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Agenda for 19th Class (FJ)• Admin

– Name plates– Handouts

• Slides• Mock mediation results

– Wednesday Nov 5 -- Make-up class 6-8PM in Rm 3 – Friday, Nov 7 -- Class canceled

• Review of Choice of Law• Personal Jurisdiction:

– International Shoe– General and Specific Jurisdiction– Challenging jurisdiction– McGee; Hanson v Denkla

• Introduction to Res Judicata and Collateral Estoppel

Assignment for Next Class• Res Judicata

– US Constitution Article IV (Supplement p. 1)– 28 USC 1738– Yeazell pp. 715-27– Questions to think about / Writing Assignment

• Briefly Summarize Frier• Yeazell p. 727 Q1

– Optional: Glannon Chapters 26 & 27• Collateral Estoppel

– Yeazell 749-67– Questions to think about / Writing Assignment

• Yeazell p. 750 Qs 1-3• Yeazell p. 753 Q 2 • Yeazell p. 756 Qs 1-4• Briefly summarize Parklane• Yeazell pp. 764ff Qs 1c, 2a&b, 5a&b

– Optional. Glannon Chapters 28 and 292

Mock Mediations• See sheet for settlements & final offers• Questions, comments, or suggestions?

SJ in A Civil Action

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Review of Erie• Apply state substantive law in federal court in diversity cases• Apply federal procedure in federal court in diversity cases• Line between substance and procedure is not clear

– Apply FRCP and interpretations of it• As long as rule is “arguably procedural” • E.g. as long as rule is legitimate, which means always

– Apply federal practices when doing so is consistent with purposes of Erie

• Discourage forum shopping• Avoid inequitable administration of law• Modern trend is to apply federal practices• Federal practice is something procedural (like standards

of review) that is not in the FRCP

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Last Class -- Choice of Law• Traditional rules• Restatement (Second)

– Find all states with contacts with dispute– Analyze the contacts

• What policies lie behind each state’s laws? How would they be affected if another state’s laws applied to the dispute

– Would advantage resident party in case?– Would affect non-parties?

• Choose state with most significant relationship– E.g. whose policies are most strongly implicated

– Often indeterminate• Laws have many policies, hard to know which strongest

– Possible biases• Bias toward applying forum law – judges prefer their own state’s laws• Bias toward plaintiff -- Judge likely to choose law that favors plaintiff• Bias toward resident - Judge like to choose law that favors in-state

resident

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Choice of Law Questions III• 7) Spend, a Nevada domiciliary, is completely irresponsible with money.

Fortunately, he recognizes this fact and has set up a spendthrift trust. Under the terms of the trust, Spend cannot borrow money without the consent of Trustee, a friend he trusts. Spend goes to California and borrows money there from Sharkey to be repaid in one year at Sharkey’s place of business in California. When Spend doesn’t repay the loan, Sharkey sues Spend in Nevada. Under Nevada law, loans to someone who has set up a spendthrift trust are void. California law does not allow people to set up spendthrift trusts, so under California law, such loans are enforceable. The traditional rule for contracts was the law of the place the contract was formed governs disputes about contract validity. Under the traditional rule, what state’s law would apply? Under the Restatement Second, which state’s law should apply to the dispute? If the traditional rule and Restatement Second suggest different answers, which makes more sense?

• 8) Same as (7), except Sharkey sues in California state court.• 9) Same as (8), except Sharkey traveled to Nevada, loaned Spend the

money there, with repayment to be made to Sharkey when he returns to Nevada a year later.

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Choice of Law Questions IV• 10) Same as (7), except the loan contract includes the following clause:

“This contract shall be governed by California law.” The traditional rule was not to enforce choice of law clauses. See also Restatement (Second) below

• § 187. Law Of The State Chosen By The Parties• (1) The law of the state chosen by the parties to govern their contractual

rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.

• (2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either– (a) the chosen state has no substantial relationship to the parties or the

transaction and there is no other reasonable basis for the parties' choice, or

– (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties.

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Choice of Law Questions V• Plaintiff in Phillips brought the case in federal district court in Montana. Why

is there a decision of the Supreme Court of Montana?• In Phillips, the Montana Supreme Court observes that “applying the law of

the place of manufacture would be unfair because it would tend to leave victims under compensated as states wishing to attract and hold manufacturing companies would raise the threshold of liability and reduce compensation…. [A state with a high concentration of manufacturing] could enjoy all the benefits associated with liability laws which favored manufacturers in order to attract and retain manufacturing firms and encourage business within its borders while placing the costs of its legislative decision, in the form of less tort compensation, on the shoulders of nonresidents injured by its manufacturers’ products.” (p. 249).– Suppose Montana has a relatively low concentration of manufacturing.

