EXAM CODE # __________

Please write this code number on each blue book or as a header to each page of typed exam turned in.    MICHAEL STEVEN GREEN

CIVIL PROCEDURE
Law 102


FALL 2008

December 13, 2008

Four Hours    Please check the appropriate box, indicating what you are submitting.

□ Exam Questions
□ Scantron
□ Exam Answers



This examination consists of 11 pages, including this cover sheet. This examination, with the cover sheet, must be returned.

TIME:  You have Four Hours for this exam. Try your best to finish.

SCORING: The total number of points for the exam is 240. That’s one minute of writing time per point. Pace accordingly.
Part I consists of 10 multiple-choice questions, each of which is worth 5 points. Use the scantron card for your answers.
Part II consists of 8 essay questions (some of which require only short answers). The total number of points for Part II is 190. Write the essays in bluebooks or type your answers.

WHAT YOU MAY USE IN THE EXAM:
Commercial outlines, hornbooks, treatises etc. are not permitted in the examination. You may have with you in the examination only the following:
1)  All materials assigned in this course:
FIELD, KAPLAN & CLERMONT, CIVIL PROCEDURE (9th ed.)
GLANNON, CIVIL PROCEDURE: EXAMPLES AND EXPLANATIONS (6th ed.)
Material posted on the website for the course.
2) A statutory supplement, such as FEDERAL RULES OF CIVIL PROCEDURE (West), but not one that offers any glosses on the federal rules. You may bring only books that offer the text of the rules, not explanations of their meaning.
3) Any outline made by you or by a study group in which you participated.
4) Your class notes.

Use of the Web is prohibited.

Should you feel ill or panicky in any way, please immediately see Dean Jackson in room 107.
 
Multiple Choice Questions

1.    P is suing D in federal court for federal securities fraud. Which of the following is most likely a violation of Rule 11?
   
a.    P’s complaint failed to state with particularity facts giving rise to a strong inference that D knew what D was saying was false.
b.    In oral argument, P’s lawyer asserted that a legal contention in the complaint was warranted by existing law. P’s lawyer had a good faith belief that this was so, but the court concluded that no non-frivolous argument that it was warranted by existing law could be found.
c.    The facts alleged in P’s complaint failed to state a claim for federal securities fraud.
d.    P’s complaint offered two theories of why D was liable to P under federal securities fraud law that were inconsistent with each other.
e.    At the time of filing, the evidentiary support that P had for the factual allegations in his complaint was hearsay inadmissible at trial.

2.    P is suing D in federal court for state law fraud. X is a crucial witness to the fraud. Which of the following is most likely to satisfy the federal discovery rules?

a.    P serves an interrogatory on X, under Fed. R. Civ. P. 33, asking X to recount what he remembers of the events surrounding the fraud.
b.    P serves a document request on X, without a subpoena, , under Fed. R. Civ. P. 34, asking for any non-privileged documents that X might have concerning the fraud.
c.    P serves a request for an admission on X, under Fed. R. Civ. P. 36, asking X to admit that he knew that D’s statements were false when made.
d.    P serves a document request on D, without a subpoena, under Fed. R. Civ. P. 34, asking D for a document the sole content of which is hearsay and therefore inadmissible at trial. 
e.    When examining D’s response to P’s document request, P is surprised to find that D has refused to turn over certain requested materials on the grounds that they are covered by the attorney-client privilege. P thinks that D’s objection is bogus and immediately brings a motion to compel disclosure.


3.    P is suing D in federal court for violations of federal securities fraud. An essential element of P’s cause of action is that P reasonably relied upon D’s misrepresentations. After filing the suit, however, P wrote a letter to a friend, which he forgot to mail and so remains in P’s files, stating that P always knew that D was lying. Which of the following is most accurate?

a.    D can get the letter in discovery, but only if he can show substantial need of the letter and the inability without undue hardship to obtain its substantial equivalent by other means.
b.    D can get the letter in discovery, but P has the right to depose D’s witnesses prior to turning it over.
c.    D can get the letter in discovery.
d.    D cannot get the letter in discovery, because to do so would mean revealing P’s mental impressions, conclusions, opinions, or legal theories.
e.    D cannot get the letter in discovery, because it is P’s own previous statement about the action or its subject matter.

4.    Which of the following actions is most likely to be dismissed for lack of subject matter jurisdiction? In each case the action is brought in the federal district court for the Southern District of New York. Assume that any relevant amount in controversy is satisfied.

a.    P (a domiciliary of New York) sues the D Corp. (a German corporation with its principal place of business in New York) for violations of federal securities fraud law.
b.    P (a domiciliary of New York) sues D1 (a domiciliary of New Jersey) under German law for a battery that occurred in Germany.
c.    P1 (a German citizen domiciled in Germany) and P2 (a domiciliary of New York) sue D1 (a German citizen domiciled in Germany) and D2 (a domiciliary of California) under New York law for a battery in connection with a brawl that occurred in New York.
d.    P (a German citizen domiciled in Germany) sues D1 (a French citizen domiciled in France) and D2 (a domiciliary of California) under New York law for a battery in connection with a brawl that occurred in New York.
e.    P (a domiciliary of New Jersey) sues D (a French national living illegally in New Jersey) under New York law for a battery that occurred in New York.

5.    Which of the following actions, brought before the federal district court for the Southern District of New York (located in Manhattan, in New York City), is most likely to be dismissed for lack of personal jurisdiction over the defendant?

a.    The defendant (a corporation incorporated in California with its principal place of business in California) is being sued for federal securities fraud violations that occurred in California. The defendant has no contacts with New York, except for the following: The corporation was served, in accordance with Fed. R. Civ. P. 4(h), by delivering the summons and complaint to its CEO while he was in Manhattan on a brief business trip that took him through the state.
b.    The defendant (an individual domiciled in California) is being sued for a battery that took place in Albany, New York, in the Northern District of New York. The defendant has never had any contacts with the Southern District of New York and was served in California.
c.    The plaintiff is bringing an in rem action to quiet title to some property in Manhattan, which the defendant (an individual domiciled in California), among others, claims to own. The defendant has never set foot in the state of New York and was served in California.
d.    The defendant (a corporation incorporated in New York with its principal place of business in California) is being sued for violations of federal securities fraud law that occurred in California. Aside from being incorporated in the state of New York, the defendant has no other significant contact with the state. The corporation was served, in accordance with Fed. R. Civ. P. 4(h), by delivering the summons and complaint to its CEO while in California.
e.    The defendant (an individual domiciled in Manhattan) is being sued for a battery that took place in California. The defendant was served in California.

6.    P (a domiciliary of New York) is suing D (a domiciliary of New Jersey) in the federal court for the District of New Jersey for violations of his federal civil rights that occurred during D’s arrest of P in New York. P has no other contacts with the state of New Jersey. P asks for $10,000 in damages. In his answer, D asserts a state-law battery action against P for some severe damages he sustained in a brawl that P and D got into three months before the arrest. D asks for $125,000. D files the answer with the court and mails it to P’s attorney. Although P’s civil rights action was brought within the statute of limitations, D’s battery action would have been barred on statute of limitations grounds if it had been brought as an independent action at the time D filed his answer. Which of the following is most accurate?

a.    P should be able to get D’s battery action dismissed for lack of subject matter jurisdiction.
b.    P should be able to get D’s battery action dismissed for improper service.
c.    P should be able to get D’s battery action dismissed for improper venue.
d.    P should be able to get D’s battery action dismissed for lack of personal jurisdiction.
e.    D’s battery action is barred on statute of limitations grounds.


NOTE ON MULTIPLE CHOICE QUESTIONS 7 THROUGH 10:

Multiple choice questions 7 through 10 concern the case of P v. D1 & the D2 Corp. In this case, P (a domiciliary of California) is suing D1 (a domiciliary of South Dakota who works in North Dakota for the D2 Corp. as a low-level broker) and the D2 Corp. (a brokerage company incorporated in the state of California with its principal place of business in North Dakota). P’s suit was filed in the federal district court for District of Minnesota and is for federal securities fraud. P is asking for $100,000 alternatively from either D1 or the D2 Corp., for damages due to misrepresentations concerning securities that D1 made (on behalf of his employer) to P in California.

7.    Under Minnesota law, only a non-party 21 or older may serve a defendant. Under North Dakota law, anyone older than 21, including a party, may serve a defendant. Under California and South Dakota law, only a non-party over 18 may serve a defendant. Furthermore, under South Dakota law, it is impermissible to serve an individual by leaving the summons and complaint at the individual’s home with someone other than that individual. In which of these cases is service on D1 least likely to be adequate?
   
a.    A 20-year-old a process server gives D1 the summons and complaint in hand while D1 is on a business trip in Minnesota.
b.    P’s lawyer (who is 40 years old) gives D1 the summons and complaint in hand while D1 is on a business trip in Minnesota.
c.    A 21-year-old process server leaves the summons and complaint at D1’s home in South Dakota with D1’s husband.
d.    P gives the summons and complaint to D1 in hand in North Dakota.
e.    A 20-year-old process server gives D1 the summons and complaint in hand while D1 is on a business trip in California.


8.    Under Minnesota law, a corporation doing business in the state of Minnesota must appoint the Secretary of State of Minnesota as its agent for service of process. Under Minnesota law delivering the summons and complaint to the Secretary of State is sufficient for service on the corporation. In order to do business in Minnesota, the D2 Corp. has appointed the Secretary of State of Minnesota as its agent for service of process. P has the D2 Corp. served by having a 21-year-old process server deliver a copy of the summons and complaint in hand to the Secretary of State of Minnesota. Which of the following is most accurate?
   
a.    The D2 Corp. should be able to get P’s action against it dismissed for lack of personal jurisdiction.
b.    The D2 Corp. should be able to get P’s action against it dismissed for insufficient service, because Rule 4(h) was not satisfied.
c.    The D2 Corp. should be able to get P’s action against it dismissed for lack of subject matter jurisdiction.
d.    The D2 Corp. should be able to get P’s action against it dismissed for insufficient service because Minnesota’s service rules violate the 14th Amendment to the United States Constitution.
e.    The D2 Corp. should be able to get P’s action against it dismissed for insufficient process.


9.    Assume that the following actions are joined to P’s federal securities fraud actions against D1 and the D2 Corp.:

Action 1: A $50,000 California state law fraud action by P against D1 concerning the same misrepresentations that are at issue in the federal securities fraud actions.
Action 2: A North Dakota breach of contract action by D1 against the D2 Corp. concerning failure to pay $100,000 in back wages.
Action 3: An impleader by D1 against I, D1’s insurance company, on the grounds that I is contractually obligated under South Dakota law to compensate D1 for any securities fraud judgments against D1. I is incorporated in South Dakota with its principal place of business in South Dakota.
Action 4:  A $50,000 California state law battery action by D1 against P concerning a brawl that D1 and P got into in California several months before the misrepresentations at issue in the federal securities fraud actions.
       
Which of the following most accurately describes the actions that should be dismissed for lack of subject jurisdiction?

a.    Actions 1, 3, and 4.
b.    Actions 1 and 3.
c.    Action 4.
d.    Action 2.
e.    None of the actions.

10.    Which of the following is the least accurate?

a.    Setting aside any problems of personal jurisdiction, subject matter jurisdiction or venue, D1 may join Action 2 (described in Question 9 above) against the D2 Corp., but if D1 had failed to do so, she could have brought it subsequently in a separate suit.
b.    Setting aside any problems of personal jurisdiction, subject matter jurisdiction or venue, D1 may join Action 3 (described in Question 9 above) against I, but if D1 had failed to do so, she could have brought it subsequently in a separate suit.
c.    Setting aside any problems of personal jurisdiction, subject matter jurisdiction or venue, D1 may join Action 4 (described in Question 9 above) against P, but if D1 had failed to do so, she could have brought it subsequently in a separate suit.
d.    There is no venue for P’s suit against D1 and the D2 Corp. in the federal district court for the District of Minnesota.
e.    P could not get Action 4 (described in Question 9 above) dismissed for lack of personal jurisdiction.



Essay Questions

Question 1 [20 points]

Employer and Employee are domiciled in Ohio. P is domiciled in New York. P and Employee got into a car accident in Ohio, while Employee was acting in the scope of his employment with Employer. P sued Employee for negligence in Ohio state court, but P lost, the jury having found not merely that Employee was negligent, but also that P was contributorily negligent.

Subsequently P sued Employer in federal court in Ohio (under diversity) under a theory of respondeat superior. P alleged that Employee was reckless in the car accident between them. Under Ohio law, contributory negligence is not an affirmative defense to an action for recklessness. Employer argues that P’s action against him should be barred by claim preclusion. Is Employer right?


