Motion to dismiss as dispositive affirmative defense: If P’s complaint itself reveals deficiency then motion to dismiss will be granted
Ex: P’s complaint was filed after SOL and D files motion 12(b)(6) and bar based on the SOL, motion will be granted
Northrop v. Hoffman: P tried to refinance her home through Mortgage Master when they ran credit report it indicated D Hoffman Honda of Avalon ran a credit report even though D and P had no business of any kind. P received no explanation why they ran her credit. P’s initial complaint was under parts of FCRA which imposed obligation upon “consumer reporting agency.” DC granted D’s motion to dismiss b/c P did not state claim upon which relief could be granted b/c they were not a credit agency. P-Appellant included on appeal part of FCRA that imposed liability on “any person who knowingly and willfully obtains information on consumer under false pretenses.” Held: Reversed DC dismissal. Under rule 8 liberal pleading principle, failure to cite statute or cite correct one in no way affects merits of claim—factual allegations are what matters. (Apply IDDES and facts state sufficient complaint)
*Court here was being generous by allowing her to bring in statute on appeal. Court of Appeals could have said that she waived her right by not including it in her first complaint
Kirksey v. Reynolds Tabacco: P brings personal injury suit in death of her husband who died from lung cancer who falsely advertised that cigarettes were not addictive. D motion to dismiss b/c P’s claim of products liability/false advertising is preempted by federal law or barred by cases interpreting IL tort law. P replies by saying her complaint is immune from a motion to dismiss b/c she complied w/ requirements of Rule 8. Held: Grant D’s motion to dismiss. P satisfied procedural sufficiency (complied w short and plain requirement of pleading under Rule 8(a)(2)) but this does not mean that the pleading has substantive sufficiency and will be immune from motion to dismiss. P failed to respond to motion to dismiss by identifying a legal basis and just standing on her complaint alone is not enough.
Formal discovery rules are controlled by CA or federal rules
Roadmap for your pleading and assists for formal discovery b/c lets you know which claims you have are solid and which are soft
Helps you fill in the gaps for figuring out what you need from the other side
Ex: Assess facts of the case come up with possibility of claims break them down to elements and identify relevant evidence facts that need to support assess strength of evidnece
Scope of Formal Discovery:
Pre 2000 revision of 26(b)(1): standard was subject-matter, but criticisms that this was too broad and through discovery find evidence of issues not in the case and expand scope of lawsuit
Rule 26(b)(1): “Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense”
1) Attorney-managed discovery (discovery not managed by the court): entitled to discover non privileged matter “relevant to claim or defense”
“Relevant” - reasonably calculated to lead to discovery of admissible evidence
Seeking information that might lead you to evidence
Discovery relevance is really broad
“Claim [or defense]” (Claim is defined as group of facts relating to series of transactions or occurrences giving rise to one or more rights of action)
Apply relevance standard to 2 definitions of claim
1) (broader) defining claim the way federal rules defines it: factual interrelationship of various legal rights of action
2) narrowly: specific right of action
“Soft Law” Effect of this interpretation has given lawyers new ability to resist discovery by claiming the standard is narrower forcing the opposing counsel to go to the judge
Rule 26(f): Mandatory pretrial conference between attorneys
Way of making litigation more efficient- rule allows both sides to design discovery plan to mold their needs
Must come up w formal discovery plan: how many depositions, how long, deadlines
Discovery plan submitted to court
All people supportive of your claim (eye witnesses)
All documents, emails, records (don’t have to turn them over)
Information on computation of damages
26(a)(1): Mandatory disclosure: imposes initial disclosure requirement on all parties w/o waiting for discovery request
Disclosure must be made w/in 14 days of Rule 26(f) conference
Advance Financial Corp v. Utsey: D did not file “written report” of Rule 26(f) by the deadline. P filed motion for Sanctions b/c D did not produce initial disclosures per 26(a)(1). D stated that counsel had eye surgery which is why it could not comply with discovery discovery conference or disclosures. Held: Court found sanction on D appropriate by default judgment.
