chapter 6 state and federal courts.pdf

INTRODUCTIONTh e United States has a unique court system. Whereas most developed countries have a hierarchical court system in which all courts are subordinate to a central supreme court, the United States has two separate court systems, federal and state; also, each state is independent from every other and is free within constitutional limits to make its own laws and administer its own system of justice. Th is chapter discusses the interrelationships of this court system and the rami cations of those interrelationships.

THE UNITED STATES CONSTITUTIONTh e U.S. Constitution allocates power between the federal and state governments. Th e aspects of the Constitution discussed here are far more important and complex than this summary treatment suggests, but acquaintance with certain constitutional provisions is essential for an understanding of state and federal court systems.

When the American colonies united into a federal republic, their representa-tives framed a charter, the United States Constitution, which allocated governmental authority between state and federal governments. Th e Constitution re ects a certain distrust of government based on the experience of abuses of traditional legal principles

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CHAPTER OUTLINE

IntroductionTh e United States Constitution

Supreme Law of the LandDue ProcessEqual ProtectionCases and ControversiesFull Faith and Credit

Subject Matter JurisdictionGeneral and Limited Jurisdiction

Federal Subject Matter JurisdictionFederal Question Cases

Diversity of Citizenship CasesTh e Erie Doctrine

Con ict of LawsLaw and Equity

Jury TrialsAdequacy of Remedy at LawClean Hands PrincipleStatutes of Limitations and LachesDomestic RelationsLanguage

Summary

State and Federal CourtsSSSttaattee aanndd Feddeerraall CCCoouurttss

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STATE AND FEDERAL COURTS 151

by the British colonial governors under a monarchy. Not only was there a distrust of government in general but also a degree of mutual distrust among the states due to di erences in local economies (e.g., plantation economies of Virginia and the Carolinas versus commercial economies of New York, Massachusetts, and Pennsylvania) and dif-ferences in size and population (e.g., Rhode Island versus New York). As a result, the Constitution was framed to limit the power of the federal government while preserving governmental autonomy among the states.

Th e Constitution was viewed as a granting of power by the states to the federal gov-ernment such that the federal governments powers were limited to those enumerated in the Constitution. All other governmental authority remained with the states, without need to specify that authority in the Constitution itself. Th is principle is embodied in the Ninth and Tenth Amendments:

AMENDMENT IX. Th e enumeration in the Constitution of certain rights shall not be construed to deny or disparage others retained by the people.AMENDMENT X. Th e powers not delegated to the United States by the Consti-tution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.Th is language re ects that the federal government exercises its authority by

grant, whereas the states exercise authority by reservation. Note that this language is the language of property law, such as when a property owner transfers or grants property rights to another, reserving those rights not granted. Like a property trans-action, the grant of power is a contract between the people and the government. Th is is not merely a philosophical point; constitutional cases may best be conceptualized as enforcing property rights in a contractual relationship in which the federal government is bound by the original bargain.

Th e scope of federal control over the states can be expanded or restricted by con-stitutional interpretation. In the twentieth century, it was greatly expanded by a broad interpretation of the commerce clause, Article I, 8, cl. 3, which gives Congress power to regulate interstate commerce. Because most business is in some way involved in interstate commerce, Congress is allowed pervasive regulation of American business. In contrast, in recent decades the U.S. Supreme Court has recognized inherent privacy rights into which neither the states nor the federal government may intrude (e.g., abortion rights).

Supreme Law of the LandArticle VI, 2, of the Constitution provides that the Constitution shall be the supreme law of the land. It was early established by the U.S. Supreme Court that this clause meant that neither state nor federal legislatures could enact laws in con ict with the Constitution, nor could any o cial or agency of government act in violation of the Con-stitution (refer to judicial review in Chapter 3). Because the U.S. Supreme Court is the ultimate authority with regard to the interpretation of the Constitution, it can exercise signi cant authority over state action.

Th e doctrine of preemption governs the con ict between federal and state statutes. Although the Constitution allocates authority between the federal government and the

preemptionThe principle or doctrine that federal statutes that overlap or are in con ict with state statutes will take precedence and prevail (be preferred), even to the point of invalidating state statutes entirely.



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states, that authority is often overlapping. In particular, the authority over regulation of interstate commerce is given to the federal government and, in the twentieth century, the U.S. Supreme Court interpreted the interstate commerce clause of the Constitution to give the federal government broad powers. Because states have the authority to regulate state businesses, it happens from time to time that state and federal law con ict. Th e ques-tion then arises as to whether the federal law preempts state law, which it usually does.

In Wyeth, a professional musician su ering from a migraine headache visited a local medical clinic. Th e method by which drugs were administered to treat her headache (intravenous push injection) resulted in her losing her arm. As one might expect, she sued everyone involved, including the drug manufacturer. Th e drug manufacturer relied on a preemption defense; it claimed that it could provide no stronger warning label than that allowed by the United States Food and Drug Administration (FDA), the federal admin-istrative agency that regulates warning labels on prescription drugs. Th e drug company argument was that the comprehensiveness of FDA regulation of drug warnings precluded an additional warning of the danger posed by intravenous administration of the drug.

WYETH, Petitionerv.

Diana LEVINESupreme Court of the United StatesNo. 06-1249129 S. Ct. 1187, 173 L. Ed. 2d 51Decided March 4, 2009.

Directly injecting the drug Phernergan into a patients vein creates a signi cant risk of catastrophic conse-quences. A Vermont jury found that petitioner Wyeth, the manufacturer of the drug, had failed to provide an adequate warning of that risk and awarded damages to respondent Diana Levine to compensate her for the amputation of her arm. Th e warnings on Phernergans label had been deemed su cient by the federal Food and Drug Administration (FDA) when it approved Wyeths new drug application in 1955 and when it later approved changes in the drugs labeling. . . .

