WARNING!

This answer key does NOT take into account subsequent changes in the law. Some of what is said here may no longer be correct.

NOTE: I provide much more information than you would have to give in order to answer the questions successfully. I do this in order to answer any background questions you might have.

Part One: Short Answers. [75 points total]

1. P sues D in state court in Kentucky for antitrust violations under Kentucky law, asking for damages and injunctive relief. The court grants summary judgment to D. Subsequently, P brings a federal antitrust action against D in United States District Court for the Eastern District of Kentucky concerning the same activities that were the ground of P’s action in state court. Briefly describe the likely preclusive effect(s) of the state court judgment in the federal court proceedings. [4]

The relevant preclusion law to apply here is Kentucky law. Summary judgment is generally considered on the merits under most states' laws, so it is reasonable to conclude that, under Kentucky law, the judgment would claim preclude the subsequent federal action, provided that the federal action  was part of the same "claim" as the Kentucky action. The most common standard concerning the scope of a claim under state law is the transactional standard (which is also the one employed under federal law). Under that standard, the federal antitrust action and the state antitrust action would be part of the same claim, since, as I made clear in the question, both actions concern the same activities. Therefore it would appear that the federal court in Kentucky, which would apply the law of the court where the previous judgment was made (which is Kentucky law), would refuse to entertain the federal antitrust action. However, federal antitrust actions have exclusive federal subject matter jurisdiction - they can be brought only in federal court. (I mentioned this around 4-5 times during the class.) Since the federal antitrust action could not have been joined to the state-law antitrust action in Kentucky state court, it is very likely that under Kentucky law P is not claim precluded from bringing it subsequently in federal court. See section 26(1)(c) of the Second Restatement of Judgments ( no claim preclusion if "the plaintiff was unable to rely on a certain theory of the case or to seek a certain remedy or form of relief in the first action because of the limitations on the subject matter jurisdiction of the courts"). However, it is very likely that the state-law and federal actions would have essential factual issues in common and that some of those issues would have been actually litigated and decided in the state-law action. So issue preclusion could be a problem for the plaintiff (or, less likely, for the defendant) in federal court.

2.  Consider a suit brought in the Federal District Court for the Southern District of New York by P, who is a citizen of New Jersey. This suit has only one defendant, D, and only one cause of action – negligence under state law.  Describe the suit briefly but CONCRETELY such that it satisfies the requirements for diversity subject matter jurisdiction and venue, but there is no personal jurisdiction over D. [4]

To make this case a diversity case without creating personal jurisdiction in NY, simply assume that D is a citizen of a state other than NJ and NY, for example Pennsylvania. Of course, one must also make sure that the amount in controversy is in excess of $75K.

The difficult part of this question tests your ability to distinguish between venue and personal jurisdiction. There are two main ways that there can be venue for an action: 1) If all the defendants reside in the same state, then there is venue in any district where a defendant resides and 2) There is venue in any district where a substantial part of the events or omissions giving rise to the claim occurred. The question here is how there could be no personal jurisdiction over D if there is venue for P's action against D.

To see how this is a problem, assume that venue is established in the S.D.N.Y. through D's residence. If D resides in the S.D.N.Y., there would be venue there. But if D resides in that district, then a federal district court in NY would have personal jurisdiction over D for any cause of action, including P's negligence action, wherever it occurred. After all residence in NY is likely to give rise to the type of pervasive contacts with NY that would give NY state courts general personal jurisdiction over D. This is likely to be true even if D only resides in NY and does not have his domicile there. And since NY state courts would have personal jurisdiction, under R. 4(k) a federal court would.

A similar problem seems to arise if one assumes that a substantial part of the events or omissions giving rise to the negligence claim arose in the S.D.N.Y. It would appear that this would be enough contact between D and NY for a NY state court to have specific personal jurisdiction over D concerning the negligence claim. Assume, for example, that the negligence claim concerned a car accident that occurred in the S.D.N.Y. That would create venue in the S.D.N.Y. But it would also be enough contact between NY and D for a NY state court to have personal jurisdiction - which would mean that (under R. 4(k)) a federal court in NY would have personal jurisdiction over D.

How do we solve this problem? Well, it is possible for a substantial part of the events or omissions giving rise to a claim to occur in the S.D.N.Y. without D having sufficient contacts with NY for there to be personal jurisdiction over him. Assume that D has no contacts with NY. The car accident between P and D occurred in Pennsylvania. After the accident, P felt fine, but later, while at work in NY City, P collapsed from an aneurysm - which had to be operated upon in a NY hospital, causing P great cost and suffering. It is plausible that a substantial part of the events or omissions giving rise to the claim occurred in S.D.N.Y. (namely the cost and suffering incurred by P), but there is no personal jurisdiction over D in NY.

Another even better possibility is that D is a company that makes a product that it sells exclusively in Oklahoma. Assume further that D has no other contacts with NY. If P bought the product in Oklahoma and took it to the S.D.N.Y., where it failed (allegedly due to D's negligence), there will be venue in the S.D.N.Y. (because a substantial part of the events giving rise to the claim occurred there) but no personal jurisdiction over D (under Worldwide Volkswagen).

Some came up with some possibilities that I had not anticipated. Since under 1391(d) an alien may be sued in any district, if D were an alien, there would be venue in any district (including the S.D.N.Y.), even if there was no personal jurisdiction over him in the state. I did not discuss this in class, but "alien" as it is used in 1391(d) includes those of foreign citizenship who are currently residing (or indeed domiciled) in a state in the U.S. See Expotrade, Ltd. v. Dominguez, 470 F.Supp. 179, 180 (D.Colo.1979). But in order for there to be diversity jurisdiction, D could not be domiciled in New Jersey if he was admitted for permanent residence in the United States, since that would make him a citizen on NJ under the diversity statute, which would destroy diversity.

Another possibility that some came up with is that New York law (either its constitution or its long-arm statute) does not allow for personal jurisdiction over D for some reason. If so, under R 4(k) there would be no personal jurisdiction in the S.D.N.Y. either, even when there was venue. I preferred the examples that did not involve hypothetical changes in (or speculations about) New York law, especially since the assumed New York law was usually very implausible. But I gave those who provided this answer most of the available points.

3. Consider a suit brought in the Federal District Court for the Southern District of New York by P, who is a citizen of New Jersey. This suit has only one defendant, D, and only one cause of action – negligence under state law.  Describe the suit briefly but  CONCRETELY such that there is personal jurisdiction over the defendant and the suit has diversity subject matter jurisdiction, but venue is not satisfied. [4]

This question also tests your ability to distinguish personal jurisdiction from venue. How can a federal court have personal jurisdiction over D in NY, without having venue in the S.D.N.Y.? You can solve this problem by presenting a case where the source of personal jurisdiction in NY (for example, the domicile of D or events that occurred in NY) are located in another judicial district in NY than the S.D.N.Y. A concrete example would be the following. D is a citizen of New York who is domiciled and resides in Buffalo (in the W.D.N.Y.). P and D get in a car accident in Buffalo. The S.D.N.Y. would have personal jurisdiction over D, because a NY state court would. See R. 4(k). After all, D resides and is domiciled in NY and the cause of action arose in NY. There are plenty of Int'l Shoe contacts with NY. The case is also a valid diversity case, provided that the amount in controversy is for more than $75K. But there is no venue in the S.D.N.Y. - D does not reside there and no substantial part of the events that gave rise to the claim occurred there. Nor does 1391(a)(3) apply, since there is another district that has venue, namely the W.D.N.Y.

