Civ Pro Cases

Dusenberry v. United States (The Requirement of Reasonable Notice)

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Shire Labs., Inc. v. Barr Labs. (Interrogatories & Admissions)

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Viacom v. YouTube Order dated July 1, 2008 (Sanctions)

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W. Zeidler, Evaluation of the Adversary System As Comparison, Some Remarks on the Investigatory System of Procedure (What Process is Due? The Choice of a Procedural System)

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National Equipment Rental, Ltd. v. Szukhent (Commencement and Notice)

1964) Rule of Law It is not a violation of due process to serve process to the agent of a party to a contract, when the party has consented to that arrangement in the contract. Facts In 1961, Szukhent (defendant) executed a lease with National Equipment Rental, Ltd. (National) (plaintiff) for the rental of farm equipment. The document was a 1.5 page form lease consisting of 18 numbered paragraphs. The final paragraph in the document assigned Florence Weinberg, an officer at National, as an agent for the purposes of accepting service under the agreement. Szukhent did not know Weinberg, but signed the lease, indicating he agreed with the terms. One year later, National brought suit against Szukhent, alleging that Szukhent had failed to make any payments on the lease. National served Weinberg with the summons and complaint as the agent assigned to Szukhent under the lease, and Weinberg promptly notified Szukhent of the service; National also notified Szukhent that Weinberg had accepted service. Szukhent filed a motion to quash the service, and the district court granted the motion, finding that the agency arrangement between Szukhent and Weinberg was faulty. The court of appeals affirmed, and the United States Supreme Court granted certiorari. Issue May a party to a contract appoint an agent to accept service of process under that contract, even if the party has not met the agent and the agent is not explicitly required to convey notice to the party? Holding and Reasoning (Stewart, J.) Yes. A party to a contract may appoint an agent to receive service of process on his behalf. Parties to a contract have the flexibility to memorialize their intents—and may agree to resolve any disputes arising under the contract in one jurisdiction over another—to allow an agent to accept service of process, or to waive process outright. Furthermore, even if a contract clause does not obligate the designated agent to inform the party of the service of process, agency law dictates that if the agent does promptly inform the party of the service, this act will validate the agency relationship. In this case, the parties contractually agreed that Florence Weinberg would be Szukhent's agent for the purposes of receiving service of process, and Weinberg fulfilled that duty by promptly informing Szukhent that she had done so. There can be no due process violation, as Szukhent was given notice of the service. Although Szukhent argues that Weinberg has a conflict of interest due to her position as an officer at National, her function as Szukhent's agent for the purposes of receiving service of process is too narrow to create a conflict. Because Szukhent has been properly served, the holding below is reversed and remanded. Dissent (Black, J.) This holding gives large corporations free reign in their un-bargained for contracts with individual consumers. The majority's decision allows corporations to include into their boilerplate contracts clauses that will require individual litigants to travel unreasonable distances at substantial cost in order to defend themselves. These agreements amount to a waiver of the litigants' constitutional rights, but it cannot be said that this waiver is knowingly and deliberately made, as is required to make the waiver valid. Dissent (Brennan, J.) A printed form, provided by a salesperson and signed by a consumer, is not the same as a contract formed by a meeting of the minds. The mere fact that Szukhent signed the form, without more, does not mean he intelligently agreed to all of its terms.

World-Wide Volkswagen Corp. v. Woodson (PJ Due Process)

1980) Rule of Law Foreseeability alone is not sufficient to authorize a state court's assertion of personal jurisdiction over a non-resident defendant that has no contacts, ties, or relations with the forum state. Facts Harry and Kay Robinson purchased a car from World-Wide Volkswagen Corp. (World-Wide) in New York while they were still residents of that state. The next year the family left New York to move to Arizona. On the way they were struck by a car in Oklahoma. Mrs. Robinson and her children were severely burned in the car crash. The Robinsons brought a products-liability suit against World-Wide, claiming that the fire was a result of the defective design of the car. World-Wide made a special appearance to the district court, claiming that Oklahoma's exercise of jurisdiction over them violated the company's due process rights. World-Wide, a New York corporation, conducted no business in the State of Oklahoma. The district court ruled against World-Wide. World-Wide (plaintiff) then sought a writ of prohibition in the Supreme Court of Oklahoma to stop the district court's Judge Woodson (defendant) from exercising personal jurisdiction over them. The Supreme Court of Oklahoma denied the writ. World-Wide then petitioned the United States Supreme Court and the case was granted certiorari. Issue Is foreseeability alone sufficient to authorize a state court's assertion of personal jurisdiction over a non-resident defendant that has no contacts, ties, or relations with the forum state? Holding and Reasoning (White, J.) No. The due process clause of the Fourteenth Amendment limits the power of a state court to assert personal jurisdiction over a non-resident defendant. See Kulko v. Superior Court, 436 U.S. 84 (1978). According to the court in International Shoe Co. v. Washington, 326 U.S. 310 (1945), a state court may only exercise personal jurisdiction over a non-resident defendant if the defendant has sufficient contacts with the forum state. The relationship between a non-resident defendant and the forum state must be such that it is reasonable to require the non-resident to come to the state to defend the action. Here, the plaintiffs had no contacts, ties, or relations with the State of Oklahoma. The only basis for the district court's assertion of personal jurisdiction over the plaintiffs is the fact that the automobile, which was sold in the State of New York to New York residents, was involved in an accident in Oklahoma. That the plaintiffs could foresee the automobile's use in Oklahoma is not sufficient to authorize the state court's assertion of personal jurisdiction. In Kulko, the court explained that foreseeability in a due process analysis refers to whether the defendant's contacts with the forum state are such that he should reasonably expect being subject to the jurisdiction of the state's courts. In this case, because the plaintiffs conducted no activities in Oklahoma, it is unreasonable to say that they should have anticipated being haled into an Oklahoma state court. Accordingly, the judgment of the Supreme Court of Oklahoma is reversed. Dissent (Brennan, J.) When determining its personal jurisdiction over a non-resident defendant, a court may consider the interest of the forum state in proceeding with the case, and the actual burden the defendant must bear in defending the action in the state, in addition to the defendant's contacts with the state. See McGee v. International Life Insurance Co., 355 U.S. 220 (1957). Further, the minimum contacts test established in International Shoe may be outdated. Given modern realities, fairness and reasonableness no longer require the extreme concern for non-resident defendants that was necessary at the time that case was decided. Here, the State of Oklahoma has a legitimate interest in proceeding with this case because it involves the enforcement of its traffic laws. Additionally, defending this action in Oklahoma would not unduly inconvenience the plaintiffs. Finally, the plaintiffs are not wholly unconnected with the State of Oklahoma. They sell automobiles that, by their very nature, are mobile and capable of traveling to distant states. Therefore, when the plaintiffs sold the automobile to the Robinsons, they purposefully injected the automobile into the stream of interstate commerce. In cases such as this, where the non-resident defendant's contacts with the forum state are less significant, but the state has a strong interest in proceeding with the case and the defendant is not unfairly burdened by defending the action in the forum state, a state court's assertion of personal jurisdiction over the defendant may be justified.

Connecticut v. Doehr (Values & Costs of Due Process)

(1991) Rule of Law A statute allowing pre-judgment attachment of property must require a bond be posted or a hearing be held prior to the attachment unless there is a danger that the defendant will hide, damage, or otherwise impair the plaintiff's ability to attach the property. Facts Connecticut law permits a plaintiff in a civil suit to obtain a pre-judgment attachment of a defendant's property without a pre-attachment hearing or the filing of a bond. The statute does not require a defendant be informed that the application for attachment has been filed until it has been granted. In 1988, Brian K. Doehr (defendant) was sued for assault and battery. Concurrent with the filing of the complaint John F. DiGiovanni (plaintiff), filed an application for a pre-judgment attachment of Doehr's house in the amount of $75,000. The attachment was granted. When Doehr was informed of the attachment, he filed suit in the United States District Court for the District of Connecticut challenging the statute on Due Process grounds. The district court upheld the statute. Doehr appealed and the state of Connecticut intervened in the litigation. The United States Court of Appeals for the Second Circuit reversed the district court. Issue Can a plaintiff in a civil suit obtain a pre-judgment attachment of a plaintiff's property without posting a bond, a pre-attachment hearing, or any notice to the defendant? Holding and Reasoning (White, J.) No. The use of pre-judgment attachment, even in a civil suit between two private parties, implicates Fourteenth Amendment Due Process concerns due to the participation of state machinery in the actual attachment of the property. This case involved two private parties, rather than a private party and the government, and the applicable test to use is to examine (1) the nature of the private interest that is affected by the attachment (2) the possibility of a defendant improperly losing the use of his property and whether there are safeguards to protect against that outcome and (3) the interest of the party seeking the attachment along with that of the government in having to provide other procedures for attachment. Under this test, the private interest at stake is the ability to enjoy one's property during the course of a civil suit. Simply because a complaint has been filed does not necessarily mean that there will be a negative result for the defendant. Therefore, the denial of the use of property during the course of a suit injures the defendant. In examining the Connecticut statute, there are few safeguards that truly protect a defendant from erroneous attachment, including a post-attachment hearing, a notice of said hearing, and double damages if a suit is commenced without cause. These safeguards, however, do not sufficiently protect the interests of a defendant in the same manner that a pre-attachment hearing or bond would. The fact that virtually every other state requires one or both of these prior to attachment is evidence of the simplicity of implementing these measures. However, there are some instances in which measures similar to the Connecticut law at issue would be proper, namely when there is a risk of the defendant damaging the property or somehow removing it from the jurisdiction. This threat is not present here. Finally, simply posting a bond would not be sufficient to satisfy Due Process concerns. Rather, a state must permit a hearing prior to an attachment unless there is a showing of exigent circumstances. Concurrence (Rehnquist, C.J.) The Court's discussion of the limits of Due Process's requirements is a departure from the facts of the case. The majority is correct in noting that Due Process analysis is necessarily fact-dependent and in keeping with that, any judicial analysis of its limits should be bounded by the facts of a given case. Concurrence (Scalia, J.) The majority in this case failed to adopt the proper test in analyzing the Due Process implications of the Connecticut statute. Rather than adopting its three-part test, the Court should have substituted the third factor for an analysis of the government's interest. Given that this procedure was erected by statute rather than common law, this review of the government's interest is proper. In spite of the differing tests, the Connecticut statute fails to comply with the demands of Due Process.

Jones v. Flowers (The Requirement of Reasonable Notice)

(2006) Rule of Law When a state is attempting to serve a citizen with process, it must take reasonable steps to serve the notice if service by mail is ineffective. Facts Gary Jones (plaintiff) owned a house at 717 North Bryan Street in Little Rock, Arkansas. Beginning in 1997, he began to fail to pay property taxes on the house. After three years of delinquency, the Commissioner of State Lands, Mary Wilcox (defendant) sent a letter via certified mail to Jones' address, informing him of his delinquency and that he had two years to pay his back taxes or the property would be sold. The letter was returned as "unclaimed." Two years after the letter was returned, Wilcox published a notice of public sale in the Arkansas Democrat Gazette. The advertisement did not receive a response, so a private sale of the property was arranged with Linda Flowers (defendant). Prior to the completion of the sale, Wilcox sent another letter to Jones, which was also returned as "unclaimed." Flowers then purchased the house and personally served a detainer notice on the property, which was accepted by Jones' daughter. Jones was notified and sued in Arkansas state court, arguing that the form of service employed by Wilcox was a constitutionally inadequate form of notice. The trial court granted summary judgment in favor of Flowers and Wilcox, which was affirmed by the Arkansas Supreme Court. Issue Is notice by mail of a tax sale, when ineffective, constitutionally sufficient to provide notice to a litigant? Holding and Reasoning (Roberts, C.J.) No. While reliance on service by mail is not unreasonable on its face, there are instances when the state is required to enlist other forms of service. When the state is aware that service by mail has failed, it must take other reasonable steps to ensure that service is achieved. When a certified letter is returned as "unclaimed," the situation is no different than if a state employee had seen a letter fall out of the postman's bag and into a storm drain. The state is aware that service by mail completely failed. That was the case here. When that occurred, the state is tasked with enlisting certain reasonable steps that would ensure service is achieved, particularly when, as here, the state had nearly two years between when it learned that mail service had failed and when the sale of Jones' property was to take place. Examples of reasonable steps include sending notice by regular mail, sending notice simply to "Occupant," or posting notice on the front door of the house. These steps would make it more likely that service would be achieved. What would not be considered reasonable is to undertake a search through the phonebook or other government records to locate Jones' new address. Further, the fact that Wilcox placed an advertisement in the newspaper for the sale was not sufficient to constitute notice. Therefore, the decision of the Arkansas Supreme Court is reversed. Dissent (Thomas, J.) The majority should review the sufficiency of the notice to Jones from the perspective of the relevant government agency at the time the notice was sent. Since actual notice is not required, this standard does not require any other action from the state once the letter had been returned. Furthermore, many of the alternatives proposed by the majority are overly burdensome on the state's ability to transact business.

Wyman v. Newhouse (Commencement and Notice)

1937) Rule of Law A judgment obtained through fraud in one jurisdiction is void, and will not be enforceable in another jurisdiction. Facts Newhouse (defendant) was induced by Wyman (plaintiff) to fly from New York to Miami, Florida, to see Wyman on urgent business; Wyman claimed that she loved Newhouse, and that she wished to see him before she left for Ireland to care for her sick mother. When Newhouse arrived at Miami airport, he saw Wyman, who was accompanied by a deputy sheriff. The sheriff served him with a summons for a lawsuit, and a photographer attempted to capture the event on film. Newhouse left Miami that night and returned to New York. Upon advice of counsel, Newhouse ignored the summons and the Florida district court entered a default judgment against him. When Wyman attempted to enforce the judgment, the district court dismissed the action, and Wyman appealed. Issue Is service of process obtained through fraud valid, meriting full faith and credit in other jurisdictions? Holding and Reasoning (Manton, J.) No. If service of process is obtained through fraud, the service is not proper, and is therefore unenforceable. A judgment based on fraud, in this case the improper and fraudulently obtained service, is void. A void judgment does not merit full faith and credit, and therefore would not be enforceable in another jurisdiction. Here, Newhouse came to Florida solely based on the misrepresentations Wyman made to him; the sheriff was able to serve Newhouse only because he was induced by Wyman's fraudulent claims. A Florida court would likely vacate the default judgment against Newhouse, and therefore, the judgment should not be enforceable in another state. The decision of the lower court is affirmed.

Dioguardi v. Durning (Notice Pleading - The Complaint)

1944) Rule of Law A complaint must contain a short and plain statement of the claim showing that the pleader is entitled to relief. Facts Dioguardi (plaintiff) attempted to import medicinal tonics from Italy. He got into a dispute with his shipper as to how much he owed for the shipment and as a result, the Collector of Customs at the Port of New York (Durning) (defendant) held the tonics for one year and then sold them at public auction pursuant to federal law. Dioguardi brought suit, asserting in his "home drawn" complaint that (1) the Collector sold the bottles to another party for $10 less than the plaintiff bid at the auction, and (2) three weeks before the sale, two cases of the tonics disappeared, presumably at the fault of the Collector. The district court dismissed the complaint for failure to state a claim upon which relief could be granted. The plaintiff appealed. Issue Must a complaint state facts sufficient to constitute a specific cause of action? Holding and Reasoning (Clark, J.) No. A complaint does not have to state facts sufficient to constitute a cause of action. Under the new rules of civil procedure, a complaint now only must contain a short and plain statement of the claim showing that the pleader is entitled to relief. The standard for a Rule 12(b) motion to dismiss is that the complaint fails to state a claim upon which relief can be granted. The court must assume that the plaintiff's contentions in the complaint are true and then make its decision on a motion to dismiss based on that assumption. In this case, although the plaintiff's complaint is "inartistically" drawn, he has stated enough facts to withstand a motion to dismiss for failure to state a claim—even if he has not stated enough to withstand a potential future motion for summary judgment. Assuming the plaintiff's allegations to be true, the Collector improperly conducted the auction and improperly converted two of the plaintiff's bottles of tonic. These allegations, if true, would entitle the plaintiff to relief. Accordingly, dismissal for failure to state a claim is inappropriate. The district court is reversed and the case is remanded.

International Shoe Co. v. Washington (PJ Due Process)

1945) Rule of Law For a defendant not present within the territory of a forum to be subjected to a judgment in personam, due process requires that he have certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Facts The commissioner responsible for the assessment of and collection of contributions to the Washington state (plaintiff) unemployment fund served a notice of assessment on International Shoe (defendant), a manufacturer and seller of shoes and footwear, for failure to pay into the fund during the years 1937 to 1940. International Shoe was a Delaware corporation with its principal place of business in Missouri. The Commissioner served the notice of assessment upon a salesman employed by International Shoe in Washington State. International Shoe sought to set aside the notice on the grounds that it was not a corporation doing business in Washington, had no registered agent within the state, and was not an employer and did not furnish employment within the state as defined under state law. Issue For a defendant not present within the territory of a forum to be subjected to a judgment in personam, does due process require that he have certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice? Holding and Reasoning (Stone, C.J.) Yes. A state may subject a corporation to in personam jurisdiction where the corporation has such minimum contacts with the state as to make it reasonable to require the corporation to defend a suit there. A corporation is deemed to be "present" in a state for jurisdiction purposes when the activities of the corporation in that state have been continuous and systematic. Due process is violated where a state makes a binding judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations. However, to the extent that a corporation exercises the privilege of conducting activities within a state, giving rise to certain obligations, it is not unduly burdensome to require a corporation to respond to a suit brought within the state to enforce those obligations. In the present case, International Shoe's activities in Washington were systematic and continuous and resulted in a large volume of interstate business. Indeed, the obligation upon which this suit is based arose out of those activities. International Shoe employed salesmen who resided in Washington, whose principal activities were confined to the state, and who were compensated by commissions based on sales. These salesmen occasionally rented at International Shoe's expense rooms in hotels or business buildings within the state for exhibiting samples. It is clear that these activities establish sufficient contacts with Washington, to make it reasonable, under traditional notions of fair play and substantial justice, to permit the state to enforce the obligations which International Shoe has incurred there. The decision of the court of appeals is affirmed. Dissent (Black, J.) States have an unqualified right to tax and permit its citizens to sue corporations whose agents do business in those states. The Court's decision diminishes the power of states to afford judicial protection to their citizens.

Mullane v. Central Hanover Bank & Trust Co. (The Requirement of Reasonable Notice)

1950) Rule of Law Notice must be reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. Facts Central Hanover Bank and Trust Company (defendant) established a common trust fund, which pools multiple small trusts into one large fund for easier administration. Central Hanover petitioned the court for settlement of its first account as trustee. Beneficiaries of the trust were given notice by publication in a local newspaper in compliance with the minimum requirements of New York banking law. The court appointed Mullane (plaintiff) as special guardian of beneficiaries of the trust who had not appeared in response to the notice, and he objected that the notice was inadequate to provide due process. Nonetheless the court entered a final decree accepting the accounts, and Mullane appealed. Issue Whether publication in a local newspaper is sufficient notice of the pendency of an account settlement to beneficiaries of a common trust. Holding and Reasoning (Jackson, J.) No. The Due Process Clause requires that deprivation of life, liberty, or property by adjudication be preceded by notice and opportunity for hearing. The proceeding potentially deprives trust beneficiaries of property by cutting off their right to contest the administration of the trust and by having their income reduced by deductions for fees and expenses. Notice is constitutionally required to be reasonably calculated to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. Such notice must reasonably convey the required information and must offer any interested parties a reasonable time to come forward. Here, under the circumstances, the notice was reasonably calculated to notify potentially interested parties of the pending litigation whose interests or addresses were unknown to the trustee and gave them sufficient opportunity to come forward with their claims. The number of beneficiaries and their identities were difficult or impossible to track. There were numerous unknown beneficiaries, and the rights were likely often transferred to other parties. The cost of tracking down these numerous beneficiaries for personal notice was enormous, and this burden should not be placed upon Central Hanover. Mullane adequately represented the interests of the parties who could not be identified, and the notice given in the newspaper was sufficient under the circumstances. However, notice by publication does not satisfy due process where the beneficiaries' addresses and interests are known to the trustee. Here, the trustee has the names and addresses of the income beneficiaries represented by Mullane. There is no reason why the trustee should be permitted to dispense with a serious effort to inform these parties personally. Because the New York banking law permits notice by publication even to parties whose addresses and interests are known to the trustee, it is incompatible with the Fourteenth Amendment's due process provision. The judgment of the lower court is reversed and remanded for further proceedings.

Zielinski v. Philadelphia Piers, Inc. (Responding to the Complaint - Rule 12)

1956) Rule of Law A general denial is ineffective if some of the claims denied are true and not at issue. Facts Zielinski (plaintiff) was operating a forklift for J. A. McCarthy, Inc. when he was injured by Sandy Johnson. Zielinski sued Philadelphia Piers, Inc. (defendant) and alleged his injuries were caused by Sandy Johnson's negligent operation of a forklift owned by Philadelphia Piers. Zielinski alleged that Johnson was an employee and agent of Philadelphia Piers at the time of the accident. Sandy Johnson had worked for Philadelphia Piers for 15 years and was not aware that the company had transferred ownership of the operation and that he had in fact been working for Carload Contractors, Inc. (Carload). Johnson also mistakenly testified that he had been working for Philadelphia Piers at pretrial depositions attended by representatives of Philadelphia Piers, who had made a general denial of the allegations in the complaint but did not clarify that it had transferred the operation to Carload Contractors. Carload, Philadelphia Piers, and the insurance company that provided insurance to both companies were aware of Zielinski's error. Zielinski did not discover that he had sued the wrong company until the pretrial conference. Zielinski moved to estop Philadelphia Piers from denying the facts alleged in the complaint because the company had allowed him to believe that they were true, in effect anticipating a dismissal of the complaint based on false statements of the parties and suing the wrong party. Issue Whether a defendant should be estopped from denying alleged facts in a complaint if he has made an ineffective denial of those facts and knowingly allows a plaintiff to continue to rely on them. Holding and Reasoning (Van Dusen, J.) Yes. A defendant who knowingly makes inaccurate statements may be estopped from denying those statements at trial. A general denial is ineffective if some of the claims denied are true and not at issue. Philadelphia Piers should have made a specific denial of the parts of the complaint it knew to be false and should have admitted the parts that were true. A specific denial would have warned Zielinski of his mistake. Under Pennsylvania law, when an improper and ineffective answer has been filed and the time allowed to amend the answer has passed, a party will be estopped from denying the allegation and any improper allegations will be deemed as true. Philadelphia Piers does not have a right to knowingly foster a mistake by its acts of omission. Philadelphia Piers is estopped from denying the agency of Sandy Johnson and the company's ownership of the forklift. If Zielinski's complaint were dismissed he would be deprived of his day in court because the statute of limitations makes it such that Carload was beyond the point where it could be sued. The matter should be allowed to proceed against the proper party.

Conley v. Gibson (Notice Pleading - The Complaint)

1957) Rule of Law A complaint is sufficient as long as the plaintiff sets forth an assertion upon which relief may be granted, and specific, detailed recitations of fact are not necessary to survive a motion to dismiss. Facts In May 1954, Local Union No. 28 (Local 28) of the Brotherhood of Railway and Steamship Clerks (Brotherhood) entered into an agreement with the Texas and New Orleans Railroad (Railroad) to discharge 45 African American employees, allegedly as part of a reduction in force layoff. In fact, Local 28 had made an agreement with the Railroad to lay off the African American employees and hire white employees in their place; in rare instances, the African American employees were rehired, but with loss of seniority. Although the African American employees requested repeatedly for help from Local 28 regarding the discriminatory firings, Local 28 did not give them any protection. The evidence further suggested that Local 28 regularly did not provide the same level of representation to African American employees as white employees. Conley (plaintiff) and several other African American members of the Brotherhood brought a class action suit against the Brotherhood, Local 28, and several officers, including Gibson (defendant), alleging discrimination in violation of Conley's and other African American members' right under the Railway Labor Act to fair representation. Gibson filed a motion to dismiss, alleging that the complaint failed to state a claim upon which relief could be granted, thus failing the standard set forth in F.R.Civ.Pro. 12. The district court granted the motion, the United States Court of Appeals for the Fifth Circuit affirmed, and the United States Supreme Court granted certiorari. Issue Are general allegations, without specific facts to support them, enough for a complaint to survive a motion to dismiss for failure to state a claim? Holding and Reasoning (Black, J.) Yes. A complaint must not be dismissed for failure to state a claim unless it appears beyond a doubt that the plaintiff can present no set of facts to support his claim so that relief may be granted. The plaintiff is not required to set out a detailed recitation of the facts supporting his claim. The Federal Rules of Civil Procedure only require the plaintiff to give the defendant a short and plain statement of the claim, which will provide the defendant with fair notice of the claim against him and the grounds of that claim. In this case, Conley and the other plaintiffs have met this low bar. They allege that the Brotherhood and Local 28 discriminatorily failed to adequately represent them against the Railroad, based on their race. If this allegation is true, it is clearly race discrimination in violation of the Railway Labor Act and a claim upon which relief may be granted. Furthermore, these allegations, while not incredibly detailed, are sufficient enough to give Gibson and the other defendants notice of the claim against them and therefore meet the requirements of Rule 8. The decision of the court of appeals is reversed and the case is remanded.

David v. Crompton & Knowles Corp. (Responding to the Complaint - Rule 12)

1973) Rule of Law A court may deny a request to amend an answer if the amendment will result in undue prejudice to the other party. Facts David (plaintiff) was injured by a shredding machine. He brought suit against Crompton & Knowles Corp. (Crompton) (defendant). David's complaint alleged that Crompton designed, manufactured, and sold the machine in question to Crown Products Corporation (Crown), which was David's employer. In its answer to the complaint, Crompton stated that it did not have sufficient knowledge to admit or deny the allegation. Subsequently, Crompton moved to amend that answer and deny that it designed, manufactured, and sold the shredding machine. Crompton based its motion to amend on information it purportedly became aware of that indicated that the machine in question was designed, manufactured, and sold by James Hunter Corporation (Hunter) prior to Crompton's purchase of Hunter. Crompton claimed that it did not assume liabilities for the negligent design until after it acquired Hunter and therefore was not liable for the shredding machine. Issue May a court deny a request to amend an answer if the amendment will result in the expiration of the statute of limitations when the statute would not have otherwise expired in the ordinary course of the proceedings? Holding and Reasoning (Huyett, J.) Yes. As an initial matter, a denial on the ground of lack of knowledge is deemed an admission when the party obviously had the knowledge or information necessary to admit or deny the complaint. Therefore, because any liability Crompton assumed on account of its purchase of Hunter arose from the sale contract between Crompton and Hunter—and because Crompton clearly had access to and knowledge of that agreement—the court will treat Crompton's averment that it did not have sufficient knowledge to admit or deny David's complaint as an admission. As for whether Crompton can amend the answer being treated as an admission, a court may deny a request to amend an answer if the amendment will result in undue prejudice to the other party. In this case, David's complaint was filed 11 months before the expiration of the statute of limitations. However, Crompton's delay in denying liability allowed the statute of limitations to expire, thus precluding David from seeking compensation from another party. This delay is unduly prejudiced to David and, therefore, Crompton's motion to amend its answer is denied and Crompton's answer will be treated as an admission.