Levines injury resulted from an IV-push injection of Phernergan. On April 7, 2000, as on previous visits to her local clinic for treatment of a migraine headache, she received an intramuscular injection of Demerol for her headache and Phernergan for her nausea. Because the combination did not provide relief, she returned

later that day and received a second injection of both drugs. Th is time, the physician assistant administered the drugs by the IV-push method, and Phernergan entered Levines artery, either because the needle pen-etrated an artery directly or because the drug escaped from the vein into surrounding tissue (a phenomenon called perivascular extravasation) where it came in contact with arterial blood. As a result, Levine developed gangrene, and doctors amputated rst her right hand and then her entire forearm. In addition to her pain and su ering, Levine incurred substantial medical expenses and the loss of her livelihood as a professional musician.

After settling claims against the health center and clinician, Levine brought an action for damages against Wyeth, relying on common-law negligence and strict-liability theories. Although Phernergans labeling warned of the danger of gangrene and ampu-tation following inadvertent intra-arterial injection, Levine alleged that the labeling was defective because it failed to instruct clinicians to use the IV-drip method of intravenous administration instead of the higher risk IV-push method. More broadly, she alleged that Phernergan is not reasonably safe for intrave-nous administration because the foreseeable risks of gangrene and loss of limb are great in relation to the drugs therapeutic bene ts. . . .




Th e evidence presented during the 5-day jury trial showed that the risk of intra-arterial injection or peri-vascular extravasation can be almost entirely elimi-nated through the use of IV-drip, rather than IV-push, administration. . . . While Phernergans labeling warned against intra-arterial injection and perivascular extravasation and advised that [w]hen administering any irritant drug intravenously it is usually preferable to inject it through the tubing of an intravenous infu-sion set that is known to be functioning satisfactorily, the labeling did not contain a speci c warning about the risks of IV-push administration. . . .

[T]he jury found that Wyeth was negligent, that Phernergan was a defective product as a result of inadequate warnings and instructions, and that no intervening cause had broken the causal connection between the product defects and the plainti s injury. It awarded total damages of $7,400,000, which the court reduced to account for Levines earlier settle-ment with the health center and clinician.

On August 3, 2004, the trial court led a compre-hensive opinion denying Wyeths motion for judgment as a matter of law. After making ndings of fact based on the trial record (supplemented by one letter that Wyeth found after the trial), the court rejected Wyeths pre-emption arguments. It determined that there was no direct con ict between FDA regulations and Levines state-law claims because those regulations permit strengthened warnings without FDA approval on an interim basis and the record contained evidence of at least 20 reports of amputations similar to Levines since the 1960s. Th e court also found that state tort liability in this case would not obstruct the FDAs work because the agency had paid no more than passing attention to the question whether to warn against IV-push administration of Phernergan. In addition, the court noted that state law serves a compensatory func-tion distinct from federal regulation. . . . Th e Vermont Supreme Court a rmed. . . .

Th e question presented by the petition is whether the FDAs drug labeling judgments preempt state law product liability claims premised on the theory that di erent labeling judgments were necessary to make drugs reasonably safe for use. . . .

Our answer to that question must be guided by two cornerstones of our pre-emption jurisprudence. First, the purpose of Congress is the ultimate touchstone in every pre-emption case. Medtronic. Second, [i]n

all pre-emption cases, and particularly in those in which Congress has legislated . . . in a eld which the States have traditionally occupied, . . . we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress. Lohr.

In order to identify the purpose of Congress, it is appropriate to brie y review the history of federal regulation of drugs and drug labeling. [Th e Courts review of this history is omitted.] . . .

Th e FDAs premarket approval of a new drug application includes the approval of the exact text in the proposed label. Generally speaking, a manufacturer may only change a drug label after the FDA approves a supplemental application. Th ere is, however, an FDA regulation that permits a manufacturer to make certain changes to its label before receiving the agencys approval. Among other things, this changes being e ected (CBE) regulation provides that if a manufac-turer is changing a label to add or strengthen a contra-indication, warning, precaution, or adverse reaction or to add or strengthen an instruction about dosage and administration that is intended to increase the safe use of the drug product, it may make the labeling change upon ling its supplemental application with the FDA; it need not wait for FDA approval. . . .

Of course, the FDA retains authority to reject label-ing changes made pursuant to the CBE regulation in its review of the manufacturers supplemental applica-tion, just as it retains such authority in reviewing all supplemental applications. But absent clear evidence that the FDA would not have approved a change to Phernergans label, we will not conclude that it was impossible for Wyeth to comply with both federal and state requirements. . . .

Impossibility pre-emption is a demanding defense. On the record before us, Wyeth has failed to demon-strate that it was impossible for it to comply with both federal and state requirements. Th e CBE regulation permitted Wyeth to unilaterally strengthen its warn-ing, and the mere fact that the FDA approved Phern-ergans label does not establish that it would have prohibited such a change. . . .

Wyeth also argues that requiring it to comply with a state-law duty to provide a stronger warning about IV-push administration would obstruct the purposes and objectives of federal drug labeling regulation.



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Levines tort claims, it maintains, are pre-empted because they interfere with Congresss purpose to entrust an expert agency to make drug labeling deci-sions that strike a balance between competing objec-tives. Brief for Petitioner 46. We nd no merit in this argument, which relies on an untenable interpretation of congressional intent and an overbroad view of an agencys power to pre-empt state law. . . .