Question 2 [30 points]

Virginia (a domiciliary of Virginia) owns a website that displays material concerning Saudi (a domiciliary of Saudi Arabia) that, under the laws of Saudi Arabia, is defamatory. Saudi brings suit against Virginia in Saudi Arabia, claiming harm to his reputation in Saudi Arabia due to availability of the material on the web in that nation. Saudi asks for an injunction against Virginia, compelling her to make the material unavailable on the web in Saudi Arabia. He also asks for compensation for damages to his reputation. Consenting to personal jurisdiction over her, Virginia appears in the Saudi Arabian suit, arguing not merely that the material is not defamatory under Saudi Arabian law, but that even if it were, the only way that she can make the material unavailable in Saudi Arabia is by removing it from her website entirely. Since the material is perfectly legal under the laws of the United States and indeed is protected under the First Amendment to the United States Constitution, Saudi should receive no relief. The Saudi Arabian court concludes the material is defamatory and that the First Amendment is not applicable in Saudi Arabia. It therefore issues the requested injunction against Virginia and gives Saudi the requested damages of $1 million. But since Virginia has no assets or any other presence in Saudi Arabia, the Saudi Arabian court cannot execute the damages judgment and has no real power to sanction Virginia for failure to abide by its injunction.

Anticipating that Saudi might seek to enforce the Saudi Arabian judgment in the United States, Virginia brings an action against Saudi in the federal district court for the Eastern District of Virginia (the district where Virginia herself lives and where she maintains her website). Virginia asks for a declaratory judgment stating that the Saudi Arabian judgment is unenforceable in the United States because it is contrary to the First Amendment. Saudi makes a motion to dismiss the declaratory judgment action for three reasons 1) the federal court lacks personal jurisdiction over him, 2) the federal court lacks subject matter jurisdiction, and 3) venue is improper. Assume that Saudi has no contacts with the United States beyond any described in this question. How should the federal court decide Saudi’s motion?


Question 3 [25 points]

P (a domiciliary of Texas) and the D Corp. (an English corporation with its principal place of business in England) entered into a contract for P to take a cruise from Galveston, Texas to the Cayman Islands. The contract contained a choice-of-forum provision that stated that all suits arising out of the cruise should be brought in England. While boarding the cruise ship in Galveston, P slipped and severely injured himself. P brought suit against the D Corp.  in Texas state court in Galveston under Texas negligence law. The D Corp. removed to the federal district court for the Eastern District of Texas. The D Corp. then made a motion to dismiss, appealing to the choice-of-forum clause. Texas state courts have refused to enforce choice-of-forum clauses of the sort in P and the D Corp.’s contract on grounds of public policy. In the context of actions with federal question and admiralty jurisdiction, federal courts have upheld such choice-of-forum clauses, provided that they were freely agreed upon by the parties to the contract. Should the federal court in Texas uphold the choice-of-forum clause and grant the D Corp.’s motion to dismiss?


Question 4 [20 points]

P (a domiciliary of Mississippi) and D (a domiciliary of Nevada) met on a cruise that started in Miami and ended in the Bahamas. On the cruise, D agreed to ship a rare widget to P’s home for $100,000. P mailed D the check from P’s home in Mississippi, but D failed to ship the widget.

P brought suit against D in Mississippi state court for breach of a contract. Although D was served with a summons and complaint in hand in Nevada, D defaulted. Prior to P’s suit, the state of Mississippi passed a statute which states that any defendant who receives actual notice of a lawsuit in Mississippi state court and fails to take advantage of a special appearance to challenge the personal jurisdiction of the court over him will be taken to have waived the defense of personal jurisdiction.

P then sued D on the Mississippi judgment in federal court in Nevada. D argued that the Mississippi judgment is void for lack of personal jurisdiction. P claimed that D waived that defense. How should the federal court decide the issue?


Question 5 [35 points]

D1 and D2 were both born in Nevada and had lived there all their lives, until they got married and decided to move to Florida. They were a bit apprehensive when accepting employment in Florida, because they accepted without actually seeing what Florida looks like. But soon after they accepted, D2 took a brief trip the Florida, and he assured D1 that the state was very nice.

The day after he got back from Florida, D1 and D2 embarked an extravagant 6-month trip through Europe and South America. They had all their furniture and personal belongings shipped to a storage facility in Florida and set off from Nevada, intending to go directly to Florida after the trip was over. One month into their trip, they decided that they needed a personal assistant to help them with their travels. So they put out an advertisement in various magazines with national circulation. P, who lives in Nevada, responded to their ad by calling them while they were London, England. They hired P sight unseen in that phone call and P flew off to meet them in London.

After only two weeks P returned to Nevada and immediately brought suit against D1 and D2 in the federal district court for the District of Nevada for various torts, including intentional infliction of emotional distress and battery. P alleged that these torts occurred while she was travelling with D1 and D2 through England. P had D1 and D2 served while they were at JFK Airport (in the Eastern District of New York), while they were en route from Europe to South America.

You represent D1 and D2 and are seeking to come up with the best arguments (preferably consistent with one another) that P’s actions against D1 and D2 should be dismissed for lack of personal jurisdiction, subject matter jurisdiction, and venue. What are the best arguments you can think of that P’s actions fail all three requirements? What, if any, are their vulnerabilities?


Question 6 [20 points]

    P is suing D for negligence in federal court in New York. D’s lawyer plans to call X, an expert witness, at trial. X’s testimony will be offered solely for the purpose of challenging the qualifications of another expert witness, Y. P’s lawyer will present Y’s expert testimony in favor of D’s negligence. In the context of informing X about Y’s qualifications, D’s lawyer gives X a document in which D’s lawyer outlines her strategies for putting Y’s qualifications in the worst light. Discuss the extent to which this document falls under any disclosure rules.


Question 7 [15 points]

X (a domiciliary of Nevada) established a trust for the benefit of twin brothers: P (a domiciliary of Oregon) and Y (a domiciliary of Oregon). Upon reaching the age of 50, P will receive 75% and Y 25% of the value of the trust. At the age of 25, P sued the trustee of the trust, D (a domiciliary of Nevada), in the federal district court for Northern District of Georgia. P alleged that D wrongly claimed ownership of a $200,000 parcel of land in the Northern District of Georgia. The land, P argued, belonged to the trust. Y testified as a witness in the case. The jury determined that the land is in fact D’s and the federal court issued a judgment for D.

Soon afterward, D dies and Z inherits his estate. Within a year, Y sues Z in state court in Georgia. Y claims that the $200,000 property that Z inherited in fact belongs to the trust. Z claims that Y is issue precluded from relitigating whether the property belongs to the trust. How should the state court rule?

Question 8 [25 points]

P1 (a domiciliary of Nevada) was vacationing in California, when he stumbled into a Walmart and decided to buy a blender manufactured by the D Corp. (incorporated in Alabama). The D Corp. is a manufacturer of around 20 different kitchen appliances. Its main office is in California. Its total sales are around $10 million. The blender was manufactured at the D Corp.’s only factory in Alabama. P1 returned with the blender to his home in Nevada, where he was injured when the blade flew off, causing P1 $200,000 in damages.

Under Nevada law, P1’s breach of implied warranty action against the D Corp. can be assigned. Because P1 needed money to pay for doctor’s bills, he assigned 25% of his interest in his breach of implied warranty action against the D Corp. to P2 (a domiciliary of California) in return for $25,000.

The D Corp. sells its kitchen appliances solely to Walmart. The contracts of sale are always entered into between Walmart and the D Corp. in California and the transfer of ownership occurs at the factory in Alabama. The D Corp. does not control where Walmart sells its products. Walmart chooses not to sell D Corp. products in some states. The D Corp. knows, however, that around 3% of the sales of its products occur at Walmarts in Nevada. No D Corp. blenders, however, are sold in that state. The D Corp. occasionally takes out advertisements for its products in magazines with national circulation, including circulation in Nevada. The D Corp. has never taken out any ads concerning its blender, however.

P1 and P2 sue the D Corp. in state court in Nevada for breach of implied warranty. The D Corp. removes the action to the federal district court for the District of Nevada. The D Corp. then makes a motion to dismiss the action for lack of personal jurisdiction and improper venue. P1 and P2 make a motion to remand to the Nevada state court on the ground that the federal court lacks subject matter jurisdiction. How should the federal court decide these motions?

END OF EXAMINATION!

ANSWER KEY

Multiple Choice Questions

NOTE: I give the point biserials for the correct answers below. A positive point biserial tells us that those scoring higher on the multiple choice exam as a whole were more likely to answer the specific question correctly. It is best to have a point biserial above .20 – and there is probably something wrong with the question if the point biserial is close to 0 or negative.

The point biserials for the correct answers were very high this year (which is a good thing). This is possibly the result of the questions being somewhat easier than previous years’ exams. An exam that is too hard can sometimes do a worse job discriminating students who have studied from those who have not than an exam that is of more moderate difficulty.

1.    P is suing D in federal court for federal securities fraud. Which of the following is most likely a violation of Rule 11?
   
a.    P’s complaint failed to state with particularity facts giving rise to a strong inference that D knew what D was saying was false.

Wrong. With respect to the allegations of fraud in P’s complaint, Rule 11 would require only the following: It would have to be the case that, to the best of P’s (or his lawyer’s) knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, the allegations had evidentiary support or, if specifically so identified, would be likely to have evidentiary support after a reasonable opportunity for further investigation or discovery. Rule 11 is about having evidence available for one’s factual allegations – it is not about any requirement to put evidence in the complaint.

It is true that there is a requirement, in federal securities fraud actions, of stating with particularity in the compliant facts giving rise to a strong inference of scienter. But this comes not from Rule 11, but from the Private Securities Litigation Reform Act. See F&K 1142-1143.

23 of you chose this answer.

b.    In oral argument, P’s lawyer asserted that a legal contention in the complaint was warranted by existing law. P’s lawyer had a good faith belief that this was so, but the court concluded that no non-frivolous argument that it was warranted by existing law could be found.

Correct. This is the most likely violation of R 11. Under R 11(b)(2), by presenting a complaint one certifies to the best of one’s “knowledge, information, and belief, formed after an inquiry reasonable under the circumstances” that one’s legal contentions are “warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law.” The standard here is reasonableness. It is not enough that one has a good faith belief that one’s argument is nonfrivolous. So the fact that P’s lawyer had a good faith belief that his argument was nonfrivolous will not help.

But couldn’t one argue that Rule 11 might still be satisfied because there might still be a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law (even if there was no nonfrivolous argument that one’s legal contention was warranted by existing law)? This strategy is unlikely to work, because P’s lawyer asserted that his legal contention was warranted by existing law. A nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law does not support a claim that one’s legal contention is warranted by existing law. We spoke about this in class. For this reason (and given that the other answers are clearly wrong), this is the best answer.

35 of you chose this. The point biserial was .50.

c.    The facts alleged in P’s complaint failed to state a claim for federal securities fraud.

Wrong. Simply because a complaint has failed to state a claim does not mean that Rule 11 was violated.

Could one argue that when one fails to state a claim one has offered a frivolous legal contention in violation of R 11(b)(2) (see b above)? This does not follow. One way that one can fail to state a claim and nevertheless satisfy R 11(b)(2) is when one argues that existing law should be extended, such that factual allegations that do not currently state a claim will state a claim, and the court refuses to accept the extension. R 11 will not be violated provided that one has a nonfrivolous argument for the extension, even if this argument was not accepted by the court.

Even when one does not seek to extend the law, one’s complaint can fail to state a claim and nevertheless satisfy R 11(b)(2) – for example when one has a nonfrivolous argument that under current law one’s factual allegations state a claim and the court simply disagrees with one’s argument.

11 of you chose this.

d.    P’s complaint offered two theories of why D was liable to P under federal securities fraud law that were inconsistent with each other.

Wrong. There is no reason that one cannot offer alternative theories of liability that are inconsistent with one another. (This is suggested by R 8(d)(3), which states that “[a] party may state as many separate claims or defenses as it has, regardless of consistency.”) Each theory of liability would have to satisfy R 11, but that would be possible if one had a nonfrivolous argument in favor of each.

Only one of you chose this.

e.    At the time of filing, the evidentiary support that P had for the factual allegations in his complaint was hearsay inadmissible at trial.

Wrong. Rule 11 does not demand that the evidentiary support for one’s factual allegations be admissible evidence. I mentioned that it could be inadmissible evidence a number of times in class. This makes sense. After all, the question Rule 11 is supposed to answer is only whether your case is sufficiently non-frivolous to proceed, not whether you could win at trial. If you have evidentiary support for your factual allegations, you should be able to go forward and try to get admissible evidence in discovery.

