Subject Matter Jurisdiction

A) Introduction
1) Federal (Non-State) Civil (Non-Criminal) Procedure (Non-Substantive)
(a) Article III – creates Supreme court and option to create fed courts
(b) 10th (federalism, delegating power to the states), 5th (due process with fed
cts), 14th Amendment (due process with states) – Due process
(c) 28 USC – fed statute
(d) FRCP – rules created as prescribed by 28 USC Section 2072
(i) SMJ - Rule 8 of FRCP
(ii) Goals – allocation decision authority, generate legally correct outcomes,
efficiency, and fairness
2) Adversarial system is method of adjudication characterized by
(a) Impartial tribunal of defined jurisdiction
(b) Formal procedural rules
3) Assignment to the parties responsibility to present their own cases and
challenge their opponents (“American Rule”)
4) Law v. Equity – Abolished by FRCP Rule 2
(a) Law – damages, jury, common law, kings bench
(b) Equity – injunction, judge, decrees, no witnesses, chancery
5) Rules v. Standards
(a) Rules - Specifies results in advance +, determinant outcomes +, low decision
costs (less facts/measuring) +, Judicial constraint/Judges have less
discretion +, Promotes predictability +, Over-and-under inclusive -, May not
match up with overall purpose -, creates exceptions which turn into
standards
(b) Standards - Hard to specify all outcomes in advanced -, Less determinant
outcomes -, greater decisions costs -, judicial activism/discretion, Less
predictable -, matches up with underlying principle +, when further defined
turn into rules

B) Constitutional Overview
1) Subject Matter Jurisdiction – Article III + Statue for all Fed courts, but USSC
Reasons for SMJ – (1) No authority without it, (2) Ex ante effects  incentive to
pay attention to details
(a) Capron - From the onset, Fed Ct. must state/affirm SMJ, Plaintiff can take
advantage of its own error, A party cannot consent to jurisdiction in Fed. Ct.
if no actual diversity exists, Challenges to SMJ may be raised at any time.
Limitation is set by Const. and cannot be waived by the parties.
(i) Current law – 28 USC §1653 – allows raising defective jurisdiction at any
time by any party (including sua sponte)
(b) Types of SMJ
(i) Limited v. General Jurisdiction
o Limited – All federal courts, must be positively affirmed via statute &
article III
o General – trial for state, district for federal
(ii) Original v. Appellate
(iii)Exclusive v. Concurrent
o Exclusive - Created by federal statutes or generally cases of state law
 (iv)Discretionary – USSC
2) Application of the law – diff than jurisdiction
(a) State courts – state law & federal law under Article 6 of Const.
(b) Federal courts – federal law & state law bc of diversity jurisdiction
3) Constitutional Overview
(a) Article III & Judiciary Act of 1789
(i) Art. III - Creates Supreme Court
o Sect 1. Independence for Fed judges (life tenure)
o Sect 2. Topics of judicial power
 “Cases and Controversies” requirement – no extrajudicial or
advisory opinions
 Subject matter (3)
a. Federal questions, federal law
b. Ambassadors – original jurisdiction
c. Admiralty – element of int’l law
 Party structures (6)
a. US as a party
b. Controversy between states
c. State and citizen of another state (original jurisdiction)
d. Citizens of different states (diversity jurisdiction)
e. Citizens of same state involving land grants
f. Alien diversity
o Federal courts have limited jurisdiction
 Must be affirmatively authorized by a statute (28 USC) and
consistent with Article III, Section 2
a. 10th Amendment creates enumerated power structure in
Constitution – powers not delegated via Const. are reserved
to the States
(b) Marbury
(i) SMJ defect: original jurisdiction to issue a writ of mandamus was not
authorized by Art. III § 2
(ii) Article III: creates a list that Congress cannot modify because of
separation of powers, defines the outer limits of SMJ
(iii)Marbury had statutory jursidction but statuture conflicted with Article
III
4) Key features:
(a) In fed crt. requires statutory and constitutional affirmation (Marbury)
(b) Parties cannot consent (Capron)
(c) Cannot waiver SMJ – Rule 12h(3)
(d) Can be sua sponte – Marbury, Mottley, FRCP 12(h)(3)
(e) Brought on appeal – Capron, Marbury
(f) Raised by plaintiff – Capron

C) Diversity Jurisdiction: designed to give neutral forum to out-of-staters

1) citizenship  nationality, Domicile  resident with the intent to remain
indefinite or legal headquarters, Residence  where you are living, Present 
current existence
2) Complete diversity rule – (28 USC § 1332(a)) To be proper diversity, no plaintiff
can be a citizen of the same state as any defendant (implicitly must be citizen of
the USA)
(a) Strawbridge – Complete diversity is necessary (via statute not Const.), Const.
requires min. diversity;
(b) Mas v. Perry – example of “domicile” v citizen of state, must be both US
citizen and domiciled in a state
(c) Usually applying state law – Erie
3) Alien jurisdiction – (28 USC § 1332 (a)) – allows for fed jurisdiction in cases
between state citizens and foreign citizens (but maintaining complete diversity)
4) Statutory Diversity: 28 USC § 1332 (a)(1)+(2)
(a) In General
o (1) Citzens of different states
o (2) Citizens of a state and citizens of a foreign state
o (3) Citizens of different statas and in which sibjects of a foreign state
are additional parties
(b) Alien diversity (No Alien v Alien)
o Domicile doesn’t matter except for permanent residents of the US
o Exception – 28 USC § 1350 for Alien’s action vs. tort using the “law of
nations clause” for Human Rights Cases, No diversity statute, but
there is SMJ because of Fed Ques. re int’l/US treaty
o Alien diversity Examples:
 P(MA)+P(FL) v. ∆ (UK) + ∆ (CT)  Yes
 P(MA) v. ∆ (FR)  Yes
 P(MA)+P(FR) v. ∆ (MA)  Yes
 P(FR) v. ∆ (UK)  No
 P(FR) v. ∆ (UK) + ∆ (CT)  No, b/c no alien complete
 P(MA) + P(FR) v. ∆ (UK) + ∆ (CT)  Yes b/c exception via 28 USC
1332(a)(3)
 P(FR) v. ∆(CT)  ??
o Alien considered aliens for purposes of diversity
 Alien v. Alien is not allowed under 1332 (c)
(c) Permanent Resident amendment – 28 USC § 1332(a)(2)
(i) P(FR) but permanent resident of LA v ∆ (LA)  NO
5) Determining Citizenship and Rules of Domcile
(a) Everyone has one domicile
(b) Children assume domicile of parents
(c) Retain domicile until you establish a new one
(d) Test for new domicile: residence + intent to remain indefinitely (Mas)
(i) Question becomes is moving to another state, not knowing where you
are going next, enough to establish intent to remain indefinitely?
(Goldsmith says YES)
(e) for foreign citizens, domicile is irrelevant
(f) Americans who are domiciled abroad cannont bring diversity action against
US citizens in US because they’re not State “citizens” w/in meaning of
§1332(a)(1) – Elizabeth Taylor case
(g) Aliens admitted to the US for permanent resident are citizens of state where
domiciled (INSERT STATUTE)
6) Corporations and Citizenship
 (a) Citizens of the state in which it is incorporated – 28 USC § 1332(c)(1)
(i) P(MA) v. ∆ Corp. (Del +NY)  Yes
(ii) P(MA) v. ∆ Corp. (Del +MA)  No
(b) “Nerve center test” – Hertz Corp. v Friend – established headquarters
as domicicile of a corporation
(i) for textualism “principal place”, administrative simplicity (mainly
effieciency), Conssitent with legilative history and rejected an “intitial
half of gross income” test
(c) Limited partnerships & unicproated assocications – considered
individual citizens of multiple states of their members
7) Perfecting diversity – ordering a non-diverse defendant or plaintiff to be
dropped from a lawsuite to create complet diversity (Caterpillar Inc)
8) Amount-in-Controversy requirement (only for diversity) – 28 USCC §1332
(Diefenthal)
(a) threshold is at the time of filing
(b) Each plaintiff must have a claim of more than $75,000 for each defendant
(i) Rare exception via ‘common undivided interests’
(ii) INSERT SUPPLIMENTAL JURISDICTION EXCEPTION LATER
(c) A single plaintiff may aggregate separate claims against a single defendant to
meet the AIC requirement (the exception is for tag-along and class actions
see supplemental jurisdiction)
(d) St. Paul Mercury  “good faith” measure except if legal or factual reason for
no recovery/damages.
(i) Must assume all facts are true and then judged on the merits
o 28 USC §1332(b) – small disincentive to win for more than $75k
9) Foresign Sovereign Immunities Acts (FSIA) – When to sue a foreign country 28
§ 1332 (a)(4)

D) Federal Question Jurisdiction (FQJ)

1) est. 1875 for Fed District Courts to ensure rigorous enforcement & review of
federal law
2) FQJ is concurrent jurisdiction (federal or state)
3) Constitutional Scope of FQJ – federal ingredient - Art III Sec 2
(a) Osborn (1824) – federal ingredient in the action – plaintiff or defense
4) Mottley Rule (1908) – 28 USC § 1331 “arise under”
(a) Well-pleaded complaint rule = only look to the part of the
complain/pleading surrounding the cause of action and claim for relief
(b) Counterclaim doesn’t count (The Holmes Group) – appears as part of the
defendants answer, Rat. = would allow defendants to forum shop via federal
counterclaims.
(c) FRCP Rule 11 – pleadings must be in good faith on law and fact
5) Appellate Jurisdiction (Mottley II)– case w/in constitutional scope of FQJ b/c
“federal ingredient” and federal statute (now 28 USC §1257)
6) Other grants of FQJ
(a) 28 USC 1338 – Exclusive, original jurisdiction re patents/copyrights. No
state SMJ for patents.
(b) 28 USC 1345 – USA as plaintiff (usually civil rights cases)
(c) 28 USC 1350 – Alien torts statute
E) Removal Jurisdiction – 28 USC § 1441
 1) Must have original SMJ at time of removal (Avitts), assumes concurrent
jurisdiction
2) Similar to Capron, disover SMJ defect, can be raised at any time
3) 28 USC §1441(a) – allows defenedt to choose afederal forum (w/in original
federal SMJ) if plaintif chose state  P cannot remove afterwards
4) All dfendants must agree to removal – USC §1446(b)(2)(a)
5) EXCEPTION – If instate via USC §1332(a), cannot remove to Fed
(a) ie: P(NY) (diverse, >75k, state law) v ∆ (MA) and in MA state court  cannot
remove to Fed bc P(NY) is fine with MA courts
(b) If above was Federal law with FQJ, could be removed
6) Tactical choices to prevent removal to Fed
(a) Keep AIC under $75k by lowering damages
(b) Add a defendant from P’s state
(c) Sue the defendant only on state claims
7) Note about timing: If fed court has jurisdiction as of the date of filing (or date of
removal), jurisdiction will continue even if the fed claim drops out. Fed court can
choose to remand.

