Civil Procedure

Professor Bert Huang

Fall 2017

TABLE OF CONTENTS
THEMES...................................................................................................................4
Rule 1 ................................................................................................................................................... 4
TIMELINE OF LITIGATION ...............................................................................4
PLEADINGS ..............................................................................................................4
Rule 8(a) – Complaint ......................................................................................................................... 4
Dioguardi v. Durning ........................................................................................................................... 4
Conley v. Gibson .................................................................................................................................. 4
Bell Atlantic v. Twombly ...................................................................................................................... 5
Ashcroft v. Iqbal ................................................................................................................................... 5
MOTIONS TO DISMISS ..............................................................................................6
Rule 12(b) – Motions to Dismiss ......................................................................................................... 6
Rule 8(b) – Answer .............................................................................................................................. 6
Rule 12(h) – Waiving Defenses ........................................................................................................... 6
Rule 55 – Default ................................................................................................................................. 6
DISCOVERY ..............................................................................................................6
Rule 26(b)(1) – Scope of Discovery..................................................................................................... 6
Goodyear v. Haeger ............................................................................................................................. 7
SUMMARY JUDGMENT .............................................................................................7
Rule 56 – Summary Judgment ............................................................................................................ 7
Summary Judgment Trilogy ................................................................................................................. 7
Scott v. Harris ...................................................................................................................................... 8
JUDGE AND JURY .................................................................................................8
RIGHT TO A JURY TRIAL ..........................................................................................8
Rule 38 – Demand for Jury Trial........................................................................................................ 8
Rule 39 – No Demand for Trial .......................................................................................................... 8
Feltner v. Columbia Pictures ............................................................................................................... 9
Markman v. Westview Instruments....................................................................................................... 9
INSTITUTIONAL COMPETENCE AND CONTROL ..........................................................9
Rule 42 – Consolidation and Separation .......................................................................................... 10
Rule 49 – Special Verdict .................................................................................................................. 10
Rule 50(a) – Judgment as a Matter of Law ...................................................................................... 10
Rule 50(b) – JNOV ............................................................................................................................ 10
Rule 59 – Motion for New Trial ........................................................................................................ 10
Rule 60 – Relief from Final Judgment ............................................................................................. 11
Rule 61 – Harmless Error ................................................................................................................. 11
APPEALS ................................................................................................................11
Cooper Industries v. Leatherman Tool Group Inc. ............................................................................ 11
Plumhoff v. Rickard ............................................................................................................................ 12

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PERSONAL JURISDICTION..............................................................................12
TRADITIONAL ........................................................................................................13
Carnival Cruise Lines v. Shute ........................................................................................................... 13
MODERN ................................................................................................................13
International Shoe Co. v. Washington................................................................................................ 13
World-Wide Volkswagen Corp. v. Woodson ...................................................................................... 13
Calder v. Jones ................................................................................................................................... 13
Walden v. Fiore .................................................................................................................................. 14
Bristol-Myers Squibb v. Superior Court of California ....................................................................... 14
Asahi v. Superior Court of California ................................................................................................ 14
J. McIntyre Machinery v. Nicastro..................................................................................................... 15
Panavision v. Toeppen ....................................................................................................................... 15
VENUE AND FORUM NON CONVENIENS .................................................................15
Atlantic Marine v. U.S. District Court for WDTX .............................................................................. 16
SUBJECT MATTER JURISDICTION ...............................................................16
28 U.S.C. § 1441(a) – Removal ......................................................................................................... 16
FEDERAL QUESTION ..............................................................................................16
Osborn v. Bank of the United States................................................................................................... 17
28 U.S.C. § 1331 ................................................................................................................................ 17
Louisville & Nashville R.R. Co. v. Mottley ........................................................................................ 17
Gunn v. Minton................................................................................................................................... 17
DIVERSITY JURISDICTION.......................................................................................18
28 U.S.C. § 1332 ................................................................................................................................ 18
Hertz v. Friend ................................................................................................................................... 19
Americold v. Conagra ........................................................................................................................ 19
JOINDER ................................................................................................................19
RULES ....................................................................................................................19
Rule 20 – Permissive Joinder of Parties ........................................................................................... 19
Rule 13 – Crossclaims and Counterclaims ....................................................................................... 19
Rule 18 – Additional Claims ............................................................................................................. 20
Rule 14 – Third-Party Impleaders .................................................................................................... 20
Rule 19 – Required Joinder .............................................................................................................. 20
Rule 21 – Misjoinder and Nonjoinder .............................................................................................. 21
Rule 24 – Intervenors ........................................................................................................................ 21
Rule 42 – Consolidation and Separation .......................................................................................... 21
SUPPLEMENTAL JURISDICTION ...............................................................................21
28 U.S.C. § 1367 ................................................................................................................................ 21
Owen v. Kroger .................................................................................................................................. 22
PRECLUSION .......................................................................................................23
CLAIM PRECLUSION ...............................................................................................23
Taylor v. Sturgell ................................................................................................................................ 24
ISSUE PRECLUSION.................................................................................................24
Parklane v. Shore ............................................................................................................................... 25
CLASS ACTIONS..................................................................................................25
CERTIFICATION AND DUE PROCESS .......................................................................26

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 Rule 23(a) – Prerequisites ................................................................................................................. 26
Rule 23(b) – Types ............................................................................................................................. 26
Rule 23(c)(2) – Notice ....................................................................................................................... 26
Wal-Mart v. Dukes ............................................................................................................................. 26
Washing Machine Cases .................................................................................................................... 26
Rule 23(c)(4) – Particular Issues ...................................................................................................... 27
Rule 23(c)(5) – Subclasses ................................................................................................................ 27
PRECLUSION ..........................................................................................................28
Smith v. Bayer .................................................................................................................................... 28
CAFA....................................................................................................................28
ARBITRATION ........................................................................................................28
AT&T v. Concepcion .......................................................................................................................... 28
American Express v. Italian Colors ................................................................................................... 28
MULTI-DISTRICT LITIGATION (MDL) ....................................................................29
SETTLEMENT..........................................................................................................29
Rule 23(e) – Settlement Approval ..................................................................................................... 29
BP – Deepwater Horizon ................................................................................................................... 29
REMEDIES ............................................................................................................30
PUNITIVE DAMAGES ..............................................................................................30
Exxon Shipping v. Baker .................................................................................................................... 30
BMW v. Gore ...................................................................................................................................... 31
State Farm v. Campbell...................................................................................................................... 31
Philip Morris v. Williams ................................................................................................................... 31
STATUTORY DAMAGES ..........................................................................................32
Sony v. Tenenbaum............................................................................................................................. 32
INJUNCTIONS..........................................................................................................32
eBay v. MercExchange ....................................................................................................................... 32
TiVo v. EchoStar ................................................................................................................................ 33
SETTLEMENT..........................................................................................................33
ADR ......................................................................................................................33

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 THEMES
Rule 1  FRCP should be “construed, administered, and employed by the court and the parties
to secure the just, speedy, and inexpensive determination of every action and proceeding”

Considerations within the legal system

 Competing aims and goals of procedure
o Interests of the system as a whole
 Even if one party is right, sometimes there are broader concerns
 Rules vs. standards
 Who decides, judge or jury? Where is discretion?
 Power and constraint – why constrain? How to constrain?
 Institutional competence
 Tailoring vs. one-size-fits-all
 Due process… for whom? Plaintiff’s vs. defendant’s interests
 Hurdles to litigation

TIMELINE OF LITIGATION
RJMOL
Pleadings JMOL (JNOV),
(complaint, (directed order new
answers) Discovery verdict) trial Appeals

Motion to Summary Trial Remedies

dismiss judgment

Pleadings
Rule 8(a) – Complaint  A pleading that states a claim for relief must contain: (1) a short and
plain statement of the grounds for the court’s jurisdiction… (2) a short and plain statement of the
claim showing that the pleader is entitled to relief; and (3) a demand for the relief sought…

DIOGUARDI V. DURNING (2d Cir. 1944) – short and simple Dioguardi & Conley are the
complaint is satisfactory under Rule 8(a) historical/traditional bases
 Judge Charles Clark (principal draftsman of FRCP, est. for R.8 and R.12(b)(6)
1938) makes it easier for immigrant π to bring claims!

CONLEY V. GIBSON (1957) – black railroad union employees sue union for discrimination (failure
to protect them when 45 were fired and replaced by whites)
 First time SCOTUS takes up the question of pleading sufficiency – this complaint is fine!

