CIVIL PROCEDURE – SPRING 2010 Textbook: Ides & May, 3rd Edition

I. Punitive Damages

a. Purpose: i. Deter wrongful conduct

ii. Punish particularly egregious behavior – people who go over the line iii. Not done to compensate plaintiff

b. Criticisms i. Too random

ii. Can’t be controlled c. Facts

i. Only awarded in 3.3% of civil trials ii. Usually modest - $40,000 median

iii. Reduction through remittitur is common d. McDonald’s: coffee spill

i. In fixing amount, take into consideration the character and degree of the wrong as shown by the evidence and necessity of preventing similar wrong

ii. The jury has tremendous power in setting the serving temperature of coffee

iii. Judge reduces amounts by remittiter e. Due Process

i. 14th Amendment: state shall not “deprive any person of life, liberty, or property without due process of law”

ii. Pacific Mutual 1. Insurance agent failed to file H’s claim 2. D claims award violated DP – inadequate procedural safeguards

a. SCOTUS refuses to reverse b. Protections were in jury instructions c. 4:1 punitive to compensatory ratio d. Say it’s close to the line, but not over

iii. TXO Production v. Alliance Resources 1. In WV – tort hell state 2. $19,000 compensatory, $10 million punitive

a. Affirmed by SC b. Potential harm if fraud not stopped was greater c. Inquiry: is there a reasonable relationship?

iv. Honda Motor v. Oberg 1. $900,000 actual $5M punitive 2. By state law, court can’t reduce amount of award

a. Real concern: potential for juries to express bias against big business

3. SC: judicial review part of due process rights f. Gore v. BMW

i. $4 million punitive damages award for bad paintjob

1. Is this going to make a difference for BMW? 2. AL statute: divulge anything that suppresses value 3. Cost of litigation actually ~$100,000

a. But punitive damages need to be higher to not disincentivize litigation

ii. Three factors 1. Degree of Reprehensibility: how bad was conduct?

a. Not that bad b. No impact on health or safety c. Even legal in other states

2. Ratio: what was comparative amount between actual and punitive damages?

a. 500:1, “breathtaking” b. Other states allow for 2:1 or 3:1 c. No issue of additional harm, as in TXO

3. Sanctions for comparable misconduct: is punitive damage award in line with what criminal or other sanctions might have been?

a. Civil penalties only $2,000 at most b. Out of nowhere – no judicial opinions that would have

indicated this kind of award iii. Federalism

1. SC’s looking at what different states are doing a. Unusual in that activity expressly legal in many states b. Suggests AL is overreaching

iv. Dissents 1. Scalia

a. Objects to open-ended interpretation of due process b. No real guidance here

2. Ginsburg a. Don’t make this about due process b. Allow states to develop their own meaningful controls

g. Post-Gore i. Leatherman Tool

1. 9th Circuit applied “abuse of discretion” standard a. Means trial judge can pretty much do what they want b. SC requires more exacting appellate review

i. De novo ii. Exxon Valdez

1. District court’s $5B judgment reversed by 9th Cir. 2. Ratio: 17:1

a. 4:1 was close to the limit b. Worried about over-deterrence

3. Comparable sanctions a. Fine of $200,000, maximum liability was $100 million

4. Reprehensibility a. Drunk captain had only $5,000 of liability

5. Reduces punitives to 1:1 a. But based on Clean Water Act, not due process

iii. State Farm v. Campbell 1. Campbell causes serious accident, State Farm his insurer

a. Insurer doesn’t take the deal, wants to delay payment b. As a result, Campbell liable for $175,000 more c. Sues for bad-faith representation

2. Utah SC reinstates $145M punitive damages 3. State Farm really wealthy and did something bad, but ratio is huge 4. SC: violates BMW

a. Ratio of 145:1 b. Concerned they were using non-Utah events in determining

damages c. But: need high punitive to make litigation worthwhile

5. How should evidence from other states be used? 6. Strong suggestion that only low ration will be upheld (2:1)

II. Due Process – Procedural a. Personal Jurisdiction

i. Historical Context 1. Pennoyer, 55

a. Mitchell files suit in OR to recover fees for service rendered to Neff

i. Judgment granted, tries to collect ii. Neff can’t be locating in CA – never notified

b. Option 1: Mitchell sues in CA i. Can always sue citizen in their home state

ii. Apply OR law in CA – happens all the time c. Option 2: Find a way to make it work in OR d. Full Faith and Credit clause

i. Pennoyer wants it, Neff says no full faith and credit ii. But: central issue is 14th Amendment due process

e. Holding i. States have power over their people and their

property ii. All assertions of jurisdictional power must be

justified consistent with these two criteria 1. This is underinclusive – can’t sue all people

we should be able to iii. Quasi-in-rem jurisdiction: must seize property

before making a judgment against out-of-state defendant

f. Mitigating principles i. Quasi-in-rem

ii. Physical presence – if there, grab them iii. Consent – express or implied iv. Status relationships (marriage, etc.)

2. Harris v. Balk a. Balk (NC) owes Epstein (MD) money, Harris (NC) owes

Balk money b. Epstein seizes Harris in MD, makes him pay what he owes

to Balk to him c. Court says this is okay

i. Very open to using the concepts to allow suits 3. CONSENT - Hess v. Pawloski – D can consent to PJ, can be

implied or express (Carnival) a. PA citizen has car accident in MA b. Agent of service of process – someone who can receive

service in that state i. MA does consent forms

1. Done in construct of Pennoyer: consent okay

2. But this isn’t really consent 3. Just driving in MA is implicit consent

c. Upheld i. D was present at one time and place is directly

related to lawsuit ii. P has interest in convenient forum, and this is the

best forum iii. Actual notice existed

ii. Modern Framework 1. Minimum Contacts - International Shoe, 77

a. Under Pennoyer, corporations are problematic as far as presence

b. Facts i. IS based in MO, don’t manufacture in WA

ii. Claim they don’t have presence at all in WA under Pennoyer

iii. Salesmen show sample 1. Contract not formed in WA 2. Orders sent back to MO, signed there

iv. WA courts say exhibiting enough c. Rule:

i. State may exercise personal jurisdiction over a defendant if she has such minimum contacts with the state that it would be fair to require her to return and defend a lawsuit

1. Corporation that chooses to conduct activities within a state accepts a reciprocal duty to answer for its in-state activities in local courts

2. Limitation: power limited to cases arising out of voluntary association with the state

d. Looking for activity that is meaningful and purposeful e. Quality of Contacts

i. Need to look to how contacts relate to activity itself ii. E.g., having 13 employees in state wouldn’t

necessarily relate to car wreck iii. Continuous/Related – emphasis on not being a one-

time thing 1. Continuous/Related: jurisdiction 2. Continous/Unrelated or

Noncontinuous/Related: tough 3. Noncontinuous/Unrelated: no jurisdiction

2. Consequences of Shoe a. Long-Arm statutes

i. States describe their jurisdiction in detail, creating the possibility of a limiting interpretation

ii. Several states explicitly go to the limit of due process

3. Step for Long-Arm Analysis a. Does D come within the terms of the long-arm statute?

i. Ex: WA statute authorized jurisdiction over companies doing business in state

b. Does D have minimum contacts such that jurisdiction would not violate due process?