F) SMJ of the Supreme Court (Smyczyk v Genesis)

1) Basics
(a) Appellate jd in fed courts over final judgments
 (b) entirely discretionary
(c) Standard of review is de novo (fresh) for questions of law. For questions of
fact, defernc to the lower courts. Findings of fact must be clearly erroneous.
2) 28 USC §1254 – allows cases from the Ct of Appeals to be reviewed vua writ of
certiorari
(a) No appellate jurisdiction of state law issues in the S.Ct. – The Sc. Ct. will not
hear a federal case sitting in diversity in order to decide a question of
sbstnativr state law.
3) Standard of Review – Rule 10
(a) Certiorari from appeals where there is
(i) Circuit splits on important issues
(ii) Conflict with appellate decision and state court of last resort decision
(iii)Something “far departed from the accepted and usual course of judicial
proceedings”
(b) (b) “A state of last resort has decided an important federal question in a way
that conflicts with the dcision of another state court of last resort or US Ct. of
Appeals”
(c) (c) State or appellate court has decided an important question that should
be settled by the S.Ct. or is in conflict with the S.Ct.
4) Additional Criteria
(a) If circuit split, SG filing amicus brief asking S. Ct. to review
(b) Criteria from Smyczyk example
(i) ‘entrenched’ circuit split
(ii) important & reoccurring question
(iii)Case is a clean/perfect vehicle with no fact disputes

Personal Jurisdiction:
Needs Statutory (via long-arm) and Constitutional via DP

A) Constitutional Foundations: Full faith v. Due Process

1) About power of court to call a defendant into jurisdiction
2) Fundamental fairness to hale a defendant into court
3) About the power to issue a default judgment against the defendant
(a) Only appealable claim on default judgment is lack of personal Tjurisdiction
4) Full faith (Historically)
(a) Before 14th Amendment DP, remedy under Full Faith & Credit Clause
(b) Full faith required judgments rendered in one state to be enforced in
another
(c) The only exception to enforcing in another state is if original judgment was
not based on correct personal jurisdiction
5) Due Process (NOW)
(a) Pennoyer (1887), PJ tied to Due process under 14th Amend (state), 5th Amend
(gov)
(b) Ever case involving personal jurisdiction involves due process
(c) 14th Am. DP Clause:
(i) Requires (1) power over ∆ & (2) notice
(ii) If absent, judgment not enforceable via Full Faith & Credit (Article IV §1)

B) Pennoyer
 1) Court conveys concept of sovereignty incl. PJ; States sovereign w/in its borders

Field’s Theory of PJ via Pennoyer

In Personam In Rem Quasi-in-Rem
(Pennoyer)
Power Person must be in Property in state Property in state
state
Notice (minimum) Personal service in Attach & Attach &
State Constructive notice Constructive notice
by publication by publication

(a) In personam: power to render judgment over a person by virtue of a person’s

presence within a state or his citizenship there
(i) personal service cannot be delivered outside of a state
(b) In rem: classic dispute over a status of property, courts control is over property
(c) Quasi-in-rem: Jurisdiction using the property re an unrelated lawsuit
(i) Land must be attached from the beginning (Pennoyer)
(ii) Judgment can only be enforced against the land – no other assets outside of
the state
2) Problems with Pennoyer
(a) Transportation & communication revolution breaks down state borders
(b) Growth of corporations (a constructive entity)
3) Fictional Consent was early response (Hess)
(a) Hess injured P in car accident
(b) Service via the DMV under Mass law, in response to Pennoyer scheme
In Personam
Power Implied Consent
Notice DMV = agent of ∆, sends
the actual notice

4) ∆ can always concet to PJ (not SMJ) b/c individual right under 14 th Am.

C) Post-Pennoyer – the shift to standards for Power of the state

1) International Shoe: DE corp. headquartered in MO employed a dozen salespeople in WA,
who were authorized only to solicit orders that could be accepted or rejected only by home
office. Although it had no permanent office in WA, the sales efforts there generated
commissions of at least $31K/yr. WA claimed that the corp. was obligated to contribute to
the state’s unemployment compensation fund. Held: WA can exercise personal jurisdiction
over corp. b/c of the continuous and systematic nature of its contacts with the forum state.
Due Process requires only that “he have certain minimum contacts with [the forum] such
that the maintenance of the suit does not offend ‘traditional notions of fair play and
substantial justice.’”
(a) IntShoe Rejects in personam prong of Pennoyer
(b) Establishes idea of Minimum Contacts test (NECESSARY for Due Process)
(i) Extent of contacts: systematic/continuous vs. casual/isolated
(ii) Benefits/Burdens: to the extent that a ∆ takes advantage of its activities in a state
and profits from state’s laws/facilities, then it’s fair to impose reciprocal burdens on
that ∆.
(iii) Relatedness of contacts to cause of action: contacts must be related to this specific
c/o/a
 (iv) Service may be presented instate upon an agent whose activities establish a
company’s presence—as long as the suit arises out of his activities there.
2) Long-Arm Laws
(a) Legislative response to IntShoe: process from courts of one state may run into others.
(b) Jurisdiction over nonresidents is based on general activity in a state—or even an act
outside of the state with effects within.
(c) Usually, actions must be committed within the jurisdiction for them to apply.
(d) Two forms of long arm statute
(i) Enumerated
o Like Volkswagen or Illinois statute
o Lists all specific situations under which out of state jurisdiction exists. Thus,
one must ask: is statute satisfied and then is constitution satisfied? Supreme
court usually only interprets constitutional issue because the statutory issue is
state law and should be resolved by state court
(ii) Unenumerated
o jurisdiction extended to full extent of Constitution
o This is only a constitutional question
(iii)first test – long arm statute satisfied?
a. state law defines Fed. Ct. power for out of state defendents, but
See Rule 4(e)(1) – some fed. laws have their own long-arm
(e) Does the plaintiff’s c/a arise of or relate to ∆ contacts with the forum?
(f) Specific Jurisdiction
(i) minimum contacts (Shoe, WWVW, Asahi, McEntyre) via o purposeful
availment
o Asahi = two tests  Is the mere awareness that a product may reach a
remote jurisdiction when put into a “stream of commerce” sufficient to
satisfy purposeful availment? (unanswered)
o O’Connor Availment (Majority Rule) – Directing action:
(a) substantial connection between ∆ and forum state requires “an action of the
defendant purposefully directed toward the forum state”
(b) Placement of product into stream of commerce, without more, is not an act
purposefully directed at a forum state.
(i) Placement +:
a. Designing a product for the market
b. Advertising in state
c. Establishing channels for advice to customers
d. Marketing through distributor
(c) But 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.

o Brennan Availment (Minority rule) stream & knowledge is enough bc

knowledge = control:
(a) Stream of commerce refers not to unpredictable currents but to regular and
anticipated flow of products to retail sale
(b) As long as participant is aware that the final product is being marketed in a
forum state, the possibility of a lawsuit is not a surprise.
(c) Once goods are placed in stream of commerce, the seller benefits from a
state’s laws regulating and facilitating commercial activity.
(d) Benefits accrue regardless of whether conduct is directly in state or
whether additional activities are present.
i. See WWV – Stream of commerce but needs intent is
sufficient:
 ii. Dealer did not purposefully avail itself even though they
could forsee that others could take their cars there, lack of
control
iii. Qualifications: dealer would have needed to regularly sold
cars to OK, seek to serve – “delivers its products into the
stream of commerce with the expectation that they would be
purchased by consumers in the forum state”
o Burger King defined jurisdictional analysis for cases arising from
contracts
 ∆ reached “out beyond Michigan and negotiated with a FL
corporation for the purchase of a long-term franchise and the
manifold benefits that would derive from affiliation with nationwide
organization”
 Contract plus analysis: look at all the
communications/transactions between the parties before,
during, after the K to determine the degree and type of contacts
∆ has w/ forum, apart from the K alone
a. Significance of K to PJ: negotiations, post contractual
relationship; consequences; terms; course of dealing; training,
signing, negotiations, governing law, who makes major decisions
b. More than the K itself to find purposeful availment and PJ, so
forum-selection/choice-of-law clause alone won’t be enough
(but it’s a factor)

(ii) reasonableness test (Asahi & Burger King)

o 1)burden on the ∆
o 2) interests of the state
o 3) π interest in obtaining relief
o 4) federal interests in Int’l relations
 esp. when weighing the π/state’s interests against Fed. interests
o 5) state’s interest in effective social policy
 More evidence of purposeful availment, easier to satisfy
reasonableness

(e) General Jurisdiction

(i) six ways
o domicile
o place of incorporation
o consent
 Hess - ∆ can always consent to PJ bc individual right via 14th
amendment
 consent can be implied – Hess (had in-state agent when crossing
borders via statute)
o principle place of business (Perkins)
 Phillipine corp. moved HQ to OH temporarily. Sued for problems in
Asia is okay.
o continuous and systematic (Goodyear & Helicopterous)
 Helicopteros - No GJ bc 1) purchases, 2) contract negotiation, 3)
payments 4) employee traning is not enough to give rise to
 continuous and systematic contacts – & unilateral activity of a 3 rd
person (payments drawn on TX bank) not appropriate for ∆s
sufficient contacts to support jurisdiction
 (Goodyear)
a. Stream of Commerce is limited/inadequate, not continuous and
systematic; only credible for bolstering claims of SJ
b. Random tires = sporadic, similar to Helicopteros purchasing
i. backed by policy = don’t want to hail int’l companies into the
Ct. who just make purchases
ii. precedent = Rosenberg “makes clear that purchases and
related trips, standing alone, are not a sufficient basis for a
State’s assertion of jurisdiction.”
c. No more quasi in rem for GJ (Cokely)
o TAG jurisdiction  if you are in the state, TAG Youre it! (Burnham)
 Jurisdiction based on physical presence constitutes due process.
Keeps alive in personam wing of Pennoyer – all assertions
a. Scalia – Shoe framework was about hauling someone into the
state, and making proxies from presence in the state
b. Brennan - ∆ satisfies minimum contacts b/c he was in the state
and he received the benefits of the state