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 o Complaint should not be dismissed for failure to state a claim unless it
appears beyond doubt that plaintiff can prove no set of facts in support of his
claim
o Dismiss if (1) when facts taken as true, still not enough, or (2) not enough notice
 Purpose of Pleading  Fair Notice, not detailed facts
o Begins era of “notice pleading,” principal guidance for civil cases until the 2000s
 Federal rules reject idea that pleading is “game of skill”

Period between Conley and 2000s

 Courts explode in litigation, increasing number of cases
 Discovery becomes more intensive
 Timeline becomes cramped
 Judges as case managers

CONLEY TWOMBLY IQBAL

Aim is “notice” “Notice” and costs of Not really about notice
discovery anymore! Goal debatable
No fact pleading Need some facts Facts only! (2-step)
No fact/law distinction Ignore legal conclusions
Story “consistent with claim “Taken as true” + plausibility “Taken as true” + plausibility
for relief” (antitrust standard) (ALL civil cases)

BELL ATLANTIC V. TWOMBLY (2007) – aftermath of trust-busting of phone companies into

regional companies, people sued saying the companies were colluding and creating monopolies
 Huge lawsuit, tons of people, discovery will be immense
 Judge Lynch dismisses, saying antitrust laws require a showing of “plausibility” of facts
in the complaint – heightened requirement!
 SCOTUS says: we are retiring the language of Conley, in practice, district court judges
have already been doing this

ASHCROFT V. IQBAL (2009) – Pakistani 9/11 detainee challenges confinement as unconstitutional,

SCOTUS applies Twombly standard to all civil pleadings
 Two-Step Test  (1) ignore legal conclusions, take remaining allegations as true, (2)
does whatever is left over make for a “plausible” claim? (exceeding mere consistency)
o How to win: either w is alleged is not even illegal, or there were not enough facts
to support a plausible claim
 Dissent: misapplication of Twombly – supposed to take allegations as true, not decide
whether probably true

Thematic Implications of Twiqbal Standard

Theoretical: greater judicial discretion, fact/law distinction, accelerates merits (gets rid of weak
cases faster). Real-world: information asymmetry more important, costs of discovery,
overpleading (longer, but less notice), underpleading. Broader: “bad cases make bad law” (using
atypical case to make precedent, context (who else can do something about it? Congress? District
court?)

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Motions to Dismiss
Rule 12(b) – Motions to Dismiss R. 8(a)
(1) Lack of subject matter jurisdiction complaint
(2) Lack of personal jurisdiction R. 12(b)
motion to
(3) Improper venue dismiss

(4)(5) Insufficient process/service of process

R. 8(b)
(6) Failure to state a claim answer

(7) Failure to join a party under R. 19

Can raise 12(b) defenses in the answer or in a separate motion – strategic reasons

Rule 8(b) – Answer  admit/deny allegations in complaint, raise 12(b) defenses, raise
affirmative defenses, crossclaim/counterclaim

Rule 12(h) – Waiving Defenses

General rule: bring them all up, otherwise it might be waived for later (see 12(g))
12(h)(1) – 12(b)(2)-(5) are waived if not raised the first time
12(h)(2) – 12(b)(6)(7) can be raised even at trial
12(h)(3) – subject matter jurisdiction can be decided at any time, no waiver (“most favored”)

Rule 55 – Default  if ∆ fails to plead or defend, or doesn’t show up, automatic relief for π

Discovery
Rule 26(b)(1) – Scope of Discovery – any nonprivileged material relevant to a claim or defense
and proportional to the needs of the case

TOOLS PRIVILEGE
 Interrogatory  Strategy-protecting
 Deposition (Rule 30) o Attorney/client
 Request documents (Rule 34) o Work product (Hickman)
o Includes objects, inspections,  Confidential/private info-protecting
electronic materials o Doctor/patient
 Request admissions o Spousal
 Automatic disclosure – R.26(a)(1) o Priest/rabbi/etc.
 Physical/mental exam (judge must order)
Automatic discovery disclosure is increasing as courts want more upfront

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DISCOVERY SANCTIONS
 Rule 37 – discovery misconduct
 Common-law “inherent power” of court
 28 U.S.C. § 1927 – attorney fee misconduct
 Rule 11 – attorney’s ethical responsibility

GOODYEAR V. HAEGER (2017) – failure of tire causes motorhome to flip over, Goodyear doesn’t
disclose test results… how big is “inherent power” of court to sanction bad-faith behavior?
 $2.7m award (all legal fees and costs since Goodyear’s bad-faith failure to disclose)
o “Contingent” amount of $2m if CoA reverses original award (“but-for”)
 SCOTUS grants cert due to circuit split, says court’s sanction power is limited only to
direct causal (“but-for”) costs resulting from misconduct
o True for all sanctions, not just court’s inherent power!
o Need causal link between misbehavior and legal fees
o Sanction must be compensatory, not punitive

Summary Judgment
Rule 56 – Summary Judgment  granted if there is no genuine dispute about a material fact
and movant is entitled to judgment as a matter of law

Rule 12(b)(6) Rule 56 (Summary Judgment)

Who decides? Judge decides Judge decides
What question? Did π fail to state a claim? Is there a genuine dispute about a
material fact?
Based on what? Is it illegal? Is it illegal?
Did π allege enough in Did non-movant show enough
complaint? (“taken as true”) evidence in the record? (viewed in
light most favorable to them)
PURPOSE Determine whether the case Determine whether the case should
should go forward to discovery go forward to trial

SUMMARY JUDGMENT TRILOGY (1986) – hurdles for plaintiffs in the litigation process
 Celotex – burden of proof can be satisfied by demonstrating the absence of evidence to
support the non-moving party (e.g. ∆ says π doesn’t have any evidence on this point)
 Liberty Lobby – court should take into account any higher burden of proof
o “Clear and convincing” higher standard for malice should be incorporated into
inquiry for summary judgment
 Matsushita – if evidence as a whole is implausible or not credible, can dismiss

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SCOTT V. HARRIS (2007) – high-speed car chase, officer rams car, Harris rendered quadriplegic.
Fourth Amendment issue – is this an excessive use of force? Reasonableness test.
 8-1 majority (Scalia) reverses denial of SJ for Scott
o SJ means we must view facts in light most favorable to Harris, but only if there is
genuine dispute – and based off the video, there is not!
o No reasonable jury would say Harris’s driving was not dangerous, so Scott
forcing him off the road was a reasonable response, SJ granted
 Dissent (Stevens) – video not enough for SJ, jury should decide reasonableness!
o Refers to rest of SCOTUS as “my colleagues on the jury”…
 Plus D.Ct. and CoA – clearly reasonable people could disagree
o SCOTUS shouldn’t play fact-finder here
o Different drivers would think differently, there was safer police practice…
 Even if video if it makes clear what happened, doesn’t answer reasonableness question

Judge Hornby, “Summary Judgment Without Illusions”– summary judgment does not save
lawyer time or legal fees, does not reduce court time or trials. It reassigns work to junior lawyers,
delays outcomes, and changes the litigation stakes in defendants’ favor. We can’t get rid of it…
so we should change terminology to “motion for judgment without trial,” judges should avoid
deciding disputed facts, should bring it back into the courthouse (ex: require conferences, oral
arguments to demonstrate to parties and public that it’s a serious consideration), should allow
more cases to go to trial.

JUDGE AND JURY

Right to a Jury Trial
Seventh Amendment: “the right of trial by jury shall be preserved”
But under FRCP, you can lose the right for a jury trial if you don’t ask for it

Rule 38 – Demand for Jury Trial  need either (A) statutory basis or (B) Seventh Amendment
(Feltner, Markman), AND needs to be requested by a party. Right is lost if party doesn’t demand
it!

Rule 39 – No Demand for Trial  (b) court may order a jury trial, (c) both parties may consent
to jury trial

Only 1-2% of civil cases are resolved by trial, but filing and settlement is still done “in the
shadow” of what would happen at a jury trial

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FELTNER V. COLUMBIA PICTURES (1998) Feltner’s company continues broadcasting Columbia
shows even after the license expires, Columbia sues under statute for copyright infringement.
Law and equity remedies, statutory damages – who decides? Feltner’s request for trial denied
 Partial SJ for Columbia – no dispute that Feltner infringed, didn’t have license
 Seventh Amendment provides right to a jury trial for issues regarding statutory
damages award in copyright cases, including issue of the amount itself
o SCOTUS says that “suits in common law” includes similar statutory cases
 History – states had copyright laws with statutory damages and jury trials
even before Constitution!
o No right to a jury trial for issues of equity
 Court can decide equitable remedies (e.g. injunction) but still need jury
trial for the liability aspect, amount of damages
 In a mixed question of law and equity, court must try legal matters to a
jury, then decide equitable matters in a manner not inconsistent with jury
verdict

MARKMAN V. WESTVIEW INSTRUMENTS (1996) Markman sues for patent infringement of dry
cleaning tracking system, Seventh Amendment question of who should determine interpretation
of terms used in patent claim
 Two parts to a patent: (1) specification and (2) claim – what is novel about the patent,
what is covered within the scope of the patent
o Need to interpret term “inventory” – should judge or jury do it?
 Souter says construction of a patent and interpretation of terms within the claim is
exclusively within the province of the court
o No historical basis for claim interpretation either way
o Judges are better suited to interpret these things
 Better at interpreting technical terms, more uniformity for patent system
 Markman argues jury should determine credibility issues – but Souter says
it’s not just about that, and also jury would create inconsistency

Institutional Competence and Control

28 U.S.C. § 1861 – All litigants in federal courts entitled to jury trial have right to juries selected
randomly from a fair cross-section of the community and all citizens should have opportunity to
be considered and obligation to serve on juries.

