Agenda for 19th Class Admin Name plates Handouts Slides M. Nov 19 is court visit. Keep 8AM-2PM clear Let me know about lunch time conflicts Mediation results Supplemental Jurisdiction (continued) Erie doctrine Choice of Law Introduction to Personal Jurisdiction

Assignment for Monday Personal Jurisdiction: International Shoe & early cases FRCP 4(k), especially 4(k)(1)(A) Yeazell, 80-91 Questions to think about (WG1) Briefly summarize International Shoe (All WGs) If the Supreme Court had not decided to change the rules in International Shoe, would jurisdiction have been proper under the prior rules? If your answer is “yes,” why do you think the Supreme Court changed the rules? If you answer is “no,” why was the outcome under the new rules better? Yeazell pp. 86ff. Qs 1a (WG2), 2a (WG3), 2b (WG4), 2c (WG5) Briefly summarize McGee (WG6) and Hanson (WG7) Optional: Glannon Chapters 1 & 2

Mediation Results Settlements 60m 50m (20m now, 30m over 10 years); public apology; clean up; university endowment for research & scholarships 46m (55% clean up; 45% to families and attorneys) 32.5m (20.25 families; 2.5 research; 9.75 lawyers); private apology; NDA 27m (5m to families; 12m to research; 10m clean up); return of discovery documents; public statement 23m (20m to families, 3m research); private apology 23m (10m annuity to families over 10 years; 2m for college fund; 9m water treatment; 2m leukemia research); press conference Close to settlement (confident would settle with more time) 35m (30m to families, 5m for new well); press release. Disagreement about leukemia research (30m as lump sum or over 15 years) Last offers: D: 10m; apology without admission of fault; P: 10m-17.6m depending on whether apology includes admission of fault No settlement Last offers: D: 50m; P: 350M Comments? Questions? Suggestions?

Review of Subject Matter Jurisdiction For subject matter jurisdiction in federal court to be proper It must be authorized by U.S. Constitution and federal statute 2 main bases of federal jurisdiction Federal question Well-pleaded complaint rule Diversity Complete diversity rule, amount in controversy Complex litigation Must find subject matter jurisdiction for each claim against each party Some relaxation in class actions or mass torts 1332(d) and 1369 Some relaxation when one claim clearly within federal jurisdiction And other claim is part of same “case or controversy” (same transaction or occurrence) Supplemental jurisdiction Statute designed to preserve complete diversity rule Supplemental Jurisdiction Problems

Erie Doctrine I Swift v. Tyson (1841)(Story). Federal courts apply state statutes in diversity cases, but do not need to follow state court decisions on common law. State court decisions are only “evidence” of “general principles of commercial law,” and federal courts are free to develop common law as they see fit Erie RR v. Tompkins (1938) (Brandeis) RR accident. Issue is whether to apply PA court decisions, defendant may be liable only for “willful or wanton injury” (not mere negligence) Rejects Swift v Tyson. Federal courts must apply common law as interpreted by state courts Usually that means as interpreted by state court in state in which federal court is located, but not necessarily (see choice of law) Swift gives out-of-state citizens unfair advantage, because they can choose either state law (by suing in state court) or federal law (by suing in federal court) Congress does not have the power to make commercial law. Nor do the federal courts. (probably wrong now) Swift makes jurisprudential mistake of assuming that there is a “transcendental body of law outside of any particular State” Influence of legal realism

Erie Doctrine II Guaranty Trust v. York (1945)(Frankfurter) (not assigned) Federal court must apply state statute of limitations, which was shorter, because statutes of limitations are “outcome determinative” Law is not “brooding omnipresence of Reason” Don’t draw (formalistic) line between substance and procedure Instead, ensure that “outcome of litigation in the federal court [is] substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in State court.” State statutes should be disregarded only if they concern “merely the manner and means by which a right to recover is … enforced.”

Erie Doctrine III Hanna v. Plumer (1965) FRCP 4 applies in federal court rather than narrower state statute FRCP are authorized by federal statute, Rules Enabling Act, and apply in federal court, regardless of contrary state court rule, as long as rule is constitutional and governs the “practice and procedure of the district courts,” and is thus authorized by the statute Every rule or practice is potentially “outcome determinative” For federal practices Consider policies behind Erie Discourage forum shopping Avoid “inequitable administration of justice” What is “federal practice”? Procedure not in FRCP or federal statutes Example: standards of review Modern trend. Apply federal rules and practices in federal court

Erie Questions I Suppose West Dakota has a summary judgment practice different from the that which has governed in the federal courts since Celotex. In West Dakota, a defendant may not prevail by pointing out that plaintiff lacks evidence on an issue, but rather the defendant can only prevail on summary judgment by presenting undisputed evidence on every issue. If a diversity case is filed in federal district court in West Dakota, what standard should apply if the defendant files a motion for summary judgment?