Notice

1) Consitutional Requirements – requires that reasonable efforts to provide notice be

made with regard to persons whose interests are to be determined.
2) Mullane (NY trust company) – “Notice reasonably calculated to inform”
(a) NY statute w/ publication in a local newspaper, not enough, when they knew the
names/addresses of many of the beneficiaries. Statute violated beneficiaries
Due Process bc it did not provide for means to contact those who could
easily be informed by other means.
(b) Although it could have been considered an in rem decision about property, it
also dealt with individual rights. Under Pennoyer, in rem PJ was satisfied in
MUllane bc property was attached and some notice by publication was given.
Court says in rem is really like in personam & higher standard is required.
Notice must reasonably alert the other person. Mullane rejects the notion that
people should be expected to keep track of property.
(c) “The means employed must be such as one desirous of actually informing the
absentee might reasonably adopt to accomplish it”
(d) Tension b/n efficiency and notice
3) Methods of delivery
(a) First class mail – “recognized as an efficient and inexpensive means of
communication”
(b) OK to leave at usual place of abode with a person of suitable age and discretion
(c) OK to leave it w/ person authorized by law to receive it (sheriff, registrar, …)
(d) posted notice on ∆’s residence – may not be sufficient in all instances.
(i) Jones – “someone who actually wanted to alert…would do more” when you
know notice wasn’t received (returned letter)
4) FRCP 4: Service of Process
 o (a) The summons + the complaint. It states the time within which ∆ must appear and
notifies ∆ that failure to appear will result in default judgment.
o (c) parties can’t serve their own complaints; have to get a disinterested party
o (d) waiver of service—carrot and stick to encourage ∆’s to waive service of process
 carrot—extra time if you waive
 stick—pay costs if you don’t waive
o (e) the federal courts get their long arms statutes from the states w/in which the fed’l
district court sits (unless otherwise provided for by fed’l law). Alternatively, you can do
same service as state in which service is affected. Thus, fed’l courts borrow state long
arm statutes.
o FRCP 4(k)(1)(A): federal district court has jurisdiction over the person of a ∆ “who could
be subjected to the jurisdiction of a court of general jurisdiction in the state in which the
district court is located”; permits a court to borrow for extraterritorial service of process
o
Venue – SMJ? PJ? Venue? need all 3
1) Statutory limitation on the geographic location of litigation to prevent a π from suing where
it would be burdensome for the ∆ to appear and defend
2) Venue is not jurisdictional:
(a) Statutory rules or common law rules; no constitutional basis
(b) Venue is not about court’s power over ∆
(c) It is a rule of convenience and may be waived or lost by default
(d) It may be agreed in advance (Carnival Cruise)
(e) Different from 1441 removal (state  fed); 1441 is about fed. gov. saying that it would
rather have fed. than state hear the case
(i) removal under this is simple ∆ can only remove if case could have originally been
brough in fed ct.; all ∆s must consent to removal
(ii) 1441 (b)(2) – removal exception: no removal when case is based on diversity of
citizenship and ∆ is in their home state (no bias bc home state)
3) §1391 (a/b) – choosing the proper judicial district
(a) §1391(b)(1) – if ∆ resides in a district and all ∆s are residents in state, can bring case in
that district
(b) §1391(b)(2) – if dustrict related to events In “substantial” and “giving rise to” way =
wishy washy
(c) §1391(b)(3) – collapses into PJ if can’t get another venue by other two rules
4) §1404: Change of venue
(a) Transfer is only from federal court to federal court
(b) Either party may file a motion to transfer
(c) §1404a: The court can transfer the action “for the convenience of the parties and
witnesses to any other district or division where it might have been brought”
(i) Balance of conveniences must weigh heavily in favor of transferor
o Access to proof
o Witness
o another court’s specialty
o Look at forum selection clauses
5) § 1406 – Problem with venue, shall (1) dismiss or (2) transfer
6) Proper transferee court: can only transfer to a district in which the action “might have been
brought”—including proper venue and valid personal jurisdiction. The moving party’s
willingness to waive objections to venue/personal jurisdiction not enough.
7) Van Dusen v. Barrack Rule: in diversity cases, applicable substantive law in transferor
forum follows transfer—regardless of who files transfer.
(a) But if venue/jurisdiction was improper in the transferor court (and that’s why the case
was transferred), the substantive law of the transferee court will apply instead.
 (i) Does Van Dusen apply in federal question as well as diversity—circuit split?
(ii) Transfer does not affect governing law and the choice of law ruls that the original
state would have applied
(iii) Ex. John Deere
o Statue of limitations runs out in PA; P files suit in MS with 6 year limitations. P
transfers to PA on §1404 because MS was inconvenient place. By going to PA,
MS law applied and statute of limitations did not.
o Is this fair? Sure, because if he failed to transfer, the result still would have been
the same, it just would have been more difficult for the plaintiff.
(iv) If choice of law is the transferor court under Dusen Rule, then venue in Blaski is
purely a question of convenience and plaintiff/defendant does not matter.
o But, if we want transfer to be a way to even the field for defendants, then
same result should be relaxed.
o Not upholding Dusen Rule in federal questions will help legal
experimentation by testing out different courts interpretations

Forum Non Conveniens

1) Unlike transfer of venue, forum non conveniens is an actual Key take-aways from Piper:
1. Alternative available forum?
dismissal of the suit and a reassignment in another court (SMJ & PJ can be via consent)
via common law (From state→state; state→foreign; 2. Change in substantive law by
fed→foreign; fed to state?) itself is not important
(a) The new forum has the option of taking the case. If a. exception for NO
remedy AT all
other forum does not take the case, it could come back 3. Presumption in favor of π’s
and claim no alternative forum. choice of forum, but it is
(b) Thus, determine jurisdictional questions before weakened for foreign π’s (ties
considering FNC motion. into balancing test)
4. Gilbert balancing factors test
2) FNC arises from common law and predates constitution.
The point is to ensure that the trial is convenient a. standard of review if
abuse of discretion
3) ∆ must show that another forum is available—that another
forum has subject matter/personal jurisdiction
4) Unlike in §1404 transfer motion where ∆’s consent to venue was irrelevant, in a forum non
conveniens motion, ∆ is presumed to consent to venue in alternative forum. Problems of
personal jurisdiction in the alternative forum can be solved by stipulation by the moving
party to submit to jurisdiction there

5) Gilbert analysis for FNC transfer:

(a) Private interest of the litigant
(i) relative ease of access to sources of proof
(ii) availability of compulsory process for attendance of unwilling witnesses
(iii) Cost of obtaining witnesses
(iv) Possibility to view premises
(v) Enforceability of judgment
(vi) Other considerations that make trial easy, fast, and cheap
(b) Public Interest
(i) administrative difficulties
(ii) Don’t make jury sit when they have no relation to the case
(iii) If the case touches many people, hold it in their view.
(iv) Have trial where there is a local interest
(v) Have trial where law governs rather than untangle foreign law

6) Piper Aircraft (Plane crash in Scotland) pg 388

(a) Suit in CA state ct. Case removed to CA district Court under §1441. §1404 venue
transfer to Penn. ∆s move for Forum non conveniens on grounds that most evidence is
 in Scotland, all parties/witnesses in Scotland, wreckage in Scotland. πs do not want to
go to Scotland because the law is very unfavorable there.
(b) Held: the cause could go back to Scotland. The possibility of a change in substantive law
should ordinarily not be given conclusive or even substantial weight in the forum non
conveniens inquiry; rather, the Gilbert analysis should be conducted and the trial
court’s determination is reviewed only upon an abuse of discretion standard
(c) Change in substantive law is usually irrelevant for FNC
(i) In §1404 transfer, change is between fed to fed court. Thus, Supreme Court can
force second court to apply first’s rule. But FNC is between state court to state
court or fed court to foreign country. Thus, US court cannot tell Scottish court which
law to apply. Thus, FNC does not involve same law like in §1404.
(ii) Only if the “remedy provided by the alternative forum is so clearly inadequate or
unsatisfactory that it is no remedy at all, can the unfavorable change in law be given
substantial weight.” (e.g. death, no codified legal remedy, etc.)
(iii) Given that plaintiffs usually choose the best place to litigate, any FNC transfer would
involve a detrimental change in law. American courts are always more favorable to
foreign courts. Plus, We do not want district courts to conduct choice of law analysis
every time.

(d) The point of forum non conveniens is to avoid complex exercises in comparative law.
The public interest factors point towards dismissal where the court would be required
to untangle problems in conflict of laws and in law foreign to itself.
(i) In Piper, if PA district court were to weigh laws, it would have to look at Scotland
laws and then at CA state laws because claim was begun in CA district court and
raised to CA fed and then 1404 transfered to PA. This is very inconvenient.