28 U.S.C. § 1862 – “No citizen shall be excluded from service as a grand or petit juror in
the district courts of the United States … on account of race, color, religion, sex, national origin,
or economic status.”

Positives/negatives of jury system?

 Punitive damages highly debated as positive or negative of jury system. Ex: McDonald’s
coffee case – people think it’s ridiculous but in reality the award was tempered by court’s
reduction

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  Jurors are smarter than we think – ruminations where they thought about insurance,
lawyer fees etc
 Can potentially be manipulated – see jury consultants, Batson podcast

PROS
Uniformity, better at handling
JUDGES complexity, more objective?
More familiar with the law
Sympathetic, community
morals, cross-section?
JURIES Secret deliberations,
credibility determiners,
democratic legitimacy, many
people making decision
Others that may play a role: arbitrators/mediators, experts, agencies
CONS
Habit/jadedness, bias,
politically motivated, one
person making decision
Sympathetic, mob justice,
secret deliberations, bias,
inconsistency

HOW CAN JUDGES CONTROL A JURY AT TRIAL?

Rule 42 – Consolidation and Separation  (a) court can consolidate actions with common
question of law or fact, (b) court can order separate trial of any issues/claims
Allows for bifurcation/trifurcation, dividing trial into phases (e.g. liability, damages)

Rule 49 – Special Verdict  court can require jury to break the verdict down into specific
elements and findings. Jury instructions tell the jury how to apply the law.
If jury messes up, maybe a sneaky reason for judge to take the case away!

Rule 50(a) – Judgment as a Matter of Law (“directed verdict”)  If a party has been fully
heard on an issue, and court finds that no reasonable jury would have evidentiary basis to find on
the issue, can issue judgment as a matter of law. Motion can be made any time before case goes
to the jury – either after a party has been “fully heard” or before party rests if a particular issue is
done.

Rule 50(b) – JNOV  If your Rule 50(a) motion was not granted, you can move after the
verdict for renewed judgment as a matter of law. Need to have moved for 50(a) first!

Rule 59 – Motion for New Trial  Reasons? Judge messed up (instructions, evidence), jury
misconduct, verdict against the weight of evidence…
New trial vs. JNOV – in a new trial, jury might find the same outcome! In JNOV, you lose (no
rational jury could find)
Idea of “conditional new trial” applied when courts use remittitur
 Sony v. Tenenbaum district court decision (Judge Gertner)
o Remittitur designed to avoid directly addressing constitutional issue
 But when using, court must offer π the alternative option of new trial to
protect Seventh Amendment jury trial right

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 o Gertner has to address constitutional issue here because π (Sony) will reject
reduced award and opt for new trial, same issues will likely arise

Rule 60 – Relief from Final Judgment  Motion to vacate judgment

Rule 61 – Harmless Error  unless justice requires, error not grounds for new trial/vacate

Appeals
When can you appeal? Reviewing the work of the trial
 Final Judgment – 28 U.S.C. § 1291 court – who decides what question?
 Interlocutory – before the end of a case
o See § 1292, Rule 23(f)
o Collateral order (Plumhoff) when there is an issue that can be resolved separately
from the merits (e.g. qualified immunity)
 Rules 59 and 60 allow trial court to fix things at its level before appeal

Trial Judges Appeals Judges

 More familiar with/closer to facts  See bigger picture (precedent)
 Accountability – know their decision  Less accountable (cert %)
can be appealed  Uniformity
 Local to the area  3 or more people
 Only one person  Takes longer to decide, potential
 Busier, more rushed dissent

Standards of Review Examples (9th Cir.)

 Fact – clear error or substantial evidence (if jury)
 Law – de novo
 Mixed law and fact – de novo
 JMOL – de novo
 Abuse of discretion – very deferential
 Plain error – if not raised at trial

COOPER INDUSTRIES V. LEATHERMAN TOOL GROUP INC. (2001) – Cooper copies Leatherman’
tool design for marketing, jury awards $4.5m punitive damages (90x compensatory). District
court says PD were not excessive under BMW. 9th Cir. affirms under abuse-of-discretion review.
 SCOTUS says no – correct standard for constitutionality of PD is de novo
o De novo review applies fluid concepts and unifies precedent
o Differences in institutional competence of trial/appellate judges supports this
o Stevens: punitive damages is a question of law, not fact-finding
 No Seventh Amendment issue
 Dissent: Ginsburg says abuse-of-discretion was correct b/c (1) PD determinations are like
fact-finding, (2) practically, d.ct. can better analyze BMW reprehensibility factor

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PLUMHOFF V. RICKARD (2014) – high speed car chase, officer shoots Rickard and he dies, his
daughter alleges unconstitutional excessive force. Officers’ motion for SJ denied, they appeal.
 Normally, SJ is not an appealable final decision (§1291), but this is an exception –
qualified immunity issue falls under collateral order doctrine – separate from merits
 Issues here are legal, not factual – CoA jurisdiction over the appeal was proper

PERSONAL JURISDICTION
Where are you going to sue?

Reasons for π and ∆ Reasons for policymakers and courts

 Better law  Fairness and power
 Cost/convenience  Consistency/precedent
 Jury demographics  Notice (expectations)
 Availability of witnesses  Forum-shopping
 Public opinion/media  Resources, expertise

WWVW "purposeful
availment"

Specific BMS "arising out of"

Modern (out-of- Int'l Shoe "minimum
state) contacts"
Calder, Walden,
General ("at home")
Nicastro, Panavision
Domicile
U.S. Constitution Due Process

Property
Traditional (in-state)
"Tag"

Consent (Carnival
Cruise)

Sources of Law
 Federal  Rule 4(k)(1)(A) – federal court basically acts as state court Rule 12(b)(2) – if
o There’s federal PJ if the ∆ is subject to that state’s PJ you don’t raise an
 State  Long-arm statutes objection to PJ,
o CA: very broad, anything under the Constitution it’s waived
o HI: enumerated, but still must consider Constitution

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Traditional
Based mostly on physical presence
Examples: owning property, “tag” service, consent (forum selection clause or waiver), domicile
for individuals, “at home” (hard to prove) or “nerve center” (headquarters, PPB) for corporations

CARNIVAL CRUISE LINES V. SHUTE (1991) – Carnival (FL-based) sells tickets to Shutes (WA) for
cruise departing from CA, slip-and-fall on the cruise, Shute sues in W.D.WA
 Carnival challenges PJ on two grounds
o Insufficient contact with WA, ticket forum selection clause requires FL litigation
 SCOTUS upholds forum selection clause as reasonable – consent to jurisdiction!
o Efficient, cost-saving to limit the fora in which Carnival can be sued
o No bad faith choice of forum since CC is based in FL
o Shutes have not met the burden to show inconvenience
o Stevens Dissent: non-refundable ticket forces it on passengers, not fair/reasonable

Modern
Based on Int’l Shoe factors of “fair play and substantial justice”

INTERNATIONAL SHOE CO. V. WASHINGTON (1945) – company incorporated in DE, based in MO,
salesmen in WA advertising products. Issue is WA tax contributions to state unemployment,
company argues WA can’t collect due to lack of PJ.
 SCOTUS changes personal jurisdiction requirement  “MINIMUM CONTACTS”
based on “traditional notions of fair play and substantial justice”
o Specific: activities in that place that you can sue about
o General: being in that place is enough to sue for any type of activity
o Company’s activity was systematic and continuous, even if not physically present
o Creates new idea of dragging ∆s into court based on fairness

WORLD-WIDE VOLKSWAGEN CORP. V. WOODSON (1980) – NY-based company sued by NY

residents who bought car in NY but crashed in OK and sue in state court there. ∆ argues no
contacts because they don’t do business in OK.
 SCOTUS agrees! BUT establishes “PURPOSEFUL AVAILMENT”
o Purposeful availment of activities within a state means you’re subject to suit there
o A state does not exceed powers under the Due Process clause by asserting PJ over
a corp that delivers products into the “stream of commerce” with the expectation
that it will be purchased by consumers in that state (not the case here)
 Dissent: it is applicable here! Cars are mobile, of course they go to other
states, networks of dealerships nationally, it’s foreseeable

CALDER V. JONES (1984) – actress Jones (CA resident) sues National Enquirer reporters (FL
residents) for libel in CA court. They challenge PJ (magazine itself doesn’t because it had clear
contacts in CA – circulation, etc).
 Assess each ∆’s contacts for PJ separately
o We’re concerned more with due process for ∆ because π can choose where to sue

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  Establishes “EFFECTS TEST” – CA has personal jurisdiction because ∆ conduct has
“effects” in CA
o They chose to write story about CA resident, knew harm would occur there
o ∆s should have expected to be sued in CA based on who they targeted
 Tension with WWVW where court said ∆ couldn’t expect to be haled into
OK court – maybe intent has some impact here
 Question: does nationwide intent or impact also suffice for a particular state?