If Congress thought state-law suits posed an obstacle to its objectives, it surely would have enacted an express pre-emption provision at some point during the FDCAs 70-year history. . . . Its silence on the issue, coupled with its certain awareness of the prevalence of state tort litigation, is powerful evidence that Congress did not intend FDA oversight to be the exclusive means of ensuring drug safety and e ectiveness. . . .

In advancing this argument, Wyeth relies not on any statement by Congress, but instead on the preamble to a 2006 FDA regulation governing the content and for-mat of prescription drug labels. In that preamble, the FDA declared that the FDCA establishes both a oor and a ceiling, so that FDA approval of labeling . . . preempts con icting or contrary State law. It further stated that certain state-law actions, such as those involving failure-to-warn claims, threaten FDAs statutorily prescribed role as the expert Federal agency responsible for evaluating and regulating drugs. . . .

Th is Court has recognized that an agency regula-tion with the force of law can pre-empt con icting state requirements. In such cases, the Court has performed its own con ict determination, relying on the substance of state and federal law and not on

agency proclamations of pre-emption. We are faced with no such regulation in this case, but rather with an agencys mere assertion that state law is an obstacle to achieving its statutory objectives. . . .

[T]he FDAs newfound opinion, expressed in its 2006 preamble, that state law frustrate[s] the agencys implementation of its statutory mandate, does not merit deference. . . . Indeed, the complex and extensive regulatory history and background relevant to this case undercut the FDAs recent pronouncements of pre-emption, as they reveal the longstanding coexistence of state and federal law and the FDAs traditional recogni-tion of state-law remediesa recognition in place each time the agency reviewed Wyeths Phernergan label.

In short, Wyeth has not persuaded us that failure-to-warn claims like Levines obstruct the federal regulation of drug labeling. Congress has repeatedly declined to pre-empt state law, and the FDAs recently adopted position that state tort suits interfere with its statutory mandate is entitled to no weight. Although we recognize that some state-law claims might well frustrate the achievement of congressional objectives, this is not such a case.

Case Questions 1. Why do you think that, after the clinic and the

clinician settled, the drug manufacturer did not? 2. What two basic concepts does the Court rely on in

analyzing the preemption defense? 3. What were the Courts reasons for failing to accord

the 2006 FDA opinion more weight?

Due ProcessTh e most important phrase in the Constitution for operation of the legal system is the due process clause of the Fifth and Fourteenth Amendments. Th e Fifth Amend-ment provides that no person shall be deprived of life, liberty or property, without due process of law. Because this applied only to the federal government, the Fourteenth Amendment was rati ed in 1868, including the language nor shall any State deprive any person of life, liberty, or property, without due process of law. In this way actions by state o cials, legislatures, and courts become federal constitutional issues if denial of due process is alleged.




Due process is an elusive concept at best. It has been de ned as requiring fundamental fairness in judicial process and prohibiting legislation that is unrea-sonable, arbitrary, or capricious. Th ese are subjective conceptsfairness and reasonableness are in the eyes of the beholder. As long as the court has the last word, what the court says is fair is fair, and what the court says is reasonable is reasonable. Unbridled power of the judiciary is mitigated, however, because the principles of stare decisis and judicial restraint constrain judges from arbitrarily imposing their views on society, and the appellate process encourages trial court judges to stay within the bounds of established law.

Due process has been divided into procedural and substantive due process. Procedural due process treats the issues of notice and hearing. Notice requires that a person threatened with legal action or whose legal rights are being a ected be noti- ed in such a way as to be able to prepare to protect those rights. Hearing requires that the form and nature of legal proceedings be fundamentally fair (e.g., an impartial tribunal, right to counsel, right of cross-examination, etc.). Substantive due process requires that legislation be reasonable, that it have a legitimate purpose, that it use rea-sonable means to e ect a reasonable end, and so on. Th e void-for-vagueness doctrine is an example of a reasonableness test.

Because the fairness and reasonableness standards of due process have been devel-oped on a case-by-case basis, to understand due process one must become acquainted with the principal cases that have interpreted it. But judges tend to perceive as unfair what most citizens perceive as unfair, so the anger and frustration that a person may feel toward treatment at the hands of the law or the courts will often strike a resonant chord in the minds of judges. Whenever the government acts to the detriment of an individual, a due process argument lurks in the background.

It is not possible to catalog all the possibilities for denial of due process, but con-sider the following in terms of potential lawsuits against government: 1. A state university has a policy not to release course transcripts if a student has

a debt outstanding to the university. George Shylock fails to be admitted to law school because his transcripts were not sent due to an outstanding $2.00 library ne he failed to pay. George had not been noti ed of the ne and now must wait an additional year to enter law school.

2. Th e Town of Uppercrust, Connecticut, passes a new zoning plan that requires residential building lots to be at least half an acre in area. Mohammed Hussein owns a lot that is four-tenths of an acre, su cient under the old ordinance for a building site, but his application for a variance (an exception to the ordinance) is denied, so he cannot build on his lot.

3. Under state law, a person can be convicted of manslaughter if involved in a fatal auto accident while driving intoxicated, even if the intoxication did not contribute to the accident.

4. In a rulemaking hearing held by the Interstate Commerce Commission, repre-sentatives of the railroad and trucking industries are permitted to o er oral tes-timony of expert witnesses concerning the impact of proposed transportation regulations but are not permitted to cross-examine witnesses.

due process clauseThe Fifth Amendment and the Fourteenth Amendment to the U.S. Constitution, which guarantee that law administered through courts of justice is equally applied to all under established rules that do not violate fun-damental principles of fairness. The process that is due before gov-ernment may deprive a person of life, liberty, or property.

procedural due processDue process that is concerned with the fairness of notice and hearing provided by government in the adjudication of rights and duties.

noticeIn law, represents the requirement of timely noti cation of the opposing party. Under procedural due process, the fairness of legal procedure requires that a party have suf cient notice to prepare a response to legal action.