Shaffer v. Heitner (General Jurisdiction, Property, and the Problem of Consent)

1977) Rule of Law Quasi in rem jurisdiction may only be asserted when the interests of the persons in the property seized have sufficient contacts, ties, or relations to the state. Facts Heitner (plaintiff) brought a shareholder derivative suit in Delaware against the Greyhound Corporation, incorporated in Delaware, represented by Shaffer, alleging acts that took place in Oregon. Heitner also filed a motion for an order of sequestration of shares of Greyhound stock owned by the individual defendants named in the complaint, who move to vacate the sequestration order on the grounds that the ex parte sequestration violated their due process rights and that the property seized was not capable of attachment in Delaware. The court rejected this challenge on the ground that the suit was brought as a quasi in rem proceeding, which is traditionally based on seizure of property present in the jurisdiction rather than contacts between the defendant and the state. Issue Whether there must be sufficient contacts between the state and the interests of the defendants in the property seized before a court can exercise jurisdiction quasi in rem. Holding and Reasoning (Marshall, J.) Yes. Quasi in rem jurisdiction may only be exercised over a person if the interests of the person in the things seized meet the minimum contacts standard established for personal jurisdiction in International Shoe Co. v. Washington, 326 U.S. 310 (1945), which established the minimum requirements for exercising jurisdiction in a manner consistent with the Due Process Clause of the Fourteenth Amendment. Thus, if there were not the minimum contacts required by International Shoe, the Delaware sequestration statute deprived Shaffer of his property without due process. Here, the property seized was statutorily located in Delaware, but it did not have any relation to the subject matter of the litigation. The defendants had nothing to do with the state of Delaware; their only connection to it was that they had accepted directorial positions in a company incorporated in Delaware, but accepting these positions does not mean they can be taken to a Delaware court. Accordingly, Delaware's assertion of jurisdiction over the defendants was inappropriate and the judgment below is reversed. Concurrence (Stevens, J.) Purchasing stocks on the open market, where the purchaser may not know in what state the corporation is incorporated, is not a sufficient contact with the state to establish jurisdiction. However, the scope of the Court's decision is uncertain and might be applied inappropriately in other contexts. Concurrence (Powell, J.) The International Shoe rationale should not necessarily extend to other forms of property, such as real property, located within the state. Concurrence/Dissent (Brennan, J.) The International Shoe standard should apply to the case. However, in accepting positions with a Delaware corporation, the defendants elected to assume powers and to undertake responsibilities wholly derived from Delaware's rules and regulations, which amounted to sufficient contacts to justify exercise of jurisdiction.

Insurance Corp. of Ireland v. Compagnie Des Bauxites De Guinee (Specific Jurisdiction)

1982) Rule of Law A defendant in a civil action may submit to the jurisdiction of a court through many means, including through failing to follow discovery orders. Facts Compagnie des Bauxites de Guinee (CBG) (plaintiff) was a mining company that primarily performed mining activities in the Republic of Guinea. CBG is 51% owned by Halco, Inc., which operates in Pennsylvania. Halco assists CBG with administrative operations. In 1973, Halco procured business interruption insurance for CBG. $10 million of coverage was obtained from the Insurance Company of North America. The excess $10 million was obtained through a group of 21, primarily foreign, insurers (defendants). In February of 1974, CBG experienced an interruption of business in excess of $10 million. When the excess insurers refused to pay the claim, CBG sued in the United States District Court for the Western District of Pennsylvania. The excess insurers claimed the court lacked personal jurisdiction over them and made a subsequent motion for summary judgment on that basis. As part of the motion, CBG sought discovery involving the excess insurers' contacts with Pennsylvania. After several delays in producing the requested material, the court warned the excess insurers that if they continued to fail to produce the requested material, it would assume, pursuant to Rule 37(b)(2)(A) of the Federal Rules of Civil Procedure (FRCP), that there existed personal jurisdiction. The excess insurers did not produce the material and the court found that personal jurisdiction existed. Issue Can a court find the existence of personal jurisdiction when a defendant to an action merely fails to follow a court's order? Holding and Reasoning (White, J.) Yes. Rule 37(b)(2)(A) of the FRCP permits a federal judge to assume a fact that is at issue when a party to a suit refuses to comply with discovery orders. In this case, that fact at issue was whether or not the court itself possessed personal jurisdiction over the instant case. The requirement that a court possess personal jurisdiction constitutes a liberty interest on the part of a defendant. Given the nature of this requirement, it can be waived or submitted to by a defendant. By appearing before a court or litigating the case without challenging the court's jurisdiction, the defendant has submitted itself to the jurisdiction of the court. The protection of this jurisdiction is then one that can be waived through other avenues, such as the failure to comply with discovery orders, as was the case here. The excess insurers also raise the argument that they were not required to follow the discovery orders of the court since it had not yet established personal jurisdiction over them. That argument ignores the option the excess insurers had to ignore the proceedings, risk a default judgment, and later challenge the jurisdiction of the court. By participating in the proceedings of the court, the excess insurers permitted the court to exercise jurisdiction over them, if only during the process of their challenge of the court's jurisdiction. Therefore, the ruling of the trial court is affirmed. Concurrence (Powell, J.) The majority in this case has changed the scope of the minimum contacts requirement that is fundamental in civil procedure law. Instead, they have relegated the requirement of minimum contacts within a state to one of many factors in determining whether personal jurisdiction exists. Now, the majority's approach makes fairness the touchstone of determining whether or not personal jurisdiction exists. Rather than make these sweeping determinations, the Court should have just decided the case on the narrow basis that the District Court had the jurisdiction to hand down FRCP Rule 37 sanctions.

Greene v. Lindsey (The Requirement of Reasonable Notice)

1982) Rule of Law Service of process must comply with the minimum standards of the Due Process Clause by using a method that is reasonably calculated to provide the parties with notice of the proceedings. Facts Acting under a Kentucky statute which provided that notice of an eviction hearing could be posted on the premises of a defendant tenant if he cannot be found, Jefferson County Sherriff Joseph Greene (plaintiff) attached a writ of forcible entry and detainder (essentially an eviction hearing notice), on the doors of three tenants of a Kentucky housing project. The tenants, including Linnie Lindsey (defendant), did not appear for the eviction proceeding, and the court entered a default judgment against them. They brought a class action suit in district court against Greene and Jefferson County, alleging that they never received notice of the eviction hearings, and that the method used to notify them of the hearing was insufficient, in violation of due process. The district court, relying on an older, unreported opinion, granted Greene's motion for summary judgment. The Court of Appeals for the Sixth Circuit reversed, and the United States Supreme Court granted certiorari. Issue Does service of process through posting always provide sufficient notice to a party? Holding and Reasoning (Brennan, J.) No. Posting notice on the doors of tenants to inform them that they are facing eviction proceedings is not always sufficient notice of service of process. Notice must conform to the minimum standards of due process guaranteed by the Fourteenth Amendment. To comply with this standard, the method of service must reasonably attempt to inform the defendant that a proceeding will occur and give him an opportunity to present his case. While attaching notice to the property of a party can often achieve this requirement, this method is not appropriate in all situations. Here, Greene posted the notice on the doors of the three tenants potentially facing eviction. Greene was aware that it is not uncommon in that housing project for tenants or children to remove notices placed on other tenants' doors, thereby depriving them of the opportunity to see it. Service through the mail would have been a more reliable method of notice to these otherwise unavailable tenants, but Greene did not use this method; instead, he relied on a method he knew was less dependable. Because the method Greene used did not adequately provide notice of the eviction proceedings to Lindsey and the other tenants, the judgment of the Court of Appeals is affirmed. Dissent (O'Connor, J.) The forcible entry and detainder action is designed to be a fast process, and the process for serving notice of these proceedings must also be fast and effective, which posting is. It is not clear that using the postal service is a more effective method of serving process than posting, due to the possibility of mail losses and delays, and the potential for mailbox theft.

Calder v. Jones (PJ Due Process)

1984) Rule of Law Personal jurisdiction is proper over a defendant where the defendant has certain minimum contacts such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Facts The National Enquirer published an unflattering story about entertainer Shirley Jones. Jones brought suit for libel against the National Enquirer, its editor (Calder), and the writer of the story (South) (defendants) in a California court. Jones lived and worked in California; the National Enquirer was a Florida corporation and Calder and South were Florida residents. Calder and South objected to California's jurisdiction. The Supreme Court granted certiorari. Issue Is jurisdiction of a libel suit proper in a state where the victim of the libel lives and works? Holding and Reasoning (Rehnquist, J.) Yes. Personal jurisdiction is proper over a defendant where the defendant has certain minimum contacts such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. In the present case, while the "contacts," traditionally speaking, of Calder and South with California are fairly limited, the focal point of their article in question is California. The story was about the activities of Jones, a California resident, which generally if not exclusively occurred in California. In addition, most of the harm from the allegedly libelous statements in the article was suffered in California as that is where Jones suffered emotional distress and that is where her professional career allegedly suffered. Accordingly, even though Calder and Jones may not have minimum contacts with California as traditionally contemplated, California jurisdiction in this case is proper because of the effects of the defendants' Florida conduct felt in California. Accordingly, California jurisdiction is not unfair to the defendants.

Keeton v. Hustler Magazine, Inc. (PJ Due Process)

1984) Rule of Law Personal jurisdiction is proper over a nonresident magazine in any state where that corporation has sold and distributed a substantial number of copies. Facts Kathy Keeton (plaintiff), a resident of New York, sued Hustler Magazine, Inc. (Hustler) and others (defendants) for libel in the United States District Court for the District of New Hampshire under its diversity jurisdiction. Keeton claims that Hustler committed libel against her in five issues of its magazine published between 1975 and 1976. Keeton has no contacts with the state of New Hampshire other than through a magazine she helps produce. Hustler is a corporation organized under the laws of Ohio, and its principal place of business is in California. Hustler sells between 10,000 and 15,000 copies of its magazine in New Hampshire per month. The district court dismissed the complaint for lack of personal jurisdiction. The court of appeals affirmed on the ground that Keeton lacked sufficient contacts with New Hampshire to justify the state's personal jurisdiction over Hustler. Further, the court of appeals placed significant weight on the fact that New Hampshire's six-year statute of limitations for libel made it the only state in which Keeton's suit could still be brought and that the "single publication rule" meant that, if successful, Keeton would be able to recover for damages suffered in all fifty states. For these reasons, the court of appeals considered personal jurisdiction over Hustler unfair. Keeton petitioned the United States Supreme Court for certiorari, which was granted. Issue Is personal jurisdiction proper in a libel action against a magazine in a state where its only contacts are magazine sales? Holding and Reasoning (Rehnquist, J.) Yes. Due process forbids the assertion of personal jurisdiction over a nonresident corporation unless the corporation has sufficient minimum contacts with the state. Hustler's "regular circulation" of its magazines within the state of New Hampshire constitutes sufficient contacts to justify the assertion of personal jurisdiction over it for a libel claim related to statements made in the magazine. Hustler purposefully sought to do business in the state of New Hampshire and regularly sells thousands of magazines per month there. Further, New Hampshire has an interest in adjudicating harm that occurs inside its borders. This includes a case involving libel committed in the state, even if committed against a nonresident. The court of appeals' concern with New Hampshire's unusually long statute of limitations and the possibility of an unfair damage award was misplaced. Choice of law matters have no bearing on a forum's right to assert personal jurisdiction over a party. In addition, a plaintiff's contacts with a forum state have no relevance to whether personal jurisdiction exists over the defendant. It is Hustler's contacts that are at issue, and while they might not be sufficient to justify general personal jurisdiction over unrelated claims, Hustler's continued business justifies specific personal jurisdiction over claims related to that business. Moreover, the fact that a plaintiff resides outside the state will not destroy personal jurisdiction over the defendant. Even though Keeton's damages would likely be greater in her home state, there is no prohibition on bringing libel actions elsewhere. Hustler purposefully availed itself of the privileges of doing business in New Hampshire, and should reasonably anticipated being haled into court for claims related to the magazine it sells there. National publications may properly be sued for their content anywhere "a substantial number of copies are regularly sold and distributed." The ruling of the court of appeals is reversed, and the case is remanded.

Burger King Corp. v. Rudzewicz (Specific Jurisdiction)

1985) Rule of Law When determining if a defendant satisfies the minimum contacts requirement for personal jurisdiction, the court must look to the purposefully directed activities of the defendant toward the forum state and whether the harm arising or relating to those activities are the cause of the litigation. Facts Brian MacShara and John Rudzewicz (defendants) jointly applied for a Burger King franchise in Detroit. MacShara and Rudzewicz negotiated the deal with Burger King Corp.'s (plaintiff) Michigan's district office and the Miami headquarters. The two men were granted a franchise and MacShara attended a management course on how to run a Burger King in Miami. Rudzewicz purchased $165,000 in restaurant equipment from Burger King corporate division in Miami. Under the franchise agreement, MacShara and Rudzewicz were to remit franchise fees and royalties to Burger King Corp. in Miami. MacShara and John Rudzewicz were unable to make these payments due to low finances. Burger King Corp. sued them for breach of contract in federal district court in Florida. Burger King claimed that federal court was appropriate under diversity and trademark jurisdiction. MacShara and Rudzewicz claimed that the court did not have personal jurisdiction over them. The court rejected their objection and awarded Burger King damages and injunctive relief. The court of appeals reversed the judgment claiming that the district court did not have personal jurisdiction. The United States Supreme Court granted certiorari. Issue Must the court look to the purposefully directed activities of the defendant toward the forum state and whether the harm arising out of or relating to those activities are the cause of the litigation when determining if a defendant satisfies the minimum contacts requirement for personal jurisdiction? Holding and Reasoning (Brennan, J.) Yes. When determining if a defendant satisfies the minimum contacts requirement for personal jurisdiction, the court must look to the purposefully directed activities of the defendant toward the forum state and whether the harm arising out of or relating to those activities are the cause of the litigation. Once a court has concluded that minimum contacts exist between the forum state and the defendant, the court must consider whether fair play and substantial justice would be offended if the defendant must defend himself in the forum state. Factors that help resolve this question include the defendant's burden if jurisdiction is imposed, the forum state's interest in imposing jurisdiction, the plaintiff's interest in obtaining relief, the interstate judicial system's interest in obtaining efficient resolution of controversies, and the furtherance of fundamental substantive social policies. If the defendant purposefully directed his activities toward the forum state, the defendant must present a compelling case that these factors indicate jurisdiction would be unreasonable. Although Rudzewicz had no ties to Florida and did not maintain any Florida offices, he deliberately negotiated with representatives outside his home state of Michigan and finalized a deal with a corporation he knew was located in Florida. The course MacShara attended to get a franchise was held in Florida. Any franchise fees Rudzewicz did pay were sent to Florida. Rudzewicz reasonably should have known that he was affiliating himself with an organization based in Florida and he might be hailed to court in that state for harm arising out of or relating to his conduct. Furthermore, the contract Rudzewicz signed acknowledged that the Burger King Headquarters in Miami regulated the franchise. It is not unreasonable to grant Florida personal jurisdiction over Rudzewicz. It should be noted that the required minimum contacts are not established by contracts obtained by fraud, undue influence, or unequal bargaining power. Such contracts may in essence deprive defendants of their day in court. The contract in this case, however, did not fall into any of these categories. The court of appeals' decision is reversed. Dissent (Stevens, J.) Rudzewicz had never entered Florida and he could not have reasonably assumed he would be brought to court there. During the business relationship with Burger King, Rudzewicz's principle point of contact was the office in Michigan. The majority's decision to grant personal jurisdiction to Florida is based solely on the contract between Rudzewicz and Burger King. Such reliance on contracts to satisfy minimum contacts is fundamentally unfair, especially to parties with unequal bargaining power. The contract terms could not have reasonably given Rudzewicz notice that he could be hailed into court in Florida.

Asahi Metal Indus. Co. v. Superior Court (Specific Jurisdiction)

1987) Rule of Law Under the Due Process Clause, a foreign business's awareness that its products will reach a state within the United States in the stream of commerce does not satisfy the minimum contacts needed for the forum state to exercise personal jurisdiction over that business. Facts Gary Zurcher (plaintiff) was injured and his wife, Ruth Moreno, was killed when they crashed their motorcycle due to a tire blowout. Zurcher filed a product liability suit over the defective tire against Cheng Shin Rubber Industrial Co., Ltd. (Cheng Shin) in California state court. Cheng Shin filed a cross-complaint for indemnification from Asahi Metal Industry Co. (Asahi) (defendant). All other claims were dismissed or settled. Asahi moved to quash the summons for lack of jurisdiction under the Due Process Clause of the Fourteenth Amendment. Asahi manufactured valve assemblies in Japan. Cheng Shin bought over 100,000 assemblies annually from Asahi. Cheng Shin incorporated the assemblies into its tires, which it sold worldwide. California accounted for 20 percent of Cheng Shin's sales in the United States. Cheng Shin alleged that it informed Asahi of its US tire sales. Still, Asahi never contemplated that third-party transactions would subject it to lawsuits in California. The trial court held that jurisdiction was appropriate, because it was not unreasonable to hold an international business accountable in the markets where it does business. The appellate court reversed and issued a peremptory writ ordering the trial court to quash the summons. The Supreme Court of the State of California reversed and invalidated the writ. The United States Supreme Court granted certiorari. Issue Whether a foreign business's awareness that its products will reach a forum state within the United States in the stream of commerce satisfies the minimum contacts needed for personal jurisdiction. Holding and Reasoning (O'Connor, J.) No. Under the Due Process Clause, the fact that it is foreseeable that a product will enter a state though the stream of commerce does not create personal jurisdiction over the distributor and retailer. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980). A defendant must purposefully direct her actions toward the forum state to create the minimum contacts necessary for the state to exercise jurisdiction. Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985). Placing a product in the stream of commerce is not an act that is purposefully directed toward the forum state. Additional actions are needed to satisfy due process. This may the include catering to the market, advertising, directing communications to consumers, or contracting third parties to sell the product within the forum state. Asahi has done none of this. The Due Process Clause of the Fourteenth Amendment prohibits a state from exercising personal jurisdiction over a defendant if doing so offends "traditional notions of fair play and substantial justice." Reasonableness depends on the following factors: (1) the defendant's burden, (2) the forum state's interest, (3) the plaintiff's interest, (4) the judicial system's interest in the "efficient resolution of controversies," and (5) the "furtherance of fundamental substantive social policies." California's assertion of jurisdiction is unconstitutional. Asahi's burden in traveling to and defending itself in a foreign country is significant. Cheng Shin has not shown that litigation in Taiwan or Japan would be more difficult. Cheng Shin is not a California resident, and the state's interest in the litigation is slight. Foreign nationals should resolve their controversies in their own countries. The contacts are not sufficient to exercise personal jurisdiction here. The state supreme court's decision is reversed. Concurrence (Brennan, J.) The Court's holding that merely placing a product into the stream of commerce is insufficient to confer personal jurisdiction over a defendant is flawed. The stream of commerce is not unpredictable; it follows regular patterns. Any party that knows its product is being marketed in a forum should be aware of the possibility of being sued there. This risk comes with benefits, including the profit derived from doing business in the state and the protection of the state's laws. There is no need for the defendant to direct any additional conduct toward the state. Nevertheless, California's jurisdiction over Asahi offends fair play and substantial justice. Concurrence (Stevens, J.) The plurality's discussion of a "purposeful direction" test of the defendant's activities toward a state is unnecessary. It may be "unreasonable and unfair" for a state to exercise jurisdiction over a defendant even if the defendant has directed activities toward the state. The fact that jurisdiction over Asahi here was unreasonable should end the inquiry. However, the plurality's application of its own test is questionable. The duration, volume, and "hazardous character of the components" involved in Asahi's contacts with the United States is more akin to "purposeful availment" of the benefits of doing business in the forum than "mere awareness" that the product may end up there.

Burnham v. Superior Court (General Jurisdiction, Property, and the Problem of Consent)

1990) Rule of Law A non-resident is properly served if he is physically present in the forum state, and the forum state may exercise personal jurisdiction over him without violating due process. Facts Dennis Burnham (plaintiff) and Francie Burnham were married from 1976 until July 1987, at which point they decided to separate. At that time, they were living in New Jersey with their two children. They agreed to divorce on the grounds of irreconcilable differences and that Francie would move to California, where she would have custody of both children. She moved to California, and in October 1987, Dennis filed for divorce in the state of New Jersey on the grounds of desertion, but never attempted to serve her. In January 1988, while in California for business and to visit his children, Dennis was served with a California court summons and Francie's divorce petition. Subsequently, he returned to New Jersey. Later that year, Dennis filed a motion to quash on the basis that it was a violation of the Due Process Clause of the Fourteenth Amendment for California to assert jurisdiction over him, because he lacked the minimum contacts necessary for personal jurisdiction. The superior court denied the motion, and the California Court of Appeal denied mandamus relief, holding that it was enough that Dennis was present in the forum and personally served with process. Dennis appealed, and the United States Supreme Court granted certiorari. Issue May a non-resident party be properly served with process while temporarily visiting a state for purposes unrelated to the suit? Holding and Reasoning (Scalia, J.) Yes. A non-resident party may be properly served with process while temporarily visiting a state without violating due process. It is well established that states have jurisdiction over non-residents who are physically present in the state, no matter how long that individual plans to stay in the state. This rule has a long and continuing tradition of being enforced by the courts, across jurisdictions. Burnham argues that he lacks the minimum contacts necessary for the court to properly apply personal jurisdiction, but that is a perversion of the standard; indeed, the minimum contacts standard was created for use in the absence of a party's physical presence in the state, which is not necessary in this case, as Dennis was physically present in California when he was served. For the same reason, Dennis cannot rely on the holding in Shaffer v. Heitner, 433 U.S. 186 (1977), which held that a state lacks jurisdiction over an individual unless the lawsuit arises out of his activities in the state, because the non-resident litigant in that case was an absent one, unlike Dennis. Justice Brennan's concurring opinion disregards the fact that this body of law is based in traditional notions of due process, not fleeting or contemporary notions. Because Dennis was physically present in California when he was served with process, the state properly asserted personal jurisdiction over him, and the holding below is affirmed. Concurrence (White, J.) The rule that a non-resident party may be served if he physically enters the forum state is not so well accepted that it would be impossible to strike down. It is, however, a useful rule to prevent flooding the courts with fact-specific inquiries relating to personal jurisdiction. Concurrence (Brennan, J.) A long history of enforcement of personal jurisdiction when a non-resident party is present in a state, while informative and persuasive, is not necessarily dispositive. It does mean, however, that defendants have notice that they might be served if they enter a different forum state. By entering the state, the defendant avails himself of the benefits made available by the state, such as police protection and use of the roads. Furthermore, the burden on the non-resident defendant is small; modern travel is not a great inconvenience for an individual who wishes to defend himself in a foreign state. Concurrence (Stevens, J.) This holding, like the holding in Shaffer, is unnecessarily broad.

Zuk v. Eastern Pennsylvania Psychiatric Institute of the Medical College of Pennsylvania (Heightened Pleading and the Deterrence of Frivolous Pleadings)

1996) Rule of Law Sanctions may be imposed on an attorney for an error in pre-complaint factual or legal investigation and are designed to deter future violators rather than compensate a party. Facts Dr. Gerald Zuk (plaintiff) was a former psychologist on the faculty of the Eastern Pennsylvania Psychiatric Institute (EPPI) (defendant). While on the faculty, Zuk conducted therapy sessions that were videotaped and maintained at EPPI. He later based a book on some of the interviews. In 1980, Zuk was placed on furlough from EPPI. He sought to obtain copies of the tapes from EPPI after his separation, with EPPI ignoring his requests and continuing to rent out the tapes. Several years passed with Zuk failing to pursue the issue. In 1994, he resumed attempting to obtain the tapes and brought suit in the United States District Court for the Eastern District of Pennsylvania seeking their return. Benjamin Lipman (defendant) represented Zuk. EPPI brought a motion to dismiss the case, which was granted by the trial court. The court also granted EPPI's motion for sanctions and attorney's fees under Federal Rule of Civil Procedure (FRCP) 11, 17 U.S.C. § 505, and 28 U.S.C. § 1927. The district court granted the motions and held both Lipman and Zuk jointly and severally liable for $15,000 in fees and sanctions. Zuk eventually settled the claim against him for $6,250. Lipman appealed. Issue Does an attorney's failure to perform proper legal or factual investigation prior to the filing of a complaint merit compensatory sanctions? Holding and Reasoning (Rosenn, J.) No. The statutory sanctions imposed on Lipman by the district court were improperly imposed. Those of 17 U.S.C. § 505 because it is a statute permitting the awarding of attorney's fees which the attorney is not personally liable for paying. Sanctions imposed under 28 U.S.C. § 1927 were improper because the statute was designed to sanction actions taken during trial that needlessly extend the proceedings, which was not the case here. Under FRCP 11, however, an attorney can be sanctioned for failing to factually or legally investigate a claim before making a complaint. While it is evident that Lipman performed proper factual investigation, it is less clear that he performed proper legal investigation. One of the Zuk's claims was brought under the Copyright Act. However, the claim is so without merit under that statute that it is not conceivable that Lipman could have performed appropriate legal investigation. When addressing the question of sanctions, FRCP 11 is designed to deter future improper actions rather than compensate adverse parties for actions taken by a sanctioned party. When determining the amount of sanctions, the court must take into account the sanctioned party's ability to pay, the severity of the action, the party's ability to pay the sanction, and how deliberate the action was. Applying all of these factors, the $8,750 sanction against Lipman was excessive. Therefore, the ruling of the district court is vacated in part and reversed and remanded in part.