Erie Questions II Federal courts have a policy of encouraging mediation. One aspect of that policy is that neither the parties nor the mediator can be compelled to reveal what was said in mediation. In addition, a mediator’s proposal is immune from disclosure. That is, if, at the end of the mediation, the mediator suggests what she thinks is a fair settlement, those settlement terms are confidential and cannot be revealed to a judge or jury. The federal policy is not embodied in the Federal Rules of Civil Procedure or Federal Rules of Evidence, but is part of case law at the appellate level in most circuits, including the Fourteenth Circuit, which includes East Dakota. East Dakota state courts have no such policy. Judges are free to ask questions of lawyers about mediation. Some find it useful to ask, “what was the mediator’s proposal?” Judges use that information in a variety of ways. Some use it as the starting point for their own settlement conferences; they encourage the parties to agree to the mediator’s proposal or something similar. Some take a more aggressive approach and implicitly threaten lawyers, “if you don’t accept the mediator’s proposal, I’ll make sure evidentiary and other rulings go against you.” Judge Fred, a federal district court judge in East Dakota, thinks that the East Dakota state court’s approach is the correct one, because mediation is so useful that no one in her right mind would refuse mediation because she feared disclosure of the mediator’s proposal. Patty sued David for breach of contract in federal court in East Dakota. The parties went through an unsuccessful mediation. May Judge Fred compel Patty and David to reveal the mediator’s proposal? (from 2011 exam)

Choice of Law Questions II 4) Driver and Passenger both reside in West Dakota. Driver drives passenger to East Dakota. While in East Dakota, Driver talks on his cell phone and causes an accident in which Passenger is injured. Passenger sues Driver in West Dakota state court for negligence. According to East Dakota law, passengers have no right to sue drivers for injuries caused by negligence. According to West Dakota law, passengers can sue drivers for negligence. Which state’s law applies to this dispute? Is your answer different under the traditional lex loci commissi rule than under the Restatement Second? If your answer is different, which rule makes more sense? 5) Same as (4), except Passenger sues in West Dakota federal court. 6) Same as (4) except Passenger sues in East Dakota state court.

Choice of Law Questions III 7) Spend, a Nevada domiciliary, is completely irresponsible with money. Fortunately, he recognizes this fact and has set up a spendthrift trust. Under the terms of the trust, Spend cannot borrow money without the consent of Trustee, a friend he trusts. Spend goes to California and borrows money there from Sharkey to be repaid in one year at Sharkey’s place of business in California. When Spend doesn’t repay the loan, Sharkey sues Spend in Nevada. Under Nevada law, loans to someone who has set up a spendthrift trust are void. California law does not allow people to set up spendthrift trusts, so under California law, such loans are enforceable. The traditional rule for contracts was the law of the place the contract was formed governs disputes about contract validity. Under the traditional rule, what state’s law would apply? Under the Restatement Second, which state’s law should apply to the dispute? If the traditional rule and Restatement Second suggest different answers, which makes more sense? 8) Same as (7), except Sharkey sues in California state court. 9) Same as (8), except Sharkey traveled to Nevada, loaned Spend the money there, with repayment to be made to Sharkey when he returns to Nevada a year later.

Choice of Law Questions IV 10) Same as (7), except the loan contract includes the following clause: “This contract shall be governed by California law.” The traditional rule was not to enforce choice of law clauses. See also Restatement (Second) below § 187. Law Of The State Chosen By The Parties (1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue. (2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.

Introduction to Personal Jurisdiction Personal jurisdiction is about which court can hear a case If case is in state court, personal jurisdiction answers question “which state court?” California state court? Massachusetts state court? If case is in federal court, personal jurisdiction answer question “federal court in which state?” Federal court in California? Federal court in Massachusetts? Contrasts Subject matter jurisdiction. Federal or state court? Venue. Which court within a state Los Angeles superior court or San Francisco superior court C.D. of California (federal court in LA) or N.D. California (federal court in San Francisco) Choice of Law Which (substantive) law applies

Personal Jurisdiction (History) Pennoyer v Neff (1877) 3 bases for personal jurisdiction In personam. If defendant is citizen or resident of state, or present in state, or consented to jurisdiction For individuals, extreme case was service of process in airplane over Arkansas. Grace v. MacArthur (1959) Corporations are citizens in state where incorporated (e.g. Delaware) Difficult to determine where corporation is “present” Where headquartered. Clearly yes Where has plant or office and lots of employees. Clearly yes What if only has a few employees? Not clear Where does business? Unclear what means to “do business” In rem. In dispute about property, personal jurisdiction is proper where property is located Quasi in rem. If suit is NOT about property, but defendant has property in state, plaintiff can sue in that state for whatever cause of action, but recovery is limited to value of property in state International Shoe (1945) – “minimum contacts” Hanson v Denckla – contacts count if “purposeful availment”