1. 1 Agenda for 16th Class Admin – Name plates – Handouts Slides Supplemental Jurisdiction – Make-up class Th Nov 11, noon-1:50, Rm 1 Dean Jones re 1L Electives Mock Mediation Court Visit Review of joinder Class Actions Subject matter jurisdiction – Federal question jurisdiction Introduction to – Diversity Jurisdiction – Supplemental Jurisdiction

2. Misc. – Dean Jones re 1L Electives – Court Visit Comments? Questions? – Mock Mediation next Friday, 10AM-11:50 Go to rooms on chart – Do not go to Rm 3 Questions? 2

3. Assignment I Settlement and Fees in A Civil Action – A Civil Action, pp. 146 to end Especially pp. 146, 154-55, 213-14, 249-51, 280, 405-10, 446-54 – Questions to think about / Writing Assignment for Group 4 In what ways does A Civil Action confirm the validity of Polinsky’s economic model of settlement? In what ways does A Civil Action contradict Polinsky’s economic model of settlement or suggest that the real world is more complex than that model? Given the settlement, how did they calculate how much Schlichtmann and the other lawyers received? 3

4. Assignment II Diversity Jurisdiction – 28 USC 1332 Focus on 1332(a) 1332(d) is the Class Action Fairness Act (2005) – 28 USC 1369 (skim) – Yeazell p. 220. – Optional. Glannon Ch 5 Supplemental Jurisdiction – Read 28 USC 1367 very carefully – Test for Supplemental Jurisdiction (handout) – Questions to think about / Writing Assignment for Group #5 Supplemental Jurisdiction Questions on pp. 3-4 of handout Optional – Glannon. Ch. 16, 17 4

5. Review of Joinder – Tradeoff Efficiency of processing claims together versus complexity – In general Easier to add claims against persons already part of law suit Harder to add new parties – Joinder always allowed (and mandatory if same transaction or occurrence) Joinder of claims. Rule 18 Counter claims. Rule 13 – Joinder allowed if same transaction or occurrence Joinder of parties. Rule 20 Cross-claim. Rule 13(g) Addition of party to counterclaim or crossclaim. Rule 13(h) Claim by 3 rd party defendant against original plaintiff. Rule 14(a)(2)(D) Claim by original plaintiff against 3 rd party defendant. Rule 14(a)(3) – Impleader. Rule 14(a) Impleading of 3 rd party defendant allowed if 3 rd party defendant would be liable to 3 rd party plaintiff for some or all of judgment, if original plaintiff prevailed against 3 rd party plaintiff (original defendant). Rule 14 Indemnity or contribution – Judge always has discretion to sever or consolidate. See FRCP 21, 42 5

6. 3 rd Party Claims (cont.) 3 rd party plaintiff may join any claims it has against the 3 rd party defendant. FRCP 18(a) 3 rd party defendant can assert any counterclaim against 3 rd party plaintiff. 14(a)(2)(B) 3 rd party defendant can assert claim against original plaintiff, if it arises out of the same transaction or occurrence as the plaintiff’s claim against third-party plaintiff. 14(a)(2)(D) Plaintiff may assert claims against 3 rd party defendant that arise out of the same transaction or occurrence as the original claim – Then 3 rd party defendant may then assert any counterclaims. FRCP 14(a)(3) Including permissive counterclaims, not part of same transaction or occ. Original plaintiff Original Defendant 3 rd party plaintiff 3 rd party defendant Original claim 3 rd party claim

7. 7 Class Actions I Class Action is super joinder device – Way of joining lots of plaintiffs (or defendants) – Single lawyer represents all – Consent from each plaintiff not required – “Class representative” is “named plaintiff” Usually chosen by class lawyer Advantages – Low cost as compared to lots of individual suits – Allows case to be brought where each plaintiff has stake that is too small to justify individual suit But where, in aggregate, significant wrong has been done Disadvantages – Class lawyer does not always act in interest of class May be more interested in fees for self than in relief for class – Large magnitude of potential liability may “coerce” defendants into settling weak claims

