iA


Civil Procedure Case Briefs II

 

Civ Pro case briefs 2

Case Name:Taylor v. Sturgell,

Page:

Heading: 553 U.S. 880

Procedural History:

Petitioner, an individual who filed suit under the Freedom of Information Act (FOIA), 5 U.S.C.S. § 552, sought review of a judgment from the United States Court of Appeals for the District of Columbia Circuit affirming the district court’s dismissal of his action based on claim preclusion. The Court granted certiorari to resolve the disagreement among the Circuits over the permissibility and scope of preclusion based on “virtual representation.”

Facts:

The lower courts found that petitioner’s suit against respondent Federal Aviation Administration was barred by the judgment in earlier litigation in which petitioner’s friend sought the same vintage airplane technical documents that were sought by petitioner. Although petitioner was not a party to his friend’s suit, the lower courts found that the friend was petitioner’s “virtual representative.” The Court disapproved the doctrine of preclusion by “virtual representation” and held that the preclusive effects of a judgment in a federal-question case decided by a federal court should instead be determined according to the established six categories for nonparty preclusion. The court of appeals reached beyond those six categories, and its definition of “adequate representation” strayed from the meaning that the Court attributed to that term.

The Court refused to adopt an amorphous balancing test that was at odds with the Court’s constrained approach to nonparty preclusion. In considering whether the result reached by the lower courts could be justified based on one of the six established grounds, the Court found that a remand was necessary to address the only applicable ground.

Analysis:

the rule against nonparty preclusion is subject to exceptions. The recognized exceptions can be grouped into six categories. First, a person who agrees to be bound by the determination of issues in an action between others is bound in accordance with the terms of his agreement. Second, nonparty preclusion may be justified based on a variety of pre-existing substantive legal relationships between the person to be bound and a party to the judgment. Third, in certain limited circumstances, a nonparty may be bound by a judgment because she was adequately represented by someone with the same interests who was a party to the suit. Fourth, a nonparty is bound by a judgment if she assumed control over the litigation in which that judgment was rendered. Fifth, a party bound by a judgment may not avoid its preclusive force by relitigating through a proxy. Preclusion is thus in order when a person who did not participate in a litigation later brings suit as the designated representative of a person who was a party to the prior adjudication. Sixth, in certain circumstances a special statutory scheme may expressly foreclose successive litigation by nonlitigants if the scheme is otherwise consistent with due process

A party’s representation of a nonparty is “adequate” for preclusion purposes only if, at a minimum: (1) the interests of the nonparty and her representative are aligned; and (2) either the party understood herself to be acting in a representative capacity or the original court took care to protect the interests of the nonparty. In addition, adequate representation sometimes requires (3) notice of the original suit to the persons alleged to have been represented. In the class-action context, these limitations are implemented by the procedural safeguards contained in Fed. R. Civ. P. 23. An expansive doctrine of virtual representation, however, would recognize, in effect, a common-law kind of class action. That is, virtual representation would authorize preclusion based on identity of interests and some kind of relationship between parties and nonparties, shorn of the procedural protections prescribed in Hansberry, Richards, and Fed. R. Civ. P. 23. These protections, grounded in due process, could be circumvented were the United States Supreme Court to approve a virtual representation doctrine that allowed courts to “create de facto class actions at will.”

Outcome:

The Court vacated the judgment. The Court remanded to give the lower courts an opportunity to determine whether petitioner, in pursuing the instant FOIA suit, was acting as his friend’s agent. Unanimous decision.

Case Name:Martin v. Wilks

Page:

Heading:490 U.S. 755

Procedural History:

Petitioners, African-Americans, sought review of a decision of the United States Court of Appeals for the Eleventh Circuit, which reversed a trial court judgment that granted their motion to dismiss respondent Caucasian firefighters’ reverse discrimination claims against a city because the challenged employment decisions were made pursuant to consent decrees in another suit.

Facts:

Respondents were Caucasian firefighters who sued the city of Birmingham, Alabama, and alleged that they were discriminated against when they were passed over for promotions in favor of less qualified African-American firefighters. The trial court dismissed their claims based on prior adjudications on the same subject. While the other case was on appeal, respondents attempted to intervene, but the appellate court denied their motion. The appellate court reversed the dismissal of respondents’ district court case.

On certiorari review, the court affirmed the judgment. The court stated that respondents had not been afforded an opportunity to present their arguments and that they should not be prevented from raising their claims based on an action to which they were not parties. The court held that such a decision was a deprivation of respondents’ rights and that they should not be deprived of their day in court.

Analysis:

(1) pursuant to the general rule that a person cannot be deprived of legal rights in a proceeding to which the person is not a party, the new group of white firefighters, who were not parties to the prior consent decree litigation, were not precluded from claiming, in a separate District Court action, that promotion decisions taken pursuant to the consent decrees constituted impermissible racial discrimination, in violation of the Constitution and federal statutes including Title VII; and (2) even though the white firefighters did not timely intervene in the prior litigation, the white firefighters’ later challenge to actions taken under the consent decrees did not constitute an impermissible collateral attack, because, under Rules 19 and 24 of the Federal Rules of Civil Procedure–which generally provide for joinder and voluntary intervention–parties seeking a judgment binding on another must join that person, but that person is not obligated to intervene.

One is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process. This rule is part of the deep-rooted historic tradition that everyone should have his own day in court. A judgment or decree among parties to a lawsuit resolves issues as among them, but it does not conclude the rights of strangers to those proceedings.

Outcome:

The court affirmed the appellate court’s decision reversing the dismissal of respondent Caucasian firefighters’ reverse discrimination case on res judicata grounds because respondents were not parties to the prior case in which the consent decrees had been entered, and they had not had an opportunity to present their case.

Case Name:Parklane Hosiery Co. v. Shore

Page: 1321

Heading: 439 U.S. 322

Procedural History:

Certiorari was granted for a review of a judgment from the United States Court of Appeals for the Second Circuit, which reversed a denial of respondent’s partial summary judgment motion where respondent sought to collaterally estop petitioner from relitigating the issues resolved in a separate action brought by the Securities and Exchange Commission.

Facts:

Respondent sued, alleging misleading and material misrepresentations in petitioner’s proxy statement. Before the action came to trial, the Securities and Exchange Commission (SEC) filed suit against petitioner, making essentially the same allegations, and entered a declaratory judgement after a trial. Respondent moved for a partial summary judgment to estop petitioner from relitigating the issues that had been resolved against them in the SEC action. The district court denied the motion on the ground that it violated petitioner’s U.S. Const. amend. VII right to a jury trial. The court of appeals reversed

On review, the Court held that application of collateral estoppel did not violate petitioner’s right to a jury trial, and mutuality was no longer required. The Court further held that the preferable approach was not to preclude the use of offensive collateral estoppel, but to grant trial courts broad discretion to determine its application. The general rule adopted by the Court was that offensive estoppel was precluded where plaintiff could have easily joined in the earlier action, or where application would be unfair to a defendant.

Rule:

a litigant who was not a party to a prior judgment is not per se precluded from using that judgment “offensively” to prevent a defensant from relitigating issues resolved in that earlier equitable proceeding

Analysis:

(1) the scope of collateral estoppel is no longer limited by the doctrine of mutuality of parties whereby a party could not use a prior judgment as an estoppel against the other party unless both parties were bound by the judgment; (2) the general rule in the federal courts with regard to the offensive use of collateral estoppel–whereby a plaintiff seeks to estop a defendant from relitigating issues which the defendant has previously litigated and lost in an action with another party–should be that a trial judge should not allow the use of offensive collateral estoppel where the plaintiff could easily have joined in the earlier action, or where the application of offensive estoppel would be unfair to the defendant;

Defensive use of collateral estoppel precludes a plaintiff from relitigating identical issues by merely “switching adversaries.” Thus, defensive collateral estoppel gives a plaintiff a strong incentive to join all potential defendants in the first action if possible. Offensive use of collateral estoppel, on the other hand, creates precisely the opposite incentive. Since a plaintiff will be able to rely on a previous judgment against a defendant, but will not be bound by that judgment if the defendant wins, the plaintiff has every incentive to adopt a “wait and see” attitude in the hope that the first action by another plaintiff will result in a favorable judgment. Thus, offensive use of collateral estoppel will likely increase rather than decrease the total amount of litigation, since potential plaintiffs will have everything to gain and nothing to lose by not intervening in the first action.

The preferable approach in the federal courts is not to preclude the use of offensive collateral estoppel, but to grant trial courts broad discretion to determine when it should be applied. The general rule should be that in cases where a plaintiff could easily have joined in the earlier action or where the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive collateral estoppel.

Outcome:

The Court affirmed the judgment of the court of appeals.

Case Name:Bernhard v. Bank of America Nat’l Trust & Sav. Asso.

Page: 1306

Heading: 19 Cal. 2d 807

Procedural History:

Plaintiff administratrix of a decedent’s estate brought an action against defendant bank to recover a bank deposit, claiming that the decedent never authorized its withdrawal. The administratrix appealed from the Superior Court of Los Angeles County (California), which entered judgment for the bank on the grounds of res judicata because ownership of the money had been conclusively established by an earlier finding of a probate court.

Facts:

The executor of an estate filed an account in probate court accompanied by his resignation. Beneficiaries under the will, including plaintiff, filed objections to the account alleging that money was improperly transferred to the former executor. The probate court settled the account and declared that the decedent made a gift of the amount of the deposit in question to the executor. Plaintiff was subsequently appointed as administratrix and instituted an action to recover the deposit against defendant bank on the grounds that defendant was indebted to the estate for the amount of the deposit because decedent never authorized its withdrawal.

On appeal, the court affirmed the trial court’s ruling that the plea of res judicata was available against plaintiff as a party to the former proceeding, despite her formal change of capacity. Plaintiff represented the same persons and interests that were represented in the earlier hearing on the executor’s account.

Rule:

in cali and a minority of jurisd, a judgment in the first action may be asserted as a defense in a later action by one who was neither a privy with a party nor a party in the first suit, so long as the party against whom the judgement is raised was a party or privy with a party in the first suit.

mutuality doctrine was inefficient, unfair to other defendant’s because issue was already litigated.

mutuality doctrine (overuled). The collateral-estoppel requirement that, to bar a party from relitigating an issue determined against that party in an earlier action, both parties must have been in privity with one another in the earlier proceeding.

Analysis:

The doctrine of res judicata precludes parties or their privies from relitigating a cause of action that has been finally determined by a court of competent jurisdiction. Any issue necessarily decided in such litigation is conclusively determined as to the parties or their privies if it is involved in a subsequent lawsuit on a different cause of action. The rule is based upon the sound public policy of limiting litigation by preventing a party who has had one fair trial on an issue from again drawing it into controversy. The doctrine also serves to protect persons from being twice vexed for the same cause. It must, however, conform to the mandate of due process of law that no person be deprived of personal or property rights by a judgment without notice and an opportunity to be hear

trad. rule – Many courts have stated the facile formula that the plea of res judicata is available only when there is privity and mutuality of estoppel. Under the requirement of privity, only parties to the former judgment or their privies may take advantage of or be bound by it. A party in this connection is one who is directly interested in the subject matter, and had a right to make defense, or to control the proceeding, and to appeal from the judgment. A privy is one who, after rendition of the judgment, has acquired an interest in the subject matter affected by the judgment through or under one of the parties, as by inheritance, succession, or purchase. The estoppel is mutual if the one taking advantage of the earlier adjudication would have been bound by it, had it gone against him.

The criteria for determining who may assert a plea of res judicata differ fundamentally from the criteria for determining against whom a plea of res judicata may be asserted. The requirements of due process of law forbid the assertion of a plea of res judicata against a party unless he was bound by the earlier litigation in which the matter was decided. He is bound by that litigation only if he has been a party thereto or in privity with a party thereto. There is no compelling reason, however, for requiring that the party asserting the plea of res judicata must have been a party, or in privity with a party, to the earlier litigation.

considerationss- In determining the validity of a plea of res judicata three questions are pertinent: Was the issue decided in the prior adjudication identical with the one presented in the action in question? Was there a final judgment on the merits? Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication?

Where a party though appearing in two suits in different capacities is in fact litigating the same right, the judgment in one estops him in the other.

Outcome:

The court affirmed the judgment for defendant in plaintiff administratrix’s action to recover a bank deposit, because the plea of res judicata was available against plaintiff as a party to the former proceeding despite plaintiff’s formal change of capacity.

Case Name:Holmberg v. Division of Risk Management

Page: 1299

Heading: 796 P.2d 823

Procedural History:

Appellant employee sought review of an order of the Superior Court of the State of Alaska, First Judicial District, Juneau, which denied her permanent total disability benefits. The Alaska Workers’ Compensation Board (ACWB) had previously denied her benefits, but a later decision of the Public Employees Retirement Board (PERB) conclusively determined that she was not physically able to perform her duties as a state employee.

Facts:

The employee requested reversal of an earlier AWCB finding because of a later PERB determination. The court held that in general, PERB determinations were entitled to preclusive effect, but the court refused to give preclusive effect to the PERB determination in the AWCB proceeding because the state was not in privity with the real party in interest in the PERB proceeding, the Public Employees Retirement System (PERS). Also, the later PERB decision could not preclude any issues raised in the earlier AWCB decision because the PERB decision was not the first final judgment.

The court held that the AWCB judgment was final for res judicata purposes, even while the appeal was pending before the court. The court affirmed the AWCB determination that the employee was physically able to perform her job requirements because it was supported by substantial evidence. The court found that to reward relitigation of an issue by reversing the original determination was completely at odds with the purpose of collateral estoppel to prevent relitigation of issues that already have been decided.

Rule:

litigation conducted before one agency or official is generally binding on another agency or official of the same government because officers of the same government are in privity with each other.

Although res judicata principles were developed in judicial settings, they may be applied to adjudicative determinations made by administrative agencies. each case must be examined on its facts to determine whether application of res judicata is warranted. An administrative decision commands preclusive effects only if it results from a procedure that seems an adequate substitute for judicial procedure.

Analysis:

Like Alaska Workers’ Compensation Board proceedings, Public Employees Retirement Board hearings include many of the procedural safeguards of a judicial hearing including the right to introduce evidence, call witnesses, and cross-examine opposing witnesses.

Litigation conducted before one agency or official is generally binding on another agency or official of the same government because officers of the same government are in privity with each other. The crucial point is whether or not in the earlier litigation the representative of the United States had authority to represent its interests in a final adjudication of the issue in controversy.

There are three necessary conditions to the application of collateral estoppel: 1. The plea of collateral estoppel must be asserted against a party or one in privity with a party to the first action; 2. The issue to be precluded from relitigation by operation of the doctrine must be identical to that decided in the first action; 3. The issue in the first action must have been resolved by a final judgment on the merits.

Collateral estoppel’s privity requirement does not have a general definition; rather it is a shorthand way of expressing assurance that the non-party has had adequate notice and opportunity to be heard, and that its rights and interests have been protected. Privity exists between different agencies of the same government unless there are important differences in the authority of the respective agencies. This is the same test that determines whether the decision of one agency binds another agency. In the privity context, however, the question is not whether the forum agencies are in privity, but whether the agencies appearing before them are.

A final judgment retains all of its res judicata effects pending resolution of an appeal of the judgment. This rule respects the principle of repose inherent in the doctrine of res judicata. If a judgment is denied its res judicata effects merely because an appeal is pending, a litigant can refile an identical case in another trial court creating duplicative litigation.

Outcome:

The court affirmed the decision of the superior court that denied the employee permanent total disability benefits.

Case Name:Hanover Logansport, Inc. v. Robert C. Anderson, Inc

Page: 1292

Heading: 512 N.E.2d 465

Procedural History:

Appellant lessor sought review of the decision of the St. Joseph County Superior Court (Indiana), which denied the lessor’s motion to dismiss appellee lessee’s action for breach of contract and lease.

Facts:

Pursuant to a lease, the lessor agreed to remove the current tenant from the leased premises before a certain date. When the current tenant still occupied the premises after the agreed-upon date, the lessee filed a complaint that prayed for lost profit or specific performance. Before trial, the lessor tendered an offer of the leased premises to the lessee pursuant to Ind. R. Trial P. 68. The lessee’s acceptance stated the acceptance was only for the purposes of damage mitigation. Subsequently, the lower court denied the lessor’s motion to dismiss.

The court reversed and remanded the decision of the lower court because the preclusive effect of the consent judgment was measured by the parties’ intent. Further, the agreement needed to be clear that both parties agreed to reserve a claim. The court found that the lessee’s acceptance was not clear as to what damage claim he was attempting to reserve, and that the lessor never intended for a money damage claim to be reserved. Therefore, because the lessee’s complaint did not include a claim for damages for delay in tendering the leased premises, the lessee was precluded from reserving such a claim in the consent judgment.

Rule:

a party who agrees to a consent decree may not unilaterally reserve a cause of action for further litigation.

Analysis:

A consent judgment has a dual aspect. It represents an agreement between the parties settling the underlying dispute and providing for the entry of judgment in a pending or contemplated action. It also represents the entry of such a judgment by a court, with all that this means in the way of committing the force of society to implement the judgment of its courts

The Court of Appeals of Indiana, Third District, adopts the consent-judgment-as-contract theory and holds that the preclusive effect of a consent judgment is measured by the intent of the parties. However, it must be clear that both parties agreed to reserve an issue or claim. And, it must be precisely stated what issues or claims are being reserved.

In order to insure that both parties agree to reserve a claim or issue and that the reserved claim or issue is clearly apparent to both parties, (1) the reservation must be incorporated into the offer of judgment itself and (2) it must be an inherent part of the original complaint.

Outcome:

The court reversed the decision of the lower court that denied the lessor’s motion to dismiss an action for breach of contract and lease. The case was remanded with instructions to enter a judgment on the offer of judgment and to grant the lessor’s motion to dismiss.

Case Name:Commissioner v. Sunnen

Page: 1284

Heading: 333 U.S. 591

Procedural History:

Petitioner Commissioner of Internal Revenue challenged a decision from the United States Circuit Court of Appeals for the Eighth Circuit affirming a portion of a tax court judgment favorable to respondent taxpayer and reversing the portion of the judgment adverse to him.

Facts:

The taxpayer was an inventor-patentee and president of a corporation engaged in the manufacture and sale of patented machines. The taxpayer entered into several agreements whereby the corporation was licensed to manufacture and sell devices on which the taxpayer had applied for patents. In return, the corporation agreed to pay the taxpayer a royalty. At various times, the taxpayer assigned to his wife all his right, title, and interest in the various license agreements. The tax court held that certain royalties paid to the wife were part of the taxpayer’s taxable income but that other royalties paid to his wife were not. The tax court held that a prior determination by the board of tax appeals applied to bar adjudication of the matter.

The United States Supreme Court granted certiorari and reversed the judgment. The Court held that collateral estoppel should not have been applied by the tax court to perpetuate the viewpoint of the assignment. The Court explained that the transactions between the taxpayer and his wife were simply a reallocation of income within the family group, a reallocation that did not shift the incident of income tax liability.