Would its citizens benefit by laws which raised the threshold of liability and reduced compensation? Or would its citizens benefit by laws which lowered the threshold of liability and increased compensation? If it lowered the threshold of liability and increased compensation, who would bear the increase in costs? What does this suggest about the fairness of applying Montana law?

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Choice of Law Questions VI• In Phillips, the Montana Supreme Court asserted that “we do not believe that

the purpose of any potentially applicable Michigan product liability law would be to regulate the design and manufacture of products within its borders. The purpose of product liability law is to regulate interstate sales or sales to residents and to set the level of compensation when residents are injured. ” (p. 249)– If the plaintiffs in Phillips had filed the case in Michigan state court, do

you think Michigan state judges would have agreed that its laws are inapplicable? What purpose might a Michigan judge ascribe to product liability law to show that Michigan law should apply?

• If you were a judge on the Montana Supreme Court, would you have retained the traditional lex loci commissi rule, or would you have voted (like the actual Montana Supreme Court) to adopt the Restatement (Second) most significant relationship approach? Why?

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Personal Jurisdiction• Answers question: Court in which state?• Need statutory or rule authority & statute or rule must be constitutional

– Federal rule: FRCP 4(k)(1)(A)– State long-arm statutes

• Constitutional constraint: Due Process Clause of 14th Amendment– Unfair to have to litigate in courts of state with no legitimate authority

over defendant or dispute– Odd mixture of sovereignty, federalism, and fairness concerns

• Before International Shoe– In personam:

• Defendant was citizen or resident of forum state• Defendant was present in forum state• Defendant consented to jurisdiction

– In rem: Disputes about property, jurisdiction where property is– Quasi in rem: Dispute not about property, jurisdiction where defendant

owns property, but only up to value of that property

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Questions on International Shoe• Briefly summarize International Shoe• If the Supreme Court had not decided to change the rules in

International Shoe, would jurisdiction have been proper under the prior rules? If your answer is “yes,” why do you think the Supreme Court changed the rules? If you answer is “no,” why was the outcome under the new rules bette

• See next slide on General and Specific Jurisdiction• Yeazell pp. 86ff. Qs 1b, 3

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General and Specific Jurisdiction• General jurisdiction

– Court which has general jurisdiction over a defendant can hear any case against the defendant

• Even if case has nothing to do with forum– Bases for general jurisdiction

• Continuous and systematic contacts (International Shoe)• Individuals. Citizenship, residence, presence, quasi-in-rem (but no

longer constitutional)• Corporations:

– Where “at home”. Goodyear v Dunlop (2011), Daimler (2014)– Clearly yes: where incorporated, where headquartered– Maybe. where have (large) factory or office and/or (lots of)

employees and/or where conduct lots of business• Do not confuse with “court of general jurisdiction” 4(k)(1)(A)• Do not confuse with citizenship for purposes of diversity jurisdiction

• Specific jurisdiction– Jurisdiction only over cases related to contacts (International Shoe)– Most cases we will read for class– In rem can be thought of as specific jurisdiction– Consent can also be thought of as specific jurisdiction

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2 Ways to Challenge Jurisdiction• In court where sued

– Make 12(b)(2) motion or state equivalent– “Special appearance” means defendant appears in court solely to

challenge jurisdiction• Otherwise, appearance in court could be construed as consent to

jurisdiction• Collateral attack

– Only possible where defendant does not have assets in forum• So plaintiff would have to enforce judgment in state where defendant

has assets• Enforcing judgment in another state requires separate suit in that

state– But Full Faith & Credit Clause of US Constitution requires state

to respect judgment of another state, IF THE STATE WHICH RENDERED THE JUDGMENT HAD JURISDICTION

– Defendant does not appear in court where sued– Default judgment is entered against defendant– When plaintiff goes to enforce judgment in state where defendant has

assets, defendant raises lack of personal jurisdiction as defense– Very risky, because if enforcing court decides the original court had

jurisdiction, defendant cannot then challenge judgment on merits

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McGee; Hanson• McGee v International Life (1957). Yeazell p. 89.

– Franklin (CA resident) purchased life insurance by mail from out-of-state insurer. He died, and insurer refused to pay. Beneficiaries sued insurer in California.

– Held: California courts can constitutionally exert jurisdiction, because contract “was delivered in California, the premiums were mailed from there and the insured was a resident of that State when he died.”

• Hanson v Denkla (1958). Yeazell p. 90– Mrs. Donner (PA resident) created a trust in Delaware, with a Delaware

bank as trustee. Later she moved to Florida. After she died, potential beneficiaries filed suit in Florida over the administration of the trust

– Held. Florida courts cannot constitutional exert jurisdiction because:• Defendant “has no office in Florida and transacts no business

there… no solicitation of business in that State either in person or by mail.”

• “The unilateral activity of [Mrs. Donner] … cannot satisfy the requirement of contact with the forum state.”