i. Has D purposefully availed himself of the privilege of working in and benefits of state’s laws?

ii. Does the suit arise out of or relate to D’s purposeful contacts, or are D’s forum contacts so extensive that no such relationship is necessary?

c. Would jurisdiction be unfair and unreasonable? i. Interests to consider: Defendant, forum state,

plaintiff, other states 4. Hanson v. Denckla, 92

a. Donner lives in PA, creates DE trust i. Moves to FL, receives income from trust

ii. Signs new docs and will in FL iii. FL courts decided case without trust company in

DE involved – challenged issue b. SC says no jurisdiction

i. Must be some act by which D purposefully avails itself of state

1. Means D deliberately chose to relate to the state in some meaningful way

ii. No real nexus to FL - the bank didn’t do anything here

c. Brennan’s dissent

i. FL has interest in seeing that its citizens’ money is properly distributed

ii. Not a big deal for bank to get involved here d. Compare to McGee

i. Nonresident D solicits reinsurance agreement out of state

ii. Offer accepted in that state iii. State had interest in providing redress for its

residents iii. Contemporary Problems

1. Burger King, 98 – Reasonableness of imposing PJ a. MI citizens open a BK (FL)

i. Contract required FL law to be applied, but all activities in MI

ii. BK files suit in federal court in FL 1. Personal jurisdiction uses state law to

determine b. Not asking: which forum is better? c. Is the contract a minimum contact?

i. Signing it not enough by itself ii. Choice of law provision not enough

iii. But D knew BK was in FL, knew their financial obligations

iv. Purposefully availing: getting some benefit d. Dissent: D didn’t plan to deliver their food in MI into the

stream of commerce e. Need to have meaningful connection between D and forum

state i. Long-term contract with FL company OK

f. Inquiry i. Purposefully availed itself?

ii. Does jurisdiction comport with fair play and substantial justice?

1. Burden on D 2. P’s interest in convenient forum 3. Forum’s interest in adjudicating the dispute 4. Interstate Justice System’s interest in

obtaining efficient resolutions 5. shared interests of the states in furthering

substantive social policies 2. Chalek v. Klein, 104

a. Purchasers stop payment on product b. IL co. files suit in IL

i. No PJ here ii. This is mere contract formation

iv. Stream of Commerce

1. World-Wide Volkswagen, 112 a. P bought Audi in NY, moving to AZ but has accident in

OK i. Suit brought in OK

ii. Dealer had not sold cars there, advertised there, cultivated OK customers, or deliberately focused on OK market

b. Diversity of citizenship i. Against NY retailers, so not automatically

c. Foreseeability i. Foreseeable that it would come to OK?

ii. If it is, there are no real limits iii. “Appointing chattel as his agent for service of

process” d. Factors

i. Forum state’s interest ii. P’s interest in convenient forum

iii. Federalism concerns 1. Minimum contacts ensures that states don’t

reach beyond their limits iv. D’s convenience

e. Majority of court seems to think that when you sell it, you’re done with it

i. Dissent says to look at the big picture, have to break out of sole focus on defendant’s rights

f. Holding: need some direct contacts between forum state and each and every D

2. Stream of Commerce Plus - Asahi, 124 a. P injured in accident, sues tire tube manufacturer in CA

i. D brings in Asahi, then settles the case ii. Asahi is Japanese company, no real presence in CA

b. Test i. Need stream of commerce plus “substantial

connection” to forum state: 1. Advertising 2. Service 3. Employees

ii. BUT: majority never signed on to this (plurality only)

c. Dissent: stream of commerce is enough d. Majority reluctant to impose US legal system on other

countries i. Lots of peculiar qualities

3. Effects Test - Kulko, 133 a. Family dispute over child custody

i. NY dad, CA mom and kids

ii. Dad allows kids to live in CA b. Need to have caused an effect in CA to set PJ

i. This single act doesn’t have an effect c. Calder v. Jones, 136

i. Defamation suit at FL writer by CA defendant ii. Did something in one state, directed at another state

where injury occurred iii. Upheld on effects test

d. Revell v. Lidov, 140 i. Online message board

ii. Zippo test: sliding scale 1. Passive: owner posts info – not sufficient 2. Interactive elements/bilateral information

exchange – might be 3. Repeated online contacts with forum

residents – jurisdiction imposed e. Pebble Beach

i. UK restaurant site uses PB name ii. Is there dilution of trademark in CA?

v. Relatedness & Reasonableness 1. Relatedness – Cause of Action must relate to the D’s purposeful

contacts a. Sometimes can establish general jurisdiction (rare)

i. What if there’s a lot of activity, but unrelated to lawsuit

2. Perkins v. Benguet, 151 a. Suit by shareholder against Philippine company right after

WWII ended i. During war, moved operations to OH

b. This establishes general jurisdiction 3. Helicopteros, 154

a. D is Colombian company, providing services in South America – sued in TX

i. Conscorcio was alter ego of joint venture in TX ii. D’s CEO flew to TX to discuss deal

iii. D bought helicopters in TX iv. Sent pilots to TX for training v. But no offices, employees, services

b. Holding: mere purchases not enough 4. Reasonableness – Asahi II

a. Plaintiff Interest – had settled b. Burden on D – From another country c. State’s interest – no real interest by state remaining d. States’ interest in efficient resolution – countervailing

international interest in not imposing US jurisdiction vi. Jurisdiction Based on Property or Presence

1. Shaffer, 183 a. Shareholder action against Greyhound board for

mishandling affairs in OR i. PPB in AZ, filed in DE (stock location)

ii. Feels like a shakedown – over 1 share of stock b. Tries to use in rem jurisdiction to get it

i. Minimum contacts not fair and reasonable here ii. Only then would you look to in rem

c. Holding: all assertions of state court jurisdiction must be evaluated according to Int’l Shoe

d. Dissent – Brennan i. Be more creative in analyzing contacts

ii. D clearly benefited from DE law – why isn’t this enough to be fair and reasonable?