Rule:

where to cases involve taxes in different taxable years, collateral estoppel will be confined to situations where the matter raised in the second suit is identical in all respects with that decided in the first proceeding and where the controlling facts and applicable legal rules remain unchanged.

Analysis:

rule of RJ- Res judicata applies to repetitious suits involving the same cause of action. It rests upon considerations of economy of judicial time and public policy favoring the establishment of certainty in legal relations. The rule provides that when a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to the suit and their privies are thereafter bound not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose. The judgment puts an end to the cause of action, which cannot again be brought into litigation between the parties upon any ground whatever, absent fraud or some other factor invalidating the judgment.

Collateral estoppel operates to relieve the government and a taxpayer of redundant litigation of the identical question of a statute’s application to the taxpayer’s status.

A taxpayer may secure a judicial determination of a particular tax matter, a matter that may recur without substantial variation for some years thereafter. But a subsequent modification of the significant facts or a change or development in the controlling legal principles may make that determination obsolete or erroneous, at least for future purposes. If such a determination is then perpetuated each succeeding year as to the taxpayer involved in the original litigation, he is accorded a tax treatment different from that given to other taxpayers of the same class. As a result, there are inequalities in the administration of the revenue laws, discriminatory distinctions in tax liability, and a fertile basis for litigious confusion.

If the legal matters determined in an earlier case differ from those raised in a second case, collateral estoppel has no bearing on the situation. And where the situation is vitally altered between the time of the first judgment and the second, the prior determination is not conclusive. A judicial declaration intervening between the two proceedings may so change the legal atmosphere as to render the rule of collateral estoppel inapplicable.

Before a party can invoke the collateral estoppel doctrine, the legal matter raised in the second proceeding must involve the same set of events or documents and the same bundle of legal principles that contributed to the rendering of the first judgment.

Outcome:

The United States Supreme Court reversed the tax court’s decision because as long as the taxpayer actually earned the income or was the source of the right to receive and enjoy the income, he remained taxable.

Case Name:Rios v. Davis

Page: 1281

Heading: 373 S.W.2d 386

Procedural History:

Appellant injured party sought review of the judgment of the trial court (Texas), which sustained appellee motorist’s plea of res judicata and collateral estoppel in an action involving an automobile accident. Appellant argued that the trial court erred in sustaining appellee’s plea of res judicata where the finding as of appellant’s contributory negligence was immaterial as the judgment in the prior case was in favor of appellant.

Facts:

A truck driver, appellee motorist, and appellant injured party were involved in an automobile accident. The truck owner brought an action against appellee for damages sustained in the accident. Appellee joined appellant as a third party defendant and sought recovery against him for damages to appellee’s truck. The jury found that both appellant and appellee were negligent. Judgment was entered denying the truck owner any recovery against appellee and denying appellee any recovery against appellant. Thereafter, appellant brought an action against appellee for injuries sustained in the accident. Appellee pled res judicata and collateral estoppel. The trial court sustained the plea.

On appeal, appellant contended that the trial court erred in sustaining appellee’s plea based on the finding of appellant’s negligence because the judgment entered was in favor of appellant. The court reversed the trial court’s judgment. The court held that the right of appeal was from a judgment and not from a finding; thus, where the finding that appellant was negligent was not essential or material to the judgment and the judgment was in appellant’s favor, the finding was not res judicata.

Rule:

it is the judgment, and not the jury verdict or conclusions of fact, filed by a trial court which constitutes the collateral estoppel, and a finding of fact by a jury or a court which does not become the basis or one of the grounds of the judgment rendered is no conclusive against either party to the suit.  This issue was not necessarily decided

Analysis:

A finding of a particular fact is not res judicata in a subsequent action, where the finding not only is not essential to support the judgment, but is found in favor of the party against whom the judgment is rendered, and, if allowed to control, leads to a result different from that which actually has been reached.

The force of the estoppel resides in the judgment. It is not the finding of the court or the verdict of the jury rendered in an action which concludes the parties in subsequent litigation, but the judgment which has been entered thereon. The fact that a judgment in a suit is in favor of a defendant precludes him from bringing in review the findings of the judge, and a party cannot be estopped by a judgment in his favor from denying findings of the court rendering said judgment the decision of which is not essential or material to the rendition of the judgment.

Outcome:

The court reversed the judgment of the trial court sustaining appellee motorist’s plea of res judicata and collateral estoppel against appellant injured party in appellant’s action for injuries sustained in an automobile accident. The finding that appellant was negligent in a prior case was not material to the prior judgment, which was in appellant’s favor; thus, res judicata did not bar appellant’s action.

Case Name:Russell v. Place

94 U.S. 606

Plaintiff patent holder appealed from an order of the Circuit Court of the United States for the Northern District of New York, which entered judgment in its favor in the patent holder’s infringement action against defendant alleged infringers on the general issue but did not preclude the alleged infringers from contesting the infringement or validity of the patent based upon other defenses.

Facts:

The trial court granted judgment in favor of the patent holder in its infringement action against the alleged infringers upon its pleading of the general issue. The patent holder appealed from the order of the trial court, which did not preclude the alleged infringers from presenting the additional defenses of want of novelty in the invention patented and its prior use by the public or precluded it from insisting upon any ground going to the validity of the patent which might have been availed of as a defense in that action and upon the want of identity in the invention covered by the reissue with that of the original patent.

The Court affirmed the trial court’s decree, holding that the trial court’s judgment as to the infringement was inconclusive because it did not appear on the record of the prior suit that the particular matter sought to be concluded was necessarily tried or determined or that the judgment necessarily involved the consideration and determination of the defenses raised in the new suit by the alleged infringers. The alleged infringers were not estopped from presenting the defenses because the estoppel could not have been certain to every intent.

Rule:

it is well settled that a judgment of a court of competent jurisd. upon a question directly involved in one suit is conclusive as to that question in another suit between the same parties, where it can be established that the precise question was raised and determined in the prior suit.

Analysis:

If there be any uncertainty on this head in the record, as, for example, if it appear that several distinct matters may have been litigated, upon one or more of which the judgment may have passed, without indicating which of them was thus litigated, and upon which the judgment was rendered, the whole subject-matter of the action will be at large, and open to a new contention, unless this uncertainty be removed by extrinsic evidence showing the precise point involved and determined. To apply the judgment, and give effect to the adjudication actually made, when the record leaves the matter in doubt, such evidence is admissible.

The general rule with respect to the conclusiveness of a verdict and judgment in a former suit between the same parties, when the judgment is used in pleading as an estoppel, or is relied upon as evidence, is to render the judgment conclusive, it must appear by the record of the prior suit that the particular matter sought to be concluded was necessarily tried or determined, that is, that the verdict in the suit could not have been rendered without deciding that matter; or it must be shown by extrinsic evidence, consistent with the record, that the verdict and judgment necessarily involved the consideration and determination of the matter.

A recovery for an infringement of one claim of a patent is not of itself conclusive of an infringement of another claim.A patent may be valid as to a single claim and not valid as to the others.

An estoppel must be certain to every intent, and if upon the face of a record any thing is left to conjecture as to what was necessarily involved and decided, there is no estoppel in it when pleaded, and nothing conclusive in it when offered as evidence.

Outcome:

The Court affirmed the decree of the trial court.

Case Name:Cromwell v. County of Sac

Page: 1273

Heading: 94 U.S. 351

Procedural History:

Plaintiff bondholder appealed a decision of the Circuit Court of the United States for the District of Iowa, which made a determination in favor of defendant county on the basis of estoppel of the judgment rendered in a prior action.

Facts:

Plaintiff bondholder sued on four bonds issued by defendant county. Defendant pleaded a prior judgment in an action brought for the use and benefit of plaintiff upon earlier maturing coupons on the same bond issue.

On appeal, the Court held that the earlier judgment did not bar the instant action. As the bonds were negotiable instruments, their issuance was authorized by defendant, and they recited on their face a compliance with the law providing for their issue, they would be held as valid obligations against defendant in the hands of a bona fide holder taking them for value. Plaintiff should have been permitted to prove he was a holder. The fact that a party may not have shown that he gave value for one bond or coupon was not evidence that he may not have given value for another and different bond or coupon. The exclusion of the evidence offered by plaintiff was erroneous.

Rule:

a judgment estops further action not only as to every ground of recovery or defense actually presented in an action, but also as to every ground which might have been presented when the subsequent action involves the same demand or claim in controversy, but where that subsequent action between the same parties is instituted upon a different claim or demand, the prior judgement operates as an estoppel only as to matters actually controverted, the determination of which were essential to the final verdict.

Analysis:

There is a difference between the effect of a judgment as a bar or estoppel against the prosecution of a second action upon the same claim or demand, and its effect as an estoppel in another action between the same parties upon a different claim or cause of action. In the former case, the judgment, if rendered upon the merits, constitutes an absolute bar to a subsequent action. It is a finality as to the claim or demand in controversy, concluding parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose.

That a judgment estops not only as to every ground of recovery or defence actually presented in the action, but also as to every ground which might have been presented, is strictly accurate, when applied to the demand or claim in controversy. Such demand or claim, having passed into judgment, cannot again be brought into litigation between the parties in proceedings at law upon any ground whatever.

Where the second action between the same parties is upon a different claim or demand, the judgment in the prior action operates as an estoppel only as to those matters in issue or points controverted, upon the determination of which the finding or verdict is rendered.

Where it is sought to apply the estoppel of a judgment rendered upon one cause of action to matters arising in a suit upon a different cause of action, the inquiry must always be as to the point or question actually litigated and determined in the original action, not what might have been thus litigated and determined. Only upon such matters is the judgment conclusive in another action.

On principle, a point not in litigation in one action cannot be received as conclusively settled in any subsequent action upon a different cause, because it might have been determined in the first action.

A judgment by default only admits for the purpose of the action the legality of the demand or claim in suit: it does not make the allegations of the declaration or complaint evidence in an action upon a different claim. The declaration may contain different statements of the cause of action in different counts. A judgment by default in such a case would make the several statements evidence in any other proceeding.

The plea of res judicata applies not only to the points upon which the court was required by the parties to form an opinion, and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties exercising reasonable diligence might have brought forward at the time.

Outcome:

The Court reversed the judgment for defendant county and remanded for a new trial because the exclusion of plaintiff bondholder’s evidence on the theory of estoppel was erroneous.

Case Name:Mitchell v. Federal Intermediate Credit Bank

Page: 1267

Heading: 165 S.C. 457

Procedural History:

Plaintiff farmer sought review of an order of the Court of Common Pleas for Beaufort County (South Carolina), which found that he was precluded from bringing an action against defendant bank because of the federal case between the parties concerning the same transaction that had already been concluded.

Facts:

The farmer brought an action seeking an accounting between him and the bank, for the proceeds of a crop of potatoes, and recovery of any balance due him after the payment of an indebtedness evidenced by two outstanding notes. The parties agreed to hold the action in abeyance pending the outcome of a federal action that had been brought by the bank against the farmer to recover on the two notes. In that case, the farmer did not, by way of counterclaim, ask for any affirmative relief. The federal case was decided in favor of the farmer. The bank then claimed that the federal action precluded the farmer from continuing his state action. The trial court agreed.

On appeal, the court affirmed. The court held that the legal wrong suffered by the farmer was the violation by the bank of his right to receive the proceeds of his potato crop, which had come into the bank’s hands, and that for this wrong, he had a single indivisible cause of action against the bank. When the bank sued him on his two notes, he had the option to interpose his claim as a defense or to demand judgment against the bank, by way of counterclaim, but he was barred from bringing his claim separately.

Rule:

a defendant may not split his cause of action against a plaintiff using part of it as a defense to the first action and saving the remainder for a separate affirmative suit.

Analysis:

If matters are set up in the first action merely as a defense, and not as a foundation of a claim for affirmative relief, the judgment in such case precludes the use of the matter as a set-off or counterclaim in a subsequent action or as the basis of an independent suit against the former plaintiff.

A party against whom an action is brought on a contract has two modes of defending himself. He may allege specific breaches of the contract declared upon, and rely on them in defence. But if he intends to claim, by way of damages for nonperformance of the contract, more than the amount for which he is sued, he must not rely on the contract in defence, but must bring a cross action, and apply to the court to have the cases continued so that the executions may be set off. He cannot use the same defence, first as a shield, and then as a sword.

Causes of action may not be divided, and one who avails himself of a part of a single claim or obligation in an action or defense is estopped thereafter from enforcing the remainder of it

A matter not necessarily involved and not raised in a previous case is not res adjudicata; but if necessarily involved, whether raised or not, it is concluded, and especially so, if the party denying the adjudication knows of the matter and could interpose it at the previous trial, either in support of a claim or as a defense.

Outcome:

The court affirmed the trial court’s decision precluding the farmer from continuing his state action against the bank.

Case Name:Jones v. Morris Plan Bank

Page: 1263

Heading: 168 Va. 284

Procedural History:

Plaintiff buyer was granted a writ of error to review the judgment of the Circuit Court for the City of Suffolk (Virginia) that was entered for defendant lender in an action alleging conversion of an automobile which had been repossessed upon the buyer’s default, where the note contained an acceleration clause and, some months before, the buyer had satisfied a judgment obtained by the lender for two installments that were not made when payable.

Facts:

The buyer financed the purchase of his car with a note containing an acceleration clause. Also, the sales contract provided that title would remain in the seller until the entire purchase price was paid. The note was assigned to the lender and when the buyer missed two payments, the lender sued and obtained a judgment for two installment payments. The buyer satisfied the judgment but then missed another payment. The lender sued again, but took a non-suit when the buyer raised a plea of res judicata. Shortly thereafter, the lender caused the physical repossession of the vehicle. The buyer sued the lender for conversion and judgment was entered for the lender after the trial court struck the evidence of the buyer.

On appeal, the supreme court ruled that the note and sales contract were one single contract and when the buyer initially defaulted, under the acceleration clause all payments became due. When the lender sued and obtained judgment on only two installments, even though all were due, upon satisfaction of that judgment, any further action for the other installments was barred and title passed to the buyer, such that the repossession constituted conversion.

Rule:

if a transaction is represented by a single and indivisible contract and the breach gives rise to a single cause of action, it cannot be split into distinct parts and separate actions.

Analysis:

If a transaction is represented by one single and indivisible contract and the breach gives rise to one single cause of action, it cannot be split into distinct parts and separate actions maintained for each. On the other hand if the contract is divisible, giving rise to more than one cause of action each may be proceeded upon separately. One of the principal tests in determining whether a demand is single and entire, or whether it is several, so as to give rise to more than one cause of action, is the identity of facts necessary to maintain the action. If the same evidence will support both actions there is but one cause of action.

The law does not permit the owner of a single or entire cause of action or an entire or indivisible demand, without the consent of the person against whom the cause or demand exists to divide or split that cause or demand so as to make it the subject of several actions. The whole cause must be determined in one action. If suit is brought for a part of a claim, a judgment obtained in that action precludes the plaintiff from bringing a second action for the residue of the claim, notwithstanding the second form of action is not identical with the first, or different grounds for relief are set forth in the second suit. This principle not only embraces what was actually determined, but also extends to every other matter which the parties might have litigated in the case. The rule is founded upon the plainest and most substantial justice, namely, that litigation should have an end and that no person should be unnecessarily harassed with a multiplicity of suits.

A contract to pay money in installments is divisible in its nature. Hence, each default in the payment of an installment may be the subject of an independent action provided it is brought before the next installment becomes due, generally speaking, however, a recovery for one installment will bar an action for the recovery of other installments then due. In other words, each action should include every installment due at the time it is commenced, unless a suit is, at the time, pending for the recovery thereof, or other special circumstances exist.

Outcome:

The judgment of the circuit court for the lender was reversed and the case was remanded for the sole purpose of determining the quantum of the buyer’s damages.

Case Name:Mathews v. New York Racing Asso

Page: 1258

Heading: 193 F. Supp. 293

Procedural History:

Defendants, race track owner and detective agency, sought summary judgment against plaintiff patron in his suit alleging assault, kidnapping, false arrest, and false imprisonment. The race track owner and the detective agency contended that the doctrine of res judicata applied.

Facts:

The race track owner employed the detective agency. Employees of the detective agency ejected the patron from the race track. The patron also alleged that the race track owner and the detective agency maliciously caused him to be convicted of disorderly conduct. A prior judgment was entered based on the same facts but a legal theory of libel and the employees of the race track owner and the detective agency were the named defendants.

The district court granted the motion. The race track owner and the detective agency were in privity with their employees as their agents. Res judicata applied when a second claim between the same parties involved the same facts as an earlier claim. The issues raised in the first suit barred the second. The facts, not the legal theory, were what counted. The acts were the same even though the legal theory changed, and again, the parties were in privity because the patron was merely filing suit against the principals in the second action. Since there was no actionable wrong against the agents in the first action, the second action against the principals was barred.

Rule:

the doctrine of res judicata operates as a bar to subsequent suits involving the same parties, or those in privity with them, based on a claim which has once reached a judgment on the merits

Analysis:

A corporation acts only through its agents, and if the agents are not at fault, there is no basis for corporate liability. This, of course, is nothing more than the application of familiar principles of the law of agency

The classic situation in which the doctrine of res judicata comes into play is where a second claim between the same parties is based on the same operative facts as the earlier one. The issues tried in the first claim and any other issues which could have been dealt with there are forever barred by the first judgment. Thus, the question is whether the claim alleged in the second complaint is the same as that in the suit concluded earlier. The term “claim” refers to a group of facts limited to a single occurrence or transaction without particular reference to the resulting legal rights. It is the facts surrounding the occurrence which operate to make up the claim, not the legal theory upon which a plaintiff relies

The plaintiff cannot be permitted to splinter his claim into a multiplicity of suits and try them piecemeal at his convenience. The plaintiff having alleged operative facts which state a cause of action because he tells of the defendant’s misconduct and his own harm has had his day in court. He does not get another day after the first lawsuit is concluded by giving a different reason than he gave in the first for recovery of damages for the same invasion of his rights. The problem of his rights against the defendant based upon the alleged wrongful acts is fully before the court whether all the reasons for recovery were stated to the court or not.

Outcome:

Summary judgment was granted to the race track owner and the detective agency in the patron’s suit based on the doctrine of res judicata following a judgment against the patron in an earlier suit.

Case Name:Rush v. Maple Heights

Page: 1251

Heading: 167 Ohio St. 221

Procedural History:

Defendant city appealed a decision from the Ohio Court of Appeals for Cuyahoga County affirming a judgment from the Municipal Court of Cleveland that awarded plaintiff damages for injuries sustained in a motorcycle accident based on res judicata and a prior adjudication that defendant negligently failed to maintain the roadway.

Facts:

The court reversed a judgment against defendant city for personal injuries suffered by plaintiff and entered judgment for defendant. Plaintiff was injured in a motorcycle accident and prevailed on a claim for property damage against defendant for failing to maintain the roadway. Plaintiff filed a second action for personal injuries, which was resolved in her favor based on res judicata.

The court reversed, holding that plaintiff could not split her cause of action and file separate actions for property damage and personal injuries based on the same accident. The court adopted the majority rule and held that if a person suffers both personal injuries and property damage as a result of the same wrongful act, there is only a single cause of action, and the different injuries are separate items of damage, not separate causes of action, thereby overruling Vasu v. Kohlers, Inc., 145 Ohio St. 321, 61 N.E.2d 707.