Swierkiewicz v. Sorema N.A. (Notice Pleading - The Complaint)

2002) Rule of Law A complaint in an employment discrimination suit need only contain a short statement of facts in order to be sufficient. Facts Swierkiewicz (plaintiff) was an employee of Sorema, N.A. (defendant), a reinsurance company based in New York. Sorema, while based in the United States, is owned by a French parent company. In 1995, Francois Chavel, a French national, became the Chief Executive Officer (CEO) of Sorema. At the time, Swierkiewicz, a Hungarian, was the Chief Underwriting Officer (CUO) for Sorema as well as a senior vice president. Upon Chavel's elevation to CEO, he transferred many of Swierkiewicz's responsibilities to Nicholas Papadopoulos, another French national who had far less experience in underwriting than Swierkiewicz. Eventually, Swierkiewicz was stripped of his title as CUO. Swierkiewicz attempted to meet with Chavel, but was unsuccessful. Swierkiewicz eventually wrote a memo to Chavel outlining his grievances and requesting a severance package so he may resign. The next day, Sorema's general counsel offered Swierkiewicz the option of resigning without a severance package or being fired. Swierkiewicz chose not to resign and was fired. Swierkiewicz filed suit in the United States District Court for the Southern District of New York for workplace discrimination. Sorema argued that Swierkiewicz had not included enough facts in his complaint and that it was therefore deficient. The district court agreed and dismissed the case. The United States Court of Appeals for the Second Circuit affirmed. Issue Is a complaint in an employment discrimination case that does not plead specific facts sufficient to constitute a complaint in federal court? Holding and Reasoning (Thomas, J.) Yes. The Federal Rules of Civil Procedure have long held that a complaint is meant to be a brief statement that essentially serves to put the defendant on notice that a claim exists against him and the nature of that claim. Requiring a plaintiff plead specific facts contravenes this policy. While there exist some instances in which more exacting pleading requirements are enforced, such as when fraud is alleged, there is no reason to extend those requirements to the employment discrimination context. Further, the Second Circuit relied on McDonnell Douglas Corp. v. Green (1973), which described what a plaintiff must prove in order to be successful in an employment discrimination suit. However, this was improperly applied, since McDonnell Douglas sets forth an evidentiary standard and not a pleading standard. Thus, it is not applicable when evaluating the sufficiency of a complaint. Finally, the facts that the Second Circuit and Southern District of New York ruled plaintiff must include in the complaint are the type of facts that are ascertained during the process of discovery. It is at that stage that a plaintiff can obtain the facts that it will use in the case, not before a complaint is filed. If a defendant feels that, after discovery, the plaintiff has not made a prima facie case, then the process of summary judgment exists to avoid a trial. Therefore, the ruling of the court of appeals is reversed.

Pavlovich v. Superior Court (PJ & Internet)

2002) Rule of Law A court may exercise specific personal jurisdiction if the defendant has (1) purposefully availed himself of forum benefits, (2) the controversy is related to or arises out of the defendant's contacts with the forum, and (3) the assertion of personal jurisdiction would comport with fair play and substantial justice. Facts Pavlovich, a resident of Texas who did not conduct business or reside in California, posted information on a website to instruct Linux users on circumventing proprietary encryption technology of California company DVD Copy Control Association, Inc. (DVD CCA), the real party in interest. DVD CCA filed suit in California court, seeking injunctive relief against Pavlovich. Pavlovich (defendant) filed a motion to quash service of process from the Superior Court (plaintiff), alleging that California lacked personal jurisdiction. The court of appeals ruled that personal jurisdiction over Pavlovich was proper based on a posting on an internet website. Pavlovich appeals this ruling. Issue Whether a posting on a website is a sufficient basis for a state court to exercise jurisdiction over a person. Holding and Reasoning (Brown, J.) No. A court may exercise specific personal jurisdiction if the defendant has (1) purposefully availed himself of forum benefits, (2) the controversy is related to or arises out of the defendant's contacts with the forum, and (3) the assertion of personal jurisdiction would comport with fair play and substantial justice. Purposeful availment requires that the defendant voluntarily direct her activities toward the forum, but in Calder v. Jones, 465 U.S. 783 (1984), the Supreme Court concluded that personal jurisdiction was proper in a libel case where the conduct occurred in one state but the effects were felt in another. Courts have applied the Calder effects test to other intentional tort cases, but even then, conduct must still be intentional and "expressly aimed at or targeting the forum state." With respect to the exercise of personal jurisdiction based on Internet use, there is a sliding scale, with jurisdiction being proper where a defendant actually conducts business in the state through the Internet and improper where a defendant posts information on a passive website that may be accessed in the forum. Here, the website was passive, making information available but without any interactive features. Pavlovich did not specifically target California residents, and indeed it is unknown whether any California residents actually accessed the website. Pavlovich did not purposefully avail himself of forum benefits simply by posting information on the website that harmed California corporations. The exercise of personal jurisdiction in this case would eviscerate traditional notions of fair play and substantial justice. All intentional tortfeasors who could potentially harm California residents would be subjected to jurisdiction there, regardless of whether they had any other contacts with the state. The judgment of the court of appeals is reversed, and the case is remanded for further proceedings. Dissent (Baxter, J.) Pavlovich deliberately targeted industries that he knew were based in California. The information sought to defeat copy protection on DVDs and would substantially undermine the movie industry's interest in their copyrighted material. This is a sufficient basis for the California court to exercise personal jurisdiction over Pavlovich.

Access Now v. Southwest Airlines (2002) (Testing the Sufficiency of the Complaint)

2002) Rule of Law In order to properly state a claim, the plaintiff must bring a suit that is covered by the statute referenced in the complaint. Facts Southwest Airlines (defendant) is one of the largest airlines in the United States and does a significant amount of its business via its website. This business includes the booking of flight reservations. Robert Gumson (plaintiff), a blind individual, sought to use the Southwest website with the assistance of certain technologies designed to allow disabled people to use the Internet. Southwest's website, however, was not designed in such a way as to allow these technologies to function. Therefore, it is impossible for the blind to navigate Southwest's website. Gumson along with Access Now, Inc. (plaintiff), an advocacy group for the disabled, sued Southwest in federal district court, alleging that Southwest's website violates Title III of the Americans with Disabilities Act (ADA). Southwest filed a motion to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Issue Must a plaintiff's suit be covered by a statute that is specifically named in the complaint? Holding and Reasoning (Seitz, J.) Yes. In order to survive a motion to dismiss brought under Rule 12(b)(6), a plaintiff must show that there is a statutory basis upon which its claim can be based. In this case, the plaintiff's case was based on Title III of the ADA, which specifically regulates places of "public accommodation." In examining both the statutory language itself as well as case law interpreting that phrase, it is not clear that a website can be considered a place of "public accommodation" under the ADA. Further, Title III of the ADA requires, if the place of "public accommodation" is not a physical, concrete location, it must at least have a nexus with a physical location. Here, no such nexus exists, since the closest nexus Access Now can identify, an airplane, is specifically exempt from coverage under the ADA. Access Now further argues that a site of "exhibition, display and a sales establishment" would be covered by the ADA. However, these locations are culled from various sections of the ADA and their definition must be determined using the words around them, specifically if those other words are more specific. This statutory interpretation tool is called ejusdem generis. Under this, the site of "exhibition, display and a sales establishment" cannot be read so broadly as to include a website. Therefore, Southwest's motion to dismiss is granted.

Tellabs, Inc, v, Makor Issues & Rights, Ltd (Heightened Pleading and the Deterrence of Frivolous Pleadings)

2007) Rule of Law In a case that is subject to the Private Securities Litigation Reform Act, the plaintiff must plead particularized facts that would lead a reasonable person to infer the conclusion that the defendant had scienter was at least as reasonable as the conclusion that he did not. Facts The Private Securities Litigation Reform Act of 1995 (PSLRA) imposes on private plaintiffs in securities litigation stricter pleading standards. Included in this standard is the requirement that a complaint contain particularly stated facts that would give a "strong inference" both that a fraud took place and that the defendant intended to defraud; a legal status referred to as scienter. Tellabs, Inc. (defendant) was a company in the business of manufacturing equipment for use in fiber optic networks. Tellabs was led by its CEO, Richard Notebaert (defendant). During the period from December 2000 to June 2001, Tellabs and Notebaert gave increasingly optimistic projections about Tellabs' potential for growth as well as its current financial condition. These statements in some instances amounted to outright false statements as to earnings. Some of these statements were also alleged to have induced certain individuals to buy Tellabs stock, thereby becoming shareholders (plaintiff). Eventually, in June 2001, the true state of Tellabs' financial health was made public. In December 2002, the shareholders filed a class action suit against Tellabs and Notebaert in the United States District Court for the Northern District of Illinois under SEC Rule 10b-5. Tellabs and Notebaert responded by making a motion to dismiss, arguing that the shareholders had not met the pleading standards articulated in the PSLRA. The district court agreed and dismissed the suit. The shareholders then filed an amended complaint containing additional and more particularized facts. The district court again dismissed, though this time with prejudice. The shareholders appealed and the United States Court of Appeals for the Seventh Circuit reversed the district court. Tellabs and Notebaert appealed. Issue Under the Private Securities Litigation Reform Act, may a plaintiff alleging fraud simply plead particularized facts that would lead a reasonable person to make an inference that the defendant had the requisite intent? Holding and Reasoning (Ginsburg, J.) No. A plaintiff in a securities fraud case pursuant to § 10(b) of the Securities Exchange Act of 1934 must plead an inference of intent to defraud, that is at least as likely as any opposing explanation, given the facts alleged. It was Congress' goal to require pleadings to provide a strong inference that there was an intent to defraud. The manner in which this strong inference is examined is by weighing the likelihood of the plaintiff's inferences against other innocent explanations for a defendant's conduct. In this case, neither the district court nor the Seventh Circuit have had the opportunity to analyze the investors' complaint in light of the standard set by this opinion regarding the allegations surrounding the intent to defraud. In passing the PSLRA, Congress created a statute that sidesteps Rule 8 of the Federal Rules of Civil Procedure, which states that a complaint must be short and solely be designed to put the defendant on notice. Rather, a complaint that is covered by the PSLRA falls more appropriately under Rule 9, which requires a higher level of pleading for a complaint alleging fraud. While adopting the language that there must be a "strong inference" of scienter, Congress implicitly forced the courts to adopt a standard that is comparative in nature. Any determination of whether or not something is strong inherently requires an examination of one inference set against another. That is the nature of the standard laid out in this case. Below, the court of appeals indicated reservation that such a holding would improperly damage a plaintiff's Seventh Amendment right to a jury trial. Such a fact-dependent examination of a complaint is a determination better left to the jury rather than the judge. A judge frequently performs such an examination in order to ensure that the complaint meets certain minimum standards. Therefore, a motion to dismiss of this nature, when considering the complaint in its entirety, does not implicate a plaintiff's Seventh Amendment right. Therefore, the ruling of the Seventh circuit is vacated. The case is remanded for further hearings based on this ruling. Concurrence (Scalia, J.) While the majority here comes to the proper result, the standard it articulates is not the appropriate standard. Simply comparing two inferences cannot determine whether a given inference is a strong inference. Rather, the standard should require a court to determine which inference as to the existence of scienter is more plausible. Concurrence (Alito, J.) The standard articulated by Justice Scalia is the standard that the majority should have adopted in this case. However, it is also important to note that only those facts that have been plead with particularity should be considered in making any inferences as to scienter. Dissent (Stevens, J.) Rather than creating a new standard comparing inferences, the Court should simply adopt a standard that looks to whether or not there is probable cause to believe that their scienter exists. The purpose of PSLRA is to protect the privacy of corporations from frivolous suits and their attendant discovery demands. This inherent respect for a litigant's privacy is comparable to that contemplated for criminal defendants in the Fourth Amendment. Therefore, this standard would be appropriate to meet these needs. Further, it is a standard that judges are comfortable applying, making it easier to use in practice.

Bell Atlantic Corp. v. Twombly (Notice Pleading Transformed)

2007) Rule of Law To state a claim under § 1 of the Sherman Act, the complaint must contain enough factual material to suggest that an agreement existed between the defendants. Facts Twombly (plaintiff) issued a complaint alleging that Bell Atlantic (defendant) violated Section 1 of the Sherman Act, which prohibits conspiracy for the purposes of restraining trade. The complaint alleged that Bell conspired with other local telephone companies by means of "parallel conduct" to inhibit the growth of upstart telecommunication companies and eliminate competition with each other. The alleged purpose of the conspiracy was to allow each local telephone company to have dominance over a specific market. In district court, Bell Atlantic moved to dismiss under Rule 12(b)(6). The court granted this motion. The U.S. Court of Appeals for the Second Circuit overturned the dismissal. The United States Supreme Court granted review. Issue To state a claim under § 1 of the Sherman Act, must the complaint contain enough factual material to suggest that an agreement existed between the defendants? Holding and Reasoning (Souter, J.) Yes. To state a claim under § 1 of the Sherman Act, the complaint must contain enough factual material to suggest that an agreement existed between the defendants. This requirement is to protect defendants from meritless claims in which plaintiffs hope to find some form of evidence in the discovery process. Discovery is expensive and time-consuming. Thus the district courts must act as gatekeepers and dismiss claims that do not point to some fact that supports a plaintiff's claim. Previous decisions have suggested that as long as a complaint leaves open the possibility that the plaintiff would find some fact to support recovery, the complaint cannot be dismissed. This way of pleading is no longer workable. Conclusory statements of claims will no longer survive a motion to dismiss. Instead, a complaint must contain enough facts to raise a reasonable expectation that the discovery process will reveal relevant evidence to support the claim. The court of appeals' decision is reversed and remanded to the lower court for dismissal. Dissent (Stevens, J.) The purpose of the pleading standards of the Federal Rules of Civil Procedure is to keep litigants in court, so that the merits of the claim can be determined during discovery. The particular concerns regarding the high costs of the discovery process in private antitrust litigation can be prevented through careful case management, strict control of the discovery process, careful scrutiny of evidence at the summary judgment stage and clear instructions to juries. Given these precautions, it is unwarranted for the majority to heighten the pleading standards to factual plausibility of a violation from legal sufficiency to state a claim. The suit should not have been dismissed because parallel conduct among competitors is circumstantial evidence suggesting conspiracy.

Ashcroft v. Iqbal (Notice Pleading Transformed)

2009) Rule of Law Under Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), a complaint will only survive a motion to dismiss if it alleges nonconclusory facts that, taken as true, state a claim to relief that is plausible on its face. Facts Javaid Iqbal (plaintiff) was arrested and detained during the investigation of the September 11, 2001 terrorist attacks. Iqbal claimed that the conditions of the custody violated the First and Fifth Amendments to the United States Constitution and sued former United States Attorney General John Ashcroft, Federal Bureau of Investigation Director Robert Mueller, and other officials (defendants) in district court. The complaint accused Ashcroft of being the "principal architect" and Mueller of being "instrumental" in the implementation of a discriminatory policy of confining individuals in harsh conditions based solely on their "religion, race, and/or national origin." Ashcroft and Mueller claimed qualified immunity and moved to dismiss Iqbal's complaint for failure to state a claim. The district court refused to dismiss the case, and the United States Court of Appeals for the Second Circuit affirmed the ruling on interlocutory appeal. Ashcroft and Mueller petitioned the United States Supreme Court for a writ of certiorari, which was granted. Issue Under Twombly, will a complaint survive a motion to dismiss if the facts alleged are conclusory in nature? Holding and Reasoning (Kennedy, J.) No. Under Twombly, a complaint must allege sufficient facts that, if taken as true, "state a claim to relief that is plausible on its face" in order to defeat a motion to dismiss. Facial plausibility means that the facts alleged permit a "reasonable inference" that the defendant is, in fact, liable. The plausibility determination in any particular case is left to the reasoned and experienced judgment of the trial court. Although the facts in the complaint must be taken as true, the court is not required to afford legal conclusions the same deference. The court may begin its inquiry by determining which allegations need not be taken as true. In this case, the allegations regarding Ashcroft and Mueller's knowledge or intent are not "unrealistic or nonsensical," but are conclusory and need not be accepted as true. Further, even though the allegations of discrimination are "consistent" with Iqbal's claims, there are other, more reasonable, alternative explanations. Although the complaint may state a claim against other defendants, the charges against Ashcroft and Mueller do not plausibly indicate anything more than a policy of keeping individuals suspected of terrorism under tight security pending a full investigation. Additional facts are needed to take the complaint from merely "conceivable to plausible." Even though a plaintiff may plead subjective knowledge and intent "generally" under FRCP Rule 9(b), this does not negate the requirements of Rule 8. Federal Rule of Civil Procedure (FRCP) 8 sets forth the basic requirements for pleadings in any civil action, and the Supreme Court's interpretation of the rule in Twombly is applicable to all such actions regardless of subject matter. Because Iqbal has not made the required showing of plausibility, the complaint does not state a claim against Ashcroft and Mueller. The ruling of the court of appeals is reversed, and the matter is remanded for consideration of whether Iqbal should be permitted to amend the complaint. Dissent (Souter, J.) Nonconclusory allegations should be accepted as true unless completely unrealistic. Nevertheless, Iqbal's pleadings were not conclusory. Dissent (Breyer, J.) Dismissal was not required. The trial court could have allowed minimal discovery in preparation for a motion for summary judgment.

Krupski v. Costa Crociere S.p.A (Amending and Supplementing the Pleadings - Rule 15)

2010) Rule of Law Relation back under Rule 15(c) does not depend on the amending party's knowledge or timeliness. Facts On February 21, 2007, Wanda Krupski (plaintiff) was injured while on board a cruise ship operated by Costa Crociere S.p.A. (Costa Crociere) (defendant). Krupski's ticket listed Costa Cruise on the front of the ticket but identified Costa Crociere as the carrier on the back of the ticket. On February 1, 2008, Krupski brought a suit in negligence against Costa Cruise. The statute of limitations expired three weeks later. After the expiration of the statute of limitations, Costa Cruise alerted Krupski to Costa Crociere's identity as the proper defendant on several different occasions. Costa Cruise ultimately moved for summary judgment on grounds that it was not the proper defendant. Krupski cross-moved to amend her complaint to add Costa Crociere. The Federal District Court for the Southern District of Florida (District Court) denied Costa Cruise's motion for summary judgment and granted Krupski's motion for leave to amend. Krupski and Costa Cruise then stipulated to dismiss Costa Cruise from the action. Krupski filed an amended complaint against Costa Crociere on July 11, 2008. Costa Crociere thereafter filed a motion to dismiss, arguing that Krupski's amended complaint did not relate back to the date of her original complaint and that, therefore, Krupski's suit was outside the statute of limitations. The District Court granted the motion to dismiss. The Court of Appeals for the Eleventh Circuit affirmed. Issue Whether relation back under Rule 15(c) depends on the amending party's knowledge or timeliness. Holding and Reasoning (Sotomayor, J.) No. Rule 15(c) of the Federal Rules of Civil Procedure allows an amended pleading to relate back to the date of the original pleading if: (1) the claim against the new defendant involves the same conduct, transaction, or occurrence set forth in the original complaint; (2) the new defendant received notice of the lawsuit such that it would not be prejudiced by being named; and (3) the new defendant knew or should have known that it would have been sued but for the plaintiff's mistake about its identity. Here, the Court of Appeals refused to allow relation back in part because Krupski knew or should have known of Costa Crociere's identity and thus, her decision to sue Costa Cruises was deliberate and not a mistake. However, the proper inquiry is what the new defendant knew or should have known, not what the plaintiff knew or should have known. Specifically, the question is whether Costa Crociere knew or should have known that, but for a mistake, it would have been named in the lawsuit. Costa Crociere argues that because Krupski was aware of Costa Crociere's existence, Krupski's decision to name Costa Cruises was not a mistake. However, simply being aware of two parties does not necessarily mean that a plaintiff cannot make a mistake in naming the wrong party. For instance, a plaintiff could be aware of the two different parties but still be mistaken as to the specific roles played by each party. The Court of Appeals also based its decision to deny relation back on Krupski's considerable delay in moving to amend. However, Rule 15(c) does not provide for undue delay as a basis for denying relation back and, in fact, mandates relation back once its requirements are met. Here, Krupski's complaint demonstrates confusion as to which company owned and operated the cruise ship Krupski was injured on. Costa Crociere, which had constructive notice of Krupski's complaint, should have known that this confusion on Krupski's part had resulted in Krupski's mistakenly naming Costa Cruises as the defendant. These facts demonstrate that Costa Crociere knew or should have known that, but for Krupski's mistake, it would have been named in the suit. Therefore, relation back is mandated. The judgment of the Court of Appeals is reversed and the case is remanded for further proceedings.

Goodyear Dunlop Tires Operations, S.A. v. Brown (General Jurisdiction, Property, and the Problem of Consent)

2011) Rule of Law A state court may not exercise general jurisdiction over a foreign subsidiary of a United States-based corporation unless it engages in continuous and systematic activities in the forum state. Facts Two 13-year-old boys, Julian Brown and Matthew Helms, from North Carolina were killed when the bus they were riding on overturned outside Paris, France. The boys' parents filed a wrongful-death suit in state court against Goodyear U.S.A., an Ohio corporation, and three of its subsidiaries organized and operating exclusively in Turkey, France, and Luxembourg (collectively the subsidiaries). The parents alleged that a defective tire manufactured in Goodyear's Turkey plant was the cause of the accident. While Goodyear U.S.A. regularly conducted business in North Carolina and agreed to submit to the court's jurisdiction, its subsidiaries did not. Thereafter, the subsidiaries argued that the state court lacked jurisdiction over them and filed a motion in the trial court to dismiss the claims. The trial court denied the motion and the subsidiaries appealed. The North Carolina Court of Appeals affirmed. The U.S. Supreme Court granted certiorari to review. Issue May a state court exercise general jurisdiction over a foreign subsidiary of a United States-based corporation if it does not engage in continuous and systematic activities in the forum state? Holding and Reasoning (Ginsburg, J.) No. In International Shoe Co. v. Washington, 326 U.S. 310 (1945), the Court held that a state may authorize its courts to exercise personal jurisdiction over an out-of-state defendant if the defendant has "certain minimum contacts with [the state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" In an attempt to more narrowly define the terms "fair play and substantial justice," the International Shoe Court classified cases involving out-of-state corporate defendants. The first general jurisdiction classification involves instances where the defendant's in-state activity is "continuous and systematic" as to render it essentially at home in the forum state. See Perkins v. Benguet Consol. Mining Co., 342 U.S. 437 (1952). The second specific jurisdiction classification involves the occurrence of certain "single or occasional acts" in a state that may be sufficient to jurisdictionally bind a defendant with respect to those acts. See Hanson v. Denckla, 357 U.S. 235, 253 (1958). Specific jurisdiction is confined to adjudication of "issues deriving from, or connected with, the very controversy that establishes jurisdiction." Here, the North Carolina courts relied on the subsidiaries placing tires into the "stream of commerce" to justify the exercise of general jurisdiction over them in the state. However, merely placing a product into the stream of commerce in a state is not enough to support the demand that the entity be amenable to suits unrelated to that activity. In Perkins, the Court noted that the defendant, a Philippine mining corporation, had its company files located in Ohio, the company's president maintained an office in Ohio and supervised others from that location. Consequently, the Court held that Ohio could exercise general jurisdiction over the company. In Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984), survivors of United States citizens who died in a helicopter crash in Peru filed wrongful-death actions in Texas state court against the owner and operator of the helicopter, a Colombian corporation. The Colombian corporation had no place of business in Texas and was not licensed to conduct business in the state. While the corporation made some purchases in Texas, these activities failed to achieve the required "continuous and systematic business contacts" noted in Perkins. Here, the sale of some tires in North Carolina through intermediaries is insufficient to warrant jurisdiction over them. Measured against Helicopteros and Perkins, North Carolina is not a forum in which it is permissible to subject the subsidiaries to general jurisdiction. The judgment of the North Carolina Court of Appeals is reversed.

J. McIntyre Machinery, Ltd. v. Nicastro (Specific Jurisdiction)

2011) Rule of Law For a defendant to be subject to a state's personal jurisdiction, it must purposefully avail itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws. Facts New Jersey resident Robert Nicastro (plaintiff) became seriously injured while using a metal-shearing machine manufactured by J. McIntyre Machinery, Ltd. (J. McIntyre) (defendant). Although the injury occurred in New Jersey, the machine was manufactured in England where J. McIntryre is incorporated. The New Jersey Supreme Court found that, even though J. McIntyre never marketed its goods in the state nor shipped them there, New Jersey courts had jurisdiction over the company because the manufacturer knew or should have reasonably known that its products were distributed through a nationwide distribution system that might lead their products being sold in any of the 50 states, including New Jersey. J. McIntyre appealed and the U.S. Supreme Court granted certiorari to review. Issue For a defendant to be subject to a State's personal jurisdiction, must it purposefully avail itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws? Holding and Reasoning (Kennedy, J.) Yes. It has been held that a court may subject a defendant to its jurisdiction only when the defendant has sufficient contacts in the forum state "such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310 (1945). Generally, the Court's exercise of power requires some act on behalf of the defendant to purposefully avail itself "of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235 (1958). Such activities may include actual presence in the state when the suit is commenced, citizenship or domicile in the state, and incorporation or having a place of business within the state. Conversely, those who live or operate outside of a state have a right not to be subjected to judgment in its courts. In Asahi Metal Industry Co. v. Superior Court of Cal., Solano Cty., 480 U.S. 102 (1987), the Court constructed a different approach. There, Justice Brennan's concurrence contended that a defendant that placed a product into the stream of commerce may be subject to a State's jurisdiction "[a]s long as a participant in this process is aware that the final product is being marketed in the forum State . . . . " Justice O'Connor's concurrence noted that "[t]he 'substantial connection' between the defendant and the forum state necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State." Id. at 112. Despite the lack of clarity put forth by Asahi, the Court's precedents make clear that it is the defendant's actions, not expectations, that allow a State's courts to exercise jurisdiction over the defendant. It is true that in some instances a defendant may be subject to the federal courts due to a relationship with the federal government but not to a court of any particular state. But that is an exception, not the rule. Here, J. McIntyre did not engage in any conduct purposefully directed at New Jersey. Consequently, it cannot be subjected to the jurisdiction of a New Jersey court. The judgment of the New Jersey Supreme Court is reversed. Concurrence (Breyer, J.) Put simply, Nicastro failed to meet his burden to demonstrate that jurisdiction over J. McIntyre was proper. Dissent (Ginsburg, J.) J. McIntyre manufactured machines with the intent of selling them within the borders of the United States. The company employed a distributor to accomplish this task. That should not mean that the manufacturer can escape liability in an American court when one of its products causes harm.