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Th ese hypothetical situations raise additional constitutional issues. Th e zoning case would be challenged as taking private property without just compensation under the Fifth Amendment; the manslaughter case would undoubtedly raise the Eighth Amendment issue of cruel and unusual punishment. Due process questions are commonly raised along with other issues.

Equal ProtectionThe Fourteenth Amendment also prohibits states from denying any person within its jurisdiction the equal protection of the laws. This language was designed originally to protect former slaves from discriminatory treatment after the Civil War. Its coverage, however, has been expanded to invalidate all laws and procedures that unreasonably discriminate. It has been invoked when classes of persons have been treated unequally by the law; for instance, alimony statutes in many states provided alimony only for women, thus discriminating against men, or public schools budgeted more for male athletics than female athletic programs, discriminating against women. The discriminatory aspect of the law may be more subtle, such as when cable TV companies objected to regulation of their broadcasting that was not also applied to noncable broadcasting. All laws by their nature discriminate drunken -driving statutes discriminate against drinkersbut such forms of discrimination are benign, protecting society and its members. Equal protection of the laws is designed to protect a stigmatized group from discrimination.

Cases and ControversiesArticle III of the Constitution vests judicial power in the Supreme Court, and in such inferior courts as the Congress may from time to time ordain and establish (see Exhibit 6-1). Article III, 2, refers to judicial power over cases and controversies. These words have been interpreted by the U.S. Supreme Court to restrict access to the federal courts in several ways, the most important of which concerns the ques-tion of standing. In our legal system, not every person may seek redress for every deprivation of a legal right. Standing is a limitation on who may bring an action. In general, only a person who has a personal stake in the outcome of a case may bring suit. This gloss on the Constitution encourages litigants to frame their suits in terms of property rights, but even in the violation of abstract rights, such as freedom of speech, suits are limited to those persons directly affected. A person may not sue the government for the abuse of power if that abuse is unrelated to the person desiring to sue.

Case and controversy have also been interpreted as referring to actual disputes between real parties. Not every slight, rebuke, or annoyance is a legal matter. The courts also refuse to hear cases concerning remote or hypothetical questions. This does not mean that some injury or wrong must necessarily have already occurred, but there must at least be an immediate threat of invasion of a right. In the Waddell case, a high school referees call was taken all the way to the Georgia Supreme Court.

hearingThe presentation of evidence and argument before a tribunal. Under procedural due pro-cess, the hearing (usu-ally the trial) must be fair and evenhanded. Most of the elements of a fair hearing have been established by custom and precedent.

substantive due processA theory of due process that emphasizes judg-ing the content of a law by a subjective standard of fundamen-tal fairness; the govern-ment may not act arbi-trarily or capriciously in making, interpreting, or enforcing the law.

equal protection of the lawsA constitutional guaranty specifying that every state must give equal treatment to every person who is similarly situated or to persons who are members of the same class; this protection is a requirement of the Fourteenth Amendment, originally enacted to protect former slaves.

standingA persons right to bring a lawsuit because he or she is directly affected by the issues presented, having a stake in the outcome of the suit.




GEORGIA HIGH SCHOOL ASSOCIATIONv.

WADDELL et al.Supreme Court of Georgia248 Ga. 542, 285 S.E.2d 7 (1981)

On October 23, 1981, a football game was played between R.L. Osborne and Lithia Springs High Schools, members of region 5 AAAA established by the Georgia High School Association. Th e winner of

this game would be in the play-o s, beginning with Campbell High School.

Th e score was 7 to 6 in favor of Osborne. With 7 minutes, 1 second, remaining in the game, Osborne had the ball on its 47 yard line, 4th down and 21 yards to go for a rst down. Osborne punted but roughing the kicker was called on Lithia Springs. Th e referee o ciating the game with the approval and sanction of the Georgia High School Association assessed the 15 yard penalty, placed the ball on the Lithia Springs 38 yard line, and declared it was 4th down and 6 yards to go.

6-1 U.S. Federal CourtsEXHIBIT

Source: http://www.uscourts.gov/



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Th e rules of the National Federation of State High School Associations provide that the penalty for rough-ing the kicker shall be 15 yards and 1st down. Th ere is a dispute as to whether the Osborne coaches properly protested to the referee, before the ball was put in play, the error in the referees failing to declare a 1st down.

From Lithia Springs 38, Osborne punted again. Lithia Springs received the punt and drove down the eld to score a eld goal. Now 2 points behind, Osborne passed. Lithia Springs intercepted and scored again. Th e nal score was Lithia Springs over Osborne, 16 to 7.

* * *On November 12, suit was led in the Superior

Court of Cobb County by parents of Osborne players against the GHSA. Hearing was held on November 13. Th e court found that it had jurisdiction, found that the referee erred in failing to declare an automatic rst down, and found that a protest was lodged with the proper o cials of GHSA. Th e court found that the plainti s have a property right in the game of football being played according to the rules and that the referee denied plainti s and their sons this property right and equal protection of the laws by failing to correctly apply the rules.

Th e court then entered its order on November 13 canceling the play-o game between Lithia Springs and Campbell High School scheduled for 8 p.m. that evening and ordered . . . that Lithia Springs High School and R.L. Osborne High School meet on the football eld on November 14, 1981 at an agreed upon time between the parties and resume play at the Lithia Springs thirty eight yard line with the ball being in the possession of R.L. Osborne High School and it be rst down and ten yards to go for a rst down and that the clock be set at seven minutes one second to play and that the quarter be designated as the fourth quarter.