Rule:

whether or not injuries to both person and property resulting from the same wrongful act are to be treated as injuries to separate rights or as separate items of damage, a plaintiff may maintain only one lawsuit to enforce his rights existing at the time such action is commenced.

Analysis:

If the owner of a single cause of action arising out of a single tortious act brings an action against his tort-feasor, he may have but one recovery; and, in case he fails to recover, he may not maintain a subsequent action on the same cause of action, even though he has failed to include his entire cause of action or elements of damage in his original action.

If an owner of a single cause of action has a recovery thereon, the cause of action is merged in the judgment; but if he fails to recover on his claimed cause of action and judgment goes against him, such judgment is res judicata and a bar to a second action on the same cause of action .

A right, question or fact in issue which was necessarily determined by a court of competent jurisdiction in a judgment which has become final, cannot be disputed or litigated in a subsequent suit between the same parties, although the subsequent suit is based upon a different cause of action.

The final adjudication of a material issue by a court of competent jurisdiction binds the parties in any subsequent proceeding between or among them, irrespective of a difference in forms or causes of action.

Where a person suffers both personal injuries and property damage as a result of the same wrongful act, only a single cause of action arises, the different injuries occasioned thereby being separate items of damage from such act.

Outcome:

The court reversed, holding that if a person suffers both personal injuries and property damage as a result of the same wrongful act, there is only a single cause of action, and the different injuries are separate items of damage, not separate causes of action.

Case Name:Gasperini v. Ctr. for Humanities

Page: 454

Heading: 518 U.S. 415

Procedural History:

Petitioner journalist challenged a decision of the United States Court of Appeals for the Second Circuit which set aside a $ 450,000 verdict in his favor as excessive pursuant to N.Y. C.P.L.R. § 5501(c) (McKinney 1995).

Facts:

Petitioner journalist was awarded $ 450,000 in compensatory damages by a federal court jury for the loss of 300 slide transparencies. Respondent’s motion for a new trial was denied. The appellate court set aside the verdict as excessive, relying on N.Y. C.P.L.R. § 5501(c) (McKinney 1995) which empowered New York appellate courts to review the size of jury verdicts and to order new trials when the award was unreasonable.

Issue:

The United States Supreme Court vacated the judgment with instructions to the appellate court to remand the case to the district court to revisit the motion for a new trial. The Court determined that the New York statute could properly be given effect in federal court, without detriment to U.S. Const. amend VII, if the statutory review standard was applied by the federal trial court judge, with appellate control of the trial court’s ruling limited to review for abuse of discretion.

Rule:

the 7th amendment does not preclude appellate review of a trial judge’s denial of a motion to set aside a jury verdict as excessive.  use the concept of hyrbidity in test analysis.  try to reconcile both the state and fed.

Analysis:

Under the law of New York, appellate courts are empowered to review the size of jury verdicts and to order new trials when the jury’s award deviates materially from what would be reasonable compensation

Under U.S. Const. amend. VII, which governs proceedings in federal court, but not in state court, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any court of the United States, than according to the rules of the common law.

N.Y. C.P.L.R. § 5501(c) (McKinney 1995), which controls compensation awards for excessiveness or inadequacy, can be given effect in federal court, without detriment to U.S. Const. amend. VII, if the review standard set out in the statute is applied by the federal trial court judge, with appellate control of the trial court’s ruling limited to review for abuse of discretion.

Material deviation from reasonableness, pursuant to N.Y. C.P.L.R. § 5501(c) (McKinney 1995), is less than that deviation required to find an award so excessive as to shock the conscience.

Although phrased as a direction to New York’s intermediate appellate courts, the “deviates materially” standard under N.Y. C.P.L.R. § 5501(c) (McKinney 1995), as construed by New York’s courts, instructs state trial judges as well.

Federal diversity jurisdiction provides an alternative forum for the adjudication of state-created rights, but it does not carry with it generation of rules of substantive law. Except in matters governed by the Federal Constitution or by acts of congress, the law to be applied in any case is the law of the state. Under the Erie doctrine, federal courts sitting in diversity apply state substantive law and federal procedural law

Where a federal court is exercising jurisdiction solely because of the diversity of citizenship of the parties, the outcome of the litigation in the federal court should be substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a state court. But, the “outcome-determination” test must not be applied mechanically to sweep in all manner of variations; instead, its application must be guided by the twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws.

Outcome:

The appeals court’s judgment setting aside the verdict as excessive pursuant state statute was vacated.

Case Name:Stewart Org., Inc. v. Ricoh Corp.

Page: 448

Heading:487 U.S. 22

Procedural History:

The United States Court of Appeals for the Eleventh Circuit reversed the district court’s denial of respondent nationwide manufacturer’s motion to transfer petitioner company’s action to the venue provided in the forum-selection clause set forth in the parties’ contract. The company filed a petition for a writ of certiorari.

Facts:

Relying on the parties’ contractual forum-selection clause, the nationwide manufacturer filed a motion to transfer the company’s action under 28 U.S.C.S. § 1404(a). The district court denied the motion, reasoning that state law controlled the motion and that state law disfavored contractual forum-selection clauses. The intermediate appellate court reversed the district court’s order and remanded with instructions that the case be transferred. The intermediate appellate court held that the choice of forum clause in the contract was enforceable as a matter of federal law.

The company filed a petition for a writ of certiorari, which the Court granted. The Court disagreed with the intermediate appellate court that the relevant inquiry was whether the choice of forum clause was enforceable. Instead, the Court stated that the relevant inquiry was whether § 1404(a) controlled the nationwide manufacturer’s request to give effect to the forum-selection clause and transfer the case. In answering that inquiry, the Court held that § 1404(a) governed the parties’ venue dispute.

Rule:

in a federal diversity suit, federal rules, not state rules, should govern questions of venue.

Analysis:

step 1- A district court’s decision whether to apply a federal statute such as 28 U.S.C.S. § 1404(a) in a diversity action involves a considerably less intricate analysis than that which governs the relatively unguided Erie choice. When the federal law sought to be applied is a congressional statute, the first and chief question for the district court’s determination is whether the statute is sufficiently broad to control the issue before the court. That question involves a straightforward exercise in statutory interpretation to determine if the statute covers the point in dispute.

step 2- If a district court determines that a federal statute covers the point in dispute, it proceeds to inquire whether the statute represents a valid exercise of Congress’s authority under the U.S. Constitution. If Congress intended to reach the issue before the district court, and if it enacted its intention into law in a manner that abides with the U.S. Constitution, that is the end of the matter. Federal courts are bound to apply rules enacted by Congress with respect to matters over which it has legislative power. When a situation is covered by one of the Federal Rules, the court applies the Federal Rule, and can refuse to do so only if the Advisory Committee, the U.S. Supreme Court, and Congress erred in their prima facie judgment that the Federal Rule in question transgresses neither the terms of the Rules Enabling Act, 28 U.S.C.S. § 2072, nor constitutional restrictions.

Federal Rules must be measured against the statutory requirement of the Rules Enabling Act, 28 U.S.C.S. § 2072, that they not abridge, enlarge, or modify any substantive right.

If no federal statute or Federal Rule covers the point in dispute, the district court proceeds to evaluate whether application of federal judge-made law disserves the so-called twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws. If application of federal judge-made law disserves those two policies, the district court shall apply state law.

Where federal law’s discretionary mode of operation conflicts with the nondiscretionary provision of state law, federal law applies in diversity.

Outcome:

The Court affirmed, on different grounds, the intermediate appellate court’s decision reversing the district court’s denial of the nationwide manufacturer’s motion to transfer petitioner company’s action to the venue set forth in the contractual forum-selection clause. The case was remanded so that the district court could determine the appropriate effect under federal law of the parties’ forum-selection clause on the motion to transfer.

Case Name:Walker v. Armco Steel Corp

Page: 442

Heading: 446 U.S. 740

Procedural History:

The Court of Appeals for the Tenth Circuit held that state law should be followed rather than Fed. R. Civ. P. 3 in determining when an action was commenced for the purpose of tolling the state statute of limitations. Plaintiff, an injured person, appealed.

Facts:

The injured person brought suit against the manufacturer within the state statute of limitations, but service was not made until more than 60 days after expiration of the limitations period. Under Okla. Stat. tit. 12, § 97 (1971), service was too late, but service would have been timely under Fed. R. Civ. P. 3. The district court dismissed the complaint because the Oklahoma tolling statute was an integral part of its statute of limitations.

The court of appeals agreed, and the Court affirmed. The Court reviewed prior rulings concerning statutes of limitation, and held that under those rulings, the state tolling provisions applied. The Court noted that in diversity actions, Rule 3 governed the date on which various timing requirements of the Federal Rules began to run, but it did not affect state statutes of limitation. On the other hand, the state statute was a statement of a substantive decision by the state that actual service on the defendant was an integral part of the several policies served by the statute of limitations. Rule 3 and Okla. Stat. tit. 12, § 97 (1971) therefore each controlled its own intended sphere of coverage without conflict.

Rule:

in diversity actions, FRCP 3 governs the date form which timing requirements of the federal rules begin to run but does not affect state statutes of limitations

Analysis:

The Federal Rules of Civil Procedure are not to be narrowly construed in order to avoid a collision with state law. The Federal Rules should be given their plain meaning.

Fed. R. Civ. P. 3 simply states that a civil action is commenced by filing a complaint with the court.

In diversity actions Fed. R. Civ. P. 3 governs the date from which various timing requirements of the Federal Rules begin to run, but does not affect state statutes of limitations.

Fed. R. Civ. P. 3 provides that an action is commenced by filing the complaint and has as its primary purpose the measuring of time periods that begin running from the date of commencement. The rule does not state that filing tolls the statute of limitations.

Okla. Stat. tit. 12, § 97 (1971) is a statement of a substantive decision by Oklahoma that actual service on, and accordingly actual notice by, the defendant is an integral part of the several policies served by the statute of limitations. The statute of limitations establishes a deadline after which the defendant may legitimately have peace of mind; it also recognizes that after a certain period of time it is unfair to require the defendant to attempt to piece together his defense to an old claim. A requirement of actual service promotes both of those functions of the statute. It is these policy aspects which make the service requirement an integral part of the Oklahoma statute of limitations. As such, the service rule must be considered part and parcel of the statute of limitations. Fed. R. Civ. P. 3 does not replace such policy determinations found in state law. Rule 3 and Okla. Stat. tit. 12, § 97 (1971), can exist side by side, each controlling its own intended sphere of coverage without conflict.

Outcome:

The Court affirmed the judgment of the court of appeals, which held that state law controlled tolling of the state statute of limitations.

Case Name:Hanna v. Plumer

Page: 431

Heading: 380 U.S. 460

Procedural History:

Petitioner injured party sought review of the decision from the United States Court of Appeals for the First Circuit, which affirmed the district court’s decision, which granted respondent executor’s motion for summary judgment. The United States Supreme Court granted certiorari.

Facts:

Petitioner injured party brought a personal injury suit against respondent executor. Service of process was made in compliance with Fed. R. Civ. P. 4(d)(1). The appeals court affirmed the decision of the district court, which granted summary judgment for respondent and the Court reversed on appeal. Petitioner argued that in a civil action where jurisdiction was based upon diversity, service of process could be made according to Fed. R. Civ. P. 4(d)(1) and did not have to be made in the manner prescribed by state law.

The Court held that in a suit where a plaintiff happened to be a non-resident, and a right was enforceable in a federal as well as in a state court, the forms and mode of enforcing the right may at times, vary because the two judicial systems were not identical. The Court held that the adoption of Fed. R. Civ. P. 4(d)(1), designed to control service of process in diversity actions, neither exceeded the congressional mandate embodied in the Rules Enabling Act nor transgressed constitutional bounds, and that Rule 4(d)(1) was therefore the standard against which the district court should have measured the adequacy of the service.

Rule:

the erie doctrine mandates that federal courts are to apply state substantive law and federal procedural law, but, where matters fall roughly between the two and are rationally capable of classification as either, the constitution grants the federal court system the power to regulate their practice and pleading (procedure).

Analysis:

In the context of the Rules Enabling Act, 28 U.S.C.S. § 2072, the test must be whether a rule really regulates procedure,-the judicial process for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for disregard or infraction of them.

Not only are nonsubstantial, or trivial, variations not likely to raise the sort of equal protection problems which troubled the United States Supreme Court in Erie; they are also unlikely to influence the choice of a forum. The “outcome-determination” test therefore cannot be read without reference to the twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws.

Congress has the long-recognized power to prescribe housekeeping rules for federal courts even though some of those rules will inevitably differ from comparable state rules.

To hold that a Federal Rule of Civil Procedure must cease to function whenever it alters the mode of enforcing state-created rights would be to disembowel either the United States Constitution’s grant of power over federal procedure or Congress’ attempt to exercise that power in the Rules Enabling Act, 28 U.S.C.S. § 2072.

Outcome:

The Court reversed the decision of the court of appeals, which affirmed the grant of summary judgment to respondent executor in petitioner injured suit for personal injuries. The Court held that service of process under the Federal Rules of Civil Procedure was the standard, which the district court should have measured the adequacy of service.

Case Name:BYRD v. BLUE RIDGE RURAL ELEC. COOP.,

Page: 422

Heading: 356 U.S. 525

Procedural History:

Certiorari was granted to the United States Court of Appeals for the Fourth Circuit to determine whether the court of appeals erred in directing judgment for respondent corporation in a negligence action and to determine whether petitioner was entitled to a jury trial.

Facts:

Petitioner was employed by a construction company that had contracted with respondent corporation to build power lines and stations. Petitioner was injured while working and brought a negligence suit against respondent. Respondent claimed that petitioner’s exclusive remedy was under the South Carolina Workmen’s Compensation Act. The court of appeals directed judgment for respondent.

The Supreme Court reversed and remanded. The Court upheld the court of appeals’ interpretation of S.C. Code Ann. § 72-111, but held that petitioner should have an opportunity to offer his own proof under that interpretation of the statute. The Court also held that petitioner was entitled to a jury trial, even though under South Carolina law petitioner would not have been entitled to a jury trial on this issue. The Court stated that it did not believe that the likelihood of a different result was so strong as to require the federal practice of jury determination of disputed factual issues to yield to the state rule in the interest of uniformity of outcome. The Court stated that there was a strong federal policy against allowing state rules to disrupt the judge-jury relationship in the federal courts.

Rule:

the Erie doctrine requires that federal courts in diversity case must respect definitions of rights and obligations created by state courts, but state laws cannot alter the essential characteristics and functions of the federal courts, and the jury functions is such an essential function (provided for in the seventh amendment).

Analysis:

Federal courts in diversity cases must respect the definition of state-created rights and obligations by the state courts. The courts must, therefore, determine whether it is bound up with these rights and obligations in such a way that its application in the federal court is required.

There is a strong federal policy against allowing state rules to disrupt the judge-jury relationship in the federal courts.

Outcome:

The Supreme Court reversed the judgment of the court of appeals that directed a verdict for respondent corporation in a negligence action. The Court also held that petitioner was entitled to a jury trial, even though under state law petitioner would not have received a jury trial. The Court stated that the federal policy favoring jury decisions of disputed fact questions should not yield to the state rule.

Case Name:Guaranty Trust Co. v. York

Page: 416

Heading: 326 U.S. 99

Procedural History:

Certiorari granted to the United States Court of Appeals for the Second Circuit to review the reversal of a summary judgment for petitioner trustee, decided on grounds that respondent noteholder’s suit alleging petitioner’s breach of trust was barred by state statute of limitations, and to determine the binding effect of state statutes and remedies on a federal diversity court.

Facts:

Petitioner trustee appealed reversal of a summary judgment that would have barred respondent noteholder’s action for petitioner’s breach of trust. The decision was reversed on grounds that a federal court sitting in diversity was not bound in equity by the state statute of limitations that barred the suit in the state court.

The court noted that under the Erie Doctrine, in all cases where a federal court had jurisdiction solely because of diversity of citizenship, the outcome of the litigation in the federal court should be substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a state court. The doctrine required the federal diversity court to follow state law, and if the statute of limitations under state law barred recovery in a state court, the federal court could not afford recovery. The court reiterated that the source of substantive rights enforced by a federal diversity court was state law, and that this law determined the outcome regardless of the forum or whether the remedy was in law or in equity.

Rule:

where a state statute that would completely bar recovery in state court has significant effects on the outcome-determination of the action, even though the suit be brought in equity, the federal court is bound by the state law.

Analysis:

In the context of determining whether state law should be applied in a diversity jurisdiction action, the question is whether such a statute concerns merely the manner and the means by which a right to recover, as recognized by the state, is enforced, or whether such statutory limitation is a matter of substance in the aspect that alone is relevant to a court’s problem, namely, does it significantly affect the result of a litigation for a federal court to disregard a law of a state that would be controlling in an action upon the same claim by the same parties in a state court? It is therefore immaterial whether statutes of limitation are characterized either as “substantive” or “procedural” in state court opinions in any use of those terms unrelated to the specific issue before the court.

In all cases where a federal court is exercising jurisdiction solely because of the diversity of citizenship of the parties, the outcome of the litigation in the federal court should be substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a state court.

The nub of the policy that underlies Erie R. Co. v. Tompkins is that for the same transaction the accident of a suit by a non-resident litigant in a federal court instead of in a state court a block away should not lead to a substantially different result. And so, putting to one side abstractions regarding “substance” and “procedure,” the court has held that in diversity cases the federal courts must follow the law of the state as to burden of proof, as to conflict of laws, and as to contributory negligence. Erie R. Co. v. Tompkins has been applied with an eye alert to essentials in avoiding disregard of state law in diversity cases in the federal courts. A policy so important to our federalism must be kept free from entanglements with analytical or terminological niceties.

A statute that would completely bar recovery in a suit if brought in a state court bears on a state-created right vitally and not merely formally or negligibly. As to consequences that so intimately affect recovery or non-recovery a federal court in a diversity case should follow state law. Particular rules of local law, however, do not in the slightest change the crucial consideration that if a statute would bar recovery in a state court, a federal court ought not to afford recovery.

The source of substantive rights enforced by a federal court under diversity jurisdiction is the law of the states. Whenever that law is authoritatively declared by a state, whether its voice be the legislature or its highest court, such law ought to govern in litigation founded on that law, whether the forum of application is a state or a federal court and whether the remedies be sought at law or may be had in equity.

dissent

The state of the forum is free to apply its own period of limitations, regardless of whether the state originating the right has barred suit upon it. 9 Whether or not the action will be held to be barred depends therefore not upon the law of the state which creates the substantive right, but upon the law of the state where suit may be brought.

Outcome:

The judgment that a federal diversity court was not bound by a state statute of limitations was reversed. The court concluded that the federal diversity courts were required to apply state law to determine the outcome of litigation, regardless of whether the remedy was in law or in equity. Respondent noteholder’s suit against petitioner trustee arising from an alleged breach of trust was remanded for further proceedings.