Viacom v. YouTube Stipulation and Protective Order (Exemptions from Discovery - Confidentiality, Privilege, and Work Product Doctrine)

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Ali v. Mid-Atlantic Settlement Servs (Commencement and Notice)

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Arbaugh v. Y&H Corp (Transfer and the Difficulties of Challenging Jurisdiction)

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Armour v. Knowles (Interrogatories & Admissions)

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Clark v. Assocs. Commercial Corp. (Joinder - Third-Party Practice & Intervention)

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Dot Com Entmt. Group, Inc. v. The Cyberbingo Corp. (Interrogatories & Admissions)

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EEOC v. Simply Storage Mgmt. (Discovery Devices)

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In re Auction Houses Antitrust Litig. (Interrogatories & Admissions)

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L. FULLER, THE PROBLEMS OF JURISPRUDENCE (What Process is Due? The Choice of a Procedural System)

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MARVIN FRANKEL, THE SEARCH FOR TRUTH: THE UMPIREAL VIEW (What Process is Due? The Choice of a Procedural System)

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Owen Equipment & Erection Co. (Supplemental Jurisdiction)

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Hansberry v. Lee (Class Actions)

Rule of Law Under the Due Process Clause of the Fourteenth Amendment, res judicata may only be applied to bind absent parties by prior litigation if they were present or adequately represented in the prior action. Facts A group of Chicago landowners agreed to place a racially restrictive covenant on their land. Under the agreement, the land could not be sold, leased, or occupied by any person of color for a set period of time. However, the covenant would not be effective unless 95 percent of the owners in the area signed it. Roughly 54 percent signed, but in an earlier class action suit concerning the covenant (Burke v. Kleiman, 277 Ill. App. 519 (1934)), it was stipulated that 95 percent of the owners signed. Hansberry and other African Americans (defendants), with knowledge of the agreement, acquired land in the area from covenant signers. Anna Lee and others (plaintiffs) sued to enjoin the defendants' breach of the covenant. The defendants claimed that the covenant was ineffective. The plaintiffs argued that the issue of whether a sufficient number of owners signed the covenant was previously decided and should be given res judicata effect. The defendants asserted that they were not parties to the original action and should not be bound, because otherwise they would be denied their right to litigate the action in violation of the Due Process Clause of the Fourteenth Amendment. The trial court ruled that the defendants were bound to the findings of Burke, and the Supreme Court of Illinois affirmed. The defendants petitioned the United States Supreme Court for certiorari, which was granted. Issue May an absent party be constitutionally bound by a prior state court ruling if her interests were not adequately represented in the previous action? Holding and Reasoning (Stone, J.) No. State courts are generally free to set their own rules for determining who will be bound by an earlier ruling under the doctrine of res judicata, subject, of course, to the requirements of the Constitution. Nevertheless, it is the duty of this Court to examine and ascertain whether the litigant's rights have been fairly adjudicated and the litigant has been afforded proper due process as required by the Fourteenth Amendment. Unless properly served or named in the litigation, a party is generally not bound by the decision rendered in the case. There is an exception where the party qualifies as a class member, even if she was not made a party to that class. While there are no set procedures that must be followed by states in binding nonparties to a prior class action, those used must adequately protect the interests of absent parties. Thus, an absent party will only be bound if that party was adequately represented, actually participated in the prior action, had joint interests or a legal relationship with a party that was present in the prior action. Here, the plaintiffs in the Burke action sought to enforce the racially restrictive covenant. The defendants in this case are seeking to resist the covenant. The interests of the defendants in this action and the plaintiffs in the prior litigation are not joint. In fact, they are conflicting. In light of these substantially divergent interests, the defendants cannot be said to be a part of the same class as that in the Burke action. Thus, the defendants cannot be bound by the prior litigation without violating due process. The previous judgment does not satisfy the requirements of res judicata. The lower court's decision is reversed.

Taylor v. Sturgell (Issue Preclusion)

Rule of Law A claim cannot be precluded if the previous litigant is a different party and there is no legal relationship between the current and past litigants. Facts Brent Taylor (plaintiff), an antique aircraft enthusiast, filed suit in the United States District Court for the District of Columbia seeking to obtain via Freedom of Information Act (FOIA) request the plans for a particular model plane's engine. Prior to Taylor's suit, his friend, Greg Herrick, also an antique aircraft enthusiast, filed a similar suit in the United States District Court for the District of Wyoming seeking the same information. Herrick's suit was dismissed when the agency he made the request to, the FAA (defendant), refused to release the plans at issue. The FAA stated that they would not release the information as it constituted trade secrets on the part of the company that built the engine, Fairchild Corporation (defendant). When Herrick produced a letter written by Fairchild in 1955 that appeared to be a repudiation of trade secret protection on Fairchild's part, the FAA contacted the company, which exercised its trade secret protection. Herrick's suit was then dismissed. Taylor sued, represented by the same attorney, arguing in addition to claims raised in Herrick's suit that Fairchild is not able to now use trade secret protections when it appeared to dispense with them years prior. The district court granted summary judgment to the FAA and Fairchild, finding that Taylor's claim was barred by claim preclusion. The United States Court of Appeals for the District of Columbia Circuit affirmed, finding that Taylor was "virtually represented" by Herrick. Herrick appealed. Issue Can a claim be precluded if the litigant in the previous case was not the same as the one in the current case and there is no legal relationship between them? Holding and Reasoning (Ginsburg, J.) No. At the district court and court of appeals level, this case was dismissed by invoking the doctrine of "virtual representation." This theory states that a litigant may be subject to claim preclusion if they bring a claim that was litigated in a previous suit and (1) their interests were adequately represented by the previous litigant and (2) a close relationship between the old party and the new party, participation by the present party in the current case, or "tactical maneuvering" by the present party in order to avoid preclusion in the first case. This doctrine is an inappropriate application of claim preclusion for three reasons. First, litigants are generally not bound by the actions of another. There are discrete exceptions to this broad rule, but it is one that exists in order to ensure that parties are held responsible only for their own actions. The "virtual representation" doctrine contravenes that idea. Second, the "virtual representation" doctrine would hold a litigant responsible for a suit for which they were not noticed. While this is acceptable in certain types of suits, such as class actions, those exceptions are creatures of statute, not common law. Third, litigating these kinds of claims would take up a significant amount of the court's time. Claim preclusion is a process designed to relieve the court of needless litigation, not create it. Therefore, this court does not recognize the doctrine of "virtual representation." However, if a legal relationship between Taylor and Herrick existed, then claim preclusion would apply. Therefore, the decision of the court of appeals is vacated and the case is remanded to determine whether there is a legal relationship between the two parties.

Southern Methodist Univ. Ass'n of Women Law Students v. Wynne and Jaffe (Joinder of Parties - Real Parties in Interest, Permissive Joinder, and Compulsory Joinder)

Rule of Law A complaint shall include the names of all the parties unless anonymity is necessary to protect a very private matter. Facts The Southern Methodist University Association of Women Law Students (Association) and Lawyers A, B, C, and D (A-D) (plaintiffs) brought suit against two law firms (defendants), alleging that the defendants discriminated against women in their hiring of summer law clerks. A-D sought to keep their names anonymous so as not to face retaliation from their current employers or a state bar that "does not like lawyers who sue other lawyers." The defendants served interrogatories seeking the true identities of A-D. A-D refused, but the trial court ordered A-D to reveal their true identities. The plaintiffs appealed. Issue Is filing a sex discrimination lawsuit against a law firm a very private matter for lawyers, permitting them to remain anonymous? Holding and Reasoning (Ainsworth, J.) No. Under the Federal Rules of Civil Procedure, a complaint shall include the names of all the parties. Courts have carved out limited exceptions where anonymity is important to protect a very private matter, such as birth control or abortion. The present case is not such a private case. A-D do not have to reveal any highly personal facts to the court. Title VII does not provide a right of anonymity and there are no prior decisions that even discuss the right. The district court's order requiring A-D to reveal their true identities is affirmed.

David v. Crompton & Knowles Corp. (Amending and Supplementing the Pleadings - Rule 15)

Rule of Law A court may deny a request to amend an answer if the amendment will result in undue prejudice to the other party. Facts David (plaintiff) was injured by a shredding machine. He brought suit against Crompton & Knowles Corp. (Crompton) (defendant). David's complaint alleged that Crompton designed, manufactured, and sold the machine in question to Crown Products Corporation (Crown), which was David's employer. In its answer to the complaint, Crompton stated that it did not have sufficient knowledge to admit or deny the allegation. Subsequently, Crompton moved to amend that answer and deny that it designed, manufactured, and sold the shredding machine. Crompton based its motion to amend on information it purportedly became aware of that indicated that the machine in question was designed, manufactured, and sold by James Hunter Corporation (Hunter) prior to Crompton's purchase of Hunter. Crompton claimed that it did not assume liabilities for the negligent design until after it acquired Hunter and therefore was not liable for the shredding machine. Issue May a court deny a request to amend an answer if the amendment will result in the expiration of the statute of limitations when the statute would not have otherwise expired in the ordinary course of the proceedings? Holding and Reasoning (Huyett, J.) Yes. As an initial matter, a denial on the ground of lack of knowledge is deemed an admission when the party obviously had the knowledge or information necessary to admit or deny the complaint. Therefore, because any liability Crompton assumed on account of its purchase of Hunter arose from the sale contract between Crompton and Hunter—and because Crompton clearly had access to and knowledge of that agreement—the court will treat Crompton's averment that it did not have sufficient knowledge to admit or deny David's complaint as an admission. As for whether Crompton can amend the answer being treated as an admission, a court may deny a request to amend an answer if the amendment will result in undue prejudice to the other party. In this case, David's complaint was filed 11 months before the expiration of the statute of limitations. However, Crompton's delay in denying liability allowed the statute of limitations to expire, thus precluding David from seeking compensation from another party. This delay is unduly prejudiced to David and, therefore, Crompton's motion to amend its answer is denied and Crompton's answer will be treated as an admission.

Galloway v. United States (Judgment as a Matter of Law and the Problem of Finality)

Rule of Law A directed verdict does not violate the Seventh Amendment. Facts Galloway (plaintiff) served in the military intermittently between 1917 and 1922. He claimed to experience severe psychological problems as a result of the period of time he served in France, from 1917 through 1919. Many years later, he applied for total disability benefits from the Veterans Administration, but he was not granted total disability. Galloway, through his wife, filed suit, and at the close of evidence in the trial, the district court granted the United States' (defendant) motion for a directed verdict. The court of appeals affirmed, and the United States Supreme Court granted certiorari. Issue Does a directed verdict violate the Seventh Amendment? Holding and Reasoning (Rutledge, J.) No. A directed verdict does not violate the Seventh Amendment. History does not support a finding that all causes of action must be heard by a jury if the plaintiff desires it. The Amendment was not designed to allow parties to proceed through to trial, regardless of the case's merit. In fact, it was designed to protect the jury trial's most fundamental elements, not all of its procedural details. Here, Galloway has not met his burden of proving that he experiences a continuous disability. The testimony presented during trial leaves a gap of nearly ten years essentially unaccounted for; he only presents expert testimony reflecting on that time period. His wife did not testify, and the testimony from Galloway's friend was vague. The evidence Galloway presented falls short of what is required to show that his mental disability is total and permanent, and the trial court was correct to grant the United States' motion for a directed verdict. The holding below is affirmed. Dissent (Black, J.) A motion for a directed verdict should only be granted when, without weighing the credibility of the witnesses, there is no evidence whatsoever of a genuine dispute of material fact. This court's holding further imbues the court with power at the expense of the jury. In this case, the court made determinations based on the credibility of a witness and rejected his testimony. That is not the role of the court; it is the role of the jury. Further, there is substantial evidence in this case that Galloway may truly suffer from a total and permanent mental disability. At the very least, now that Galloway has been informed that expert testimony is not sufficient to prove his mental disability during the ten year period, he should have the opportunity to present other evidence relating to his mental status during that period, at a new trial.

United Mine Workers of America v. Gibbs (Supplemental Jurisdiction)

Rule of Law A federal court can exercise pendent jurisdiction over state and federal claims if the federal and state claims are the type that would be expected to be heard at a single hearing and are "derive[d] from a common nucleus of operative fact." Facts In the spring of 1960, the Tennessee Consolidated Coal Company laid off 100 miners from one of its mines. The workers were members of the United Mine Workers of America's (UMW) Local 5881 (defendant). Later that summer, Grundy Company, a subsidiary of Consolidated, opened a mine nearby and gave Paul Gibbs (plaintiff) a contract to haul coal from the mine to the railroad. Many of the jobs at the new mine were given to members of the Southern Labor Union. Not long after work began, members of UMW prevented work from occurring, often resorting to physical violence against workers. They believed that the jobs at the new mine had been promised to members of their union. Gibbs lost his haulage contracts and claims that he was unable to obtain other hauling contracts as a result of a UMW plan against him. He sued the UMW's international parent in the United States District Court for the Eastern District of Tennessee. He claimed violations of § 303 of the Labor Management Relations Act as well as Tennessee common law. The jury found for Gibbs under both federal and state law and awarded both compensatory and punitive damages. The trial court eventually set aside the award of damages under the federal claim. The court of appeals affirmed the trial court's ruling. Issue May a federal court hear a case based on a state claim if the federal claim is found to be wanting but the claims arise from the same factual bases? Holding and Reasoning (Brennan, J.) Yes. Pendent jurisdiction is a long-settled concept in federal jurisdiction permitting a federal court to hear a case that is premised both on federal and state law. A court may hear such a claim so long as both claims grow from the same factual background and they constitute one case. Courts have been given significant latitude in determining whether or not they may hear a claim constituting pendent jurisdiction, focusing their analysis specifically on judicial economy and fairness. Additionally, trial courts should take note of the role state claims play in the case. If they constitute the overwhelming basis of the claim, then they should be dismissed and are best left for a decision by state courts. However, if they are as significant as the federal claims at issue, then they should be allowed to continue so long as the federal counts can be sustained. This determination, while normally made at the pleading stage, may be made at any time during the litigation, including during and after trial. Facts may be presented at trial that can be determinative of jurisdiction in spite of a thorough airing of issues at the pleading stage. In this case, the § 303 claims and the Tennessee common law claims implicated questions of federal pre-emption. Additionally, the federal questions did not play a minor role at the trial but rather were an important element of Gibbs' case. Therefore, the decision of the district court not to dismiss the state claim is affirmed.

Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg (Federal Question Jurisdiction)

Rule of Law A federal court may have jurisdiction over a state cause of action, if the action has a substantial federal component in actual controversy, and federal jurisdiction would not disrupt the balance of labor between state and federal courts. Facts In 1994, the Internal Revenue Service (IRS) seized Michigan real property belonging to Grable & Sons Metal Products, Inc. (Grable) (plaintiff) to satisfy federal back taxes Grable owed to the IRS. After giving Grable the statutorily guaranteed notice of the upcoming sale via certified mail, the IRS sold the property to Darue Engineering and Manufacturing (Darue) (defendant). Five years after the sale, Grable filed a motion to quiet title in state court, alleging that he did not receive proper notice of the sale because he was not personally served in the manner required by 26 U.S.C. §6335, but rather received notice via certified mail. Darue removed the action to federal court, arguing that the case presented a federal question, because it required interpretation of a federal tax law. The district court found that the federal jurisdiction was appropriate, and the United States Court of Appeals for the Sixth Circuit affirmed. The United States Supreme Court granted certiorari on the jurisdictional question. Issue When a state cause of action addresses a substantial federal question, may the case be properly removed to federal court? Holding and Reasoning (Souter, J.) Yes. A state-law cause of action may give rise to federal question jurisdiction, if the case relies on the application and analysis of a federal law. A state-law cause of action may give rise to a federal question, and thereby give the federal court federal question jurisdiction, if the right to relief is based in the application of federal law. In order for federal question jurisdiction to be proper, the federal law must actually be in controversy, and this controversy must be substantial. Furthermore, the court must consider whether taking the case would upset the balance of labor between state and federal courts. In this case, federal question jurisdiction is appropriate. While the cause of action here is a state quiet title dispute, the issue is whether or not the IRS properly provided Grable notice of its property's sale, as defined by federal tax law. Both the government and individual litigants alike benefit from having access to federal judges who are familiar with tax issues, and because quiet title actions very rarely involve a federal component, there is little likelihood that giving the federal court jurisdiction over this issue will flood the federal courts. This holding is not contrary to Merrell Dow Pharmaceuticals Inc. v. Thomson, 509 U.S. 579 (1993). In Merrell Dow, the court held that in a suit alleging five common tort law claims and one violation of a federal law with no private cause of action, federal jurisdiction is improper. While the fact that the federal law provided no private cause of action was an important factor in that decision, as is the case here, an equally important factor was the balance between state and federal courts. If federal jurisdiction was found proper whenever a state tort claim is supported by a federal law, the federal courts would be flooded with cases which are primarily the purview of state courts. That is not the case here, and therefore this court must distinguish the holding in Merrell Dow from the holding in this case. The decision of the court of appeals is affirmed.

Erie R. Co. v. Tomkins (Erie)

Rule of Law A federal court sitting in diversity must apply state substantive law, whether statutory or common law. Facts While walking along the railroad tracks, Harry Tompkins (plaintiff), a citizen of Pennsylvania, was injured by a train owned by Erie Railroad Co. (Erie) (defendant). Tompkins sued Erie, a New York company, for negligence in New York federal court. At trial, Erie argued that Tompkins was a trespasser and, under Pennsylvania state law, the company was not liable unless its conduct was wantonly negligent. Tompkins argued that federal general law should apply and determine Erie's duty and liability. The trial judge applied the rule from Swift v. Tyson, 41 U.S. (16 Pet.) 1 (1842), holding that federal courts were only bound to apply state statutory and customary law, not state common law. Thus, the trial court applied the general law. Because the majority rule was that railroad company owed a duty of ordinary care to travelers like Tompkins, the district court granted recovery for Tompkins. The circuit court affirmed judgment for Tompkins claiming that federal courts could use their discretion on matters of general law. The United States Supreme Court granted certiorari. Issue Must a federal court sitting in diversity apply state common law? Holding and Reasoning (Brandeis, J.) Yes. Swift v. Tyson (1842) held that federal trial courts exercising diversity jurisdiction were free to disregard state law and exercise independent judgment on matters of general jurisprudence. The Swift decision had been controversial from its inception and had many judicial defects. The Swift rule prevented uniformity in state administration, created uncertainty for plaintiffs and defendants, and resulted in discrimination and unequal treatment under the law. For example, corporate parties could avoid applying state common law in a suit by reincorporating under the laws of a new state in order to establish diversity, e.g., Black & White Taxicab v. Brown & Yellow Taxicab, 276 U.S. 518 (1928). Thus, to avoid injustice and further discrimination, the law of the state should be applied in diversity of citizenship cases on general matters, regardless of whether it is made by its courts or its legislature. A federal trial court exercising diversity jurisdiction must respect and enforce state law. Refusing to use state law in general matters represents an unconstitutional invasion of state autonomy and a denial of its independence. The Constitution does not give the federal courts the power to create a "general federal common law." To do so would undermine the sovereignty of the state governments. Therefore Swift is overturned. Concurrence (Reed, J.) The Swift decision was merely erroneous, not unconstitutional. It is unlikely that without federal statutory direction, federal courts would be required to follow state decisions. It is also doubtful that Congress does not possess the authority to declare what rules of substantive law govern federal courts. The majority's reasoning purports to entirely re-interpret the Constitution. Dissent (Butler, J.) The only questions raised by Erie Railroad Co. were whether its duty should have been defined by Pennsylvania common law and whether Tompkins was contributorily negligent. The constitutional questions decided by the majority were not raised or argued, nor were they necessary to dispose of the case. The Swift doctrine has been in place "since the foundation of the government," almost without question. There is no suggestion that Congress did not have the authority to make the rule as it was interpreted under Swift. Further, by statute, the federal government has a right to intervene in any case where the constitutionality of an act of Congress is challenged. The majority should have assigned the case for reargument of the constitutional issues and permitted the attorney general to intervene. Regardless, none of that should have even been considered, because under the law of Pennsylvania and pretty much everywhere else, Tompkins was contributorily negligent.

Guaranty Trust Co. v. York (Erie)

Rule of Law A federal court, exercising jurisdiction based strictly on diversity of citizenship, must abide by any state legal rule that would be outcome determinative if held in state court. Facts York (plaintiff) sued Guaranty Trust Co. (Guaranty) (defendant) for alleged breach of trust. The suit was a federal diversity action and New York substantive law governed. Guaranty claimed the suit was barred by the statute of limitations. York argued that since the action was "in equity," the federal court was not bound by the statute of limitations. The court of appeals agreed and permitted the suit to continue. The United States Supreme Court granted certiorari. Issue Must a federal court, exercising jurisdiction based strictly on diversity of citizenship, abide by any state legal rule that would be outcome determinative if held in state court? Holding and Reasoning (Frankfurter, J.) Yes. A federal court, exercising jurisdiction based strictly on diversity of citizenship, must abide by any state legal rule that would be outcome determinative if held in state court. Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938), sought to reorient the proper balance of judicial power between state and federal courts. No longer must courts inquire into whether the statute of limitations falls under procedural or substantive law. The inadequacies of this inquiry resulted in inequitable treatment of parties similarly situated. The outcome of their case was dependent on whether the party was in state or federal court. For this reason, when determining whether to apply federal or state law, courts should consider the outcome of the litigation. If applying federal law would result in a substantially different outcome, then the court should apply state law. Because in this particular case federal law would provide a remedy while New York law would bar York's suit, the court should apply state law. The court of appeals' decision is reversed and remanded for further proceedings consistent with this decision.

Mason v. American Emery Wheel Works (Erie)

Rule of Law A federal district court may infer from dicta what a different state court would hold if it were presented with a similar issue. Facts Mason (plaintiff) was injured by an emery wheel manufactured by American Emery Wheel Works (AEWW) (defendant). Mason was working in Mississippi when the injury occurred and AEWW was a Rhode Island corporation. Mason brought suit in federal court in Rhode Island. AEWW filed a motion to dismiss based on a lack of privity as the emery wheel in question had passed through a number of owners before being bought by Mason's employer. The district court granted AEWW's motion to dismiss on the basis of Ford Motor Co. v. Myers (1928), which required privity to sue a manufacturer on a products liability claim. In doing so, however, the district court noted that the modern trend of states was not to require such privity and that it was reluctantly making its decision based on Ford. Mason appealed on the grounds of E.I. Du Pont De Nemours & Co. v. Ladner (1954). In Du Pont the Supreme Court of Mississippi did not expressly overrule Ford because it disposed of the issue on another ground. However, the Supreme Court of Mississippi did state that "the principle seems now to be well established by the decision of many courts that a person who has had no [privity] with a manufacturer may nevertheless recover from such manufacturer for damages . . . ." Issue May a federal district court infer from dicta what a different state court would hold if it were presented with a similar issue? Holding and Reasoning (Magruder, C.J.) Yes. A federal district court may infer from dicta what a different state court would hold if it were presented with a similar issue. In Du Pont, the Supreme Court of Mississippi inferred that it was prepared to change the rule on privity that it had laid down in Ford. The court here therefore bases its decision on the likely soon-to-be revised law of Mississippi and finds that privity between Mason's employer and AEWW is not required for Mason to recover. The district court's judgment dismissing the case is vacated and the case is remanded. Concurrence (Hartigan, J.) Although it is clear in this case what the Supreme Court of Mississippi would have held if presented with the direct issue of privity, the question of how clear dicta must be to win out over a previously controlling decision presents a difficult question moving forward.

Parklane Hosiery Co. v. Shore (Issue Preclusion)

Rule of Law A litigant who was not a party to a prior judgment may nonetheless use that judgment offensively to prevent a defendant from relitigating issues resolved in the earlier proceeding, provided that (1) the plaintiff could not easily have joined in the earlier action and (2) use of the judgment will not result in unfairness to the defendant. Facts Shore (plaintiff) brought a stockholder's class action against Parklane Hosiery Co. (Parklane) (defendant), alleging that Parklane had issued a proxy statement that contained materially false and misleading information and statements, directly in violation of federal securities laws and the regulations promulgated by the Securities and Exchange Commission (SEC). Before the case went to trial, the SEC also sued Parklane, likewise alleging that the proxy statement Shore complained of contained materially false and misleading information and statements. Following a nonjury trial, the district court entered a declaratory judgment in favor of the SEC, finding that the proxy statement was materially false and misleading. The Second Circuit Court of Appeals affirmed the district court's judgment. Shore then moved for partial summary judgment against Parklane, asserting that Parklane was collaterally estopped from relitigating the issue of whether the proxy statement contained materially false and misleading statements, as was determined in the SEC lawsuit. The district court denied the motion on the ground that such an application of collateral estoppel would deny Parklane its Seventh Amendment right to a jury trial. The court of appeals reversed, concluding that the Seventh Amendment preserves the right to a jury trial only with respect to issues of fact not already adjudicated in a prior proceeding. The United States Supreme Court granted certiorari. Issue May a litigant who was not a party to a prior judgment nonetheless use that judgment offensively to prevent a defendant from relitigating issues resolved in the earlier proceeding? Holding and Reasoning (Stewart, J.) Yes. The purpose of collateral estoppel is to protect litigants from relitigating an identical issue with the same party and promoting judicial economy by preventing needless litigation. Until 1971, the scope of collateral estoppel was limited by the doctrine of mutuality, which provided that neither party could use a prior judgment as an estoppel against the other unless both parties were bound by the judgment. However, the doctrine of mutuality was abandoned by the Court in Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S 313 (1971), which permitted the defensive use of collateral estoppel (i.e. a plaintiff was estopped from asserting a claim that the plaintiff had previously litigated and lost against another defendant). In contrast, the present case involves an offensive use of collateral estoppel (i.e. a plaintiff is seeking to estop a defendant from relitigating issues which the defendant previously litigated and lost against another plaintiff). The offensive use of collateral estoppel may be unfair to a defendant in cases where the defendant was sued for nominal damages in the first action and did not vigorously defend, denied certain procedural advantages in the first action, or where the judgment relied upon as a basis for the estoppel is inconsistent with one or more previous judgments in the defendant's favor. However, despite the potential for unfairness to the defendant, trial courts should be granted broad discretion to determine when offensive collateral estoppel should be applied. Therefore, where a plaintiff could easily have joined in the earlier action or application of offensive estoppel would be unfair to the defendant, a trial judge should not allow the use of offensive collateral estoppel. None of the aforementioned circumstances that would argue against the offensive use of collateral estoppel is present in this case. Firstly, Shore probably could not have joined the SEC's injunctive action. Secondly, Parklane had every incentive to litigate the SEC lawsuit fully and vigorously due to the seriousness of the allegations. Thirdly, the judgment in the SEC's action was not inconsistent with any previous decision. Finally, Parklane was not presented with any procedural disadvantages in the first action that might affect the outcome of the second action. The decision of the court of appeals is affirmed. Dissent (Rehnquist, J.) The Seventh Amendment has not been repealed, which means the protections afforded in 1791 when it was enacted persist today. The amendment must be construed according to historical standards. Courts cannot dramatically alter the substance of the common law right under the guise of "procedural" changes. Either party may demand a jury if one was authorized for actions of that kind in 1791. Here, a jury trial would have been granted to determine whether the proxy statement was false and misleading. At that time, collateral estoppel was only effective when both parties were bound by the previous ruling. While courts may have dispensed with this requirement, the substance of the jury trial right remains. Using offensive collateral estoppel to deny a defendant a jury trial is a substantive change to the common law right. Even if offensive collateral estoppel does not run afoul of the Constitution, it is improper in this case. Parklane never had a right to a jury trial in the SEC lawsuit. Moreover, public policy favors jury trials, and a jury might well reach a different result. The negligible cost savings involved here do not justify diminishing this important right. Defendants in administrative actions will now have to settle with the agency or risk losing their right to a jury trial in later actions, which is not a "club" Congress intended administrative agencies to have.