2. Burnham, 197 a. Divorce cases – NJ to CA – dad served on business trip in

CA b. Shaffer not saying that physically present Ds have to be

treated the same as absent ones c. Int’l Shoe only about absent Ds

b. Notice Requirement i. Service of Process

1. Need service of summons and copy of complaint 2. Rule 4 give 120 days to serve

a. Subsequent docs can be mailed between counsel with certificate of service

3. Statute of Limitations: 3 years for medmal, usually less for oral breach/libel (1 year). Breach of written contract can be 4 or 5 years.

a. State rules either: i. Filing suit is enough for SOL

ii. Serving complaint required to meet SOL b. Why?

i. Providing peace to potential Ds ii. Promote prompt claims in certain contexts

iii. Ensure fresh evidence 4. Tolling Agreement

a. Potential D agrees to waive SOL to give time to investigate b. Agree as D if you don’t think there’s a case

i. If there’s nothing there, investigation will prevent lawsuit

5. Mechanics a. Historically, had to serve complaint personally

i. Anyone over 18, but not P b. Now: offer D a chance to waive service of process – sign

and return

6. AICPA v. Affinity, 227 a. Handed to guy with different company

i. But right person got it indirectly b. Court wants to avoid default judgments, open cases up on

their merits i. Functional test: should the person know what to do

with the papers ii. Guy served didn’t work for D, what’s he supposed

to know? ii. Constitutional Notice Requirement

1. Mullane, 235 a. NY banking law allows consolidation of trust accounts

i. Lots can go wrong in trust management ii. Here, bank coming to court for final accounting

1. Res judicata – barred from future changes iii. Mullane lawyer for beneficiaries

b. Service of process done through newspaper filing i. This isn’t a great way to do it

c. Due process requires notice reasonably calculated, under all the circumstances, to apprise interested parties of the pending action

i. Notice by publication not good enough 1. Only if no other way, or property forfeited

ii. Notice doesn’t need to be perfect, just practical iii. Mail is good – you know who income beneficiaries

are 2. Mennonite Board, 244

a. Homeowner doesn’t pay taxes i. Kicked out, but continues to pay mortgage

ii. Sold to Adams at action by county without knowledge

iii. No notice to mortgagee b. This case particular

i. Most houses bought with mortgage, crazy not to notify both owner and mortgagee

III. Structuring the Lawsuit a. Modern Approach to Pleading

i. Filing the Complaint 1. Historically

a. Pleading meant to narrow cases to specific disputes b. Lots of cases thrown out on technicalities

2. Rule 7: in simple case, pleadings limited to P’s complaint and D’s answer

3. Purposes a. Put parties on notice of claims and defenses b. Identify facts

c. Narrow the issues d. Provide a basis for identifying non-meritorious suits e. Provide a basis for enforcing ethical requirements on

lawyer i. Send deterrent by refusing to settle

4. Reform a. Rule 2: only one form of action – merger of courts of law

and equity b. Rule 1: Rules should be construed to secure the just,

speedy, and inexpensive determination of every action 5. Rule 8

a. Requires only a short and plain statement of the claim showing P is entitled to relief

b. No need for facts or cause of action 6. Dioguardi

a. Pleading doesn’t even make sense i. But not a tough love system

b. Notice Pleading i. Can figure out what you need to uncover?

ii. Does it put defendant on notice as to nature of the claim?

7. Rule 11: when you sign complaint, you’re certifying there’s a reasonable basis

ii. Rule 9(B) Paradigm 1. 9B

a. Fraud or mistake should be stated with a particularity i. More at stake here

ii. Liability for fraud can mean 2x damages iii. Protecting reputational interests

2. Leatherman, 575 a. Civil rights case against municipality

i. 5th Circuit requires heightened pleading standards ii. SC says you can’t require more

iii. Can’t square heightened pleading requirement with simple notice requirement of Rule 8

3. Need to specifically state “special damages” a. Really rare though, mostly for malicious prosecution

iii. Defendant Responses 1. If your complaint doesn’t do much, then you won’t get much from

your answer 2. Most responses nothing more than total denial of claim

a. D responds paragraph by paragraph admitting what they agree with (facts) and denying everything else

b. If don’t know, can say there isn’t sufficient knowledge to from a belief (Rule 8b)

3. Possible responses

a. Doing nothing – in default b. Rule 12b motions prior to filing answer, and/or c. Filing an answer (with or without 12b motion) d. Asserting affirmative defense

i. If not asserted, usually held to have been waived e. Asserting counterclaims f. Bringing in new parties

4. King Vision a. D’s answer neither admits nor denies, but demands strict

proof i. Judge goes nuts

ii. Wants a plea 5. 12(b)(6) Motion

a. Permits D to move to dismiss for failure to state a claim b. In considering, court accepts as true the facts alleged by P c. Northrop, 589

i. Case allowed to proceed even though no mention of specific provision that might permit relief

ii. P claims D obtained credit report on her, but didn’t call her back

1. Allegedly hurt mortgage application and caused emotional distress

2. Didn’t cite statute holding that claim exists if person knowingly obtains information under false pretenses

iii. Court fills in the blanks on its own d. Kirksey, 592

i. 7th Circuit grants motion finding no identifiable legal theory

ii. P sues D tobacco company for wrongful death – false advertisement

iii. Court dismisses – need viable legal theory e. Rule 15 – Amendments

i. P can amend complaint once automatically before answer filed

ii. All pleadings can be amended with “leave of the court” with leave to be “freely given”

iii. Issue is statute of limitations iv. Twombley/Iqbal

1. Notice Pleading paradigm a. When considering motion to dismiss, Court should not

grant unless it appears beyond doubt that the plaintiff can prove no set of facts that would entitle him to relief

b. Dismiss only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations

2. Conley a. Race relations case post-Brown b. Class action by black union against white counterpart

i. White union criticizes complaint ii. SC at this time looking to bolster desegregation

efforts and takes opportunity to allow broader pleading theory

c. General allegations of discrimination were sufficient to fulfill Rule 8 requirement of “short plain statement”

3. Twombley, 597 – need to show enough facts to raise a reasonable expectation that discovery will reveal evidence of an illegal agreement – Complaint needs to state a claim for relief that is plausible, not merely conceivable, on its face

a. Class action suit on behalf of customers, claiming monopolistic high prices

i. Allegations that it’s conscious parallelism, implicit agreement to maintain monopolies

ii. What would discovery be? 1. Communications between companies 2. It’s possible that it’s going on (based on

Conley) 3. Tough to prove – basically relying entirely

on private communications a. Fishing expedition b. Court very critical of the discovery

process in this case b. Court says you need more there

i. P says you need discovery to find the causes of action

ii. Is there middle ground between dismissal and fishing expedition?

1. Judicial supervision of discovery process 2. Limit scope of investigation

iii. Need to show facts that there is plausibility iv. Show that you are entitled to relief

1. How do you disprove the alternative? 2. Really hard to do so factually

v. Specter of expensive discovery too overwhelming to impose on defendants

c. What is more? i. Enough factual material (taken as true) to suggest

an agreement ii. Have to show something beyond companies doing

the same thing – could be rational explanation iii. Probability not good enough – that’s for criminal,

not civil

iv. Need to show that what’s there is plausible d. Message

i. Judges: don’t read it too closely ii. Conley retired, not overruled (fake distinction)

iii. Risk of in terrorem settlements e. Dissent

i. Inconsistent – Rule 8a is simple pleading ii. Lots of courts relying on Conley

iii. A conspiracy is possible, but the way to deal with it is to do discovery, then MSJ if nothing pans out

f. Implications i. Seems good for Defendants

1. Lots more language to create viable motion 2. Early in litigation 3. Stops case from going

ii. Would it allow judges to spend more time on good cases by preemptively throwing out the bad?