Additional Methods to Discover Materials
Depositions: method of gathering information from a party through oral examination
Attorneys, parties and someone to officiate: take deposition and record oath
Open ended questions as long as questions satisfy discovery qualification (reasonably calculated to lead to information for party’s claim)
D’s counsel may object but question must still be answered
Interrogatories (25 allowed)
Formal written request for information
Interrogatory can only be to a party
Interrogatories are answered by attorneys and will give as little information as possible
No follow up
Party can raise some objections
Requests for production and inspection
Products liability or business litigation (K’l disputes)
Asking the other side to hand over any document
Any property or real property inspected
Cannot be work product and privileged like with other categories
Sanctions: court’s inherent authority for imposing sanctions for violating court order and refusing to participate in discovery
Can be sanctioned for not preserving information even if it was before law suit if you had reason to believe a lawsuit would arise
Rule 34(a)(1)(A): permits discovery over electronically stored information
Rule 26 (b)(5)(B): provides a method of sequestering privileged information that is advertently disclosed during discovery pending the judicial resolution of claim of privilege
Rule 26(b)(2)(b): Entitled to discover information unless party resisting discovery can show information is not reasonably accessible due to undue burden of cost
Usually party receiving discovery request pays for it
Rule 26(b)(2)(c): Proportionality standard (this is the weighing of value v. burden)
2 sets of factors
1) Advisory Committee Standard:
1) Specificity of discovery request: more specific it is the more likely granted
2) Quantity of information available from other more easily accessed sources? Interrogatories, depositions?
3) Failure to produce relevant information that seems likely to have existed but is no longer available on more easily accessed sources
4) Likelihood of finding relevant, information from more easily accessed sources: (merits related)
5) Predictions as to importance and usefulness of further information
6) Importance of issues at stake in litigation
7) The parties’ resources
Advisory Committee Notes:
26(b)(2)(C): Allows court to set conditions on discovery. Court may request from the responding party focused discovery such as sampling of sources to learn more about costs and burdens on the parties
2) Zubalake Standard: (main difference is Zubalake focuses on which party should pay)
1) Extent to which request is specifically tailored to discover relevant info
2) Availability of such information from other sources
3) Total cost of production, compared to amount in controversy
4) Total cost of production, compared to resources available to each party
5) Relative ability of each party to control costs and its inentive to do so
6) Importance of the issues at stake in litigation
7) Relative benefits to the parties of obtaining the information
Wood v. Capital One: P claims that Capital One and NCO violated statute that prohibits debt collectors to use deceptive acts. Claim that a pre-legal letter sent to P stating no legal action has been taken but what his options are to pay the amount violated statute. P’s account was sent to NCO collection agency at which point NCO sent letter about action it was taking on P’s account. Cap’l One’s defense is that they are not debt collectors. NCO’s defense, letter was not sent by them. P seeking discovery request of all emails related to Pre-Legal Notices and Pre-Legal Program at Cap’l One and NCO. Held: P has not made a strong case that there is a suggestion or inference based on what’s been discovered so far that would lead to discovery of relevant information in emails; even if relevant, huge burden relative to what the Ds would have to take on going through emails and the amount at stake (minimal amount in collection)
*Magistrate perhaps should have looked at information thus far from interrogatories and information handed over to see if it could be used to discover if Capital One was a debt collector
JOINDER AND CLAIMS OF PARTIES Joinder of claims by Ps and Ds
1. Originating claim
2. Counter-claim: responsive claim from party who is already in an adversarial relationship with
3. Cross-claim: Claim brought by one D against another D or P against another P (co-party v. co-party)
4. Third party claim: claim brought by someone brought into the law suit (indemnity, impleader)
Rule 18(a): Joinder of Claims
Party asserting claim, counter-claim or 3rd party claim may join as independent or alternative claims, as many claims as it has against an opposing party (related or unrelated)
18(a) is a permissive rule, you are not required to bring all claims
All claims must satisfy SMJ
Rule 13(a): Counterclaims: any counterclaims allowed
13(a): Compulsory: required to file
13(a)(1)(A): “same transaction” test: Arising out of the transaction or occurrence that is the subject matter of the opposing party’s claim
Ie: a logical relationship between the claims
Not a bright line test