Asserting that the trial courts order was erroneous under Smith v. Crim, 240 Ga. 390, 240 S.E.2d 884 (1977), and would disrupt the play-o games not only

between Lithia Springs and Campbell but succeeding play-o s, the GHSA led a motion for supersedeas in this court on November 13, 1981, and the court entered its order suspending the trial courts order, pending further order of this court.

In Smith v. Crim, supra, we held that a high school football player has no right to participate in inter-scholastic sports and has no protectable property interest which would give rise to a due process claim. Pretermitting the question of state action which is the threshold of the 14th Amendment, we held that Smith was not denied equal protection by the rule of GHSA there involved. Similarly we nd no denial of equal protection by the referees error here. Were our decision to be otherwise, every error in the trial courts would constitute a denial of equal protection. We now go further and hold that courts of equity in this state are without authority to review decisions of football referees because those decisions do not present judicial controversies. Th e stay granted by this court on November 13, 1981, is hereby rea rmed.

All the Justices concur.

Case Questions 1. Why is state action the threshold question for an

inquiry into a denial of equal protection of the law under the Fourteenth Amendment?

2. Why did the football players have no right and no property interest to qualify for due process protection?

3. Did the players receive fair procedure?

Case Glossarysupersedeas

An order staying the execution of judgment by a trial court; suspension of the trial courts power, as when an appeal halts the courts power to execute judgment.

Full Faith and CreditArticle IV of the Constitution begins Full faith and credit shall be given in each State to the public acts, records, and judicial proceedings of every other State. As a practical




matter, this means that the courts of each state must recognize the validity of the laws and judicial orders of other states. Divorce provides a useful example. Frequently, after divorce, an ex-husband ordered to pay child support or alimony moves to another state and stops making payments. Th e ex-wife may bring an action in the state to which the former husband has moved to collect arrears in payments. In the action, the court must recognize the validity of the divorce and the order to make payments.

Full faith and credit has some limitations. A court may nd that the law or court order of another state is repugnant to public policy, a rare occurrence. Th is state-ment will undoubtedly be tested in the light of legalization of same-sex marriage (e.g., Massachusetts). What happens when a same-sex married couple moves to a state that does not allow such marriages? Another basis for denying recognition is jurisdic-tion. One state may conclude that the court of another state did not have jurisdiction over the matter in the rst place. Jurisdiction is the rst issue in any case. A court with-out jurisdiction has no authority and its orders no validity. For example, husband and wife separate and live in di erent states. One brings a divorce action in one state and the other in another state. Only one state should have jurisdictiontwo con icting divorce decrees make no legal or practical sense. A court may conclude that the court of another state did not have jurisdiction and refuse to enforce its orders.

Th is may have unanticipated results; consider the following case. Many years ago, a man from North Carolina obtained a quickie divorce in Nevada, immediately remarried in Nevada, and returned to North Carolina with his new wife. North Caro-lina charged and convicted him of bigamy, and the case went to the U.S. Supreme Court twice. Th is created the anomalous situation in which a man was a bigamist for living in one state with the only one with whom the other state would permit him lawfully to live (Justice Douglas, Williams v. North Carolina, 317 U.S. 287 [1942]). Th e Court required North Carolina to respect the Nevada decree (with vigorous dissenting opin-ions). Th e advent of no-fault divorce since this case was decided has mitigated the need for divorce havens like Nevada, but jurisdictional problems can still create a tangled web in divorce cases.

SUBJECT MATTER JURISDICTIONAlthough jurisdiction may properly be treated as part of civil and criminal procedure, the distinction between federal and state court systems is grounded on jurisdiction as well. Th e power and authority of a court in a particular dispute are based on jurisdiction. We repeat: Without jurisdiction, a court has no authority; its orders are not valid. Subject matter jurisdiction refers to the kinds of disputes a court has the authority to decide. For example, the Constitution provides that the federal government has exclusive control over bankruptcy, patent, trademark, copyright, and admiralty. A state court has no power to decide a bankruptcy case; if it should do so, its orders would have no validity.

General and Limited JurisdictionCourts are classi ed as having general or limited subject matter jurisdiction. Courts of general jurisdiction have authority to decide a wide variety of cases

case and controversy Terms used in Article III, 2, of the U.S. Constitu-tion regarding the judi-cial power; the terms have been interpreted to mean that the courts have authority over real disputes between real parties, as opposed to hypothetical disputes or nonadversarial par-ties. The courts do not answer questions about the law, but decide actual disputes.

full faith and creditThe Constitution requires that each state respect the legal pro-nouncements of sister states, Full faith and credit shall be given in each State to the public acts, records, and judicial proceedings of every other State (Article IV).

subject matter jurisdictionThe jurisdiction of a court to hear and deter-mine the type of case before it. For example, in Florida, election contests are heard in the circuit court but not in county court. The reference to Leon County in the Circuit Court for Leon County refers only to the loca-tion of the courtit is a circuit court, not a county court.



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and apply the full range of judicial remedy and relief. Major trial courts in each jurisdiction t into this category. However, most states have also established courts of limited jurisdiction to handle only a restricted class of cases. A probate court, for example, handles matters concerning decedents estates (many probate courts also have jurisdiction over some areas of law relating to juveniles). Th us, a probate court does not hear cases of tenant evictions. Some states divide their courts into criminal and civil courts; Texas even divides appeals into civil and criminal appeals at the supreme court level.