WALDEN V. FIORE (2014) – GA police officer seizes cash from NV residents at Atlanta airport,
they sue in NV alleging he knew they were going to NV and his actions would have effects there
 NV does not have jurisdiction because ∆ did not target NV specifically
o Court distinguishes from Calder
 Intentional tort there occurred in CA (publication requirement)
 Harm/effects could happen in any state π went to
o Need to show ∆ contacts with state itself, not people in the state
 π contacts cannot be decisive
o “Effects test” really more like aim/impact/targeting test

BRISTOL-MYERS SQUIBB V. SUPERIOR COURT OF CALIFORNIA (2017) – 86 CA residents and

almost 600 non-CA residents sue in CA for harms caused by BMS drug Plavix. BMS sold Plavix
in CA but didn’t develop, market, or manufacture it there. CA trial court finds general
jurisdiction (“at home”) due to BMS offices and labs in CA. CoA says there’s no general
jurisdiction under Daimler but there is specific jurisdiction. CA Supreme Court uses “sliding
scale approach” and justifies on grounds that nonresident and resident claims are similar
 SCOTUS (8-1) denies personal jurisdiction! Harms are not “ARISING OUT OF” BMS
activities in CA
o Contacts unrelated to the suit don’t matter; CA distributor not enough
o No connection between nonresident claims and CA
 Dissent: Sotomayor says this makes it hard for πs to sue, creates inefficiency for mass
action… the only justice who has been a trial judge!

ASAHI V. SUPERIOR COURT OF CALIFORNIA (1987) – Zurcher (CA) sues Chengshin (Taiwanese
manufacturer of motorcycle tube), Chengshin seeks indemnification from Asahi (Japanese
manufacturer of valve for the tube), other parties settle out so it ends up as Chengshin against
Asahi in CA court. Asahi has no offices, sales, marketing in CA, but superior court upholds
jurisdiction on the basis that Asahi knew some valves would end up in CA. SCOTUS rules no
PJ. 4-4-3 split (agree on outcome but not reasoning!)
 O’Connor (II-A): “Stream(+) Analysis”
o Awareness or foreseeability that the stream of commerce will bring a product to a
place is NOT enough for PJ
o Need specific targeting of the state through design, marketing, distribution…
o Asahi didn’t purposefully avail of CA, need “substantial connection”
 O’Connor (II-B, 8 justices agree): Reasonableness Analysis
o Under Int’l Shoe “fair play and substantial justice,” there’s a severe burden on
Asahi, and neither plaintiff nor CA have real interest in the dispute, so CA
jurisdiction is unreasonable/unfair

14
  Brennan concurrence: Foreseeability is enough for stream of commerce (no stream+)
o It’s regular, predictable, so Asahi can expect a lawsuit
o Stevens: foreseeability would satisfy purposeful availment here

J. MCINTYRE MACHINERY V. NICASTRO (2011) – Nicastro injures hand in machine manufactured

by British company. They never shipped or marketed in NJ (had independent US distributor) but
attended US conferences and held a US patent.
 Kennedy: No personal jurisdiction because they didn’t purposefully direct conduct at NJ
o Purposefully availing yourself of benefits and laws of a state means submitting to
that state’s sovereign power – justifies specific jurisdiction
o It’s about sovereign’s authority, not fairness like Brennan says in Asahi
 Breyer: agrees with outcome but not reasoning – mixes regular stream theory (flow into
NJ not regular) and stream(+) (don’t have specific targeting)
 Ginsburg: Fairness in the modern world! McIntyre developed national US market, so not
unfair for it to defend in NJ
o If PJ is really about state’s authority, why can you waive it?
o Distinguishes from Asahi: control over final destination of products, US targeting

PANAVISION V. TOEPPEN (9th Cir. 1998) – IL resident registers domain names and tries to
ransom them to companies. Panavision sues for trademark dilution. Apply CA law under long-
arm statute and Rule 4(k)(1)(A). How does PJ work on the internet?
 Court upholds jurisdiction based on Calder “effects” doctrine – Toeppen knew
Panavision would suffer harm there
 Counterarguments? State doesn’t matter, he could target anywhere, harm happens
anywhere (Walden); imposes a major burden on the defendant (fairness factors)

Fairness Factors to Consider

 Burden on ∆ and witnesses
 π interests in obtaining relief
 Forum state’s interest in adjudicating dispute
 Judicial interest in efficient resolution
 State’s interest in furthering fundamental procedural and substantive policies

Venue and Forum Non Conveniens

Personal jurisdiction is the
power of the state Personal New
Jurisdiction York

Within the state’s court

system, there are sub- Venue SDNY EDNY WDNY NDNY
divisions  VENUE
Governed by 28 U.S.C. §
1391

15
28 U.S.C. § 1391 governs venue
 (b)(1): district where any defendant resides if all ∆ are residents of the same state
 (b)(2): where a substantial part of the events giving rise to the claim occurred
 (b)(3): if neither, a district in which any defendant is subject to PJ (“fallback provision”)

28 U.S.C. § 1406(a) and Rule 12(b)(3) allow transfer or dismissal when venue is improper
(generally discretionary)

Forum non conveniens (FNC) is an administrative device for transfer or dismissal

 A motion made when venue is proper, but case should be heard elsewhere
o Judge can transfer to another district that parties consent to or where the case
could have been brought
 28 U.S.C. § 1404(a) – forum non conveniens transfer to different district in fed system

ATLANTIC MARINE V. U.S. DISTRICT COURT FOR WDTX (2013) – contract provided for litigation
in VA but company sues in TX
 § 1404(a) controls enforcement of forum selection clause
o If parties agree and sign a contract, the clause should be enforced
o Must transfer absent extraordinary circumstances
o Normally, weigh convenience and justice in determining FNC transfer, but here,
forum selection clause has controlling weight – don’t disrupt parties’ expectations

SUBJECT MATTER JURISDICTION

Article III, Section 2
Art. III § 2 Judicial power extends to all cases “arising
under” the Constitution – two main categories

Federal Federal Question Diversity Jurisdiction

Diversity
Question 28 U.S.C. § 1331 28 U.S.C. § 1332

District courts have Between citizens of

jurisdiction over all different states
§ 1331 § 1332 civil actions “arising
under” Constitution SUBJECT MATTER
JURISDICTION IS
Mottley, Interpreted more NOT WAIVABLE
Grable/Gunn narrowly than Art. III AND CAN’T BE
Sec. 2! CONSENTED TO!!!

28 U.S.C. § 1441(a) – Removal  if there’s federal jurisdiction and π brings claim in state
court, then defendant can remove to district court

Federal or state court?

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  State court – “general subject matter jurisdiction”
o Torts, contracts, crime, family…
o Concurrent jurisdiction with feds over many types of cases (e.g. civil rights)
o Expertise? Local interest? Elected/bias? More judges, but also more cases
 Federal court – “limited subject matter jurisdiction”
o Maritime, securities, crime, patent, bankruptcy…
o Many state law claims go to federal court
o Expertise? Media coverage? Uniformity?