Leonard v. Mideast System: Leonard was counsel for Mideast in lawsuit against the US gov’t. When it lost the case Leonard sued Mideast in DC to recover attorney’s fees and Mideast made no appearance and default judgment entered against it. After Mideast filed a legal malpractice claim against Leonard in NY state court. Leonard responded by seeking declaratory relief in federal court and that malpractice claim was barred b/c it was a compulsory counterclaim. Held: Malpractice claim was a compulsory counterclaim b/c Mideast knew about this claim/defense and logical relation between the claims. Declaratory judgment for P granted and D barred from ever bringing malpractice suit
In default context, 13(a) applies and is interpreted as if D filed answer and what the answer would have contained (no counterclaim)
Burlington Northern Railroad v. Strong: P employee of D, Burlington, was awarded $73,000 for personal injury. D moved to off set the judgment for P from a disability insurance program funded by D, denied by DC (but suggested that D could recover by suing under the P’s union K). D brought separate suit for recovery of funds and summary judgment in D’s favor and P argued that D’s claim was compulsory so is barred from bringing it. Held: Not compulsory b/c 1) two suit do not arise out of same transaction (accident/injuryP’s lawsuit and K’l provisions of union K D’s lawsuit) and 2) D’s claim did not mature until the conclusion of the first lawsuit when P got his judgment
13(b): Permissive: may file
Supplemental Jdx and Counterclaims:
Compulsory counterclaims: Rule 13(a)(1)(A) “same transaction” will automatically satisfy “common nucleus of operative fact” standard established by 1367
Old approach: Permissive counterclaims were automatically deemed jdx’lly deficient because same-transaction test and common nucleus test were synonymous and failure to satisfy one was failure to satisfy other
Emerging trend: (3 circuits follow) 1367 is slightly more generous than 13(a)(1)(A) A claim can be permissive but still satisfy supplemental jdx
Hart v. Clayton-Parker: P filed lawsuit against D in federal court, under federal Fair Debt Collection Practices Act and AZ state law prohibiting unreasonable debt collection acts, alleging JC Penny assigned her acct to D when she was unable to pay balance. D filed counterclaim alleging P defaulted on payment and owes D amount plus interest and attorneys fees. P moved to dismiss counterclaim claiming that court did not have SMJ over counterclaim b/c it was not a compulsory counterclaim and her unfair collection practices does not arise from same transaction as D’s claim against her (K’l issue). D args that there is logical relationship between complaint and counterclaim and therefore compulsory. Held: D’s counterclaim was not compulsory b/c precedent cases of unfair collection practices and underlying debt have been seen as permissive. Equates compulsory counterclaim with satisfying requirement for supplemental. Therefore since it is not a compulsory counterclaim court no supp jdx.
*This court applied faulty reasoning by using the test for joinder Rules to establish SMJ. Use the template! Would result in same conclusion but conceptually more correct.
*Apply emerging trend: Fair debt collection case there is a common nucleus of operative facts: starts with the debt and credit, so could satisfy SMJ but NOT compulsory to bring counterclaim b/c doesn’t arise from same transaction
However, court could decline to exercise supp jdx based on policy. Policy that to allow debt collectors to file counterclaim for amount owed defeats purpose of fair debt collection acts, which allow borrowers to bring claims about bad debt collection b/c they would automatically be filed w/ a counterclaim.
Parallel Federal Proceedings
Counterclaim is filed in another court, so same problem filed in more than 1 court
First to file Rule: First proceeding will prevail: First court can enjoin or second court can dismiss or transfer proceeding (second court can dismiss case based on first court’s judgment)
Semmes v. Ford:
1st action NJ: P, Semmes, who formed an alliance of Ford dealers filed an injunction in NJ state court (later removed to NJDC) against Ford from contacting customers that dealers alleged returned cars to the dealer for warranty defect. (Ford reimburses dealers for maintenance repairs made based on forms the dealer submits and Ford suspects dealers are inflating or falsely submitting refund claims. In the meantime Ford’s auditors discovered about 70% of repairs not performed.)
Oct 8, Ford countered NJ action to dismiss P’s claim and filing answer and counterclaim to recover false warranty refunds.
NJ- additional counterclaim by D to recover false warranty refunds
2nd action NY: Oct 7, P informed D that they intended to file the same NJ action in a NYDC seeking temporary restraining order, which had been rejected in NJ. Ford also on Oct 8 also sent notice to terminate Semmes dealership.
P then sought and obtained leave to amend complaint from NYDC to include termination of Semmes dealership.
NY- P amended complaint to include D’s termination of dealership
Ford motion to stay the NY proceedings and willing to allow Semmes to amend complaint and reply in NJ action w/ respect to termination of dealership
Held: First to file rule NJ controls. Semmes had 21 days to file an answer to Ford’s counterclaim in NJ (by Oct 28, and by this date Semmes already knew about their termination and could’ve answered); Ford’s counterclaim triggered 13(a) b/c it claimed Semmes engaged in fraud and as a result terminated their dealership and Semmes compulsory counterclaim would’ve been “no we did not engage in fraud” unlawful termination. Semmes failure to respond impliedly included omission of its unlawful termination claim.