Case Name:Erie R.R. v. Tompkins

Page: 408

Heading: 304 U.S. 64

Procedural History:

Petitioner railroad company appealed a decision of the United States Court of Appeals for the Second Circuit affirming judgment for respondent in a negligence action to recover damages for injuries respondent sustained when he was hit by a door projecting from petitioner’s train while he was walking along a railroad right of way.

Facts:

Respondent brought a negligence action against petitioner railroad company, seeking damages for injuries sustained when he was hit by a door projecting from petitioner’s train while he was walking along a railroad right of way. The circuit court affirmed the judgment in favor of respondent, refusing to consider petitioner’s claim that it was not liable for respondent’s injuries under state common law. It held instead that liability was a question of general law about which federal courts were free to render independent decisions.

On appeal, the court reversed and remanded, holding that there was no federal general common law, and that except in matters governed by the U.S. Constitution or by acts of Congress, the law to be applied by federal courts in any diversity case was the law of the state. In so holding, the court disapproved the contrary doctrine of Swift v. Tyson, 16 Pet. 1 (1842), finding it an unconstitutional assumption of powers by federal courts that invaded state autonomy and prevented uniformity in administering state law. The court also held that § 34 of the Federal Judiciary Act of 1789, 28 U.S.C.S. § 725, was not declarative of the Swift doctrine.

Rule:

although the 1789 rules of decision act left federal courts unfettered to apply their own rules of procedure in common law actions brought in federal court, state law governs substantive issues.  state law includes not only statutory law, but case law as well.

Analysis:

Except in matters governed by the U.S. Constitution or by acts of Congress, the law to be applied in any case is the law of the state. Whether the law of the state shall be declared by its legislature in a statute or by its highest court in a decision is not a matter of federal concern. There is no federal general common law. Congress has no power to declare substantive rules of common law applicable in a state, whether they be local in their nature or general, be they commercial law or a part of the law of torts

The U.S. Constitution recognizes and preserves the autonomy and independence of the states in their legislative and judicial departments. Supervision over either the legislative or the judicial action of the states is in no case permissible except as to matters by the Constitution specifically authorized or delegated to the United States.

The doctrine of Swift v. Tyson, 16 Pet. 1 (1842), rests upon the assumption that there is a transcendental body of law outside of any particular state but obligatory within it unless and until changed by statute, that federal courts have the power to use their judgment as to what the rules of common law are, and that in the federal courts the parties are entitled to an independent judgment on matters of general law. But the common law so far as it is enforced in a state, whether called common law or not, is not the common law generally but the law of that state existing by the authority of that state without regard to what it may have been in England or anywhere else. Thus the doctrine of Swift v. Tyson is an unconstitutional assumption of powers by courts of the United States.

Outcome:

The judgment was reversed and the case remanded for consideration of applicable state law as to petitioner railroad company’s liability for respondent’s injuries, the court holding that there was no federal general common law, and that except in matters governed by the U.S. Constitution or by acts of Congress, the law to be applied by the federal courts in diversity cases was the law of the state.

Case Name:Piper Aircraft Co. v. Reyno

Page: 392

Heading: 454 U.S. 235

Procedural History:

Petitioner manufacturer appealed a decision from the United States Court of Appeals for the Third Circuit, which reversed a district court’s grant of petitioner’s motion to dismiss respondent representative’s wrongful-death action on the ground of forum non conveniens.

Facts:

Respondent’s decedents died in an aircraft in the Scottish highlands. All the decedents were Scottish residents, as were their heirs. As the decedents’ personal representative, respondent filed suit against petitioner in the United States because petitioner manufactured the aircraft in Pennsylvania and because the law was more favorable there. Petitioner wanted to litigate the tort action in Scotland, and filed to dismiss the action in Pennsylvania. A district court dismissed the action, but the lower appellate court reversed the district court’s decision.

On appeal, the court reversed, finding the district court had not abused its discretion in dismissing the matter. It noted that the possibility of an unfavorable change in the law in Scotland should not, by itself, bar dismissal. There usually was a strong presumption, the court explained, in favor of a plaintiff’s choice of forum. However, that presumption applied with less force when a plaintiff or real party in interest was foreign. It was more convenient for a plaintiff to choose its home forum. Therefore, when a foreign plaintiff chose a United States forum, the presumption was less reasonable.

Rule:

a plaintiff may not defeat a motion to dismiss for forum non conveniens merely by showing that the substantive law that would be applied in the alternative forum is less favorable to him than that of the present forum

two tiered test 1.an alternative forum available?                     an alt. forum is not available simply bc the law in that forum would prevent the pl. from recovering.  availbility means is there a constituted court w jurisd. over the claims? it’s a formulistic analysis 2. weigh the Gilbert factors (public and private factors)              private- Important considerations are the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive. There may also be questions as to the enforceability of a judgment if one is obtained. The court will weigh relative advantages and obstacles to fair trial. But unless the balance is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed. pubic interests admin difficulties, jury duty, etc.

Analysis:

When trial in the chosen forum would establish oppressiveness and vexation to a defendant out of all proportion to plaintiff’s convenience, or when the chosen forum is inappropriate because of considerations affecting the court’s own administrative and legal problems, the court may, in the exercise of its sound discretion, dismiss the case.

Dismissal on grounds of forum non conveniens may be granted even though the law applicable in the alternative forum is less favorable to the plaintiff’s chance of recovery. The possibility of an unfavorable change of law should not, by itself, bar dismissal.

28 U.S.C.S. § 1404(a) transfers are different than dismissals on the ground of forum non conveniens. Congress enacted § 1404(a) to permit change of venue between federal courts. Although the statute was drafted in accordance with the doctrine of forum non conveniens, it was intended to be a revision rather than a codification of the common law. District courts are given more discretion to transfer under § 1404(a) than they had to dismiss on grounds of forum non conveniens.

There is ordinarily a strong presumption in favor of the plaintiff’s choice of forum, which may be overcome only when the private and public interest factors clearly point towards trial in the alternative forum. The presumption applies with less force when the plaintiff or real parties in interest are foreign.

The forum non conveniens determination is committed to the sound discretion of the trial court. It may be reversed only when there has been a clear abuse of discretion; where the court has considered all relevant public and private interest factors, and where its balancing of these factors is reasonable, its decision deserves substantial deference.

Outcome:

The court reversed the decision of the lower appellate court and affirmed the decision of the district court, finding that the possibility of an unfavorable change in the law should not, by itself, bar dismissal.

Case Name:Gulf Oil Corp. v. Gilbert

Page: 391

Heading: 330 U.S. 501

Procedural History:

Petitioner, an oil company, appealed from a decision of the United States Court of Appeals for the Third Circuit, which reversed a district court order that dismissed respondent warehouse owner’s action for damages on the ground of forum non conveniens.

Facts:

Certiorari was granted to address whether the district court had inherent power to dismiss a suit pursuant to the doctrine of forum non conveniens and, if so, whether that power was abused in this case. Respondent initially brought this case in federal district court based on diversity of citizenship. The district court, applying Erie, considered the law of New York as to forum non conveniens applied and that it required the case to be left to Virginia courts and dismissed the action.

Appeal was taken. The appeals court disagreed as to the applicability of New York law, took a restrictive view of the application of the entire doctrine in federal courts, and reversed with one dissent. Petitioner appealed. The court studied the doctrine of forum non conveniens and its applicability, and determined it could never apply if there was absence of jurisdiction or mistake of venue. The court concluded the district court had not exceeded its powers or the bounds of its discretion in dismissing plaintiff’s complaint and remitting it to the courts of his own community. The appeals court judgment was too restrictive.

Analysis:

The principle of forum non conveniens is simply that a court may resist imposition upon its jurisdiction even when jurisdiction is authorized by the letter of a general venue statute.

If the combination and weight of factors requisite to given results are difficult to forecast or state, those to be considered are not difficult to name. An interest to be considered, and the one likely to be most pressed, is the private interest of the litigant. Important considerations are the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive. There may also be questions as to the enforceability of a judgment if one is obtained. The court will weigh relative advantages and obstacles to fair trial. But unless the balance is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed.

Factors of public interest also have place in applying the doctrine of forum non conveniens.

Outcome:

Judgment of the appeals court was reversed.

Case Name:Hoffman v. Blaski,

Page: 382

Heading: 363 U.S. 335

Procedural History:

Petitioner judges appealed judgments from the United States Court of Appeals for the Seventh Circuit that held that petitioners did not have authority under 28 U.S.C.S. § 1404(a) to transfer respondent litigants’ cases to districts in which respondents did not have the right to bring their actions.

Facts:

Respondent litigants initiated lawsuits against third parties. The third parties sought to transfer the cases to districts in which respondents could not have initiated the actions, and the third parties agreed to waive any objections to venue. Petitioner judges either accepted jurisdiction over the cases or transferred the cases to the other districts under 28 U.S.C.S. § 1404(a). The appellate court reversed petitioners’ judgments.

The Court affirmed the appellate court’s judgments. Based upon the statutory language and legislative history, the phrase “where it might have been brought” in § 1404(a) could not be interpreted to mean “where the case could be brought after the suit was initiated and with defendants’ consent.” The district courts’ power to transfer a case under § 1404(a) did not depend on whether the third parties consented to the transferee district or waived venue and personal jurisdiction defenses, but rather it depended on respondents’ ability to initiate the suits in the transferee districts.

Rule:

under 28 USC 1404(a), a federal court can only transfer a case to a court where the plaintiff could have originally brought the case.

pl. can bring the case where courts would have – original matter jurisd, SMJ, and personal jurisd.

pl. choice of forum should rarely be disturbed, but rarely does not mean never.

when a case is transferred you are going to apply the same law as in the state was originally filed.  but don’t assume that it’s the substantive law of that jurisd., the choice of law rules still apply.

Analysis:

28 U.S.C.S. § 1404(a) is unambiguous, direct, and clear, and the unequivocal words of § 1404(a) and the legislative history establish that Congress indeed meant what it said. The conduct of a defendant after suit has been instituted cannot add to the forums where “it might have been brought.” In the normal meaning of words this language of § 1404(a) directs the attention of the judge who is considering a transfer to the situation which existed when suit was instituted.

If when a suit is commenced, plaintiff has a right to sue in that district, independently of the wishes of defendant, it is a district “where the action might have been brought” under 28 U.S.C.S. § 1404(a). If he does not have that right, independently of the wishes of defendant, it is not a district “where the action might have been brought,” and it is immaterial that the defendant subsequently makes himself subject, by consent, waiver of venue and personal jurisdiction defenses, or otherwise, to the jurisdiction of some other forum.

DISSENT

the intent of 1404(a) was to enable courts to transfer cases to the court which would be most convenient to the parties and would best serve the ends of justice.  if a case could be better handled by another court and the case could have been brought there at the time of transfer, the case should be transferred.

Outcome:

The Court affirmed the judgments.

Case Name:Bates v. C & S Adjusters, Inc.

Page: 379

Heading: 980 F.2d 865

Procedural History:

Plaintiff debtor appealed a judgment from the United States District Court for the Western District of New York, which dismissed plaintiff’s action against defendant debt collector under the Fair Debt Collection Practices Act, 15 U.S.C.S § 1692 et seq.

Facts:

Defendant debt collector mailed collection letter to plaintiff’s old address. Post office forwarded letter to plaintiff’s new address, which was in different judicial district. Plaintiff sued, and defendant had case dismissed for improper venue. The court reversed. The court held that venue was proper, under 28 U.S.C.S. § 1391(b)(2), in the district in which a substantial part of the events or omissions giving rise to the claim occurred.

The court noted the liberalization of venue provisions, to permit multiple venues, and not to require a district court to determine what was the best venue. The court then held that under the Fair Debt Collection Practices Act, 15 U.S.C.S. § 1692 et seq., the harm the statute sought to prevent did not occur until the collection notice was received. Therefore, the court held, a substantial part of the claim occurred in the district where plaintiff received the notice.

Rule:

venue is proper under the fair debt collection practices act in the district where an allegedly offending letter is received.

Analysis:

The statutory standard for venue 28 U.S.C.S. § 1391(b)(2) focuses not on whether a defendant has made a deliberate contact–a factor relevant in the analysis of personal jurisdiction–but on the location where events occurred.

Receipt of a collection notice is a substantial part of the events giving rise to a claim under the Fair Debt Collection Practices Act, 15 U.S.C.S. § 1692 et seq

Outcome:

The court reversed the trial court’s judgment that dismissed plaintiff’s complaint for improper venue and remanded for further proceedings under the Fair Debt Collections Practice Act.

Case Name:Borough of W. Mifflin v. Lancaster

Page: 353

Heading: 45 F.3d 780

Procedural History:

Petitioner municipal government filed a writ of mandamus that challenged the decision of the United States District Court for the Western District of Pennsylvania, which had remanded respondent claimants’ state case involving malicious prosecution, abuse of process, negligence, and a federal civil rights claim under 42 U.S.C.S. § 1983 back to the state court after being removed to the district court based on the § 1983 claim.

Facts:

Respondent claimants had filed an action against petitioners, retail mall and municipal government, for malicious prosecution, abuse of process, negligence, and a federal claim under 42 U.S.C.S. § 1983. Petitioners, based on the § 1983 claim, filed a notice of removal to the federal district court. Respondents moved to remand it back to state court. The district court remanded back to state court, and petitioners challenged that decision by filing a writ of mandamus to compel the district court to accept jurisdiction.

The court granted the writ and found that the federal court had jurisdiction under 28 U.S.C.S. §§ 1331 and 1343. Because the district court had jurisdiction, the action was properly removed from state court under 28 U.S.C.S. § 1441. The court found that § 1441(c) granted to the district court only limited authority to remand a case, and that respondents’ claims were not separate and independent. The court found that 28 U.S.C.S. § 1367(c) did not sanction the remand of the entire case because the district court had supplemental jurisdiction over the other claims.

Rule:

a district court may not remand to state courts an action containing a S1983 claim on the grounds that the state law claims predominate

Analysis:

28 U.S.C.S. § 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. 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). Suits involving pendent, now supplemental, state claims that derive from a common nucleus of operative fact, do not fall within the scope of § 1441(c), since pendent claims are not separate and independent.

Pendent jurisdiction is a doctrine of discretion, not of plaintiff’s right. Its justification lies in considerations of juridical economy, convenience and fairness to litigants; if these are not present a federal court should hesitate to exercise jurisdiction over state claims, even though bound to apply state law to them. Needless decisions of state law should be avoided both as a matter of comity and to promote justice between the parties by procuring for them a surer-footed reading of applicable law. Certainly, if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well. Similarly, if it appears that the state issues substantially predominate, whether in terms of proof, of the scope of the issues raised, or of the comprehensiveness of the remedy sought, the state claims may be dismissed without prejudice and left for resolution to state tribunals.

A fair reading of the Congressional intent in enacting the amendment to § 1441(c) is that it was designed to restrict removal to only those cases falling within the court’s federal question jurisdiction and to bring the remand provisions into harmony with 28 U.S.C. § 1367, thereby possibly avoiding piecemeal litigation.

unless the federal question claims removed by the defendant were “separate and independent” from the state law claims, § 1441(c) cannot apply and the district court must retain the federal claim. Hence, the district court’s discretion to remand under § 1441(c) can pertain only to those state low claims which the district court could decline to hear under 28 U.S.C. § 1367.

Similarly in the present case, Lindsey and Coughanour rely on the same series of events for all counts of their complaint, including the federal § 1983 count; therefore, the federal claim is not separate and independent under § 1441(c), and the district court had no authority to remand the case under that section.

Outcome:

The court issued the writ of mandamus

Case Name:Executive Software N. Am. v. United States Dist. Court

Page:

Heading: 24 F.3d 1545

Procedural History:

Petitioners, an employer and related individuals, sought a writ of mandamus to an order of respondent United States District Court for the Central District of California remanding pendent state law claims by plaintiff employee, the real party in interest, in an employment discrimination suit.

Facts:

The employee filed federal and state law claims for employment discrimination against petitioners. Petitioners removed the action to federal court. When the district court remanded the pendent state law claims, petitioners requested a writ of mandamus.

The court granted the writ, holding that the district court clearly erred in not maintaining supplemental jurisdiction over the pendent state claims. The district court did not rely on the supplemental jurisdiction statute, 28 U.S.C.S. § 1367(c), in making its decision and failed to articulate how the circumstances that warranted declining jurisdiction were exceptional and compelling under the statute. The district court clearly erred by articulating a basis for declining jurisdiction that was unauthorized by statute. The district court’s errors were significant and the question was an important question of first impression. Petitioners faced unrectifiable prejudice if not granted the writ and there were no other adequate means for relief.

Rule:

a court can decline to assert supplemental  jurisdiction over a pendent claim only if one of the four categories specifically enumerated in section 1367(c) applies. These are:(1) the claim raises a novel or complex issue of State law,  (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.

Analysis:

28 U.S.C.S. § 1367(c)(4) permits a discretionary remand of pendent claims when in exceptional circumstances, there are other compelling reasons for declining jurisdiction. “Compelling reasons” for the purposes of 28 U.S.C.S. § (c)(4) are those that lead a court to conclude that declining jurisdiction best accommodates the values of economy, convenience, fairness, and comity.

Under 28 U.S.C.S. § 1367(c)(4), a court must identify the predicate that triggers the applicability of the category (the exceptional circumstances), and then determine whether, in its judgment, the underlying values are best served by declining jurisdiction in the particular case (the compelling reasons).

By use of the word “shall,” the statute makes clear that if power is conferred under section 1367(a), and its exercise is not prohibited by section 1367(b), 8 a court can decline to assert supplemental  [*1556] jurisdiction over a pendent claim only if one of the four categories specifically enumerated in section 1367(c) applies. These are:(1) the claim raises a novel or complex issue of State law,  (2) the claim substantially predominates [**32] over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.

Outcome:

The court reversed, holding that the district court clearly erred when it relied on a basis for remanding pendent state claims that was not permitted by statute and failed to articulate its reasons for remanding the pendent claims.

Case Name:Exxon Mobil Corp. v. Allapattah Servs.

Page:

Heading: 545 U.S. 546

Procedural History:

In a class action suit, the United States Court of Appeals for the Eleventh Circuit affirmed a district court’s exercise of supplemental jurisdiction pursuant to 28 U.S.C.S. § 1367 with respect to class members who did not meet the amount in controversy. In a separate suit, the United States Court of Appeals for the First Circuit found that supplemental jurisdiction was lacking. The Supreme Court granted certiorari.

Facts:

The circuits were split as to whether a federal court in a diversity action could exercise supplemental jurisdiction over additional plaintiffs whose claims did not satisfy the minimum amount in controversy.

The Supreme Court found that, where the other elements of jurisdiction were satisfied and at least one named plaintiff met the amount-in-controversy requirement, § 1367 authorized supplemental jurisdiction over claims of other plaintiffs in the same U.S. Const. art. III case or controversy, even if those claims were for less than the jurisdictional amount. By enacting 28 U.S.C.S. § 1367, Congress overruled prior Supreme Court precedent that had required every plaintiff to separately satisfy the amount-in-controversy requirement. Although § 1367(b) precluded supplemental jurisdiction over claims of plaintiffs joined under Fed. R. Civ. P. 19 or intervenors under Fed. R. Civ. P. 24, nothing in the statute withheld jurisdiction over claims of plaintiffs permissively joined under Fed. R. Civ. P. 20 or certified as class members under Fed. R. Civ. P. 23. The Class Action Fairness Act, Pub. L. No. 109-2, 119 Stat. 4, did not affect the Court’s interpretation of 28 U.S.C.S. § 1367.