Mas v. Perry (Diversity of Citizenship)

Rule of Law A party is domiciled in the state where her true, fixed, and permanent home is located. Facts Mr. and Mrs. Mas (plaintiffs) were graduate students at Louisiana State University (LSU). Mr. Mas was a French national, and Mrs. Mas was from Mississippi. They married at Mrs. Mas's home in Mississippi before returning to LSU for two years; then, they moved to Illinois for approximately four months, after which they moved back to Louisiana. While the couple lived in Louisiana, their landlord, Perry (defendant), watched them through a two-way mirror in their bedroom, without the Mases knowledge or consent. The couple filed suit against Perry in federal court in Louisiana, and Perry challenged the court filing, alleging that Mrs. Mas was not diverse from him. The district court held that Mrs. Mas was a resident of Mississippi, and Perry appealed. Issue Is a party who currently resides in one state, but does not intend to stay in that state, domiciled there for the purposes of diversity jurisdiction? Holding and Reasoning (Ainsworth, C.J.) No. A party who temporarily lives in one state, but has a permanent residence in another state, is domiciled in the state where her permanent residence is located for the purposes of diversity jurisdiction. In order to attain diversity, the parties on one side must live in a different state from the parties on the other side at the time the case is filed. It is the burden of the party pleading diversity citizenship to prove that diversity exists. To determine whether diversity jurisdiction exists, the court must look at where the parties are domiciled; that is, where the parties have their true, fixed, and permanent homes. To change where she is domiciled, a party must both take up residence in a different location and intend to stay at the new location. Here, logic indicates that Mrs. Mas must be a resident of Mississippi. While under common law, a wife is generally considered to be domiciled in the same state as her husband, there are many exceptions to this rule. Mr. Mas is a French foreign national, so if Mrs. Mas were domiciled in the same location as her husband, she would not be domiciled in any state. Nor does it make sense to make Mrs. Mas a domiciliary of Louisiana, as she is a student and only temporarily residing there. Although Mrs. Mas does not intend to return to Mississippi, she has not yet acquired a new domicile, and as such remains a Mississippi citizen. The decision of the lower court is affirmed.

Cummings v. General Motors Corp. (The Scope and Management of Discovery)

Rule of Law A party is not obligated to disclose witnesses or documents, whether favorable or unfavorable, that it does not intend to use. Facts Tracey Cummings (plaintiff) got into a car accident and was paralyzed. She brought suit against General Motors Corp. (GM) (defendant), the car's manufacturer, alleging a defect in the seat and seatbelt. GM alleged that her injuries were not the result of a defect, but rather because she was reclined in the seat at the time of the accident. Cummings produced evidence that her child was in a rear-facing child seat behind her seat, so she could not have reclined the seat. GM produced evidence that the car seat was actually facing forward, giving Cummings room to recline. The jury found in favor of GM. Cummings appealed and one month after the verdict found videos produced by GM in an unrelated trial that allegedly tended to show that it was impossible for Cummings to have had her seat reclined at the time of the accident. Seven months after discovery of the video, Cummings filed a motion for relief based on Rule 60(b) of the Federal Rules of Civil Procedure, arguing that the videos fell within her previous discovery requests. The district court denied the motion as untimely and lacking support. Cummings appealed. Issue Is a party required to automatically produce any document relevant to the disputed facts at issue in the case? Holding and Reasoning (Kelly, Jr., J.) No. Under Rule 26 of the Federal Rule of Civil Procedure, a party is not required to automatically produce any document relevant to the disputed facts at issue in the case. In fact, a party is not obligated to disclose witnesses or documents, whether favorable or unfavorable, that it does not intend to use. Here, GM did not intend to use the video in question at this trial. Accordingly, it was not required to disclose the video. The district court's denial of Cummings's motion is affirmed.

Celotex Corp. v. Catrett (Summary Judgment)

Rule of Law A party making a motion for summary judgment does not need to provide affirmative evidence in the form of affidavits to support its motion. Facts Catrett (plaintiff) sued a number of asbestos manufacturers including Celotex Corp. (defendant) in district court, claiming that her husband died from exposure to the manufacturers' asbestos. Celotex motioned for summary judgment on the ground that Catrett failed to present any evidence showing that her husband had been exposed to Celotex's products. In objection to the summary judgment, Catrett submitted three documents that suggested the decedent had been exposed to Celotex's products. The district court granted summary judgment, because Catrett lacked sufficient evidence to show her husband had been exposed to Celotex asbestos in the District of Columbia or anywhere else. The court of appeals reversed on the ground that Celotex had not offered any evidence to support its motion. The United States Supreme Court granted certiorari. Issue Does a party making a motion for summary judgment need to provide affirmative evidence in the form of affidavits to support its motion? Holding and Reasoning (Rehnquist, J.) No. Rule 56(c) directs the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to establish the existence of an element essential to that party's case, and bears the burden of proof of demonstrating that element at trial. Summary judgment is designed to afford the parties a just, speedy and inexpensive resolution to their controversies. The party seeking summary judgment carries the initial responsibility of informing the court of the reason why the motion should be granted by identifying those parts of the lawsuit lacking a genuine issue of material fact. However, there is no specific requirement under Rule 56 that the movant provide affidavits to support its motion. A party making a motion for summary judgment does not need to provide affirmative evidence (in the form of affidavits) to support its motion. The court of appeals incorrectly assumed that the moving party was expressly or impliedly required to provide affidavits or other evidence disproving the adverse party's claim. No such requirement exists under Rule 56(c). The summary judgment motion should be used to identify factually insufficient claims or defenses. While the moving party does not need to present affirmative evidence, the nonmoving party is expected to present some form of affirmative evidence to overcome the challenge. The court of appeals should have looked at Catrett's evidence produced in the trial court to see if her claim was warranted. The court of appeals' decision is reversed and remanded so that an appropriate review of Catrett's evidence can be conducted. Concurrence (White, J.) In order to receive summary judgment, the movant must support the motion in some way. Submitting conclusory allegations to the court is insufficient. Dissent (Brennan, J.) The majority's legal analysis is correct, but incorrectly applied. If the burden of persuasion is with the nonmoving party, the moving party may request summary judgment by either submitting affirmative evidence disproving an essential element of the claim or demonstrating to the court that the evidence on record is insufficient. Celotex has elected to take the second option, but its motion cannot succeed with conclusory assertions. While affirmative evidence is not required under the second option, an affirmative showing of the absence of evidence is necessary. Celotex did not meet its burden of production in showing that Catrett did not possess any evidence supporting her claim.

Janney Montgomery Scott, Inc. v. Shepard Niles, Inc. (Joinder of Parties - Real Parties in Interest, Permissive Joinder, and Compulsory Joinder)

Rule of Law A party must be joined if the court cannot accord complete relief to existing parties without that party, or if disposing of the action without that party would impair the party's ability to protect its interests in the subject matter of the litigation or leave an existing party subject to a substantial risk of double obligations. Facts Janney Montgomery Scott, Inc. (Janney) (plaintiff) contracted to serve as an advisor to The Underwood Group, Ltd. (Underwood), and all of Underwood's subsidiaries, including Shepard Niles, Inc. (Shepard) (defendant). Janney brought suit against Underwood in state court and also brought this federal suit against Shepard for breach of contract, but did not join Underwood, the sole signatory of the contract, in the suit. Shepard filed a motion for judgment for failure to join an indispensable party. The United States District Court for the Eastern District of Pennsylvania granted the motion, finding that a decision against Shepard in the case would have an improper negative effect on Underwood in Janney's pending state action. Janney appealed. Issue Does the fact that a decision against one co-obligor in a federal breach of contract action could create precedent detrimental to the other co-obligor in a future state action make the other co-obligor's joinder in the federal action compulsory? Holding and Reasoning (Hutchinson, J.) No. A party must be joined if, (1) without that party, the court cannot accord complete relief to existing parties, or disposing of the action without that party would (2) impair the party's ability to protect its interests in the subject matter of the litigation or (3) leave an existing party subject to a substantial risk of double obligations on account of the omitted party's interests. In the present case, (1) the court is able to afford complete relief to Janney and/or Shepard without the joinder of Underwood. The contract at issue imposes joint and several liability against the parties, so complete relief may be granted against Shepard individually. (2) Failure to join Underwood would not impair Underwood's ability to protect its interests. A decision against Shepard would be against Shepard only. It would not directly affect Underwood, and it would not affect Underwood's right to contribution or indemnity from Shepard. In addition, contrary to the United States District Court for the Eastern District of Pennsylvania's findings, the fact that a decision against Shepard in this case may provide persuasive precedent against Underwood in the state action does not make Underwood's joinder compulsory. Finally, (3) failure to join Underwood would not leave Shepard with a substantial risk for double obligations. If Shepard is held not liable in the present federal action, Shepard is precluded from being held liable in the state action. Alternatively, if Shepard is held liable in this federal action, that liability applies only to Janney and Shepard remains free to seek contribution or indemnity from Underwood. As a result of the foregoing, Underwood's joinder is not necessary under Rule 19(a) of the Federal Rules of Civil Procedure. The United States District Court for the Eastern District of Pennsylvania is reversed and Shepard's motion is denied.

Piper Aircraft Co. v. Reyno (Forum Non Conveniens)

Rule of Law A plaintiff may not defeat a motion to dismiss on grounds of forum non conveniens merely by showing that the substantive law that would be applied in the alternative forum is less favorable to the plaintiffs than that of the present forum. Facts In 1976, a small commercial aircraft crashed in Scotland, killing the pilot and five passengers. The deceased were all Scottish citizens and residents. The plane was manufactured in Pennsylvania by Piper (defendant), and the propellers were manufactured in Ohio by Hartzell (defendant). Reyno (plaintiff), the administratrix of the estates of the five passengers, filed wrongful death actions against Piper and Hartzell in California state court, alleging negligence and strict liability. Reyno admitted to filing the action in the United States because its laws were more favorable to her case than those of Scotland. Piper and Hartzell removed to federal district court in California and then sought a transfer to the Middle District of Pennsylvania. The California district court granted these motions. After both cases were moved to federal district court in Pennsylvania, Piper and Hartzell sought to dismiss the case on grounds of forum non conveniens. The Pennsylvania district court granted the motions, citing the discretion courts have to dismiss a case when an alternative forum has jurisdiction to hear the case, and when trial in the chosen forum would be burdensome to the defendant. The Third Circuit Court of Appeals reversed on the ground that dismissal for forum non conveniens is not appropriate where the law of the alternative forum is less favorable to the plaintiff. Piper and Hartzell appealed to the United States Supreme Court. Issue May a plaintiff defeat a motion to dismiss on grounds of forum non conveniens merely by showing that the substantive law that would be applied in the alternative forum is less favorable to the plaintiffs than that of the present forum? Holding and Reasoning (Marshall, J.) No. The possibility of an unfavorable change in substantive law should never be a relevant consideration in a forum non conveniens inquiry. If conclusive or substantial weight were given to the possibility of a change in law, the forum non conveniens doctrine would be rendered useless and American courts would become even more attractive to foreign plaintiffs, increasing the flow of litigation into the United States. The central purpose of a forum non conveniens inquiry is to ensure that the trial is convenient. In this vein, a resident or citizen plaintiff is entitled to greater deference when it has chosen the home forum because it is reasonable to assume the choice is convenient. The same cannot be said for a foreign plaintiff. The forum non conveniens determination is at the discretion of the trial court and may be reversed only when there has been a clear abuse of discretion. To guide trial court discretion, in Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947), the Court set out "private interest factors" and "public interest factors" affecting the convenience of the forum. As to private interest factors, although records concerning the design, manufacture, and testing of the propeller and plane are located in the United States, a large proportion of the relevant evidence is located in Great Britain. Most importantly, the district court was correct to conclude that Piper and Hartzell's inability to implead potential third-party defendants supports holding the trial in Scotland. If Piper and Hartzell can show the accident was caused by the negligence of the pilot, the plane's owners, or the charter company, they will be relieved of liability. As to public interest factors, if the case were tried in Pennsylvania, then Pennsylvania law would apply to Piper and Scottish law to Hartzell. A trial involving two sets of laws would be confusing to the jury. Further, Scotland has a strong interest in this case given that the accident occurred in its airspace, all the decedents were Scottish, and apart from Piper and Hartzell, all potential plaintiffs and defendants are either Scottish or English. Therefore, the district court did not abuse its discretion in deciding that public and private interests support moving the trial to Scotland. The judgment of the court of appeals is reversed.

Dyer v. McDougall (Summary Judgment)

Rule of Law A plaintiff may not withstand a summary judgment if the only possible evidence he could bring at trial is evidence of the demeanor of the witnesses against him. Facts Dyer (plaintiff) brought a suit for slander against MacDougall (defendant). Dyer claimed that: (1) MacDougall said to Almirall that Dyer sent a letter to the shareholders of the Queensboro Corporation that blackmailed MacDougall; and (2) MacDougall's wife, as MacDougall's agent, said to Dyer's sister-in-law, Mrs. Hope, that Dyer had "written and sent out a blackmailing letter." In affidavits and a deposition, MacDougall and his wife denied making the statements and Almirall and Mrs. Hope denied hearing the statements. The trial court granted summary judgment to the defendants on the grounds that Dyer had no evidence to bring at trial that could sustain his claim. Dyer appealed. Issue May a plaintiff withstand a summary judgment if the only possible evidence in his favor at trial is evidence of the demeanor of the witnesses against him? Holding and Reasoning (Hand, J.) No. A defendant is entitled to summary judgment if he shows that there is no genuine dispute as to a material issue of fact and as a result he is entitled to judgment. Put another way, if a defendant succeeds in showing that a plaintiff does not have enough evidence to sustain the plaintiff's burden of proving his claim at trial, the defendant is entitled to summary judgment. In the depositions of this case, MacDougall and his wife denied making the slanderous statements, and Almirall and Mrs. Hope denied hearing the statements. Assuming that the witnesses will testify the same way at trial, the only evidence that Dyer could possibly bring at trial to support his claim is the demeanor of the four witnesses on the stand. Although evidence of a witness's demeanor is relevant, it is not, on its own, sufficient to win a verdict at trial. This is because if such demeanor evidence was sufficient to win a verdict, there would never be a ground for appeal because the demeanor evidence observed at the trial could not be reviewed by an appeals court. In addition, although it is possible that Dyer may be able to elicit an admission on the stand, this distinct possibility is not enough to avoid summary judgment either. As a result, Dyer has no admissible evidence to bring at trial to sustain his slander claim. Therefore, the trial court's grant of summary judgment is affirmed. Concurrence (Frank, J.) Judge Hand is correct in holding that Dyer is unable to sustain his burden of proof solely based on the trial court's disbelief of the witnesses' testimony. However, Judge Hand's proposition that there would be no grounds for appeal if demeanor evidence alone were used to reach a verdict is troubling. If this proposition were true, then the same argument could be made in any case where a directed verdict is based on oral testimony. Demeanor, whether relied on heavily or not at all, is always part of oral testimony and therefore can never be properly reviewed. Judge Hand's argument "cuts too far."

Marrese v. American Academy of Orthopaedic Surgeons (Claim Preclusion)

Rule of Law A state court judgment does not preclude a later suit based on federal law if the federal suit could not have been brought in state court. Facts Dr. Marrese (plaintiff) and Dr. Treister (plaintiff) were two orthopaedic surgeons practicing in the Chicago area. They both applied for membership in the American Academy of Orthopaedic Surgeons (the Academy) (defendant) and were denied admission. Neither doctor received a reason for the denial, nor was a hearing to challenge the denial available to them. Both doctors sued the Academy in the Circuit Court of Cook County, Illinois. The doctors alleged that the Academy violated the right to associate provided in the Illinois Constitution. They did not claim any violations of state antitrust laws. The Academy moved to dismiss the complaint on the grounds that the doctors failed to state a cause of action. The Illinois court granted the motion and dismissed the case with prejudice. After the doctors had exhausted their state appeals, they filed a suit in the United States District Court for the Northern District of Illinois, alleging that the Academy violated federal antitrust laws. The Academy filed a motion to dismiss, arguing that the previous state action based on the same set of facts precluded the doctors from bringing a subsequent case in federal court. The district court denied the motion. The Academy appealed to the United States Court of Appeals for the Seventh Circuit, which reversed the district court. The doctors appealed. Issue Can a state court judgment preclude a suit based on federal law that can only be brought in federal court? Holding and Reasoning (O'Connor, J.) No. The Full Faith and Credit Clause of the U.S. Constitution requires each court to give credit to the rulings of other courts. This effect extends to the preclusive effect of the state court's ruling. This constitutional requirement was given statutory power by 28 U.S.C. § 1738, which requires a federal court to rely on the preclusion law of the state in which the previous case was litigated in order to determine whether a federal case is precluded. When interpreting § 1738, the federal court must determine if there is an express or implied exception to § 1738 in the state law or the federal law on which the new suit is based. The instant claim cannot be brought in state court, as federal antitrust claims cannot be prosecuted in state courts. Rather, they can only be prosecuted in federal court. Neither § 1738 nor Illinois law preclude a claim because it was not brought in a court that does not have subject-matter jurisdiction over the claim. In this particular case, the contours of Illinois preclusion law must be reviewed by the district court to determine if state law would explicitly bar this claim. Therefore, the ruling of the court of appeals is reversed and the case is remanded to the district court for a further review of Illinois preclusion law. Concurrence (Burger, C.J.) It is likely that, once this case is remanded, Illinois state law will be silent as to the preclusive effect of the state decision on the federal case here. Therefore, this Court should have determined the effect of such statutory silence on claim preclusion. The Court does not do so today, but will soon be forced to.

Cohen v. Beneficial Industrial Loan Corp. (Judgment as a Matter of Law and the Problem of Finality)

Rule of Law A statute requiring that a bond be posted before a shareholder brings a derivative suit is both constitutionally permissible and sufficiently substantive to be applied by a federal court sitting in diversity. Facts A shareholder derivative action is a lawsuit in which the shareholder of a corporation alleges that the corporation is being managed in a way that benefits the management, not the shareholders. The shareholder must make a demand to the company that it recoup its losses from the managers who took benefits beyond what they should have received, and if the company does not comply with the request, the aggrieved shareholders can sue the company. Because this litigation can be very cumbersome to the corporation, New Jersey adopted a law providing that if a plaintiff in a shareholder derivative suit owns less than five percent of the shares of a company it is suing, that shareholder must post a bond to institute the litigation. If the shareholder does not win, the shareholder must pay the corporation's attorney fees. Cohen (plaintiff) owned approximately .0125 percent of Beneficial Industrial Loan Corp. (defendant), which did business in New Jersey. Cohen believed that Beneficial's management was enriching itself at the expense of the corporation, and brought suit in federal court. The district court held that it was not bound to follow the New Jersey statute requiring a bond because, under the rule of Erie R. Co. v. Tompkins, 304 U.S. 64 (1938), the statute was merely procedural. The court of appeals reversed and ordered a bond to be posted. Cohen appealed to the United States Supreme Court. Issue Must a federal court apply New Jersey's rule requiring plaintiffs in shareholder derivative actions to post a bond if they control only a small minority of shares? Holding and Reasoning (Jackson, J.) Yes. A state has an interest in ensuring that a minority shareholder does not bring an action which depletes the accounts of the corporation, and thus injures all the other shareholders. The corporate managers whom the suit accuses of wrongdoing have in theory been chosen and are supported by the majority of shareholders. Thus, the directors bear the imprimatur of the majority, while the minority shareholder bringing a derivative suit does not. It is well within the power of the state to decide that the best way to protect the interests of the shareholders is to require the plaintiff to post a bond ensuring that he will be able to pay the fees of the corporation in the event that his litigation is not successful. It is also within the state's purview to decide that if a minority shareholder has five percent or more of a company's stock, he will be sufficiently attuned to the company's bottom line so as not to bring a derivative suit when the effect will be to diminish the value of the overall corporation. In this case, New Jersey's statute does not raise an unconstitutional barrier to entering the courts. New Jersey's rule creates a new liability for Cohen, one that would not have existed without the law. Accordingly, it is not a state procedural rule but a substantive rule, which binds the federal courts. The courts cannot ignore the choice that New Jersey made by holding that New Jersey's substantive requirement was merely a procedural matter. The court of appeals is affirmed, and Cohen must post a bond to continue the suit.

Zubulake v. UBS Warburg LLC (Sanctions)

Rule of Law A trial judge can, at his discretion, sanction a party for the destruction and significant alteration of evidence or the failure to preserve property for another's use as evidence in pending or reasonably foreseeable litigation. Facts Laura Zubulake (plaintiff) sued UBS (defendant) for gender discrimination, failure to promote, and retaliation. In response to her claim that all her allegations could be proven by email correspondence sent to UBS employees, the judge ordered the parties to share the costs of retrieving the backup tapes containing the emails. UBS accordingly ordered its employees to preserve information stored on backup tapes. When several backup tapes were discovered missing, Zubulake moved for sanctions against UBS for failure to preserve the missing tapes and the emails contained therein in federal district court. Issue Whether a party can be sanctioned for spoliation of evidence that is not relevant to the litigation. Holding and Reasoning (Scheindlin, J.) No. The obligation to preserve evidence arises when the party has notice that the evidence is relevant to pending or reasonably foreseeable litigation. UBS instructed its employees to retain information stored on backup tapes, so all its employees were aware of the potential for litigation and were under a duty to preserve what they reasonably should have known was relevant to the litigation. UBS employees did not comply with the order to preserve the information on the backup tapes. Thus they were liable for spoliation of the evidence and were grossly negligent if not reckless in their failure to preserve the evidence. However, Zubulake failed to demonstrate that the lost emails would have been favorable to her. Prior to the motion at issue she submitted sixty-eight other emails. None of them supported an inference of gender discrimination, so it is unlikely that the missing emails would have either. Since the emails would not have been favorable to her case the evidence was not relevant and UBS was not liable for their spoliation. Nonetheless UBS's failure to produce the requested emails means Zubulake had to re-depose witnesses regarding the destruction of the emails. Because UBS should have produced these emails in the first place, UBS should bear the costs of Zubulake re-deposing these witnesses.

Quackenbush v. Allstate Insurance Co. (Judgment as a Matter of Law and the Problem of Finality)

Rule of Law An abstention-based order remanding a suit to state court is appealable as a final order. Facts In an attempt to collect the assets of the liquidated Mission Insurance Company (Mission), the Insurance Commissioner for the State of California (Commissioner) (plaintiff), as trustee for Mission, filed suit against Allstate Insurance Company (Allstate) (defendant) in state court, claiming contract and tort damages for Allstate's breach of reinsurance agreements. Allstate removed the suit to federal court based on diversity of citizenship. The Commissioner sought to remand the case to state court, claiming that the federal district court should abstain from hearing the case because its order may interfere with California's regulation of Mission's liquidation. The district court agreed with the Commissioner and remanded the case to state court. On appeal, the United States Court of Appeals for the Ninth Circuit determined as an initial matter that the remand order was appealable under 28 U.S.C. § 1291, or the final judgment rule. Issue Is an abstention-based order remanding a suit to state court appealable as a final order? Holding and Reasoning (O'Connor, J.) Yes. An abstention-based order remanding a suit to state court is appealable as a final order. Under the final judgment rule, parties may only appeal after a final judgment has been ordered. Although an abstention-based remand order is not "final" in the traditional sense (in that the suit continues in state court after the remand), such a remand to a state court puts the parties "effectively out of court" and the federal court surrenders jurisdiction, making its role in the litigation final. This type of an order is final in the sense that it does not allow the parties back in federal court on the matter in question. Such orders must be reviewable. In this case, therefore, the Court determines that the district court's abstention-based remand order is appealable as a final judgment under 28 U.S.C. § 1291. The United States Court of Appeals for the Ninth Circuit is affirmed.

Insolia v. Philip Morris, Inc. (Joinder of Parties - Real Parties in Interest, Permissive Joinder, and Compulsory Joinder)

Rule of Law Claims of multiple parties will be combined if the claims assert a right to relief jointly or with respect to the same transaction or occurrence and any issue of law or fact common to all plaintiffs or defendants will arise in the action. Facts Insolia, Mays, and Lovejoy (plaintiffs), former smokers diagnosed with lung cancer, brought suit against major cigarette manufacturers and tobacco industry trade organizations (defendants), claiming an industry-wide conspiracy to deceive customers about the dangers of smoking. The claims of the plaintiffs were joined pursuant to Rule 20 of the Federal Rules of Civil Procedure. The defendants filed a motion to sever the claims of the plaintiffs because the claims were not sufficiently similar. Specifically, the plaintiffs started to smoke at different ages; the plaintiffs smoked different brands of cigarettes; the plaintiffs quit for different reasons; and there is evidence that Mays contracted cancer due to a work-related accident unrelated to smoking. Issue Can claims of multiple parties be joined if their claims arise under circumstances that are similar, but are factually different and would require distinct evidence and discovery to prove? Holding and Reasoning (Crabb, J.) No. Claims of multiple parties will be combined if they assert any right to relief jointly or with respect to the same transaction or occurrence and any issue of law or fact common to all plaintiffs or defendants will arise in the action. In the current case, the only aspect of the plaintiffs' individual claims that are common is the alleged industry conspiracy. However, the plaintiffs started to smoke at different ages—importantly, Insolia began smoking before the defendants began their propaganda about the effects of smoking; the plaintiffs bought different brands of cigarettes; and the plaintiffs quit under different circumstances. In addition, there are questions of medical causation as Mays may not have contracted lung cancer from cigarette smoke. In sum, there are too many distinct issues among the plaintiffs and their claims do not arise from the same transactions. The claims thus cannot be joined under Rule 20, and the defendants' motion is granted.