8. 8 Class Actions II Class actions must be “certified” – Plaintiff’s lawyer first brings regular (non-class-action) case on behalf of named plaintiff(s) – Plaintiff’s lawyer then petitions judge to certify class Prerequisites for class action – 1. Numerosity. Class is so large that joinder (under Rule 20) is not practical. 23(a)(1) – 2. Commonality. There are questions of law or fact common to all class members. 23(a)(2) – 3. Typicality. The class representative(s) have claims which are typical. 23(a)(3) – 4. Adequacy. The class representative(s) can adequately represent class. 23(a)(4) Technically about parties. In reality, about class lawyers. Also, no conflicts of interest. – 5. Case must fit into one of 23(b) categories See next page

9. 9 Class Actions III 23(b) categories – (b)(3). Primarily for money damages E.g. mass tort Common issues must “predominate” Class action must be “superior to other available methods for fairly and efficiently adjudicating the controversy” – (b)(2). Injunctive or declaratory relief appropriate for whole class E.g. desegregation, prison conditions – (b)(1). Risk of inconsistent litigation E.g. limited fund or conflicting injunctions Not very common Interlocutory appeal of certification decision. 23(f) – Grant or denial – Discretionary with court of appeals

10. 10 Class Actions IV Notice and Opt-Out. 23(c)(2) – Only (b)(3) requires “best notice that is practical under the circumstances” – Only (b)(3) requires the class members be given the opportunity to “opt out” Settlement with court approval only. 23(e)

11. 11 Class Action Qs Yeazell Pp. 865ff. Qs 1, 2 Summarize Walmart Why do you think the plaintiffs brought the case as a 23(b)(2) class action rather than a 26(b)(3) class action? What do you think the plaintiffs lawyers in Walmart should have done after the Supreme Court decision in Walmart? Enrom manipulated the price of its stock by failing to disclose information that would cause share prices to fall. Would a class action alleging violation of federal securities law against Enrom on behalf of all shareholders who purchased stock during the period when the information was being withheld be appropriate? RhinePool supplied blood to hemophiliacs, but failed to screen adequately for HIV. As a result, many hemophiliacs in dozens of states got AIDS and some died. Would a product liability class action against RhinePool on behalf of all hemophiliacs who contracted AIDS as a result of contaminated blood produced by RhinePool be appropriate?

12. Introduction to Subject Matter Jurisdiction I – Federal courts have limited jurisdiction Can hear only cases allowed by Constitution and statute Constitution sets outer limit of jurisdiction – But congress can choose to give courts less Constitution is not “self-executing” – Need statutory as well as constitutional authority – 2 principle categories Diversity – Plaintiff and defendant are citizens of different states – Complete diversity rules » No plaintiff is citizen of the same state as any defendant – Alienage » One party is US citizen, other party is foreign citizen Federal question – Cases arising out of federal statute or constitution – Other categories Admiralty Special statutes, such as 28 USC 1338 (patents, copyrights, etc) 12

13. Introduction to Subject Matter Jurisdiction II – Federal jurisdiction is usually “concurrent” Plaintiff can bring case either in federal court or state court – State courts can adjudicate issues of federal law or relating to treaties or the US Constitution – Sometimes, federal jurisdiction is “exclusive” Plaintiff cannot bring case in state court – If statute is silent on whether jurisdiction is concurrent or exclusive, it is concurrent See 28 USC 1331. Federal question jurisdiction – If jurisdiction is exclusive, statute will be explicit 28 USC 1338. “No State court shall have jurisdiction over any claim for relief arising under any Act of Congress relating to patents… or copyrights” – But does not specifically exclude state jurisdiction over trademarks, so states have concurrent jurisdiction. 13