• For jurisdiction, defendant must “purposefully avail[] itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protection of its laws.”

– Key for later cases is “purposeful availment” requirements• Contacts only count if voluntarily made by defendant

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Introduction to Former Adjudication• 2 concepts

– Res judicata / claim preclusion– Collateral estoppel / issue preclusion

• Res judicata– Cannot litigate same claim several times

• Finality– If two claims are closely related to each other (e.g. same transaction or

occurrence)• Then must bring them together. Compulsory joinder• If litigate one claim and then try to litigate the other

– Second claim will be barred by res judicata• Collateral estoppel

– If issue resolved in one case, cannot relitigate that issue in subsequent case– Suppose long-term contacts

• Litigation I. breach in 1990. Court: contract is valid• Litigation II. Breach in 2000. cannot relitigate contact validity

– Key issue is “non-mutual” collateral estoppel• Case I. A sues B for patent infringement. Court: patent invalid• Case II. A sues C for patent infringement. Can relitigate validity?

– No estoppel if person against whom estoppel asserted was not a party in first case

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Res Judicata• Sometimes one adjudication bars later adjudication

– If plaintiff tries to bring second suit, then defendant has valid affirmative defense

• Policies– Save costs– Prevent inconsistent judgments– Encourage consolidated litigation of related claims

• Also called “claim preclusion”• Easily applies when same plaintiff brings exactly same claim against same

defendant for which previously had lost (or won) after trial and appeal– But res judicata is not so limited

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4 Requirements for Res Judicata• Same claim

– Federal court. Claim arising out of the same transaction or occurrence• Even if claim in second suit not actually raised or litigated in first suit

– Some state courts may apply narrower rules• E.g. claim in second suit arises out of “same evidence”

• Judgment on the Merits– Trial, summary judgment, default judgment– 12(b)(6), but not equivalent dismissals in some states courts– NOT dismissal for lack of jurisdiction or venue

• Final judgment– Judgment entered on all claims– In federal court, still final if appeal pending; not in some state courts

• Same parties– Except judgment against former real property owner bars subsequent

owner– Perhaps other exceptions when interests of parties are very closely

aligned• But exception narrowed by Taylor v. Sturgell

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Collateral Estoppel Requirements• 1. Same issue• 2. Actually litigated. No C.E. if party admitted issue in first suit• 3. Actually decided. No C.E. if court resolved case without deciding issue

– Can be hard to tell if jury verdict• 4. Necessarily decided / Essential to judgment

– If changing result on issue would not change outcome of case, then no C.E.

– If court decides negligence case by finding duty, but no negligence• No C.E. on duty• CE would not be fair to defendant, because could not have appealed

finding of duty– If court decides contract case by deciding that there was no contract and

that, even if there was a contract, there was no breach• Some courts follow Restatement 2nd

– C.E. applies neither to “no contract” nor to “no breach”» Court may not have thought carefully about» Plaintiff may have thought appeal futile

– Unless issue squarely decided on appeal• Other courts follow 1st Restatement and apply C.E. to both

• Like res judicata, apply collateral estoppel rules of court which rendered first judgment

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Nonmutual Collateral Estoppel I• Traditionally, collateral estoppel applied only when parties were the same in

first and second suit (like res judicata)• Some court allow person not a party to the first suit to assert collateral

estoppel, as long as person against whom c.e. asserted was in the first suit (and 4 other requirements satisfied)– Called nonmutual collateral estoppel

• 2 kinds of nonmutual colleral estoppel– Defensive– Offensive

• Defensive nonmutual collateral estoppel– Plaintiff sues defendant1 for patent infringement– Court decides that patent is invalid– Plaintiff sues defendant2 for patent infringement– Defendant2 can assert collateral estoppel against plaintiff

• Because plaintiff already litigated and lost on issue of patent validity– Now accepted in nearly all jurisdictions– “defensive” means asserted by defendant

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Nonmutual Collateral Estoppel II• Offensive nonmutual collateral estoppel

– Plaintiff1 sues defendant for poisoning water– Court decides that defendant poisoned the water– Plaintiff2 sues defendant for poisoning the water– Defendant may be estopped from arguing that did not poison the water– Very controversial

• If defendant loses one case (1st or 2nd or 99th case), would mean that defendant loses all subsequent related cases

– But if one plaintiff loses case, then later plaintiffs not bound by c.e

• Discourages joinder• Defendant may not have had incentive to litigate hard in first case

– Federal courts have discretion to apply c.e. offensively. Factors:• Has there been inconsistent litigation outcomes?• Did plaintiff strategically wait (not join) so as to take advantage of

offensive non-mutual collateral estoppel• Did defendant have sufficient incentive to litigate issue aggressively

in first case– “Offensive” means by plaintiff