Th ere is a wide variety of lower courts handling minor matters with limited subject matter jurisdiction; one example is small claims court (limited to cases involv-ing a low maximum monetary amount and having limited remedial powers it cannot grant divorces, issue injunctions, etc.). Municipal courts are common in the United States, typically handling violations of city ordinances and other minor civil and crimi-nal matters. Many of these lesser courts are conducted with less formality than higher trial courts. Small claims courts are designed to provide litigants with an inexpensive means of resolving disputes. Lawyers do not usually participate, court reporters are usually not present (and therefore no transcript is made), and court costs are minimal; the judge tends to take a more active role in the process because the litigants are unfa-miliar with the technicalities of the law.

FEDERAL SUBJECT MATTER JURISDICTIONFederal jurisdiction applies to two categories of cases: (1) federal question cases and (2) diversity of citizenship cases (see Exhibit 6-2).

Federal Question CasesTh e Constitution provides that the federal courts have jurisdiction over cases arising under the Constitution, laws, and treaties of the United States. Th ese are called federal question cases. A case may directly raise a constitutional issue, or the issue may

bankruptcyGenerally, the situation in which a person, busi-ness, or government cannot or will not pay its debts; its property is entrusted to a trustee in bankruptcy who distributes the property to creditors.

patentAn exclusive right, granted by the govern-ment, to use ones invention.

trademarkA distinctive mark, in symbols or words, used to distinguish products of manufacturers or merchants.

copyrightA right in literary prop-erty, giving an author exclusive rights over her or his works for a limited period of time.

admiraltyBranch of law pertain-ing to maritime com-merce and navigation.

Federal question A case arising under the United States Constitution, laws, and treaties of the United States

Diversity of citizenship Each plainti is from a state or country di erent from each defendant and the amount being disputed is more than $75,000

6-2 Bases For Federal Court JurisdictionEXHIBIT




arise under a federal statute enacted by Congress (e.g., federal civil rights violations, environmental protection issues).

Each state (and the District of Columbia) has at least one U.S. District Court, the federal trial court to which federal question cases are brought. Many cases involve both state law and federal questions and may be brought in state courts, which must then decide issues of both state and federal law. For instance, the drunken-driving man-slaughter case in our hypothetical situations considered earlier would begin as a state prosecution in which the defendant would raise defense arguments based on the due process and cruel and unusual punishment clauses of the U.S. Constitution as well as their counterparts in the state constitution (and factual defenses, of course). If con-victed, the defendant could appeal to the state court of appeals and the state supreme court and then petition the U.S. Supreme Court for a writ of certiorari on the federal constitutional issues.

A case originating in the federal district court will stay in the federal system even if an issue of state law must be decided. A case originating in the state courts will remain in the state court system until decided or denied consideration by the states highest court, from which appeal is made (by way of certiorari) to the U.S. Supreme Court. A defendant may challenge federal question jurisdiction in a case in a U.S. District Court, which would force the case into state court if the challenge is successful. Simi-larly, a defendant may petition the U.S. District Court for removal from state court to the federal court and will succeed if the federal court concludes that the case could have been brought originally in the federal court.

Keep in mind that state courts have the nal authority to declare state law, and federal courts have nal authority to declare federal law. State courts will thus use federal cases to determine federal law, while federal courts will rely on decisions of state courts where state law is concerned. Th e exceptions to this are: (1) if state and federal laws overlap and con ict (e.g., certain state and federal labor laws may give rise to an inconsistency between them), state law must yield to federal law and (2) any state statute or court decision that is held to be in con ict with the U.S. Constitution is invalid and without authority as to the part that is unconstitutional.

Federal question cases commonly arise in those areas in which the federal gov-ernment has a special stake by virtue of the authority it has through the Constitution regarding interstate commerce, copyright, patent, bankruptcy, the military, customs, and so on. In each of these areas, a body of federal law has been developed by Congress and de ned by the federal courts.

Th e Federal Trade Commission Act, a federal act regulating sale of commercial products to consumers, allows the Federal Trade Commission (FTC) to sue a company for fraud where false advertising statements induced the consumer to purchase the companys product. In QT, the company claimed that its bracelet provided quick relief from chronic pain. Th e magistrate judge who tried the case enjoined the advertising and ordered the company to transfer some $16 million to the FTC for distribution to defrauded consumers.

general subject matter jurisdiction A courts authority to hear and decide a broad range of cases.

limited subject matter jurisdiction A courts restricted authority to decide only certain kinds of cases; for example, a probate court hears only cases concerning decedents estates.

federal questionIssues in cases arising under the Constitution, laws, and treaties of the United States, over which federal courts have subject matter jurisdiction.

writ of certiorariA writ issued by a higher court to a lower court requiring the cer-ti cation of the record in a particular case so that the higher court can review the record and correct any actions taken in the case that were not in accordance with the law.

certiorariTo be informed of; to be made certain in regard to.



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FEDERAL TRADE COMMISSION, Plainti -Appellee

v.QT, INC., Q-Ray Company, Bio-Metal, Inc., and

Que Te Park, Defendants-AppellantsUnited States Court of Appeals, Seventh CircuitNo. 07-1662Decided Jan. 3, 2008.

WIRED Magazine recently put the Q-Ray Ionized Bracelet on its list of the top ten Snake-Oil Gadgets. See http://blog.wired.com/gadgets/2007/11/10-awesome-gadg.html.

Th e Federal Trade Commission has an even less honorable title for the bracelets promotional campaign: fraud. In this action under 15 U.S.C. 45(a), 52, 53, a magistrate judge, presiding by the parties consent, concluded after a bench trial that the bracelets promotion has been thoroughly dishonest. Th e court enjoined the promotional claims and required defen-dants to disgorge some $16 million (plus interest) for the FTC to distribute to consumers who have been taken in.

