide rules for the Federal Court. Under Byrd, federal courts must apply federal law in certain situations regardless of whether choice of law would be outcome determinative. e) The choice of the federal or state rule have a marked effect upon the outcome of litigation but the difference between the rules would be of scant if any relevance to the choice of forum. A party would not choose a federal court simply because Rule 4(d)(1) has an easier method of service. The Erie rule has never been invoked to void a Federal Rule. f) This case is differentiated from York and Erie in that they never dealt with a federal rule conflicting with state law. If there is no federal rule, Erie commands the enforcement of state law. The exercise of constitutional authority by Congress in the Rules Enabling Act does not have to take a backseat to state created rights and procedures. The federal rule is valid and controls the case. 5) Walker v. Armco Steel Corp. (1980) a) State statute of limitations must apply and must serve the defendant before the state statute of limitations runs b) Rule 3 does not make any reference to notification of the defendant c) In a diversity action in federal court, state law should be followed in determining when an action is commenced for the purpose of tolling the state statute of limitations. d) In order for a Federal Rule to control, it must be broad enough ("direct collision") to cover the issue at hand. 6) Stewart Organization v. Ricoh Corp. (1988) a) Facts: P and D had a problem with a contractual dealership agreement. The agreement contained a forum selection clause providing that any dispute arising out of the contract could be brought only in a court located in Manhattan. i) P brought a complaint in the district court of NDAL. ii) Relying on the forum selection clause, D moved the district court to either transfer the case to SDNY under 1404(a) or dismiss under 1406. b) Holding: When a federal law to be applied in a diversity action is a congressional statute, there are two questions the court must answer: i) Whether the statute is sufficiently broad to control the issue before the court. ii) If so, whether the statute represents a valid exercise of Congress' authority under the Constitution. c) If Congress intended to reach the issue before the court, and if it enacted its intention into law in a manner that abides with the Constitution, that is the end of the matter; federal courts are bound to apply laws enacted by Congress with respect to matters over which it has legislative power. d) Section 1404 is sufficiently broad to cover the issue 7) Gasperini v. Center for Humanities (1996) a) Gasperini, during the course of seven years in Central America, took over 5,000 slide. In 1990, Gasperini supplied 300 of his original transparencies to The Center for Humanities for use in an educational video. The center agreed to return the transparencies, but they were lost. Gasperini commenced suit in the District Court for the Southern District of New York. The trial jury applied New York law and found for Gasperini, awarding him $450,000 in compensatory damages. The defendant moved for a new trial, asserting, among other things, excessiveness of the award. The district court dismissed

the motion and the defendant appealed. The Second Circuit vacated and remanded for a new trial, unless the plaintiff accepted a remittitur for $100,000. b) The case involved an important issue of what standard of review should be used by a federal court in measuring the excessiveness of a jury verdict. The standard typically applied by federal courts was that a verdict was excessive if it "shocked the conscience of the court." New York had recently enacted legislation changing the standard as a part of a tort reform initiative to the standard that an award was excessive if it "deviates materially from what would be reasonable compensation." The question arose as to whether the standard was substantive or procedural, as the Erie Doctrine stipulated that the federal court should apply the substantive law of the state and federal procedural law c) The federal district court should apply the New York standard for excessiveness, reasoning that the case did not include a distinct choice between federal and state interests, but rather presented an opportunity to serve both interests. The federal interest lay primarily in discharging the Seventh Amendment, which precludes review of facts tried by a jury. The Second Circuit had reviewed the verdict against the New York excessiveness standard and thus ran afoul of the Seventh Amendment. Accordingly, the Court vacated the judgment of the Second Circuit and ordered the case remanded to the district court for a new trial so that the trial judge could test the jury's verdict against the state standard. 8) Shady Grove v. Allstate (2010) 9) Ascertaining State Law a) Klaxon v. Stentor Electric (1941) i) In order to promote the desired uniform application of substantive law within a state, federal courts must apply the conflicts-in-law rules of the states in which they sit b) Mason v. American Emery Wheel (1957) i) Plaintiff sued Defendant in federal court based on diversity of citizenship for injuries allegedly cause by Defendants product. The District Court applied Mississippi law, the law of the state where the injury occurred. Because the only Supreme Court of Mississippi case that addressed the issue required privity of contract between the parties for the cause of action, the Court dismissed Plaintiffs case for lack of privity. ii) The Supreme Court of Mississippi would not decide the case the same way if the issue were presented again. It is not necessary that a case be explicitly overruled in order to lose its persuasive force as an indication of the law. (1) In E.I. Dupont De Nemours & Co. v. Ladner, the Supreme Court of Mississippi approved of the modern doctrine of MacPherson v. Buick, which does not require privity of contract in order to sue the manufacturer. Because the Supreme Court of Mississippi would probably overrule Ford Motor Co. when it was presented with such an opportunity, the District Court should not have applied the old case law to the case at hand. iii) Concurrence. It is clear that in E.I. Dupont, the Supreme Court of Mississippi no longer approves of the holding in Ford Motor Co. However, when the situation is less clear, applying the rule of this case will cause problems.