iii. Used a ton since the decision (cited 6,000 times) 1. Number of motions to dismiss, the

seriousness in which they’re considered, and the number of cases dismissed have all exploded

4. Iqbal, PM a. Facts

i. Cable repairman arrested post-9/11 and jailed, then released and deported

ii. Files civil case against Ashcroft and FBI Director Robert Mueller

iii. District Court says do discovery, Circuit affirms b. Holding

i. Twombley not limited to antitrust cases ii. No factual context to allegations, can’t credit

iii. Have to know something about it, but can’t get discovery to prove it

iv. Ashcroft has substantively strong defense: qualified immunity

v. Supreme Court has lost faith in judges’ ability to control discovery

1. Targeted discovery not an option 2. Breyer: this is concern, but a judge can take

it into consideration and deal with it c. Response

i. House and Senate bills to restore Conley by adding its language into 12(b)(6)

ii. Possibility that courts are just over-reading it

iii. Intolerable obstacles to Ps? Or faithful to the FRCP pleading requirements/restoring balance between P and D?

b. Discovery i. Federal Approach – FRCP 26

1. Relevant information need not be admissible at trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence

2. Scope: can obtain discovery of any matter, not privileged, that is “relevant to the claim and defense of any party”

a. Trying to limit fishing expedition ii. Privilege and the Work Product Doctrine

1. Jaffe, 619 a. Discovery of psychotherapy sessions between cop and

social worker i. Rationale of privilege is to encourage to

communicate fully on embarrassing or damaging subject matter

ii. Privilege found here (but not for doctors) b. In states, privilege can be bestowed by legislation

i. Not in federal court c. Privilege here is absolute

i. Predictability key for establishing trust ii. Patient/client needs assurances that it’ll be

confidential 2. Hickman v. Taylor, 633

a. Death of crewmen on barge i. Company’s lawyer takes interviews and signed

statements of all survivors ii. P wants the statements, lawyer’s memos, and

summaries b. Rule 26(b)(3) – “need to know”

i. Covers attorney work-product and consultants ii. Obtainable if party has a substantial need for the

materials, and iii. Party cannot without undue hardship obtain their

substantial equivalent by other means 1. Disclosure should avoid against attorney’s

mental impressions, conclusions, opinions, or legal theories

c. Justifications i. Free rider problem

ii. Aversion to lawyer as witness iii. Sanctity of adversarial process iv. Worried about case where lawyer might game it

1. Assume it will be turned over, so alter memos accordingly to influence the evidence

d. Holding i. Work-product doctrine extends to this

ii. If you ask the right question, you’ll get the answer through an interrogatory

e. Adversarial process: can lead to obfuscation i. If interrogatory asks for something, can be too

narrowly drawn, lead to additional questions ii. Work product claimed for things that aren’t

1. System not really very cooperative 2. Way overclaimed, don’t get full exchange of

info specified by SC iii. Making Discovery Work

1. Controlling discovery a. How to make speedy and cost-efficient? b. Mandatory disclosure

i. Put forth what you will use to support your claims ii. Have to turn over insurance policy even though

existence of insurance not admissible at trial 1. Don’t want juries knowing there’s insurance

because it screws up how they’ll look at negligence issues

c. Discovery conference i. Rule 26(f): parties must meet to develop a proposed

discovery plan ii. Must be submitted for court approval

d. Managerial judge i. More involved than in past

ii. Many issues delegated to magistrates e. Advanced Financial, 647

i. D’s attorney repeatedly fails to comply with 26(f) ii. District court imposes default judgment as sanction

2. Rule 35 - Schlagenhauf, 656 a. Greyhound crash

i. Truck owner asserts that driver should have seen brake lights

ii. District judge orders huge amount of exams for driver

b. Rule 35 i. Court can order a physical/mental examination

when a party’s condition is in controversy 3. Rule 37

iv. Privacy and Protection of Confidential Information

1. Seattle Times, 669 – Protective Orders – balance with need for information

a. Libel suit, D asks for extensive discovery of donor records i. Depose Lou Ferrigno

ii. Helps assess Aquarian’s claims of damages b. Protective order issued preventing Times from printing

information found through discovery c. Rule 26c – authorizes judge to issue order for good cause to

protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense

d. Rule 26(b)(2)(c) – mandatory limits on discovery: unreasonably cumulative or duplicative

e. SC upholds trial court’s discretion to control discovery i. Worried about chilling effect on lawsuits

2. Coca Cola - BALANCING a. Trade secrets protected

i. D must show disclosure would be harmful ii. Then court balances need vs. injury

v. Adversarial Expert 1. Expense: gone through the roof in last ten years

a. Doctors charge high rates to offset their high malpractice insurance costs

2. Overuse a. Expert disarmament b. Plaintiffs’ lawyers: cost is major issue

i. Can you just do one expert each in each area? ii. Work something out with insurers

iii. But defense lawyers want two experts to every one for plaintiff

1. Seems like you have facts on your side 2. Bias toward plaintiffs anyway

3. Reliability - Is quality of experts enough? 4. Rule 26(a)(2): must disclose qualifications of witness including:

a. Publications b. Compensation paid c. List of cases in which he testified as expert in the last 4

years 5. Types

a. Witness expert i. Experts, but are involved in the case (normal

experts not until hired to testify) 1. Court hiring outside expert extremely rare

ii. Doctor who treated injured driver who testifies what he did to treat the patient

iii. Just normal witnesses otherwise b. Non-testifying expert

c. Testifying Expert i. Can be the linchpin of the case

ii. Why not disqualify? 1. If he gets tossed out, could be dismissed

without prejudice and plaintiff will re-file later with better expert

2. Take those points during cross-ex 3. Explain and explore weaknesses of their

expert, show how yours is better iii. Should the number of experts consulted matter?

1. If it takes 20 to find the right opinion, how good is the case?

iv. Offering opinions on critical issues based on supplied evidence

1. Explain to the jury what went wrong v. Why are they discoverable?

1. Need to be able to do cross-ex 2. Function of its significance in the case

a. Not a fact like most discoverable things

b. Previously, could get the expert opinion from an interrogatory

i. Not that helpful, didn’t get much of a response

ii. Questions can’t comprehensive enough

c. Won’t settle without knowing what expert is going to say

3. Norm now is that opposing side pays expert for deposition

6. 1993: FRCP changed on expert discovery, disclosure issue a. Gone from model where you just need background info to

one where b. Need to submit detailed expert report

i. Express every opinion, every document examined ii. If expert has new opinion, opposing side can move

to exclude the evidence c. Rewriting the rules

i. Slide d. What is responsibility of court to say that someone isn’t

sufficiently qualified? 7. Daubert

a. Product liability - pharmaceutical b. Early Bendectin Cases

i. Jury awards, but judge throws out ii. Re-play the jury trial, reading from the record

c. Frye test i. Scientific testimony must be of general acceptance

ii. Compare to FRE 702: needs only to be made by person qualified as expert and assists trier of fact

d. Judge as gatekeeper i. Testimony should be relevant and reliable

ii. Factors 1. Is technique or theory tested? 2. Peer reviewed? 3. What’s the error rate? 4. Were there appropriate controls and

standards? 5. Has it been generally accepted within

scientific community? (Frye) iii. Flexible test – uniformity is concern

8. Kuhmo – Daubert applies to all expert witnesses, not just scientific 9. FRE Revised

a. OK to give expert opinion if testimony is based upon sufficient facts or data, is the product of reliable principles and methods, and the witness has applied the principles and methods reliably to the facts of the case