Another possibility is a case where D neither resides in nor is domiciled in NY and no substantial part of the events that gave rise to the claim occurred in NY, but D is tagged in NY. The S.D.N.Y. would have personal jurisdiction, because a NY state court would, but there would be no venue in the S.D.N.Y. because here D does not reside in the S.D.N.Y. and no substantial part of the events that gave rise to the claim occurred in the S.D.N.Y. The application of 1391(a)(3) could be avoided by making sure that D resides or a substantial part of the events that gave rise to the claim occurred in another district in the U.S., so there will be venue elsewhere.

4. Describe briefly but CONCRETELY how the factual allegations in a plaintiff’s complaint could violate Rule 9(b) (according to the 9th Circuit’s interpretation in Glenfed) but satisfy Rule 11. [4]

The key to answering this question is recognizing that Rule 9(b) concerns standards for specificity in pleading fraud -- NOT the amount of evidence that the pleader has in favor of the allegations of fraud that are pleaded. I specified that the 9th Circuit's interpretation of Rule 9(b) in Glenfed was applicable, because the 2d Circuit has interpreted Rule 9(b) as requiring the pleader to show evidence in the complaint. For the 2d Circuit, the pleader must plead facts giving rise to a "strong inference of fraudulent intent" on the part of the defendant. That is not true in the 9th Circuit. All that is required is that the pleader plead fraud with specificity. Furthermore, as far as the intent of the defendant is concerned, the pleader need only plead generally.

In contrast, Rule 11 (as it applies to factual allegations) IS about the evidence standing behind allegations in the pleading. Under R. 11, the signer of a pleading certifies that to the best of her knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.

With this in mind, it is easy to come up with an example of a pleading that violates R. 9(b) but satisfies R. 11. To violate R. 9(b), the pleading would have to be one that alleges fraud, but is insufficiently particular in its allegations. Consider a suit for fraud in which the plaintiff claims that the defendant lied to her by saying that the house she bought was on a stable foundation, when it was actually built upon quicksand. R. 9(b) would be violated if the complaint did not specify when the defendant said this, or where he said this, or exactly what about the foundation he in fact said.

R. 11 would be satisfied if, the person who signed the pleading reasonably believed that the allegations of fraud had evidentiary support. You could make this evidentiary support as obvious as possible. Perhaps there was a videotape of the whole transaction in which the defendant was recorded as saying that the house was built upon a stable foundation.

5. Describe briefly but CONCRETELY how the factual allegations in a plaintiff’s complaint for negligence could satisfy Rule 11 and yet summary judgment for the defendant would be appropriate. [4]

Prima facie, one would think that a complaint that satisfies R. 11 must be able to withstand a motion for summary judgment by the defendant. Under R. 11, the signer of a pleading certifies that to the best of her knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery. Since R. 11 has been satisfied, it looks like we must conclude that the factual allegations in the complaint have evidentiary support. If so, it seems impossible that no reasonable jury could find in favor of the plaintiff concerning an element of the cause of action. For each element, there would be evidentiary support, and once there is some evidentiary support, it seems possible that a reasonable jury could find in favor of the plaintiff concerning that element.

But there are cases where R. 11 can be satisfied and summary judgment for the defendant would nevertheless be appropriate. Here are some examples:

a) The signer of the complaint reasonably believes that all the allegations have evidentiary support, but one (for example an allegation of damages) doesn't in fact have such support, because the evidence in its favor turns out to be fraudulent (in a way that the signer could not have reasonably been expected to discover at the time of signing). For example, the signer's client very convincingly feigns a back injury.

b) The signer of a pleading reasonably believes that a crucial factual allegation (for example, breach by the defendant) is likely to have evidentiary support after a reasonable opportunity for further investigation or discovery but after discovery no evidence arises. (It should be noted that for R. 11 to be satisfied in such a case, the signer must identify the allegation as one that lacks evidentiary support but is likely to have such support after discovery.) For example, assume that there is evidence that the defendant has been negligent in cases very similar to the plaintiff's, which makes it reasonable to think that evidence that the defendant was negligent in the plaintiff's case will arise during discovery. But after discovery it turns out that there is no evidence that the defendant was indeed negligent after all.

c) The evidence in favor of a crucial factual allegation is inadmissible at trial (because it is hearsay) and no admissible evidence ever appears during discovery. R. 11 does not require that the evidence in favor of one's factual allegations be admissible at trial. But if it is not admissible (for example it is a letter), it will not be able to be submitted in opposition to the defendant's summary judgment motion.

d) All of the plaintiff's factual allegations have evidentiary support (satisfying R. 11) but in her answer the defendant introduces an affirmative defense. If the defendant has evidence in favor of the affirmative defense that would have to convince a reasonable jury and if the plaintiff has no evidence to oppose, summary judgment for the defendant would be appropriate.

There are other examples.

Some of you gave examples where the plaintiff satisfied Rule 11 with respect to all factual allegations, but simply failed to provide any factual allegations in the complaint in favor of an element of a cause of action for negligence (e.g. duty or damages). Such examples did not work. The defendant's response in such a case would not be a motion for summary judgment. During the pleading period it would be a 12(b)(6) motion for failure to state a claim. After the pleading period, it would be a R. 12(c) motion for a judgment on the pleadings (which is not the same as summary judgment).

Some of you (undoubtedly because of your assignments in legal writing) gave examples where the plaintiff's factual allegations in his complaint satisfied R. 11, but the defendant introduced the affirmative defense of sovereign immunity. This on its own is not enough to show that summary judgment is appropriate. Only if the defendant also offered evidence such that a reasonable jury would have to find in favor of the defendant on that affirmative defense would summary judgment be appropriate. So the example could work, but more had to be said.

6. Give the most plausible reason the following is possible: A plaintiff brings a negligence action in federal court. The defendant moves for summary judgment. The plaintiff offers no evidence in opposition to the motion. Nevertheless the court finds for the plaintiff and refuses to grant summary judgment to the defendant. [4]

A defendant receives summary judgment if she can show, with respect to one element of the plaintiff's cause of action, that a reasonable jury could not find in favor of the plaintiff. Since we are assuming that the plaintiff has offered not a scrap of evidence in opposition to summary judgment, it is hard to see how a reasonable jury could possibly find in favor of the plaintiff with respect to any element of the cause of action. So it's hard to see how a court could refuse to grant summary judgment to the defendant. The solution to the question is to realize that a plaintiff has a duty to offer evidence in opposition to a defendant's motion for summary judgment only if the defendant has met her burden of production. Only then does the plaintiff have to offer any response at all. If we assume that the plaintiff can defeat summary judgment without offering any evidence, we must assume that the defendant has failed to meet her burden of production.

The defendant does NOT have to offer evidence in order to satisfy this burden of production. To be sure, she COULD offer evidence such that, on the basis of this evidence, a reasonable jury would have to find in her favor with respect to an element of the plaintiff's cause of action. BUT she could also offer an argument that, on the basis of the admissible evidence that has come out in discovery, no reasonable jury could find for the plaintiff with respect to an element of the plaintiff's cause of action. Therefore, the following two scenarios would work:

a) The defendant has merely stated, in a conclusory manner, that insufficient evidence has arisen in discovery to allow a reasonable jury to find for the plaintiff with respect to an element of the cause of action (e.g. breach or damages). Because the defendant has failed to provide an argument that would satisfy her burden of production, the plaintiff need not respond at all in order to defeat summary judgment.

b) The defendant has decided to argue for summary judgment by offering evidence that, she claims, is so strong that a reasonable jury would have to find in her favor with respect to an element of the cause of action. But she is wrong - the evidence is not such that a reasonable jury would have to find for her concerning an element of the cause of action. A reasonable jury could go either way on the basis of that evidence. Because the defendant has failed to satisfy her burden of production, the plaintiff need not respond at all in order to defeat summary judgment.