11 of you chose this.


2.    P is suing D in federal court for state law fraud. X is a crucial witness to the fraud. Which of the following is most likely to satisfy the federal discovery rules?

a.    P serves an interrogatory on X, under Fed. R. Civ. P. 33, asking X to recount what he remembers of the events surrounding the fraud.

Wrong. Interrogatories may not be served on non-parties.

3 of you chose this.

b.    P serves a document request on X, without a subpoena, under Fed. R. Civ. P. 34, asking for any non-privileged documents that X might have concerning the fraud.

Wrong. A subpoena duces tecum is needed to get documents from a non-party.

2 of you chose this.

c.    P serves a request for an admission on X, under Fed. R. Civ. P. 36, asking X to admit that he knew that D’s statements were false when made.

Wrong. Admissions may not be requested of non-parties.

1 of you chose this.

d.    P serves a document request on D, without a subpoena, under Fed. R. Civ. P. 34, asking D for a document the sole content of which is hearsay and therefore inadmissible at trial. 

Correct. One can request documents, without a subpoena, from a party and the fact that the content of the document requested is inadmissible hearsay does not mean that it is not within the scope of discovery, provided that the document appears “reasonably calculated to lead to the discovery of admissible evidence.” FRCP 26(b)(1).

61 of you chose this. The point biserial was .52.

e.    When examining D’s response to P’s document request, P is surprised to find that D has refused to turn over certain requested materials on the grounds that they are covered by the attorney-client privilege. P thinks that D’s objection is bogus and immediately brings a motion to compel disclosure.

Wrong. A motion to compel “must include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action.” FRCP 37(a)(1). That requirement could not have been satisfied here.

14 of you chose this.


3.    P is suing D in federal court for violations of federal securities fraud. An essential element of P’s cause of action is that P reasonably relied upon D’s misrepresentations. After filing the suit, however, P wrote a letter to a friend, which he forgot to mail and so remains in P’s files, stating that P always knew that D was lying. Which of the following is most accurate?

a.    D can get the letter in discovery, but only if he can show substantial need of the letter and the inability without undue hardship to obtain its substantial equivalent by other means.

Wrong. This assumes that the letter is work product. But it isn’t. Although the letter was written after the suit began, it was not written “in anticipation of litigation or for trial.” See FRCP 26(b)(3)(A). It is simply discoverable evidence of the falsity of P’s allegation.

10 of you chose this.

b.    D can get the letter in discovery, but P has the right to depose D’s witnesses prior to turning it over.

Wrong. If D had asked for evidence from P that could be used to impeach D’s witnesses, then a court might allow such discovery only after D’s witnesses had been deposed (so that there would be a record of their story before they had taken into account the impeaching evidence). But there is nothing in the question that suggests that the evidence could be used to impeach D’s witnesses.

9 of you chose this.

c.    D can get the letter in discovery.

Correct. There is no reason the letter is not discoverable. (In particular, it is not work product.)

53 of you chose this. The point biserial was .53.

d.    D cannot get the letter in discovery, because to do so would mean revealing P’s mental impressions, conclusions, opinions, or legal theories.

Wrong. There is no reason to think that the letter is opinion work product (which is usually material created by a lawyer).

8 of you chose this.

e.    D cannot get the letter in discovery, because it is P’s own previous statement about the action or its subject matter.

Wrong. The fact that a document is one’s own previous statement is a reason to conclude that the person who made the statement can get it in discovery. See FRCP 26(b)(3)(C). But the fact that a document is one’s own previous statement is NOT a reason to conclude that others CANNOT get it in discovery.

1 of you chose this.


4.    Which of the following actions is most likely to be dismissed for lack of subject matter jurisdiction? In each case the action is brought in the federal district court for the Southern District of New York. Assume that any relevant amount in controversy is satisfied.

a.    P (a domiciliary of New York) sues the D Corp. (a German corporation with its principal place of business in New York) for violations of federal securities fraud law.

Wrong. This clearly has federal question SMJ (since P is suing under federal securities law).

2 of you chose this.

b.    P (a domiciliary of New York) sues D1 (a domiciliary of New Jersey) under German law for a battery that occurred in Germany.

Wrong. This is clearly a diversity case, under 1332(a)(1), since it is a suit between citizens of different states. It does not matter that the suit is under German law.

9 of you chose this.

c.    P1 (a German citizen domiciled in Germany) and P2 (a domiciliary of New York) sue D1 (a German citizen domiciled in Germany) and D2 (a domiciliary of California) under New York law for a battery in connection with a brawl that occurred in New York.

Wrong. This is clearly a diversity case, under 1332(a)(3), since it is a controversy between “citizens of different States and in which citizens or subjects of a foreign state are additional parties.” It does not matter that a German is on each side.

14 of you chose this.

d.    P (a German citizen domiciled in Germany) sues D1 (a French citizen domiciled in France) and D2 (a domiciliary of California) under New York law for a battery in connection with a brawl that occurred in New York.

Correct. This does not have federal SMJ. First of all, it is not under federal law, so 1331 does not apply. Second, 1332(a) is not applicable either. Here is what 1332(a) says:
(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between
(1) citizens of different States;
(2) citizens of a State and citizens or subjects of a foreign state;
(3) citizens of different States and in which citizens or subjects of a foreign state are additional parties; and
(4) a foreign state ... as plaintiff and citizens of a State or of different States.
This is not a suit between citizens of different states under 1332(a)(1), because there is no citizen of a state on the plaintiff side. For the same reason 1332(a)(3) cannot apply. 1332(a)(2) is not applicable because there are aliens on both sides (I mentioned this reading of 1332(a)(3) in class). Finally 1332(a)(4) is inapplicable, for obvious reasons.

52 of you chose this. The point biserial was .49.

e.    P (a domiciliary of New Jersey) sues D (a French national living illegally in New Jersey) under New York law for a battery that occurred in New York.

Wrong. This is an alienage case under 1332(a)(2). It is true that under 1332(a), “an alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which such alien is domiciled.” But D is not admitted for permanent residence.

4 of you chose this.


5.    Which of the following actions, brought before the federal district court for the Southern District of New York (located in Manhattan, in New York City), is most likely to be dismissed for lack of personal jurisdiction over the defendant?

a.    The defendant (a corporation incorporated in California with its principal place of business in California) is being sued for federal securities fraud violations that occurred in California. The defendant has no contacts with New York, except for the following: The corporation was served, in accordance with Fed. R. Civ. P. 4(h), by delivering the summons and complaint to its CEO while he was in Manhattan on a brief business trip that took him through the state.

Correct. There are no International Shoe contacts with New York. Delivery of the summons and complaint to the CEO in Manhattan is adequate service under FRCP 4(h), but it is not sufficient to give a state court in New York PJ over the corporation (which is required for PJ in federal court in New York under FRCP 4(k)(1)(A)). There is no evidence in the question that the CEO has been appointed the corporation’s agent for service of process in a manner that would create PJ.

60 of you chose this. The point biserial was .53.

b.    The defendant (an individual domiciled in California) is being sued for a battery that took place in Albany, New York, in the Northern District of New York. The defendant has never had any contacts with the Southern District of New York and was served in California.

Wrong. A state court in New York would have PJ over the defendant. The fact that the battery occurred in Buffalo NY would be adequate for specific PJ. It does not matter for PJ that the contacts were in the Northern District of New York.

13 of you chose this.

c.    The plaintiff is bringing an in rem action to quiet title to some property in Manhattan, which the defendant (an individual domiciled in California), among others, claims to own. The defendant has never set foot in the state of New York and was served in California.

Wrong. The claim to ownership of the New York property would be sufficient for PJ for such an in rem action in New York state court. We discussed this in class.

5 of you chose this.

d.    The defendant (a corporation incorporated in New York with its principal place of business in California) is being sued for violations of federal securities fraud law that occurred in California. Aside from being incorporated in the state of New York, the defendant has no other significant contact with the state. The corporation was served, in accordance with Fed. R. Civ. P. 4(h), by delivering the summons and complaint to its CEO while in California.

Wrong. There is always general PJ over a corporation in its state of incorporation. We discussed this in class.

3 of you chose this.

e.    The defendant (an individual domiciled in Manhattan) is being sued for a battery that took place in California. The defendant was served in California.

Wrong. There is always general PJ over a individual in his state of domicile. We discussed this in class.

None of you chose this.


6.    P (a domiciliary of New York) is suing D (a domiciliary of New Jersey) in the federal court for the District of New Jersey for violations of his federal civil rights that occurred during D’s arrest of P in New York. P has no other contacts with the state of New Jersey. P asks for $10,000 in damages. In his answer, D asserts a state-law battery action against P for some severe damages he sustained in a brawl that P and D got into three months before the arrest. D asks for $125,000. D files the answer with the court and mails it to P’s attorney. Although P’s civil rights action was brought within the statute of limitations, D’s battery action would have been barred on statute of limitations grounds if it had been brought as an independent action at the time D filed his answer. Which of the following is most accurate?

a.    P should be able to get D’s battery action dismissed for lack of subject matter jurisdiction.

Wrong. Although D’s permissive counterclaim does not have supplemental jurisdiction (since it is not part of the same constitutional case or controversy as P’s federal civil rights action against D), it is itself an adequate diversity action under 1332(a)(1).

7 of you chose this.

b.    P should be able to get D’s battery action dismissed for improper service.

Wrong. Rule 5, not Rule 4(e), governs the service of counterclaims on plaintiffs. We discussed this in class.

9 of you chose this.

c.    P should be able to get D’s battery action dismissed for improper venue.

Wrong. The majority view is that even permissive counterclaims do not have to satisfy the venue statute. We discussed this in class. It is true that there is a minority view that dismissal is proper, making this answer somewhat accurate. But answer e is most accurate.

2 of you chose this.

d.    P should be able to get D’s battery action dismissed for lack of personal jurisdiction.

Wrong. The majority view is that even permissive counterclaims cannot be dismissed by plaintiffs for lack of PJ. We discussed this in class. It is true that there is a minority view that dismissal is proper, making this answer somewhat accurate. But answer e is most accurate.

2 of you chose this.

e.    D’s battery action is barred on statute of limitations grounds.

Correct. In our discussion of statutes of limitations for counterclaims, there were cases identified where a defendant’s counterclaim would be saved from dismissal on statute of limitations grounds, provided that it was within the statute of limitations at the time that the plaintiff brought his original action against the defendant. But I said that the argument was strongest for saving such a counterclaim if it were compulsory or if it were a permissive counterclaim that was functioning as a setoff. In this case we have a permissive counterclaim that is not functioning as a setoff (D is asking for more than what P is asking for). I noted in class that it was rare for such permissive counterclaims to be saved. Since not saving such permissive counterclaims is clearly the majority approach, this is the most accurate answer.

61 of you chose this. The point biserial was .49.


NOTE ON MULTIPLE CHOICE QUESTIONS 7 THROUGH 10:

Multiple choice questions 7 through 10 concern the case of P v. D1 & the D2 Corp. In this case, P (a domiciliary of California) is suing D1 (a domiciliary of South Dakota who works in North Dakota for the D2 Corp. as a low-level broker) and the D2 Corp. (a brokerage company incorporated in the state of California with its principal place of business in North Dakota). P’s suit was filed in the federal district court for District of Minnesota and is for federal securities fraud. P is asking for $100,000 alternatively from either D1 or the D2 Corp., for damages due to misrepresentations concerning securities that D1 made (on behalf of her employer) to P in California.

7.    Under Minnesota law, only a non-party 21 or older may serve a defendant. Under North Dakota law, anyone older than 21, including a party, may serve a defendant. Under California and South Dakota law, only a non-party over 18 may serve a defendant. Furthermore, under South Dakota law, it is impermissible to serve an individual by leaving the summons and complaint at the individual’s home with someone other than that individual. In which of these cases is service on D1 least likely to be adequate?
   
a.    A 20-year-old a process server gives D1 the summons and complaint in hand while D1 is on a business trip in Minnesota.

Wrong. The relevant FRCP for service on individuals is 4(e), which says:

(e) Serving an Individual within a Judicial District of the United States.
Unless federal law provides otherwise, an individual — other than a minor, an incompetent person, or a person whose waiver has been filed — may be served in a judicial district of the United States by:
(1) following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made; or
(2) doing any of the following:
    (A) delivering a copy of the summons and of the complaint to the individual personally;
    (B) leaving a copy of each at the individual’s dwelling or usual place of abode with someone of suitable age and discretion who resides there; or
    (C) delivering a copy of each to an agent authorized by appointment or by law to receive service of process.