(e) Why sue in US federal court

(i) Better substantive laws in fed than in Scotland
(ii) No contingent lawyer fees in Scotland
(iii) Much more discovery, leading corporation to settle
(iv) Collection of damages
(v) jury trials

Pleading
1. Purpose of FRCP 1938
a. Simplify pleading
i. It’s really just about notice
ii. Only need a short statement showing entitlement to relief together with a
certification that allegations are truthful.
b. Liberality: let in everything upfront
i. Wide use of discovery makes pleading the facts unnecessary
c. Correct or bad claims with sanction, summary judgment
i. Rule 11 is used to deter fraudulent claims.
ii. Rule 56 summary judgment is used to deter unworthy claims
d. Abolish law and equity distinction

2. Rule 1: Just, speedy, inexpensive

a. The system does not promote the latter two
3. Rule 2: There shall be one form of action to be known as "civil action."
4. Rule 3: Civil Action commences by filing a complaint with the court
5. Rule 4: Service of process
a. (e)
6. Rule 7: Types of pleadings
 a. Complaint and answer; reply to counter claim; answer to cross claim; third party
complaint; third party answer.
b. Rule 7b1 – request for court order = motion

7. Rule 8: General rules of Pleading (this is the essence of the new approach to pleading)
a. (a) Claims for relief (regular; counterclaim; crossclaim…)
i. (a1) short plain statement of jurisdiction (must meet minimum amt.
requirement)

ii. (a2) short, plain statement of the claim entitling relief

iii. Pre-Twombly-Iqbal
1. Claim simply needs to entitle π to relief. The court will extract a
violation of law and find the claim from the facts; just throw facts at the
court and it will pull out the law. Dioguardi (crazy Italian guy).
a. Survives 12b(6) (which is used to get rid of bad claims) –
taking facts in the light most favorable to the π, has π stated a
claim upon which relief can be granted
2. Facts in pleading do not need to constitute a prima facie cause of
action; and do not need to specify law. Pleading must only provide
sufficient circumstances to give defendant notice of what the case
is about. Dioguardi, Doe v. Smith
a. Conley (1955): No 12(B)(6) dismissal unless its “beyond doubt
that the plaintiff can prove no set of facts.”
b. Hishon (1984): 12(b)(6) dismissal “only if it is clear that no
relief could be granted under any set of facts that could be
proved consistent with the allegations.”
c. Leatherman (1993) rejects formal heightened pleading
standard outside FRCP.
d. Swierkiewicz (2002): Rule 8(a) does not consider “whether a
claim will succeed on the merits. . . . [I]t may appear on the
face of the pleadings that a recovery is very remote and
unlikely but that is not the test.”
e. (Doe v. Smith) - FRCP rejected fact pleading, lowers # of
facts to only notice
iv. Twombly-Iqbal Standard– movement from
possible/conceivable (Conley & Dioguardi) to plausible
a. Step 1: Accept the factual allegations as true except
eliminate legal conclusions & allegations that track the
elements
b. Step 2: Take facts, if true, could plausibly give rise to relief
i. context specific inquiry
ii. if facts are equally consistent with legal action and
illegeal action, then dismiss
c. Moved from Notice pleading  Discovery-worthy
pleading
d. Standard gives judges tons of room for discretion before
moving to discovery
i. Policy: Iqbal possibly raises the bar to leap from
pleadings to discover. Summary judgment too late to
weed out weak claims b/c discover is too costly.
Worry that Conley was too easy and winning
settlements.
 ii. Normative issue: (1) Illegitimate way to change rule
8 via Supreme Court case decision. Change the rule
w/out the formal process. (2) Gives ∆ power in
settlement (3) w/ less docket pressure, some π get
more attention (4) are there alternatives to Twombly-
Iqbal? (like fee-shifting schemes) (5) catch-22 for civil
rights cases b/c can’t find intent until discovery
v. (a3) Demand for judgment (different types may go together); sufficient facts to
support allegation.

b. (b) Defenses; denial

i. State in short and plain terms defenses to each claim; admit, deny, or state lack
of knowledge of claims; denials should specify which parts of a claim are denied
c. (c) Affirmative defenses: arbitration and award; assumption of risk; contributory
negligence; discharge in bankruptcy; duress; estoppel; failure of consideration; fraud;
illegality; laches; release; res judicata; statute of frauds; statute of limitations;
waiver; any other matter constituting avoidance or affirmative defense
i. Definition of Affirmative Defense: pleadings that admit the allegations of the
complaint but suggest some other reason why there is no right of recover (eg.
Statute of limitations); or Pleadings that concern allegations outside of the
plaintiff’s prima facie case and so could not be brought in the answer
ii. If not raised in the pleadings, you may not be able to raise later. The further
into trial you go, the harder it is to amend later. You must give the plaintiff
time to prepare for these defenses (Ingraham; Holds: ∆ cannot wait until
judgment to raise statute of limitations/damages)
1. Rule 15 Amended Pleadings
2. Rule 60: Relief from judgment for mistake, inadvertence, new
evidence
iii. 8c prevents unfair surprises and notifies the plaintiff of potential issues
that will arise in litigation (Due Process).

d. (d) Failure to deny: assertions in a pleading are admitted if not denied

e. (e) Pleadings should be Concise, Direct, and Consistent

8. Rule 9: Pleading Special matters (For Pleadings with mistake and fraud)
a. (b) Circumstances regarding fraud and mistake should be asserted with particularity
i. Provide who, what, when, where, why, how of ∆’s acts
ii. Give enough information to put ∆ on notice that fraud is an issue so that he
can prepare defense.
iii. Rule 9 fits within easy requirements of Rule 8; just provide slightly more
information than 8.
iv. Denny: Still, there must be more than vague allegations that a corporation’s true
financial picture was not so bright as its reports claimed
b. Single out these claims for higher standard to protect reputation; deter frivolous suits;
defend completed transactions; provide adequate notice.

c. (Due Process) Is the cost of making defendants go through discovery too high?
Should we require higher standards/more process for fraud allegations
i. Are there a lot of fraudulent fraud claims? It think that fraud is a pretty
invidious crime (against most of what an open capitalist economy is about), and
I do not think that we want to deter people from prosecuting it too much—
especially if fraud is often perpetuated against the poor and uneducated who
will not be able to investigate on their own.
9. Rule 11: Signing; Representations; Sanctions (Designed to deter frivolous activities)
a. 9a) Signature
i. Pleadings must be signed by attorney; stricken if not signed promptly
b. (b) Representations to the court
i. Pleadings must not harass or cause unnecessary delay or increased cost
ii. New theories should not be totally frivolous
iii. Allegations must have or be likely to have some evidentiary support
iv. Denials of fact must be reasonably warranted
c. (c) Sanctions for violation of (b)
i. Either by motion or on court’s initiative
ii. Limited to deter future conduct
1. May include directives, payments to the court, or payments to the
movant for attorney fees
2. Sliding scale; eg. circulate court’s opinion on Rule 11 violation to
members of his firm; suspension from practice; requiring him to take
continuing education courses; often not money)
iii. Does not apply to discovery requests, disclosures, responses and objections.

Responding to a Complaint

1. Rule 55 (a) = default (doing nothing )

a. Default = defendant’s failure to plead or defend in timely fashion. Rule 55(a).
i. Admission of facts pled by plaintiff
b. Default judgment = enforceable judgment (Lacey –Mp3 downloading case)
i. Court typically assesses complaint’s sufficiency and damages under 55(b)
(2)  similar to 12(b)(6) review
1. assesses complaint’s sufficiency and damages under 55(b)(2) – just
proving statutory (not actual) damages
c. Setting Aside Default or Judgment under Rules 55(c) & 60(b)
i. Default is disfavored
ii. 60(b)(1) – excusable neglect
iii. 60(b)(4) – judgment void (e.g. lack of notice or PJ) Pennoyer

2. Rule 12: Defenses and Objections

a. (a) When presented: serve answer within 20 days after service of summons and
complaint
b. (b) How presented (first line of attack to get rid of a case)
i. Every defense to a claim, counter, cross, etc. must be presented in
responsive pleading
ii. EXCEPT the following may be made by motion before responsive pleading
1. (1) lack of SMJ - Marbury
2. (2) lack of personal jurisdiction – Pennoyer etc.
3. (3) Improper venue (USC 1391)
4. (4) insufficiency of process (defect in “the paper “ - summons
and complaint)
5. (5) Insufficiency of service
6. (6) failure to state a claim – Iqbal etc.
a. Is there a claim for which relief may be granted?
i. Does NOT need to be prima facie claim with sufficient
facts; just needs to be a valid claim.
ii. Just need facts sufficient to put ∆ on notice? (Dioguardi
—crazy guy)
 b.Interpret claim in favor of plaintiff; assume allegations are true
c.Just because insufficient facts may logically follow from
allegations, that is not reason to dismiss
d. If unsure about meaning of claim, ask for 12e rather than
dismissal.
e. Federal Court may often postpone judgment until state court
decides; this is related to Erie
7. (7) joinder - failure to join necessary 19a party.

Other Rule 12 motions

c. 12(c) Motion for judgment on the pleadings
i. Made after all pleadings in; a later 12(b)(6)
d. 12(d) Converted summary judgment motion
i. Made when matters outside pleadings presented
e. 12(e) Motion for more definite statement: if pleading is unclear, move for more notice.
i. Pleadings too vague to provide notice
ii. Party must specify defects and desired clarification
f. 12(f) Motion to strike
i. “redundant, immaterial, impertinent, scandalous”
ii. Allegations have no connection to controversy
iii. Rarely granted

3. Rule 12 Waiver Trap

a. Rule 12(h)(1) requires 12(b)(2)-(5) objections to be made in first responsive pleading
or in first motion. See also 12(g)(2).
i. lack of PJ, improper venue, insufficiency of process, or insufficiency of
service of process is waived if not raised in pleadings
b. 12(h3) lack of SMJ may be dismissed at any time. .
c. Post-answer exceptions for failure to state a claim and failure to join.
d. Hunter – You cannot “reserve” a PJ defense to prevent waiver, the policy behind the rule
is not one of notice to the other litigants, but promoting judicial efficiency via
consolidation
2. After pre-answer motion, 10 days (Rule 12(a)(4)(A) to:
a. Assert the left over Rule 12(b) defenses
b. Admit or deny the factual allegations of the complain) (Rule 8(b)(1)(b))
c. Affirmative defenses (Rule 8(c))
i. Affirmative defenses in the rule or “any other matter constituting
avoidance” that is not raised in the answer is waived. Court stops unfair
suprises (Ingraham – cap on damages was an “avoidance”)
1. Court will give ∆ ability to amend complaint
d. Counterclaims or crossclaims
3. Rule 12(f) “insufficient defense” = a Rule 12b(6) equivalent for answers
a. Answer can be inadequately plead b/c answer is a Rule 8 pleading
b. Policy for possible Iqbal standard on affirmative defenses weighs equity for both π
and ∆ against ∆ only has 21 days to reply
4. Rule 15: Amended Pleadings: Party may amend pleading once at any time before a
responsive pleading is served; Otherwise, a party may amend the pleading only by leave of court
or consent of other party.
5. Rule 16 Pretrial Conference: expedite the disposition of the action; establish early control fo
discover; discourage wasteful pretrial activities; improve quality through preparation; facilitate
settlement of case
a. make schedule only after conference
Summary Judgment
I) SJ in general
A) SJ is used to correct for simple pleading. SJ determines whether there is a material factual
dispute and hence if there is a reason to go to trial. In SJ, the adverse party may not rest on
mere allegations or denials of other party’s pleadings; it must set forth facts showing need
for a trial
1) Judge does not weigh evidence for SJ; rather, viewing facts in light most favorable to the
nonmoving party, he asks whether there a genuine issue of material fact
2) Rule 56(c): Grant SJ if pleadings show that “there is no issue of material fact” and
therefore the only question is for the judge to apply the law to the facts.

