1. Agenda for 17th Class Admin Name plates Handouts Slides Choice of Law
Mock Mediation on Friday
Go directly to room on chart
Review of last class
Subject matter jurisdiction
Federal question jurisdiction
Diversity Jurisdiction
Supplemental Jurisdiction
Introduction to
Erie

2. Assignment for Next Classes
Assignment for Friday
Prepare for mock mediation, discuss first offer with opposing side
Assignment for Friday afternoon
me,
One per mediation group
Cc all group members (team and opposing team)
Subject line: Mediation results
Content
If settled: Terms of settlement
If did not settle. Last P and D offers
Optional: Feedback on mock mediation and mediator
Assignment for Monday
Erie Doctrine
28 USC 1652, 2072
Yeazell ,
Questions on next 2 slides
Optional. Glannon Chapters 10 and 11
Choice of Law
Readings in packet
Blackboard questions on Choice of Law
Questions on 4 “Choice of Law Slides Questions” slides

3. Erie Questions I
1. (WG1) 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?

4. Erie Questions II
2. (WG2) 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)

5. Choice of Law Questions I
Note that the Questions on this slide are on Blackboard.
1) Suppose Wes, a resident of West Dakota, gets into an accident with East, a resident of East Dakota, on a highway in West Dakota. Wes sues East in West Dakota state court alleging per se negligence because East was driving 79 miles per hour. No speed limit was posted. West Dakota law states that, unless otherwise posted, the speed limit on a highway is 70 miles per hour. East Dakota law, however, states that, unless otherwise posted, the speed limit on a highway is 80 miles per hour. 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?
2) Same as (1) except Wes sues in West Dakota federal district court.
3) Same as (1) except Wes sues in East Dakota state court.

6. Choice of Law Questions II
4) (WG3) 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) (WG3) Same as (4), except Passenger sues in West Dakota federal court.
6) (WG4) Same as (4) except Passenger sues in East Dakota state court.

7. Choice of Law Questions III
7) (WG5) 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) (WG6) Same as (7), except Sharkey sues in California state court.
9) (WG7) 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.

8. Choice of Law Questions IV
10) (All WGs) Same as (7), except the 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 (2nd) 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.

9. 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
Counterclaims. 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 3rd party defendant against original plaintiff. Rule 14(a)(2)(D)
Claim by original plaintiff against 3rd party defendant. Rule 14(a)(3)
Impleader. Rule 14(a)
Impleading of 3rd party defendant allowed if 3rd party defendant would be liable to 3rd party plaintiff for some or all of judgment, if original plaintiff prevailed against 3rd party plaintiff (original defendant). Rule 14
Indemnity or contribution
Judge always has discretion to sever or consolidate. See FRCP 21, 42

10. Review of Class Actions
4 requirements under Rule 23(a)
Numerosity
Commonality
Typicality
Adequacy
2 additional requirements for damages class actions, 23(b)(3)
Predominance
Superiority
Rhone-Poulenc
Concern that defendants may be coerced into settlement very large class action
Predominance may not be satisfied if several states’ laws apply
Superiority may not be satisfied where each plaintiff has large enough claim to bring separate suit
Walmart
Commonality means there are common issues of law or fact in dispute
Depends both on substantive law and what actually in dispute in particular case
Walmart, Rhone-Poulenc, and other recent cases
Hostility to large class actions

11. 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 
Supplemental jurisdiction allows jurisdiction over claim which would not, alone, be within federal subject matter jurisdiction
If closely related to claims which have subject matter jurisdiction
AND if would not substantially weaken the complete diversity rule

12. 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 plaintiffs had drafted a well-pleaded complaint and the case had not been dismissed for lack of subject matter jurisdiction, what pleading would defendant have filed in response? What would have been the most important part of that pleading?
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

13. 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)

14. Subject Matter Jurisdiction in State Court
A 2nd 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
2nd 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”

15. Diversity Jurisdiction III
Federal subject matter jurisdiction if
Plaintiff and defendant are citizens of different states
Individuals. Citizenship = Domicile = residence + intent to remain
Corporations. Citizenship = place of incorporation AND principal place of business (nerve center)
Complete diversity rule
No plaintiff may be a citizen of the same state as any defendant
Can be relaxed by Congress
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

16. Supplemental Jurisdiction
Exception to general rule that need to show independent ground for subject matter jurisdiction over each claim and each plaintiff-defendant pair.
Need to serve process on each defendant separately following FRCP 4
Each defendant must serve an answer
See problems on handout

17. Introduction to Erie
In diversity cases, federal court applies state substantive law
State statutes
State court interpretations of common law
BUT federal court applies FRCP and other aspects of federal procedure
Note that situation was completely different before 1930s
Federal courts applied state procedure
FRCP did not exist
Federal courts applied their own interpretations of the common law
“general common law” (Swift v Tyson)
Only applied state substantive law if embodied in statute

18. Introduction to Choice of Law I
Courts do not always apply their own law
Federal courts apply state law in diversity cases
State courts apply federal law when required by the Supremacy Clause
Sometimes one state court applies the law of another state
If MA citizen gets into accident in CA and is sued in MA, MA court is likely to apply CA traffic law
If NY citizen and UK citizen get married in UK and then move to NY, UK law may govern validity of marriage
Choice of law (a.k.a. conflict of law) answers the question “whose law applies?”
MA or CA law
US or UK law
Choice between federal or state law is not usually considered choice of law question
Rather Erie, Supremacy Clause, or preemption question
Major change in 20th century
Traditional rules. Rigid, territorial
Modern rules. Evaluations of interests of relevant states
Restatement 2nd

19. Introduction to Choice of Law II
Old rules (1st Restatement)
Different rules for different areas of law
Torts: lex loci commissi / Lex loci delictus (law of place of accident)
If car accident in CA, then CA law applies
Some ambiguity about situations where defendant’s negligence took place in different state than harm to plaintiff
E.g. If D negligently manufactured car in MI which caused accident in CA, would CA or MI law apply?
In general, courts held that place of harm rather than place of negligence was key
Contracts
Place of formation, if issue was whether contract properly entered into
Place of performance, if issue was whether contract breached
Choice of law clauses not generally enforced

20. Introduction to Choice of Law III
Modern rules
Many different versions
Restatement Second, “most significant relationship”
What relationships count in tort?
Place of injury, Place where conduct causing injury occurred
Domicile, residence, nationality, place of incorporation, place of business of plaintiff and defendant
Not clear which factor dominates in any case
May consider “interests” of various states in applying their law
Plaintiff’s state has interest in applying own law, if favors plaintiff
But not if favors defendant
Defendant’s state has interest in applying own law, if favors defendant
But not if favors plaintiff
Similar factors for contract and other areas of law
Choice of law clauses generally enforced
But complicated rules governing enforceability
Federal court in State X applies X’s choice of law rules. (Klaxon)
Only relevant in diversity cases
If federal question, apply federal law