Rule:

where one plaintiff’s claim satisfies the minimum amount in controversy requirement for federal diversity jurisdiction, and another plaintiff’s related claim does not, 28 USC 1367 allows federal courts to exercise supplemental jurisdiction over the claim that is less than the required amount.

Analysis:

Where the other elements of jurisdiction are present and at least one named plaintiff in the action satisfies the amount-in-controversy requirement, 28 U.S.C.S. § 1367 does authorize supplemental jurisdiction over the claims of other plaintiffs in the same U.S. Const. art. III case or controversy, even if those claims are for less than the jurisdictional amount specified in the statute setting forth the requirements for diversity jurisdiction.

When a well-pleaded complaint contains at least one claim that satisfies the amount-in-controversy requirement, and there are no other relevant jurisdictional defects, a district court, beyond all question, has original jurisdiction over that claim. The presence of other claims in the complaint, over which the district court may lack original jurisdiction, is of no moment. If the court has original jurisdiction over a single claim in the complaint, it has original jurisdiction over a “civil action” within the meaning of 28 U.S.C.S. § 1367(a), even if the civil action over which it has jurisdiction comprises fewer claims than were included in the complaint. Once the court determines it has original jurisdiction over the civil action, it can turn to the question whether it has a constitutional and statutory basis for exercising supplemental jurisdiction over the other claims in the action.

The indivisibility theory–that all claims in a complaint must stand or fall as a single, indivisible “civil action” as a matter of definitional necessity–is easily dismissed, as it is inconsistent with the whole notion of supplemental jurisdiction. The indivisibility theory is further belied by the United States Supreme Court’s practice–in both federal-question and diversity cases–of allowing federal courts to cure jurisdictional defects by dismissing the offending parties rather than dismissing the entire action.

The contamination theory--that the inclusion of a claim or party falling outside the district court’s original jurisdiction somehow contaminates every other claim in a complaint, depriving the court of original jurisdiction over any of these claims–can make some sense in the special context of the complete diversity requirement because the presence of nondiverse parties on both sides of a lawsuit eliminates the justification for providing a federal forum. The theory, however, makes little sense with respect to the amount-in-controversy requirement, which is meant to ensure that a dispute is sufficiently important to warrant federal-court attention. The presence of a single nondiverse party may eliminate the fear of bias with respect to all claims, but the presence of a claim that falls short of the minimum amount in controversy does nothing to reduce the importance of the claims that do meet this requirement.

28 U.S.C.S. § 1367(a) applies by its terms to any civil action of which the district courts have original jurisdiction, and the last sentence of § 1367(a) expressly contemplates that the court may have supplemental jurisdiction over additional parties. So it cannot be the case that the presence of those parties destroys the court’s original jurisdiction, within the meaning of § 1367(a), over a civil action otherwise properly before it.

When a well-pleaded complaint in district court includes multiple claims, all part of the same case or controversy, and some, but not all, of the claims are within the court’s original jurisdiction, does the court have before it any civil action of which the district courts have original jurisdiction? It does. Under 28 U.S.C.S. § 1367, the court has original jurisdiction over the civil action comprising the claims for which there is no jurisdictional defect. No other reading of § 1367 is plausible in light of the text and structure of the jurisdictional statute. Though the special nature and purpose of the diversity requirement mean that a single nondiverse party can contaminate every other claim in the lawsuit, the contamination does not occur with respect to jurisdictional defects that go only to the substantive importance of individual claims.

Outcome:

The judgment of the United States Court of Appeals for the Eleventh Circuit was affirmed. The judgment of the United States Court of Appeals for the First Circuit was reversed and remanded.

Case Name:Finley v. United States

Procedural History:

Petitioner widow challenged a judgment of the United States Court of Appeals for the Ninth Circuit. The court of appeals reversed a district court judgment which had allowed her to include claims against defendants over whom the federal courts would not otherwise have had jurisdiction in her action against respondent government under 28 U.S.C.S. § 1346(b) of the Federal Tort Claims Act.

Facts:

After her husband and children died in a plane crash, petitioner widow filed a state court action. Upon discovering that respondent government was also partly responsible, she filed a district court action which based jurisdiction on 28 U.S.C.S. § 1346(b) of the Federal Tort Claims Act (FTCA). On petitioner’s motion, the district court asserted pendent jurisdiction over the state-court defendants. The court of appeals reversed in an interlocutory appeal. Petitioner sought a writ of certiorari and the court affirmed. In cases of pendent-claims jurisdiction, federal courts were allowed to assume jurisdiction over state claims when the claims derived from a common nucleus of operative fact and plaintiffs would ordinarily be expected to try them in one judicial proceeding. Where, as here, no independent basis of jurisdiction existed over the non-federal parties, the case was one of pendent-party jurisdiction and demanded careful attention to the relevant statutory language. The FTCA conferred jurisdiction only over civil actions on claims against the United States. Since it expressed no intention to include jurisdiction over other parties, pendent-party jurisdiction was not available.

Analysis:

The determination that federal and nonfederal claims derive from a common nucleus of operative fact and are such that a plaintiff would ordinarily be expected to try them in one judicial proceeding does not end the inquiry into whether a federal court has power to hear the nonfederal claims along with the federal ones. Beyond this constitutional minimum, there must be an examination of the posture in which the nonfederal claim is asserted and of the specific statute that confers jurisdiction over the federal claim.

Pendent jurisdiction, in the sense of judicial power, exists whenever there is a claim arising under the United States Constitution, the laws of the United States, and treaties made, or which shall be made, under their authority, U.S. Const. art. III, § 2, and the relationship between that claim and the state claim permits the conclusion that the entire action before the court comprises but one constitutional “case.” The requisite relationship exists when the federal and nonfederal claims derive from a common nucleus of operative fact and are such that a plaintiff would ordinarily be expected to try them in one judicial proceeding.

Outcome:

The court affirmed the judgment holding that the district court could not assert jurisdiction over parties who were not otherwise subject to federal jurisdiction in petitioner widow’s action against respondent government under the Federal Tort Claims Act (FTCA). Pendent jurisdiction was not available because the FTCA conferred federal jurisdiction only over claims against the government.

Case Name:Owen Equipment & Erection Co. v. Kroger

Page: 332

Heading: 437 U.S. 365

Procedural History:

Respondent widow filed a wrongful-death action against a power company. The power company filed a third-party complaint against petitioner equipment company. Summary judgment was granted for the power company, and the case went to trial between the widow and the equipment company. The equipment company appealed the United States Court of Appeals for the Eighth Circuit’s affirmation of the district court’s denial of its motion to dismiss.

Facts:

On appeal, the Court held that it was undisputed that there was no independent basis of federal jurisdiction over the widow’s state-law tort action against the equipment company because both were citizens of Iowa. Thus, it was clear that the widow could not originally have brought suit in federal court naming the equipment company and the power company as codefendants, because citizens of Iowa would have been on both sides of the litigation.

The widow’s claim against the equipment company, however, was entirely separate from her original claim against the power company, where the equipment company’s liability to the widow depended not at all upon whether or not the power company was also liable. The nonfederal claim was asserted by the widow, who voluntarily chose to bring suit upon a state-law claim in a federal court. The Court held that the district court lacked power to entertain the widow’s lawsuit against the equipment company. Thus, the asserted inequity in the equipment company’s alleged concealment of its citizenship was irrelevant.

Rule:

A finding that federal and nonfederal claims arise from a common nucleus of operative fact, does not end the inquiry into whether a federal court has power to hear the nonfederal claims along with the federal ones. Beyond this constitutional minimum, there must be an examination of the posture in which the nonfederal claim is asserted and of the specific statute that confers jurisdiction over the federal claim, in order to determine whether Congress in that statute has expressly or by implication negated the exercise of jurisdiction over the particular nonfederal claim.

Analysis:

Pendent jurisdiction, in the sense of judicial power, exists whenever there is a claim arising under the Constitution, the laws of the United States, and Treaties made, or which shall be made, under their authority. U.S. Const. art. III, § 2. The relationship between that claim and the state claim permits the conclusion that the entire action before the court comprises but one constitutional case. The state and federal claims must derive from a common nucleus of operative fact. But if, considered without regard to their federal or state character, a plaintiff’s claims are such that he would ordinarily be expected to try them all in one judicial proceeding, then, assuming substantiality of the federal issues, there is power in federal courts to hear the whole.

Outcome:

The Court reversed the judgment of the court of appeals.

Case Name:Aldinger v. Howard

Page: 330

Heading: 427 U.S. 1

Procedural History:

Petitioner employee sought certiorari review of the judgment of the United States Court of Appeals for the Ninth Circuit, which held that it did not have supplemental jurisdiction to hear the employee’s civil rights action against respondent employer. The employee contended that she was discharged in violation of 42 U.S.C.S. § 1983 and that the courts had supplemental jurisdiction under 28 U.S.C.S. § 1343(3) to hear her case.

Facts:

An employee was terminated from her employment with a county. The employee filed an action asserting state and federal claims against the employer. The state-law claim rested on state statutes that waived the employer’s sovereign immunity and provided for vicarious liability for the tortious conduct of its officials. The lower courts dismissed her 42 U.S.C.S. § 1983 claim because the county was not a person for the purpose of 28 U.S.C.S. § 1343, and dismissed the state claims for lack of jurisdiction.

The court held that the lower courts properly determined that the federal claim failed because the employer was a county and, therefore, was not a person for the purpose of 42 U.S.C.S. § 1983. Therefore, the court held that the jurisdiction conferred by 28 U.S.C.S. § 1343(3) did not provide a source of pendent jurisdiction for the state-law claims. The court held that because there was no statutory claim upon which pendent jurisdiction over the state law claim could rest, the lower federal courts lacked jurisdiction over the state law claims.

Rule:

If the new party sought to be joined is not otherwise subject to federal jurisdiction, there is a more serious obstacle to the exercise of pendent jurisdiction than if parties already before the court are required to litigate a state-law claim. Before it can be concluded that such jurisdiction exists, a federal court must satisfy itself not only that U.S. Const. art. III permits it, but that Congress in the statutes conferring jurisdiction has not expressly or by implication negated its existence.

if congress says there can’t be pendant party jurisd. then there is no jurisd. despite federal question.

Analysis:

As against a plaintiff’s claim of additional power over a pendent party, the reach of a statute conferring jurisdiction is construed in light of the scope of the cause of action as to which federal judicial power is extended by Congress.

Outcome:

The judgment of the court of appeals holding that federal courts lacked jurisdiction was affirmed.

Case Name:United Mine Workers v. Gibbs (famous first case)

Page: 325

Heading: 383 U.S. 715

Procedural History:

Petitioner union sought review of a decision of the United States Court of Appeals for the Sixth Circuit, which held in favor of respondent employee on his unfair labor practice action that was brought pursuant to 29 U.S.C.S. § 8 (b)(4).

Facts:

The employee was awarded compensatory and punitive damages in an action against petitioner union for alleged violations of federal law governing unfair labor practices. The employee brought his action in federal court in connection with a state court action for unlawful conspiracy and unlawful boycott. The suit stemmed from the conduct of union members, who, through violent means, forcibly prevented the opening of a mine operation supervised by the employee.

The Court held that even assuming pendent jurisdiction was proper in the case, reversal was required due to the employee’s failure to meet special proof requirements imposed by federal law, which required proof that the union ratified the acts of its members. The Court held that while the union members acted in a way that was reprehensible, there was no proof that the union approved of the violent methods. The mere fact of continued picketing at the mine site was not properly relied upon to show ratification. Actual proof existed that the union put a stop to it as soon as it became aware. Therefore, the ruling of the appellate court was reversed.

Rule:

under pendent jurisdiction, federal courts may decide state issues which are closely related to the federal issues being litigated. fairness, convenience and efficiency can also influence the judge’s decision to apply jurisd.

3 part test: 1. substantial federal claims ( the federal claim must be sufficiently substantial to support federal question jurisd.), 2. common nucleus of operative fact (the federal and nonfederal claims must derive from a common nucleus of operative fact) and 3.on judicial proceeding (the federal and nonfederal claims must be such that the pl. “”would ordinarily be expected to try them in one judicial proceeding”)

Analysis:

State law claims are appropriate for federal court determination if they form a separate but parallel ground for relief also sought in a substantial claim based on federal law.

While a federal court may not assume jurisdiction of a separate and distinct nonfederal cause of action because it is joined in the same complaint with a federal cause of action, yet where two distinct grounds in support of a single cause of action are alleged, only one of which presents a federal question, and the federal question averred is not plainly wanting in substance, the federal court, even though the federal ground is not established, may nevertheless retain and dispose of the case upon the nonfederal ground.

Pendent jurisdiction, in the sense of judicial power, exists whenever there is a claim arising under the Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority, U.S. Const. art. III, § 2, and the relationship between that claim and the state claim permits the conclusion that the entire action before the court comprises but one constitutional “case.” The federal claim must have substance sufficient to confer subject matter jurisdiction on the court. The state and federal claims must derive from a common nucleus of operative fact. But if, considered without regard to their federal or state character, a plaintiff’s claims are such that he would ordinarily be expected to try them all in one judicial proceeding, then, assuming substantiality of the federal issues, there is power in federal courts to hear the whole.

Although the Federal Rules of Civil Procedure do not expand the jurisdiction of federal courts, they embody the tendency of judicial decisions to require a plaintiff to try his whole case at one time and to that extent emphasize the basis of pendent federal jurisdiction over nonfederal claims.

Pendent jurisdiction is a doctrine of discretion, not of plaintiff’s right, it need not be exercised in every case in which it is found to exist, and its justification lies in considerations of judicial economy, convenience, and fairness to litigants, and if these are not present, a federal court should hesitate to exercise jurisdiction over state claims, even though bound to apply state law to them; needless decisions of state law should be avoided both as a matter of comity and to promote justice between the parties, by procuring for them a surer-footed reading of applicable law.

Under the doctrine of pendent federal jurisdiction over nonfederal claims, if federal claims are dismissed before trial even though not insubstantial in a jurisdictional sense, state claims which are alleged should be dismissed as well, and if it appears that the state issues substantially predominate, whether in terms of proof, of the scope of the issues raised, or of the comprehensiveness of the remedy sought, the state claims may be dismissed without prejudice and left for resolution to state tribunals.

Although the question whether a federal court has power to exercise pendent jurisdiction over nonfederal claims is ordinarily resolved on the pleadings, the issue whether pendent jurisdiction has been properly assumed is one which remains open throughout the litigation, and once it appears that a state claim constitutes the real body of a case, to which the federal claim is only an appendage, the state claim may fairly be dismissed.

Outcome:

Petitioner union was granted relief and the Court reversed the appellate court’s ruling in favor of respondent employee, holding that respondent employee could not recover against petitioner union for the actions of its members absent specific proof that the union ratified those actions.

Case Name:T. B. Harms Co. v. Eliscu

Page:

Heading: 339 F.2d 823

Procedural History:

Plaintiff appealed from the ruling of the United States District Court for the Southern District of New York dismissing its action for equitable and declaratory relief for alleged copyright infringement.

Facts:

Plaintiff sued defendants for copyright infringement. Plaintiff alleged its own New York incorporation and did not allege the citizenship of defendants. Defendants moved to dismiss the complaint for failure to state a claim on which relief could be granted and for lack of federal jurisdiction, which was granted.

On appeal, the court held that the district court was correct when it treated jurisdictional issue as turning solely on whether the complaint alleged any act or threat of copyright infringement. The plaintiff did not do so in its complaint and, therefore, plaintiff did not have a proper action.

Rule:

the proper forum to hear a case is the one having control over the laws which created the cause of action.

Analysis:

the grant extended to every case in which federal law furnished a necessary ingredient of the claim even though this was antecedent and uncontested.  The United States Supreme Court has long given a narrower meaning to the “arising under” language in statutes defining the jurisdiction of the lower federal courts.

creation test- Mr. Justice Holmes stated that ‘(a) suit arises under the law that creates the cause of action’; in the case sub judice, injury to a business involving slander of a patent, he said, ‘whether it is a wrong or not depends upon the law of the State where the act is done’ so that the suit did not arise under the patent laws.

The Federal courts have exclusive jurisdiction of all cases arising under the patent laws, but not of all questions in which a patent may be the subject-matter of the controversy. For courts of a state may try questions of title, and may construe and enforce contracts relating to patents.

Even though a claim is created by state law, 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.

An action “arises under” the Copyright Act if and only if the complaint is for a remedy expressly granted by the Act, e.g., a suit for infringement or for the statutory royalties for record reproduction, 17 U.S.C.S. § 101, or asserts a claim requiring construction of the Act, or, at the very least and perhaps more doubtfully, presents a case where a distinctive policy of the Act requires that federal principles control the disposition of the claim. The general interest that copyrights, like all other forms of property, should be enjoyed by their true owner is not enough to meet this last test.

Outcome:

The court affirmed the ruling of the district court, citing the fact that the plaintiff did not allege an act or threat of copyright infringement.

Case Name:Louisville & N. R. Co. v. Mottley

Page:

Heading: 211 U.S. 149

Procedural History:

Appellees, a married couple, obtained an injunction in the Circuit Court of the United States for the Western District of Kentucky to compel appellant railroad company to issue travel passes to appellees according to a contract.

Facts:

Appellant, a railroad company, entered into a contract with appellees, a married couple, to give them travel passes every year. When a new federal law prohibited railroads from issuing free passes, appellant declined to renew the passes. Appellees sued in federal court for specific performance of the contract, and the circuit court granted an injunction.

The Supreme Court of the United States, finding it improper to plead that a defense under federal law was anticipated, reversed the judgment and remanded to the circuit court with instructions to dismiss the action for lack of federal question jurisdiction.

Rule:

alleging an anticipated constitutional defense in the complaint does not give a federal court jurisdiction if there is no diversity if citizenship between the litigants.

the artful pleading means that you can’t bring up a defense for the other side becuase that’s not part of the pleading.

this is an intepretation of the statute.  osborn is an interpretation of the constitution.

Analysis:

A suit arises under the Constitution and laws of the United States only when the plaintiff’s statement of his own cause of action shows that it is based upon those laws or that Constitution. It is not enough that the plaintiff alleges some anticipated defense to his cause of action and asserts that the defense is invalidated by some provision of the Constitution of the United States.

The complainant in the first instance shall be confined to a statement of its cause of action, leaving to the defendant to set up in his answer what his defence is, and if anything more than a denial of complainant’s cause of action, imposing upon the defendant the burden of proving such defence.

Outcome:

The Supreme Court of the United States reversed the judgment and remanded to the circuit court with instructions to dismiss the action for lack of federal question jurisdiction.