Sum Judge checklist

1. ID Substantive law (incl. C-O-L options)
2. ID Material fact
3. ID proper record & evidence to be
considered (See 56(c))
4. Examine if the evidence offered by the
moving party shows that there is no
genuine dispute of material fact & is
therefore entitled to judgment as matter of
law
5. Consider if non-moving party has specific
facts in the record that create a genuine
dispute of material fact
6. Disposition of the case

Motions – pg1003

 12(b)(6) – failure to state a claim – facts in the

complaint
 12(c) – motion for judgment on the pleadins –
facts in complaint and answer
 56 – motion for summary judgment –
movant’s and non-movant’s materials (but
must not be an issue of material fact)
 50(a) – motion for judgment as a matter of law
or direct verdict – basically post-trial after the
evidence has been admitted

B) THREE Types of SJ
1) Proof-of-elements SJ motion
(a) Moving party must establish material facts in support of each eement & show there
is no disputed issue (can be for claim, counterclaim, ffirmative defense, etc.)
(b) Movant has burden of proof
2) Disproof of elements (See Slaven v. City of Salem –Suicidal guy in jail )
(a) Disproving one element via evidence on the record
(b) Negates an essential element of the claim
 (c) Movant does not have burden of proof
3) Absence of proof motion (See Duplantis v. Shell – π did not show any facts re ownership
of the board, so ∆ pointing out the absence of evidence (no duty!) was enough)
(a) Moving party shows there is no evidence in the record to support he elements of he
claim. Non-moving party then has duty to “show” there is no evidence
(b) Movant does not have burden of proof
 Ultimate burden 
o if π files SJ motion of proof elements, then points out what π has on the record
o If ∆ files, can do either absence of proof or disproof of elements
C) Civil Trial
1) Complaint: sets forth claims
2) Answer: responds to the claims
3) Rule 12b6: test the legal sufficiency of the complaint
(a) Taking facts most favorable to plaintiff, does the claim warrant relief.
(b) Only defendant files
4) Discovery: collection of evidence
5) Rule 56: summary Judgment:
(a) Test factual sufficiency of claims
(b) Both parties file
(c) Burden of proof/ production/persuasion
II) Rules 56, 50a, 50b
A) Pretrial: Rule 56
1) look for material dispute of fact
2) reasonable jury could reach different conclusions
B) Trial: Rule 50a – directed vierdict
C) Post verdict: Rule 50b
1) My reject jury verdict because no reasonable jury could have reached that conclusion
2) (7th amendent concern)

Discovery
Threshold to get to discovery has been raised via Twombly &
Iqbal
Key tools:
1) Interrogatories - Rule 33
(a) Rule 33(b)(3) & (4)
2) Request for production – Rule 34
3) Depositions – Rule 30
(a) corporation: Rule 30(b)(6) – must say what the subject matter will be
(b) person: Rule 30(b)(1) – no notice of topic
4) Discovery outside the FRCP

Choice of Law
I) Basics
A) Now 3 Kinds of Law:
1) Substantive (ie Tort, K, Prop)
2) Choice of law rule (meta-rules about selecting the governing substantive law)
(a) Modern rule  interest analysisis
(b) Traditional rule  pace of tort
3) Procedural  FRCP (court applies it’s own)
 Klaxon ? and removal – (See Piper)
B) Every court applies its own choice of law rules.
1) But note the “renvoi” problem
(a) circular logic – choice of law may tell you to look at another state’s law re the
issue, which might include choice of law analysis

II) Horizontal Choice of Law (b/n states)

A) The Traditional Approach
1) Prevailed until 1940s, now followed in 10 or so states
2) Vested rights territorialism
(a) Place of the wrong, place of the making of the contract, place of the
celebration of the marriage, etc.
(b) Public policy exception when foreign law violates “some fundamental
principle of justice, some prevalent conception of good morals, some deep-
rooted tradition of the common weal.” (Cardozo)
3) Purports to be a rule-based, determinate system that promotes choice-of-law
uniformity.
B) Problems with the Tradiational Approach
1) Unattractive results
(a) Carroll (AL train case)
(i) π can’t recover because AL COL is place of injury (or where the right to
sue, or the c/a arose) rule, applying MS law
(ii) Characterization problem arises because this could have been seen as a
K case, and then would have applied different COL & therefore probably
diff substantive law
2) “Escape Devices” and manipulation
(a) – Characterization problems (tort v. contract, procedure v. substance, etc.)
(b) –Public policy exception manipulable
3) Hoped-for uniformity never materialized.
(a) –Characterization
(b) –Different COL rules in different jurisdictions
C) Modern Approaches
1) “Most significant relationship” test – extremely malleable
(a) Contacts-counting + policy analysis
2) Phillips v. GM (kid w/o parents bc of blown-up engine case)
(a) judge manipulates the conflict using pubclic policy and renvoi proble to get
the result that it wants
3) Paul v. National Life (WV residents; guest of driver case; accident in IN))
(a) WV uses trad’l COL rules with public policy exception
(i) Ct. doesn’t use modern COL -- “[I]f we are going to manipulate conflicts
doctrine to achieve substantive results, we might as well manipulate
something we understand.”
(ii) BUT, Judge belives application of foreign law would have been
repugnant to the court and Court applies local law because guest statute
violates public policy

III) Vertical Choice of Law

A) Pre-Erie & General Common Law (GCL)
1) “the laws of the several states” in the Rules of Decision Act §1652 (RDA) held not to
include state common law. thus, federal courts followed their own view of what the
“general” common law was or should be
(a) Plain meaning argument: “laws” doesn’t mean court decisions because court
decisions aren’t laws but rather mere evidence of laws
(b) Policy argument: federal courts should derive general, uniformly applied
commercial laws
(i) Natural law view: the idea that there are a priori principles of law waiting to be
discovered by judges through “right” reasoning. Hence, the court states that the
law is not what the NY Ct. of App. says, b/c they could have failed to use “right”
reasoning. This view of the common law is, in Holmes’s anti-GCL view in Black
& White Taxicab, a “brooding omnipresence in the sky.”
(ii) Practical aim = horizontal and vertical uniformity.
o Swift v. Tyson regime guaranteed horizontal uniformity among the federal
courts: the USSC’s decision was binding on the lower federal courts (though
not the state courts). The hope was that these decisions would be so
persuasive that the state courts would follow federal court interpretation of
the common law, thus fostering vertical uniformity.
B) Problems with the Pre-Erie Swift regime & GCL
1) Changing attitudes toward law: shift from natural law to legal positivism/realism.
2) Non-uniformity – what topics for GCL & problems w/ local customs
3) Every Fed. Ct. applied GCL differently
4) Failure to achieve uniformity: state courts didn’t follow the federal court interpretation
of the common law
5) Practical difficulties and unfairness: Swift rule led to forum shopping. If you don’t like
state rule, get into federal court. Unfair b/c parties who are similarly situated except for
litigating in different court systems within the same state can be governed by different
substantive rules, which undermines the ends of state substantive policies and
complicates private planning.
(a) Black & White Taxicab: π avoided state common law anti-monopoly rule by
reincorporating in another state and then bringing a diversity action in federal
court, which followed “Fed common law”
(b) Holmes dissent: Holmes takes issue here w/ the assumption that the Swift doctrine
is Constitutional. Rather than fitting in with the natural law rubric embraced by the
federal judiciary (and the Swift court), he is a legal positivist/realist; i.e., law is not
found but made—by both judges and legislators.
(i) The legal positivist critique is that there is no law except that enacted by a
sovereign; therefore, there was no “general” common law floating out there
for courts to find.
(ii) The legal realist critique is that each state Supreme Court is a sovereign
authority on the law of that particular state on the same plane as that state’s
legislature, in that judges “make” law.
(iii) And to the extent that each state makes the common law w/in its borders,
it is an unconstitutional assumption of the powers of the federal courts to
decide cases in derogation of state Supreme Court decisions because it
impinges on state sovereignty. Two pronged constitutional attack on
Swift:
o 10th amendment federalism problem (“powers not delegated”): Swift
doctrine tramples state sovereignty
o But even if no Fed problem, Separation of Powers problem: Lack of
affirmative grant of power in the constitution for federal courts to
announce “general” common law
 o 14th/5th Equal protection: two different laws in one state is against rule of
law. Rights should not depend simply on what door you walk into.
o Article VI creates Fed law that USSC interprets and binds all courts, but
GCL didn’t bind state courts

C) THE ERIE DOCTRINE

1) Consitutionality:
(a) What is unconstitutional is the idea that federal courts could ever be free to
interpret general law—even with Congressional authority. (10 th Amend)
(b) Entire federal government, including Congress and the courts, lack the power to
make law with respect to, say, torts (or other state law areas). This is the federalism
holding (“Congress has no power to declare substantive rules of common law
applicable in a State” (tort, Ks), therefore, that power is delegated to the states).
(i) “Congress has no power to declare substantive rules of common law applicable
in a State” – RDA doesn’t do that (which is why Brandeis doesn’t strike the RDA
down). Brandeis points out that there’s no affirmative grant in the Art. I of the
Constitution for Congress to do this, and so this is a possible way of framing the
constitutional holding of Erie. And if Congress doesn’t have power to do this
under the legislative power, how can the courts do this under the judicial
power.
(c) Federal courts (but not necessarily the entire federal gov’t, including Congress) lack
the power to make law with respect to, e.g., torts (and other state law areas). I.e.,
even if Art. I gives Congress the power to create substantive rules in diversity cases,
the courts don’t have that power. This is the separation of powers holding (i.e., that
Congress has the power, but hadn’t delegated its powers to the courts).
2) Using Erie to Make Decisions:
(a) An Erie guess – “supreme court predictive approach” appled by fed. ct. using
due care, but state trial court is not bound by the fed. ct.’s ruling only by
state appellate/supreme cts OR
(b) Certify Q’s to state supreme ct.
3) BASICS
(a) Fed law > state law when it governs, Fed interp of Fed Law > State law
(b) State Cts. have last word on state law