Rule 13(g): Permissive Cross claims
1) Filed against co-party AND
2) Same transaction
Pleading may state as cross claim by any party against a co-party (non adversarial relationship)
Once cross claim asserted by party, the other party is an opposing party w/in meaning of 13(a)
If opposing party has a substantive counterclaim (not just indemnity or contribution, must be brought if it is compulsory or party will be precluded from bringing it up later
Rainbow Mgmt v. Atlantis Submarines: 1st suit: Rainbow’s vessel collided w Boston Whaler where passengers were injured and passenger brought suit against Rainbow and Atlantis negligent. Atlantis filed crossclaim against Rainbow for contribution and indemnity AND breach of K, and third party complaint against Haydu. Rainbow then filed cross claim against Atlantis for contribution and indemnity and denied wrongdoing. 2nd suit: Rainbow brings suit against Atlantis and Haydu for recover of damages to its vessel. Atlantis motion for summary judgment b/c P’s claims are barred b/c they were compulsory counterclaims (became counterclaim when Atlantis filed cross claim against Rainbow) not pleaded in previous litigation regarding collision. Held: once cross claim is filed, party becomes opposing party w/in meaning of 13(a), but only in instances where substantive claims are asserted (not merely claim for contribution and indemnity). Atlantis asserted breach of K claim so Rainbow’s counterclaim was a compulsory counterclaim.
Ps and Ds filing cross claims:
Majority rule (Harrison court): broad interpretation Ps can be co-parties. Parties are allowed to file cross claim if it arises from same transaction that is subject matter of original action or counter claim
Minority rule (Danner court): Parties are not co parties and eligible to file cross claim unless D has filed a counterclaim
Harrison v. MS Carriers: Ps Gilbert, Daniels and Harrison filed suit against D as a result of auto accident. Ds removed the case to federal court based on diversity. P then moved to amend complaint to name Harrison (driver) and his insurer as additional Ds. D opposed motion asserting that P must assert claim against Harrison as cross claim. P uses Danner (3rd Circuit) ruling that 13(g) does not authorize P to state cross claim against a co-P in claim arising out of transaction which is subject matter of common complaint against D. Held: Cross claim is appropriate joinder here b/c cross claim only has to satisfy that it is from the same transaction and that parties are not adverse
*Although cross claim allowed, P would not pass Step 9 of template b/c clear Kroger evasion (Ps were joined under 20, so P is asserting a claim against a party joined under 20)
*18(a) Joining unrelated cross claims: Once cross claim has been filed under 13(g), party can join w/ that claim any unrelated claims (as long as SMJ is satisfied)
Permissive Joinder of Parties by Ps
Rule 17: Real Parties in Interest
Purpose: to bring in real parties and avoid a D being sued twice
B/c its for Ds benefit, real-party-in-interest objection is waived if not raised promptly in motion or as affirmative defense in answer
Rule 17 does not define who is a real party but leaves that matter to the applicable state or federal substantive law
Relation back provision: party substituted or joined shall have same effect as if action had been commenced in name of real party in interest.
If permitted court has discretion to substitute or dismiss
Real party brought in must still meet SMJ (ex: if diversity is destroyed by bringing in real party, then court must dismiss)
Green v. Daimler Benz (Rule): P Green sued manufacturer, wholesaler, and retailer of Mercedes that got caught in embankment and caught fire. D moved for summary judgment b/c claimed that Green has no prop interest in the Mercedes and so is not real party and IC&Y was. Green used Mercedes as President of IC&Y but was policyholder for insurance. Metropolitan (insurance) held interest in car in subrogation. Green wants to substitute Metropolitan in as P under Rule 17. If summary judgment granted, Metro cannot collect b/c SOL would have run. Under PA state law an insurance co can bring claim in the name of the insured (to avoid prejudices of juries) and it doesn’t have to sue in its own name. Relation-back provision of Rule 17 allows Ps to be switched and functions as if Metro was always the P (no problem w SOL). Held: Rule 17 allows for substitution b/c PA law allowed Metro to sue in Green’s name and reasonable assumption that car belonged to Green and Green promptly responded after objection and invoked Rule 17.