Another possibility is the following:

c) The defendant is arguing for summary judgment on the basis of an affirmative defense, such as contributory negligence, concerning which she has the burden of production and persuasion at trial. If so, then to meet her burden of production with respect to summary judgment (which is not the same as the burden of production at trial) the defendant must offer evidence that is so strong that, on the basis of that evidence alone, a reasonable jury would have to find in her favor with respect to the affirmative defense. Assume that she tried this strategy and is wrong - the evidence is not such that a reasonable jury would have to find for her concerning the affirmative defense. Because the defendant has failed to satisfy her burden of production, the plaintiff need not respond at all in order to defeat summary judgment.

If you simply said that the plaintiff had no duty to respond with evidence because the defendant had offered no evidence herself and had therefore failed to satisfy her burden of production, you did not do well, because this argument works only on the false assumption that the defendant has to provide evidence in order to satisfy her burden of production.

7. Describe briefly but CONCRETELY a corporation about which the following is true: There would be personal jurisdiction over the corporation for any cause of action brought in any federal district court in the United States. Then explain why this is true of the corporation. [4]

Under R. 4(k)(1)(A), a federal district court will have personal jurisdiction over a defendant if the defendant could be subjected to the jurisdiction of a court of general jurisdiction in the state in which the district court is located. That means that one must come up with an example of a corporation that could be sued on ANY cause of action in ANY state court. This corporation would have to have contacts with each state that, in the words of Justice Stone in Int'l Shoe, are "so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities." An example would be a corporation that has a factory in every single state. It is NOT enough to imagine a corporation that simply ships its goods to every state, although many of you gave such an example. That type of contact would be enough for causes of action related to the goods shipped, but is not likely to be enough (without other types of presence in the state) for GENERAL jurisdiction. I was on the lookout for whether you understood the difference between specific and general jurisdiction. Absent any other evidence, if you described the corporation's contacts as "continuous and systematic" I assumed you meant specific jurisdiction, since that is how that term is used in Int'l Shoe. ("'Presence' in the state in this sense has never been doubted when the activities of the corporation there have not only been continuous and systematic, but also give rise to the liabilities sued on, even though no consent to be sued or authorization to an agent to accept service of process has been given." (emphasis mine).) Those who spoke about stream of commerce cases like Asahi were also going down the wrong road, since they too concern specific rather than general jurisdiction.

8. Describe briefly but CONCRETELY a corporation about which the following is true: If a plaintiff sued the corporation as the sole defendant, there would be venue for any cause of action against the corporation no matter the federal district court in which the plaintiff chose to sue. Then explain why this is true of the corporation.[4]

There are two main ways that a district court can have venue for a case. There is venue in a judicial district where any defendant resides, if all defendants reside in the same State and there is venue in a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred. 28 USC 1391(a)(1)-(2), (b)(1)-(2). Clearly the "substantial part of the events" provision could never allow ANY district court to have venue for ANY cause of action against a corporation, since many causes of action against a corporation can be imagined concerning which a substantial part of the events giving rise to the cause of action occurs only in a few districts, not in every single district. So we need to come up with a corporation that resides in every district. What does it mean for a corporation to reside in a district? Under 1391(c), a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. In a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State.

So we need a corporation that would have contacts with every district (NOT every state), that would be sufficient to give that district GENERAL jurisdiction if that district were a state. Once again, the distinction between general and specific jurisdiction was crucial here (see answer to Q. 7). General jurisdiction is needed so the corporation will reside in the district no matter what cause of action is being brought against it. What would work is a corporation that had a factory in every judicial district.

Another possibility, not anticipated by me when I wrote the question, is an alien corporation, since aliens can be sued in any district. See 1391(d).

9.  Describe briefly but CONCRETELY a case in which an absent party is a necessary party (you need not discuss whether this party is indispensable). [4]

Under R. 19(a), a party is necessary if (1) in the person's absence complete relief cannot be accorded among those already parties, or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.

All you needed to do is give a concrete example of this. It you only quoted the above, it was not enough -- I wanted a concrete example. An example would be a person holding a vase claimed by two people, only one of whom was currently suing him. Without joinder of the other claimant he might be sued and lose twice, exposing him to "double obligations." This is similar to the Haas case. Other examples were, of course, possible.

10. Describe briefly but CONCRETELY a document that is discoverable but could not be submitted in support of or in opposition to a motion for summary judgment. [4]

I wanted an example of a document that was relevant to the litigation, and therefore discoverable, but was hearsay that was not admissible for summary judgment. An example would be the Hoff letter in Celotex. It was relevant to the litigation and reasonably calculated to lead to admissible evidence, but was hearsay (an out of court statement offered in court in favor of the truth of the matter stated) not in the affidavit form that is necessary for admissibility in summary judgment proceedings. Many of you gave examples of documents that were inadmissible in summary judgment without describing them such that they were discoverable. You had to describe the document such that it was relevant to the litigation.

NOTE: Questions 11-21 are connected.

11. P (a citizen of New York), D (a citizen of Vermont), and X (a citizen of New Hampshire) are in a three-car wreck in Vermont. P sues D in the Federal District Court for the District of Vermont under Vermont law for $80,000, which she claims are the damages caused by D’s negligence. Describe briefly but CONCRETELY an action by D against X that, under the joiner rules, D could join to P’s action against D. [3]

I was looking for a R. 14(a) impleader claiming contribution. I wanted a concrete example of such a contribution claim. For it to work, D would have to claim that if P prevailed against D it would be because D and X were joint tortfeasors (a good example is that D and X were both drag-racing) and jointly caused P's injury. It would also work if you described a scenario where both X and D  were negligent and their combined negligence caused P's injury. It would not work to say that X's negligence was what really caused P's injury. Many of you provided such examples anyway, saying, for example, that X was driving negligently and hit D, causing D to hit P. That is a case where X is the sole negligent party and, although it is a good defense to P's claim against D, it is not a grounds for an action of contribution by D against X.

12. Assume that D’s action against X (described at 11) is for $30,000. Would X be able to successfully have this action against him dismissed for lack of subject matter jurisdiction? Why or why not? [3]

No. Impleaders have supplemental jurisdiction. It is part of the same constitutional case or controversy (thereby satisfying 1367(a)) and furthermore does not fall under the exceptions spelled out in 1367(b). Although the primary action (P v. D) is a diversity case, D's action is not one brought by a plaintiff or by someone seeking to be joined as a plaintiff.

13. Would X be able to successfully have D’s action against him (described at 11) dismissed for improper venue? Why or why not? [2]

No. First of all, if the action is for contribution, a substantial part of the events or omissions giving rise to D's claim against X  would have taken place in D. Vt., allowing for venue under 1391(b)(2). But, more importantly, if the original action satisfies the venue statute, courts do not demand that impleaders also satisfy it. This rule makes sense. If it has already been determined that bringing the action in  the district satisfies the purposes (e.g. convenience and fairness) of the venue statute, then there should be no reason not to allow an impleader to be brought in that district as well, given that it is so closely related to the original action. So X would be unable to object on venue grounds even if the action of D v. X had not satisfied the venue statute on its own.

14. Would X be able to successfully have D’s action against him (described at 11) dismissed for lack of personal jurisdiction? Why or why not? [2]

No. As a new party brought into the action, X has a right to demand that the court have personal jurisdiction over him. But it does. D's contribution action against X concerns actions that X voluntarily undertook in the state of Vermont (namely driving there). Since a Vermont state court would have PJ over X, under R. 4(k)(1)(A), D. Vt. would.