Erie Principles in Six Steps a. Choice-of-law rules are substantive for Erie
purposes; thus a federal court sitting in diversity
1. The Constitution is supreme law. See Article VI; must apply state choice-of-law rules. See Klaxon.
Marbury. In cases where it governs an issue, it 5. If there is no governing federal law (Constitution,, statute,
trumps inconsistent state and federal law. treaty, or Federal ) and the issue is arguably procedural, use
2. Federal courts must apply federal statutes and twin aims test
treaties in cases where they govern, unless they are 6. In certain limited contexts, federal courts maintain federal
unconstitutional. See Erie; Ricoh. common law powers traceable to a governing federal law.
3. Federal courts must apply a legitimately promulgated a. Three types: Interpretive, delegated, and
Federal Rule of Civil Procedure that governs an issue. structural federal common lawmaking.
See Rules Enabling Act, 28 U.S.C. §2072; Hanna v. b. Post-Erie federal common law differs from pre-
Plumer. Erie general common law in two ways:
4. If there is no governing federal law (Constitution, i. i. It is ultimately grounded in a statute,
statute, treaty, or Federal Rule) and the issue is treaty, or the Constitution (this is what
clearly substantive, a federal court must apply state makes it consistent with Erie);
law, including state common law rules. This is the ii. ii. Because its source is federal law, it is
holding of Erie. See also Rules of Decision Act, 18 binding on the states under the
U.S.C. §1652; U.S. Const. Art. III & 10th Amendment. Supremacy Clause, Article VI.

D) Federal Specific Common Law

 1) United States v. Standard Oil Co. (Soldier hurt)
(a) USSC case power via the structure of the Const., but doesn’t want to use it.
The issue is for Congress in creating laws to deal with behavior that leads to
loss of $ for the US gov’t. Not USSC’s place to create law here
(b) Rule: Before applying a specific fed common law rule, court must find that a
federal interest (via statute or constitution) requires application of federal
law
(i) Because statute or Const., no 10th Amendment issues, not reserved to the
states

E) Post-Erie “New” Federal Common Law

1) Binding on states via supremacy clause:
(a) Interpretive Common law – implicit via fed statute - staturoy intepratation
(b) Delegated Common Law – explicit via fed statute - ie FRCP etc
(c) Structural Common Law – inferred via structure of Const. - based on
structural inferences from the Const. (ie Standard Oil Co.)

F) Horizontal and Vertical Choice of Law

1) Klaxon (breach of K issue, K in NY, Assets & Biz in NY, DE corp., case in DE in Fed.
Ct.)
(a) Fed. Ct. in diversity applies both the substantive & COL rules that would be
applied by the state courts in the state that the Fed Ct. sits
(b) COL rules must conform to those prevailing in the state otherwise accident
of diversity would disturb equal protection clause b/n state courts & fed cts.
that sit across the street from another
2) Ferens
(a) Ferens injured in PA, sues in MS fed. ct. for longer state SOL, then seeks and
receives 1404 transfer to PA fed. ct.
(i) Note that SOLs treated as substantive under Erie.
(b) Van Dusen held that transferor law applies when defendant seeks transfer.
(c) Ferens extends Van Dusen to plaintiff transfers despite forum shopping
implications.
(i) Forum shopping no matter what the rule.
(ii) Real problem, if there is one, is general jurisdiction?
3) Ricoh
(a) Stewart (AL) sues Ricoh (NY) in AL fed. ct. despite forum selection clause
(FSC) for NY; Under AL law FSC is invalid.
(b) But remember, federal courts apply federal law when it “governs.”
(c) Court holds that 1404 governs the interpretation of contracts in 1404
transfers.
(i) FSC is part of 1404’s private interest calculus.

Joinder Rules

Combining defendants, claims, different types of damages, or plaintiffs

4 ways to join claims
1. Compulsory counterclaim (13a)
a. All counterclaims arising from the common nucleus must be asserted
b. Example: A sues B for injuries out of car accident. B not only thinks that he’s not
responsible, he thinks that A was the one who caused the accident. B has to bring
his claim against A in the suit of A v. B.
c. NECESSARILY INVOLVES SAME NUCLEUS
2. Permissive counterclaim (13b)
a. One may make a counterclaim that does not arise from same circumstance
b. Example: A sues B for injuries out of car accident. B thinks that A has breached an
unrelated contract. B may join his contract counterclaim to the tort suit, but doesn’t
have to.
i. Note that if A has a claim related to B’s contract claim, and B brings the
counterclaim, then A’s claim becomes a compulsory countercounterclaim,
which he must bring or waive.
c. DOES NOT INVOLVE COMMON NUCLEUS (must have an independent basis for
jurisdiction)
3. Cross claims (13g)
a. Cross claims may be made against co-parties that arise from the same common
nucleus of either the main claim or a counterclaim.
i. Example: A sues B and C for injuries in three way car accident. B and C can
sue each other over car accident, but can’t bring cross claims against each
other in relation to unrelated contract dispute
b. NECESSARILY INVOLVES SAME NUCLEUS
4. Joinder of claims (18)
a. If there is a valid original claim, counterclaim, cross-claim, or third-party claim, one
may join other claims that do not arise from the common nucleus.
b. Once a valid claim is brought against a party, all others may be brought
c. DOES NOT INVOLVE COMMON NUCLEUS (must have an independent basis for
jurisdiction)

5. ∆ can add a non-party for Contribution – 14

a. Erkins v. Case Power - A ∆ may use rule 14 to implead a third party defendant where
the third party defendant is or may be liable to the defendant derivatively or
secondarily, and not to join a person who is or may be liable solely to the plaintiff
The basis for third party liability is generally contribution or indemnity.

Joinder of Parties
1. Mandatory joinder of parties, according to necessity, availability, and
indispensability. Any other joinder is optional.
2. Rule 20(a)(1) – Allows plfs to sue together if they assert claims that “aris[e] out of
the same transaction, occurrence, or series of transactions or occurrences; and
[if their claims involve] any question of law or fact common to all plaintiffs….”
3. Rule 20(a)(2) – Allows ∆s to be sued together if any claim is asserted against them
jointly under the same criteria as above.
a. Hohlbein v. Heritage Mutual Insurance Co: involving 4 plfs asserting that ∆
made material misrepresentations to them during separate time periods in
separate situations. However, the misrepresentations were the same, ct allowed
the action to continue b/c there seemed to be a pattern of misrepresentation.
b. Rule 21 – Misjoinder of parties is not grounds for dismissal, but tests “same
transaction or occurrence”. The court can sever a party, or sever any claims
against a party, and can occur sua sponte. See rule 42 – court can do trial
 severance for “convenience, to avoid prejudice, or to expedite and economize,”
for any claim.
4. Note: Joinder rules do not confer SMJ or personal jurisdiction. Fed R Civ P 82.

A) “Leiendecker Rule” for compulsoru counterclaims – Rule 13(a)

1) Must be able to bring the counterclaim for it to be waived via res judicata
B) Same transaction or occurrence
1) focuses on the underlying events gigving rise to litigation
2) NOT legal theory/type of relief
3) Can be different state v. federal law pg 616-617
C) Rule 20(a)(1) & Rule 18(a), so if π1 + π2 v. ∆, then π2 can bring additional and
unrelated claims against ∆
D) Compulsory counterclaims from Rule 13(a)(1)(A) that don’t meet AIC have SMJ via
28 USC 1367

Supplemental Jurisdiction
I) Gibbs Test
A) United Mine Workers of Am. v. Gibbs
1) Both federal and state claims arose from the same series of actions by D. fed’l law
claims dismissed.
2) Held: pendent jurisdiction is permissive over state law claims and Article III is not
violated by supplemental claim that is unrelated to federal jurisdiction as long as
there is a common nucleus of operative facts.
(a) satisfies Mottley & Art. III § 2 Clause 1 because it deals w/ original “common
nucleus of operative fact” dealt with a federal statute
3) “Same transaction or occurrence” in joinder rules is the same as common nucleus of
operative facts → same circumstances; same questions of law or fact.
4) ct. has discretion not to exercise jurisdiction where values of economy, convenience,
fairness, and comity militate against exercising pendent jurisdiction.
II) 28 USC §1367
A) Confers supplemental jurisdiction on all state law claims that arise out of the same
“nucleus of operative facts” as the original claim that confers original jurisdiction on the
federal court.
B) Where the case is founded solely on §1332, supplemental jurisdiction doesn’t extend to
any claims by πs against a party joined under rule 14 (adding nonparty ∆ who is
liable), 19 (required joinder), 20 (permissive joinder), or 24 (intervention), when
supplemental jd “over such claims would be inconsistent with the jd requirements of
§1332.”
1) π v. ∆ < 75 + ∆ < 75 is not allowed! (opposite of Gibbs)
C) A court can decline to hear a claim even though it has supplemental jurisdiction.
1) Novel/complex state claim.
2) Supplemental claim is dominate
3) Ct has dismissed all clams over which it has original jd.
4) other “compelling” reasons

D) Supplemental Jurisdiction Made Easy

1) If statutory jurisdiction exists over “civil action,” §1367 confers statutory
supplemental jurisdiction over claims that satisfy Gibbs.
 2) Exception: If statutory jurisdiction over civil action is based on 28 USC §1332,
then no supplemental jurisdiction under (a) over certain claims by (original)
plaintiffs.
3) Discretion to dismiss supplemental claims.
III) Kroger (no pendant parties when it would defeat complete diversity)
1) A sues B. B impleades C. A crossclaims on C. B drops out and C turns out non diverse.
NOT ALLOWED via statute (make sure this is facts of Kroger)
(a) Would have been constitutionally OK under Gibbs because the claim arose out of the
same nucleus.
(b) But if jurisdiction were allowed, statutory requirement of complete diversity could
be defeated simply by suing only diverse parties and waiting for them to implead.
(c) Held: 28 USC 1367(B) π v. ∆2 via exception
IV) Exxon Mobile Corp. v. Allapattah Services
1) Does “diversity case in which the claims of some plaintiffs satisfy the amount-in-
controversy requirement, but the claims of others plaintiffs do not, present[] a
‘civil action of which the district courts have original jurisdiction?’”
2) Yes! “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 §1367(a),
even if the civil action over which it has jurisdiction comprises fewer claims than
were included in the complaint.”
3) Because court has original jurisdiction over P (PR, >75k) v. D (PA, DE), it has
original jurisdiction over a “civil action and §1367(a) is satisfied.
4) Rule: Where the court has original jd over at least one claim in a diversity suit,
§1367 extends supplemental jurisdiction to claims of other plfs in the same Art.
III case or controversy, whether or not they meet the amount-in-controversy
requirement. – Exxon Mobile

5) Court doesn’t kill complete diversity requirement.