Case Name:Osborn v. President, Directors & Co. of Bank

Page:

Heading: 22 U.S. 738

Procedural History:

Defendants, a state auditor and treasurer and their successors and agents, appealed a judgment of the United States Circuit Court for the District of Ohio, ordering them to restore to complainant Bank of the United States a sum forcibly removed from complainant by defendants under authority of a state statute levying a tax on complainant and authorizing seizure of the tax.

Facts:

The State of Ohio enacted a statute providing that complainant, the Bank of the United States, was pursuing its operations contrary to state law. The State levied a tax on the bank and authorized the state auditor to seize the levied tax. Despite an injunction obtained by complainant, the auditor’s agent forcibly removed from complainant a sum of money and delivered it to the state treasurer. Complainant sued to enjoin defendants from paying away the money and to require them to restore the money. The state court directed defendants to repay the amount seized with interest, and defendants appealed.

The Unites States Supreme Court affirmed. The Court first held that the clause in complainant’s act of incorporation, enabling complainant to sue in the courts of the United States, was consistent with the Constitution. The creation of complainant was constitutional under the Necessary and Proper Clause, and because the state law imposing the tax on complainant was unconstitutional and void, the circuit court correctly directed defendants to repay the money being held in the state treasury, regardless of the fact that they were authorized by state law to seize the money.

Rule:

if the federal law is an ingredient in the action then there is federal jurisd.

osborn is an interpretation of the constitution motlley is an interretation of the statute.

Analysis:

the ingredient in this case is that this entity created by federal law, then there is jurisd.  the fed govt. has to protect the bank.  very broad jurisd.

this remains good law for the purpoes on interpreting article 3 constitutional power.

Outcome:

The Court affirmed. The Court held that complainant’s articles of incorporation, enabling it to sue in federal court, were consistent with the Constitution, and that because the state law authorizing defendants to seize the money was unconstitutional and void, the circuit court correctly ordered defendants to repay the money with interest.

Case Name:A.F.A. Tours, Inc. v. Whitchurch

Page: 285

Heading: 937 F.2d 82

Procedural History:

Plaintiff corporation appealed order of summary judgment issued by the United States District Court for the Southern District of New York in favor of defendant/former employee in misappropriation of trade secrets suit.

Facts:

Plaintiff corporation sued defendant, a former employee, for misappropriate of trade secrets; plaintiff claimed defendant, after his resignation, made use for profit of client, marketing, and tour information developed by plaintiff. The federal district court granted summary judgment to defendant, finding that irrespective of the factual issues as to whether the information in question was confidential and known by defendant to be confidential, plaintiff had failed to establish amount in controversy sufficient to invoke federal diversity jurisdiction.

On appeal, the federal appellate court reversed and remanded, holding that plaintiff was not afforded a fair opportunity to support its claim that a sufficient amount in controversy existed, and that, assuming the amount in controversy was sufficient, factual disputes remained as to whether the information in question was confidential and whether defendant knew that. The case was remanded for further fact-finding as to the amount in controversy.

Rule:

a court may not dismiss a diversity action for a failure to meet the amount in controversy requirement without allowing a plaintiff to brief the issue.

rule for proving diversity amount – the sum claimed by the plaintiff controls if the claim (will be shown in complaint) is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify a dismissal.

one plaintiff can aggregate any/all claims against one def. to meet the amount in controversy requirement (AIC is set at the time of the complaint, if something is later discovered to be covered in warranty etc, it doesn’t matter).  for separate def. you need to meet the AIC against each.

multiple plaintiffs may not aggregate their claims together to meet the jurisdictional requirement if the claims are separate and distinct.  Each PL can aggregate all their claims against one defendant to meet the AIC.  Each PL needs themselves to claim AIC.  however, multiple plaintiffs may aggregate their claims only when they seek “to enforce a single title or right, in which they have a common and undivided interest” (property only).

aggregation against one plaintiff and one defendant NO OTHER AGGREGATION

injunction – Where a plaintiff seeks injunctive relief, the value of his claim is generally assessed with reference to the right he seeks to protect and measured by the extent of the impairment to be prevented by the injunction. In calculating that impairment, a court may look not only at past losses but also at potential harm.

Analysis:

Pursuant to 28 U.S.C.S. § 1332, federal district courts have jurisdiction over civil diversity suits where the matter in controversy exceeds the sum or value of $ 50,000, exclusive of interest and costs. The test for determining whether a plaintiff meets the jurisdictional amount is as follows: The rule governing dismissal for want of jurisdiction in cases brought in the federal court 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. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify a dismissal.

The amount of damages recoverable in an action for misappropriation of trade secrets may be measured either by the plaintiff’s losses, or by the profits unjustly received by the defendant. In addition, if punitive damages are permitted under the controlling law, the demand for such damages may be included in determining whether the jurisdictional amount is satisfied. New York law apparently allows the recovery of punitive damages in a trade secrets case if the defendant’s conduct has been sufficiently gross and wanton

In appropriate circumstances, the owner of trade secrets may obtain an injunction against their use or disclosure by another in breach of his confidential relationship with the owner. Where a plaintiff seeks injunctive relief, the value of his claim is generally assessed with reference to the right he seeks to protect and measured by the extent of the impairment to be prevented by the injunction. In calculating that impairment, a court may look not only at past losses but also at potential harm.

Before making a determination that the plaintiff’s claim does not meet the jurisdictional minimum set by 28 U.S.C.S. § 1332, a federal district court must afford the plaintiff an appropriate and reasonable opportunity to show good faith in believing that a recovery in excess of the jurisdictional amount is reasonably possible.

Outcome:

The summary judgment order was vacated, as plaintiff was not given adequate opportunity to establish the requisite amount in controversy for diversity jurisdiction, and issues as to confidentiality remained unresolved.

Case Name:Mas v. Perry,

Page: 279

Heading: 489 F.2d 1396

Procedural History:

Defendant appealed from a decision of the United States District Court for the Middle District of Louisiana, which had jurisdiction based on diversity of citizenship under 28 U.S.C.S. § 1332(a)(2) between appellant, a resident of Louisiana, and appellees, a French national residing in the United States and his American wife.

Facts:

The appeal arose from a judgment for appellee tenants awarding damages incurred as a result of the discovery of “two-way” mirrors through which the appellant landlord watched them. Appellant’s motion to dismiss for lack of diversity and jurisdictional amount was denied by the lower court.

The reviewing court affirmed, stating that, under 28 U.S.C.S. § 1332(a)(2), the federal judicial power extended to the claim of appellee husband, a foreign national. While the domicile of the wife–and her state citizenship for purposes of diversity jurisdiction– was generally deemed to be that of her husband, the court concluded that for diversity purposes a woman did not have her state citizenship changed solely by reason of her marriage to an alien. Furthermore, the amount in controversy was determined by the amount claimed in good faith rather than the amount awarded.

Rule:

a natural person must be both a citizen of the United States and a domiciliary of that state.  mere residence in a state does not establish domicile for purposes of diversity jurisdiction.  two part test for figuring out domicile: (a) taking up residence (b) the intention to remain there. until you establish a new domicile, then it kicks back to the last one.

Analysis:

It has long been the general rule that complete diversity of parties is required in order that diversity jurisdiction obtain; that is, no party on one side may be a citizen of the same state as any party on the other side. This determination of one’s state citizenship for diversity purposes is controlled by federal law, not by the law of any state. As is the case in other areas of federal jurisdiction, the diverse citizenship among adverse parties must be present at the time the complaint is filed. The burden of pleading the diverse citizenship is upon the party invoking federal jurisdiction, and if the diversity jurisdiction is properly challenged, that party also bears the burden of proof.

To be a citizen of a state within the meaning of 28 U.S.C.S. § 1332, a natural person must be both a citizen of the United States and a domiciliary of that state. For diversity purposes, citizenship means domicile; mere residence in the state is not sufficient.

A person’s 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. A change of domicile may be effected only by a combination of two elements: (a) taking up residence in a different domicile with (b) the intention to remain there.

While it is generally the case that the domicile of the wife–and, consequently, her state citizenship for purposes of diversity jurisdiction–is deemed to be that of her husband, the court finds no precedent for extending this concept to the situation where the husband is a citizen of a foreign state but resides in the United States.

An American woman is not deemed to have lost her United States citizenship solely by reason of her marriage to an alien. 8 U.S.C.S § 1489. Similarly, the court concludes that for diversity purposes a woman does not have her domicile or state citizenship changed solely by reason of her marriage to an alien.

Outcome:

Judgment affirmed, because diversity extended to appellee foreign national, appellee wife retained her state citizenship for purposes of jurisdiction, and the jurisdictional amount was the amount claimed in good faith, not the amount awarded.

Case Name:Jones v. Flowers

Page: 209

Heading: 547 U.S. 220

Procedural History:

Petitioner property owner sued respondent state official and property purchaser, alleging that failure to provide him notice of a tax sale and his right to redeem resulted in the taking of his property without due process. The Arkansas Supreme Court affirmed summary judgment in favor of respondents. Certiorari was granted to determine if the government had to take additional reasonable steps when a notice of a tax sale was returned undelivered.

Facts:

The owner purchased a house and lived in it until he separated from his wife. He paid his mortgage each month for 30 years and the mortgage company paid his property taxes. After the mortgage was paid off, the property taxes went unpaid, and the property was certified as delinquent. Two notices, one for the tax delinquency and the other for an impending tax sale, were sent by certified letter to the address, but both were returned unclaimed.

The Court held that as mailed notice of a tax sale was returned unclaimed, the State should have taken additional reasonable steps to attempt to provide notice to the property owner before selling his property since it was practicable to do so. Although the State may have made a reasonable calculation of how to reach the property owner, it had good reason to suspect when the notice was returned that the owner was no better off than if the notice had never been sent. Although Ark. Code Ann. § 26-35-705 provided strong support for the argument that mailing a certified letter to the owner was reasonably calculated to reach him, it did not alter the reasonableness of doing nothing more when the notice was promptly returned unclaimed

Outcome:

The judgment of the Arkansas Supreme Court was reversed.

Case Name:Mullane v. Cent. Hanover Bank & Trust Co

Page: 199

Heading: 339 U.S. 306

Procedural History:

Appellant special guardian sought review of a decision of the New York Court of Appeals that held that the statutory notices to the trust beneficiaries was adequate to afford due process under U.S. Const. amend. XIV.

Facts:

Appellee bank and a trust company established a common trust fund that complied with N.Y. Banking Law § 100-c. Appellee petitioned for a settlement of its first account as a common trustee. Upon the filing of the petition, appellant was appointed the special guardian. The only notice given to the beneficiaries was by a publication in a local newspaper that was in strict compliance with § 100-c. Appellant objected, contending that the notice and statutory provisions for notice to beneficiaries were inadequate to afford due process. The New York Court of Appeals overruled the objection.

The Court reversed, holding that the notice requirement under § 100-c was inadequate because it did not provide for a means to contact those who could easily be informed by other means. The notice had to reasonably convey the required information and afford a reasonable time for those interested to make their appearance

Rule:

in order to satisfy due process challenges, notice must be by means calculated to inform the desired parties, and, where they reside outside of the state and their names and addresses are available, notice by publication is insufficient

notice must be reasonably effectuated to provide actual notice.

if there are a set of options that would work, the court will allow you to use any of those options if they are the same.

Analysis:

state interests – Whatever the technical definition of its chosen procedure, the interest of each state in providing means to close trusts that exist by the grace of its laws and are administered under the supervision of its courts is so insistent and rooted in custom as to establish beyond doubt the right of its courts to determine the interests of all claimants, resident or nonresident, provided its procedure accords full opportunity to appear and be heard.

The fundamental requisite of due process of law is the opportunity to be heard.

An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. The notice must be of such nature as reasonably to convey the required information, and it must afford a reasonable time for those interested to make their appearance. But if with due regard for the practicalities and peculiarities of the case these conditions are reasonably met, the constitutional requirements are satisfied.

When notice is a person’s due, process which is a mere gesture is not due process. The means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it. The reasonableness and hence the constitutional validity of any chosen method may be defended on the ground that it is in itself reasonably certain to inform those affected, or, where conditions do not reasonably permit such notice, the form chosen is not substantially less likely to bring home notice than other of the feasible and customary substitutes.

Where the names and post-office addresses of those affected by a proceeding are at hand, the reasons disappear for resort to means less likely than the mails to apprise them of its pendency.

Outcome:

The notice statute was found unconstitutional. The Court held that the statute was required to afford reasonable time for those interested to make an appearance and that the notice requirement under the statute was inadequate because it did not provide for the means to contact those who could easily be informed by other means.

Case Name:Dudnikov v. Chalk & Vermilion Fine Arts

Page:

Heading: 514 F.3d 1063

Procedural History:

Appellants, e-bay sellers, sued appellees, copyright owners, in the United States District Court for the District of Colorado and sought a declaratory judgment that their prints did not infringe the owners copyrights. The owners filed a motion to dismiss and argued that the court lacked personal jurisdiction over them. The district court concurred and dismissed the sellers’ complaint. The sellers appealed.

Facts:

Neither the Copyright Act, 17 U.S.C.S. § 101 et seq., nor the Declaratory Judgment Act, 28 U.S.C.S. § 2201 et seq., provided for nationwide service of process, so Fed. R. Civ. P. 4(k)(1)(A) commanded the district court to apply the law of the state in which the district court sat. Colorado’s long-arm statute conferred the maximum jurisdiction permissible consistent with the Due Process Clause. Thus, the first, statutory, inquiry effectively collapsed into the second, constitutional, analysis.

The district court’s dismissal of the sellers’ action for lack of personal jurisdiction was reversed because the sellers met the minimum contacts and purposeful availment requirements where the owners sent a notice of claimed infringement (NOCI) to eBay expressly intending to suspend the sellers’ auction in Colorado, the sellers’ suit arose from, and was indeed an effort to reverse, the intended consequences of the owners’ NOCI, which they incurred in Colorado, and the court had to assume that the owners knew that the sellers business was located in Colorado. Moreover, traditional notions of fair play or substantial justice would not have precluded suit in the district of Colorado.

Rule:

It is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications. So long as a commercial actor’s efforts are purposefully directed toward residents of another state, the United States Supreme Court has consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there.

Actions that are performed for the very purpose of having their consequences felt in the forum state are more than sufficient to support a finding of purposeful direction.

Analysis:

overview of the entire process – The United States Supreme Court has held that, to exercise jurisdiction in harmony with due process, defendants must have minimum contacts with the forum state, such that having to defend a lawsuit there would not offend traditional notions of fair play and substantial justice. Because a state’s sovereignty is territorial in nature, a defendant’s contacts with the forum state must be sufficient such that, notwithstanding its lack of physical presence in the state, the state’s exercise of sovereignty over it can be described as fair and just. A venerated principle to be sure, it is also one that has long eluded a definitive legal test and proven fertile ground for debate by law students, lawyers, and judges alike. The United States Supreme Court has instructed that the minimum contacts standard requires, first, that the out-of-state defendant must have purposefully directed its activities at residents of the forum state, and second, that the plaintiff’s injuries must arise out of defendant’s forum-related activities. Additionally, exercising personal jurisdiction over defendants must always be consonant with traditional notions of fair play and substantial justice. While those elements afford some shape to the due process inquiry, each is not without its own interpretative difficulties.

The purposeful availment element can appear in different guises. In the tort context, the courts often ask whether the nonresident defendant purposefully directed its activities at the forum state; in contract cases, meanwhile, the courts sometimes ask whether the defendant purposefully availed itself of the privilege of conducting activities or consummating a transaction in the forum state. In all events, the shared aim of purposeful direction doctrine has been said by the United States Supreme Court to ensure that an out-of-state defendant is not bound to appear to account for merely random, fortuitous, or attenuated contacts with the forum state.

calder – The United States Supreme Court has found purposeful direction because of the presence of: (a) an intentional action, writing, editing, and publishing the article, that was; (b) expressly aimed at the forum state; with (c) knowledge that the brunt of the injury would be felt in the forum state.

The court affirmed the district court’s judgment.

The unilateral activity of another party is not an appropriate consideration when determining whether a defendant has sufficient contacts with a forum state to justify an assertion of jurisdiction. Unilateral acts, however, occur in at least two analytically distinct ways. First, a plaintiff might purchase a product in one forum and carry it into another forum. Absent at least the seller’s foreknowledge that the buyer was going to take the product into a particular forum, the defendant cannot reasonably be said to have purposefully directed its activities at the forum. The defendant’s only contact, the presence of its product in the forum, is the result of the act of someone else and not the defendant’s own intentional conduct. A second type of unilateral activity appears where the defendant has purposefully directed its activities at the forum, but the plaintiff’s injury nonetheless arises out of the plaintiff’s or a third party’s unilateral acts, rather than the defendant’s.

The mere foreseeability of causing an injury in the forum state is, standing alone, insufficient to warrant a state exercising its sovereignty over an out-of-state defendant. But the plaintiffs must establish not only that defendants foresaw or knew that the effects of their conduct would be felt in the forum state, but also that defendants undertook intentional actions that were expressly aimed at that forum state.

arise out of casuality analysis – Many courts have interpreted the “arise out of” language to require some sort of causal connection between a defendant’s contacts and the suit at issue. There is perhaps nothing in the entire field of law which has called forth more disagreement, or upon which the opinions are in such a welter of confusion, as causation doctrine. Some courts have interpreted the phrase “arise out of” as endorsing a theory of but-for causation, while other courts have required proximate cause to support the exercise of specific jurisdiction. Under the former approach, any event in the causal chain leading to the plaintiff’s injury is sufficiently related to the claim to support the exercise of specific jurisdiction. The latter approach, by contrast, is considerably more restrictive and calls for courts to examines whether any of the defendant’s contacts with the forum are relevant to the merits of the plaintiff’s claim. Yet a third approach, departing somewhat from the causation-based principles, instead asks whether there is a substantial connection or discernible relationship between the contacts and the suit. Under that theory, the relationship between the contacts and the suit can be weaker when the contacts themselves are more extensive.

With minimum contacts established, it is incumbent on defendants to present a compelling case that the presence of some other considerations would render jurisdiction unreasonable. In making such an inquiry courts traditionally consider factors such as the following: (1) the burden on the defendant; (2) the forum state’s interests in resolving the dispute; (3) the plaintiff’s interest in receiving convenient and effectual relief; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of controversies; and (5) the shared interest of the several states or foreign nations in furthering fundamental social policies.

Outcome:

The judgment of the district court was reversed, and the case was remanded for further proceedings not inconsistent with the opinion.

Case Name:Pebble Beach Co. v. Caddy,

Page: 150

Heading: 453 F.3d 1151

Procedural History:

Appellant California golf course resort sued appellee British bed and breakfast (B & B) owner under federal and state law alleging intentional infringement and dilution of its trademark. The United States District Court for the Northern District of California dismissed the complaint for lack of personal jurisdiction and denied the resort’s motion for additional discovery. The resort sought review.

Facts:

The B & B owner operated under the same name as the resort and advertised its services, which did not include a golf course, at a non-interactive website, which included general information about its accommodations and restaurant. The resort contended that the B & B owner was subject to personal jurisdiction in California, or alternatively, in any forum in the U.S., because he expressly aimed tortious conduct at the U.S. and the state.