IV. Resolving Disputes a. Defaults/Involuntary Dismissals

i. FRCP 55: Default and default judgments possible consequences of D failing to file answer

1. 55(b)(2): if party has appeared they are to get at least 3 days notice before default automatically entered (by clerk of court) and default judgment (entered by judge)

2. But: policy is against use of defaults, decide on merits ii. FRCP 41: permits courts to dismiss P’s case “for failure of P to prosecute”

1. Courts need to clean up their docket; there may be cases listed as pending that have been resolved

2. Some P don’t have a case but won’t admit it 3. Compare: CA’s five years to trial rule

iii. Voluntary Dismissal 1. Plaintiff wants to dismiss without prejudice

a. Sometimes they realize they don’t have a case and want to pull the plug before they get sanctions under Rule 11

b. Rules say it only gets automatic drop without prejudice if done before D files answer

i. Afterwards, no automatic right – parties have to agree

ii. Majority of time, D won’t iii. Courts want to discourage dismissal

1. Can’t do it more than once

2. Will look more severely at it when it’s close to trial

b. Summary Judgment (usually done after discovery) i. Rationale

1. Avoid adverse publicity to Ds 2. Imposes expense on D in trial prep and trial 3. Risk of aberrational jury verdicts 4. Promotes “nuisance value” settlements if there’s no way out

ii. Rule 56: designed to allow early resolution of cases in which P meets minimal burden to plead elements of compensable claim, but cannot prove one or more of those elements

1. Appropriate only if evidence before court demonstrates there are no disputed issues of material fact to be tried (56(c))

2. D can file at any time, P must wait 20 days after filing complaint (56)(a))

3. As practical matter, judge will not entertain motion until parties have had a reasonable chance to conduct discovery. 56(f)

iii. Evidence - Materiality 1. Information from discovery available and affidavits are commonly

filed to pierce the allegations of the complaint 2. Try to see if there is no genuine issue as to any material fact

iv. Anderson, 935 1. Libel suit brought by public official

a. Need to prove actual malice based upon clear and convincing evidence

b. Question is: is there a sufficient basis on which jury can find for P?

2. Holding: SJ inquiry should mirror standard for a directed verdict under Rule 50(a)

a. Judge must bear in mind the actual quantum and quality of proof under substantive legal standard

v. Celotex, 947 1. Death due to asbestos exposure 2. Motion saying that nothing has been shown by P

a. What should’ve happened before this? i. Burden of production on plaintiff of producing

some evidence that there was exposure to Celotex asbestos

ii. Burden of persuasion – make evidence stick 3. Adickes: D didn’t carry its burden of showing there wasn’t a

policeman in the restaurant a. Burden on D when filing SJ motion

i. Adickes says not supposed to change burden to show initially the absence of a genuine issue

4. Message to judges: SJ not discouraged

a. Don’t need to show evidence of lack of exposure to win SJ, just that P failed to show evidence

c. Settlements i. Change to the managerial judge

1. More than just a trial judge 2. Rule 16 historically very short: used to be people showed up on

morning of trial with motions, but 16 allows judges to evaluate up to two weeks before hand

a. Encourage efficiency b. But over time, construed to get judge into settlement

process c. Judge can say there is a middle ground

3. Risky for judge to get involved? a. Discussing merits of case without formality of adversarial

process b. Can bias toward one party based on discussions c. Judge can play both sides off each other

i. Consent essentially coerced ii. Owen Fiss: we learn something from trial, but

settlement doesn’t help us iii. Vanishing jury

ii. Heileman 1. Judge tells lawyers there’s going to be a settlement conference

with clients present a. Clients don’t want to be there (why hire attorneys?), one

doesn’t show b. In-house lawyer shows up instead, judge angry – he wants

decisionmaker present 2. 7th Circuit says: why can’t judge do this? It’s in Rule 16 to

compel parties to appear a. But: IL judge ordering Secretary of Labor to appear b. Doesn’t matter – we’ve accepted the power c. “If appropriate, the court may require that a party or its

representatives be present or reasonably available by telephone in order to consider possible settlement of the dispute” – 1993 Amendment to Rule 16

d. Why hire lawyers if not to be your spokesman before a judge?

d. Trial Process i. US alone in leaving juries as factual decider for civil cases

1. Implications a. Delay and expense – takes twice as long

i. Have to give instructions, give more background, allow for deliberation

b. Competency i. Can you expect laypeople to deal with all this stuff>

ii. Jury trial right not going anywhere c. Are decisions less legal?

i. Juries more likely mix in “common sense”? 1. Good thing?

d. Rigidity i. Continental inquisitorial systems have more

flexibility 1. Focus on one question at a time, split cases

up 2. Can’t do that with a jury, have to do

everything at once a. Have to do way more discovery up

front e. Impact on legal profession?

i. Different types of people will be successful in each system

1. Jury system leads to more folksiness 2. Seventh Amendment – “The right of trial by jury shall be

preserved” (and re-examination clause) a. Preservation is distinction between courts of law and equity

i. Even though we have merged the two b. Breach of contract/tort = law, with juries

i. Award was compensatory damages c. Equity courts: injunctions, specific performance,

reformation/rescission of contract i. All hard to do with 12 people, need single point of

authority ii. Based on type of relief requested

1. But if injunction granted, equity courts could decide damages without jury

d. What happens now when everything has changed? i. Claims more complex, can be both legal and

equitable 1. Suit seeking rescission and counterclaim

seeking damages ii. Right to Trial by Jury

1. Beacon Theatres, 1000 – any factual issue part of the legal claim, opt for jury first

a. Fox owns theater, Beacon opens nearby drive-in i. Fox plaintiff, but Beacon is one asking for jury

ii. Asking for declaratory judgment to prevent Beacon from using antitrust claims

1. Asking court to say what they’re doing is okay

iii. Injunction 1. Equitable principle – no jury

iv. Beacon makes antitrust counterclaim b. Options

i. Different types of action floating around here ii. Judge could make own assessment as to what makes

sense 1. (what ends up happening) 2. Historical justification for it

iii. Balancing test: is it more legal or equitable? 1. Presumption in favor of the jury

iv. Would jury be any good at this? 1. Really complicated antitrust issue 2. Can judge frame the issue properly for jury?

c. Court holds that judge was wrong i. In the past, did equitable remedies when legal

remedies inadequate 1. But Declaratory Judgment Act and FRCP

change the scope of it 2. Law courts can handle more, equity courts

less important ii. Factual issue that entitles you to jury must be tried

first, before equitable claims 1. Don’t have judge deciding issue that would

take it away from the jury 2. Renunciation of equitable clean-up doctrine

(incidental factual issue settled in equity court)

2. Dairy Queen a. One of first franchises

i. Franchisee using name but not keeping up with obligations

ii. DQ asks for injunction for accounting (both equitable)

iii. Case would only have been in equity courts in 1791 b. Supreme Court says we’re no longer weighing whether it’s

more of a legal vs. equitable case i. There is a factual issue here: how much damages

for violation of trademarked name ii. Need to protect jury’s right to decide all factual

issues on the question iii. Recharacterized as legal claim

3. Chauffeurs v. Terry, 1006 a. Claim by truck drivers against company and union over

transfer i. Normally, you’d file a grievance with the union

ii. Are they entitled to a jury in their claim against the union?