Mohawk Indus., Inc. v. Carpenter (Judgment as a Matter of Law and the Problem of Finality)

Rule of Law Deferring review of adverse attorney-client privilege orders does not threaten the attorney-client privilege such that all such orders should be immediately reviewable. Facts Norman Carpenter was an employee of Mohawk Industries, Inc. (Mohawk). Carpenter was terminated from his employment after alerting human resources to his belief that Mohawk had been employing undocumented immigrants. Mohawk, at the time, had been the subject of a class action suit alleging that Mohawk had been lowering the wages of legal employees by hiring undocumented workers. Mohawk's counsel in the class action suit met with Carpenter and allegedly pressured him to retract his statement. Carpenter refused and was subsequently terminated. Carpenter brought suit, alleging Mohawk terminated his employment under false pretenses. The plaintiffs in the class action learned of Carpenter's complaint and requested an evidentiary hearing regarding Carpenter's statement. At the hearing, Mohawk testified as to the circumstances involving Carpenter's termination. After the evidentiary hearing in the class action, Carpenter sought an order to compel disclosure of certain information subject to the attorney-client privilege in the instant action. The district court granted the motion. Mohawk then filed a notice of appeal from the district court's decision. The Court of Appeals dismissed the appeal, on grounds that it lacked jurisdiction under 28 U.S.C. § 1291. Specifically, the Court of Appeals held that the order was not an immediately appealable collateral order. Issue Whether deferring review of adverse attorney-client privilege orders threatens the attorney-client privilege such that all such orders should be immediately reviewable. Holding and Reasoning (Sotomayor, J.) No. Section 1291 provides for the immediate review of collateral orders. Collateral orders are typically those that lead immediately to the entry of final judgment. Collateral orders also include prejudgment orders that are conclusive, resolve important questions distinct from the merits, and are effectively unreviewable if review is deferred until final judgment. Generally, discovery orders are not deemed final under § 1291. However, Mohawk argues that immediate review is necessary here in order to preserve the attorney-client privilege. The issue here is whether deferring review of an order adverse to the attorney-client privilege until final judgment so imperils the attorney-client privilege that immediate review should be allowed. In making such a determination, the Court does not examine whether an individual claim is entitled to immediate review, but rather whether an entire class of similar claims is entitled to immediate review under the collateral order doctrine. This Court finds that deferred review does not threaten the attorney-client privilege because remedies such as vacating the judgment and remanding for new trial are available. Moreover, deferring review does not necessarily threaten the free exchange of information between attorney and client, in part because there are a number of other reasons that privileged communications may need to be disclosed, such as situations in which the privilege is waived or the communication falls within an exception to the privilege. Furthermore, there are other remedies available to a party whose attorney-client privilege is threatened. For instance, an injured party may seek certification for an interlocutory appeal pursuant to 28 U.S.C. § 1292 or seek a petition to the court of appeals for a writ of mandamus. An injured party may also simply ignore the discovery order and incur sanctions and resort to a contempt appeal. Such remedies reduce any hardship sustained by a litigant required to disclose privileged information. Notably, in the majority of cases, the lack of availability of collateral order review will be inconsequential. The fact that in some cases, it will result in considerable harm does not warrant making an entire class of such cases immediately appealable. Finally, the Court observes that Congress explicitly left the question of what types of prejudgment orders should be immediately reviewable to the Court through the rulemaking process. Thus, any determination as to what type of order should be immediately reviewable should be made in the rulemaking context. In light of the remedies available to an injured party, deferring review of an order adverse to the attorney-client privilege does not render such an order effectively unreviewable upon final judgment. Consequently, this Court holds that the collateral order doctrine does not allow for the immediate review of orders affecting the attorney-client privilege. The judgment of the Court of Appeals for the Eleventh Circuit is affirmed. Concurrence (Thomas, J.) The Court recognizes that the rulemaking is the proper context where this decision should be made. Thus, the Court should reserve all value judgments made in this opinion for the rulemaking process.

Gasperini v. Center for Humanities (Erie)

Rule of Law Federal courts must apply state law standards of review for jury awards, even if they conflict with federal standards. Facts Journalist William Gasperini (plaintiff) reported from Central America. The Center for Humanities, Inc. (Center) (defendant) asked to borrow slide transparencies Gasperini took. Gasperini lent the Center 300 transparencies, which were lost. Gasperini sued in the United States District Court for the Southern District of New York under diversity jurisdiction. The Center conceded liability, and the only issue for trial was damages. Gasperini's expert witness testified that the industry standard value was $1,500 per transparency. The jury awarded Gasperini $450,000, and the Center moved for a new trial under Federal Rule of Civil Procedure (FRCP) 59, arguing that the award was excessive. The district court denied the motion without comment, and the Center appealed. New York state law gives appellate courts the authority to order a new trial if a jury damage award "deviates materially from what would be reasonable compensation." N.Y. C.P.L.R. (CPLR) § 5501(c). The court of appeals vacated the judgment pursuant to CPLR § 5501(c), finding that the verdict materially deviated from reasonable compensation. The court of appeals ordered a new trial unless Gasperini agreed to reduction to $100,000. Gasperini petitioned the United States Supreme Court for certiorari, which was granted. Issue Must a federal appellate court apply state law standards for excessiveness of jury verdicts, even if they conflict with federal standards? Holding and Reasoning (Ginsburg, J.) Yes. Federal courts must apply state law standards of review for jury awards, even if they conflict with federal standards. Under the Seventh Amendment's Reexamination Clause, which applies to federal but not state courts, no fact tried by a jury may be reviewed unless permitted by common law rules. The issue is whether a federal court may review a jury verdict under the standard set by state law under the Reexamination Clause. The traditional standard for determining whether an award is excessive is whether the award "shock[s] the conscience of the court." This decision was left to the trial court. New York codified a different standard in CPLR § 5501(c), which allows appellate judges to order a new trial if a jury award is excessive under the deviates materially standard. CPLR § 5501(c) is substantive, because it directly impacts a plaintiff's damage award, and procedural, because authority to review jury verdicts is vested in appellate courts. Federal courts sitting in diversity are bound to apply state substantive law and federal procedural law. Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). Courts first applied the outcome-determination test to see whether failure to apply the state law would result in a significantly different result. Guaranty Trust Co. v. York, 326 U.S. 99 (1945). If so, the law was substantive; if not, it was procedural. Later rulings clarified that federal judges should apply this standard with the goals of discouraging forum shopping and ensuring equity in mind. Hanna v. Plumer, 380 U.S. 460 (1965). A law that results in a substantially larger recovery in federal than state court is substantive. Here, the district court had not ruled on the excessiveness of the jury award before the court of appeals ordered a new trial. Historically, the prevailing view was that the Reexamination Clause prohibited appellate review of a trial judge's refusal to set aside a jury verdict as excessive. The modern view that the amendment does not bar such review is affirmed. State and federal interests can be accommodated. A district court judge must first decide whether a jury award is excessive under the deviates materially standard, and the decision may be reviewed for abuse of discretion by the court of appeals. The judgment of the court of appeals is vacated, and the case is remanded to the district court to review the jury verdict under the standard of CPLR § 5501(c). Dissent (Scalia, J.) The Court's holding is prohibited by the Seventh Amendment. Under the common law of 1791, federal appellate courts could only review jury awards on writ of error for questions of law. The proper amount of damages is a question of fact, not law. Review of an award amount necessarily requires reexamining the facts, and the fact that the courts of appeals have all decided they are empowered to do so is irrelevant. The majority's "accommodation" of state and federal interests interferes with the federal system and violates federal policy. CPLR § 5501(c) changes the rule of review, not the rule of law. The fact that the outcome would be changed does not mean the law is substantive; "[o]utcome-determination 'was never intended to serve as a talisman.'" The majority applies state damage review standards to trial courts, but not appellate courts, and in so doing will likely "destroy the uniformity of federal practice." The Court's Erie interpretation is flawed and entirely unnecessary. FRCP 59 allows appellate courts to order a new trial for any reason permitted "in the courts of the United States." This is controlling and does not permit application of state law. Dissent (Stevens, J.) The district court had the chance to consider whether the jury award was excessive. The district court failed to do so, and the court of appeals properly ordered a new trial. The Reexamination Clause does not prohibit federal appellate review of jury awards, but the Seventh Amendment does not require an abuse of discretion standard of review, as the majority holds. Nevertheless, the majority's reliance on pragmatic considerations lessens the problem. Under Erie, federal courts sitting in diversity must apply state standards for reviewing jury awards. The court of appeals should be affirmed.

Louisville & Nashville R. Co. v. Mottley (Federal Question Jurisdiction)

Rule of Law For a suit to arise under the Constitution and laws of the United States, giving a federal court jurisdiction to hear the case, a plaintiff must allege a cause of action based upon those laws or that Constitution. Facts In 1871, the Mottleys (plaintiffs) were injured in a railway accident. The railroad, Louisville & Nashville Railroad (defendant), settled the Mottleys' claims with a lifetime pass for free transportation on its line. In 1906, Congress passed an act forbidding passes granting free transportation. In 1907, the railroad refused to renew the Mottleys' passes. The Mottleys brought suit in federal district court, seeking specific performance of their settlement agreement with the railroad. The Mottleys alleged that the act did not apply to their free pass and that, if the law is construed as prohibiting such passes, it deprives them of their property in violation of the Fifth Amendment. The railroad demurred to the Mottley's complaint. The trial court overruled the demurrer and entered judgment in favor of the Mottleys. The railroad appealed to the United States Supreme Court. Issue For a suit to arise under the Constitution and laws of the United States, giving a federal jurisdiction to hear the case, must a plaintiff allege a cause of action based upon those laws or that Constitution? Holding and Reasoning (Moody, J.) Yes. In order for federal question jurisdiction to be granted, a plaintiff's statement must show that her original cause of action arises under the Constitution or a federal law. It is not sufficient that the plaintiff anticipates that the defendant will raise a federal statute in defense. Instead, the plaintiff's "well pleaded complaint" must state that the defendant directly violated some provision of the Constitution, laws or treaties of the United States. The decision of the trial court is reversed and the case remanded with instructions to dismiss for lack of jurisdiction.

Hanna v. Plumer (Erie)

Rule of Law For service of process in federal diversity actions, Federal Rule of Civil Procedure 4(e)(2)(B) is the appropriate standard of process because the rule does not exceed congressional authority or constitutional boundaries of jurisdiction. Facts Hanna (plaintiff), an Ohio resident, got into a car accident with Plumer (defendant), a Massachusetts resident. Plumer died from the accident and Hanna sued in federal court the estate of Plumer for personal injuries. Hanna served Plumer's executor with process by leaving a copy of the summons/complaint at his residence with someone of suitable age and discretion. This practice was in accordance with Federal Rules of Civil Procedure (FRCP) 4(d)(1) [now found at 4(e)(2)(B)]. However, Massachusetts state law requires that executors be served by hand. Plumer's estate filed for summary judgment on the grounds that Hanna did not properly serve the executor within the statue of limitations. Plumer's estate argued that state law, and not the FRCP, should apply. The district court and the court of appeals both ruled in Plumer's favor and the United States Supreme Court granted review. Issue Is Federal Rule of Civil Procedure 4(e)(2)(B) the appropriate standard for service of process in federal diversity actions since the rule does not exceed congressional authority or constitutional boundaries of jurisdiction? Holding and Reasoning (Warren, J.) Yes. For service of process in federal diversity actions, FRCP 4(e)(2)(B) is the appropriate standard of process because the rule does not exceed congressional authority or constitutional boundaries of jurisdiction. The Erie doctrine, establishing an outcome determinative test, is not a strict standard. If the doctrine were strictly applied, then the FRCP would be meaningless in diversity cases since every procedural variation is outcome determinative in some fashion. The Erie rule was not intended or used to circumvent federal rules with state laws. Instead, state law was applied only when the situation was not fully governed by a federal rule. However, if there is a direct conflict between an existing federal rule and a state rule, the federal rule applies. It is also important to consider the basic principles of Erie when deciding whether or not to apply state law in diversity cases. The purpose of the Erie decision was to discourage forum shopping, and avoid inequitable administration of laws. Since a variation in the rule describing service of process is not likely to influence the choice of forum and the difference is too slight to be inequitable, the federal courts are permitted to apply the FRCP in this case. In general, federal courts are to apply state substantive law and federal procedural law. The decisions of the lower courts are reversed. Concurrence (Harlan, J.) While the Erie doctrine was concerned with forum shopping, and avoiding inequitable administration of laws, the Erie decision also recognized that our constitutional scheme mandates that state substantive law trump federal substantive law. The test for determining which system, state or federal, should apply is an analysis of whether the rule would affect the legality of the substantive conduct of the parties. If it does, state law must apply since the Constitution grants the states the authority to govern the primary activities of its citizens. The majority incorrectly grants the federal system too much authority by allowing federal rules to be superior to state laws regardless of the context. However, the decision is correct since the federal rule in this case is negligibly concerned with the parties' substantive conduct.

North Ga. Finishing, Inc. v. Di-Chem, Inc. (Values & Costs of Due Process)

Rule of Law Fuentes v. Shevin (1972) applies to a state statute that does not require more than a conclusory allegation for the issuance of the writ of garnishment. Facts The plaintiff sold various goods to the defendant, but the defendant did not pay the full balance and the plaintiff filed suit to recover. A Georgia law called for a writ of garnishment if the plaintiff or his attorney claimed that they had reason to believe that the defendant would somehow get rid of the goods during trial if no garnishment was issued. The plaintiff's president signed such an affidavit. A court clerk then ordered a writ of garnishment, freezing the defendant's bank account without a hearing or notice. The defendant appealed based on the United States Supreme Court's decision in Fuentes v. Shevin, 407 U.S. 67 (1972), which called for a hearing prior to garnishment. Issue Does Fuentes apply to a state statute that does not require more than a conclusory allegation for the issuance of the writ of sequestration? Holding and Reasoning (White, J.) Yes. Fuentes applies to a state statute that does not require more than a conclusory allegation for the issuance of the writ of garnishment. The Georgia statute in this case does not contain any of the "saving characteristics" that are seen in the Louisiana statute involved in Mitchell v. W.T. Grant Co., 416 U.S. 600 (1974). The Georgia statute does not require a clear showing of the nature of the claim and the grounds relied upon and does not even require participation of a judge. The lack of these safeguards combined with the lack of an opportunity for a hearing renders the statute invalidated under Fuentes. The lower court is reversed. Concurrence (Stewart, J.) Fuentes was in fact not overruled by Mitchell. Concurrence (Powell, J.) In garnishment cases, the garnishment should come only after the creditor provides a factual basis for the writ of garnishment. In addition, states should offer a post-garnishment hearing in which the creditor bears the burden of proving that garnishment is necessary. The Georgia statute in this case comes with neither of these requirements and therefore should be invalidated. Dissent (Blackmun, J.) Fuentes should not have been decided by a seven member Supreme Court. Doing so has now put the Court on a path of a long and tedious state-by-state analysis of these types of statutes.

Mitchell v. W.T. Grant Co (Values & Costs of Due Process)

Rule of Law Fuentes v. Shevin (1972) does not apply to a state statute that requires a clear showing of the nature of the claim and the grounds relied upon for the issuance of the writ of sequestration. Facts W.T. Grant Co. (Grant) (plaintiff) sold various appliances to Mitchell (defendant) on credit. Mitchell did not pay the full balance and Grant filed suit to recover. Under Louisiana law, Grant's lien on the appliances would expire if Mitchell transferred possession of the appliances. A Louisiana statute called for sequestration of such property if the creditor claimed that the debtor could "conceal, dispose of, or waste the property or the revenues therefrom, or remove the property from the parish, during the pendency of the action." The law provided that the sheriff would hold the property during the court proceedings. Grant's credit manager signed an affidavit stating that Grant had reason to believe that Mitchell would somehow dispose of the appliances during the proceeding. The trial judge then ordered sequestration of the appliances, directing the sheriff to take possession without a hearing or notice to Mitchell. Mitchell appealed based on the United States Supreme Court's decision in Fuentes v. Shevin, 407 U.S. 67 (1972), which called for a hearing prior to sequestration. Issue Does Fuentes apply to a state statute that requires a clear showing of the nature of the claim and the grounds relied upon for the issuance of the writ of sequestration. Holding and Reasoning (White, J.) No. Fuentes does not apply to a statute that requires a clear showing of the nature of the claim and the grounds relied upon for the issuance of the writ of sequestration. In Louisiana, unlike the states involved in Fuentes, the facts underlying a petition for sequestration must clearly show that a writ of sequestration is appropriate and warranted. Under the Louisiana sequestration statute "bare conclusory claims of ownership" are not enough to obtain sequestration. The Louisiana statute protects the interests of debtors and merely "seeks to minimize the risk of error of a wrongful interim possession by the creditor." There are many safeguards in place to ensure that a writ of sequestration is properly granted in Louisiana, as well as the opportunity for an immediate hearing after the seizure. Accordingly, this case is distinguishable from Fuentes and Fuentes does not require invalidation of the Louisiana sequestration statute. The lower court is affirmed. Concurrence (Powell, J.) The majority is correct in its judgment and it should therefore be declared that Fuentes is overruled. Dissent (Stewart, J.) This case is indistinguishable from Fuentes, and the majority simply overrules Fuentes without admitting that it is doing so. Dissent (Brennan, J.) Fuentes requires invalidation of the Louisiana sequestration procedure.

Adickes v. S.H. Kress & Co. (Summary Judgment)

Rule of Law In a motion for summary judgment, the moving party has the burden of showing the absence of a genuine issue as to any material fact. Facts On August 14, 1964, Sandra Adickes (plaintiff), a white schoolteacher, was refused service at the lunch counter at S.H. Kress & Co. (Kress) (defendant) in Hattiesburg, Mississippi, because she was accompanied by several of her African American students. After Adickes left the store, she was arrested on a charge of vagrancy. Adickes brought suit against Kress, alleging violation of her equal protection rights. She alleged two counts: (1) that she was refused service because she was in the company of African Americans, and there was a custom in the community of segregation in eating places; and (2) that the refusal of service and arrest were the result of a conspiracy between Kress and Hattiesburg police. At trial, Adickes did not prove that there had been other instances of a white person being refused service because he was accompanied by African Americans, and therefore failed to establish a custom, so the trial court directed a verdict in favor of Kress on the first count. The second count was dismissed on summary judgment before trial. The court of appeals affirmed with regards to both counts, Adickes appealed, and the United States Supreme Court granted certiorari. Issue Whether in a motion for summary judgment, the moving party has the burden of showing the absence of a genuine issue as to any material fact. Holding and Reasoning (Harlan, J.) Yes. In a motion for summary judgment, the moving party has the burden of showing the absence of a genuine issue as to any material fact. Rule 56 states that the court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law. When deciding a motion for summary judgment, the court must view the evidence in the light most favorable to the nonmoving party. If the movant does not establish the absence of a genuine issue, then the motion will be denied, even if the non-movant does not present opposing evidence. In this case, it was error to grant Kress' motion for summary judgment on Adickes' second count. Kress did not meet its burden of proving that there was no conspiracy between Kress and the Hattiesburg police. Kress would have had to show that there was no policeman in the store at the time of the incident, and that the policeman did not reach an understanding with Kress employees that Adickes not be served. Because Kress did not prove that there was no police presence in the store during the incident with Adickes, the summary judgment is reversed. The holding below is reversed and remanded.

Finley v. United States (Supplemental Jurisdiction)

Rule of Law In making determinations regarding recipients of government subsidies, the government may consider content but must remain viewpoint-neutral. Facts The National Foundation on the Arts and Humanities Act (NFAHA) requires the Chairperson of the National Endowment for the Arts (NEA) to ensure that "artistic excellence and artistic merit are the criteria by which grant applications are judged, taking into consideration general standards of decency and respect for the diverse beliefs and values of the American public." Finley and three others (plaintiffs) were performance artists who applied for NEA grants. A NEA advisory panel recommended approval of Finley's projects. The NEA Council then considered the projects, and a majority of the Council recommended disapproval. Finley was informed he had been denied funding, and brought suit against the NEA (defendant) in district court. Finley alleged that the NEA's grant-awarding policy violated their First Amendment rights. The district court granted summary judgment for Finley, and the court of appeals affirmed. The United States Supreme Court granted certiorari. Issue Whether a congressional act that limits funding to artists by taking into consideration generally accepted standards of decency violates the First Amendment. Holding and Reasoning (O'Connor, J.) No. Because Finley alleged that the NEA policy was facially invalid, they face a heavy burden in advancing their claim. To prevail, Finley has to demonstrate a substantial risk that application of the NEA provision would lead to the suppression of speech. Finley argues that the provision is a prime example of "viewpoint discrimination" because it rejects any artistic speech that either fails to respect mainstream values or offends standards of decency. The NEA argues, however, that the provision merely articulates "considerations" in the grant-awarding process, and does not operate as an absolute restriction on funding for art that is viewed as indecent or disrespectful. In deciding the correct interpretation, congressional intent in passing the NFAHA is useful. The fact that Congress passed the NFAHA to reform grant-awarding procedures and not as a tool for precluding speech undercuts Finley's argument that the NFAHA inevitably would be utilized as a tool for invidious viewpoint discrimination. Any content-based considerations that might be taken into account in the grant-awarding process are merely a consequence of the nature of arts funding. This is because funding is limited and the NEA has to deny grants for many projects with artistic value. Thus, a natural and accepted part of the NEA funding process is consideration of the content of art for the purpose of making value judgments and awarding funds based on many criteria. If a subsidy were manipulated to have a coercive effect, then judicial relief is an appropriate remedy. However, unless and until the NFAHA is applied in a manner that raises concern about the suppression of disfavored viewpoints, it is constitutional. Additionally on the subject of government subsidies, the government does not run afoul of the First Amendment by allocating competitive funding according to criteria that would be impermissible if direct regulation of speech or a criminal penalty was at stake. As long as legislation does not infringe on other constitutionally protected rights, Congress may choose to selectively fund a program to encourage certain activities it believes to be in the public interest, without at the same time funding an alternative program which seeks to address the public interest in another way. In doing so, the government is not discriminating on the basis of viewpoint, but is merely choosing to fund one activity to the exclusion of others. These principles stand for the proposition that the government can constitutionally choose to not subsidize Finley's projects without being accused of viewpoint discrimination. The decision of the lower courts is reversed. Concurrence (Scalia, J.) The majority is correct to uphold the ultimate constitutionality of the NFAHA, but its opinion effectively strips it of all meaning. The provision in question should be evaluated as written, and not distorted by the NEA—the agency that the NFAHA is meant to control. By its terms, the NFAHA establishes content and viewpoint-based considerations for the disbursement of government subsidies. This is constitutional, as the text of the First Amendment prohibits the government from "abridging" speech. In requiring the grant-awarding council at the NEA to consider "decency" and "diverse viewpoints" in making grant decisions, the NFAHA is not abridging speech. Speech that is not decent and inconsiderate of diverse viewpoints is still free to occur, but it is just not guaranteed government funding. The First Amendment guarantees a right to speech, not to government funding of speech. The NFAHA is constitutional because it does not interfere with the right to speech itself. Dissent (Souter, J.) Permitting "decency" and "respect for diverse public values" as considerations for awarding a government-subsidized grant necessarily mandates viewpoint-based decisions in the disbursement of subsidies. The government completely fails to explain why the NFAHA should be granted an exemption from the fundamental rule of the First Amendment against viewpoint discrimination in the exercise of public authority over expressive activity. The majority is mistaken in concluding that the NFAHA is not viewpoint-based, that it is not a regulation, and that the NEA could permissibly engage in viewpoint-based discrimination.

Tiffany v. Ebay (Amending and Supplementing the Pleadings - Rule 15)

Rule of Law In order to be liable for contributory infringement, a service provider must have more than a general knowledge or reason to know that its service is being used to sell counterfeit goods. Facts eBay, Inc. (eBay) (defendant) was an online marketplace where third parties sellers operated. Tiffany Inc. (Tiffany) (plaintiff), a high-end jewelry chain, discovered that counterfeit Tiffany jewelry was being sold on eBay. Among other methods designed to stop the practice, Tiffany sent eBay demand letters and filed Notice of Claimed Infringement (NOCI) forms. The demand letters did not specify which sellers were infringing Tiffany's trademark. The NOCIs did identify specific sellers. Upon receiving a NOCI, eBay removed the identified listing(s) and suspended repeat offenders from its service. Tiffany brought suit against eBay for contributory trademark infringement, among other things. The district court found that eBay was not liable for contributory infringement. Tiffany appealed. Issue Must a service provider have more than a general knowledge or reason to know that its service is being used to sell counterfeit goods in order to be liable for contributory infringement? Holding and Reasoning (Sack, J.) Yes. Under Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (1982), a service provider is liable for contributory infringement if it (1) induces a third party to infringe a trademark, or (2) continues to supply its service or product to one whom it knows or has reason to know is engaging in trademark infringement. In terms of counterfeit goods under the second method, a service provider must have more than a general knowledge or reason to know that its service is being used to sell counterfeit goods. In the present case, given the demand letters and NOCIs, among other forms of notice that Tiffany sent, it is clear that eBay had general knowledge that its service was being used to sell counterfeit Tiffany goods. However, such general knowledge is not sufficient to prove contributory infringement. Under the Inwood test, which the United States Supreme Court has deemed narrow, the service provider is liable if it continues to supply its service or product to one whom it knows or has reason to know is engaging in trademark infringement. This is not a generalized requirement; it is very specific. Tiffany has not shown that eBay continued to supply its service to specific parties that eBay knew or had reason to know was engaging in trademark infringement. Tiffany's demand letters did not specify which sellers were infringing its trademark. And although the NOCIs did so identify sellers, eBay promptly removed the listings that the NOCIs identified and suspended repeat offenders from its service. eBay thus did not continue to supply its product to a party whom it knew was engaging in trademark infringement. The district court's finding of no contributory infringement is affirmed. The case is remanded on other grounds.

Access Now v. Southwest Airlines Co. (2004) (Testing the Sufficiency of the Complaint)

Rule of Law In order to properly state a claim, the plaintiff must bring a suit that is covered by the statute referenced in the complaint. Facts Southwest Airlines (defendant) is one of the largest airlines in the United States and does a significant amount of its business via its website. This business includes the booking of flight reservations. Robert Gumson (plaintiff), a blind individual, sought to use the Southwest website with the assistance of certain technologies designed to allow disabled people to use the Internet. Southwest's website, however, was not designed in such a way as to allow these technologies to function. Therefore, it is impossible for the blind to navigate Southwest's website. Gumson along with Access Now, Inc. (plaintiff), an advocacy group for the disabled, sued Southwest in federal district court, alleging that Southwest's website violates Title III of the Americans with Disabilities Act (ADA). Southwest filed a motion to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Issue Must a plaintiff's suit be covered by a statute that is specifically named in the complaint? Holding and Reasoning (Seitz, J.) Yes. In order to survive a motion to dismiss brought under Rule 12(b)(6), a plaintiff must show that there is a statutory basis upon which its claim can be based. In this case, the plaintiff's case was based on Title III of the ADA, which specifically regulates places of "public accommodation." In examining both the statutory language itself as well as case law interpreting that phrase, it is not clear that a website can be considered a place of "public accommodation" under the ADA. Further, Title III of the ADA requires, if the place of "public accommodation" is not a physical, concrete location, it must at least have a nexus with a physical location. Here, no such nexus exists, since the closest nexus Access Now can identify, an airplane, is specifically exempt from coverage under the ADA. Access Now further argues that a site of "exhibition, display and a sales establishment" would be covered by the ADA. However, these locations are culled from various sections of the ADA and their definition must be determined using the words around them, specifically if those other words are more specific. This statutory interpretation tool is called ejusdem generis. Under this, the site of "exhibition, display and a sales establishment" cannot be read so broadly as to include a website. Therefore, Southwest's motion to dismiss is granted.