On appeal, the court affirmed. The B & B owner did not purposefully avail himself of the privilege of conducting activities in California or purposefully direct his activities toward the state. The B & B owner’s passive website and domain name alone did not satisfy the Calder effects test, and there was no other action expressly aimed at California or the U.S. that would have provided the required “something more” for personal jurisdiction. Additionally, the fact that the B & B owner worked in California at some point in his past did not constitute “individualized targeting” of the state to show purposeful availment. The court also upheld the denial of additional jurisdictional discovery since it would not have been helpful.

Outcome:

The court affirmed the district court’s judgment.

Case Name:Shaffer v. Heitner

Page: 161

Heading: 433 U.S. 186

Procedural History:

Appellants, corporate officers and directors, sought review of judgment from the Supreme Court of Delaware in appellee’s shareholder derivative suit, contending that Delaware’s statute permitting courts of that state to take jurisdiction of a lawsuit by sequestering defendant’s property located in the state violated the due process clause of U.S. Const. amend. XIV.

Facts:

Appellants, corporate officers and directors, sought review of judgment in appellee’s shareholder derivative suit, contending that Delaware’s statute permitting courts of that state to take jurisdiction of a lawsuit by sequestering defendant’s property located in the state violated the due process clause of the Fourteenth Amendment, U.S. Const. amend. XIV, as it permitted state courts to exercise jurisdiction despite the absence of sufficient contacts with the state. On appeal, judgment was reversed.

In support of its ruling, the court held that the minimum contacts test of International Shoe should have been applied to assertions of in rem as well as in personam jurisdiction. The court noted that appellant’s seized property did not have sufficient contacts with the state to support Delaware’s assertion of jurisdiction over appellants. The court further held that appellants had neither purposefully availed themselves of the privilege of conducting activities within the state, nor had any reason to expect to be brought before a Delaware court.

Rule:

jurisdiction cannot be founded on property within a state unless there are sufficient contacts within the meaning of the test developed in international shoe.

all assertions of state-court jurisd. must be evaluated according to the standards set forth in intl. shoe., unless you tag someone in the state

Analysis:

If a court’s jurisdiction is based on its authority over the defendant’s person, the action and judgment are denominated in personam and can impose a personal obligation on the defendant in favor of the plaintiff. If jurisdiction is based on the court’s power over property within its territory, the action is called in rem or quasi in rem. The effect of a judgment in such a case is limited to the property that supports jurisdiction and does not impose a personal liability on the property owner, since he is not before the court.

Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations.

The relationship among the defendant, the forum, and the litigation, rather than the mutually exclusive sovereignty of the states is the central concern of the inquiry into the constitutionality of an exercise of personal jurisdiction.

Property cannot be subjected to a court’s judgment unless reasonable and appropriate efforts have been made to give the property owners actual notice of the action.

In considering whether jurisdiction in a particular case violates the Due Process Clause, all assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny.

In order to justify an exercise of jurisdiction in rem, the basis for jurisdiction must be sufficient to justify exercising jurisdiction over the interests of persons in a thing. The standard for determining whether an exercise of jurisdiction over the interests of persons is consistent with the Due Process Clause is the minimum-contacts standard elucidated in International Shoe.

Outcome:

The judgment was reversed as appellant’s seized property did not have sufficient contacts with the state, and appellants neither purposefully availed themselves of the privilege of conducting activities within the state nor had any reason to expect to be brought before a Delaware court.

Case Name:Burnham v. Superior Court of Cal.,

Page: 175

Heading: 495 U.S. 604

Procedural History:

Petitioner nonresident sought review of a Court of Appeal of California, First Appellate District, decision that upheld service of process on petitioner in a divorce action and held that U.S. Const. amend. XIV did not prohibit the court from asserting in personum jurisdiction over him because he had the requisite “minimum contacts” with the state.

Facts:

Petitioner nonresident challenged an appeals court decision that held that the forum state had a valid jurisdictional predicate for in personam jurisdiction over petitioner in a pending divorce action in the forum state because petitioner had been present in the forum state and personally served with process. In a plurality opinion, the Supreme Court affirmed the decision of the appeals court. The forum state had jurisdiction over petitioner after he was served with process while temporarily in the state for activities unrelated to the pending divorce action. Due process under U.S. Const. amend. XIV was satisfied because nothing in the line of cases supporting the minimum contacts doctrine supported the proposition that physical presence was itself insufficient to establish jurisdiction.

Rule:

the 14th amendment does not deny a state jurisdiction over a person personally served with process while temporarily in a state, in a suit unrelated to his activities in the state.

due process protects def. who are out of the jurisd, while here, the person was in the area, so there is no need to look at it through the due process..

Analysis:

To determine whether the assertion of personal jurisdiction is consistent with due process, courts have long relied on the principles traditionally followed in marking out the territorial limits of each state’s authority. Due process means a course of legal proceedings according to those rules and principles which have been established in the United States system of jurisprudence for the protection and enforcement of private rights and includes well-established principles of public law respecting the jurisdiction of an independent state over persons and property. A state court’s assertion of personal jurisdiction satisfies the Due Process Clause if it does not violate traditional notions of fair play and substantial justice. Deviations are permissible, but only with respect to suits arising out of an absent defendant’s contacts with a state.

The courts of a state have jurisdiction over nonresidents who are physically present in a state. Each state has the power to hale before its courts any individual who can be found within its borders, and that once having acquired jurisdiction over such a person by properly serving him with process, a state can retain jurisdiction to enter judgment against him, no matter how fleeting his visit. Where a party is within a territory, he may justly be subjected to its process, and bound personally by the judgment pronounced, on such process, against him.

Jurisdiction based on physical presence alone constitutes due process because it is one of the continuing traditions of the United States legal system that define the due process standard of traditional notions of fair play and substantial justice.

Outcome:

In a plurality opinion, the Supreme Court affirmed the decision of the appeals court.

Case Name:Burger King Corp. v. Rudzewicz

Page: 119

Heading: 471 U.S. 462

Procedural History:

On a writ of certiorari, appellant franchisor sought review of the judgment of the United States Court of Appeals for the Eleventh Circuit, which found that the State of Florida could not exercise jurisdiction over appellee franchisee under Fla. Stat. ch. 48.193(1)(g) (Supp. 1984), in an action for breach of contract.

Facts:

Appellant brought suit against appellee for breach of contract in the Florida courts. The court of appeals reversed the holding of the lower court that Fla. Stat. ch. 48.193(1)(g) (Supp. 1984) granted the Florida courts personal jurisdiction over the appellee. On review, the Supreme Court determined that a party that avails themselves of the protections and benefits of the law of a forum state is subject to personal jurisdiction of that state.

The court found that the appellees had entered into a contract and established a substantial and continuing relationship with the appellant, a Florida resident. The court further found that the appellee had fair notice that he might be subject to suit in Florida. The court further found that the exercise of jurisdiction would not offend due process and reversed the holding of the court of appeals and remanded for further proceedings.

Rule:

a party who establishes purposeful minimum contacts with a state is subject to that state’s exercise of personal jurisdiction over him.

Analysis:

Where a forum seeks to assert specific jurisdiction over an out-of-state defendant who has not consented to suit there, the fair warning requirement is satisfied if the defendant has purposefully directed his activities at residents of the forum, and the litigation results from alleged injuries that arise out of or relate to those activities.

The forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State and those products subsequently injure forum consumers.

The foreseeability that is critical to due process analysis is that a defendant’s conduct and connection with a forum state are such that he should reasonably anticipate being haled into court there.

The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant’s activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.

The “purposeful availment” requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of “random,” “fortuitous,” or “attenuated” contacts, or of the unilateral activity of another party or a third person. Jurisdiction is proper, however, where the contacts proximately result from actions by the defendant himself that create a “substantial connection” with the forum State. Where the defendant “deliberately” has engaged in significant activities within a State, or has created “continuing obligations” between himself and residents of the forum he manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded by the benefits and protections of the forum’s laws it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well.

So long as a commercial actor’s efforts are purposefully directed toward residents of another State, the U.S. Supreme Court has consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there.

Where a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable. Nevertheless, minimum requirements inherent in the concept of “fair play and substantial justice” may defeat the reasonableness of jurisdiction even if the defendant has purposefully engaged in forum activities.

Prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing must be evaluated in determining whether a nonresident defendant purposefully established minimum contacts within a forum

Outcome:

Judgment of the court of appeals finding the Florida courts could not exercise jurisdiction over appellee was reversed because the exercise of jurisdiction by the Florida courts was not a violation of due process.

Case Name:Asahi Metal Indus. Co. v. Superior Court of Cal.

Page: 129

Heading: 480 U.S. 102

Procedural History:

On writ of certiorari to the Supreme Court of California, petitioner, a Japanese corporation, sought review of a decision that California courts had personal jurisdiction over it on the claim of respondent, a Taiwanese corporation, for indemnification in a products liability action where the defect involved a component manufactured by petitioner and sold to respondent, who had it assembled in respondent’s factory in Taiwan.

Facts:

Petitioner, a Japanese corporation, manufactured a valve that was sold to respondent, a Taiwanese corporation, who used it in the manufacture of a motorcycle tire. When the tire exploded while the motorcycle owner was driving it in California, the driver filed a products liability action against respondent, who filed a cross-complaint for indemnity against petitioner. The trial court denied petitioner’s motion to quash the service of summons, the appellate court reversed, and the state supreme court reversed the appellate court.

On certiorari, the Supreme Court held that the mere fact that petitioner knew that some of its component parts would be used in products that would be sold in the state did not provide the necessary minimum contacts for the state to exercise personal jurisdiction over petitioner, since petitioner did nothing to purposely avail itself of the privilege of conducting activities in the state. Therefore, since there were no minimum contacts, the state was estopped by Fourteenth Amendment due process from exercising personal jurisdiction over petitioner. The Court reversed the judgment of the state supreme court and remanded the case.

Rule:

minimum contacts sufficient to sustain jurisdiction are not satisfied simply by the placement of a product into the stream of commerce coupled with an awareness that its product would reach the forum state.

Analysis:

Minimum contacts must have a basis in some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws. Jurisdiction is proper where the contacts proximately result from actions by the defendant himself that create a “substantial connection” with the forum state.

The substantial connection between the defendant and the forum state necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum state. The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum state.

A defendant’s awareness that the stream of commerce may or will sweep the product into the forum state does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum state.

The determination of the reasonableness of the exercise of jurisdiction in each case will depend on an evaluation of several factors. A court must consider the burden on the defendant, the interests of the forum state, and the plaintiff’s interest in obtaining relief. It must also weigh in its determination the interstate judicial system’s interest in obtaining the most efficient resolution of controversies; and the shared interest of the several states in furthering fundamental substantive social policies.

The unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders.

Outcome:

The Court reversed the judgment and remanded the case, since petitioner conducted no activities in the state and thus did not have the necessary minimum contacts with the state that would allow the state to exercise personal jurisdiction over petitioner.

Case Name:Perkins v. Benguet Consol. Mining Co

Page: 138

Heading: 342 U.S. 437

Procedural History:

Petitioner appealed the order of the Supreme Court of Ohio sustaining respondent foreign corporation’s motion to quash service for petitioner’s cause of action that did not arise within the state and did not relate to respondent’s activities there.

Facts:

Petitioner, a nonresident of Ohio, filed suit against respondents, including respondent incorporated foreign mining company. The mining company had been carrying on a limited but continuous and systematic part of its general business in the state . Petitioner’s cause of action did not arise in Ohio and did not relate to the company’s activities there. At issue was whether the Due Process Clause of the U.S. Const. amend. XIV precluded Ohio from subjecting a foreign corporation to the jurisdiction of its courts in an action in personam.

The U.S. Supreme Court held that the company’s continuous and systematic in-state activities, including directors’ meetings, business correspondence, banking stock transfers, and payment of salaries, were enough to make it fair and reasonable to subject the company to proceedings in personam, at least insofar as the proceedings sought to enforce causes of action related to those very activities or to other activities within the state. As such, it did not violate federal due process for Ohio to either take or decline jurisdiction of the company.

Rule:

A state may exercise personal jurisdiction over a foreign corporation even when the cause of action does not arise in the state or relate to any of the corporation’s activities in the state if the corporation carries on continuous and systematic corporate activities in that state.

Analysis:

If an authorized representative of a foreign corporation is physically present in the state of the forum and is there engaged in activities appropriate to accepting service or receiving notice on its behalf, there is no unfairness in subjecting that corporation to the jurisdiction of the courts of that state through such service of process upon that representative. This has been squarely held to be so in a proceeding in personam against such a corporation, at least in relation to a cause of action arising out of the corporation’s activities within the state of the forum.

The amount and kind of activities which must be carried on by the foreign corporation in the state of the forum so as to make it reasonable and just to subject the corporation to the jurisdiction of that state are to be determined in each case. The corporate activities of a foreign corporation which, under state statute, make it necessary for it to secure a license and to designate a statutory agent upon whom process may be served provide a helpful but not a conclusive test. For example, the state of the forum may by statute require a foreign mining corporation to secure a license in order lawfully to carry on there such functional intrastate operations as those of mining or refining ore. On the other hand, if the same corporation carries on, in that state, other continuous and systematic corporate activities as it did here — consisting of directors’ meetings, business correspondence, banking, stock transfers, payment of salaries, purchasing of machinery, etc. — those activities are enough to make it fair and reasonable to subject that corporation to proceedings in personam in that state, at least insofar as the proceedings in personam seek to enforce causes of action relating to those very activities or to other activities of the corporation within the state.

Outcome:

The Court vacated and remanded, holding that it did not violate federal due process for the state either to take or to decline jurisdiction in the proceeding since the company’s continuous and systematic carrying of business made it fair and reasonable to subject the company to the proceedings.

Case Name:Helicopteros Nacionales de Colombia, S. A. v. Hall

Page: 142

Heading: 466 U.S. 408

Procedural History:

Petitioner foreign corporation sought review of a decision of the Supreme Court of Texas, which ruled that the corporation’s contacts with the state were sufficient to allow a state court to assert jurisdiction over the corporation in respondent representatives’ cause of action against the corporation for the wrongful deaths of their decedents, which did not arise out of, and was unrelated to, the corporation’s activities within the state.

Facts:

The foreign corporation entered into contract negotiations in Texas with decedents’ employer to provide helicopter services. They signed a contract in Peru that provided for decedents’ employer to make payments to the corporation’s United States bank account. The corporation did not maintain a place of business in Texas, but purchased helicopter parts there and sent employees there for training. The decedents’ representatives filed a wrongful death action against the corporation following the decedents’ deaths in a helicopter crash in Peru.

Reversing the lower court, the Supreme Court held that the corporation’s contacts with the state were not sufficient to subject it to the state court’s in personam jurisdiction. Because the representatives’ causes of action for wrongful death arose out of the crash in Peru, and were not related to the corporation’s contacts with the state, and the corporation’s business contacts with the state were not continuous and systematic enough to satisfy the requirements of the Due Process Clause of the Fourteenth Amendment, the Supreme Court concluded that the state court lacked personal jurisdiction over the corporation.

Rule:

purchases of equipment and training of personnel may be insufficient to confer personal jurisdiction.

Analysis:

When a controversy is related to or “arises out of” a defendant’s contacts with the forum, the Court has said that a relationship among the defendant, the forum, and the litigation is the essential foundation of in personam jurisdiction.

Even when the cause of action does not arise out of or relate to the foreign corporation’s activities in the forum state, due process is not offended by a state’s subjecting the corporation to its in personam jurisdiction when there are sufficient contacts between the state and the foreign corporation.

Unilateral activity of another party or a third person is not an appropriate consideration when determining whether a defendant has sufficient contacts with a forum State to justify an assertion of jurisdiction.

Purchases and related trips, standing alone, are not a sufficient basis for a State’s assertion of jurisdiction.

Outcome:

The Supreme Court reversed the state court’s judgment that found the corporation subject to the in personam jurisdiction of the state courts.

Case Name:Kulko v. Superior Court of Cal

Page: 117

Heading: 436 U.S. 84

Procedural History:

Appellant father sought review of a decision from the Supreme Court of California, which affirmed the denial of his motion to quash service of the summons on the grounds that by consenting to his children living in California, appellant had caused an effect in that state warranting its exercise of personal jurisdiction over him.

Facts:

The Supreme Court reversed a decision that denied appellant father’s motion to quash service of the summons in a judicial action filed by appellee mother in California to modify a child support award entered in New York

The Court determined that California state courts were constitutionally unable to exercise personal jurisdiction over appellant as a nonresident, nondomiciliary parent of minor children domiciled within California, because appellant lacked sufficient minimum contacts with California. By merely consenting to his children’s living with appellee in contradiction of the parties’ separation agreement, appellant did not purposefully avail himself of the benefits and protections of California law. Particularly, because the action was domestic in nature, appellant did not derive any commercial or financial benefit from his children’s presence in California. Therefore, appellant’s actions were not such that it was fair, just, or reasonable to require him to conduct his defense to the child support modification in California.

Rule:

The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum state. It is essential in each case that there be some act by which the defendant purposefully avails himself of the privilege of conducting activities within the forum

Analysis:

A father who agrees, in the interests of family harmony and his children’s preferences, to allow them to spend more time in a particular state than was required under a separation agreement can hardly be said to have purposefully availed himself of the benefits and protections of that state’s laws.

Outcome:

The Court reversed a decision denying appellant’s motion to quash service of the summons in appellee’s action in California to modify a child support order because California state courts did not have personal jurisdiction over appellant. By consenting to his children’s living in California, appellant did not purposely avail himself of any benefits of California laws.

Case Name:Keeton v. Hustler Magazine, Inc.

Page: 115

Heading: 465 U.S. 770

Procedural History:

Petitioner individual appealed a judgment from the United States Court of Appeals for the First Circuit, which affirmed an order of the district court that dismissed petitioner’s libel complaint against respondent publisher for lack of personal jurisdiction.

Facts:

Petitioner filed a libel action against the publisher in the only forum in which the statute of limitations on her claim had not expired. Holding that petitioner’s lack of contacts with the forum state was not a factor in considering whether a court in the state could assert jurisdiction over respondent, the Court reversed the judgment.

The Court held that there was no question that respondent’s contacts with the forum state were sufficient to support jurisdiction, at least where petitioner’s claim arose out of those contacts. The Court stated that whether the laws of the forum would require application of the “single publication rule” and expose respondent to extra-jurisdictional damages was not material because jurisdiction, not choice of law, was at issue. The Court noted that the forum state had a substantial interest in deterring tortious acts within its borders, even to the extent that those acts harmed nonresidents. The Court held that while a plaintiff’s contacts with the forum could bolster the case for jurisdiction, the lack of contact could not subvert the case, noting that it had upheld jurisdiction where a plaintiff had no contacts with a forum.

Rule:

Plaintiff’s residence in the forum state is not a separate requirement, and lack of residence will not defeat jurisdiction established on the basis of a defendant’s contacts.

Analysis:

Outcome:

The Court reversed the judgment of the court of appeals. The cause was remanded for proceedings consistent with the opinion.