Federal Question
OSBORN V. BANK OF THE UNITED STATES (1824) – as long as there’s a federal “ingredient,”
federal jurisdiction is proper – Justice Marshall’s broad construction of “arising under”

BUT – statutory authority is needed because Article III does not confer SMJ on district courts
28 U.S.C. § 1331 – Congress grants federal question jurisdiction to district courts
 “Arising under” is more narrowly interpreted here than in Constitution
o Only if plaintiff’s claim requires proof of federal law (Mottley)
o Prevents too many claims arguing x is unconstitutional

LOUISVILLE & NASHVILLE R.R. CO. V. MOTTLEY (1908) – Mottleys receive free railroad passes
in contract as compensation for crash, company declines to renew them, citing fed statute
prohibiting free passes. State law contract claim, but they sue in WDKY, alleging federal law
allows their free passes, or that it violates Fifth Amendment deprivation of property
 SCOTUS raises SMJ issue sua sponte
 No subject matter jurisdiction  π claim is about state contract, not arising out of Const.
o Federal issue must be in complaint; not enough to anticipate federal defenses
 “Mottley Rule” or “well-pleaded complaint rule”

“Holmes Test” – is the cause of action is created by federal law? Then federal SMJ applies
 No SMJ in Mottley because the source of plaintiff’s claim to relief was state contract law
o The “law that creates the cause of action” was state law
 Sometimes, though, state law claims involving federal issues are proper under § 1331
o Grable: state law property claim, but serious federal interest involving IRS
 Only disputed issue is legal notice, doesn’t open door like Merrell Dow
o Merrell Dow: negligence per se based on violation of federal duty is a state law
claim that implicates federal issue. In this particular case, not enough for SMJ!
Too broad, opens the door to too many claims

GUNN V. MINTON (2013) – does state law claim of legal malpractice in patent case require federal
court jurisdiction?
 Not a constitutional issue (Osborn federal “ingredient” test) but rather a statutory issue
o § 1338 – “arising under” jurisdiction for patents
 Interpret in same narrow way as § 1331

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  Grable Test: is claim (1) necessarily raised, (2) actually disputed, (3) substantial, (4)
possible for fed court to determine without disturbing fed-state balance?
 SCOTUS says NO SMJ here – claim is necessary and disputed, but not substantial! Not
an important enough issue for federal interest/system as a whole

Diversity Jurisdiction
Reasons for & against diversity jurisdiction
 Local bias against out-of-staters – does it still exist?
 Respect for state law and principles of federalism
 Slows development of state law
 Places burden on overworked state courts – shift cases to federal court?

Constitutional Requirements (Art. III, Sec. 2) Statutory Requirements (§ 1332)

Amount in Controversy
Between a state and citizens of another state, or $75,000+
between citizens of different states (Claims can be aggregated to meet
amount, but only between same π and ∆)

Minimal Diversity Complete Diversity

Just some opposing parties must be diverse No overlap between states on opposing
sides (Strawbridge)

28 U.S.C. § 1332 grants diversity jurisdiction to district courts, again, narrower than Constitution
 (a)(1) Citizens of different states
o “Citizen of a state” – individual must be U.S. citizen and domiciled (physical
presence, intention to stay indefinitely) – domicile is the last place you had both
those things
o American living abroad is a “stateless citizen” – no federal jurisdiction!
 Ex: Elizabeth Taylor
 (a)(2) Alienage jurisdiction – citizens of a state and a foreign state
o But if the foreign citizen is admitted for permanent residency and domiciled in
same state, they’re like a citizen and no diversity jurisdiction
 Congress gets authority to constrain jurisdiction in Article III
 (c)(1) Corporations
o Citizen of state in which it’s incorporated, or the state in which it has its principal
place of business (Hertz “nerve center”)
o Non-corporation’s citizenship depends on state citizenship of individual members
of the business (Americold)

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HERTZ V. FRIEND (2010) – Hertz wants to get to federal court (more favorable to corporate ∆s),
dispute over “principal place of business” (headquarters in NJ, but most business is in CA)
 Court says PPB is “nerve center” (where the company’s officers control and direct its
business, usually the HQ) and here that is NJ
 Why do we need a more bright-line rule? (compared to personal jurisdiction)
o 12(b)(1) – most favored, not waivable!
o The main consideration is subject matter, not fairness as with PJ

AMERICOLD V. CONAGRA (2016) – warehouse fire destroys goods, π sues owner Americold, they
remove from state to federal court, 10th Cir. raises SMJ issue sua sponte
 Diversity jurisdiction for non-corporate entities is based on citizenship of members
o No evidence in record of Americold member citizenship
 Whoever removes to federal court has burden of showing diversity

JOINDER
Look at personal jurisdiction and subject matter jurisdiction before joinder
 Parties (PJ) – Rules 20, 14, 19, 24
 Claims (SMJ) – Rules 18, 13, 14
o Analyze SMJ for every claim!!!

Reasoning for Joinder

 If claims involve same transaction or occurrence, more efficient to litigate them together
o Also avoids the possibility of inconsistent judgments on the same issue
 Plaintiff is “master of the claim” in theory – decide parties, claims
o Rule 20 doesn’t require parties to be joined
o BUT, things can go awry if ∆ removes, or if party asserts claim against π… also
required joinder and intervenors

Rules
Rule 20 – Permissive Joinder of Parties
20(a)(1) – Joining Plaintiffs  plaintiffs can join if relief arises out of the same transaction or
occurrence, and common question of law or fact
20(a)(2) – Joining Defendants  same as for plaintiffs (transaction or occurrence, common
question)

Rule 13 – Crossclaims and Counterclaims

Only covers claims by defendants against plaintiffs. Rule 18 addresses the rest.
13(a) – Compulsory Counterclaim  must arise out of same transaction or occurrence, you must
raise or you won’t be able to in a separate case
13(b) – Permissive Counterclaim  can be about anything, not required to raise

19
13(g) – Permissive Crossclaim  against co-party (same side of the “v.”), must arise out of same
transaction or occurrence
 Once you have a 13(g) crossclaim, you can add unrelated claims under 18(a)

Rule 18 – Additional Claims

Applies to anyone involved in a case. Permissive, but federal claim preclusion will apply to T&O
18(a)  a party can join as many claims as it wants against opposing party

Rule 14 – Third-Party Impleaders (see Glannon pp. 273-75)

You cannot use Rule 14 to remove liability for yourself or get out of court. You will still be held
liable, but can bring in third-party ∆ who could be liable to YOU.
14(a)(1)  defendant (“third-party plaintiff”) can bring in another party who may be liable for
all or part of its claim (liable to ∆, not to original π)
 Examples: insurance (they’ll be paying anyway), employment/subcontractor issues, joint
& several liability
 Judges have discretion to deny R.14 impleader
 Once you have R.14 claim, can add unrelated claims under 18(a)
 Impleader does not affect SMJ – otherwise ∆ could manipulate to
destroy diversity… But still always need PJ!
14(a)(2)(B)  third-party ∆ can assert counterclaims against third-party
π and crossclaims against any other third-party ∆
14(a)(2)(D)  third-party ∆ can file claims against original π if they arise out of the same
transaction or occurrence
14(a)(5)  third-party ∆ can also bring in a nonparty who may be liable
to the third-party ∆ for claim against them by a third-party π
 You cannot use R.14 to bring in a third-party ∆ who is liable for
separate claims to third-party π. But, if you properly implead a
third-party ∆, you can add other claims with R.18

C may not want to sue G (even if G will eventually be brought in)

because then G could permissively counterclaim against C under 13(b)
 G can bring claims against C under 14(a)(2)(D) relating to the
same transaction or occurrence and THEN tack on unrelated
claims under 18(a)!

Rule 19 – Required Joinder (see Glannon pp. 284-88)

19(a)(1)(A)  if the person is necessary for relief, must join (e.g. co-owner)
 Still have to consider SMJ and PJ (“subject to service”)
19(a)(1)(B)(i)  if absentee has an interest in action and would be practically impaired, must
join (e.g. limited funds)
19(a)(1)(B)(ii)  if absentee’s absence would cause double/multiple/inconsistent obligations on
an existing party, must join
 Inconsistent judgments ≠ inconsistent obligations! It’s ok if ∆ is found liable against one
π and not another in separate lawsuits
19(b) – When Joinder is Not Feasible  court has discretion whether to continue or dismiss

20
Rule 21 – Misjoinder and Nonjoinder  not grounds for dismissing an action! Court has
discretion to add/drop parties and sever claims

Rule 24 – Intervenors (see Glannon pp. 290-95)

24(a) – Intervention of Right  parties MUST be allowed to join if given right by statute or if
their interest in the matter is not represented and will be practically impaired (see (19(a)(1)b()(i))
 Must be timely – court has discretion to deny intervention if it will significantly disrupt
24(b) – Permissive Intervention  Court has discretion whether to allow; consider whether it
will delay or prejudice original parties’ rights; may allow limited participation

P has limited funds, so M should be joined

Who raises this issue? C doesn’t want M – less money!
 19(a)(2) – court must order required joinder
 M can intervene under Rule 24
o 24(a) intervention of right  19(a)(1)(B)(i)
o 24(b) permissive – interest that would be impaired if no
adequate representation by current parties (court has
discretion here)

Rule 42 – Consolidation and Separation

42(a) – Consolidation  court has discretion to consolidate if common question of law or fact
42 (b) – Separate Trials  court has discretion to order separate trial for some claims,
crossclaims, counterclaims, third-party defendants, etc.