1. Historically, wouldn’t be (unions illegal) iii. Why want a jury?

1. Big business opponent b. Analogies

i. Arbitration (no jury) ii. Suit against trustee (no jury) – majority thinks this

is right answer iii. Legal malpractice (jury) iv. Probably comes out differently today

c. Test i. Historical Analysis – common law analogue

ii. Nature of remedy – does it more closely resemble a legal remedy or equitable remedy?

1. Occam’s Razor: simplest explanation is most likely

2. Historical analysis tricky, find the broad sweep of it and avoid getting into the nuances

d. Remedy test i. What’s requested here? Money

1. Use jury – this would’ve been case at court of law, not equity

4. Markman, 1015 a. Patent suit – motion for judgment as matter of law

i. If clear legal claim involving private rights, require a jury

iii. Selecting the Jury 1. Methods

a. Automatic exclusions (felons and lawyers) b. Challenges for cause (judicial determination) c. Party choice (peremptory challenges)

i. What if potential juror not honest? 1. Not grounds for new trial unless the answer

was clearly dishonest, and would have constituted a basis for a cause exclusion

ii. Liked by lawyers 2. J.E.B.

a. Paternity claim against alleged father i. State suing on behalf of mother, uses challenges to

get all-female jury ii. State action?

b. Ruling: gender can’t be basis for exclusion (along with race, Batson)

c. Alverio: women struck because less educated and not experienced, but some men selected had even less education

iv. Controlling the Jury 1. Instructions: not given at beginning, want to discourage

notetaking/focusing on just one part of case 2. Mitchell, 1027

a. Negligence suit against family who took child to lake and drowned

i. Issue of instructions: proximate or “but for” causation?

ii. To be overturned, should be reasonably probable that a result more favorable to the appealing party would have been reached

3. Rule 50(a): judge can enter a judgment as matter of law if there is no legally sufficient evidentiary basis for a reasonable jury to find for that party

a. Granted at close of evidence b. But must be moved prior to close of evidence c. 50(b) permits renewed motion only when court does not

grant a motion for judgment as a matter of law made at the close of all the evidence

4. Can order new trial if verdict is against clear weight of the evidence

a. Only when there were prejudicial errors 5. Weisgram, 1053

a. P died from fire caused by heater i. Jury found for P on expert testimony

ii. Appeals court tosses experts under Daubert iii. Can do so without remanding

6. Tesser, 1060 – claimed anti-Semitism in schools e. Arbitration

i. Average person subject to 20+ arbitration agreements in lifetime ii. What’s happening here?

1. Different from trial 2. Maybe less adversarial 3. Binding

a. Very limited appeal rights 4. Contracts of Adhesion

a. No ability to change it b. Issues about who is going to be the arbitrator and who will

pay for it iii. Green Tree

1. Mortgage loan fee requires arbitration a. Fighting over whether to enforce b. Clause said nothing about costs of arbitration c. Party resisting arbitration bears burden of proving that

claims at issue are unsuitable for arbitration i. Not met here

iv. Mitsubishi 1. Contract clause says all disputes settled by arbitration in Japan 2. Federal Arbitration Act

a. Arbitration clause valid unless there are some grounds as exist at law or equity for revocation

3. Ruling: arbitration does not forego substantive rights afforded by statute

a. Trades for simplicity, informality, expedition 4. Dissent: Resolve this in the light of day

v. Circuit City 1. Circuit decision bans arbitration clauses in employment context 2. Congress has chosen to have FAA interpreted broadly

a. Can change if they want to b. Other countries with arbitration don’t use it for consumer-

type transactions, only commercial cases 3. EEOC concerned about employers putting arbitration clauses in

a. How to ensure that there is quality in arbitration processes? i. Neutral arbitrators who know law

ii. Employee can get access to employer records (discovery)

iii. Right to counsel (some arbitration clauses specified no lawyers, no discovery)

iv. Should be able to get same results as you would in litigation

v. Need written decisions, with judicial review 4. Don’t turn arbitration into second court system

vi. DAI v. Casarotto 1. How do we make arbitration work? 2. Arbitration clause in franchise

a. How do you limit exposure i. Arbitration clause

ii. Forum selection clause (require where litigation happens)

iii. Choice of law provision (apply CT law) b. What should you get rid of?

i. Forum selection seems unfair (MT to CT travel a big deal)

3. Protecting consumers a. Some states have gotten rid of arbitration clauses b. MT: require notice that contract includes arbitration

agreement i. Restriction singles out arbitration

ii. Can’t assume something is unfair about it 1. Put on equal footing with any other contract

iii. States can’t step in and create fairness in arbitration act

1. Even though it’s a pretty innocuous regulation

2. But by warning, is it really neutral? 4. Reform suggestions

a. Write out employer-employee disputes 5. Left open possibility of invalidating through unconscionability

doctrine V. Federal Court Issues

a. Subject-Matter Jurisdiction i. Federal Question

1. Presumption a. State courts are competent to handle disputes unless

Congress expressly states otherwise b. But there are places where federal courts have exclusive

jurisdiction: antitrust, admiralty, patents, securities 2. Arising Under – Art. III, S. 2

a. Not self-executing b. Congress needs to decide which aspects of federal power to

assign to federal courts c. Osborn Test – FEDERAL INGREDIENT

i. US stops state official from taxing national bank ii. Statute gave federal courts jurisdiction over any

claim where bank is party 1. So long as there is federal ingredient as to

the substantive law 2. Pretty broad

3. Section 1331 a. Codifies that district courts have original jurisdiction over

all civil actions arising under the Constitution, laws, or treaties of the US

b. Less expansive definition c. Requires:

i. Cause of action created under federal law, or ii. Includes an essential federal ingredient

4. Creation Test a. Find jurisdiction if the source of the P’s enforceable legal

right against D is federal law b. American Well Works

i. Patent created by federal law, P suing for slander 1. Slander is state law, but evidence could

revolve around patent law 2. Holmes: what are you suing for?

a. Slander is created by state law – that’s it

5. Private Right of Action

a. What if federal statute doesn’t have private right of action?

b. Factors – if no clear statement that anyone aggrieved can file:

i. Is P part of class for whose special benefit the Act was created?

ii. Congressional intent iii. Would private cause of action further the legislative

scheme? iv. Was it traditionally part of state law? v. (unstated) Impact on case load