In addition, FRCP(c)(2) says the following:

 (2) By Whom. Any person who is at least 18 years old and not a party may serve a summons and complaint.

In this case, service was clearly adequate. 4(c)(2) was satisfied, since the server was a non-party at least 18. And 4(e)(2)(A) was satisfied, since this person gave D1 a copy of the summons and complaint personally. It does not matter what any state law says on the matter, since P is not relying on FRCP 4(e)(1).

10 of you chose this.

b.    P’s lawyer (who is 40 years old) gives D1 the summons and complaint in hand while D1 is on a business trip in Minnesota.

Wrong. Once again service was clearly adequate. 4(c)(2) was satisfied, since the server was a non-party at least 18. (We discussed in class the fact that a party’s lawyer is not a party for the purpose of 4(c)(2).) And 4(e)(2)(A) was satisfied, since the server gave D1 a copy of the summons and complaint personally. Once again, it does not matter what any state law says on the matter, since P is not relying on FRCP 4(e)(1).

15 of you chose this.

c.    A 21-year-old process server leaves the summons and complaint at D1’s home in South Dakota with D1’s husband.

Wrong. Once again service was clearly adequate. 4(c)(2) was satisfied, since the server was a non-party at least 18. And 4(e)(2)(B) was satisfied, since the server left a copy fo the summons and complaint “at the individual’s dwelling or usual place of abode with someone of suitable age and discretion who resides there.” Once again, it does not matter what any state law says on the matter, since P is not relying on FRCP 4(e)(1).

8 of you chose this.

d.    P gives the summons and complaint to D1 in hand in North Dakota.

Correct. This is the case in which service on D1 is least likely to be adequate. Why? 4(c)(2) was not satisfied, since the server was a party. Could one argue that service was OK, since the service was OK under state law? It is true that under FRCP 4(e)(1), an individual…may be served in a judicial district of the United States by following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made.” In this case, the relevant state law methods are Minnesota (the state where the district court is located) and North Dakota (the state where service was made).

Minnesota law won’t work, because it requires a non-party to serve. But under North Dakota law, anyone older than 21, including a party, may serve a defendant. But, as I discussed in class, it is unlikely that FRCP 4(e)(1) refers to requirements concerning who may serve, It is probably only about how service is effected (e.g. whether the summons and complaint can be left at the defendant’s door). It seems much more likely that FRCP (c)(2) governs who may serve. Therefore, this is the service least likely to be adequate.

45 of you chose this. The point biserial was .37.

e.    A 20-year-old process server gives D1 the summons and complaint in hand while D1 is on a business trip in California.

Wrong. Service was clearly adequate. 4(c)(2) was satisfied, since the server was a non-party at least 18. And 4(e)(2)(A) was satisfied, since the server gave D1 a copy of the summons and complaint personally. Once again, it does not matter what any state law says on the matter, since P is not relying on FRCP 4(e)(1).

3 of you chose this.


8.    Under Minnesota law, a corporation doing business in the state of Minnesota must appoint the Secretary of State of Minnesota as its agent for service of process. Under Minnesota law delivering the summons and complaint to the Secretary of State is sufficient for service on the corporation. In order to do business in Minnesota, the D2 Corp. has appointed the Secretary of State of Minnesota as its agent for service of process. P has the D2 Corp. served by having a 21-year-old process server deliver a copy of the summons and complaint in hand to the Secretary of State of Minnesota. Which of the following is most accurate?
   
a.    The D2 Corp. should be able to get P’s action against it dismissed for lack of personal jurisdiction.

Wrong. Service on a corporation’s agent for service of process is sufficient for PJ over the corporation. We discussed this in class and it was in the reading. Notice that there is an important difference between an agent for service of process and a person who can be given the summons and complaint in order to provide service on the corporation under FRCP 4(h). Delivering the summons and complaint to the CEO is adequate service on the corporation under 4(h), but that does not mean that there is PJ over the corporation in the state where the CEO got the summons and complaint. But if someone is designated an agent for service of process for the corporation, then service on the agent is sufficient for PJ on the corporation in the state of service.

35 of you chose this.

b.    The D2 Corp. should be able to get P’s action against it dismissed for insufficient service, because Rule 4(h) was not satisfied.

Wrong. This is what FRCP 4(h) says about service on a corporation:

(h) Serving a Corporation, Partnership, or Association.
Unless federal law provides otherwise or the defendant’s waiver has been filed, a domestic or foreign corporation, or a partnership or other unincorporated association that is subject to suit under a common name, must be served:
(1) in a judicial district of the United States:
    (A) in the manner prescribed by Rule 4(e)(1) for serving an individual; or
    (B) by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process and — if the agent is one authorized by statute and the statute so requires — by also mailing a copy of each to the defendant.

Now you might say that service was inadequate because, although a copy of the summons and complaint was delivered to an agent for service of process, there was no copy mailed to the corporate defendant. So 4(h)(1)(B) was violated. But mailing is required only if the state statute authorizing the agent for service requires such mailing, and the Minnesota statute did not require it.

Another way of getting to the conclusion that service was adequate under 4(h) is that 4(h)(1)(A) says that service on a corporation is valid if “in the manner prescribed by Rule 4(e)(1) for serving an individual” – that is, if it is in accordance with the state law “where the district court is located or where service is made.” Here the service was in accordance with Minnesota law (where the service was made and where the district court was located).

Of course, the fact that delivery of the summons and complaint was only on the Secretary of State and not on any actual employee of the D2 Corp is a reason to think that the Minnesota rules violate the due process clause of the 14th Amendment, because such service is not reasonably calculated to apprise the defendant of the pendency of the action. But that does not mean that FRCP 4(h) was not satisfied.

11 of you chose this.

c.    The D2 Corp. should be able to get P’s action against it dismissed for lack of subject matter jurisdiction.

Wrong. P’s suit is for federal securities fraud. It clearly has federal question SMJ.

8 of you chose this.

d.    The D2 Corp. should be able to get P’s action against it dismissed for insufficient service because Minnesota’s service rules violate the 14th Amendment to the United States Constitution.

Correct. The fact that delivery of the summons and complaint was only on the Secretary of State and not on any actual employee of the D2 Corp. is a reason to think that the Minnesota rule violated the due process clause of the 14th Amendment, because such service is not reasonably calculated to apprise the defendant of the pendency of the action. It would also follow that if a federal court allowed such service the 5th Amendment due process clause would be violated. This is true even though such service satisfies FRCP 4(h).

18 of you chose this. The point biserial was .41.

e.    The D2 Corp. should be able to get P’s action against it dismissed for insufficient process.

Wrong. This would mean that there was something wrong with the papers submitted to the Secretary of State (e.g. there was no summons). There is no evidence of that.

9 of you chose this.


9.    Assume that the following actions are joined to P’s federal securities fraud actions against D1 and the D2 Corp.:

Action 1: A $50,000 California state law fraud action by P against D1 concerning the same misrepresentations that are at issue in the federal securities fraud actions.
Action 2: A North Dakota breach of contract action by D1 against the D2 Corp. concerning failure to pay $100,000 in back wages.
Action 3: An impleader by D1 against I, D1’s insurance company, on the grounds that I is contractually obligated under South Dakota law to compensate D1 for any securities fraud judgments against D1. I is incorporated in South Dakota with its principal place of business in South Dakota.
Action 4:  A $50,000 California state law battery action by D1 against P concerning a brawl that D1 and P got into in California several months before the misrepresentations at issue in the federal securities fraud actions.
       
Which of the following most accurately describes the actions that should be dismissed for lack of subject jurisdiction?

a.    Actions 1, 3, and 4.

Wrong.

Action 1 has supplemental jurisdiction, because it is part of the same constitutional case or controversy as P’s federal question action against D1. That is all that is needed under 28 USC 1367.

Action 3 has supplemental jurisdiction, for the same reason as action 1.

But this is right that action 4 does not have federal SMJ. First of all, it does not have supplemental jurisdiction, because it is not part of the same constitutional case or controversy as P’s federal question action against D1. Furthermore, it does not have its own source of subject matter jurisdiction. Although D1 and P are diverse, the jurisdictional minimum is likely not met. (It is true that a person asking for $50,000 could get more than $75,000 – but the fact that he is asking for $50,000 is a strong reason to think that the jurisdictional minimum is not met.) Keep in mind that the amount in controversy of D1’s counterclaim against P cannot be aggregated with the amount in controversy of P’s action against D1 to get above the jurisdictional minimum. (We discussed this in class.)

3 of you chose this.

b.    Actions 1 and 3.

Wrong. Actions 1 and 3 have supplemental jurisdiction for the reasons mentioned at a.

2 of you chose this.

c.    Action 4.

Correct. Action 4 does not have federal SMJ for the reasons mentioned at a.

44 of you chose this. The point biserial was .29.

d.    Action 2.

Wrong. Action 2 has federal SMJ. Although it is not part of the same constitutional case or controversy as P’s federal question actions against D1 and the D2 Corp, it has its own source of federal SMJ. D1 and the D2 Corp are diverse and the jurisdictional minimum is met.

27 of you chose this.

e.    None of the actions.

Wrong. Action 4 has no federal SMJ for the reasons mentioned at a.

5 of you chose this.


10.    Which of the following is the least accurate?

a.    Setting aside any problems of personal jurisdiction, subject matter jurisdiction or venue, D1 may join Action 2 (described in Question 9 above) against the D2 Corp., but if D1 had failed to do so, she could have brought it subsequently in a separate suit.

Correct. This is the least accurate. Although D1’s action against the D2 Corp has federal SMJ (for the reasons discussed in the previous question), it is not properly joined, because it is not allowed under FRCP 13(g). In particular, it does not arise out of the same transaction or occurrence as P’s actions against D1 and the D2 Corp.

33 of you chose this. The point biserial was .45.

b.    Setting aside any problems of personal jurisdiction, subject matter jurisdiction or venue, D1 may join Action 3 (described in Question 9 above) against I, but if D1 had failed to do so, she could have brought it subsequently in a separate suit.

Wrong. This is not the least accurate. Indeed it is completely accurate. Rule 14(a) impleaders are discretionary, not mandatory.

14 of you chose this.

c.    Setting aside any problems of personal jurisdiction, subject matter jurisdiction or venue, D1 may join Action 4 (described in Question 9 above) against P, but if D1 had failed to do so, she could have brought it subsequently in a separate suit.

Wrong. This is not the least accurate. Indeed it is completely accurate. D1’s counterclaim against P is permissive (under 13(b)). It may, but need not, be brought.

5 of you chose this.

d.    There is no venue for P’s suit against D1 and the D2 Corp. in the federal district court for the District of Minnesota.

Wrong. This is not the least accurate. Indeed it is completely accurate. There is indeed no venue for the actions. No substantial part of the events or omissions giving rise to the claims arose in the D. Minn. Furthermore, no defendants reside in the D. Minn. Finally, the “fallback” provision of 1391(b)(3) cannot apply, because there is another district where the action may be brought, namely the district in California where the misrepresentations were made.

16 of you chose this.

e.    P could not get Action 4 (described in Question 9 above) dismissed for lack of personal jurisdiction.

Wrong. This is not the least accurate. In fact, the majority view is that permissive counterclaims by a defendant against a plaintiff cannot be dismissed by the plaintiff for lack of PJ, even if there would be no PJ if the permissive counterclaim were brought as a separate suit. It is true that there is a minority view that dismissal should be allowed. But this is still not the least accurate, because a is thoroughly inaccurate.

13 of you chose this.


Essay Questions

Question 1 [20 points]

Employer and Employee are domiciled in Ohio. P is domiciled in New York. P and Employee got into a car accident in Ohio, while Employee was acting in the scope of his employment with Employer. P sued Employee for negligence in Ohio state court, but P lost, the jury having found not merely that Employee was negligent, but also that P was contributorily negligent.

Subsequently P sued Employer in federal court in Ohio (under diversity) under a theory of respondeat superior. P alleged that Employee was reckless in the car accident between them. Under Ohio law, contributory negligence is not an affirmative defense to an action for recklessness. Employer argues that P’s action against him should be barred by claim preclusion. Is Employer right?

This question was about claim preclusion, not issue preclusion. There was a cause of action not asserted by P against Employee in the previous litigation (namely recklessness). May it be asserted by P in subsequent litigation against Employer or is P claim precluded from doing so?