15. Describe briefly but CONCRETELY a cause of action that D would have to bring against X (or lose in the future), assuming that D is able to bring the action against X described at 11. [3]

If D brought a contribution action against X (that is, a claim that, as joint tortfeasors in the accident, X is liable to D for all or part of any damages that D must pay P), then D would have to bring any other cause of action against X concerning the same transaction (namely the accident) or be barred, under claim preclusion, from bringing the cause of action against X in the future. So D would have to sue X for any damages that D sustained as a result of X's negligence in the accident.

16. Assume that there is subject matter jurisdiction, personal jurisdiction and venue for D’s action against X (described at 11). Describe briefly but CONCRETELY an action by X against P that, under the joinder rules, X could join to D’s action against X. [3]

This is the pleading with no name. Under the sixth sentence of R. 14(a), once impleaded by D under a theory of contribution, X could bring a cause of action against P that concerned the same transaction or occurrence as P's claim against D. So X could sue P for the damages that X sustained in the accident due to P's negligence.

17. Assume that X’s action against P (described at 16) is for $30,000. Would P be able to successfully have this action dismissed for want of subject matter jurisdiction? Why or why not? [3]

No. It has supplemental jurisdiction. It is part of the same constitutional case or controversy as P's claim against D, since they concern a common nucleus of operative fact (the car accident). So 1367(a) is satisfied. Furthermore, it does not fall under the exceptions spelled out in 1367(b). Although the primary action (P v. D) is a diversity case, X's action against P is not one brought by a plaintiff or by someone seeking to be joined as a plaintiff.

18. Would P be able to successfully have X’s action against him (described at 16) dismissed for improper venue? Why or why not? [2]

No. First of all, a substantial part of the events or omissions giving rise to X's claim against P would have taken place in D. Vt., allowing for venue under 1391(b)(2). But, more importantly, if the original action satisfies the venue statute, courts do not demand that sixth sentence of R. 14 actions also satisfy it. This rule makes sense. If it has already been determined that bringing the action in  the district satisfies the purposes (e.g. convenience and fairness) of the venue statute, then there should be no reason not to allow a sixth sentence of R. 14 action to be brought in that district as well, given that it is so closely related to the original action. So P would be unable to object on venue grounds even if the action of X v. P had not satisfied the venue statute on its own.

19. Would P be able to successfully have X’s action against him (described at 16) dismissed for lack of personal jurisdiction? Why or why not? [2]

No. First of all, even if X v. P had been brought as an action on its own in federal court in Vermont, there would be personal jurisdiction over P. It concerns actions that P voluntarily undertook in the state of Vermont (namely driving there). Since a Vermont state court would have PJ over P, under R. 4(k)(1)(A), D. Vt. would. But, more importantly, even if there would be no PJ over P if X v. P had been brought as an action on its own in federal court in Vermont, P is considered to have waived his defense of PJ against X's action by willingly suing D in Vermont.

20. Describe briefly but CONCRETELY an action by P against X that, under the joinder rules, P would have to bring against X (or lose in the future), assuming that X is able to bring the action against P described at 16. When answering this question, do not worry about whether there is personal jurisdiction, venue or subject matter jurisdiction for P’s action against X.  [3]

Given that X has now sued P for the damages in the accident that X claims P's negligence caused, P is now obligated under R. 13(a) to bring as a compulsory counterclaim any causes of actions that P has against X concerning the same transaction or occurrence (namely the car accident). So P must now sue X for any damages from the accident that P claims X's negligence caused, assuming, of course, that there is personal jurisdiction, venue and subject matter jurisdiction for the actions.

21. What is the best argument that there is indeed subject matter jurisdiction for P’s action against X (described at 20)? [4]

Of course, P's counterclaim against X is part of the same constitutional case or controversy as P's claim against D, since they concern a common nucleus of operative fact (the car accident). So 1367(a) is satisfied. But, prima facie, it falls under the exceptions spelled out in 1367(b). First of all, the primary action (P v. D) is a diversity case. Second, P's counterclaim is one brought by a plaintiff against someone made a party under R. 14. Finally, exercising supplemental jurisdiction would be inconsistent with the jurisdictional requirements of section 1332, since P would be able to sue X without satisfying the jurisdictional minimum.

But it really makes sense to allow supplemental jurisdiction in this case. The idea that P could take advantage of this allowance of supplemental jurisdiction to make an end run around the diversity statute is very very implausible. P would have to sue D, anticipating that D would implead X and that X, once impleaded, would then join an action against P under the sixth sentence of R. 14. This is even more implausible than the already implausible scenario that Justice Stewart describes in the Owen case. (See F & K 879).

But how to get around the language in 1367(b)? One could say that P's counterclaim is not in fact an action by a plaintiff against someone made a party under R. 14, the way it would if P were simply joining an action against X under the seventh sentence of R. 14. It is instead an action by a sixth-sentence-of-R.-14-defendant against the person who joined an action against him under the sixth sentence of R. 14. Some courts have allowed supplemental jurisdiction in cases such as this.

22. P, a citizen of New York, is suing D, a citizen of Nebraska, for violations of federal securities law in the Federal District Court for the District of Nebraska. Assume that, under Nebraska law, service may be effected upon an individual defendant by having any person who is at least 21 years of age nail a copy of the summons and complaint to the front door of the defendant’s place of abode. P, who is 30 years old, nails a copy of the summons and complaint on the door of D’s home. This form of service would be sufficient if the suit had been brought in a Nebraska state court. In her answer, D argues that P’s action should be dismissed for insufficient service. Should D succeed in getting P’s action dismissed? [5]

This is Glannon v. Green. There are two relevant Fed. Rs. Civ. P. to look to. Under R. 4(e)(1), service may be effected "pursuant to the law of the state in which the district court is located." That suggests that service was adequate, since Nebraska law on service was abided by. But under R. 4(c)(2), service may be effected "by any person who is not a party and who is at least 18 years of age." The question is whether 4(e)(1) trumps 4(c)(2) (in which case service is adequate) or visa-versa (in which case it is not).

In those situations where state law is more restrictive that 4(c)(2) about who may serve (for example, it requires an official process server), Glannon has argued that 4(e)(1) trumps 4(c)(2). When one uses 4(e)(1) and serves according to state law, state law on who may serve applies too, whatever 4(c)(2) might say. That would suggest that, in situations such as the current one (when state law is less restrictive than 4(c)(2) about who may serve), someone who is using 4(e)(1) and serving according to state law may take advantage of state law about who may serve, even if 4(c)(2) is violated. I gave an primarily historical argument in class that Glannon is wrong and that 4(c)(2) trumps 4(e)(1). Accordingly I would say that D would be successful in getting the action dismissed. If you choose Glannon's approach instead, that's fine, although you needed to say that there is a conflict between 4(c)(2) and 4(e)(1).

This is not an Erie question, because it is not a diversity case. The cause of action is under FEDERAL law. To be sure, you could worry (as some did) about whether 4(c)(2) is a valid Fed. R. Civ. P. It is, of course, since it is clearly arguably procedural and does not abridge enlarge or modify a substantive right. But there was no reason to engage in this inquiry. Let's say that R. 4(c)(2) was invalid. There would still be no reason to follow Nebraska law on service, since the cause of action was one under federal rather than state law.

Part Two. Essay Questions (125 points total). Write your answers in this exam.