Rule 20 Permissive Joinder of Parties: allows multiple Ps or multiple Ds to join together in a law suit if claims arise out of same transaction or series of transactions
20(a)(1): allows multiple Ps to join together in a law suit if the claims arise out of same transaction or series of transactions AND share common question of law or fact
Do not have to be seeking same relief
20(a)(2): a P or group of Ps can sue a single D or group of Ds if the claims arise out of same transaction or series of transactions AND share common question of law or fact
“Liberal joinder of parties”
Joinder and amount in controversy requirement for Ps joined
Exxon Mobil v. Allapattah (SMJ): Ps filed class action against Exxon in USDC for overcharging fuel purchased under diversity jdx. (Ps joined under Rule 23- class action) Jury verdict for Ps and court exercised 1367 supplemental jdx over class of members who did not meet amt in controversy (Before class action rule: all named Ps must be diverse from Ds and amt in controversy satisfied between each member of class and D). Ortega case in first circuit interpreted 1367 narrowly and jdx is lacking if one P fails to satisfy amt in controversy. (P joined under 20) In that case a girl cut herself on a can of tuna and her parents joined suing for their emotional distress and medical expenses arising from their daughter’s injury. (parents did not meet requisite amt). Held: Will not up hold minority rule which says DC must have original jdx over each claim. Supplemental claims do not have to meet the amt in controversy. Minority view assumes all claims must stand or fall as single, indivisible civil action (indivisibility theory) but this theory is inconsistent w notion of supp jdx. Contamination theory: theory was for the issue of non diverse actual parties being on both sides and violating complete diversity, but not re amount in controversy (apply at step 2)
Joinder of Parties by Ds
Rule 13(h): Joinder of Third Parties in Cross claims or Counterclaims: Parties are allowed if they are allowed under Rule 19 or 20
Schoot v. United States (1331) (Rule): Ps Schoot and Vorbau were assessed penalties for failure to pay for taxes and Schoot originally filed claim against IRS to recover improperly assessed money. US counterclaimed against Schoot for balance on penalty and Vorbau was made 3rd party D to the counterclaim under 13(h). Vorbau seeking dismissal for lack of personal jdx, improper venue and improper joinder. Held: RE: personal jdx: satisfies the long arm statute of IL and Vorbau was president of IL company; RE: venue, venue statutes apply only to original claims and not compulsory counterclaims; RE: joinder: Rule 20 allows joinder if any question of law or fact common to all Ds arise in the action, therefore denied dismissal and Vorbau was properly joined in US’s counterclaim
Hartford Steam Boiler Ins v. Quantum (1332) (SMJ): Quantum (D’s) heater at its plant exploded and damaged some property and Hartford (P) insured Quantum for damages resulting from explosion but not from an accident to an object and Property Insurers covered explosions but not accidents to objects. Both insurance companies deny coverage. Hartford sought declaratory judgment in diversity that Quantum’s losses are not covered by its policies. Quantum counterclaimed against Hartford and filed a 3rd party complaint via 13(h) & 20 against Prop Ins. b/c claims relate to same question of fact (was the heater malfunction an explosion or damage?). Held: Joinder of non diverse Prop Ins was proper. *Court used the fact that Hartford’s counterclaim was compulsory to establish SMJ but go through template—that is the proper framework.
Rule 14 Impleader: A defending party, as a third party P, may cause summons and complaint to be served upon party not party to action or liable to third party P for all or part of P’s claim against third party P
Recovery under theory of derivative liability (indemnification, contribution)
Once party is brought through 14(a) all other claims are allowable like cross claims and counterclaims litigation can blossom
*18(a): party may assert as many claims as it has against a 3rd party
14(a)(2) 3rd party D can file counterclaim against D OR cross claims if there are more than 1 3rd party Ds if transactionally related
14(a)(3) 3rd party D can file claim against original P if transactionally related
14(a)(4) original P can file against 3rd party D if transactionally related
14(a)(5) Allows 3rd party D sued for indemnity to proceed under rule against another pary 4th party D, 5th party… whether brought in under 14(a) or 14(b)
14(b): When claim is asserted against the P, P can do anything a D can do
Wallkill 5 Associates v. Tectonic Engineering (Rule): P hired D to perform geological test on a piece of prop that he was going to purchase. Ds report advised that land was suitable for development. P claims that in reliance on it he purchased it only to hire Poppe, general contractor, and find that land was not suitable for development. D motions to request leave to add Poppe under Rule 14(a). Held: D cannot add Poppe under 14. D failed to show how Poppe would be liable to D if they were found liable under any secondary liability theory. D is just alleging that Poppe was the one who moved the unsuitable material or permitted it to be moved so caused the unsuitability of the land.