First of all, it should be mentioned that the claim preclusion law that would answer this question is Ohio’s. This follows from the second court’s obligations under Full Faith and Credit. In particular, the Full Faith and Credit statute (28 U.S.C. § 1738) is at issue, rather than the Full Faith and Credit Clause (U.S. Const. Art IV, § 1), since the question is the obligation of a federal court to recognize a state court’s judgment, not the obligation of a state court to recognize another state court’s judgment. Under the Full Faith and Credit statute, a federal court must give the judgment of a state court the same effect that it would have in the state where the judgment was rendered (with exceptions we didn’t discuss and that are irrelevant here). The court that issued the judgment was a state court in Ohio. So the question is the claim preclusive effect that Ohio state courts would give that earlier Ohio state court judgment – and that is a question of Ohio law. 

Notice that this is NOT an Erie/Semtek question. In Semtek the issue was what law one should look to when determining the claim preclusive effect of the judgment of a federal court sitting in diversity. Is it the federal law of claim preclusion or the law of the state where the federal court is located? But the judgment in this case was not made by a federal court sitting in diversity. It was made by a state court in Ohio. So the relevant claim preclusion law is clearly Ohio state law. True, the second court (the court considering the earlier court’s claim preclusive effect) is a federal court sitting in diversity. But as we have seen the relevant law of is the law of the first court – the court that issued the judgment.

Of course, you don’t know anything about Ohio’s law of claim preclusion. So you had to speculate on the basis of what you knew in general about claim preclusion.

It is true that the transaction is the same in the two suits and there was a final valid judgment on the merits. But there is a problem: The parties are not the same. In the first suit Employee was sued by P and in the second Employer was. Nor are the two in privity. To see why this is the case, assume that Employee lost the first suit because Employee was found to have been negligent and P was found to be not contributorily negligent. Assume further that P couldn’t get any money from Employee and so decided to bring a second suit against Employer for Employee’s negligence. If Employee and Employer were in privity, Employer could be issue precluded from relitigating Employee’s negligence. That would be unfair to Employer. Clearly privity does not exist.

So it looks like there should be no claim preclusion. But not so fast. A good deal of you recognized that there is a problem with not allowing nonmutual claim preclusion. Assume that P could sue Employer for Employee’s recklessness. Would Employer have an indemnification action against Employee? If we say yes, then Employee is treated unfairly. The earlier judgment in Employee’s favor was supposed to insulate Employee from all subsequent causes of action concerning that transaction – but now Employee must defend (against Employer) concerning recklessness that allegedly occurred during the transaction.

On the other hand, if we say there is no indemnification action allowed, then Employer is treated unfairly. The liability of employers for the torts of their employees is predicated on the possibility of the employer to be indemnified by the employee. It would be unfair to hold Employer liable to P, but claim that Employer cannot recover his loses through an indemnification suit against Employee.

The solution is to bar P from bringing the recklessness action against Employer in the first place. Non-mutual claim preclusion is commonly allowed in such cases. See, e.g., Citibank, N.A. v. Data Lease Fin. Corp., 904 F.2d 1498, 1502-1503 (11th Cir. 1990) (claim against the person vicariously responsible is barred by a judgment in favor of the person primarily responsible). This is nonmutual claim preclusion, because the action is that is barred is one that was not brought in the earlier action, but is part of the same transaction litigated in the earlier action.

Although the question was about claim preclusion, many of you insisted on talking about issue preclusion anyway. In fact issue preclusion would have been useless to Employer in defending himself against P’s suit. Why? In the second suit, P is suing Employer for Employee’s recklessness. What issues were actually litigated and decided and essential to the judgment in the earlier action between P and Employee? Only P’s contributory negligence. And, as I noted in the question, P’s contributory negligence is not a defense to an action by P for recklessness.

Some of you tried to argue that the finding in the earlier litigation that Employee was negligent could be used by Employer to issue preclude P from litigating Employee’s recklessness. This was wrong for a number of reasons.

First of all, the conclusion that Employee was negligent was not essential to the judgment for Employee in the first suit. The court could have come to the judgment for Employee solely on the basis of the finding that P was contributorily negligent – without the finding the Employee was negligent. Since the finding was not essential, issue preclusion will not apply.

Second, even if the finding that Employee was negligent had been essential to the earlier judgment, it could not be used to issue preclude P from litigating Employee’s recklessness. To find someone negligent is not to find that he was not reckless. Even if the evidence screamed out that Employee was not merely negligent but also reckless, the jury, not being asked whether Employee was reckless (since P was suing Employee for negligence), would have still have come in only with a finding that Employee was negligent.

Question 2 [30 points]

Virginia (a domiciliary of Virginia) owns a website that displays material concerning Saudi (a domiciliary of Saudi Arabia) that, under the laws of Saudi Arabia, is defamatory. Saudi brings suit against Virginia in Saudi Arabia, claiming harm to his reputation in Saudi Arabia due to availability of the material on the web in that nation. Saudi asks for an injunction against Virginia, compelling her to make the material unavailable on the web in Saudi Arabia. He also asks for compensation for damages to his reputation. Consenting to personal jurisdiction over her, Virginia appears in the Saudi Arabian suit, arguing not merely that the material is not defamatory under Saudi Arabian law, but that even if it were, the only way that she can make the material unavailable in Saudi Arabia is by removing it from her website entirely. Since the material is perfectly legal under the laws of the United States and indeed is protected under the First Amendment to the United States Constitution, Saudi should receive no relief. The Saudi Arabian court concludes the material is defamatory and that the First Amendment is not applicable in Saudi Arabia. It therefore issues the requested injunction against Virginia and gives Saudi the requested damages of $1 million. But since Virginia has no assets or any other presence in Saudi Arabia, the Saudi Arabian court cannot execute the damages judgment and has no real power to sanction Virginia for failure to abide by its injunction.

Anticipating that Saudi might seek to enforce the Saudi Arabian judgment in the United States, Virginia brings an action against Saudi in the federal district court for the Eastern District of Virginia (the district where Virginia herself lives and where she maintains her website). Virginia asks for a declaratory judgment stating that the Saudi Arabian judgment is unenforceable in the United States because it is contrary to the First Amendment. Saudi makes a motion to dismiss the declaratory judgment action for three reasons 1) the federal court lacks personal jurisdiction over him, 2) the federal court lacks subject matter jurisdiction, and 3) venue is improper. Assume that Saudi has no contacts with the United States beyond any described in this question. How should the federal court decide Saudi’s motion?

Let’s begin with venue. The matter is very easy, since an alien (which Saudi is) may be sued in any district. End of story.

It is also possible to argue for venue on the ground that a substantial part of the events or omissions giving rise to the claim (under 28 USC 1391(a)(2) or (b)(2)) occurred in the E.D. Va., since that is where Virginia maintains her website. Some of you argued against venue because the claim in Virginia’s declaratory judgment action concerned the Saudi Arabian judgment, not the website. But one might argue that she sought a declaratory judgment so that she could refrain from having to remove the material from the website (in addition to not having to pay $1M), once again arguably making the event giving rise to the claim an event in the E.D. Va. You were rewarded for wondering about these issues, although the fact that Saudi is an alien made the motion to dismiss on venue grounds a non-starter.

Next let’s look at SMJ. Some of you simply said that the action had federal question SMJ under 28 USC 1331, since the suit concerned the First Amendment. But does this satisfy the Mottley rule? Imagine that the Mottleys had brought an action in federal court seeking a declaratory judgment that the contract they had with the railroad was compatible with the federal statute forbidding free passes. In such a case they would not be suing the railroad under state contract law anymore (the way they were in the actual Mottley case). But their declaratory judgment action would in effect be seeking a determination of a federal defense to such a state contract law action. If such declaratory judgment actions had federal question SMJ, there would be a relatively easy avenue for bringing federal defenses in federal court.

I mentioned this problem briefly in class. The Supreme Court has concluded that federal question SMJ cannot be created in this fashion:

Where the complaint in an action for declaratory judgment seeks in essence to assert a defense to an impending or threatened state court action, it is the character of the threatened action, and not of the defense, which will determine whether there is federal-question jurisdiction in the District Court. Public Serv. Comm'n of Utah v. Wycoff Co. 344 U.S. 237, 248–249 (1952).

In effect, Virginia is seeking to litigate a federal defense to an action by Saudi, under state law, to enforce his Saudi Arabian judgment. There will be no federal SMJ unless Saudi’s action to enforce the judgment would have federal SMJ. I was rather pleased how many of you caught this reason why Virginia’s declaratory judgment action would not have federal question SMJ.

But there is still the possibility of alienage SMJ under 29 USC 1332(a)(s). After all, even a suit by Saudi against Virginia to enforce the Saudi Arabian judgment would be a controversy between “citizens of a State and citizens or subjects of a foreign state.” In addition, the amount in controversy is surely satisfied, since the judgment is for $1 M (not counting the cost to Virginia of abiding by the injunction). So there is federal SMJ.

Finally, let’s look at PJ. This question is similar to an actual case – Yahoo v. La Ligue Contre Le Racisme et L’Antisemitisme (“LICRA”) and L’Union des Etudiants Juifs de France (“UEJF”), 433 F.3d 1199 (9th Cir. 2006) (en banc). LICRA and UEJF got a judgment against Yahoo in French court concerning the availability in France of Nazi-related content on Yahoo’s sites. Such material is illegal under French law. Yahoo was ordered by the French court to remove the material, even though Yahoo argued this could not be done unless the material was removed from Yahoo sites entirely. Yahoo then brought a declaratory judgment action in federal court in the N.D. Cal. seeking a determination that the French judgment was not entitled to recognition in the U.S. because it violated the First Amendment. (It is worth noting that the constitutional requirements of full faith and credit do not extend to the judgments of other nations. A US court is not required to give a French judgment the same preclusive effect it would have in France.) LICRA and UEJF made a motion to dismiss for lack of PJ. The district court held for Yahoo, a panel on the 9th Circuit reversed, and then the 9th Circuit, en banc, reversed the panel, holding that there was indeed PJ (although it also held that the case was not ripe, a matter not at issue in our question).

Why did the 9th Circuit ultimately hold that there was PJ? Notice that under FRCP 4(k)(1)(A), we must show that a state court in California would have PJ.

General PJ will clearly not work. There was no evidence of any contact between LICRA or UEJF and California except the fact that they brought suit against Yahoo in France. That would surely not be the sort of substantial continuous contacts for them to be sued in California on any cause of action.

So we must show specific PJ. Was the French lawsuit itself a sufficient contact with California for specific jurisdiction? It is not enough, surely, that LICRA or UEJF choose to sue a California company. But the French suit requested that Yahoo be compelled to so something (remove the materials) that could only be done in California. In that sense they committed an act intentionally directed at California. Furthermore Yahoo’s declaratory judgment action concerns this very action.

This is obviously a close case, but the best answers focused on Saudi’s Saudi Arabian lawsuit itself (which sought to require Virginia to do something in Virginia) as the contact with the state of Virginia that might support PJ, even if you concluded in the end that there was no PJ.

Some of you pointed to the information about Saudi that was put on the website in Virginia. But there is no evidence that Saudi bore any responsibility for the information being on the site. Remember, for PJ one must point to what it was about the defendant’s acts that created contacts with the forum state.

Some of you said that PJ over Saudi in Virginia could be generated from Saudi observing the material on Virginia’s site. In fact, there is no evidence that Saudi has ever looked at the site. His suit is for defamation, that is, damage to his reputation from other people in Saudi Arabia looking at the site. He could have found out about the content of the site solely from these other people. Furthermore, assuming that he did look at the site, it is unlikely that this would create PJ. After all, this act is not directly related to his cause of action (which, as we have seen, concerns other people looking at the site). If he did look at the site, it would be merely to find out about the wrong that was committed against him. His looking at the site would not itself be the wrong.

Notice that there would be no problem showing PJ over Saudi if Saudi had actually brought suit in Virginia to enforce the Saudi judgment. But that has not happened yet and it isn’t clear that it will ever happen.

Some of you attempted to argue that the 4(k)(2) was applicable, on the ground that Virginia’s suit was under federal law and there would be no PJ in any state. I don’t think that provision could be relied upon, because, as we have seen, Virginia’s action is not a federal question action. But even if it were relied upon, there would still have to be sufficient contacts with the US for PJ under the 5th Amendment. The only possible contact, it seems, is Saudi’s bringing a lawsuit against Victoria in Saudi Arabia that seeks to require her to do something in Virginia.

Some of you mentioned the comment I made in class that there is a practical tendency in 4(k)(2) cases to read 5th Amendment due process broadly, in the sense that PJ in the US is found on the basis of contacts with the US that, if they were contacts with a particular state, would be insufficient for PJ in the state under the 14th Amendment. Although this is true as a practical matter, the legal standard is still the defendant’s intentional contacts with the US. Some of you seemed to assume that 5th Amendment PJ could be found without the defendant reaching out to the US in any fashion. This is not so.