1. E (an employee of the P Corp.), D and X are in a three-car accident in northern Alabama. The P Corp. (which is incorporated in Alabama) sues D, a citizen of Georgia, under Alabama negligence law for the $100,000 in damages that, it claims, D’s negligence caused its truck and contents. The P Corp.’s suit against D is in the Federal District Court for the Northern District of Georgia. D makes a motion to dismiss for lack of subject matter jurisdiction, on the ground that the P Corp.’s principal place of business is Georgia. Evidence is submitted by each side and the federal court in Georgia finds that the P Corp. does indeed have its principal place of business in Georgia. The court dismisses the case. A few days after the dismissal, the P Corp. brings suit against X (also a Georgia citizen), under Alabama negligence law, in the Federal District Court for the Northern District of Alabama. The P Corp.’s suit is for the $100,000 in damages that, it claims, X’s negligence caused its truck and contents. X makes a motion to dismiss for lack of subject matter jurisdiction on the grounds that the P Corp.’s principal place of business is Georgia. Furthermore, X argues, the P Corp. is issue precluded from relitigating its principal place of business because of the earlier litigation of that issue in Georgia. The P Corp. denies that its principal place of business is Georgia and denies that it can be precluded by X from relitigating this issue. Under Alabama law, non-mutual issue preclusion is allowed. Under Georgia law, however, issue preclusion requires mutuality. Is the P Corp. issue precluded from relitigating its principal place of business or not? Why? [30 points]

I said I was going to have an Erie question and this is it. It was very very hard. Whether you did well on this question has everything to do with whether you recognized that it was an Erie question. There are three possible bodies of law on issue preclusion that you needed to consider. Alabama law, Georgia law, and federal law. I did not mention whether federal law on issue preclusion requires mutuality, because you already know, or should know, that it does not. See, e.g., Parklane Hosiery.

Here is the problem: The P Corp. has already litigated the issue of its principal place of business in the suit in federal court in Georgia. Is it precluded from relitigating the same issue in the suit in federal court in Alabama? Some of you may have wondered whether issue preclusion applies to jurisdictional questions at all. But we have already seen in class that it does. Assume A sues B, B appears and litigates the issue of subject matter or personal jurisdiction and loses, and then also loses on the merits. When A brings a second suit on the judgment, B is issue precluded from relitigating the question of whether the earlier court had jurisdiction. So we know that issue preclusion applies to questions of jurisdiction.

But in this case the person taking advantage of issue preclusion was not a party to the earlier suit. (This is, incidentally, a case of defensive non-mutual issue preclusion. The person taking advantage of issue preclusion is a defendant, using it as a shield.) Therefore it makes a world of difference whether the applicable law on issue preclusion requires mutuality or not. Alabama and federal law do not. Georgia law does.

The relevance of Alabama law can be dismissed quickly. As we have noted many times in class, the relevant preclusion law is the law of the court where the precluding judgment was entered, not the law of the court where the doctrine of issue preclusion is being invoked. So there is no chance that Alabama law is relevant. We must instead look to the law of the court where the issue precluding judgment was entered.

But since this court was a federal court sitting in diversity, we have two laws to choose from: Georgia law and federal law. This is our Erie question. Which applies? In the Semtek case, it was decided that state law determines the question of whether a judgment of a federal court sitting in diversity is "on the merits" and so has claim preclusive effect. So the quick answer is simply to say that Semtek applies to issue preclusion as well and thus that Georgia law applies. That would mean that the P Corp. may relitigate this issue of its principal place of business.

But this is too quick. You will remember from class that I argued that even with respect to other aspects of claim preclusion law (such as the question of the scope of a claim), Erie analysis may suggest that federal rather than state law is applicable. Semtek may be limited. So you have to do the Erie analysis.

This is, of course, a question of choosing between state procedural law and federal procedural common law. So the "relatively unguided" (Hanna p. 254) Erie analysis is applied.

The first question under this analysis is whether having different mutuality requirements in state and federal courts will lead to forum shopping and the inequitable administration of the laws. Crucial to answering this question is determining whether we are talking about differences in mutuality requirements concerning the issue preclusive effect of all factual determinations or merely concerning the factual determinations of whether federal subject matter jurisdiction exists. If we are talking only about the latter there are probably no forum shopping worries. After all, the state court will not even make a determination of whether there is federal subject matter jurisdiction. So it is not as if the differences in the preclusive effect of the determination of that issue would make a difference to plaintiffs when choosing a forum to sue in (or to defendants when deciding whether to remove or not). The issue simply will not be determined in state court at all. To be sure, someone who is worried about the issue-preclusive effect of determinations of federal subject matter jurisdiction may choose state over federal court. But the reason will primarily be because the federal court will decide this issue while the state court will not. This problem of "forum shopping" will exist to some extent no matter what answer to the Erie question one comes to, even if one concludes that the Georgia mutuality rule applies. The forum shopping problem is primarily a result of the fact that federal courts (unlike state courts) must decide the question of whether there is subject matter jurisdiction. So it does not seem to make that much of an extra difference to forum shopping that federal law will determine the preclusive effect of that determination of federal subject matter jurisdiction. Similar arguments apply to the question of "inequitable administration of the laws."

On  the other hand, let's say that we are determining the mutuality requirement with respect to the issue preclusive effect of all factual determinations. Then the story is quite different. In particular a defendant may not want to remove to federal court (choosing instead to remain in state court) in order to keep the adverse determinations of issues from having preclusive effect that could be taken advantage of by non-parties. Say a company is being sued in state court in Georgia for negligently designing a product. It would not want to remove to federal court (even if it was its right to do so), because, if federal law of issue preclusion applies in federal court in diversity cases, any finding that the product was negligently designed might be taken advantage of by countless other potential plaintiffs. Since the costs of litigating in federal vs. Georgia state courts would be so different, there would be a great deal of forum shopping.

The question of whether there are countervailing federal interests in uniformity also has to do with whether the question is 1) mutuality concerning the preclusive effect of determinations of federal subject matter jurisdiction or 2) mutuality concerning the preclusive effect of determinations of any factual issue. Federal courts clearly have an interest in a uniform body of law concerning when the determination federal subject matter jurisdiction by one federal court will have issue preclusive effect in another federal court. Furthermore, to bring up Stantay factors, states are not really concerned about their issue preclusion law applying the determinations of federal subject matter jurisdiction.

On the other hand, if the question is the mutuality requirement for issue preclusion as a whole, the arguments for federal uniformity may be less strong and the interest of the state in having its preclusion law apply in federal court may be stronger.

How you came out on this matters less than going through the proper Erie analysis.

Many of you argued that Alabama issue preclusion law should be used by the federal court in Alabama, citing Klaxon (according to which federal courts use the choice-of-law rules of the state where the federal court is sitting). This was a sign of two types of confusion.

First of all, simply because the federal court in Alabama must use Alabama's choice of law rules does NOT mean that Alabama issue preclusion law applies. The question is whether an Alabama state court, when confronted with the determination of an issue in another jurisdiction, would use the issue preclusion law of that other jurisdiction or its own issue preclusion law. And we already know the answer -- as I have said above, just as courts tend to use the claim preclusion law of the court where the claim-precluding judgment was entered (NOT the law of the court where claim-preclusion is being invoked), so courts tend to use the issue preclusion law of the court where the issue-precluding judgment was entered, NOT the law of the court where issue preclusion is being invoked. We have no reason to believe that an Alabama court would not do this too, so Klaxon provides no argument for the use of Alabama issue preclusion law.

Why do courts look to the law of the court where the claim- or issue-precluding judgment was entered? Because if the law of the court where claim or issue preclusion is invoked were used, there would be serious problems of notice. No one in the earlier action would know what claim or issue preclusion law applied to their case, because they would not know in what court claim or issue preclusion might subsequently be invoked.

Second, KLAXON CANNOT ANSWER ERIE QUESTIONS !!!!!!! (Except, of course, the narrow Erie question of whether federal or state choice of law rules should be used in a diversity case.) Once we know that an Alabama court would apply the law of the court where the issue-precluding judgment was entered, we still have an Erie question. That earlier court was a court sitting in diversity, so we must answer whether the law that applies is federal or state (in this case Georgia) law. Only Erie analysis can answer this question. Even if one (wrongly) came to the conclusion that an Alabama court would use the law of the court where issue preclusion is invoked and so, under Klaxon, the federal court in Alabama should use its own law of issue preclusion, there still is the question of which law that is, federal or state (in this case Alabama) law. Once again, only an Erie analysis can answer that question.