Upjohn Co. v. United States (Exemptions from Discovery - Confidentiality, Privilege, and Work Product Doctrine)... What's Upjohn??

Rule of Law In the corporate context, the attorney-client privilege applies to not only those high-level employees who have the authority to act on the legal advice of the attorney, but also to any of those employees who provide information to the attorney so that he may give such legal advice. Facts In response to an independent audit reflecting illegal payments to foreign government officials by employees of Upjohn (defendant), Upjohn's general counsel, Gerard Thomas, sent a questionnaire to Upjohn employees requesting any information they had concerning the payments. The IRS issued a summons requesting Upjohn's production of the questionnaires, but Upjohn refused to produce the questionnaires on the basis of attorney-client privilege. The district court enforced the summons and the United States Court of Appeals for the Sixth Circuit affirmed, holding that the attorney-client privilege did not apply in the corporate context to those employees that were not directly responsible for directing Upjohn's actions in response to legal advice. The United States Supreme Court granted certiorari. Issue Are questionnaires sent to a company's employees, including lower level employees, by its general counsel protected by the attorney-client privilege? Holding and Reasoning (Rehnquist, J.) Yes. In corporations the attorney-client privilege applies to all employees, including lower-level employees, who provide factual information to the attorney so that he may give the company sound legal advice. Although the courts below held that attorney communications with these lower-level employees are outside the scope of the attorney-client privilege because the employees do not have the authority to act on the attorney's legal advice, information from these employees is often required for the attorney to give sound and informed legal advice to those that do act on it. The lower courts' restriction of the privilege to those employees that act on legal advice discourages the communication of oftentimes necessary information from lower-level employees to the company's attorney. Lower-level employees can and do, within the scope of their employment, involve the companies in legal troubles so they will oftentimes have information relevant and necessary to an attorney providing legal advice. Thus, in this case, the questionnaires filled out by the Upjohn employees are protected by the attorney-client privilege. The questionnaires were responded to so that Thomas could give sound and informed legal advice to Upjohn and the employees knew that they were providing their responses to the company's general counsel and that the information was to be used in a legal investigation. It is important to note, however, that the facts contained within the questionnaires are not protected and that the prosecution may elicit such facts by questioning the employees directly. It just may not acquire the facts by looking at Thomas's privileged questioning of Upjohn's employees. Accordingly, the United States Court of Appeals for the Sixth Circuit is reversed as the questionnaires are protected communications within the attorney-client privilege. Concurrence (Burger, C.J.) The majority was correct to reject the United States Court of Appeals for the Sixth Circuit's limit on the application of the attorney-client privilege in the corporate context. However, the majority did not articulate a standard to govern similar cases in the future; it limited its holding to this case. To ensure uniform application of the privilege to corporations, the Court should adopt a clear standard.

Kozlowski v. Sears, Roebuck & Co. (Discovery Devices)

Rule of Law Once it is determined that items are within the scope of discovery, the party from whom the discovery is sought has the burden of showing some sufficient reason why the discovery should not be allowed. Facts Kozlowski (plaintiff) brought a products liability suit against Sears, Roebuck & Co. (Sears) (defendant) after he was severely burned when Sears's pajamas he was wearing "was caused to ignite." Kozlowski filed a motion to compel discovery of a record of other complaints or discussions involving personal injury caused by Sears's pajamas. A federal magistrate order compelled production of the records, but Sears did not produce. Kozlowski filed a motion for entry of default judgment which was granted by the United States District Court for the District of Massachusetts. Sears filed a motion to remove the default judgment, claiming that production of all of such records was impractical and nearly impossible. Issue Is the fact that compliance with an order compelling discovery would be costly or time-consuming generally sufficient to avoid the discovery? Holding and Reasoning (Julian, S.D.J.) No. Once it is determined that items are within the scope of discovery, the party from whom the discovery is sought has the burden of showing some sufficient reason why the discovery should not be allowed. The fact that compliance with an order compelling discovery would be costly or time-consuming is generally insufficient to avoid the discovery. In the case at bar, the records that Kozlowski seeks are within the scope of discovery because the existence of other complaints about a particular product is relevant in a products liability action about that product. Therefore, it is up to Sears to come up with a reason of why it should not have to comply with the court's order compelling the records. Sears has stated only that due to the way in which it keeps its records, producing such information would be "the equivalent of an impossible task." Such a reason is not sufficient to excuse Sears from producing the records. Accordingly, Sears's motion to dismiss the default judgment is denied.

Hickman v. Taylor (Exemptions from Discovery - Confidentiality, Privilege, and Work Product Doctrine)

Rule of Law Opposing counsel must demonstrate necessity, justification, or undue prejudice for access to counsel's written statements, private memoranda, and personal recollections. Facts On February 7, 1943, the tugboat "J.M. Taylor" (defendant) sank while helping to tow a car float belonging to the Baltimore & Ohio Railroad. Five crew members died in the accident. J.M. Taylor's owners and underwriters of the company hired attorneys to prepare defenses against potential suits of the deceased and to seek damages against Baltimore & Ohio Railroad. Fortenbaugh, one of the hired attorneys, privately interviewed four survivors of the accident after each had testified in a public hearing about the incident. Fortenbaugh interviewed other witnesses and memorialized his findings. Of the five estates of the deceased, only one estate, Hickman (plaintiff), filed suit in federal court against the tugboat owners and the railroad company under the Jones Act. In preparing a defense, opposing counsel asked for exact copies of all written statements and summaries of all information taken orally. Fortenbaugh declined on the basis of privilege taken in the course of preparing for litigation. The district court ordered him to comply. Taylor appealed. Issue Must opposing counsel demonstrate necessity, justification, or undue prejudice for access to counsel's written statements, private memoranda, and personal recollections? Holding and Reasoning (Murphy, J.) Yes. Opposing counsel must demonstrate necessity, justification, or undue prejudice for access to counsel's written statements, private memoranda, and personal recollections. Proper legal preparation demands that attorneys have freedom to prepare their legal theories free from undue interference or intrusion. If opposing counsel had unrestricted access to the work product of counsel, attorneys would stop memorializing their work to avoid complete exposure of their ideas. Without written detail of the attorney's work, the quality of legal representation would deteriorate to the detriment of the clients. Fortenbaugh's interviews and statements were secured through third parties, not through his clients. Therefore, this information is not a privileged attorney-client communication and is not exempt from discovery demands. However, the numerous interrogatories taken on public record and the free access to all the witnesses relevant to the case creates doubt why these open areas of investigation are not sufficient for opposing counsel. Hickman's counsel admits that the request for Fortenbaugh's information is for the purposes of verifying his own information. Such a reason does not merit intrusion into the work product of the opposing attorney. The lower court's decision is reversed. Concurrence (Jackson, J.) The Federal Rules of Civil Procedure should not be manipulated to advance unsure or unprepared attorneys and disadvantage attorneys who exhaustively prepare their cases. Lawsuits are structured as adversarial proceedings and attorneys must be protected from discovery demands that curtail competitive edges. Hickman's attorney's request for opposing counsel's work product to double check his own work is inconsistent with the judicial process.

Hickman v. Taylor (The Scope and Management of Discovery)

Rule of Law Opposing counsel must demonstrate necessity, justification, or undue prejudice for access to counsel's written statements, private memoranda, and personal recollections. Facts On February 7, 1943, the tugboat "J.M. Taylor" (defendant) sank while helping to tow a car float belonging to the Baltimore & Ohio Railroad. Five crew members died in the accident. J.M. Taylor's owners and underwriters of the company hired attorneys to prepare defenses against potential suits of the deceased and to seek damages against Baltimore & Ohio Railroad. Fortenbaugh, one of the hired attorneys, privately interviewed four survivors of the accident after each had testified in a public hearing about the incident. Fortenbaugh interviewed other witnesses and memorialized his findings. Of the five estates of the deceased, only one estate, Hickman (plaintiff), filed suit in federal court against the tugboat owners and the railroad company under the Jones Act. In preparing a defense, opposing counsel asked for exact copies of all written statements and summaries of all information taken orally. Fortenbaugh declined on the basis of privilege taken in the course of preparing for litigation. The district court ordered him to comply. Taylor appealed. Issue Must opposing counsel demonstrate necessity, justification, or undue prejudice for access to counsel's written statements, private memoranda, and personal recollections? Holding and Reasoning (Murphy, J.) Yes. Opposing counsel must demonstrate necessity, justification, or undue prejudice for access to counsel's written statements, private memoranda, and personal recollections. Proper legal preparation demands that attorneys have freedom to prepare their legal theories free from undue interference or intrusion. If opposing counsel had unrestricted access to the work product of counsel, attorneys would stop memorializing their work to avoid complete exposure of their ideas. Without written detail of the attorney's work, the quality of legal representation would deteriorate to the detriment of the clients. Fortenbaugh's interviews and statements were secured through third parties, not through his clients. Therefore, this information is not a privileged attorney-client communication and is not exempt from discovery demands. However, the numerous interrogatories taken on public record and the free access to all the witnesses relevant to the case creates doubt why these open areas of investigation are not sufficient for opposing counsel. Hickman's counsel admits that the request for Fortenbaugh's information is for the purposes of verifying his own information. Such a reason does not merit intrusion into the work product of the opposing attorney. The lower court's decision is reversed. Concurrence (Jackson, J.) The Federal Rules of Civil Procedure should not be manipulated to advance unsure or unprepared attorneys and disadvantage attorneys who exhaustively prepare their cases. Lawsuits are structured as adversarial proceedings and attorneys must be protected from discovery demands that curtail competitive edges. Hickman's attorney's request for opposing counsel's work product to double check his own work is inconsistent with the judicial process.

Fuentes v. Shevin (Notice)

Rule of Law Parties whose rights are to be affected are entitled to be heard, and in order that they may enjoy that right they must first be notified. Facts Fuentes (plaintiff) purchased a gas stove and later a phonograph from Firestone represented by court officer Shevin (defendant) under separate payment plans. Under the payment plan contract Firestone retained title but Fuentes could possess the property until she defaulted on payments. Following a dispute over maintenance of the stove, Firestone brought a repossession action in state court for Fuentes failing to make the monthly payments. Firestone instituted an action in small claims court for repossession and obtained a writ of replevin. The sheriff seized both the stove and phonograph from Fuentes's home even though Fuentes had not yet received the summons to answer Firestone's complaint. Fuentes had no notice of the writ. The Florida statute at issue makes no requirement of the applicant to make a "convincing showing" prior to seizure of the goods in question. The United States Supreme Court granted certiorari on the Fourteenth Amendment issues. Issue Whether a state may seize property pursuant to a writ of replevin without giving the affected party notice and an opportunity to be heard. Holding and Reasoning (Stewart, J.) No. Under the Fourteenth Amendment's Due Process Clause, parties whose rights are to be affected are entitled to be heard, and in order that may enjoy that right they must first be notified. Notice and opportunity to be heard must be granted at a meaningful time and in a meaningful manner. Any taking by the state of personal property requires this due process. Here, Fuentes's property was repossessed without any notice or opportunity to be heard. There is no public policy justifying this taking without due process, as the taking was only to serve Firestone's private interest. Accordingly, the statute authorizing issuance of the writ of replevin runs afoul of the Fourteenth Amendment's due process requirement. The judgment of the lower court is vacated and remanded.

McPeek v. Ashcroft

Rule of Law Restoring potentially relevant backed-up data is necessary for discovery only when the results and expense justify it. Facts Steven McPeek (plaintiff) filed an informal sexual harassment claim against his boss at the Bureau of Prisons with the Department of Justice (DOJ). After the complaint, McPeek claimed that he suffered humiliation and retaliation from his fellow government employees on account of the claim. McPeek filed suit against the U.S. government (defendant) in its role as his employer. During discovery, McPeek filed a motion attempting to compel the DOJ to search its backup computer systems in hopes of obtaining relevant data that was deleted by users but still stored on the backup tape. The DOJ objected, arguing that the distant possibility that such a search would produce relevant data did not justify the enormous costs involved. Issue Is restoring all potentially relevant backed-up data necessary for discovery in every case? Holding and Reasoning (Facciola, U.S. Magistrate J.) No. Restoring potentially relevant backed-up data is necessary for discovery only when the results and expense justify the search. In the present case, the court orders a "test run," ordering the DOJ to restore backed-up emails from only McPeek's supervisor's computer. When the production of those files is completed, the DOJ is ordered to file a certification of the time and money spent on the production as well as the results of the search. Upon that filing, the parties may argue why the results and expense do or do not justify additional searches of the DOJ's backed up data.

Walker v. Armco Steel Corp. (Erie)

Rule of Law Rule 3 of the Federal Rules of Civil Procedure does not toll a state statute of limitations or preempt state tolling rules. Facts Walker (plaintiff) filed a products liability suit against Armco Steel Corp. (Armco) (defendant) in Oklahoma federal district court on the basis of diversity of citizenship. The complaint was filed before the Oklahoma statute of limitations had run on the claim, but service of process was not actually made until after the statute of limitations had run. An Oklahoma state law did not deem an action to commence for purposes of the statute of limitations until process was served on the defendant. Based on the running of the statute of limitations without commencement of an action, therefore, Armco filed a motion to dismiss. Walker admitted that his claim would be dismissed under the state law, but argued that Rule 3 of the Federal Rules of Civil Procedure governed when an action is commenced and thus preempted the Oklahoma state law. The United States Supreme Court granted certiorari. Issue Does Rule 3 of the Federal Rules of Civil Procedure affect state statutes of limitations? Holding and Reasoning (Marshall, J.) No. Rule 3 governs the timing of various other federal rules, but does not toll a state statute of limitations or preempt state tolling rules. The Oklahoma statute of limitations is a substantive decision made by the state that service of process is an "integral part" of the statute of limitations. Because Rule 3 only governs the timing of federal rules, it does not conflict with the Oklahoma statute in question. Accordingly, Hanna v. Plumer (1965) does not apply. Rather, Erie Railroad Co. v. Tompkins (1938) and Ragan v. Merchants Transfer & Warehouse Co., Inc. (1949) apply. Under that precedent, because there is no controlling federal law on the issue of service requirements in relation to a statute of limitations, state service requirements control in state actions in federal court. As a result, the Oklahoma statute governs in this case, and Armco's motion to dismiss is granted due to the expiration of the statute of limitations for Walker's claims.

Arnestein v. Porter (Summary Judgment)

Rule of Law Summary judgment is inappropriate when a case's resolution depends on the credibility given to a particular witness's testimony. Facts Arnstein (plaintiff) was a composer who enjoyed some commercial success early in his career. Later on, however, this success evaporated as his career proceeded. Cole Porter (defendant) was an extremely successful composer whose work was well known worldwide. Arnstein filed a copyright infringement suit against Porter in federal district court, alleging that Porter stole several of Arnstein's works and turned them into some of Porter's most successful songs. During discovery, Arnstein was deposed and claimed that Porter's employees broke into Arnstein's apartment as part of a campaign of harassment. When asked if he had any proof to support these claims, Arnstein said he had none. Porter claimed that he had no knowledge of these alleged acts. Following discovery, Porter filed a motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. The motion was granted and the case dismissed. Arnstein appealed to the United States Court of Appeals for the Second Circuit. Issue Is summary judgment proper if a case will be resolved based on a determination of a particular witness's credibility? Holding and Reasoning (Frank, J.) No. Summary judgment is a procedural tool designed to avoid a trial in which there is no dispute of fact. Thus, the resolution of the case depends solely on a determination of law rather than fact. In a case properly resolved through summary judgment, a trial would add nothing. However, credibility determinations are decisions that are left in the hands of the jury. Therefore, a trial is indispensible when the outcome of the case depends upon whether a given witness or witnesses are credible. In this case, the controlling legal question is whether Porter had access to Arnstein's music. Arnstein can establish access if his claims that Porter's employees broke into his apartment are true. Without corroborating evidence, the only way to determine if the break-in took place is if Arnstein's testimony is credible. This, then, is an instance where the credibility of a witness (Arnstein in this case) dictates the outcome of the matter. Therefore, a trial is required in order to allow a jury to determine whether Arnstein's testimony is credible. The ruling of the district court is therefore reversed and remanded. Dissent (Clark, J.) Arnstein's claims in this matter are so legally insufficient that a trial should not be permitted. While cross-examination is an important tool by which to determine a witness' credibility, courts should only permit its use in a case where there are sustainable legal claims. This is not a case that has such a claim. Rather, there is insufficient similarity between Arnstein and Porter's songs. Therefore, the case should have been dismissed.

Castano v. The American Tobacco Co. (Class Actions)

Rule of Law The complexity and novelty of a particular class action can be sufficient to revoke class certification. Facts Castano (plaintiff) is the representative plaintiff for a class of plaintiffs that is defined as all nicotine-addicted individuals in the United States born after 1943, a class that would include millions of people. American Tobacco Co. (defendant) is one of eight tobacco companies who are being sued by Castano and the class. Castano alleges that American Tobacco was aware of the addictive nature of nicotine, withheld that information from the public, and in fact manipulated the level of nicotine in cigarettes to increase demand. Castano sued and the class was certified by the United States District Court for the Eastern District of Louisiana. The district court certified the class, ordering a four-stage litigation process. First, a jury would decide the "core liability issues" dealing with defendants' knowledge and their actions with regard to nicotine levels in cigarettes. Second, the jury would then decide issues of injury-in-fact of plaintiffs, proximate cause, reliance, and any affirmative defenses. Third, there would then be a determination of compensatory damages for each member of the class individually. Finally, a jury would determine the punitive damages to be awarded to each individual member of the class based on a ratio arrived at during the first phase. The defendants filed an appeal of the class certification. Issue Can a class action's complexity and novelty provide sufficient grounds for reversing certification of the class? Holding and Reasoning (Smith, J.) Yes. In this case, the district court failed to consider three areas that strongly counsel against certifying a class. First, this matter is replete with individual issues of state law. Many of the claims the plaintiffs pursue vary based on what state each individual class member lives. A significant example is the fact that the requirements for proving fraud vary from state to state. The district court fails to provide any method of resolving these significant conflicts, nor can one be arrived at without sacrificing the rights of the class members or the defendants. Second, it is not clear from the how a jury trial based on a tort of fraudulent addiction would proceed in practice. Plaintiff is alleging a novel tort and it is not clear how it would proceed in a class action setting. This counsels against certification of the class. Finally, it would not appear that a class action is not superior to a policy of pursuing separate actions on the part of each individual class member. As an initial matter, there are enormous issues with managing a class action suit involving millions of class members, all of which will require some level of individual fact finding. Additionally, the novelty of the tort being pursued does not permit the court to reflect on previous trials that have relied on this theory of liability. Therefore, it is not clear that such an individual approach would not be preferable. Finally, while the plaintiffs argue that they face significant obstacles as well as drawn out litigation if litigation is to proceed on an individual basis, those same obstacles will likely present themselves, and in potentially a more exaggerated form, in a class action proceeding. Therefore, the class certification is reversed and this case is remanded with instructions to dismiss the complaint.

Federated Dep't Stores, Inc. v. Moitie (Claim Preclusion)

Rule of Law The doctrine of res judicata is not subject to modification. Facts The Government filed suit against Federated Department Stores (plaintiff), alleging Federated had violated the Sherman Act by engaging in price fixing of women's clothing at Federated's California stores. Subsequently, several class action antitrust lawsuits comprised of local retailers were filed, including one by Moitie (defendant) in state court and Brown in the federal court. Both Moitie and Brown's complaints were nearly indistinguishable from the Government's complaint, except that Moitie's complaint was couched in state, rather than federal, law. Moitie's case was removed to federal court based on diversity and federal question jurisdiction, and the district court dismissed both Moitie's, Brown's, and the other five plaintiffs' antitrust suits on the basis that none of them had sustained a legally cognizable injury within the meaning of the Clayton Act. The plaintiffs in five of the lawsuits appealed. However, Moitie and Brown refiled their claims in state court instead of appealing. Moitie and Brown's re-filed claims were dismissed on res judicata grounds, and they appealed. While the appeals were pending, the United States Supreme Court issued a decision holding that retailers could sustain a legal injury to their business or property upon which relief could be granted under the Clayton Act; as a result of this holding, the United States Court of Appeals for the Ninth Circuit reversed and remanded the dismissals in the five antitrust cases. The court of appeals also reversed the district court's dismissal of Moitie and Brown's claims. Although the court acknowledged that res judicata prevented this reversal, it held that public policy and justice demanded an exception to the doctrine. The United States Supreme Court granted certiorari to determine whether the Ninth Circuit's exception to the res judicata doctrine was valid. Issue Is the doctrine of res judicata subject to modification? Holding and Reasoning (Rehnquist, J.) No. The doctrine of res judicata is not subject to modification. Res judicata provides certainty and finality to litigation and allows parties to reasonably rely on the final judgments of the courts. Disturbing this solid doctrine for individual equitable purposes would create much more havoc than benefit; ad hoc determinations of fairness are no substitute for res judicata. In this case, if Moitie and Brown wished to avoid preclusion on res judicata grounds, they simply had to appeal the dismissal of their claims, rather than re-file their complaints. Discontinuing this court's steadfast enforcement of res judicata for Moitie and Brown's individual benefit would be an unwise precedent. Finally, there is no reason to reach the merits on whether Brown's state claims alleged in his second complaint were properly dismissed, because his federal claims were precluded by res judicata with respect to his first claim. The holding below is reversed and remanded. Concurrence (Blackmun, J.) The majority should find that the dismissal of Brown's claims was precluded by res judicata with respect to his state law claims, even if he did not allege them in his first compliant. The dismissal of Brown's first set claims is res judicata for them all, because the doctrine applies both to claims actually raised and claims that could have been raised but were not. Dissent (Brennan, J.) Brown's second lawsuit alleges four distinct state law causes of action, none of which exist in federal law. It is the plaintiff's prerogative to couch his claim in either state or federal law, and Brown chose state law. He presented no federal questions, and therefore his case was improperly removed to federal court.

Byrd v. Blue Ridge Rural Electric Cooperative, Inc. (Erie)

Rule of Law The federal policy of having the jury answer questions of fact prevails over state rules that would interrupt the judge-jury relationship in federal court. Facts Byrd (plaintiff) was employed as an independent contractor by Blue Ridge Rural Electric Cooperative (Blue Ridge) (defendant) and was injured on the job. Byrd sued for negligence. Blue Ridge argued that because Byrd was doing the same work as its regular employees, Byrd was a statutory employee as defined by the South Carolina Workmen's Compensation Act (SCWCA). SCWCA does not allow employees to sue. Instead, employees must accept the statutory compensation benefits. The issue of whether Byrd qualifies as a "statutory employee" must be decided by the trier of fact. The state practice would have the factual question decided by the judge. However, the federal practice is to leave such a question up to the jury. The trial court found that following the state practice was appropriate. The United States Supreme Court granted certiorari. Issue Does the federal policy of having the jury answer questions of fact prevail over state rules that would interrupt the judge-jury relationship in federal court? Holding and Reasoning (Brennan, J.) Yes. Erie RR. Co. v. Tompkins, 304 U.S. 64 (1938), stated that federal courts exercising diversity jurisdiction must respect state-created rights and obligations. However, SCWCA's rule displacing the jury as the trier of fact is not a rule properly categorized as a state-created right or obligation. Guaranty Trust Co. v. New York, 326 U.S. 99 (1945), established a broader policy of enforcing all state rules consistently in federal and state courts, whether the rules concern state-created rights or obligations or rules of form and mode. This policy was established to avoid inequitable justice by having different outcomes of similar cases based solely on whether the case was tried in federal court or state court. However, the outcome of the case is only one factor to be considered when determining whether to apply state or federal law in diversity cases. There are other countervailing considerations that may overcome the policy of Guaranty Trust Co., such as respecting the independence of the federal system and the compelling federal interests included in that system. The federal system's interest in maintaining the traditional allocation of functions between judge and jury necessitate that the court follow the federal, rather than the state, rule. The federal policy of having the jury answer questions of fact prevails over state rules that would interrupt the judge-jury relationship in federal court. This policy is supported, if not commanded, by the Seventh Amendment to the Constitution. Contrary to Guaranty Trust Co., it is not certain, or even probable, that the outcome of this case would be different under the federal rule than under the state rule. The risk of a different outcome is slight since federal judges have the power to grant a new trial if the verdict appears to be against the weight of the evidence. Since the fear of outcome inconsistency is not present and there is a strong countervailing federal interest, the federal practice should not be superseded by state practice. The lower court's decision is reversed and remanded.

Hoffman v. Blaski (Transfer and the Difficulties of Challenging Jurisdiction)

Rule of Law The power of a district court to transfer an action to another district depends not upon the wish or waiver of the defendant but, rather, upon whether the transferee district was one in which the action might have been brought initially by the plaintiff. Facts Blaski (plaintiff) brought a patent infringement suit in the United States District Court for the Northern District of Texas (Texas District Court) against Howell and a Texas corporation (defendants). The defendants filed a motion under 28 U.S.C. § 1404(a) to transfer the suit to the United States District Court for the Northern District of Illinois (Illinois District Court). Section 1404(a) stated that a transfer may not be made unless it is for the convenience of the parties, in the interest of justice, and is a venue where the suit "might have been brought." The Illinois District Court lacked original venue over the action, but the Texas District Court nonetheless granted the defendant's motion to transfer because it was "in the interest of justice." Blaski appealed, and the United States Court of Appeals for the Fifth Circuit affirmed the transfer. When Judge Hoffman of the Illinois District Court was assigned the case on transfer, Blaski filed a motion to remand the suit back to the Texas District Court. Hoffman denied the motion. Blaski then petitioned the United States Court of Appeals for the Seventh Circuit, seeking a writ of mandamus forcing Hoffman to reverse his ruling. The court granted Blaski's writ and the defendants appealed. Issue May a district court transfer an action to another district "in the interest of justice" if the action could not have been brought in the transferee district initially? Holding and Reasoning (Whittaker, J.) No. The power of a district court to transfer an action to another district depends not upon the wish or waiver of the defendant but, rather, upon whether the transferee district was one in which the action might have been brought initially by the plaintiff. Thus, a district court may not transfer an action to another district "in the interest of justice" if the action could not have been brought in the transferee district initially. Because defendants have waiver power over venue, if defendants were permitted to transfer cases in this manner, it would be discriminatory against plaintiffs. Defendants would be able to transfer actions to districts wherever they wanted, but plaintiffs would not be able to do the same because of the defendants' waiver power. In the present case, because the Illinois District Court was not a proper initial venue for the case, transfer to that court was inappropriate, regardless of the interests of justice. Therefore, the United States Court of Appeals for the Seventh Circuit is affirmed, and Judge Hoffman is ordered to reverse his ruling and remand the case back to the Texas District Court. Dissent (Frankfurter, J.) The phrase "might have been brought" should be construed more broadly than the Court allows in this case. The legislative history of the section 1404(a) states that the section was drafted "in accordance with the doctrine of forum non conveniens." Consistent with this is a reading of the section that allows a transfer "regardless of the plaintiff's right as an original matter to sue him in the transferee court." Moreover, the Court's main argument about discrimination against the plaintiff does not hold true. Because under section 1404(a) a case can only be transferred if convenient for the parties and in the interest of justice, there is no way a plaintiff can be discriminated against by such a transfer. Accordingly, the writ of mandamus in this case should be denied.