6. Merrell Dow- Private Right of Action a. Bendectin case in state court, state tort claims

i. No count of violating the FDA (but embedded in case)

ii. D removes to federal court, denied jurisdiction iii. Court says Congress locked the front door by not

creating private right of action 1. Would’ve been huge expansion of caseload

in fed courts 7. Grable, 299

a. Suit to quiet title – IRS seizes property and re-sells i. Mailed notice of seizure

ii. Five years later, sues and says notice invalid under federal law

b. Creation would say: quitclaim is state law c. Grable test

i. More likely to allow jurisdiction if they don’t see a flood of cases coming out of decision

ii. Probably pretty limited iii. Factors

1. Is federal issue clearly raised? 2. Is it clearly contested? 3. Is it at least arguable substantial? 4. Is the issue one that reasonable belongs in

federal court? 8. Embedded Test – Smith v. KC

a. Jurisdiction okay if right if it appears that right of relief depends on construction or application of federal law

b. Case comes under state corporation law, but federal issue is crucial – embedded

i. Jurisdiction okay 9. Louisville v. Mottley, 309

a. Perceived abuse in statute (free passes) i. Causes P to lose passes, saying that fed law was

taking 1. Sued in federal court, no one questions

jurisdiction until they get to SC

2. No jurisdiction a. Not waivable b. Fundamental to constitutional

integrity of federal courts c. Duty of court to see jurisdiction not

exceeded b. Well-Plead Complaint: doesn’t plead possible defenses as

basis for FQ c. Federal statute alone not enough to set federal jurisdiction

i. At its core, this is just a breach of contract case ii. Must assert a claim that arises under federal law

iii. Here, the claim arose under state law, and the federal law the P questioned was merely a likely defense

ii. Diversity of Citizenship – Cases between citizens of different states 1. Gordon v. Steele – college student

a. PA woman treated in PA, goes to school in ID, sues in federal court

b. What is state citizenship? i. Domicile – no definite intent to leave

2. Lundquist, 319 a. P lives/resides in MA, but really FL or NH b. Complete diversity rule

i. No plaintiffs can be from same states as any of the defendants

ii. Determination of citizenship 1. Based on time of filing

c. Burden is on party seeking to invoke federal jurisdiction to prove it

3. Tubbs, 324 – Principal place of business a. Nerve Center vs. total activity

i. Nerve center means headquarters ii. Total activity means where they do the most

4. Section 1332c a. Corporations are citizens for diversity purposes of state

where their principal place of business is and where they are incorporated

5. Hertz v. Friend a. Class action by CA citizens in CA, removed

i. Plaintiff says both are CA 1. Hertz in 44 states, PPB is NJ, but CA is 20%

of their operations 2. District court says CA wins total activity test

a. If this is acceptable, corporation almost always citizens of CA

b. Supreme Court rejects “substantially predominates” test

i. Go back to simplified view 1. PPB is where corporation’s officers direct,

control and coordinate the corporation’s activities

2. Easier to apply 3. But can create absurd results: Boeing in WA

6. Amount in controversy – FOR DIVERSITY ONLY a. $75,000 minimum

i. But can be $75,000 for nothing (stubbed toe) ii. If legal certainty that P can’t recover more than

$75,000, then case should be dismissed b. Aggregation

i. Multiple claims against single D by single P: yes ii. Single plaintiff against multiple Ds: no

iii. Multiple Ps against single D: no 7. Removal

a. File notice of removal in federal court b. Notice to all parties c. Halts state court proceedings d. Can only remove if it is one where district courts have

original jurisdiction – 1441(a) e. 1441(b) – only possible when none of Ds is citizen in state

in which action is brought i. But doesn’t apply to FQ

ii. P can defeat this by adding non-diverse D 1. But must have good claim – meet legal

sufficiency of 12b6 motion iii. Supplemental Jurisdiction

1. Joinder Theory: how much can be packaged together in one case? a. Tolerate other claims and other parties – very liberal b. Analysis:

i. May an expansion of claims or parties be done under the rules?

ii. Do the rules require the particular expansion? iii. Does joinder create jurisdictional issues for the

federal courts? 2. P adding additional claims against D (Rule 18)

a. No inherent limit and permits expansion whether claims are related or not

b. But Rule 8: no compulsion to include it c. Some state courts require filing any and all claims at same

time 3. UMW v. Gibbs, 361

a. Suit against union on federal claim and state conspiracy claim

i. Not enough evidence on fed claim, but federal court awards for conspiracy with no diversity of citizenship and on solely a state law claim

b. Article III grants jurisdiction over entire cases i. So long as P asserts proper claim based on federal

law or diversity, related state claim can come along for the ride

ii. But not required to hear the claim c. Holding

i. Federal claim must be substantial ii. State claim must be related to federal claim

iii. State claim must derive from common nucleus of

operative fact

d. Discretion of Court i. Does state claim predominate?

ii. Require court to decide sensitive or novel issues of state law?

iii. Hearing claims together confuse the jury? iv. Are federal questions resolved early in the case?

4. Owen Equipment v Kroger, 366 a. Diversity of citizenship case

i. State lines change based on river ii. Third-party D actually has no diversity

b. State claim part of same constitutional case as main diversity claim

i. But incomplete diversity violates statutory limits c. Court doesn’t want Ps to play games

i. Sue diverse, then have D bring in the non-diverse party

5. Finley a. Federal action against FAA, state negligence actions

against SD b. Follows Kroger - Overruled

6. Section 1367 – allows jurisdiction over state claims that form part of the same case or controversy as federal question claim

a. Affirms Kroger, preference for federal question jurisdiction b. Congress means for courts to be expansive in recognizing

supplemental jurisdiction in federal question cases i. Provides the statutory authority for hearing related

claims, provided there is original jurisdiction (more restrictive in diversity cases than FQ)

ii. Missing Gibbs’ discretionary factors iv. Venue

1. Not constitutional doctrine – question of housekeeping a. Local cases (involving land) need to be filed in particular

jurisdiction

i. Foreclosure on house in Durham filed in Durham Co.

b. Transitory cases are all other kinds 2. Common venue principles

a. Residence of D b. Where D has significant ties c. Where claim arose d. Residence of P (less common) e. Court in area with significant relationship to dispute f. Halfway between P and D? g. Goals are fairness to P/D and efficiency

3. Venue in federal court (1391) a. District where any D resides (if all in same state) b. Or any district where substantial part of events or

omissions giving rise to claim occurred c. Or if no district found under 1 and 2, where any D may be

found i. For diversity cases, where any D is subject to PJ –

rest are the same 4. Residence – NOT CITIZENSHIP

a. Most courts say residence = domicile b. Some more flexible c. Corporations

i. 1391(c): 1. Resides in any district where it is subject to

PJ 2. Make it less likely that corporation

challenges venue successfully 5. First Michigan, 409

a. Investment in MI leads to arbitration filing in FL b. Court looks at change to venue provision in Code

i. Was: judicial district in which claim arose ii. Now: a judicial district in which a substantial part

of the events or omissions giving rise to the claim occurred

6. Transfer Provisions – 1404(a) – D saying there’s a better place a. Case may be transferred to other district for convenience of

parties and witnesses, or in interest of justice i. Federal court balances all interests

b. Can only be transferred to case where suit could have been properly filed in the first place

c. 1406 – if venue is wrong, can transfer to right court or dismisss it

d. 1407 – Multi-District Litigation Panel i. Pretrial handling done by one judge

ii. Done for convenience of parties and promotion of just and efficient conduct

e. Forum selection clauses mostly upheld, unless unreasonable and unjust or fraud