2. Assume that Congress has just enacted (and the President has signed) 28 U.S.C. § 8812. This statute creates two new federal courts (called the Court of Constitutionality and the Court of Appeals of Constitutionality), both located in New York City. The statute allows any plaintiff suing in any state court to remove the entire action to the Court of Constitutionality if two conditions are met: 1) the state court had personal jurisdiction over all of the defendants 2) a defendant in the state court proceedings offered as a defense the argument that the law under which the plaintiff is suing is contrary to a provision in the United States Constitution. The Court of Constitutionality decides only the issue of the constitutionality of the state law. Its decision can be appealed to the Court of Appeals of Constitutionality. The Supreme Court may review the decision of the Court of Appeals of Constitutionality by granting cert. After the issue has been decided and appeals exhausted, the case is then remanded to the state court for proceedings consistent with the decision. Assess the constitutionality of 28 U.S.C. § 8812. [20 points]

This is a relatively easy question. First of all, under Art. I, section 8 of the U.S. Const., Congress has the power "to constitute tribunals inferior to the supreme Court." So there is nothing about the fact that 8812 creates new federal courts that is unconstitutional. But an important question is whether the type of case that these courts take falls within the judicial power of the United States as identified in Art. III, section 2. We know that the judicial power of the United States extends to cases "arising under [the] Constitution." Does "arising under" include cases in which the Constitution is introduced as a defense? Although "arising under" as it is used in 28 USC 1331 does not give federal courts subject matter jurisdiction for cases involving federal defenses (see Mottley), the term as it is used in the Art. III does. So Art. III does not create a problem for 8812.

There is one worry, however. 8812 allows the "entire action" to be removed to the new court. Apparently this includes joined causes of action concerning which the defendant has not introduced constitutional defenses. Of course, for those causes of action that are part of the same constitutional case or controversy as the cause of action with a constitutional defense there would be no Art. III problem. But if there were some joined causes of action that were utterly unrelated to the cause of action that had the constitutional defense, it would apparently be unconstitutional for the federal court to take jurisdiction of them, even if it was merely putting them on hold while it decided the constitutional defense. So the new courts would probably have to separate these causes of action and remand them to the state court.

Another question is the due process clause of the 5th Amendment. Can a federal court in New York have personal jurisdiction over the defendants, given that the action was brought originally in a state court, often one outside New York? If the state court had personal jurisdiction over the defendants under the 14th A., the federal court should have personal jurisdiction over them under the 5th A. After all, if you have sufficient Int'l Shoe contacts with a one state in order for its courts to have personal jurisdiction over you, you must have sufficient Int'l Shoe contacts with the United States as a whole for its courts to have personal jurisdiction over you. There is no constitutional requirement that there be a federal court within each state, so the defendants can have no objection to going to a federal court in New York. If such an objection were valid, people appealing on a constitutional issue from a state supreme court to the U.S. Supreme Court could require the U.S. Supreme Court, if it took cert, to come to their state to hear the issue!

Any discussion of the conflict between this statute and another statute (such as 1331 or 1441) and any discussion of its conflict with a Federal Rule of Civil Procedure (such as 4(k)) was irrelevant. If there is such a conflict that simply means that 8812 abrogates the older statute or federal rule.

Is Erie relevant to this question? Well, when one is dealing with a federal statute, the Erie question is the simple one of whether the statute is within Congress's legislative power. And we have already answered this question: Under Art. I, section 8 of the U.S. Const., Congress has the power "to constitute tribunals inferior to the supreme Court."

But some said that this statute does not merely create a new federal court: it also regulates its procedure (for example the procedure for removal by plaintiffs). The test that is used for determining the constitutionality of federal statutes that regulate the procedure of lower federal courts is the "arguably procedural" test. This test has its source in the following reasoning: Under Art. I, section 8 of the U.S. Const., Congress has the power create the lower federal courts. This power, combined with the necessary and proper clause of Art. I, section 8, gives Congress the power to regulate the procedure of these courts.  Under Hanna we know that if the statute is rationally classifiable as procedural, it is within Congress's power to regulate. 8812 is surely rationally classifiable as procedural. So it is clearly constitutional as far as Erie is concerned.

3. P, a citizen of New York, entered into a contract in New York with the D Corp., which is incorporated in the state of Oklahoma, to purchase $78,000 worth of shares in the D Corp. (This is about 4% of the D Corp.’s total shares.) The D Corp. is a holding company – its sole asset is shares in other companies. In the case of the D Corp., the other companies are the following: The Y Corp. (incorporated in Pennsylvania) and the Z Corp. (incorporated in Delaware). The D Corp. owns 2% of the Y Corp.’s total shares and 51% of the Z Corp.’s total shares. The contract between P and the D Corp. is to buy shares in the D Corp., not shares in the corporations that the D Corp. owns.

Because the D Corp. does not hold a majority of the Y Corp.’s shares, it is not able to control the Y Corp.’s activities. The D Corp. does, however, own a majority of the shares of the Z Corp. and thus can control its activities. In other words, the officers and directors of the Z Corp. are those that the D Corp. chooses. The Z Corp. makes candy and has two equally sized plants, one in Long Island, New York and one in Cambridge, Massachusetts. The Z Corp.’s offices are in New York City. The Y Corp. is a very large steel manufacturing company with most of its factories and offices in Pennsylvania. About 2/3 of the value of the D Corp.’s total assets are shares in the Y Corp. and about 1/3 of the value of the D Corp.’s total assets are shares in the Z Corp.

When entering into the contract with the D Corp., P negotiated with X, who (not counting P) is the sole shareholder of the D Corp. and its sole officer and director. X lives in New York City, but runs the D Corp. out of his office in Newark, New Jersey.

P paid the D Corp. $78,000, but the D Corp. has refused to issue P his shares. P wants to sue the D Corp. for breach of contract under New York law. P wants specific performance – that is, an injunction ordering the D Corp. to issue to him the shares he paid for. Assume that P is right that breach of contract under New York law is the appropriate cause of action against the D Corp.

P wants his suit to be brought before a New York state trial court in Manhattan, but he is afraid that the D Corp. will remove the action to federal court. He is adamant about not having the action proceed in federal court. He comes to you to discuss arguments or means of structuring the suit that would be useful to defeat removal. How should you respond? If there are legal or factual issues that you are unsure about, identify them and answer the question given each possible answer. Do not discuss personal jurisdiction or venue in your analysis. [30]

If the case of P v. D Corp. is removable to federal court, it will be removable as a diversity case. We know that P is a citizen of New York. Structured as P v. D Corp., the case could be non-removable if the D Corp. could be shown to have its citizenship in New York. That would defeat diversity and, in addition, would mean that the case was non-removable under 1441(b), since a defendant would be a citizen of the state in which the action was brought. An alternative is to show that the amount in controversy is $75,000 or less. Or P could change the structure of the suit to defeat diversity by changing the plaintiff or defendant or by joining another plaintiff or defendant.

Let's begin with arguments that the D Corp.'s citizenship (or domicile) is New York. Corporations have the domicile of any state where they are incorporated and of the one state where they have their principal place of business (PPoB), 28 U.S.C. 1332(c)(1). The D Corp. is incorporated in Oklahoma. That won't help us. But what about saying that its PPoB is New York? At this point you should have been confused. How does one determine the PPoB of a holding company? We know that the citizenship of the shareholders of a corporation is irrelevant to the citizenship of the corporation itself. So the fact that X is a citizen of New York and is the sole shareholder of the D Corp. will not give the D Corp. a New York citizenship. But should the activities of the companies in which a holding company owns shares be relevant when determining the PPoB of the holding company?