I was a little distressed that so many (around 10%) of you argued that Saudi had waived PJ by offering other defenses in his motion, namely lack of SMJ and improper venue. We discussed in class a number of times that under the federal rules (in particular FRCP 12(b)) “[n]o defense or objection is waived by joining it with one or more other defenses or objections in a responsive pleading or in a motion.” This distinguishes the federal approach from the “special appearance” approach of some state court systems, in which joining the defense of lack of PJ with a defense on the merits (like failure to state a claim) waives the defense of lack of PJ. FRCP 12(b) makes it clear that there was no such waiver.

Furthermore, even in the state court systems that use the special appearance approach, the joinder of procedural defenses (which would include improper venue or lack of SMJ) does not waive the defense of lack of PJ – only the joinder of defenses on the merits does so.

Question 3 [25 points]

P (a domiciliary of Texas) and the D Corp. (an English corporation with its principal place of business in England) entered into a contract for P to take a cruise from Galveston, Texas to the Cayman Islands. The contract contained a choice-of-forum provision that stated that all suits arising out of the cruise should be brought in England. While boarding the cruise ship in Galveston, P slipped and severely injured himself. P brought suit against the D Corp.  in Texas state court in Galveston under Texas negligence law. The D Corp. removed to the federal district court for the Eastern District of Texas. The D Corp. then made a motion to dismiss, appealing to the choice-of-forum clause. Texas state courts have refused to enforce choice-of-forum clauses of the sort in P and the D Corp.’s contract on grounds of public policy. In the context of actions with federal question and admiralty jurisdiction, federal courts have upheld such choice-of-forum clauses, provided that they were freely agreed upon by the parties to the contract. Should the federal court in Texas uphold the choice-of-forum clause and grant the D Corp.’s motion to dismiss?

As most of you recognized, this was an Erie question – one that is very similar to an actual Erie question that is currently unresolved by the Supreme Court. There is in fact a federal common law standard for determining the enforceability of forum selection clauses, articulated in an admiralty case. See M/S BREMEN v. Zapata Off-Shore Co., 407 U.S. 1 (1972). Like the standard in the exam question, it is relatively pro-enforcement. And, as in the exam question, some states refuse to enforce forum selection clauses. The Supreme Court has not answered whether the federal or state approach applies in a diversity case.

The matter is made a bit more complicated – but in a way irrelevant to your answering the exam question – because in cases in which the defendant uses the forum selection clause to compel transfer of the case from one federal district court to the federal district court chosen by the clause, the Supreme Court has decided that the enforceability of the clause is governed by a federal statute related to transfer of venue, 28 USC § 1404(a). Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 32 1988).

But what if the forum selection clause cannot be used to transfer the case to another federal district court, because the clause says that a particular state court or a court in a foreign nation must take the case? In such cases (which include the situation in the exam question) 1404(a) is not at issue and one must face the more complicated Erie question of whether the federal common law standard, already articulated for admiralty cases, or the relevant state standard applies. This is an issue about which federal courts have disagreed. See, e.g., Northwestern Nat'l Ins. Co. v. Donovan, (7th Cir. 1990) (federal law); Manetti-Farrow, Inc. v. Gucci Am., Inc., (9th Cir. 1988) (federal law); Farmland Indus., Inc. v. Frazier-Parrott Commodities, Inc., (8th Cir. 1986) (state law).

Notice that you should have assumed that the federal law on the matter is common law – not constitutional law, federal statutory law, or a federal rule of civil procedure. What I said in the question was that in federal question and admiralty actions, “federal courts have upheld such choice-of-forum clauses, provided that they were freely agreed upon by the parties to the contract.” You were rewarded for worrying whether the federal courts in these cases might have been looking to a constitutional or statutory provision or a federal rule of civil procedure – but since none was mentioned you should have assumed that the rule was a common law one.

Some of you said that there was no federal common law rule on point because no rule had yet been articulated for diversity actions. This was confused. There clearly is a federal common law rule in place, namely that articulated in federal question and admiralty actions. What has not been decided is if the federal common law rule applies in diversity actions. If a federal rule had been articulated for diversity actions, the Erie issue in the question would have already been answered – it would have already been decided that the federal rather than state standard applies in diversity actions.

Some of you wondered whether the enforceability of forum selection clauses is actually a matter bound up with state substantive rights and obligations, making the application of state law constitutionally required. See Byrd. Assume, for example, that P sued D for breach of contract in federal court in diversity. Assume further that under state law the contract was invalid because it was not in writing, but the federal court ignored state law and held the contract valid under its own federal principles. That would clearly be the type of substantive common law making that occurred in Swift v. Tyson and that Erie held unconstitutional. But wouldn’t a very similar thing happen in our question if a federal court using federal rather than state principles for determining the enforceability of the forum selection clause? You were rewarded for worrying about this.

But the question is not the enforceability of the contract in general, but the enforceability of a provision concerning where lawsuits may be brought. Questions of when rights to bring a lawsuit in a federal court can be altered by private agreement certainly sound sufficiently procedural to take them outside the category (identified in Byrd) in which state law must be applied as a constitutional matter.

That means we are probably within the “relatively unguided Erie choice” described in Hanna. The first question, therefore, is whether having differing state and federal rules on the matter would be contrary to the twin aims of Erie: avoiding vertical forum shopping and the inequitable administration of the laws. As many of you noted, there would be a forum shopping problem. A plaintiff who wanted to sue in a place contrary to the forum selection clause would sue in state court, where the clause might not be recognized, whereas the defendant would remove to federal court in order to get the action dismissed. This is also arguably inequitable administration of the laws, since the chance of getting the action dismissed would be available to an out-of-state, but not an in-state defendant.

The next question is possible federal interests in the application of federal law (of the sort mentioned in Byrd) and state interests that would recommend the application of state law in federal court. I was looking for some original thought here. You need to actually think about why the federal and state rules exist – the purposes standing behind them.

Many of you did not. It was common for people to say vaguely that the purpose behind the state rule was “public policy.” We know that this is true (I said that in the question). But what public policy? You needed to say. One possibility is that Texas is especially protective of Texans’ ability to sue in Texas concerning events that happen in Texas (because of the inconvenience to the Texas plaintiff of going to another forum or because of the presence of witnesses in Texas). Indeed Texas is so protective that it will not let Texans contract away this right. I was very generous in grading if you made a stab at figuring out the purpose of the Texas approach, but you had to make a stab.

As for the reasons for the federal approach – one possibility is docket clearing (federal courts like it when people choose other fora than federal court for their suits). Another is a belief in people’s ability to determine for themselves in their contracts what is in their best interest. Once again I was generous if you made an attempt to discern the purposes behind the federal standard.

I also made no demands about what conclusion you thought these various factors pointed to – state or federal law. (For the record, I think state law should apply.)

Question 4 [20 points]

P (a domiciliary of Mississippi) and D (a domiciliary of Nevada) met on a cruise that started in Miami and ended in the Bahamas. On the cruise, D agreed to ship a rare widget to P’s home for $100,000. P mailed D the check from P’s home in Mississippi, but D failed to ship the widget.

P brought suit against D in Mississippi state court for breach of a contract. Although D was served with a summons and complaint in hand in Nevada, D defaulted. Prior to P’s suit, the state of Mississippi passed a statute which states that any defendant who receives actual notice of a lawsuit in Mississippi state court and fails to take advantage of a special appearance to challenge the personal jurisdiction of the court over him will be taken to have waived the defense of personal jurisdiction.

P then sued D on the Mississippi judgment in federal court in Nevada. D argued that the Mississippi judgment is void for lack of personal jurisdiction. P claimed that D waived that defense. How should the federal court decide the issue?

In general, a federal court must give state court judgments full faith and credit – which means that they must give them the same preclusive effect that they would have in the rendering state. This obligation comes not from the Full Faith and Credit Clause in Art. IV of the Constitution (which obligates state courts to give the judgments of other states full faith and credit), but from the full faith and credit statute (28 U.S.C. § 1738).

Accordingly, under 28 U.S.C. § 1738, the federal court in Nevada must give the Mississippi state court default judgment against D the same preclusive effect in would have in Mississippi state courts. Since under Mississippi law the judgment precludes D from litigating whether there was PJ over him, it sounds like the federal court in Nevada must take D to be precluded from litigating the question of PJ.

But the federal court in Nevada is not obligated to apply this Mississippi law if it is unconstitutional. After all, if the Mississippi law is unconstitutional it isn’t applicable even in Mississippi state courts, so a federal court would not be violating its obligations under 28 U.S.C. § 1738 if it did not apply the law.  Accordingly we must answer the question of whether the Mississippi approach to PJ violates the 14th Amendment. 

In the past the US SCt has suggested that such a statute would be unconstitutional. See Earle v. McVeigh, 91 U.S. 503, 507 (1875) (“A party that simply refuses to appear may contend in a later case that the first tribunal lacked jurisdiction….”); Baldwin v. Iowa State Traveling Men's Assn., 283 U.S. 522, 525 (1931) (The defendant “had the election not to appear at all. If, in the absence of an appearance, the court had proceeded to judgment, and the present suit had been brought thereon, respondent could have raised and tried out the issue in the present action, because it would never have had its day in court with respect to jurisdiction.”).

But I expected you to venture an account of why it is unconstitutional. Some of you mischaracterized the statute by saying that it somehow forced PJ upon D even when none existed otherwise. It is hard to see how that’s so. If there is in fact no PJ over D in Mississippi, all D has to do is make a special appearance in the Mississippi court, argue that there is no PJ, and the court should dismiss the action. All the Mississippi statute does is require that the litigation about whether there is PJ take place in Mississippi.

But perhaps the Mississippi state court would read its personal jurisdictional power too broadly. As Judge Easterbrook has put it, if the Mississippi statute were constitutional, “a court that lacked jurisdiction could strong-arm a party to litigate the subject, decide in favor of its own power, and thus block any review of its adjudicatory competence.” United States v. Cook County, 167 F.3d 381, 388 (7th Cir.1999). But in fact, if the Mississippi court wrongly found that it had PJ, there would remain the possibility of review of this matter if the US SCt granted cert.

Perhaps the best argument is that even if the Mississippi court would make the right decision that there is no PJ, it violates due process to require D to travel to Mississippi to litigate the question when there is in fact no PJ over him in Mississippi.

Some of you argued that the statute was unconstitutional because – per Scalia in Burnham – it was not allowed at the time of time of the enactment of the 14th Amendment (and, even if it were, it is not generally accepted by the states today). That is a possible argument, although, once again, it is important to note that the Mississippi statute does not really create a novel form of PJ. It simply determines where the issue of PJ is to be litigated.

In the end, I did not care which way you came down on the matter of the constitutionality of the statute – what mattered is that you addressed the right questions. In fact, I wonder whether there are really any good arguments that the statute would be unconstitutional. Here is what 18A Wright & Miller, Federal Practice & Procedure § 4430 has to say on the matter: “It would not be unthinkable to require a defendant to raise the jurisdictional objection in the initial forum or lose it. The opportunity to default and raise the question later distinguishes personal jurisdiction from defenses on the merits in deference to longstanding traditions that may one day vanish.”

Some of you who claimed that the statute was unconstitutional (and thus that D was not precluded from collaterally attacking the Mississippi default judgment) went on to discuss whether the collateral attack would be successful – that is, whether there actually was PJ over D in Mississippi. That was fine, although the constitutionality of the Mississippi statute was the heart of the question.

There was obviously no general PJ over D in Mississippi. The only possible PJ was specific. That P mailed the check to D won’t work, since that is something P did, not something D did. Nor is the fact that D contracted (outside of Mississippi) with someone he knew to be a Mississippian enough. The best one could do is point to the fact that D promised to ship the widget to Mississippi, which, one might argue, is a form of intentionally reaching out to the state. It is questionable, however, that this is sufficient for specific PJ. The US SCt, as we have seen, prefers some sort of physical reaching out to the forum state and the widget was not in fact shipped to Mississippi.

A remarkably large number of you thought this was an Erie question of whether federal or Mississippi law on the preclusive effect of the default judgment applied. This showed considerable confusion on your part. The judgment at issue was made by a STATE court in Mississippi, not a federal court sitting in diversity. The law on the preclusive effect of the default judgment of a state court in Mississippi is Mississippi, not federal, law (although, as we have seen, that Mississippi law could be unconstitutional).

In short, this was not like the Semtek case. In Semtek, a Maryland state court was asked to decide the preclusive effect of a dismissal by a federal court sitting in diversity in California. That introduced an Erie question, namely whether the preclusive effect of the dismissal was governed by federal or California law.