Semtek Int'l, Inc. v. Lockheed Martin Corp. (Claim Preclusion)

Rule of Law The res judicata effect of a federal diversity judgment is such as would belong to judgments of the state courts rendered under similar circumstances and may not be accorded any higher sanctity or effect. Facts Semtek Intl. Inc. (Semtek) (plaintiff) sued Lockheed Martin Corp. (Lockheed) (defendant) in California state court for various breach of contract and business tort claims. The case was removed on the basis of diversity citizenship to federal court, and Lockheed moved for dismissal on the basis that Semtek's claims were barred by California's two-year statute of limitations. When the court dismissed the claim on its merits, Semtek refiled the suit in the state circuit court for Baltimore, Maryland, under which the claim would have been subject to a three-year statute of limitations. The court dismissed the claim, however, on the ground that dismissal of the case on its merits in federal court precluded the claim from being raised in state court. Issue Whether dismissal in federal court precludes the claim from being raised in state court. Holding and Reasoning (Scalia, J.) No. Existing federal law does not resolve the issue and since state law is at issue, there is no need for a uniform federal rule. To hold otherwise would encourage forum shopping and inequitable administration of laws, since parties would seek to remove cases to federal court under diversity jurisdiction for their claim-preclusive effect on cases brought in state courts. Here, the case was dismissed in federal court only because the California statute of limitations barred claims older than two years, but there is no federal interest in giving that limitation more effect (i.e. by holding it applicable in Maryland) than California state courts themselves could impose. This matter should not have been dismissed by the Maryland court and is remanded for further proceedings.

Executive Software N. Am., Inc. v. United States District Court For the Central District of California (Removal Jurisdiction and Venue)

Rule of Law Under 28 U.S.C. § 1367(c)(4), if a court declines supplemental jurisdiction of a pendent claim, the court must specify why the circumstances are exceptional, while also explaining that a balancing of the Gibbs values provides compelling reasons for declining jurisdiction. Facts Donna Page filed a discrimination suit in state court against Executive Software North America, Inc. (Executive Software) (plaintiff). Page's complaint contained two federal causes of action and three state causes of action. Executive Software removed the suit to federal court. The United States District Court of the Central District of California (District Court) (defendant) issued an order remanding the three state law claims to state court. In the order, the District Court outlined the requirements for exercising supplemental jurisdiction, from United Mine Workers v. Gibbs, 383 U.S. 715 (1966), and 28 U.S.C. § 1367, but did not give any reasons why it was remanding the state law claims in this case. Executive Software then petitioned for a writ of mandamus seeking to compel the District Court to retain jurisdiction over the state law claims. Issue If a court seeking to decline supplemental jurisdiction of a pendent claim does not specify why the circumstances of the case are exceptional or explain that a balancing of the Gibbs values provides compelling reasons for declining jurisdiction, must the court hear the pendent claim? Holding and Reasoning (Nelson, J.) Yes. Section 1367(c) provides the reasons for which a federal district court may remand pendent claims, and a court must base its remand on one of the provisions in that section. If it cannot or does not do so, then federal supplemental jurisdiction is appropriate and the case may not be remanded. Pertinent to this case is Section 1367(c)(4), a catchall provision permitting discretionary remand when, "in exceptional circumstances, there are other compelling reasons for declining jurisdiction." The "compelling reasons," in this context, mirror the Gibbs values in that if a federal court declines jurisdiction, the decision must "best accommodate[] the values of economy, convenience, fairness, and comity." Thus, under Section 1367(c)(4), a court must specify why the circumstances are exceptional, while also explaining that a balancing of the Gibbs values provides compelling reasons for declining jurisdiction. In this case, the District Court did neither. This was clear error and the writ of mandamus is granted. Dissent (Leavy, J.) The District Court in this case made no findings in its remand order. As a result, it is unknown what grounds the District Court relied on to remand the case. It therefore cannot be said that the District Court committed clear error in remanding the case because this court does not know the District Court's decision that is supposedly in error.

Kedra v. City of Philadelphia (Joinder of Parties - Real Parties in Interest, Permissive Joinder, and Compulsory Joinder)

Rule of Law Under Federal Rule of Civil Procedure 20(a), a plaintiff may join claims against any defendants that arise out of the same series of transactions or occurrences, no matter how much time has elapsed between incidents. Facts In a series of events that took place over the course of a year and a half, police officers employed by the City of Philadelphia (defendants) allegedly committed various unconstitutional acts against members of the Kedra family, including arrests without probable cause, interrogations lasting some seventeen hours, violent beatings, illegal searches of their home, unlawful detentions, and other types of harassment. The Kedra family sued the police officers, the commissioner, the City of Philadelphia, and others (defendants) under 42 U.S.C. § 1983 for violations of their civil rights. The named plaintiffs are Delores Kedra (Kedra); her children Elizabeth, Patricia, Teresa, Kenneth, and Joseph; and her son-in-law Richard Rozanski (plaintiffs). In addition, Kedra sued on behalf of her minor children, Michael, Robert, and James. The complaint alleged violations of the First, Fourth, Fifth, Eighth, and Fourteenth Amendments to the United States Constitution, as well as articles of the Pennsylvania Constitution. The defendants moved to dismiss the claim on two grounds: (1) Kedra did not have standing to sue on behalf of her minor children and (2) the defendants were improperly joined. Issue For purposes of joinder under the Federal Rules of Civil Procedure, can a plaintiff's claims against different defendants arise out of the same series of transactions or occurrences if the events took place over a year and a half? Holding and Reasoning (Luongo, J.) Yes. Defendants may be joined in a federal lawsuit so long as the claims alleged are "reasonably related" to each other. Federal Rule of Civil Procedure (FRCP) 20 governs joinder in federal lawsuits. Under FRCP 20(a), the plaintiffs may join any defendants against whom they have claims "arising out of the same transaction, occurrence, or series of transactions or occurrences" in the litigation. This rule is construed broadly, and "joinder of claims, parties and remedies is strongly encouraged." This policy promotes efficiency and saves time and money. Thus, it is enough that the claims against different parties are "reasonably related" to satisfy the rule. The issue is not whether too much time passed between events, but whether the events complained of are reasonably related. In this case, while the abuses committed by the officers spanned a long time period, they are all part of a "systematic pattern" of conduct. Nothing about the length of time that elapsed breaks the "factual relationship" between the incidents. The claims against the various defendants do therefore "aris[e] out of the same transaction, occurrence, or series of transactions or occurrences." Joinder is therefore proper under Rule 20(a). However, it is possible that trying all of the defendants together in one proceeding might prejudice some defendants, particularly those who were not involved in all of the events. FRCP Rule 20(b) gives the court the authority to separate any claims or defendants in order to prevent delay or prejudice. The defendants' assertion that Kedra lacked standing is clearly frivolous. Nevertheless, the ruling on the motion to dismiss is deferred until after discovery when this risk of prejudice caused by joinder can be better assessed.

Natural Resources Defense Council, Inc. v. United States Nuclear Regulatory Commission (Joinder - Third-Party Practice & Intervention)

Rule of Law Under Federal Rule of Civil Procedure 24(a)(2), nonparties to a federal lawsuit may intervene as a matter of right if they have an interest in the subject matter of the lawsuit, disposition would practically impair their ability to protect that interest, and the interest is not adequately represented by existing parties. Facts The Atomic Energy Act of 1954, 42 U.S.C. §§ 2011-2296, allows the United States Nuclear Regulatory Commission (NRC) to issue licenses to operate uranium mills. The NRC, as a federal agency, must complete an environmental impact statement (EIS) before each issuance. However, the NRC may negotiate agreements with states, like New Mexico, allowing the states to issue licenses. State agencies are not required to complete EISs. The Natural Resources Defense Council, Inc. and others (plaintiffs) sued the NRC and the New Mexico Environmental Improvement Agency (NMEIA) (defendants) in the United States District Court for the District of New Mexico. The plaintiffs requested equitable remedies blocking the defendants from issuing licenses without preparing an EIS. The United Nuclear Corporation (United) was granted a license by NMEIA, but the plaintiffs seek to enjoin its issuance. United intervened. Subsequently, Kerr-McGee Nuclear Corporation (Kerr-McGee), another uranium mill operator, and the American Mining Congress (AMC) moved to intervene. Intervention as a matter of right was denied, because United adequately represented the interests of the intervenors. The court refused to allow permissive intervention, and Kerr-McGee and AMC appealed both denials to the United States Court of Appeals for the Tenth Circuit. Issue May nonparties to a federal lawsuit intervene as a matter of right? Holding and Reasoning (Doyle, J.) Yes. Under Federal Rule of Civil Procedure (FRCP) 24(a)(2), nonparties may intervene in a lawsuit as a matter of right if (1) they have an interest in the subject matter of the litigation, (2) adjudication of the matter could "as a practical matter impair or impede their ability to protect that interest," and (3) the interest is not adequately represented by existing parties. Nonparties must have a "significantly protectable interest," (Donaldson v. United States, 400 U.S. 517 (1971)), that could be impaired by the outcome of the case. See Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129 (1967). Next, adjudication must "as a practical matter" impair the nonparty's ability to protect that interest. Impairment may result even if the decision would not have res judicata effect; stare decisis could be enough. Last, intervention should be granted unless existing parties represent the interest. The party seeking intervention must show that the representation is inadequate, but the burden is slight and may be satisfied if the existing parties' interests are "similar to, but not identical with" the nonparties' interest. Here, the outcome of this case may be that an EIS must be completed before any license is issued by the NMEIA or that the agreement authorizing the NMEIA to issue licenses is invalidated. This impacts the interests of operators in the state, like Kerr-McGee and the members of the AMC. That interest could be impaired, because the decision will have the effect of stare decisis and may directly impact the NRC and NMEIA. Although United's interests are similar to those of Kerr-McGee and AMC, they could diverge. United has been granted a license and could raise a laches defense. In addition, allowing intervention is good policy, ensuring all interests are represented and operators are bound by the decision. The district court's denial of the intervention is therefore reversed.

Lentz v. Eli Lilly & Co (Transfer and the Difficulties of Challenging Jurisdiction)

Rule of Law Under the New York approach, DES manufacturers are severally liable to a plaintiff in proportion to their national market shares, and a court cannot exculpate a manufacturer who produced and marketed DES for use by pregnant women but can prove that it did not cause the particular plaintiff's injury. Facts Around 300 companies manufactured and marketed the drug DES for use by pregnant women to prevent miscarriages. Many years later, female children of mothers who took DES began to develop vaginal cancer and other complications. Because of the time lapse, many mothers found it impossible to remember which company manufactured the particular DES pill that she took. Because of this, DES daughters found it difficult to prove which manufacturers were responsible for their injuries. In response, the New York legislature enacted a bill to revive DES actions barred by the statute of limitations. In this case, Hymowitz (plaintiff) sued Eli Lilly and other manufacturers of DES (defendants) for her injuries caused by DES. Eli Lilly moved for summary judgment on the ground that Hymowitz failed to prove which manufacturer produced the DES that caused the injury in question. The trial court denied the motion, and the appellate court affirmed the decision. Issue To recover in a DES case, must a plaintiff prove that a specific manufacturer produced the drug ingested by the plaintiff? Holding and Reasoning (Wachtler, C.J.) No. DES manufacturers are severally liable to a plaintiff in proportion to their national market shares, and a court cannot exculpate a manufacturer who produced and marketed DES for use by pregnant women but can prove that it did not cause the particular plaintiff's injury. There are many possible bases for alternative liability, and Summers v. Tice, 199 P. 2d 1 (Cal.1948), created the first basis. Summers held that when two defendants breach a duty to a plaintiff and there is uncertainty about which defendant caused the harm, the burden of proof for causation shifts to the defendants. The court reasoned that when a small number of defendants have better access to information than the plaintiff and all possible wrongdoers are before the court, it is not unfair to force the defendants to exonerate themselves. However, in DES cases, there are a large number of possible defendants who might not possess more information than the plaintiff. The doctrine of concerted action imposes joint and several liability on defendants who agree to participate in a common plan to commit a tortious act. There is no evidence, however, that the DES manufacturers worked in concert to produce an unsafe drug. Because no existing common law doctrine exists to impose alternative liability on the DES manufacturers, only a modification of existing common law will allow for Hymowitz's recovery. Due to the parallel nature of the manufacturers' conduct, the large time gap between sale of the drug and injury, and the legislative action reviving barred DES actions, the case at hand calls for a very narrow modification to the common law to allow for plaintiffs to recover in DES cases. Turning to the apportionment of DES losses, courts have established four general approaches. In Sindell v. Abbott Labs, 607 P.2d 924 (1980), the California Supreme Court allowed recovery when only a "substantial share" of defendants were before the court, and held that any manufacturer unable to prove that its drug did not injure the plaintiff would be liable according to the manufacturer's market share. Brown v. Superior Court, 751 P. 2d 470 (1988) modified Sindell slightly by holding that DES liability is several, and that a court should use the national market in determining market share. In Collins v. Eli Lilly & Co., 342 NW 2d 37 (1984), the Wisconsin Supreme Court took a broader approach to market share, holding that each defendant was liable proportional to the amount of risk the manufacturer created that DES would injure the plaintiff. The Washington Supreme Court took a different approach, allowing defendants to exculpate themselves by proving that they did not manufacture the DES that injured the plaintiff. However, all unexculpated defendants are then presumed to have a market share of one hundred percent, so that the plaintiff receives a full recovery. The market share theory, using a national market, appears to be the best solution. Using any other metric to allocate responsibility is impractical with the widespread litigation of DES claims. Furthermore, the Washington approach of assessing the risk created by each defendant would place a heavy burden on the fact finder in each case. Apportioning liability according to the national market share will eventually correspond to the overall culpability of each DES manufacturer. Allowing a DES manufacturer to exculpate itself would also be unwise, as this would create a windfall for a culpable defendant who escaped liability only because it produced a unique pill or sold only to particular stores. Finally, the liability of DES manufacturers is several only, and should not be inflated when all possible defendants are not before a court. This may prevent plaintiffs from a full recovery; however, it would increase a defendant's responsibility beyond its fair share. Accordingly, the trial court's denial of Eli Lilly's motion for summary judgment is affirmed. Concurrence/Dissent (Mollen, J.) A DES manufacturer should be allowed to exculpate itself from liability by proving by a preponderance of the evidence that it did not produce the pill ingested by a plaintiff's mother. Additionally, joint and several liability should apply to ensure that DES plaintiffs receive a full recovery.

Swift v. Tyson (Erie)

Rule of Law Under the Rules of Decision Act, 28 U.S.C. § 1652, federal courts are not bound to apply state common law doctrines. Facts New York resident John Tyson attempted to buy land from a couple of land speculators, Nathaniel Narton and Jairus Keith, with a negotiable instrument called a bill of exchange. In fact, Narton and Keith did not own the land. Using the bill of exchange they got from Tyson, Narton and Keith paid off an unrelated debt to George Swift, a Maine resident. Swift then tendered the bill of exchange to Tyson for payment, but Tyson refused to honor it on the ground that it had been fraudulently obtained. Swift filed a lawsuit in federal circuit court, claiming that he was entitled to collect as a bona fide holder of a negotiable instrument for valuable consideration. The trial court concluded that New York state law, rather than federal law, controlled. Under New York case law, a preexisting debt did not constitute valuable consideration. Thus, Swift was not a bona fide holder of a negotiable instrument for valuable consideration, and Tyson was able to raise the defense of fraud. The trial court found in favor of Tyson. Swift appealed to the United States Supreme Court by a certificate of division. Issue Must federal courts apply state common law rules? Holding and Reasoning (Story, J.) No. Federal courts are not required to apply state common law rules. Under the Rules of Decision Act (RDA) of the Judiciary Act of 1789, federal courts are bound to apply the "laws of the several states, except where the Constitution, treaties or statutes of the United States shall otherwise require or provide." Nevertheless, the ordinary meaning of the word "laws" does not include state court rulings. The term "laws" refers to statutes enacted by the legislature or customary law. In other words, the RDA requires federal courts to apply the "positive statutes of a state." State court decisions, in contrast, provide evidence of what the laws are. Such rulings may be reversed or modified at any time. Particularly with respect to general commercial law, federal courts are perfectly able to apply "general principles and doctrines of commercial jurisprudence." State rulings on such matters are persuasive, but not binding on federal courts. In this case, there is no question that a bona fide holder of a negotiable instrument for valuable consideration, without notice of any defects, takes free from the defenses or claims of the party seeking to avoid payment. The question is whether payment of a preexisting debt constitutes valuable consideration. If so, Swift is a bona fide holder entitled to payment under the bill of exchange. If not, Tyson has a valid defense of fraud. New York case law makes clear that preexisting debts are not valuable consideration for purposes of this rule. Federal courts are not required to apply state common law rules, however. Under federal law, payment of a preexisting debt is valuable consideration. This rule promotes convenience and certainty in commercial transactions. Swift is not a bona fide holder of a negotiable instrument for valuable consideration. The ruling of the lower court is reversed.

Goldberg v. Kelly (What Process is Due? The Choice of a Procedural System)

Rule of Law When a state seeks to terminate welfare benefits, procedural due process requires the state to provide the recipient with a pre-termination evidentiary hearing for the purpose of determining the validity of discontinuing public assistance in order to protect the recipient against an erroneous termination of his benefits. Facts Kelly (plaintiff) represented a group of residents of New York City receiving financial aid under the federally assisted program of Aid to Families with Dependent Children (AFDC) or under New York State's general Home Relief program. Kelly brought suit against Goldberg and other New York City and New York State officials (defendants) tasked with administering these programs. The suit was brought in district court on the grounds that the state terminated such aid without prior notice and hearing, thereby denying Kelly's right of due process. The district court held that a pre-termination evidentiary hearing was constitutionally required and granted Kelly's relief. The state appealed to the United States Supreme Court. Issue Whether a state that terminates public assistance payments to a particular recipient without affording him the opportunity for an evidentiary hearing prior to termination denies the recipient procedural due process in violation of the Due Process Clause of the Fourteenth Amendment. Holding and Reasoning (Brennan, J.) Yes. The state officials do not deny that procedural due process applied to the termination of welfare benefits, as the termination of such benefits involve state action that adjudicates important rights. Rather, the parties in the case disagree over the type of process that is constitutionally required in a decision to terminate welfare benefits. Consideration of what procedures due process requires under any given set of circumstances begins with a determination of the precise nature of the government function involved as well as the private interest that has been affected by governmental action. Welfare provides the means to obtain essential food, clothing, housing, and medical care for recipients. Termination of aid, during the pendency of the resolution over eligibility, might deprive an eligible recipient of the very means by which to live while he waits. Only a pre-termination evidentiary hearing would provide a welfare recipient with procedural due process because of the significant individual interests at stake. Additionally, important governmental interests are promoted by affording recipients a pre-termination hearing. Hearings promote the dignity and well-being of welfare recipients facing termination of life-sustaining benefits. Thus, public assistance is not merely charity but a means to promote the general welfare and secure the blessings of liberty for all people.. A state's provision of proper hearings before terminating such benefits is important for promoting the general welfare. The state wrongly argues that the government's interests in conserving fiscal and administrative resources outweigh the recipient's welfare interest. States can minimize costs by developing procedures for prompt pre-termination hearings and by skillful use of personnel and facilities. Ultimately, the interest of an eligible recipient in uninterrupted receipt of his public assistance, coupled with the state's interest that his payments not be erroneously terminated, clearly outweigh any of the state's competing concerns to prevent increases in its fiscal and administrative burdens. Thus, the stakes are extremely high and deserve a pre-termination hearing of welfare benefits. This holding is qualified, however, by noting that the pre-termination hearing is not required to take the form of a judicial or quasi-judicial trial. Rather, a fair hearing for purposes of procedural due process can be administrative in nature and should be conducted for the purpose of producing an initial determination of the validity of the welfare department's grounds for discontinuance of payments in order to protect the recipient against an erroneous termination of his benefits. The state violates their procedural due process rights because the state denied this opportunity to Kelly and other New York City welfare recipients. The decision of the district court is affirmed. Dissent (Black, J.) The United States has impermissibly moved too far towards becoming a "welfare" state with significant tax burdens imposed on more affluent citizens to feed and clothe the poor. Significant turnover in welfare recipients places severe administrative burdens on state governments. As such, states cannot handle the significant additional procedural requirements that would be imposed on their welfare systems by the majority's holding. Thus, the new system would create extreme delays in the ability of welfare recipients to receive hearings, and would ultimately limit their access to courts.

Exxon Mobil Corp. v. Allapattah Services, Inc. (Supplemental Jurisdiction)

Rule of Law Where other elements of diversity jurisdiction are present and at least one named plaintiff satisfies the amount-in-controversy requirement, the court may exercise jurisdiction over other plaintiffs who might otherwise be properly joined but who do not allege damages which reach the jurisdictional amount. Facts The United States Supreme Court consolidated two cases to resolve a split in the circuits regarding amount-in-controversy in diversity cases. The first case, Exxon Mobil Corp. v. Allapattah (2005), involved a class action of 10,000 Exxon dealers who brought suit against Exxon, alleging that the company was overcharging them for fuel. Some of the dealers' damages did not rise to the amount required for diversity jurisdiction, but the district court and the United States Court of Appeals for the Eleventh Circuit allowed joinder, holding that the unnamed members of a class action suit were not all required to meet the amount-in-controversy requirement, so long as at least one plaintiff did. The second case involved a nine-year-old girl who sued Starkist based on the unusually serious injuries she endured when she cut herself on a tuna can. She attempted to join her parents as plaintiffs as well, but the district court held that none of the parties had damages to the level of the jurisdictional amount. On appeal, the Court of Appeals for the First Circuit found that while the parents' damages were below the jurisdictional amount and therefore could not be properly joined, the girl's damages were sufficient. The United States Supreme Court granted certiorari to resolve the split. Issue When other elements of diversity jurisdiction are present and at least one named plaintiff satisfies the amount-in-controversy requirement, may the court exercise jurisdiction over other plaintiffs who might otherwise be properly joined but who do not allege damages which reach the jurisdictional amount? Holding and Reasoning (Kennedy, J.) Yes. Where other elements of diversity jurisdiction are present and at least one named plaintiff satisfies the amount-in-controversy requirement, the court may exercise jurisdiction over other plaintiffs who might otherwise be properly joined but who do not allege damages which reach the jurisdictional amount. It is well-settled that federal courts are courts of limited jurisdiction. Although diversity jurisdiction is available to parties from different states, to prevent flooding of the federal courts, jurisdiction is limited to cases that exceed a fixed amount of money. Federal courts may also exercise supplemental jurisdiction over issues related to a case or controversy over which the court already properly has jurisdiction. Here, this court must decide, based on this settled law, whether under §1367 the court may exercise jurisdiction over other plaintiffs who might otherwise be properly joined, but who do not allege damages which reach the jurisdictional amount. This Court finds that they can. A failure for some claimants to meet the amount-in-controversy requirement does not affect the claims the way that, for example, allowing a case to stay in federal court when diversity jurisdiction were destroyed would. Furthermore, some parties must be joined as indispensable parties under Rule 19; to hold that the case-in-controversy requirement forbids this joinder would be illogical. The holding of the Court of Appeals for the Eleventh Circuit is affirmed, and the holding of the Court of Appeals for the First Circuit is reversed and the case remanded. Dissent (Ginsburg, J.) This Court is mistaken in reading § 1367 so broadly, and its reading ignores the fact that Congress did not intend to so expand federal jurisdiction with § 1367's enactment. Instead, the court should read the statute as requiring plaintiffs to first meet the original jurisdiction requirement, that is, the amount-in-controversy requirement, before supplemental jurisdiction may be authorized. The reading the court propounds discards an established history of the doctrine of supplemental jurisdiction.

Lasa Per L'Industria Del Marmo Societa Per Azioni v. Alexander (Joinder of Claims)

ule of Law If a cross- and/or third party claim arises out of the same transaction or occurrence as the original action, a court may assert ancillary jurisdiction over that claim. Facts Southern Builders was hired by the City of Memphis (City) to build City Hall. Southern Builders subcontracted with Alexander Marble and Tile Co. (Alexander) (defendant) to supply and install marble in the City Hall. Alexander subcontracted with LASA Per L'Industria Del Marmo Societa Per Azioni (LASA) (plaintiff) to supply the marble. LASA brought suit against Alexander, Southern Builders, and the City, claiming that it had performed its duties under the contract, but had not been paid in full. Alexander and Southern Builders both filed a counterclaim, claiming that LASA had shipped the wrong type of marble, had not shipped it on time, and did not ship the full amount of the marble. Alexander also filed a cross-claim against Southern Builders and the City, seeking money due on its subcontract with Southern Builders. In response, Southern Builders filed a cross-claim against Alexander for breach of contract. Alexander also filed a third party claim against the architect of the City Hall project, claiming negligent supervision of the project. The district court dismissed the cross-claims and the third party claim, holding that they did not arise out of the same transaction or occurrence of the original action or of a counterclaim therein. The parties appealed. Issue May cross- and third party claims based on different contracts, but that each arise based on the same construction job be joined in the same trial? Holding and Reasoning (Phillips, J.) Yes. If a cross- and/or third party claim arises out of the same transaction or occurrence as the original action, a court may assert ancillary jurisdiction over that claim. The phrase "transaction or occurrence" is to be interpreted broadly so as to avoid multiple suits if possible. Here, all of the cross- and third party claims involved are based on contracts that relate to the construction of City Hall. The issue in each of the claims is who is liable for the problems with the marble used in the construction job. The court thus determines that the cross- and third party claims arise out of the same transaction or occurrence as LASA's original suit. The district court therefore should hear the claims together. The district court's dismissal of the cross- and third party claims is reversed and the case is remanded. Dissent (McAllister, J.) The judgment of the district court should be affirmed. The questions of law or fact in LASA's suit are very different from those in Alexander's claims against Southern Builders and the architects. Those cross- and third party claims are for breach of contract—indeed, a different contract than is the basis of LASA's suit—and tort. The "proofs" in LASA's suit and the counterclaims therein are much different than the proofs needed in the cross- and third party claims. Accordingly, the cross- and third party claims do not arise out of the same transaction or occurrence as LASA's initial suit and the counterclaims therein.