I didn't expect you to know "the answer" to this, but I did expect you to try to think of an answer. It certainly seems true that in some cases the activities of the corporation whose shares a holding company owns would determine the PPoB of the holding company itself. Imagine that the M Corp. held all the shares of the Q Corp. and only shares of the Q Corp. and that the Q Corp. was a large candy company with all its offices and production in New York. Wouldn't it be fair to say that the M Corp. had its PPoB in New York, even if the one-person headquarters of the M Corp. was in New Jersey? The M Corp. does nothing else but direct the activities of the Q Corp. -- it seems indistinguishable from the Q Corp. To be sure, the management of the M Corp. in New Jersey is part of the activities of the M Corp. But it seems to pale in comparison to activities that the M Corp. engages in in NY through the Q Corp.  In particular, a New York judge who was trying to favor New Yorkers would very likely favor the M Corp., because the bulk of its activities are in New York. That's a reason to say that the M Corp.'s domicile is in NY as far as 1332 is concerned.

The problem in our case, however, is that the D Corp. owns shares in more than one company - the Y Corp. and the Z Corp. The Z Corp. appears to have its PPoB in New York (half of its factories are there and its offices are in NYC). The Y Corp. has its PPoB in Pennsylvania. One cannot simply say that the D Corp. has the PPoB of all of the companies in which it owns shares - both New York and Pennsylvania. A corporation has only one PPoB. So what does one do? In general, when a holding company owns more than one company, and the activities of these companies are dispersed, the holding company is determined to have the PPoB of the state where the holding company's activities are directed. That would make New Jersey the D Corp.'s PPoB. But I didn't expect you to know this.

Some decided to look at the aggregate activity of all of the corporations in which the D Corp. owns stock and to weight the activities of each corporation on the basis of what percentage of the total shares owned by the D Corp. are shares of that corporation. Since 2/3 of the activities of the D Corp. are activities of the Y Corp. and 1/3 are activities of the Z Corp., the PPoB of the D Corp. turned out to be Pennsylvania. Others said that the Z Corp. should be given greater weight, because the D Corp. exercises control over it. This would make the D Corp.'s activities in NY and Mass. (the states of the Z Corp.'s activities) greater than its activities in Penn. (the state of the Y Corp.'s activities) and argued for a NY PPoB for the D Corp. Both of these approaches to the problem were fine.

The next possibility is to argue that the amount in controversy is $75,000 or less. The action is for injunctive relief. That means one must determine the value of the injunction. Courts vary in their approach to this problem. Some look to the value to the plaintiff, others the cost to the defendant, and others look to the value to the plaintiff when the plaintiff is bringing the action in federal court and the cost to the defendant when the defendant is removing to federal court. Here it would not make that much of a difference which approach one uses. The amount in controversy is very likely the market value of the shares. If the market has gone down sufficiently such that the shares that P demands are now worth $75,000 or less, then P could defeat removal.

It should be noted that courts vary on the standard that must be satisfied by a removing defendant when arguing that the amount in controversy is greater than the jurisdictional minimum. Some argue that the defendant must show to a legal certainty that the plaintiff would get more that $75,000 if he prevailed. Some say that the defendant need only show that it is not a legal certainty that the plaintiff would not get more than $75,000. Others use standards somewhere between these two.

Even if the amount in controversy is greater than the jurisdictional minimum, P could simply waive his right to all shares that would put him above the minimum.

Another very important possibility is to join (under R. 20) a party that defeats diversity. The best candidate is X, since he is domiciled in NY. But in order to satisfy the concerns of Rose v. Giamattti, P must have a genuine cause of action against that person. I expected you to spell out just why P should be entitled to some relief from X. One reason is that if P is not legally entitled to the shares from the D Corp., that means that X defrauded him when they entered into the contract. There were other possibilities. Many people said that the Z Corp. should be joined, but failed to offer a convincing reason why P should be entitled to any relief from the Z Corp.

There were other more drastic possibilities to defeat removal, including P's assigning all or a significant part of his interest in the shares to someone domiciled in Oklahoma or the state of the D Corp.'s PPoB (probably NJ). Another possibility was P's moving to Oklahoma or NJ in a manner that would satisfy Baker v. Keck.

4. “The law of personal jurisdiction is incoherent. Although much of it follows from the principles expressed in International Shoe, much of it is incompatible with these same principles and can be understood only in terms of the principles expressed in Pennoyer v. Neff.” Discuss. [15]

You could go either way on this, but it was important to discuss the reasons to think that the law of personal jurisdiction is being tugged in different directions by competing sets of principles. What are the principles standing behind Pennoyer? The most important is that PJ has its source in current power over the defendant - the presence within the territorial borders of the state of the defendant's person or property at the time of the initiation of the suit. It simply does not matter how much conduct the defendant engaged in in the forum state in the past - current contacts are all that matter. This is tied to the idea of states as jealous sovereigns that are unwilling to allow their citizens to be sued in foreign states. The only way that a foreign state can adjudicate the rights and responsibilities of a defendant who is not currently a resident of the state is if he or his property is within the state at the beginning of the suit, so they can be grabbed.

Int'l Shoe changed all that. Past contacts could be sufficient for PJ, provided that the cause of action was sufficiently related to those contacts. The idea is that by conducting activities in a state and taking advantage of the protection of its laws, a defendant obligated himself to return to the state to answer for causes of action arising from those activities. In addition, if the defendant's activities were significant enough, he could be required to answer for causes of action even unrelated to those activities.

The main form of PJ that is difficult to make sense of according to the principles in Int'l Shoe is tagging. The contact with the forum state when the defendant is tagged can be remarkably low and the cause of action is almost always completely unrelated to what the defendant was doing when tagged. Low contact plus high unrelatedness would appear to mean no PJ. And yet it is allowed. Why? One argument is a Pennoyer theory. The forum state has immediate power over the defendant (for example, it could keep him in prison until the suit began) and that's enough. The Burnham case is relevant to this and should have been the prime focus of your discussion.

Another problem is why general jurisdiction over a defendant (whether it is a corporation or individual) that occurs without tagging invariably requires current contacts with the forum state. The point of Int'l Shoe is apparently that whether the contacts are past or current does not matter. The question is only the level of the contacts and the relation between the cause of action and those contacts. If the contacts are great enough (e.g. domicile in the forum state), that should allow for a suit concerning an unrelated cause of action even if all the contacts were in the past. And yet past domicile is insufficient to give general jurisdiction. Only current domicile works. This emphasis on current presence once again looks like it is justified by Pennoyer, not Int'l Shoe.

Some of you discussed quasi-in-rem cases. The problem with this is that under Shaffer, it looks as if these cases will fail unless they satisfy the standards for Int'l Shoe. So it is not clear that we have any cases that cannot be justified by Int'l Shoe. Still quasi-in-rem actions (especially where real property is the res) often occur, and there is a good argument that they don't satisfy Int'l Shoe, for the following reason: If the property is a sufficient contact with the forum state to allow for general jurisdiction under the principles of Int'l Shoe, then there should be no reason to limit the claim to the value of the property. On the other hand, if it isn't a sufficient contact to allow for PJ for a cause of action unrelated to the property, then it should not help that the action is limited to the value of the property. The limitation of the value of the claim that occurs in quasi-in-rem actions makes little sense from an Int'l Shoe perspective. But it does make sense according to Pennoyer: All the forum state could get its hands on at the initiation of the suit was the property, so its power over the defendant is limited by the value of the property.