Guaranteed Systems v. American Nat’l Can Co(SMJ): Guaranteed Sys (P) filed claim in NC state court for Nat’l Can (D)’s failure to pay on a construction work it provided D. D removed to federal court based on diversity and counterclaimed against P that it was negligent in its construction work. P answered counterclaim and added per Rule 14 3rd party HydroVac alleging indemnity and contribution. D motion to dismiss b/c court does not have supp jdx over HydroVac Held: Allowing supp jdx would make 1367(b) overreach limits of Art III. *Congress did not say that P can’t file against someone non diverse under Rule 14, it said cannot file against party under Rule 14 if doing so would be inconsistent w 1332. (OPINION: incorrect; use template)
Intervention by Absentees
Party intervening must file 1) a motion (either 24(a) or 24(b) and 2) a proposed answer if D and proposed complaint if P
Once you intervene you are an ACTUAL P or D (not 3rd party)
Rule 24 Intervention of Right
24(a)(1): Statutory right (ex: USC 2403: US is allowed to intervene in actions involving constitutionality of federal law)
24(a)(2): Non-statutory intervention
1) Timely motion: measured from moment movant is aware of suit
2) Intervening party has interest relating to property or transaction that is subject matter of action
Broad scope typically
3) An impairment of that interest w/o intervention: (low threshold)
Could even argue stare decisis as a factor holding in this case will affect future suit brought
4) Movant’s interest is not adequately represented by other parties to litigation
Some court say the party absentee is joining has burden of showing adequacy of representation
Another rule: opposing party has burden of proving interest is adequately represented
Some circuits say burden is on intervening party
*Strong presumption that party representing your interest is US gov’t then they will adequately represent you
1st Circuit says no presumption that gov’t represents interest of citizens
Ex: Diff motivation or speculative assertion that the party will not do a good enough job is not enough
Rule 24(b): Permissive Intervention:
If claim or defense shares with main action common question of law or fact
Discretion of court but must consider whether intervention will unduly delay or prejudice adjudication of original parties’ rights (ie: collateral issue)
Great Atlantic & Pacific Tea v. Town of East Hampton (Rule): A&P (P) brings suit against Town (D) seeking declaratory judgment over the constitutionality of the Town’s passage of the Superstore Act which would prevent A&P to open stores there. The Group helped draft the Superstore Act and its mission is to preserve the area’s rural and residential character. Group filed motion under 24(a) and 24(b) to intervene and filed proposed answer as a D. Group’s arg is that they have diff reason to defend statute. Held: Group cannot intervene on 24(a) b/c different motivating reasons is not enough to show that their rights would not be adequately represented; Group cannot intervene on 24(b) b/c subject to discretion of court and there is potential collateral issue. Group wants to prevent the development of A&Ps site even if it were w/in limits of Superstore Law.
Intervening party and SMJ and indispensability:
Indispensability: Rule 19 factors
Indispensability in terms of SMJ is determined at outset of case
If a party can intervene by right and the case is in diversity, the party must satisfy SMJ:
If party not-diverse and party is indispensible destroys complete diversity
If party is not-diverse and party is not indispensible does not destroy complete diversity
Mattel v. Bryant (SMJ): Mattel (CA) sues Bryant (MI) a former employee for breach of K and various torts relating to Bryant’s creation of Bratz line of dolls. After couple removals to federal court by D, diversity was satisfied at the DC. MGA (CA) maker of Bratz dolls motion to intervene as D to protect its rights over the line. 1) Issue is if MGA is an indispensible intervening party then MGA defeats diversity. MGA argues it is not indispensible and P argues that it is. Indispensability is determined by the factors under 19(b). 2) P argues that 1367(b) does not allow MGA to be made party under Rule 24. Held: 1367(b) does not trump 1332 and non diverse and not indispensible D intervener does not destroy complete diversity.
Stage 1: Is stakeholder (P) faced with adverse claims to same stake or property? (threat of multiplicity of lawsuits)
Stage 2: Claimants litigate against each other and stakeholder leaves (stakeholder can also become claimant if he thinks he owns property)
1) Statute interpleader (1335):
SMJ: at least 2 of the claimants must be diverse from each other and stake worth $500 min.
If stakeholder becomes “claimant” (ie: action is “in nature of interpleader”) his citizenship is considered as a claimant’s citizenship
ex: P (NY) v. 5 Ds (CA) diversity satisfied b/c P and D are diverse and claimants
Venue: 1397- district which any claimant resides
Personal jdx: 2361- Nationwide service
Deposit of stake with court: 1335- must deposit stake or bond w court
Enjoining other proceedings: 2361- court may enjoin all other suits against stake
Tashire: interpleader action brought by insurer of truck driver involving injury of dozens of people. DC issued injunction, SC overturned saying that 2361 not meant to be used as bill of peace. claimants may be enjoined from litigating insurance policy but doesn’t bar claimants from litigating other claims arising out of accident
*Defensive interpleader: Courts will allow D stakeholder to defensive interplead via counterclaim or crossclaim
2) Rule interpleader (Rule 22):
SMJ: Normal rules, stakeholder must be diverse from all claimants and worth over $75,000
Personal jdx: 4(k)(1)(A) borrow state long arm
Deposit of stake w court: optional
Enjoining other proceedings: court may enjoin all other suits against stake
*22(a)(2): allows a defensive interpleader by stakeholder who one of claimants have sued
Indianapolis Colts v. Mayor and City of Baltimore (rule): MD passed bill allowing city of Baltimore power to acquire Colts (DE/IN) by eminent domain. Manager decided to move Colts to Indianapolis as it negotiated a K w/ CIB (IN) in Indiana to play there. K had escape clause. Baltimore (MD) responded by filing a condemnation in MD state court and state restrained Colts from transferring any element of team from Baltimore. Colts- stakeholder; CIB and Baltimore- claimants. Colts removed case to federal court and filed interpleader action in IN USDC via 1335. 1335 satisfied: 1) claimants are diverse: Balitmore and CIB diverse from each other (Diversity established at time suit was filed) 2) amt in controversy: more than $500. 3) Personal jdx- nationwide service allows it. 4) if proper interpleader then DC can enjoin the state proceeding. Held: rule does not allow interpleader b/c not adverse claimants. Majority opinion treats the Colts as a property to be owned and CIB is only in a K to have the Colts play in their Hoosier Dome vs. Baltimore is seeking to own the Colts. Also CIB K has an escape clause so there is no threat of multiplicity of law suits.