Always look for spots where you can argue that the judge has discretion!
Rules 14 (implied), 19(b), 24(b), 42, § 1367

Supplemental Jurisdiction
28 U.S.C. § 1367
(a) You can drag a state law claim into federal court (without federal question or diversity
jurisdiction) as long as it’s part of the same case or controversy (Gibbs “common nucleus of
operative fact”) as the original claim, UNLESS:
(b) (mandatory!) claim is brought by plaintiff against persons made parties under Rule 14
(third party impleader), 19 (required parties), 20 (joined π/∆s), 24 (intervenors), and the
exercise of supp.j would mess up diversity jurisdiction (§1332) requirements
(c) (discretionary!) the claim raises a complex state law issue, the state law claim
predominates over the original claim, all original claims were dismissed, or any other
compelling reason… then court can decline to exercise supplemental jurisdiction (but
these claims can subsequently probably be brought separately… not quite preclusion)

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OWEN V. KROGER (1978) – background to § 1367; Kroger sues NE company who impleads
Owen, Kroger asserts claims against Owen, other company gets SJ, turns out that Owen is really
in IA (true PPB) so all that’s left is diversity-breaking IA v. IA case
 federal court claims it still has jurisdiction
 SCOTUS reverses and says no jurisdiction
o State and federal claims must derive from “common nucleus of operative fact” to
be heard together in federal court (Gibbs), but that doesn’t automatically give fed
court the power to hear state claim
o Problem: complete diversity is destroyed here, allowing suit creates workaround
to diversity (§1332) requirement, means π could game system
o Concern is on π here because π chooses where to sue. Owen’s impleader was OK
even though it destroyed complete diversity because it was done by ∆
 Congress subsequently enacts § 1367: (a) invokes Gibbs, (b) creates exclusions reflecting
Kroger concerns about diversity and gaming, (c) allows DISCRETION

§ 1367 “Glitches”
Certain supplemental claims do not need to meet the amount in controversy requirement. Rule 20
plaintiff cannot break up state diversity, but permitted to join even if they don’t meet amount in
controversy.

Allapattah Rule 20 Plaintiff Glitch

 Technically, this is permitted under the rules since § 1367(b)
does not cover claims by plaintiffs coming under Rule 20
 BUT it messes up state diversity, so…
 SCOTUS SAYS NO! NOT ALLOWED!!!

Allapattah Amount-in-Controversy Glitch

 Amount here is messing up § 1332 diversity req, but…
 SCOTUS says OK!
o Only care about state diversity, not the amount!

Counterclaim Glitch
 If G brings a claim against C, she is required to assert any
compulsory counterclaim under R. 13(a)… but § 1367 bars
claims by plaintiffs against persons made parties under R.14!
 C can probably still bring the claim separately, but she should
still try the first time to show a good-faith effort

Two-Defendant Glitch – Glannon p. 320 #13

 If A and B (NY) join as co-plaintiffs to sue C and D (OH), and B’s claim is $25k, it’s
barred by § 1367(b) because the co-∆s were made parties under Rule 20
 B can claim if they sue one ∆, but not if both; in practice people will just sue separately

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 PRECLUSION
Reasons for More Chances Reasons for Fewer Chances
 More information  Prevent inconsistency
 Legitimacy?  Legitimacy? When is a case
 Accuracy  Resources really over? How
 Unfair to π if something  Unfair to keep dragging many chances
comes up later ∆ into court should you get to
 Helps equalize? (e.g.  Incentive to prepare relitigate?
lawyer quality) best possible case the
first time

CLAIM PRECLUSION ISSUE PRECLUSION

(res judicata, merger and bar) (res judicata, collateral estoppel)

What needs to have Actually litigated, decided, and

happened in case #1? Final judgment, on the merits “necessary” (would have
changed outcome)

What is barred? “Same claim” (transaction or “Same issue”

occurrence)

Who is bound? Same parties (same π and ∆ Same party

on same sides; AB)

Claim Preclusion
Final judgment on the merits, same claim, same parties.
 Plaintiff’s right to recover from separate defendants are considered separate claims
 Claims need not actually have been litigated to be barred; they need only have been
available
o Need to raise all your potential claims arising out of a transaction/occurrence or
they will be barred by claim preclusion
o 12(b)(6) creates claim preclusion in federal court
 Idea that if you can’t amend to state a claim, you don’t have right to relief
o If plaintiff files but doesn’t pursue, and case is dismissed, it’s barred
 It’s “on the merits” because there was opportunity to litigate
 Judgment must be final – many courts consider trial judgment final, even if appeal is
pending
 SJ/JMOL count as “on the merits”

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  First suit. Judgment for Bryan and Coolidge. Subsequently, Bryan
sues Coolidge for same T&O… that suit is barred!
Res judicata applies to all parties who assert claims.
After asserting his first claim, Bryan needs to assert all other possible
claims arising from the same transaction.

Second suit could have been included in the original like so 

 Rule 18(a) allows
 Supplemental jurisdiction allows – same transaction,
§1367(b) only bars claims by plaintiffs
 OR diversity jurisdiction if claim was more than $75k

Coolidge suing Smith is not barred because a 14(a)(2)(D) claim is not

compulsory in the first action.
§ 1367 allows jurisdiction (same occurrence, not claim by plaintiff).

If judge doesn’t allow the claim in the first case (under §1367(c) discretion) after a party asserts
it (have to try the first time around), they CAN sue after! “Full and fair opportunity to be heard”

TAYLOR V. STURGELL (2008) – reminds us of due process constraint on who is bound. Herrick
sues FAA under FOIA for airplane plans, denied. Taylor sues for the same plans, district court
says it’s barred through virtual representative theory of claim preclusion
 RBG (9-0) reverses – due process principle is “full and fair opportunity to be heard,”
judgment should not bind nonparties
o Exceptions: (1) consent, (2) substantive legal relationship (privity/proerpty), (3)
already adequately represented (Rule 23), (4) non-party controlled original party,
(5) original party relitigating through proxy, (6) statutes
 These must be construed narrowly to avoid due process concerns
 Rule 23 class action limits are a model for this
 Need a rule, not flexible standard

Issue Preclusion
Same issue, actually litigated and decided, necessary to the judgment.
 Narrower than claim preclusion; only precludes issues that were actually litigated and
decided by the same parties
o Need it because issues already litigated may come up again related to separate
events (claim preclusion wouldn’t cover those)
 Problem with general verdicts
o If there are multiple claims but a general winning verdict, don’t know which claim
was “actually decided” or “necessary” to the judgment
 If it’s a losing verdict, clear that all claims were rejected (thus necessary)
o Even if special verdict splits up claims, if damages are general, still don’t know!
 SOLUTION: break up damages by claim as well

24
Example: Morgan sues Gould in SDNY for civil rights violation. Gould moves to dismiss on PJ,
denied. Judgment for Morgan because Gould defaults. Morgan then tries to enforce judgment in
FL, Gould opposes saying NY lacked PJ.
 Relitigation of PJ issue is barred by issue preclusion (collateral estoppel)
 Relitigation of merits of civil rights claim is barred by claim preclusion

PARKLANE V. SHORE (1979) – Shore and SEC both sue Parklane for securities violation
(false/misleading proxy statement). District court rules for SEC finding the statement false.
Shore tries to use that judgment to collaterally estop Parklane saying the issue is already decided.
No claim preclusion because different parties, but issue preclusion
 Concerns with offensive nonmutual collateral estoppel Defensive collateral estoppel
is when new defendant tries to
o Plaintiffs are different and may have different estop same plaintiff
issues/incentives DUE PROCESS – estopped
 Parklane may be incentivized to litigate party must be in both suits
differently vs. SEC than class action (If Parklane had won, they can’t
depending on $$$ use judgment against Shore)
o “Wait and see problem” – party could have joined
suit, but instead waits either for a win (to help them) or loss (a chance to
relitigate). Fair play concerns, more suits
o Different procedural stuff – how friendly is the forum?
o Inconsistent prior rulings – what if court ruled pre-SEC that Parklane didn’t lie?
 Court says use discretion in allowing it… concerns about unfairness don’t apply here
o Shore couldn’t have join SEC action (rules) and they actually sued first
o SEC is serious and has every incentive to litigate aggressively
o No different procedure or prior rulings
 BUT… there was no jury trial for SEC ruling! Is that okay to preclude on??
o Rehnquist dissent says no, it denies Parklane’s Seventh Amendment right

CLASS ACTIONS
Policy Reasons for Class Actions (see casebook pp. 1021-23)
 Ability to sue – there might be a lot of harm in the aggregate, but individuals won’t sue
for small amounts because it’s not worth it
 Press/scope (large group)
 Efficient use of resources Main ideas are aggregation
 Consistency and representative
 Deterrence/alternative to regulation
 “Global peace” for defendants – sometimes they want it! (Exxon)

25
Certification and Due Process
Rule 23(a) – Prerequisites  must meet all factors
23(a)(1) – numerosity (need to have enough people)
23(a)(2) – commonality (question of law or fact)
23(a)(3) – typicality (claims of representatives are typical of class)
23(a)(4) – adequate representation of interests