Of course, much more could be said about these issues.

Many of you spent time talking about confusing or incoherent parts of the law on personal jurisdiction under the Int'l Shoe regime (such as stream of commerce cases and Asahi), without saying why this confusion and incoherence is a result of residual attachment to Pennoyer. I did not ask you to talk about incoherence in the law of PJ. I asked you to talk about incoherence in the law of PJ that is due to the tension between the principles standing behind Int'l Shoe and the principles standing behind Pennoyer.

Others simply recapitulated everything they knew about the law on PJ, running through each case, without actually answering the question.

Finally some of you said that there is no incoherence to the law of PJ, because Int'l Shoe simply expands what was allowed under Pennoyer. Although there is something to this line of argument, it has two weaknesses. First of all, even if it is true that doesn't mean that the law on PJ isn't incoherent. It's still incoherent if the principles standing behind Pennoyer and the principles standing Int'l Shhoe are incompatible. Second, it's not true that if PJ was good under Pennoyer, it's good now whether or not it satisfies Int'l Shoe. Look at Shaffer. The SCt rejected this quasi in rem action from the perspective of Int'l Shoe, it did not examine whether or not it would have been allowed under Pennoyer.

5. ANSWER ONLY ONE OF THE FOLLOWING TWO QUESTIONS! [30]

a. Describe the work-product privilege. Why does it exist? What are its costs? Might the concerns that motivated the work product privilege be answered by other means or by a work product privilege with a more restricted scope?

First, you needed to say what the WP privilege is. Under FRCP 26(b)(3), the WP privilege applies to documents and tangible things prepared in anticipation of litigation or for trial by or for another party or by or for that other party's representative. It does not need to be created by a lawyer; indeed the client does not yet have to have a lawyer for WP to be generated. The WP privilege can be overcome upon a showing that the party seeking discovery has substantial need of the materials and is unable without undue hardship to obtain their substantial equivalent. An attorney's mental impressions and legal theories are subject to an unqualified privilege. It should be noted that if a party asks for the contents of the WP document, rather than the document itself, 26(b)(3) does not technically apply, but Hickman v. Taylor provides equivalent protection.

Why does the WP privilege exist? First of all, without it attorneys' mental impressions and trial strategies would be discoverable. But what about a simple witness statement, created by an investigator for the client in anticipation of litigation? There are no attorney theories revealed in it. Why not allow the other side to get it? (Many of you simply ignored this problem and treated the WP privilege as if it were solely about protecting legal theories and strategies.)

One reason is a free-rider problem. One side might wait for the other side to do all the investigative work, in the hopes of getting the fruits of its labor in discovery. The other side would do the same, with the result that too little investigation would occur. One may question, however, just how plausible this rationale is. One side is not going to investigate witnesses the way the other side would - which provides an incentive for each side to do its own investigation.

Perhaps the most important reason for protecting fact WP is the following. Without the WP privilege one side might want to use the other side's WP to impeach the other side's witnesses. Say the plaintiff's witness is going to say X at trial, but said something somewhat incompatible when initially interviewed by the plaintiff's attorney. If WP is discoverable, the defendant would want the interview to impeach the plaintiff's witness. Furthermore, the attorney might have to testify at trial to explain the circumstances of the discrepancy between the WP and the interview. 

Finally, without the WP privilege, lawyers might refrain from keeping records, in order to avoid creating scenarios like that outlined above. The quality of representation would therefore be lower.

What are the costs of the WP privilege? The first is duplication of effort. Both sides will now generate much the same WP.

The second is that there may be some important evidence that will not be discoverable. But many of you misdescribed how this might occur. It is crucial to understand that FACTS ARE NOT PROTECTED BY THE WP PRIVILEGE. Let's say that an agent for the defendant determines that the skid marks at the sight of the accident between the plaintiff and the defendant were 10 feet long. The defendant believes her. In addition, the police measured the marks as 2 feet - a measurement that is more to the benefit of the defendant. When asked what the length of the skid marks were in discovery, the defendant MUST ANSWER 10 FEET. That he learned this fact through WP doesn't matter. In that sense the WP privilege does not keep crucial information for getting out at trial.

So what's the cost to the WP? Well, let's say that the defendant does not believe the agent, but believes that police instead. Then the defendant might be able to answer 2 feet and the other side would not be able to get the alternative measurement, which they could use to impeach the police's measurement. The difference between this and the Rackers case (F&K p. 590) is that, in the Rackers case, the party that wanted discovery of the alternative measurement claimed that the publicly available measurement was erroneous and this statement  was "not contradicted" by the party claiming the WP privilege.

Another problem is that large corporations may be able to keep facts from being discoverable, because the facts are not in anyone's head (so it could be uncovered, say, through a simple deposition), but only in a document that is subject to the WP privilege.

As for alternatives, I was looking for creativity and for an understanding of the place of the WP privilege within the rest of the discovery rules.

b. What are the methods currently employed in federal courts to reduce the number of frivolous law suits? How effective are those methods? What are their costs? Can you think of better alternatives?

Obviously many answers to this question were possible, particularly when you were suggesting alternatives. So I will only provide a brief sketch of what I was looking for here.

First of all, I looked to see whether you adequately noted the current methods for discouraging frivolous lawsuits in federal courts. I also wanted a discussion of their effectiveness and costs. The two most important methods are:

1) Rule 11
    This most directly discourages frivolous lawsuits, by sanctioning those responsible for them.
    But it is only as effective as the willingness of the judge to apply sanctions. Plus the 21-day safe harbor arguably reduces its effectiveness, by giving a plaintiff a free chance to serve a frivolous complaint without the possibility of sanctions. In addition, since the fact that the plaintiff has violated R. 11 is likely to be evident only after discovery (when the poverty of evidence supporting his factual allegations becomes apparent), it can allow plaintiffs to get into the discovery period. If a defendant is forced to face discovery she will often simply settle to avoid the costs.
    The costs of R. 11 include satellite litigation (that is litigation over whether R. 11 was violated, which was one of the reasons the 21-day safe harbor was created) and the discouragement of creative suits. Another important cost is that, by requiring that the plaintiff get evidence prior to discovery to support his factual allegations, R. 11 can prohibit suits that would be shown to have merit if only the plaintiff could get to discovery. This problem is solved to some extent by allowing a plaintiff to identify his factual allegation as one that is likely to have evidentiary support after discovery R. 11(b)(3). But the prospect of evidence itself must be supported by some form of evidence (what I have called proto-evidence). Furthermore, the more lenient R. 11 is on this score, the less it will be able to discourage suits that are nothing more than fishing expeditions. A discussion of this balancing act was one of the main things I was looking for.

2) Pleading standards.
   The more specific that a plaintiff has to be in his pleadings, the more difficult it will be for him to bring frivolous suits. Pleading standards also have the benefit of getting rid of suits before the discovery period is reached. But this method, although heavily relied upon in code pleading systems, is not relied upon greatly in the Federal Rules. Most complaints fall under R. 8(a), which is so undemanding that it does little to discourage frivolous suits. Only actions for fraud and mistake have more specific pleading requirements under R. 9(b). But even here, the effectiveness of pleading rules is questionable – for example, they work only if plaintiffs are honest in drafting complaints.
   The costs of specific pleading rules are those spelled out in Glenfed – e.g. long and formal complaints and stifling suits that would be shown to have merits during discovery.

Other methods that could be mentioned are:
3) Summary judgment and motions for judgment as a matter of law.
4) Dismissals for failure to state a claim and motions for judgments on the pleadings.

As for possible recommendations, I was looking for creativity and an understanding of the place that your recommendations would have within the current system in federal courts.

End of Examination