Geler v. Nat’l Westminster Bank: Susana and Ben owned a trust that goes to their children upon their death. Ben dies and Susana took money out of bank acct but then was told to return money b/c it goes to children, Gelers. Question that must be determined is whether acct was under Ben’s name only or Ben and Susana (Susana dies and administrator handles acct). 1st case in federal court: Gelers v. Bank. 2nd case: Susana v. Bank (State). 3rd case: Bank via Rule interpleader in federal court against Gelers and Susana (1335 doesn’t work b/c Gelers and Susana are both aliens.) Bank wants to stay the state other actions but because of a Federal anti-injunction act, Act only has 3 exceptions (one of them “aid of jdx”). Held: Interpleader is proper in this situation and to stay the state proceeding is within the allowance of the Federal anti-injunction act. Federal court told Bank to go to state court and ask them to stay proceedings (court is being polite to have them go to state court)
*Bank could have done defensive interpleader Rule 22(a)(2) in earlier case in Geler v. Bank
Compulsory Joinder Rule 19 (similar requirements as Rule 24(a)(2)), triggered by motion to dismiss rule 12(b)(7)
Step 1) “Required party:” Should this person be brought into the case
19(a)(1)(A) and (B): Can P get complete relief in that party’s absence?
Assess from viewpoint of D and court (ie: will there be another lawsuit?)
19(a)(1)(B)(i): Does absent party claim an interest related to subject matter? Would interest be impaired as a practical matter?
19(a)(1)(B)(ii): If absent party is not brought in, would there be practical impact on parties?
Worst type of prejudice: inconsistent judgment subject to double liability subject to potential excessive liability (least type of prejudice and standing alone not enough)
Step 2) “Feasibility:” Possibility of bringing party in
i) Determine whether absent party would come in as a P or D: analysis is conceptually how would the party align
Court makes ultimate determination if party is coming in as a P or a D
ii) 3 qualifications, if one not met go onto step 3
1) Personal jdx/service of process
3) Venue- established unless party objects
Step 3) 19(b)“Absence:” Are they an indispensible party that the court cannot proceed w/o? [higher threshold version of Step 1]
19(b)(1): Extent of prejudice to parties (existing parties, absent parties and court)
Speculative prejudice or will party be really at risk
19(b)(2): Can relief be shaped to avoid prejudice
19(b)(3): Adequacy of judgment in absence of party
19(b)(4): If dismissed what detriment to the P? (do they lose their claim?)
Provident v. Patteron: Cionci was driving Dutcher’s car with two other passerngers when Smith hit the car killing, Smith, Lynch and Cionci. Cionci, Lynch and Smith were killed and Harris serious injured. Smith and Harris brought law suits against Cionci, Lynch and Dutcher in state court (pending, hadn’t gone to trial) and Lynch sued Cionci’s estate and got judgment for $50,000.
Another law suit between Lynch, Smith and Harris v. Cionci and Lumberman’s (Dutcher’s insurance policy). Ps seeking declaratory relief that Cionci was driving w/ Dutcher’s permission which would trigger policy and they could collect on $100,000 insurance policy. D wants to bring Dutcher in as an indispensible party to testify to defeat P’s claim (Dutcher would destroy diversity. 1) potential harm to Dutcher (if judgment for P and Lumberman pays P, and Dutcher faced with future lawsuit he could not use insurance to pay this b/c insurance already paid out) and Lumberman (may face future litigation with Dutcher) 2) No SMJ—Dutcher not diverse 3) extent of prejudce to parties if dismissed; very prejuducal to Ps b/c they litigated and already won; D may have to relitigate, but doesn’t count b/c they never raised this to begin with; little prejudice to Dutcher; prejudice to court to have to start over; 4) shape the relief: enjoin the judgment until state cases adjudicated or Lumberman defensive interpleader
Joinder and Jdx Template
1. Identify the factual narrative underlying lawsuit or cluster of claims
2. “Anchor Claim” Is there a claim over which an IBJ can be established
*If Anchor claim is based on diversity and case includes claim by P against non-diverse party, apply contamination rule of Exxonand either case or non diverse party must be dismissed*
YES- continue NO- Case must be dismissed
3. Do the FRCP permit joinder? (Identify specific rule and apply to facts)
YES- continue NO- Joinder not permitted
4. Do either 1331 or 1332 provide an IBJ over joined claim or party?
YES- Joinder permitted NO- Continue
5. Can supplemental jdx be established over joined claim or party under 1367(a)’s same case or controversy standard (common nucleus of operative facts)?