According to the district courts ndings, almost everything that defendants have said about the bracelet is false. Here are some highlights: Defendants promoted the bracelet as a miraculous

cure for chronic pain, but it has no therapeutic e ect. Defendants told consumers that claims of imme-

diate, signi cant or complete pain relief had been test-proven; they hadnt.

Th e bracelet does not emit Q-Rays (there are no such things) and is not ionized (the bracelet is an electric conductor, and any net charge dissipates

swiftly). Th e bracelets chief promoter chose these labels because they are simple and easily remembered -and because Polaroid Corp. blocked him from calling the bangle polarized.

Th e bracelet is touted as enhancing the ow of bio-energy or balancing the ow of positive and negative energies; these empty phrases have no connection to any medical or scienti c e ect. Every other claim made about the mechanism of the bracelets therapeutic e ect likewise is techno-babble.

Defendants represented that the therapeutic e ect wears o in a year or two, despite knowing that the bracelets properties do not change. Th is assertion is designed to lead customers to buy new bracelets. Likewise the false statement that the bracelet has a memory cycle speci c to each individual wearer so that only the bracelets original wearer can experience pain relief is designed to increase sales by eliminating the second-hand market and explaining the other-wise-embarrassing fact that the buyers friends and neighbors cant perceive any e ect.

Even statements about the bracelets physical com-position are false. It is sold in gold and silver varieties but is made of brass.

Th e magistrate judge did not commit a clear error, or abuse his discretion, in concluding that the defendants set out to bilk unsophisticated persons who found themselves in pain from arthritis and other chronic conditions.

Defendants maintain that the magistrate judge subjected their statements to an excessively rigorous standard of proof. Some passages in the opinion could be read to imply that any statement about a products therapeutic e ects must be deemed false unless the claim has been veri ed in a placebo-controlled, double-blind study. . . .

Nothing in the Federal Trade Commission Act, the foundation of this litigation, requires placebo-controlled, double-blind studies. Th e Act forbids false and misleading statements, and a statement that is plau-sible but has not been tested in the most reliable way cannot be condemned out of hand. Th e burden is on the Commission to prove that the statements are false. . . .




Now for the remedy. Defendants do not contest the terms of the injunction. Th ey do, however, say that the nancial award was excessive. Th e magistrate judge set as his goal the disgorgement of the pro ts that defendants made while the Q-Ray Ionized Bracelet was heavily promoted with infomercials on late-night television. Disgorging pro ts is an appropriate remedy. But defendants say that the record does not contain evidence about their pro ts. True, the FTC compiled balance sheets showing pro ts running in the millions every year. Th ese should not be consid-ered, defendants insist, because when Que Te Park (defendants principal investor and CEO) testi ed about the subject, he was asked only whether he could see the enterprises net income (he conceded that he could), not whether the gures are correct, and the FTCs lawyer then forgot to o er the balance sheets themselves as evidence.

Th is is too clever by half. Th e FTC made estimates of pro ts from the Q-Ray Ionized Bracelet business and gave defendants an opportunity to respond. Th ey chose not to do so. Parks noncommittal answers avoided any risk of prosecution for perjury but did not meet the FTCs prima facie showing. Th e magistrate judge was entitled to treat the evasion as an admission that the FTCs computation is in the ballpark. A monetary award often depends on estimation, for defendants may not keep (or may conceal) the data required to make an exact calculation. Defendants business was a pro table one; that much, at least, they concede. (It is so pro table that they continue to carry it on despite the injunction that requires them to stop making most of their old claims for its e cacy. Today it is sold with testimonials and vaporous statements.) A court is entitled to proceed with the best available information; if defendants thought that their pro ts for these years were below $16 million, they should have produced their own guresfor once the FTC

produces a reasonable estimate, the defendants bear the burden of showing that the estimate is inaccurate.

Although defendants complain that the magistrate judge failed to separate ill-got gains from legitimate pro ts, they o er no reason to think that any of their pro ts are legitimate. Defendants sole business is the sale of Q-Ray products.

On top of paying $16 million (plus interest) into a fund for distribution to all of their customers, defendants must refund the full purchase price of some bracelets purchased over the Internet. Defendants infomercials promised buyers that the purchase price would be refunded any time during 30 days after the sale if the buyers were not satis ed with their brace-lets. Defendants honored that promise for bracelets purchased by telephone but not for bracelets purchased from their web sites. Internet purchasers were allowed only 10 days to return their bracelets. Th e district court held that defendants must refund the purchase price of anyone who bought from the web sites and returned the merchandise between days 11 and 30. Defendants protest that their web sites disclosed the 10-day refund period, but this does not meet the FTCs point. Th e infomercials promised a 30-day return period, then suggested that customers purchase online. Anyone who followed that advice received only a 10-day return period. Th e disclosure of this shorter period was buried several clicks away in the web site. Th e district court was entitled to conclude the switch deceived reasonable persons who relied on what the infomercials told them.

Case Questions 1. What is a snake-oil gadget? 2. What is the rationale for requiring truth in consumer

advertising? 3. Is federal regulation of consumer advertising

necessary?

Diversity of Citizenship CasesArticle III of the Constitution placed suits between citizens of di erent states under federal jurisdiction. Th is jurisdiction is not exclusive, so a plainti of Maryland suing a defendant from Virginia may elect to sue in a state court (most likely Virginia) or in a U.S. District



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Court. Th e di erences in state citizenship are referred to as diversity of citizenship, and jurisdiction is based on the status of the parties without regard to the subject matter of the case; that is, no federal law other than the diversity clause of the Constitution is required. Diversity cases additionally require that the amount in controversy exceed $75,000.