Case Name:Pennoyer v. Neff

Page: 71-78

Heading: 95 U.S. 714, 24 L.Ed. 565

Procedural History:

Defendant sought review of a decision from the Circuit Court of the United States for the District of Oregon, which held that a judgment granting ownership of certain property to defendant was invalid.

Facts:

Mitchell used service by publication to give notice to a law suit to Neff who lived in another state.  when neff didn’t show, defualt judgment was given to Mitchell.  Mitchell then waited until Neff had land in Oregan and then used his judgment to get the sheriff to confiscate the land, which M then sold to pennoyer. Neff found out and argued that the court did not have personal jurisdiction over him.

Issue:

where an action involves the adjudication of personal rights and obligations of the parties, is service by publication against a nonresident sufficient to confer jurisdiction?

Rule:

where an action involves the adjudication of personal rights and obligations of the parties, service by publication against nonresidents is ineffective to confer jurisdiction

there are four stems of personage authority to serve on the following people:1.  property in state. 2. present in court 3. resident 4. people “found” in the state and served

Analysis:

The authority of every tribunal is necessarily restricted by the territorial limits of the State in which it is established. Any attempt to exercise authority beyond those limits would be deemed in every other forum, as has been said by this court, an illegitimate assumption of power, and be resisted as mere abuse.

The State through its tribunals, may subject property situated within its limits owned by non-residents to the payment of the demand of its own citizens against them; and the exercise of this jurisdiction in no respect infringes upon the sovereignty of the State where the owners are domiciled

Since the adoption of U.S. Const. amend. XIV, the validity of judgments against persons who have not been personally summoned or had notice of the proceeding may be directly questioned, and their enforcement in the State resisted, on the ground that proceedings in a court of justice to determine the personal rights and obligations of parties over whom that court has no jurisdiction do not constitute due process of law

Outcome:

The lower court’s decision was affirmed. The court held that the judgment from the underlying action was invalid due to the fact that plaintiff was a non-resident of the state in which the action was brought and was not personally served

Case Name:Hess v. Pawloski

Page: 82

Heading: 274 U.S. 352

Procedural History:

Plaintiff in error, a non-resident of Massachusetts, sought review of a judgment from the Superior Court of Worcester County, Massachusetts, which held him liable for injuries caused by plaintiff in error’s negligent operation of a motor vehicle on a Massachusetts public highway. Plaintiff in error argued service of process under Mass. Gen. Laws ch. 431, § 2 (1923) deprived him of his property without due process of law.

Facts:

Plaintiff in error, a non-resident of Massachusetts, sought review of a judgment that held plaintiff in error liable for personal injuries sustained by defendant in error because of plaintiff in error’s negligent operation of a motor vehicle on a public highway in Massachusetts. Plaintiff in error asserted the complaint should have been dismissed on the ground that the service of process pursuant to Mass. Gen. Laws ch. 431, § 2 (1923), if sustained, would have deprived him of his property without due process of law in violation of U.S. Const. amend. XIV.

The United States Supreme Court held that in order to obtain personal jurisdiction over a non-resident, there had to be actual service within the state of notice upon him or upon someone authorized to accept service for him. The Court further held the state, if making no hostile discrimination against non-residents, was empowered to declare that the use of a highway by a non-resident was the equivalent of the appointment of the registrar as agent on whom process could be served. Accordingly, the judgment that denied plaintiff in error’s request for dismissal was affirmed.

Issue:

does a state statute by which nonresident motorists are deemed to have appointed a state official as their agent for service of process in cases arising out of accidents involving them, violate due process?

Rule:

in advance of a nonresident’s use of its highways, a state may require the nonresident to appoint one of the state’s officials as his agent on whom process may be served in proceedings growing out of such highway use.

Analysis:

The process of a court of one state cannot run into another and summon a party there domiciled to respond to proceedings against him. Notice sent outside a state to a non-resident is unavailing to give jurisdiction in an action against him personally for money recovery. There must be actual service within the state of notice upon him or upon some one authorized to accept service for him. A personal judgment rendered against a non-resident who has neither been served with process nor appeared in a suit is without validity. The mere transaction of business in a state by non-resident natural persons does not imply consent to be bound by the process of its courts.

In the public interest a state may make and enforce regulations reasonably calculated to promote care on the part of all, residents and non-residents alike, who use its highways

Literal and precise equality in respect of actually receiving and receipt for notice of the service and a copy of the process between residents and nonresidents of a state is not attainable; it is not required.

A state’s power to regulate the use of its highways extends to their use by non-residents as well as by residents. And, in advance of the operation of a motor vehicle on its highway by a non-resident, a state may require him to appoint one of its officials as his agent on whom process may be served in proceedings growing out of such use. A state has the power to exclude a non-resident until the formal appointment is made. And, having the power so to exclude, a state may declare that the use of the highway by a non-resident is the equivalent of the appointment of the registrar as agent on whom process may be served.

Outcome:

The Court affirmed the judgment that denied plaintiff in error’s request for dismissal because Massachusetts had personal jurisdiction over him where the state, if making no hostile discrimination against non-residents, could declare the use of a highway by a non-resident was the equivalent of the appointment of the registrar as agent on whom process may be served, such that service was made upon plaintiff in error’s authorized agent.

Case Name:Int’l Shoe Co. v. Wash. (Modern Approach)

Page: 85

Heading: 326 U.S. 310

Procedural History:

Appellant corporation sought review, on U.S. Const. amend. XIV due process grounds, of a judgment from the Supreme Court of Washington that affirmed the denial of appellant’s motion to dismiss an order and notice of assessment of delinquent contributions entered by appellee state pursuant to � 14(c) of the Washington Unemployment Compensation Act, Wash. Rev. Stat. � 9998-114(c) (1941).

Facts:

Appellee state sought to collect from appellant corporation a deficiency in the payment of contributions to the state unemployment compensation fund. Appellee personally served appellant’s salesman with notice of the suit and mailed a copy of the notice to appellant’s out-of-state headquarters. Holding that the systematic and continuous activities carried on in-state by appellant’s salesmen made it reasonable and just to permit appellee to enforce the tax by suit against appellant in the forum, the court affirmed.

The court held that in order to subject appellant to a judgment in personam, due process required only that appellant have certain minimum contacts with the forum state such that the maintenance of the suit did not offend traditional notions of fair play and substantial justice. The court also held that a corporation was deemed to have a “presence” in a state for jurisdictional purposes where its in-state activities had been continuous and systematic and gave rise to the liability sued on. The court held that the activity of appellant’s salesmen was not only substantial, but also gave rise to the obligation to contribute to the unemployment compensation fund.

Rule:

for a state to subject a nonresident defendant to in personam jurisdiction, due process requires that he have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. (Modern view, but allows use of past precedent to argue and decide cases)  Applies to individual as well.

Analysis:

Since the corporate personality is a fiction, although a fiction intended to be acted upon as though it were a fact, it is clear that unlike an individual its “presence” without, as well as within, the state of its origin can be manifested only by activities carried on in its behalf by those who are authorized to act for it.

The terms “present” or “presence” are used merely to symbolize those activities of the corporation’s agent within the state which courts will deem to be sufficient to satisfy the demands of due process. Those demands may be met by such contacts of the corporation with the state of the forum as make it reasonable, in the context of this federal system of government, to require the corporation to defend the particular suit which is brought there. An “estimate of the inconveniences” which would result to the corporation from a trial away from its “home” or principal place of business is relevant in this connection.

Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations.

“Presence” in a state is not doubted when the activities of the corporation there have not only been continuous and systematic, 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. Conversely the casual presence of the corporate agent or even his conduct of single or isolated items of activities in a state in the corporation’s behalf are not enough to subject it to suit on causes of action unconnected with the activities there. To require the corporation in such circumstances to defend the suit away from its home or other jurisdiction where it carries on more substantial activities is thought to lay too great and unreasonable a burden on the corporation to comport with due process.

To the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise to obligations, and, so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue.

Outcome:

Judgment affirming the denial of appellant corporation’s motion to dismiss an order and notice of assessment of delinquent contributions entered by appellee state was affirmed. The conduct of appellant corporation’s salesmen in soliciting business in the forum state was sufficient minimum contact with the state to subject appellant to suit for a liability to the state unemployment compensation fund that arose out of that conduct.

Case Name:Gray v. American Radiator & Standard Sanitary Corp. (“specific act statute” tortious conduct is the specificity) use as precedent on exams

Page: 93

Heading: 22 Ill. 2d 432

Procedural History:

Plaintiff appealed from a decision of the Circuit Court of Cook County (Illinois), which granted defendant foreign corporation’s motion to dismiss plaintiff’s personal injury action for lack of jurisdiction.

Facts:

A personal injury suit was brought against several defendants, including defendant foreign corporation, alleging that a water heater exploded and injured plaintiff. The complaint charged that the foreign corporation had negligently constructed the safety valve, and that plaintiff’s injuries were suffered as a proximate result thereof. A summons was issued and was duly served on the foreign corporation’s registered agent in Cleveland, Ohio. The foreign corporation filed a motion to quash the summons and to dismiss the claims against it on the ground that it had not committed a tortious act in Illinois. The foreign corporation’s affidavit stated that it did no business in Illinois and that it sold the completed valves to a co-defendant outside Illinois.

The circuit court granted the foreign corporation’s motion to dismiss the complaint. On appeal, the court held that the foreign corporation had sufficient contacts with the State of Illinois to provide jurisdiction because the foreign corporation elected to sell its product for ultimate use in that state.

Rule:

whether a nonresident activity within a state is adequate to subject it to jurisdiction of that state depends upon the facts of each case, and the relevant inquiry is whether the defendant engaged in some act or conduct by which he invoked the benefits and protections of the forum.

Analysis:

Section 16 of the Civil Practice Act, Ill. Rev. Stat. ch. 110, para. 16 (1959), provides that a summons may be personally served upon any party outside the state; and that as to nonresidents who have submitted to the jurisdiction of Illinois courts, such service has the force and effect of personal service within Illinois.

Under § 17(1)(b) of the Civil Practice Act, Ill. Rev. Stat. ch. 110, para. 17 (1959), a nonresident who, either in person or through an agent, commits a tortious act within Illinois submits to jurisdiction.  jurisdiction is predicated on the committing of a tortious act in Illinois. it contemplates the exertion of jurisdiction over nonresident defendants to the extent permitted by the Due Process Clause.

The place of a wrong is where the last event takes place that is necessary to render the actor liable. A second indication that the place of injury is the determining factor is found in rules governing the time within which an action must be brought. In applying statutes of limitation the court has computed the period from the time when the injury is done.

To be tortious an act must cause injury. The concept of injury is an inseparable part of the phrase. In determining legislative intention courts will read words in their ordinary and popularly understood sense. Intent should be determined less from technicalities of definition than from considerations of general purpose and effect.

Under modern doctrine the power of a state court to enter a binding judgment against one not served with process within the state depends upon two questions: first, whether he has certain minimum contacts with the state and second, whether there has been a reasonable method of notification.

Continuous activity within the state is not necessary as a prerequisite to jurisdiction

As a general proposition, if a corporation elects to sell its products for ultimate use in another state, it is not unjust to hold it answerable there for any damage caused by defects in those products.

Outcome:

The order granting defendant foreign corporation’s motion to dismiss was reversed and the case was remanded because sufficient minimum contacts existed for the trial court to exercise jurisdiction over the foreign corporation without violating due process.

Case Name:McGEE v. INTERNATIONAL LIFE INS. CO

Page: 100

Heading: 355 U.S. 220

Procedural History:

Petitioner life insurance beneficiary appealed from a judgment of the Court of Civil Appeals of Texas, First Supreme Judicial District, which refused to enforce the beneficiary’s California state court judgment against respondent insurance company on a contract of insurance.

Facts:

The beneficiary obtained a judgment against the insurer in a California state court and attempted to enforce it through an action in the Texas state courts. The Texas courts refused to enforce the California judgment, holding that the judgment was void under the Fourteenth Amendment because service of process outside California could not give the courts of California jurisdiction over the insurer. On appeal, the Court found that the Due Process Clause did not preclude the California court from entering a judgment that was binding on the insurer.

The Court found it sufficient for purposes of due process that the suit was based on a contract that had substantial connection with California. The contract was delivered in California, the premiums were mailed from there, and the insured was a resident of California when he died. There was no contention that the insurer did not have adequate notice of the suit or sufficient time to prepare its defenses and appear. The Court determined that the insurer had no vested right not to be sued in California and concluded that due process was satisfied because the insurer had certain minimum contacts with the State of California.

Rule:

It is sufficient for purposes of due process that a suit is based on a contract that had substantial connection with that State in which the suit is filed.

Analysis:

In the context of personal jurisdiction, today many commercial transactions touch two or more states and may involve parties separated by the full continent. With this increasing nationalization of commerce has come a great increase in the amount of business conducted by mail across state lines. At the same time modern transportation and communication have made it much less burdensome for a party sued to defend himself in a state where he engages in economic activity.

Outcome:

The Court reversed the judgment and remanded the cause to the Texas appellate court for further proceedings not inconsistent with the Court’s opinion.

Case Name:Hanson v. Denckla

Page: 101

Heading: 357 U.S. 235

Procedural History:

The court granted certiorari to a decision from the Delaware Supreme Court where the executrix of the subject estate appealed a judgment from the Supreme Court of Florida in consolidated cases concerning rights to part of the corpus of a trust established in Delaware by a settlor who later became domiciled in Florida. The papers whereon appeal was taken from the Florida judgment were treated as a petition for certiorari, which was granted.

Facts:

In consolidated cases, the parties contested the trust assets that were located in Delaware. The court held that Florida acquired no in rem jurisdiction to adjudicate the validity of the inter vivos dispositions simply because its decision might augment an estate passing under a will probated in its courts. The fact that the owner was domiciled in Florida was not a sufficient affiliation with the property upon which to base jurisdiction in rem.

Finding that Florida had no in rem jurisdiction, the court held that a judgment purporting to rest on that basis was invalid in Florida and must be reversed. Florida additionally had no in personam jurisdiction over the Delaware trustee. Since Florida was forbidden to enter a judgment attempting to bind a person over whom it had no jurisdiction, it had even less right to enter a judgment purporting to extinguish the interest of such a person in property over which the court had no jurisdiction. The unilateral activity of those who claimed some relationship with the nonresident defendant could not satisfy the requirement of contact with Florida. The Florida judgment was invalid under the fourteenth amendment principles of the constitution.

Analysis:

As technological progress has increased the flow of commerce between states, the need for jurisdiction over nonresidents has undergone a similar increase. At the same time, progress in communications and transportation has made the defense of a suit in a foreign tribunal less burdensome. In response to these changes, the requirements for personal jurisdiction over nonresidents have evolved from a rigid rule to a flexible standard. But it is a mistake to assume that this trend heralds the eventual demise of all restrictions on the personal jurisdiction of state courts. Those restrictions are more than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of territorial limitations on the power of the respective states

However minimal the burden of defending in a foreign tribunal, a defendant may not be called upon to do so unless he has had the “minimal contacts” with that state that are a prerequisite to its exercise of power over him.

Outcome:

The Delaware judgment not to accord full faith and credit to the Florida decree was affirmed. The Florida judgment that the contested part of the corpus of the trust passed under the residuary clause of the settlor’s will, which was admitted to probate in Florida, was reversed and remanded. Florida had no jurisdiction over the trust or the trustee and the resulting judgment was, therefore, invalid.

Case Name:World-Wide Volkswagen Corp. v. Woodson, (most recent)

Page: 105

Heading: 444 U.S. 286

Procedural History:

Petitioners, a New York car retailer and a New York wholesale distributor, sought a writ of certiorari from a decision of the Supreme Court of Oklahoma, which denied their request for a writ of prohibition to restrain respondent, a state trial judge, from exercising in personam jurisdiction over them in a products-liability suit brought by the New York residents arising from an auto accident in Oklahoma.

Facts:

New York residents purchased a new car from petitioner retailer. While driving through Oklahoma to a new home in Arizona, the purchasers’ car was struck in the rear by another vehicle, causing a fire, which severely injured them. The purchasers brought a products-liability action in an Oklahoma court against petitioners, among others. Petitioners, which were incorporated in New York and did business there, entered special appearances, claiming that, because they had no minimal contacts with the state, Oklahoma’s exercise of jurisdiction over them would violate their rights under the Due Process Clause of U.S. Const. amend. XIV. The Oklahoma trial court rejected petitioners’ claim, and petitioners sought a writ of prohibition in the Oklahoma supreme court to restrain respondent, a state trial judge, from exercising in personam jurisdiction over them.

The state supreme court denied the writ, holding that personal jurisdiction was authorized by Oklahoma’s long-arm statute, Okla. Stat. tit. 12, § 1701.03(a)(4) (1971). On certiorari, the Court reversed on due process grounds, finding that petitioners had no contacts, ties, or relations with the State of Oklahoma.

Rule:

the sale of an automobile by a corporate defendant is not a sufficient purposeful availment of the benefits and protection of the laws of a state where the automobile is fortuitously driven there so as to constitute the requisite “minimum contacts” with that state for personal jurisdiction purposes.

Analysis:

The concept of minimum contacts protects the defendant against the burdens of litigating in a distant or inconvenient forum, and acts to ensure that the states, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system.

The defendant’s contacts with the forum state must be such that maintenance of the suit does not offend traditional notions of fair play and substantial justice.

The relationship between the defendant and the forum must be such that it is reasonable to require that party to defend the particular suit which is brought there.

balancing test- The burden on the defendant, while always a primary concern, will in an appropriate case be considered in light of other relevant factors, including the forum state’s interest in adjudicating the dispute; the plaintiff’s interest in obtaining convenient and effective relief, at least when that interest is not adequately protected by the plaintiff’s power to choose the forum; the interstate judicial system’s interest in obtaining the most efficient resolution of controversies; and the shared interest of the several states in furthering fundamental substantive social policies.

Even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another state; even if the forum state has a strong interest in applying its law to the controversy; even if the forum state is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the state of its power to render a valid judgment.

“Foreseeability” alone has never been a sufficient benchmark for personal jurisdiction under the Due Process Clause. The foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum state. Rather, it is that the defendant’s conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there

DISSENT

copy this to outline: the min contacts doctrine is merely vehicle for ascertaining fairness.  the amount of contacts necessary of jurisdiction to exist varies from situation to situation.  here, where a dealer of highly mobile articles is invalid, it is hardly unfair to require him to defend in the state where the auto was taken. the co. knows that the car will be driven to another state etc.

I would find that the forum State has an interest in permitting the litigation to go forward, the litigation is connected to the forum, the defendant is linked to the forum, and the burden of defending is not unreasonable. Accordingly, I would hold that it is neither unfair nor unreasonable to require these defendants to defend in the forum State.

The conclusion I draw is that constitutional concepts of fairness no longer require the extreme concern for defendants that was once necessary. Rather, as I wrote in dissent from Shaffer v. Heitner, supra, at 220 (emphasis added), minimum  [*310] contacts must exist “among the parties, the contested transaction, and the forum State.” 15 The contacts between any two of these should not be determinative.

Outcome:

Finding that petitioners had no contacts, ties, or relations with the State of Oklahoma, the Court reversed the state supreme court’s denial of a writ of prohibition.


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