(a) “Incomplete diversity destroys original jurisdiction with respect to all
claims, so there is nothing to which supplemental jurisdiction can adhere.”
(b) “A failure of complete diversity, unlike the failure of some claims to meet the
requisite amount in controversy, contaminates every claim in the action.”

Finality
Pocedural system is tradeoff b/n: legal & factual accuracy, fairness, and finality

A) Claim Preclusion – Res Judicata

1) If C2 involves
(a) the same parties as in C1 (or their privies), -- side of the “v” doesn’t matter
(b) the same c/a as in C1 [i.e. claim in C2 arises from same operative fact, or
same transaction or occurrence, as claim in C 1], and if
(c) judgment in C1 was final, valid, and on merits,
then
All legal claims that were raised in C1, or that could have been raised in C1, are
precluded from relitigation in C2.
2) River Park - “transaction test”
 (a) River Park Inc. alleges that Highland Park undermined efforts to develop
country club property.
(b) C1: RP v. HP, federal court, federal claim, RP loses on merits
(c) C2: RP v. HP, state ct., state law claims.
(i) –Does C1 preclude C2?
(d) Court adopts “transaction test” for claim preclusion, and dismisses.
(i) “assertion of different kinds of theories of relief still constitutes a single
cause of action if a single group of operative facts give rise to the
assertion of relief.”
(ii) Transaction test promotes efficient resolution in C1.
(iii)Similar to Cf. FRCP 13(a) – compulsory countrerclaim, and Gibbs test.
3) On the merits
(a) 12(b)(6) usually not on the merits (unless legally insufficient, dismissed
with prejudice)
B) Same parties?
1) Rule Against Non-Party Preclusion
(a) “[O]ne 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.”
2) Taylor v. Sturgell: Supreme Court rejected virtual representation as a new
exception to general rule against precluding nonparties.
(a) FOIA lawsuit seeking certain documents from Federal Aviation
Administration. Greg, his friend, had previously brought unsuccessful suit
seeking same records.
(b) 3 reasons for rejecting virtual representation:
(i) General rule is a powerful presumption against binding non-parties
(ii) Would create common law class actions (based on some relationship
b/w the parties), without procedural safeguards in Rule 23
(iii) Too open-ended, would involve a multi-factor balancing test to
determine whether an “identity of interests” actually exists. Would
create administrative difficulties, when the goal of claim preclusion is
to promote efficiency (undermines efficiency).
(c) Friendship/“close associates” not enough to establish non-party
preclusion.
(d) Virtual representation differs from the other 7 exceptions because those
involve either an express or implied legal relationship between nonparty
and party who litigated original case, whereas virtual representation
subjects a nonparty to preclusion in the absence of such a relationship.
(e) Closest is proxy (representative agent); court remands to assess whether
C2’s plaintiff is C1 plaintiff’s agent
(f) Six exceptions (all some form of legal relationship between party and non-
party):
(i) Contract
(ii) Privy
(iii)Representative suits (e.g. class actions)
(iv)Assumed control of litigation in C1
(v) Relitigation through proxy (agency etc.)
(vi) Special statutory scheme
3) Same cause of action?
(a) Three tests:
(1) Transactional test (harsher): Separate claims are considered the
same cause of action if they arise from a single group of
operative facts
Followed in River Park v. City of Highland Park:
o C1: federal claim against City for deprivation of property
rights, because engaged in conspiracy to delay permit process
so that the bank would foreclose on property and city could
purchase cheaply.
o C2: state law claims arising out of same facts
 Tortious interference with business expectancy
 Breach of implied k
 Abuse of government power
o Parties disagreed on which test to use
(Transactional/Evidence)
o Irrelevant that the claims rested on different theories of relief
(focus is on factual basis)
 doesn’t matter that plaintiff initially asserted federal claim
of relief (due process), then asserted state claims - both
claims rest on same set of operative facts. (“substitution of
labels”).
 Similar to “common nucleus of operative fact” concept from
Supp. J.
 Could you establish the second claim without using any facts
of the first claim?
 Most commonly used test.
a. Best serves efficiency (poses greatest risk that claim
will be precluded later, incentivizing plaintiff to assert
all claims at once)
b. Most likely to reduce conflicting results
c. Most effective at avoiding serial lawsuits (protects
defendant)
d. But also puts plaintiff at greatest risk of inadvertently
losing a legitimate cause of action
 Similar to test for joinder of claims, and to the Gibbs test for
Article III case
a. 13(a) (Compulsory counterclaim: same transaction or
occurrence), Gibbs, and transactional share common
backdrop: claims arise from groupings of commonality
(2) Same evidence test:
o If the evidence needed to sustain the second action is the same
as the evidence needed in C1, then barred.
o If different theories of liability, often need different evidence
o Fewer claims are barred when this test is used (less
preclusion)
 Problem with the same evidence test:
 Difficulty: in many cases, some of the evidence
will be identical, so it is difficult to determine
whether the evidence is sufficiently similar to
consider the claims to be the “same.”
 Not a determinative test (subjective)
 Permits successive litigation
 Need to spend a lot of time to see if same evidence-
not efficient
(3) Primary rights test:
 Plaintiff has a separate claim for each right that the
defendant has violated.

 Hypo: Car accident. Claims (1) negligence (2) battery.

1. Transactional: 1 claim because both claims
arise from a single set of operative facts,
from the same event.
2. Evidence: 2 claims, different evidence to
prove negligence & battery
3. Primary Rights: 3 claims - personal injury,
property damage, lost profits.

2. 3) Final, valid and on the merits?

a. Final: pragmatic; most important-trumps all other considerations
 Final once a trial court enters a judgment
 Even if the losing party might subsequently file a post-trial
motion (eg for new trial) or appeal
 In practice:
 If the judgment in C1 is on appeal and C2 is brought in
another court, the court in C2 will typically wait until
the appeal is complete before determining whether res
judicata applies.
 Rule 60(b)(5): If C2 is dismissed under res judicata
while C1 is on appeal, and then the appellate court
reverses or vacates C1, the party can set aside the
dismissal of C2. (relief from the judgment)
 If law changes while on appeal, the court will apply the new
law
b. Valid
 “Invalid” judgment and not entitled to claim preclusion if the
court issuing the judgment lacked SMJ or PJ, or if defendant
didn’t receive proper notice of the lawsuit.
 Exceptions:
 If parties litigated without raising SMJ or PJ, the
judgment is valid.
 1. Res judicata applies even where the court in
C1 lacked subject matter jurisdiction,
unless the district court’s decision to hear
the case was a “manifest abuse of
authority” or would “substantially infringe
the authority of another tribunal.”

c. On the merits
 Generally: whether the parties had opportunity to litigate on
the merits.
 Excludes: dismissals for failure to state a claim (12(b)(6)), or
dismissals for lack of subject matter jurisdiction, personal
jurisdiction or improper venue (12(b)(1)-(3))
 Includes: jury verdicts, summary judgments, judgments as a
matter of law, default judgments, arbitrations, settlements
(parties had opportunity to litigate but chose settle).
 Gray area: statute of limitations dismissals. Trend is to give
them preclusive effect.
 Increasingly widespread view that claimants should
have fewer opportunities to relitigate claims; courts
have interpreted “on the merits” to include wide range
of dispositions

3. Relationship with compulsory counterclaim:

a. For claim preclusion to apply, the plaintiff from the first case needs to
be the plaintiff in the second case, and the defendant from the first
case needs to be the defendant in the second case.
 Thus, claim preclusion doesn’t apply when original defendant
is now the claimant and the claimant in the original case is
now the defendant.
b. However, while claim preclusion doesn’t bar the case, compulsory
counterclaim rule 13(a) does.

4. Exceptions to claim preclusion (Courts can refuse to apply the doctrine

when):
a. Parties have agreed that the plaintiff can split his claim
b. Court has expressly reserved plaintiff’s right to bring a second action
c. Plaintiff unable to rely on a legal theory or seek a certain remedy
because of subject matter jurisdiction limitations (Plaintiff did not
allege cause of action because it would’ve been jurisdictionally
improper to do so).
  River Park, Inc. v. City of Highland Park tried to use this
defense. Plaintiff said federal courts lacked SMJ over state
claims therefore claim preclusion doesn’t apply (that they’d
dismiss the federal claim & therefore not be able to litigate
state claim). Court held this wasn’t true because of
supplemental jurisdiction. They never even filed the state
claim, not to mention that under 1367 courts have discretion
whether or not to keep state claim, and previously have.
d. Judgment in first action was plainly inconsistent with the fair and
equitable implementation of a statutory or constitutional scheme
e. Continuing or recurrent harm, and plaintiff given option to sue from
time to time for damages
f. Clearly and convincingly shown that the policies favoring preclusion
are overcome for an extraordinary reason

B. ISSUE PRECLUSION/COLLATERAL ESTOPPEL

1. Test for issue preclusion:
a. If C2 involves:
 an issue of fact or law that was
 actually litigated in C1 (i.e. parties had full and fair
opportunity and incentive to litigate) and actually decided
 necessary to judgment in C1
 in a judgment that was final, valid and on the merits
b. Then
 the determination in C1 has preclusive effect in C2
 between the same parties or their privies (mutuality)
 even if C2 involves a different claim
 (unless an exception applies)
c. In some jurisdictions, can be non-mutual (parties do not need to be
the same in C1 and C2)

2. Effect of issue preclusion: if collateral estoppel applies, that issue has the
effect of being taken as established in C2. No need to introduce further
evidence on the issue.
a. But case is not over, as there are still other issues to litigate