7. Forum Non-Conveniens – case doesn’t belong in this system a. Piper Aircraft, 433

i. Plane crash in Scotland, want US courts because of higher damages/better law for P

ii. Court: inappropriate to focus on Scotland’s different rules/law

1. Might be different if there were no remedy there

2. But this is clearly a Scottish case a. Don’t want Americanization of

world disputes b. Erie Doctrine

i. Swift v. Tyson: judicial opinions of state not part of the law – federal court free to choose best law for that issue

1. Court saying courts don’t make law, they discover its transcendental truths

2. Leads to bad results a. Not uniform at all b. Discrimination in favor of out-of-stater (Black & White

Taxi) c. Federal judges making law in areas where federal

government has no delegated powers ii. Erie Railroad, 456

1. Case in NY federal a. PA common law unfavorable b. Rules of Decision Act

i. In diversity cases, laws of states, except for FQ jurisdiction, should be regarded as rules of decisions

2. Holding: In diversity cases, federal courts must apply the law that would be applied by the courts of the state in which the sit

a. But use federal procedural rules iii. Track 1: Federal Statutes and Supremacy Clause

1. Stewart Organizations v. Rico, 466 a. Contract includes forum-selection clause, must be in NY

but filed in AL i. D moves to dismiss or transfer (but 1404 doesn’t

allow it for FS clause) ii. AL law says FS clauses disfavored

b. Holding: 1404 covers this change i. 1404 occupies the field of determining when federal

courts decide how to shift cases around 1. Must enforce it – supremacy clause

ii. Don’t need to take into account the AL policy 1. Not about the substantive law 2. This is procedural issue

c. Dissent: this is substantive law, Congress said nothing about FS clauses

iv. Track 2: Federal Rules 1. Sibbach, 484

a. D requests P to submit to Rule 35(a) physical exam i. P says IL law says courts don’t have that power (but

in fed court) ii. Is this substantive or procedural?

1. Rules Enabling Act: delegates power to Supreme Court to make rules of procedure

2. Rules shall not “abridge, enlarge, or modify” any substantive right

b. Same question as Rico: is statute “arguable procedural?” i. Yes, about discovery

ii. Then it’s constitutionally viable and we don’t need to worry about Erie

2. Ragan a. Difference of SOL rules

i. State: filed lawsuit and served prior to 2 year running, or within 60 days of filing

ii. Fed: Rule 3 – suit begins by filing complaint; Rule 4M – 120 day to serve summons and complaint (S/C)

b. Court says given Erie, state wins i. If it had been filed in state court, would have failed

3. Hanna, 491 a. Diversity case in MA – issue of SOP

i. State: hand delivery ii. Federal: served at home

1. Trying to make it easier to serve people 2. State says personal service required

b. Arguably Procedural test i. When situation is covered by one of the FRCP, it’s

not an Erie decision 1. Must apply the Rule unless advisory

committee, court, or Congress erred in their judgment that the rule neither transgresses the Enabling Act nor constitutional restrictions

a. Tough standard b. This was about one thing – how to

validly deliver a complaint

i. Federal rule said you can do it

ii. Can a rule not have a procedural dimension?

2. If rule is arguably procedural, it’s constitutionally permissible

a. UNLESS: Congress exceeded its authority by abridging,

ii. Seemed like existence of federal rule or approach was determinative

4. Walker v. Armco Steel - if they can coexist, use state substantive law

a. Replay of Ragan SOL battle b. Does FRCP override state rule (as in Hanna)? c. Analysis

i. Is scope of the Federal Rule sufficiently broad to control the issue before the court?

1. If Yes, apply Hanna d. Here, FRCP doesn’t actually say anything about SOL

i. But that’s really what it’s about ii. Leave open possibility that Rule doesn’t cover this

particular situation 1. Allow FRCP to co-exist with state

provisions if possible 2. Doesn’t cover the same ground

v. Track 3: Federal Common Law 1. Guaranty Trust, 504

a. Apply state SOL or common law equitable doctrine of laches?

i. Case would have been dismissed in state court b. Not asking the Erie question: is the substantive or

procedural? i. Instead look to policy of Erie

1. Want the outcome to be same 2. Federal courts should be neutral forum, not a

different way of getting relief 3. Don’t want forum-shopping

ii. Given that case would fail in state court, can’t let it go forward in federal court

1. Outcomes should be the same as far as rules are concerned

c. Extreme Outcome Analysis i. Too simplistic

ii. What happens when state court approach not significant enough? (difference in paper size for filings)

2. Byrd, 509 a. Is P employee or independent contractor? Worker Comp or

negligence i. Should judge or jury determine this status? State

law says judge, federal court practice (not law) was to send to jury

b. Balancing test: importance of state’s interest vs. importance of federal issue

i. State interest: is it bound up with the definition of the rights of the parties (no)

ii. Federal interest: here, jury trial right – really important

c. Holding: use outcome determinative test, unless federal interest outweighs

3. Hanna a. Unlike Byrd, the federal interest isn’t that important

i. Actually is state interest here b. Holding:

i. Guaranty Trust overstated 1. Outcome doesn’t really matter

ii. Goals of Erie: 1. Discourage forum shopping 2. Avoid the inequitable administration of

justice iii. Not every difference in law leads to the problems

Erie’s trying to avoid 1. This wouldn’t have been a factor in

selection of forum c. Refined outcome test

i. Does difference have inappropriate forum shopping implications?

ii. Prejudiced? vi. Modern Erie Dilemma

1. Gasperini, 517 a. Amateur journalists sues for lost slides, gets gigantic award

i. Federal district approach: review jury award as you would under common law by trial judge – shock the conscience

1. Rule 59: new trials may be granted for reasons they were granted under common law

a. Errors in trial process (improper instructions, etc.)

b. Process fair, but result wrongs

ii. State approach: appellate court, reverse only if award materially deviates from reasonable compensation

1. More objective iii. 7th Amendment: no fact tried by jury shall be re-

examined, except under rules of common law b. Seems like Rule case, but looked at under Procedural (track

3) c. This is tort reform – isn’t it substantive?

i. Definitely would be if it were cap on damages ii. Says this approach doesn’t limit amount recoverable

– it’s procedural 1. Erie precludes bigger recovery in federal

courts d. Refined Outcome Test

i. Is state approach “outcome affective” – is it important enough to have an effect that unfairly discriminates against state citizen or would predictably lead to forum shopping?