14. Introduction to Subject Matter Jurisdiction III – Subject matter jurisdiction must be plead. See FRCP 8(a) & Form 7 Jurisdictional statement is about subject matter jurisdiction (not personal jurisdiction) – If court does not have subject matter jurisdiction Defendant can bring motion to dismiss under FRCP 12(b)(1) Court can (and must) dismiss, even if defendant does not make motion – Judge Snyder mentioned that her clerks (or externs) perform a subject matter jurisdiction check of every case – Case can be dismissed for lack of subject matter jurisdiction at any time Issue is never waived. Issue can be raised for the first time in appellate court – By judge or party 14

15. Removal – If jurisdiction is concurrent, plaintiff can choose federal or state court But if defendant prefers federal court, it can “remove” the case to federal court. 28 USC 1441 – Removal is proper whenever a case could have been brought initially in federal court. 28 USC 1441(a) Except, in diversity cases, when the defendant is a citizen of the state in which sued. 28 USC 1441(b) 15

16. Federal Question Jurisdiction – Permissible because allowed by US Constitution, Article III “The judicial Power shall extent to all Cases …. Arising under this Constitution, the Laws of the United States, and Treaties….” – Authorized by 28 USC 1331 “The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties….” – What are cases “arising under” the US Constitution, federal law, or treaties Same words used in Article III and 28 USC 1331, but have different meaning In Article III: any case in which US constitution, federal statute, or treaty needs to be interpreted In 28 USC 1331: any case in which US constitution, federal statute, or treaty created the cause of action – E.g. if complaint would mention or implicitly refer to US Constitution, federal statute, or treaty » Well-pleaded complaint rule. Louisville & Nashville Railroad v Mottley – Not sufficient that federal issue is a defense » Defense would be raised in answer, not complaint 16

17. 17 Federal Question Jurisdiction Questions Summarize Louisville. – Your summary should include the answer to Yeazell. P. 213 Q1 Under the FRCP as it exists today – If plaintiff had drafted a “well pleaded complaint,” what would have been the key allegations of that complaint? – If plaintiff had drafted a well-pleaded complaint, what paper would defendant have filed in response? What would have been the key elements of that paper? – How would plaintiff have raised the unconstitutionality the Act of Congress which the defendant alleges prohibited giving the passes that the railroad gave the Mottleys? – If defendant’s answer had admitted that it had given passes to the Mottleys, but argued that they were invalid, what motion would the plaintiff have had to make in order to get the Court to grant the Mottleys the relief they requested without discovery or trial? Yeazell p. 213 Q3

18. 18 Subject Matter Jurisdiction in State Court A 2 nd meaning of subject matter jurisdiction is the jurisdiction of a specialized court – E.g. jurisdiction of family court, bankruptcy court, tax court, probate court, small claims court 2 nd meaning is generally more important in state court Unlike federal courts, state courts can generally hear any cause of action – U.S. Constitution does not limit jurisdiction of state courts – Although some statutes give federal courts exclusive jurisdiction And thus bar state court jurisdiction – So don’t need to think about diversity jurisdiction or federal question jurisdiction to determine state court subject matter jurisdiction – State constitutions or statutes may limit state court jurisdiction State are free to set up court systems as they please – Most have more specialized courts than federal courts Probate, small claims court, family court – Non-specialized state court is usually called “superior court” But in NY called “supreme court” – Highest appellate court in NY called “Court of Appeals”

19. 19 Diversity Jurisdiction I Federal subject matter jurisdiction if – Citizen of State A sues citizen of state B – AND “amount in controversy exceeds … $75,000” Rationale – Concern about state court bias against non-citizens – Concern about anti-corporate bias of state courts – Federal forum for disputes with inter-state/national implications US citizen is citizen of US state in which “domiciled” – Domicile = residence with intent to remain indefinitely “indefinitely” means no plans to leave, even if don’t plan to stay permanently – Individuals do not lose domicile in one state until establish domicile somewhere else – Student who grew up in MA and went to school in IL and CA may still be citizen of MA, even if hasn’t lived there for 10 years, as long as never intended to remain indefinitely in IL or CA Corporations are citizens of two places – State of incorporation – State of principal place of business (PPB) PPB = “nerve center” or headquarters. Hertz (2010) – Means LESS likely to get diversity jurisdiction If individual citizen of CA sues corporation incorporated in Delaware with PPB in CA, then no diversity jurisdiction Similarly, if individual citizen of Delaware sues….