3. Difference between claim and issue preclusion

a. Claim preclusion applies to entire claims; issues are “smaller pieces
of lawsuits” (eg some legal or factual element of a claim: ownership
of property, validity of a contract, family relationship – sometimes
broader elements like a party’s negligence or contributory
negligence).
b. Claim preclusion bars claims that could have been raised but were not
in C1. Issue preclusion bars only issues that were actually litigated.
c. Claim preclusion requires same parties. Non-mutual issue preclusion
does not.
 d. Claim preclusion can only be used defensively, when a defendant
fends off liability by pointing to a finding from a prior action. Issue
preclusion can be used both defensively and offensively, when a
plaintiff invokes issue preclusion to establish facts to prove its claim
(Panniel).
e. Felger v. Nichols (difference between collateral estoppel and res
judicata)
 C1: Nichols (attorney) sues Felger for unpaid legal fees.
Felger says fee unreasonable; legal services bad. Nichol wins.
 C2: Felger sues Nichols for malpractice. Nichols claims
collateral estoppels. Not barred by res judicata because no
compulsory counterclaim rule in Maryland.
 C2 malpractice claim barred by collateral estoppel: evidence
in case 1 on inadequacy of representation = same issue
actually litigated and decided

4. 1) Same issue of fact or law?

a. Need to look back at the record to determine which issues were
litigated
b. Look out for different states – where different law would apply

5. 2) Actually litigated?
a. Not satisfied if:
 Not raised in C1
 If raised but the litigant did not have a full and fair opportunity
and incentive to litigate the issue
 Involved a small amount of damages
1. But see Felger v. Nichols: plaintiff barred
from suing for legal malpractice, because
the issue had been fully litigated in a prior
action for unpaid legal fees. Even though
the damages were only $345, found that
Felger had litigated the facts (produced
evidence) of Nichols’ malpractice and lost.
But Glannon says might be unfair to
preclude Felger from litigating the issue in
a lawsuit with greater stakes.
 Inconvenient forum
b. Admissions are not actually litigated
c. Does not matter for the purposes of collateral estoppel whether the
decision in C1 was correct.
 Promote finality, not accuracy
d. Can be litigated:
 In arbitration (a consensual process of private dispute
resolution) (Panniel v. Diaz)
 Evidentiary hearing
  Rule 12(b)(6) motion, summary judgment, judgment on the
pleadings, judgment as a matter of law

6. 3) Necessary to the judgment?

a. The finding must be legally necessary to the decision. Look out for
general verdicts.
b. In cases where only a general verdict is reported, but the plaintiff
asserted two claims, such that we cannot determine which one was
necessary to the judgment  no preclusion
 Or if general verdict for the defendant on a negligence claim
in a state that allows contributory negligence as a total bar to
recovery  cannot determine whether the jury found (a) that
the defendant was not negligent, (b) that plaintiff was
contributorily negligent, or (c) both
 If a court grants SJ or JMOL on a defense before the verdict is
rendered, then that defense is not necessary to the judgment
c. Rationale:
 Want to preclude only issues that the judge has fully, carefully
considered
d. Cambria v. Jeffery: in Massachusetts when contributory negligence
was a bar to recovery
 C1: J sues C for negligence. Court finds both negligent.
Judgment for C.
 C2: C sues J for property damage.
 Cambria is not precluded from litigating the claim that he was
not contributorily negligent. C1 was decided solely on the
basis that Jeffery had been contributorily negligent. The
finding that Cambria was negligent was unnecessary for the
judgment.
 Whether or not Cambria was negligent, Jeffery was
going to lose because he was contributorily negligent.
 Apply a but-for test:
 If Cambria had not been found negligent, would
Jeffery have won? No.
e. Hypotheticals:
 J is non-negligent, C is negligent
 C1: J sues C. J wins.
1. So both the finding that C was negligent and
that J was non-negligent were necessary to
the judgment
 C2: C sues J. Precluded.
 J is non-negligent, C is non-negligent.
 C1: J sues C. C wins.
1. For C to win, she had to have been non-
negligent. So this is essential, and is
precluded in C2.
 2. Finding that J was non-negligent is not
essential.
 C2: C sues J
 p. 1241 hypothetical
f. Alternative holdings: no clear rule
 Restatement says issue preclusion should not apply to either of
the alternative reasons for deciding an issue
 May not have been as carefully reasoned as necessary
 Losing party ordinarily would be unlikely to appeal
(would most likely lose, since there are two bases for
the decision against him), but now would have an
incentive to appeal in order to avoid issue preclusion
effects.
g. In a situation of a default judgment: personal jurisdiction finding will
be necessary to the judgment, because a court will only enter a default
judgment if it would have PJ

7. 4) Final, valid and on the merits? (see above)

8. 5) In the case of mutual collateral estoppel: same parties or their

privies?
a. As in claim preclusion, there is a presumptive rule against precluding
non-parties
b. Panniel v. Diaz:
 C1: Panniel vs. NJM insurance company
 Panniel wins on the finding of causation
 At this point, suing NJM as her insurer
 C2: Panniel vs. Diaz and RWJ (also insured by NJM)
 Presumptively not precluded, since the parties (Diaz
and RWJ) were not parties in C1.
 Court says Diaz and RJW are in privity with NJM
 Exception in Taylor where the nonparty “assumes
control” of the suit.
 Here, NJM
1. will pay the damages that result
2. is effectively in control of C2
a. plaintiff is seeking damages only
up to the limit that NJM will pay
(identity of interests)
3. if NJM had won in C1, would have been able
to use that judgment defensively in C2
 But court exercises its discretion not to apply collateral
estoppel: exceptions
 May have an adverse impact on the public interest
 1. Arbitrations will turn into litigations, when
their purpose is to make the profess of
settling claims more efficient
 Unfair to the defendant
1. Diaz and RJW’s insurance premiums might
go up if court allows judgment against
them
2. Also not clear that Diaz and RJW would not
have litigated the lawsuit more
aggressively than NJM did

9. Non-Mutual Collateral Estoppel

a. Most jurisdictions, including the federal courts, have eliminated the
mutuality requirement in the context of collateral estoppel to some
degree.
 Non-mutual: a new party can invoke collateral estoppel in C2
against a party who litigated and lost an issue in C1: parties in
C2 are not both able to use the C1 judgment to establish an
issue in C2.

b. Non-Mutual Defensive Collateral Estoppel

 Permits a new party in C2 (stranger in C1) to prevent a repeat
party from relitigating an issue on which it litigated against
another party in C1.
 The new party uses preclusion as a shield.
 When the party being estopped had fully and fairly litigated
the common issue in the earlier litigation (one bite at the
apple)
 Blonder-Tongue v. University of Illinois Foundation:
Supreme Court endorsed non-mutual collateral estoppel.
University “switched adversaries,” sued for infringement of
the same patent.
 C1: University sues different lab for patent
infringement  patent found invalid.
 C2: University sues Blonder-Tongue for patent
infringement  collateral estoppel prevents University
from relitigating patent’s validity, even though BT was
not party to C1 (non-mutual defensive)
 Not allowed by some states
 Winner of an issue in a previous litigation cannot invoke
collateral estoppel affirmatively – cannot deprive a new party
of its bite at the apple.
 C1: X sues Y, X wins
 C2: X sues Z: X cannot invoke collateral estoppel
affirmatively on an issue on which it litigated and won.
Cannot deprive Z of its bite at the apple.
c. Non-Mutual Offensive Collateral Estoppel
 Permits a plaintiff to prevent the defendant from relitigating an
issue that the defendant has previously lost in an action with
another party.
 The new party uses preclusion as a sword (cannot deny
something that was found in a previous action – like
negligence)
 Can also be used by defendants: can avoid liability by
preventing the plaintiff from relitigating an issue on which she
has previously litigated and lost
 Again, collateral estoppel cannot be used against a
party that has not previously had an opportunity to
litigate the issue (due process issue)
 Most states do not allow non-mutual offensive collateral
estoppel.
 Parklane Hosiery Co. v. Shore:
 C1: SEC sued Parklane and Parklane lost: proxy
statement found to be materially false and misleading.
 C2: Shore sued Parklane. Parklane precluded from
relitigating the issue of whether proxy statement is
false and misleading. Shore used the finding
“offensively” to prevent Parklane from relitigating.
1. Factors in favor of allowing offensive
collateral estoppel here:
a. Shore could not have joined C1,
because brought by a non-private
party. Thus, the court is not
promoting “wait and see” by
plaintiffs. (if plaintiff could have
easily joined the lawsuit, is a
reason not to allow offensive CE)
b. Parklane had a strong incentive to
litigate the issue in C1, because it
was a serious allegation and
subsequent lawsuits were likely.
c. Not inconsistent with any prior
judgment.
d. No procedural devices were
available in C2 that were not
available in C1.
  Trial courts have broad discretion over when to allow non-
mutual offensive collateral estoppel: Rule from Parklane: “in
cases where a plaintiff could easily have joined in the earlier
action or where, either for the reasons discussed above or for
other reasons, the application of offensive estoppel would be
unfair to a defendant, a trial judge should not allow the use of
offensive collateral estoppel.”
 Objections to offensive collateral estoppel:
 Anti-efficiency: gives plaintiffs an incentive to “wait
and see.”
1. If the second plaintiff had joined the first,
might have lost.
2. But if the second plaintiff waits for the
judgment in the first suit:
a. If the plaintiff in C1 wins: can use
that judgment to her favor
b. If the plaintiff in C1 loses: not
bound by that judgment, can try a
different tactic in her suit
 Might be unfair to defendant if didn’t have as strong an
incentive to litigate in C1
 Problem of inconsistent judgments
1. If a train wreck occurs and there are many
victims: the first 25 judgments, the railroad
company wins. On the 26th, the railroad
company loses. Next plaintiffs should not
be able to use the 26th judgment to estop
the railroad company from relitigating.
a. Defendant in this case has a huge
incentive to settle, to avoid the
collateral estoppel consequences
of a judgment
b. Also could promote unfair
strategy/manipulation by plaintiffs
as to which should go first
d. For a non-mutual collateral estoppel problem:
 First: does it meet the prerequisites for collateral estoppel
(same issue, actually litigated, necessary to the judgment,
final, valid and on the merits)?
4) Then: should court allow (wait and see problems, fairness to defendant/whether
had full incentive to litigate, inconsistency with prior judgments, procedural
devices available in C2 that weren’t available in C1)?