Rule 23(b) – Types  categories of class action, must meet at least one, class action ok if…
(b)(1) and (2) are mandatory classes; (b)(3) is an “opt-out” class
23(b)(1)(A) – separation would create risk of inconsistent adjudication
(B) – impairing nonparty interest (e.g. limited fund)
23(b)(2) – injunctive relief appropriate
23(b)(3) – common Q predominates over individuals, class action is superior method
 See 23(c)(2)(B) – need to give notice to (b)(3) class members

Rule 23(c)(2) – Notice

23(c)(2)(A) – for (b)(1) or (b)(2) classes, the court may give notice
23(c)(2)(B) – for (b)(3) classes, court must give best notice possible to everyone who can be
identified through reasonable effort – let them opt out if they want

WAL-MART V. DUKES (2011) – 1.5 million female employees sue alleging discriminatory
practices in pay, promotion, etc. Large group all over USA with different positions, salaries.
They ask for an injunction and backpay. Certified under 23(b)(2) – injunctive relief!
 Scalia reverses certification, says not enough commonality under 23(a)(2)
o Goes against the text of the rule and says it’s based on common answer, not Q
o Issues “central to the validity” of claims that can be dealt with “in one stroke”
o Members must have suffered “same injury”
o “Glue” holding all the reasons together
 Falcon – two ways in which commonality can be shown
o Biased testing procedure or significant proof of policy of discrimination
o Scalia says neither apply or are relevant here
 Unanimous – 23(b)(2) was not the right rule
o Monetary relief here is not “incidental” to injunctive relief
o Injunctive relief doesn’t include damages, but it’s an easier bar to meet
certification than 23(b)(3)
o People were using it as a workaround to avoid procedural opt-out constraints
 Need more merits! Similar to Twiqbal shift
 How to set up a class now? Smaller/more specific classes, more evidence, state-by-state

WASHING MACHINE CASES (6th and 7th Cirs.) – moldy washing machines, only 3% have a
problem, but class of all owners certified!
 Posner – class action is for efficient adjudication, just like this case! People wouldn’t
have sued otherwise because damages were small

26
 o Counterargument – hurts company’s rep/sales, many people not harmed who
might benefit, how to defend against different types of claims?
o Procedural solution – judge can split class into subgroups  Rule 23(c)
 Lower courts preserve the practicality of how class actions work
 How to solve problem of different damages among class members?
 Wal-Mart – ∆’s conduct enough for commonality
 Use issue classes like 23(c)(4) or bifurcate trial

Rule 23(c)(4) – Particular Issues  action can be brought/maintained as class action with
respect to particular issues

Rule 23(c)(5) – Subclasses  court has discretion to divide class into subclasses

Due Process and Class Actions

 Concern – class actions bind people who have not had their day in court
 Rule 23(a) and (b) requirements ensure due process
o Impose responsibility on named plaintiffs to represent class’s interests
o Absent class members are not bound if their claims are not typical or common
o Opt-out rights when monetary damages are involved – 23(b)(3) classes
 Some courts require it also for hybrid classes involving injunctions and $$
o “Manageability” requirement of (b)(3)
 Personal Jurisdiction Issues
o Due process concern for π because they might not have chosen forum
 But OK because they don’t have to show up (no burden), can opt-out
o Bristol-Myers problem for multi-state classes suing a ∆
 They should sue ∆ in place where they’re at home (HQ/PPB) so you can
have general jurisdiction… otherwise, state-by-state classes

Supplemental Jurisdiction and Class Actions

§ 1367(b) doesn’t mention Rule 23
 But in Allapattah, SCOTUS says that it applies
o Same thing as for Rule 20 plaintiffs
o Don’t want π to game system, still need complete diversity!
 “Section 1367 still has a role to play in class actions that fall outside CAFA’s threshold
requirements. After Exxon Mobil, the rules governing diversity-only class actions that are
not covered by CAFA are as follows:
o For federal court jurisdiction to exist, there must be complete diversity between the named parties,
i.e., no named plaintiff can be a citizen of the same state as any named defendant.
o For federal court jurisdiction to exist, at least one named plaintiff must have a claim in excess of
the jurisdictional amount (currently $75,000). The claims of separate plaintiffs or class members
cannot be aggregated to meet the jurisdictional amount.
o The citizenship of absent class members is irrelevant for jurisdictional purposes.
o The size of the separate claims of the absent class members is irrelevant for jurisdictional
purposes.”

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Preclusion
SMITH V. BAYER (2011) – McCollins sues Bayer in WV state court, asks to certify class of WV
residents. Smith (unaware of other suit) sues elsewhere in WV asking for the same thing. Bayer
removes McCollins case to fed court where it’s consolidated under MDL in D.Minn. Smith case
stays in WV state court due to lack of complete diversity (some WV ∆s, this is pre-CAFA).
 McCollins case denied certification under Rule 23
o Individual issues of fact predominate over common ones – 23(b)(3)
 D.Minn grants Bayer’s request for injunction to preclude Smith state court case
o Rare use of issue preclusion – issue is CERTIFICATION
o Bayer’s argument – plaintiffs would just keep moving jurisdiction and making
new named plaintiffs in order to recertify, infinite number of tries
 Smith was adequately represented by McCollins
o Smith’s argument – not the same issue! FRCP vs. WV rules
 Wording the same, but “predominance” has been interpreted differently
 SCOTUS: Kagan agrees with Smith, says there was no adequate representation because
interests were not aligned
o You can’t say you’re a class until certification
 If certified, then it is precluded, but not before
o Comity – court respecting judgment of another (no class ever existed)
CAFA
“Class Action Fairness Act” – § 1332(d) diversity jurisdiction
 Only need minimal diversity (can use absent π)
 Need more than 100 people
 Need amount in controversy exceeding $5M (can aggregate)

Defendants like it because it makes it easier to get class actions into federal court which is more
favorable to corporate defendants and allows MDL consolidation
 But, awkward to admit you did more than $5m in damages
If controversy is primarily local, then no federal CAFA jurisdiction
 Unless similar class action filed in last 3 years
 If it’s semi-local (e.g. half and half), federal court has discretion to decline jurisdiction

Arbitration
Increasing restrictions  concerns that consumer action will be lost

AT&T V. CONCEPCION (2005) – beginning of tug-of-war over class arbitration between SCOTUS
and CA Supreme Court. SCOTUS says Federal Arbitration Act (FAA) preempts CA law, so the
arbitration clause is enforceable. Covers a lot of contracts-based consumer class action (cf. Wal-
Mart squashing a lot of torts-based class action).

AMERICAN EXPRESS V. ITALIAN COLORS (2013) – upholds clause barring arbitration by class. If it
costs too much to bring an individual claim, too bad.

DirectTV (2015) – even if the contract has an “out,” still going to enforce individual arbitration –
so really there’s no out

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EpicSystems (2017) – conflicting laws (FAA and National Labor Relations Act) over whether
arbitration is allowed for workplace disputes

Banks and credit card companies – Senate voted to kill rule allowing class action lawsuits
against them, they will probably now have to be resolved through arbitration. Pros and cons.

Multi-District Litigation (MDL)

If MDL panel decides class action cases are similar, they can consolidate them. Theoretically it’s
just for pretrial (motions, discovery, management) then it’s remanded back to the original
district. Personal jurisdiction is not an issue because the statute basically creates national PJ. It’s
an alternative to class action and a way to manage it, sometimes can create a class action. Does
not bind all potential parties! See article for more.

Settlement
Judge has to approve!!! Not the case in non-class action settlements

Rule 23(e) – Settlement Approval

23(e)(1) – must give reasonable notice to all who would be bound
23(e)(2) – need hearing to determine it’s fair, reasonable, and adequate
23(e)(3) – no side deals
23(e)(4) – if it’s a (b)(3) class, need another chance for opt-out!
23(e)(5) – class members can object

Settlement Examples
 Uber safe ride class action – you’re automatically in the class! Can opt out to sue on your
own, but no one is going to for $1 (total cost to Uber is $32M though!)
o You can object to the settlement terms
o 23(e) but a and b still apply (Amgen)
 Subway footlong class action – shows classic problem of no real benefit for class, just $$
for lawyers
 NFL Settlement
o No cap on the total amount! Judge Brody requested this
o Don’t have to show causation, just that you ended up with neurological disease
o Covers all retired players – avoid lawsuits in future
 But some opt out to sue individually (Junior Seau) – have to show
causation!
o Advantages – contracting around the law, avoid causation, collective bargaining
o Disadvantage – pressure to stay in the settlement, too few diseases covered,
players won’t get that much money in the end, should

BP – DEEPWATER HORIZON (2014)

Huge oil spill (10x as big as Exxon), 23(b)(3) class action, BP settles on the eve of trial.
 Settlement – no proof of causation needed, no cap on overall amount paid by BP,
calculated by zones/formulas