Once again, in our question the judgment at issue was made by a state court, not a federal court sitting in diversity. Of course, the court that is trying to decide the preclusive effect of the state court judgment is a federal court sitting in diversity (in Nevada). But the fact that the court making this decision is a federal court sitting in diversity introduces no Erie questions (which, if they existed would be about whether federal or NEVADA law applies, not whether federal or Mississippi law applies).

There are two reasons that there are no interest Erie issues about whether federal or Nevada law applies concerning the recognition of the Mississippi judgment. First of all, we know that under the federal full faith and credit statute (28 U.S.C. § 1738), a federal court must give the default judgment of the Mississippi state court the same preclusive effect it would have in Mississippi (unless Mississippi law is invalid because it is contrary to the 14th Amendment). Since this is determined by a federal statute (which is clearly valid), there is no possibility that Nevada law on the recognition of judgments would apply.

Furthermore, there is no interesting difference between federal courts’ obligations under 28 U.S.C. § 1738 and the obligations of a Nevada state court, since under the Full Faith and Credit Clause of the Constitution Nevada state courts also must give the default judgment of the Mississippi state court the same preclusive effect it would have in Mississippi (unless the Mississippi law is unconstitutional).

In short, Erie discussions were a blind alley.

Question 5 [35 points]

D1 and D2 were both born in Nevada and had lived there all their lives, until they got married and decided to move to Florida. They were a bit apprehensive when accepting employment in Florida, because they accepted without actually seeing what Florida looks like. But soon after they accepted, D2 took a brief trip the Florida, and he assured D1 that the state was very nice.

The day after he got back from Florida, D1 and D2 embarked an extravagant 6-month trip through Europe and South America. They had all their furniture and personal belongings shipped to a storage facility in Florida and set off from Nevada, intending to go directly to Florida after the trip was over. One month into their trip, they decided that they needed a personal assistant to help them with their travels. So they put out an advertisement in various magazines with national circulation. P, who lives in Nevada, responded to their ad by calling them while they were London, England. They hired P sight unseen in that phone call and P flew off to meet them in London.

After only two weeks P returned to Nevada and immediately brought suit against D1 and D2 in the federal district court for the District of Nevada for various torts, including intentional infliction of emotional distress and battery. P alleged that these torts occurred while she was travelling with D1 and D2 through England. P had D1 and D2 served while they were at JFK Airport (in the Eastern District of New York), while they were en route from Europe to South America.

You represent D1 and D2 and are seeking to come up with the best arguments (preferably consistent with one another) that P’s actions against D1 and D2 should be dismissed for lack of personal jurisdiction, subject matter jurisdiction, and venue. What are the best arguments you can think of that P’s actions fail all three requirements? What, if any, are their vulnerabilities?

This was not a very difficult question, but the better answers took seriously the idea that the arguments for a lack of PJ, SMJ and venue should be consistent with one another.

The suit is not under federal law, so diversity is the only hope for federal SMJ. To determine whether there is diversity, we must look to the states of domicile of the parties (not their states of residence, as too many of you said).

We know that P’s domicile is Nevada. Even if there was a doubt about whether her domicile was Nevada at the time of wrongs being litigated (since she had left Nevada and was travelling with the defendants), what matters is one’s domicile at the time of filing and at that point she was clearly back in Nevada and domiciled there.

What about the domiciles of D1 and D2? They were clearly domiciled in Nevada most of their lives, so the question is whether one or both established a new domicile (presumably in Florida). It is important to remember that one always has a domicile (some tried to argue that the defendants had no domicile) and that one retains one’s old domicile until a new one is established. So unless they established a new domicile, they are Nevada domiciliaries even if they will never return to Nevada and have cut off all contact with the state.

Establishing a new domicile requires, roughly (see Baker v Keck for the details), that one establish a dwelling place in the state with the intent of making it one’s home indefinitely. Furthermore, at some point one must be actually present at the dwelling place with the requisite intent for domicile to be established. Without this presence, there is no change of domicile. (Remember the Robinsons in World Wide VW, who remained New York domiciliaries because they had not yet made it to their new home in Arizona?)

This suggests that there was no domicile established in Florida. D1 never actually set foot in Florida. And when D2 did set foot there, it did not look as if he had the requisite intent, since he did not actually intend Florida to be his dwelling place at that time. That means that we have no diversity, since the plaintiffs and defendants are domiciled in the same state. This is true even setting aside the question of whether the jurisdictional minimum was satisfied (about which we know too little to answer). Furthermore, even if D2 did establish a Florida domicile (as some of you argued) there still is no diversity, since complete diversity is required. There must be no one on one side of the v that is domiciled in the same state as someone on the other side of the v.

Some of you profitably spent time worrying about whether, if D2’s presence was sufficient to change D2’s domicile, it might also have been sufficient to change D1’s as well (since D2 was the spouse of D1). Some courts have found that the presence of one spouse is sufficient to change the domicile of the other. See Lea v. Lea, 18 N.J. 1, 112 A.2d 540 (1955) (wife’s presence could change husband’s domicile). Others haven’t. See McIntosh v. Maruicopa Co., 73 Ariz. 366, 241 P.2d 801 (1952) (wife’s presence could not change husband’s domicile).

But if D1 (and probably D2) are domiciled in Nevada, there will apparently be problems consistently arguing that the case should be dismissed for lack of PJ. Keep in mind that a federal court in Nevada will have PJ over a defendant only if a state court in Nevada would. See FRCP 4(k)(1)(A). Since we know nothing about Nevada’s long-arm statute or state constitution, the only limitation on a Nevada state court’s assertion of PJ that we can really address is the 14th Amendment. The problem is that domicile is a traditional source of general PJ over a defendant under the 14th A.

For this reason some of you tried to argue that D1 and D2 were domiciled abroad. Although the requisite intent is surely lacking (they don’t intend to make Europe their home), this was a nice strategy in other respects. If one argues that they are domiciled in Florida, that would remove domicile in Nevada as a source of PJ, but it would ruin the argument that there is no SMJ, since there would be diversity. But if the defendants were US citizens domiciled abroad, there would be no general PJ or SMJ. Why no SMJ? Well, first of all, the suit would not be between “citizens of different States” under 1332(a)(1), since the defendants would not be domiciled in any US state. But it also would not be a suit between “citizens of a State and citizens or subjects of a foreign state” under 1332(a)(2) since the defendants would not be citizens or subjects of a foreign state (they would remain Americans). See, e.g., Twentieth Century-Fox Film Corp. v. [Elizabeth] Taylor, 239 F. Supp. 913 (S.D.N.Y. 1965); Hammerstein v. Lyne,  200 F. 165 (W.D. Mo. 1912).

But there is another possibility of making a consistent argument for a lack of SMJ and of general PJ. There is no reason to assume, without argument, that “domicile” as it is used for diversity is sufficient for general PJ. After all, there is domicile here only in a very unusual sense – the defendants have cut off all ties to Nevada and are considered Nevada domiciliaries only by virtue of the fact that they have not established a new domicile. One might accept that the defendants are domiciled in Nevada for the purpose of diversity, but argue that this is not enough for general PJ. This is true even if domicile in this attenuated sense might have been sufficient for PJ under the Pennoyer v Neff regime. The question, one might argue, is whether Int’l Shoe requirements are satisfied. You were rewarded for exploring such arguments.

But what about specific PJ? Did the defendants reach out to the state of Nevada in a way that was connected to the causes of action? This is very unlikely. The most one can point to is the fact that they put out a national ad for a personal assistant. The ad would very likely be insufficient for PJ over the defendants in Nevada. This is true even if P’s action had been for breach of the contract that P entered into with the defendants by phone in response to the ad.  After all, P really took the initiative in entering into the contract. But in fact P is not even suing for breach of contract, but for torts that occurred in England. This further attenuates the connection between the ad and the causes of action.

Finally, what about venue in the D. Nev.? It does not appear that “substantial part of the events or omissions giving rise to the claim” occurred in the D. Nev. See 28 USC 1391(a)(2). It is true that when one speaks of transactional venue (unlike PJ) one can look not merely to what the defendants did in the distict, but also to what the plaintiff did. So we could include not merely the defendants’ ad but also the plaintiff’s phone call from Nevada to the defendants. But the fact remains that the claims are not about the contract that was entered into in this call, but the torts that occurred in England. Transactional venue in the D. Nev. is unlikely.

Is there venue in the D. Nev. on the grounds that all the defendants “reside” in that district and state? See 28 USC 1391(a)(1). You should have know that the majority approach is to treat venue as equivalent to domicile. So, once again, we have the problem that an argument against SMJ (on the grounds that the defendants are domiciled in Nevada) would generate venue (since it would mean that the defendants all “reside” in the D. Nev.). One might argue, however, that only D2 is domiciled in Florida. As we have seen, the continuing domicile of D1 in Nevada would be sufficient to knock out SMJ. Furthermore if D1 is domiciled in Nevada and D2 in Florida, they would not “reside” in the same state – making venue in the D. Nev. under 1391(a)(1) impossible. (There would still be the problem of general PJ over D1 in Nevada however.)

Another alternative is to argue – as a few federal courts have – that “reside” as the term is used in the venue statute does not mean domicile and that the defendants do not reside in the D. Nev. Or one might argue that even the majority view did not envision our situation, where the defendants, after having cut off all ties with a state, are considered domiciled in that state solely because they have not yet established a new domicile. After all, venue is about convenience, and there is no longer a good argument that litigating in Nevada would be convenient for the defendants. You were rewarded for exploring such arguments.

There was one final problem, however. If there is no other district that would have venue under 1391(a)(1) or (a)(2), then the fallback provision of 1391(a)(3) might generate venue in the D. Nev. This is a genuine worry because it does not seem that a “substantial part of the events or omissions giving rise to the claim” occurred in any district (it all occurred abroad). Of course one might argue that the defendants both in fact “reside” in Florida, creating venue in the district in Florida where they reside. But there is a weak argument that the defendants reside in different states (D1 in Nevada and D2 in Florida) and a somewhat stronger argument that they both reside abroad (but are not aliens since under 1391(d) that would create venue in any district).

If they reside abroad or reside in different states then there would be no venue in any district under 1391(a)(1) or (a)(2), generating venue in “a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced” under 1391(a)(3). This might create venue in D. Nev., assuming that one of the defendants is subject to PJ in Nevada, a matter that we already discussed above. Once again, you were rewarded for worrying about this.

Question 6 [20 points]

    P is suing D for negligence in federal court in New York. D’s lawyer plans to call X, an expert witness, at trial. X’s testimony will be offered solely for the purpose of challenging the qualifications of another expert witness, Y. P’s lawyer will present Y’s expert testimony in favor of D’s negligence. In the context of informing X about Y’s qualifications, D’s lawyer gives X a document in which D’s lawyer outlines her strategies for putting Y’s qualifications in the worst light. Discuss the extent to which this document falls under any disclosure rules.

Notice that the question was whether the document fell under disclosure rules, not discovery rules. The first step in answering this question is recognizing that if one is going to present the testimony of an expert witness at trial there is a duty to disclose (that is, affirmatively give over to the other side without being asked) a report that includes, among other things, the materials on the basis of which the expert came to his opinions. (We discussed this in class. See FRCP 26(a)(2).) The purpose of this rule is to allow the other side an opportunity to impeach the expert’s testimony. It is important to note that this disclosure obligation trumps privileges, such as the work product privilege. (We discussed this in class as well.) It is very dangerous, therefore, to give material over to your expert witnesses, if they will testify.

But there is a conflict between this disclosure rule and another rule. Notice that the document is not just work product privileged material. It is opinion work product – that is, it includes a lawyer’s opinions and theories about the case. Under FRCP 26(b)(3)(B), a court “must protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of a party's attorney or other representative concerning the litigation.” Which rule wins out – 26(a)(2) or 26(b)(3)(B)?

Courts have been conflicted on the matter. See the cases cited in 8 Wright & Miller, Federal Practice and Procedure § 2016.2 n. 41. I didn’t care how you decided this conflict – what mattered is that you recognized it. Some of you argued, plausibly, that the disclosure obligation in 26(a)(2) did not apply to the document in the first place because it was not really something upon the basis of which the expert formulated his opinion. It was good to mention this but you should also have discussed the conflict between 26(a)(2) and 26(b)(3)(B).

There is another conflict. The expert is testifying solely for the purpose of impeaching another expert witness. And impeachment evidence is not, in general, subject to disclosure obligations. There is an exception for impeachment evidence with respect to initial disclosure under 26(a)(1) and pretrial disclosure under 26(a)(3). Shouldn’t that exception also apply to expert witness disclosure under 26(a)(2)?