YES- Continue NO- Joinder not permitted
6. Is this case in federal court solely on the basis of diversity (Step 2)?
YES- Continue NO- Joinder permitted (go to step 9)
7. A) Is P asserting claim against a party joined pursuant to Rule 14, 19, 20 or 24?
B) Has P entered the case under either Rule 19 or 24?
YES to either- Continue NO- Joinder permitted (go to step 9)
8. Would the proposed joinder be inconsistent with complete diversity, Kroger or amount in controversy requirements?
YES- Joinder not permitted NO- Joinder permitted (go to step 9)
9. May or should the court decline the exercise of supp jdx over the claim/party pursuant to the standards of 1367(a)?
BINDING EFFECT OF FINAL JUDGMENT Claim Preclusion or Res Judicata
Claim preclusion requirements:
1) Same claim: Claim in second proceeding is same claim or cause of action that was resolved in first
1. Transactional approach: (majority/federal) claim that arises from the same set of facts
1) Same time, space, origin or motivation- Did both complaints come from the same problem?
2) Trial convenience- Does it make sense to bring both complaints together in one suit and be more efficient?
3) Parties expectations- Would the D be surprised if he had another law suit?
Porn v. National Grange Mutual Ins Co: P filed a claim related to nonpayment of damages by his insurance company covered by his policy for accidents w/ uninsured motorists. In 2nd lawsuit P raised issue of bad faith allegations and D moved for summary judgment based on claim preclusion. The issue was whether the claims were the same and the court took the Restatement approach. Held: 1) Same occurrence of same time, space, origin and motivation, 2) would’ve been convenient for first case to hear K’l breach and bad faith allegations in one trial since uses much of same evidence and 3) D would be surprised by a second lawsuit since P even said he would sue for “bad faith.”
2. Primary rights approach: (CA) focuses on specific right of action, if the right at stake is the same right at stake in the second
ex: Primary right to enter into K, Primary right to bodily autonomy
3. Same evidence approach: same evidence that establishes violation must be the same in first as in second
Final judgment: (applies to both claim and issue preclusion)
Federal requirement: final court must enter judgment onto docket
Majority rule: Finality not altered by appeal or ability to file motion to vacate/reconsider judgment
Issue if second court’s preclusion is based on appellate court’s reversal of first court’s (now pending) judgment can delay second action by first court’s pending determination
Minority rule: Judgment is not final until appellate process is complete
Federated Department Stores v. Moitie: The Gov’t sued various department stores in violation of Sherman Act for price fixing. Ps representing class of retail purchasers filed complaint in USDC almost verbatim to Gov’t case dismissed b/c Ps had not alleged injury to business w/in meaning of Clayton Act (Moitie 1). Instead of appealing, Ps refiled case in state court (Moitie II) based on state law (artful pleading) and D invoked res judicata. Held: Prior decision was final and on the merits therefore Ps bared from bringing second case.
Personal jdx: waived if not brought up and party may still collaterally attack
SMJ: presumption that rendering court properly decided the issue but may be challenged throughout
Fraud, duress, mistake: These challenges are often directed to the initial court. Court unlikely to find judgment by fraud, duress or mistake by another court likely.
Final judgment for P is considered 100% on the merits
Final judgment for D, a little more wiggle room b/c D may have a bunch of procedural methods to get final judgment (ex: lack of personal jdx, therefore not on the merits)
Restatement: final judgment for defendant and NOT on merits if
Premised on lack of jdx, improper venue or improper joinder
P agrees to elect a nonsuit (voluntary dismissal) w/o prejudice or court directs P to be nonsuited w/o prejudice
By statute or rule judgment does not operate as bar to another action on same claim or does not operate unless court specifies
3) Same parties OR in privity (see III. Parties in Privity)
State to state: Full faith and credit (Art IV): 2nd court always applies law 1st court would apply
State to federal: Full faith and credit (28 USC 1738): Instructed by Congress to apply the law of the first state court
First case (state law issue) second case (federal law issue) still apply first court’s claim preclusion standard
Federal to State: Supremacy Clause of Art III: State court must follow federal law of preclusion (transactional approach)
Federal question federal/same transaction
*Diversity federal court applies the law of the state in which it sits