20. 20 Diversity Jurisdiction II Removal allowed if case could have been brought initially in federal court AND defendant is NOT from forum state – CA sues MA in MA court for $80,000, MA defendant cannot remove to federal court, even though CA plaintiff could have brought case in federal court Complete diversity rule – No plaintiff can be a citizen of the same state as any defendant MA v CA & MA, no diversity jurisdiction MA & CA v MA, no diversity jurisdiction MA & CA v NV, diversity jurisdiction AL & AK & CA & DE v AL & FL & KS & MO & NH & NM & OH – NO diversity jurisdiction – Rationale In-state party protects out-of-state party – Doesn’t make sense, because co-defendants may have divergent interests Reduce federal caseload – Not constitutionally required Congress could change by statute…. and has – see CAFA Similar to status of well-pleaded complaint rule

21. 21 Diversity Jurisdiction III Also diversity jurisdiction if – Suit between citizen of US and foreigner (citizen or subject of foreign state). 28 USC 1332(2) CA v. France; MA v Germany, etc. Called “alienage jurisdiction” – Alien admitted to US for permanent residence treated like citizen of the state in which domiciled CA v French permanent resident domiciled in MA. Diversity CA v French permanent resident domiciled in CA. No diversity If no diversity, can, of course, still get federal jurisdiction through federal question Even if diversity of citizenship, must still show personal jurisdiction & venue

22. 22 SMJ in Complex Litigation I In general, subject matter jurisdiction determined independently for each claim – Unless there’s an exception that specifically covers the situation – Joinder does not give subject matter jurisdiction Some relaxation of complete diversity rule – In class actions, complete diversity is determined by considering ONLY citizenship of named plaintiff(s) Suppose named plaintiff is from CA and defendants are from NV and MA, there is diversity jurisdiction, even if plaintiff class includes plaintiffs from NV and/or MA Manipulable by plaintiff who wants or does not want federal jurisdiction – Federal SMJ in any non-securities class action where any member of plaintiff class is a citizen of a state different from any defendant, IF amount in controversy exceeds $5,000,000. 28 USC 1332(d). With discretion to decline jurisdiction for reasons in (d)(3) and (d)(4) Removable only if 100 or more plaintiffs. (d)(11)(A) This is relatively new statute. Class Actions Fairness Act (2005) – Federal SMJ in cases involving death of at least 75 people, if minimal diversity and “substantial part of accident” took place in state other than defendant’s residence, or any two defendants reside in different states, or substantial parts of the accident took place in different states. 28 USC 1369

23. 23 SMJ in Complex Litigation II Aggregation of amount in controversy – Can meet amount in controversy requirement by adding together amounts in controversy for several claims? – Relevant for diversity jurisdiction only – See Yeazell pp. 232ff – Single plaintiff may aggregate claims against single defendant – 2 or more plaintiffs may aggregate claims against 1 or more defendants only if their claims are part of a common undivided interest – In class actions, sufficient that one member’s claim meets the amount in controversy requirement But cannot aggregate if no member meets the amount in controversy requirement – Except under CAFA (5m total; removal only if 100 or more plaintiffs) – Origin and current status of aggregation rules unclear May be displaced by supplemental jurisdiction statute Supplemental Jurisdiction – Monday’s class Removal – All defendants must ordinarily consent to removal. 1446(b)(2)(A)