Once again, I did not care how you came down on this issue – what mattered is that you recognized it. I could find no case directly dealing with this problem. I think the reason is that it is rare for expert witnesses to solely present impeachment evidence. For example, if an expert witnesses for the plaintiff says that the defendant’s product was defective, the expert witness for the defendant is likely to testify not merely that the plaintiff’s expert is not an expert (thereby impeaching him), but also that the defendant’s product was not defective. So understood, the defendant’s expert’s testimony would not be solely for the purposes of impeachment and the disclosure obligation would clearly apply.

The best answers, after recognizing this conflict, then went on to offer an argument for a resolution. Some of you claimed, plausibly, that even impeaching experts should be subject to disclosure obligations since they should be able to be impeached as well.


Question 7 [15 points]

X (a domiciliary of Nevada) established a trust for the benefit of twin brothers: P (a domiciliary of Oregon) and Y (a domiciliary of Oregon). Upon reaching the age of 50, P will receive 75% and Y 25% of the value of the trust. At the age of 25, P sued the trustee of the trust, D (a domiciliary of Nevada), in the federal district court for Northern District of Georgia. P alleged that D wrongly claimed ownership of a $200,000 parcel of land in the Northern District of Georgia. The land, P argued, belonged to the trust. Y testified as a witness in the case. The jury determined that the land is in fact D’s and the federal court issued a judgment for D.

Soon afterward, D dies and Z inherits his estate. Within a year, Y sues Z in state court in Georgia. Y claims that the $200,000 property that Z inherited in fact belongs to the trust. Z claims that Y is issue precluded from relitigating whether the property belongs to the trust. How should the state court rule?

First of all, it’s worth noting the Erie problem lurking in this question. We are trying to determine the issue preclusive effect of a judgment of a federal court sitting in diversity in Georgia. Which law applies – federal law or Georgia law? Semtek is not exactly on point, since it said only that state law applies to the claim preclusive effect of a dismissal, on statute of limitations grounds, issued by a federal court sitting in diversity.

But since you don’t either Georgia or federal law on the particular issue preclusion question, I expected you only to identify the Erie problem without resolving it. You had to answer the question simply by relying on what you know in general about the law of issue preclusion.

One element of the question is easy – Z, as a successor in interest, is surely in privity with D. (We discussed this in class.) For this reason, whatever issue preclusion arguments D could have offered had he been sued by Y, Z can offer against Y as well. Accordingly, this is not an example of nonmutual issue preclusion, since the person taking advantage of issue preclusion was a party or in privity with a party in the earlier action.

But there is a problem with Z (or D) being able to issue preclude Y, since Y was not a party in the earlier action. (Being a witness is not the same as being a party.) Nor can one say that Y was in privity with P. The mere fact that both P and Y had similar interests (getting as much into the trust as possible) is insufficient to create a relationship of privity. Consider the Showworld case, in which the landlord and the tenant had similar interests (that the tenant would not be evicted) and yet no relationship of privity was found.

It is true that P had as strong an incentive to show that the land was part of the trust as Y would. But that is not enough to show privity. Consider a plane crash in which many people, including P and Y, were harmed. P suffered $150K in damages, and Y $50K in damages. It is true that P has at least as strong an incentive as Y to show that the airline was negligent. But it would be wrong to issue preclude Y from litigating the airline’s negligence simply because P had sued the airline individually and lost.

If there is no privity between Y and P, there is a problem with issue precluding Y, since the general rule is that someone who is not a party or in privity with a party in an earlier action cannot be issue precluded.

But there is a problem with not allowing issue preclusion too. If we don’t D (and Z) could be whipsawed. This is because Y was a necessary party in the earlier action. Y claims an interest in the property and is so situated that disposing of the action in Y’s absence will leave D (and Z) subject to a substantial risk of incurring inconsistent obligations. See FRCP 19(a). Even though it was determined with respect to P that D rather than the trust owns the property, it could later be determined with respect to Y that the trust, rather than D, owns the property. This is intolerable. Does poor D (and Z) own the property or not?

As we discussed in connection with the Showworld case, there is a current tendency (on the cutting edge of issue preclusion law) to hold a necessary party who could have intervened but failed to do so issue precluded. The scenario in this question is a particularly strong case for such preclusion. Some of you pointed to such considerations as a reason to say that there was privity between P and Y. I’m not sure this should be called privity, but what mattered was that you recognized the argument for issue preclusion.

Could Y have intervened? Since he was a witness, he certainly knew about P’s action against D. The only problem is SMJ since Y’s action was for only $50K (25% of $200K property). But there would have been SMJ for Y’s action against D for two reasons. First of all, P and Y were asserting a common and undivided right in the property, see Shields v Thomas, 58 U.S. (17 How.) 3 (1855), so Y should be able to aggregate his action against D with P’s $125K action against D to get above the jurisdictional minimum. Second, even if aggregation were not allowed, Y’s action would have supplemental jurisdiction under Kennedy’s theory in Allapattah. (I’ll leave it to you to figure out why.)

Question 8 [25 points]

P1 (a domiciliary of Nevada) was vacationing in California, when he stumbled into a Walmart and decided to buy a blender manufactured by the D Corp. (incorporated in Alabama). The D Corp. is a manufacturer of around 20 different kitchen appliances. Its main office is in California. Its total sales are around $10 million. The blender was manufactured at the D Corp.’s only factory in Alabama. P1 returned with the blender to his home in Nevada, where he was injured when the blade flew off, causing P1 $200,000 in damages.

Under Nevada law, P1’s breach of implied warranty action against the D Corp. can be assigned. Because P1 needed money to pay for doctor’s bills, he assigned 25% of his interest in his breach of implied warranty action against the D Corp. to P2 (a domiciliary of California) in return for $25,000.

The D Corp. sells its kitchen appliances solely to Walmart. The contracts of sale are always entered into between Walmart and the D Corp. in California and the transfer of ownership occurs at the factory in Alabama. The D Corp. does not control where Walmart sells its products. Walmart chooses not to sell D Corp. products in some states. The D Corp. knows, however, that around 3% of the sales of its products occur at Walmarts in Nevada. No D Corp. blenders, however, are sold in that state. The D Corp. occasionally takes out advertisements for its products in magazines with national circulation, including circulation in Nevada. The D Corp. has never taken out any ads concerning its blender, however.

P1 and P2 sue the D Corp. in state court in Nevada for breach of implied warranty. The D Corp. removes the action to the federal district court for the District of Nevada. The D Corp. then makes a motion to dismiss the action for lack of personal jurisdiction and improper venue. P1 and P2 make a motion to remand to the Nevada state court on the ground that the federal court lacks subject matter jurisdiction. How should the federal court decide these motions?

Let’s start with P1 and P2’s motion to remand. Is this an adequate diversity action? We know P1 is domiciled in Nevada and P2 in California. If it turns out that the D Corp. has a California citizenship (a matter we will get to in a second), then there will not be complete diversity and the case will have to be remanded.

But is the assignment of part of the action to P2 able to defeat diversity? Let us compare it with the assignment from Panama to Kramer in Kramer v. Caribbean Mills, which was an unsuccessful attempt to create diversity. In Kramer the assignment failed to create diversity because Kramer did not actually have a genuine interest in the suit. After all, 95% of the recovery went back to Panama. But in our case the assignment is not a sham. P2 has a genuine interest in the lawsuit. He is as much an interested party as P1 is (although he will get only $50K if they win, while P1 will get $150K).

We discussed such scenarios in class. It is true that they may not work if only a very small part of the cause of the action is assigned to a diversity destroying co-plaintiff. Assigning 1/100th of the action may not work – see F&K question 23 pp. 455-56. But in this case a sizeable part of the action was assigned to P2.

It is also surely relevant that the assignment was not for the purpose of destroying diversity (but because of P1’s financial need). But, for the reasons’ outlined above, P2 would probably count for diversity purposes even if the assignment had been to destroy diversity.

Since P2 probably counts, the question of the D Corp’s citizenship is important. We know that it has the citizenship of its state of incorporation (Alabama). But it also has the citizenship of the state of its principal place of business. Here most of you recognized that under the nerve center test it would be California, while under the muscle test it would be Alabama (the sole state of manufacturing).

Some of you thought that there might be other factories elsewhere. I said that the blender was made at the D Corp’s “only factory in Alabama” but this might mean that there is only one factory in Alabama, not that there are no factories elsewhere. I made sure that the assumption that there were factories elsewhere did not harm you.

If the D Corp’s principal place of business is California, then the motion to remand will succeed. But even if Alabama is the D Corp’s sole state of citizenship and thus there is complete diversity, isn’t a remand still appropriate, since P2’s action against the D Corp is below the jurisdictional minimum? No, because there would be supplemental jurisdiction for the action under Kennedy’s theory in Allapattah. (I’ll leave that for you to figure out.)

Some of you argued that P1 and P2 share a common and undivided right (since it would be impossible for P1 to win without P2 winning as well). As a result P1’s and P2’s actions could be aggregated to get P2 above the jurisdictional minimum. Although supplemental jurisdiction made aggregation unnecessary, you got some credit for making the aggregation argument, although I’m not sure it would succeed.

Next let’s consider the D Corp’s motion to dismiss for lack of venue. This would clearly fail, since there is always venue for a removed action. (This was in the Glannon reading and discussed in class.) End of story. One might also try to argue that there was venue on the basis of 1391(a)(1) or (a)(2), but that was unnecessary.

On the other hand, the motion to dismiss for lack of PJ would probably succeed. Keep in mind that a federal court in Nevada will have PJ over a defendant only if a state court in Nevada would. See FRCP 4(k)(1)(A). Since we know nothing about Nevada’s long-arm statute or state constitution, the only limitation on a Nevada state court’s assertion of PJ that we can really address is the 14th Amendment.

Specific jurisdiction is very unlikely to succeed. Remember that for specific jurisdiction, the contacts with Nevada would have to be the activities giving rise to the cause of action. For this reason one cannot point to the D Corp’s products shipped to Nevada to create specific PJ, since the accident did not concern these products. It concerned a product shipped to California.

Many of you wrongly treated Asahi as relevant to this case. But in Asahi the contact with the forum state (California) was the activity being sued upon. Asahi shipped (through the intermediary of Cheng Shin) valves into California and it was one of those California valves that blew up, harming the plaintiffs. That’s not so here. The activity being sued upon was the D Corp’s shipment (though the intermediary of Walmart) of a product to California, not Nevada (the forum state). Indeed the D Corp sells no blenders in Nevada at all. Discussions of Asahi were largely irrelevant.

Nor will the D Corp’s ads in Nevada work to create specific PJ. P1 did not buy the blender in California in response to a Nevada ad. Indeed, the D Corp does not advertize its blenders in Nevada at all. (But some of you argued, creatively, that P’s purchase might have been in response to the brand recognition created by Nevada ads. This was a nice argument.)
 
To be sure, P1, after buying the blender in California, took it to Nevada, where it injured him. But we know from World Wide Volkswagen that the consumer’s moving the product to the forum is unlikely to create specific PJ. This is particularly true for a product, like a blender, that doesn’t generally move around.

So what about general jurisdiction? In many respects this was like Ex Parte Newco Mfg., 481 So.2d 867 (Ala. 1985), which we discussed in class. In that case an Alabama plaintiff sought to sue a Missouri company in Alabama for an accident with a thimble clamp that the defendant manufactured outside of Alabama and that injured the plaintiff outside of Alabama. The plaintiff argued for general PJ over Newco on the basis of its sales (through an intermediary) of other thimble clamps in Alabama. 

The Alabama Supreme Court found that PJ existed, although, as I noted in class, this was a very problematic decision. General PJ requires substantial continuous contacts with the forum state and sales of one’s products are unlikely to do the trick. Indeed, even though NewCo was not a specific PJ case, it is not clear that was is really a general PJ case either. If there is general PJ in a state the defendant can be sued on any cause of action in that state. It is unlikely that the Alabama SCt would have found PJ over Newco for any cause of action (for example, an action for breach of a contract between NewCo and another Missouri company entered into in Missouri with performance in Missouri). Instead PJ in Alabama for actions concerning thimble clamps was allowed, perhaps because NewCo, having sold many thimble clamps in Alabama, should not be surprised to be sued in Alabama concerning a thimble clamp.

But in our case, the D Corp does not sell any blenders in Nevada, so the NewCo argument (which is weak already) looks less applicable.

In general, it mattered far less whether you ultimately said that there was no PJ in this case than that you identified and acknowledged the problems for PJ discussed above.