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  March opinion (5th Cir.) – BP has regrets and goes on the attack, argues that claimants
need to show causation and that the class definition requires causation
o Court says no, you already said they didn’t have to, and it’s sufficiently limited by
requiring claimaints to sign under penalty of perjury saying the oil spill caused
their harm
 January opinion (5th Cir.) – what if some class members weren’t even harmed? Court
rejects all arguments
o 23(a)(2) – that’s a merits question, not a question for certification
o 23(a)(4) – no cap, so no loss
o 23(b)(3) – settlement isn’t relevant to certification
o 23(e) – fairness is for absentees, not the defendant

REMEDIES
Remedies in Law Remedies in Equity
 Compensatory Damages  Permanent Injunction
 Punitive Damages  Preliminary Injunction
 Nominal Damages  Temporary Restraining Order (TRO)

Remittur: common-law doctrine allowing judges to reduce damages, requires that judge offer
alternative option of new trial to protect Seventh Amendment jury trial right
Additur: when judge increases damages; unconstitutional in federal court

Punitive Damages
Purposes of Punitive Damages
 Historical – punish extraordinary wrongdoing, make up for missing compensation, make
an example of someone
 Today – deterrence and punishment
o Absolute/complete deterrence vs. optimal – how to get right amount?
 Procedural constraints add consistency

EXXON SHIPPING V. BAKER (2008) – 1989 Exxon-Valdez oil spill in Alaska, $5B punitive
damages against Exxon (10:1 ratio to compensatory), Ninth Circuit reduces to $2.5B. Maritime
federal common law. Are PD excessive?
 No precedent, so where does court look to establish constraints?
o Criminal law – sentencing guidelines narrow from pure verbal determinations
o Other countries use PD less commonly
o States – some have fixed dollar amounts, some peg it to compensatory, many
have statutory limits
o Comprehensive studies regarding amount of real-life awards
 SCOTUS imposes quantitative ratio for damages in maritime law – 1:1 max ratio
o Relies on statistics – median is 0.6:1
o Is this correct? Can courts do this? (vs. statute imposing a cap)?

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 Due Process and Punitive Damages
These are constitutional law cases (vs. Exxon federal common law)
Concerns – arbitrariness/unpredictability, fairness, notice, opportunity to be heard

BMW V. GORE (1996) – 500x actual damages violates due process

 Three guideposts to judge punitive damages awards
o (1) degree of reprehensibility
o (2) reasonableness of ratio to actual harm
o (3) compare with other penalties [becomes less important in later cases]

STATE FARM V. CAMPBELL (2003) – construes second BMW factor, overturns 145:1 ratio
 Difficult to satisfy due process if punitive-to-compensatory ratio is greater than single-
digit (not a hard cap though)

PHILIP MORRIS V. WILLIAMS (2007) – starts in OR state court, $79.5M punitive damages, trial
judge reduces to $32M. After some back and forth, original award is upheld, cert granted.
 Doesn’t have to reach the question of whether damages are excessive, because they
decide third-party harm was improperly considered, award may change on remand
 Harm to nonparties can be used to show reprehensibility, but NOT to punish defendant
directly for third-party harm
o How to know whether jury is considering the former but not the latter?
 Breyer (majority) says you need specific jury instructions
 Stevens (dissent) says there’s no difference – considering for
reprehensibility is direct punishment (“eludes me” = eludes JURY!)
o Due process concern with direct punishment for nonparty harm
 Doesn’t give PM a chance to defend itself against those claims
 It would make things too arbitrary – jury will speculate, erodes standard

Exxon BMW State Farm Philip Morris

Federal common law Con Law (Due Process) Con Law (Due Process) Con Law (Due Process)
(1) Reprehensibility 9:1? Jury instructions
1:1 (2) Reasonable ratio (Single Digit Ratio)
(3) Compare to others
Rule Standard Rules-ish

Redundant Punitive Damages Problem (theoretical)

 Punitive damages for every instance of harm  repeated punishment
o Can result in overcompensation and overpunishment
o Can we solve this problem with rules that already exist?
o Not an issue in Exxon due to class action
 Solve with fixed and variable components?
o Compensatory damages are variable

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 o Punitive damages are fixed, should only be awarded once
 In subsequent suits, PD will run concurrently (like in criminal law)
 “If a judge believes that some portion of the total damages in a case before him
reflects an amount that this defendant should not be made to pay repeatedly,
then he should designate this portion to run concurrently with the awards in
other cases”
 E.g. mass tort – compensatory damages vary by plaintiff,
determine fixed PD number at the end
 Problem: how do you know when all suits are done?
 Doesn’t matter where the money goes because the purpose is
punitive not compensatory
 Problem: jurisdiction, lawsuits in different states?

Statutory Damages
17 U.S.C. § 504 – Copyright Statute
 Gives plaintiff choice between actual damages and statutory damages
o Actual often difficult to prove, so might want to choose fixed statutory amount
 Range of penalties – whether ∆ was willful or unaware adjusts bounds of range
o Fairly “one-size-fits-all” – same whether it’s Eiffel Tower design or one song

SONY V. TENENBAUM (1st Cir. 2013) – copyright violation (illegal downloading and distributing),
$22.5k per song for $675k total. Tenenbaum appeals constitutionality of damages (DP)
 Court says NO, there was no due process violation
o These are statutory, not punitive damages, so BMW is not correct authority!
 Statute provides fair notice – designed to provide reparation and deter
 Statutory damages can reflect public wrong as well
 BMW penalty comparison guideposts don’t make sense here

Injunctions
Remedy in equity asking court to order action of a defendant, make them do something.
Damages are for past harms, injunction is for the future!

Common-Law Injunction Principles  (1) may command outside territory, (2) no more
burdensome than necessary for complete relief (see TiVo)

EBAY V. MERCEXCHANGE (2006) – MercExchange sues for patent infringement for “Buy It
Now” feature, district court finds infringement but denies injunction, so they appeal. Fed Cir
reverses on “general rule” that courts should issue injunctions for patent infringement cases.
 SCOTUS says Fed Cir was wrong to apply this rule, remands back to them
o Four-factor test traditional in courts of equity for determining whether to award
permanent injunctive relief
 (1) irreparable injury
 (2) inadequate remedy at law
 (3) balance of hardships
 (4) public interest

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 Not just eBay customers, but integrity of patent system, impact on e-
commerce generally
o Majority – Fed Cir got it wrong, should have applied four-factor standards test rather
than rule
 Dct is wrong to say licensing not enough for irreparable harm/injunction
 “categorical rule” overly broad, should take it case by case
 some licensees don’t fall into category – e.g. university researchers
o Roberts concurrence – look to history, right = remedy (what is point of having
property/patent if you can’t keep people from using it)
 Rules-ish spin on the standard
o Kennedy concurrence – consider technological developments! Times have changed,
concern about patent trolls who are in the industry just to make money by suing, right
doesn’t always equal remedy! Standards
 Remand Opinion
o Factors 1 and 2 weigh against injunction – skeptical that Merc is really engaged in
productive activity, they just want money
o Factor 3 – hard to determine, but in the end injunction doesn’t hurt Merc, eBay
worked around the patent, so injunction doesn’t really hurt them either
o Factor 4 – weighs against injunction – public benefit of lots of people using eBay
versus Merc’s two employees. Favors damages at law & that’s what Merc wants
o Problem: can’t companies just infringe, then pay damages?
 Affects Merc’s future bargaining power
 Can a court really come up with the right amount?

TIVO V. ECHOSTAR (2011) – TiVo sues for patent infringement, gets permanent injunction and
damages. Two-part injunction: no manufacturing, no DVR installation (broad – any DVR
function). EchoStar creates new software and installs, TiVo seeks to hold them in contempt for
violation of the injunction.
 Federal Circuit says the injunction is valid despite no continuing infringement!
o Even though it’s too broad, EchoStar should have appealed the first time
 Can’t raise scope argument on appeal of contempt
 POWER OF PROCEDURE

Settlement
 Can happen at any time! Before filing, during trial, after trial, appeal
 Basically uncontrolled by courts – parties decide
o “Settling in the shadow of the law” (or zone of settlement) – parties make
predictions based on law to decide whether they’re going to settle or not
 How does it change as we go along the timeline? More/less likely? What info do you
have?

ADR (see casebook pp. 619-25)

 Alternative dispute resolution – third party helps parties come to an agreement
 Retreat from public law mode to more private model
o Pros: reduces cost and delay of litigation, generates creative solutions

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 o Cons: unequal bargaining power compromises parties’ rights, secrecy
 Mediation (neutral actor facilitates agreement negotiated by parties) and arbitration
(parties agree upon a selected decisionmaker who creates the final judgment)
 Most federal courts have mediation programs – broad congressional mandate, rules vary

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