Diversity jurisdiction requires total diversityif there are multiple plainti s or defendants and any plainti is a citizen of the same state as any defendant, diversity jurisdiction will be denied. Like federal question cases, a petition for removal (to the federal court) is available to the defendant if the plainti elects to bring the suit in the state court. Th e petition, however, is not available if suit is brought in the defendants state. Th e rationale for this exception is based on the original purpose of the diversity clause. When the Constitution was framed, it was feared that parties might face preju-dice when suing or being sued in a state other than their own. Federal jurisdiction was made available on the belief that federal courts would be less inclined to partiality. Th us, when a defendant is sued at home, the rationale for federal jurisdiction no longer holds.

diversity of citizenship The subject matter jurisdiction of federal courts to hear cases between citizens of different states.

In the Fine case, both sides led suit on the same day, one in state court and one in federal court. As the case indicates, a corporation may be a citizen of more than one state for the purposes of diversity jurisdiction. Although a defendant sued in state court may petition for removal to federal court, claiming diversity jurisdiction, a defendant

William M. FINE, et al., Plainti sv.

DELALANDE, INC., DefendantUnited States District Court, S.D. New York545 F. Supp. 275 (1982)

Th is lawsuit began on April 1, 1982, in the New York Supreme Court, New York County, the same day on which the defendant Delalande, Inc. led an action in this Court against the plainti s herein based upon claimed diversity of citizenship. Delalande removed this action from the state court on April 20, 1982, pursuant to 28 U.S.C. 1441(c).

By motion docketed May 5, 1982, the Fine plainti s seek the remand of this action to the state court as improvidently removed, because Delalande, Inc. is a citizen of New York by reason of its principal place of business of this state.

For purposes of 18 U.S.C. 1441, a corporation is deemed to be a citizen of the state wherein it has its principal place of business, and of the state of its incorporation. 28 U.S.C. 1332(c).

For reasons discussed more fully in this Courts Memorandum and Order of this date in the companion Delalande action, 545 F. Supp. 268, familiarity with which is assumed, this Court nds that Delalande has its principal place of business in New York. Accordingly, there is not complete diversity because at least eleven of the plainti s are also citizens of New York.

Plainti s motion to remand this action to the state court is granted.

Case Questions 1. If Delalandes principal place of business is New

York, on what basis was it claiming diversity of citizenship?

2. Why would the plainti prefer state court or the defendant federal court?




sued in federal court in a diversity case may move to remand to the state court, claiming a lack of diversity jurisdiction. Note that a removal should be distinguished from a remand, which in a diversity case would seek a transfer from a federal court back to the state court. Both removal and remand may be distinguished from a motion to dismiss for lack of jurisdiction.

Many have argued that the diversity clause no longer makes sense and unnecessarily clogs federal courts, which ought to be deciding cases of federal rather than state law.

Th e Erie DoctrineIn 1938, the U.S. Supreme Court decided the case of Erie Railroad v. Tompkins, 304 U.S. 64, which altered the nature of diversity cases forever. Tompkins was injured by a train while walking along a path beside the railroad tracks, when an open door on a refrigerator car hit him. Tompkins was a citizen of Pennsylvania, and the incident occurred in Pennsylvania; but Erie was a New York corporation. Tompkins brought a diversity case in federal court in New York and was awarded $30,000 in damages. Th e Second Circuit Court of Appeals a rmed the award, but the railroad petitioned and received certiorari from the U.S. Supreme Court.

At issue was the substantive law to be followed in a diversity case. Th e trial judge instructed the jury that the railroad was liable under general law if the jury found simple negligence. Th e railroad argued from the beginning that the common law of Pennsylvania, the site of the injury, should apply. Under Pennsylvania law, Tompkins would be considered a trespasser, as he was walking on the railroads right of way, so the railroad would not be liable to a trespasser on the basis of ordinary negligence; it would be liable only if the jury found gross negligence (i.e., wanton and reckless misconduct). In Pennsylvania, a landowner such as the railroad owes a lower duty of care to a tres-passer than to nontrespassers. For this reason, Tompkinss attorneys chose to bring the case in federal court rather than the Pennsylvania state court.

Section 34 of the Federal Judiciary Act of 1789 had provided for the recognition and application of state common law in appropriate cases, but in Swift v. Tyson, 41 U.S. 1 (1842), the Court had held that the federal courts were free to disregard speci c deci-sions of state common law in favor of general principles of common law.

Th e e ect of Swift v. Tyson was to encourage the creation of a general federal common law that could di er signi cantly from the law of a particular state. Th is would encourage litigants for whom diversity jurisdiction was available to select the court, state or federal, in which they would have the greatest likelihood of successprecisely what Tompkinss lawyers did. In Erie, the Supreme Court overruled Swift v. Tyson and declared that, henceforth, the federal courts in diversity cases would follow the common law of the state.

Mr. Tompkins lost his case.Erie has been applied to substantive law but not procedurewhen suing in federal

court, federal procedure is followed.In the Brown case, like the Fine case, the principal issue is diversity jurisdiction.

Once the court determines it has jurisdiction, the case is summarily dismissed by inter-preting state law as Erie requires. Th e Brown plainti is suing for wrongful discharge,



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Deborah BROWN, Plainti v.

SOUTHLAND CORPORATION, et al., Defendants

United States District Court, E.D. Missouri, E.D.620 F. Supp. 1495 (1985)

Plainti , a resident of Missouri, brought this action for damages in the Circuit Court of the City of St. Louis against Southland Corporation, a Texas corporation, and Clyde Tinsley, a resident of Missouri.

Th e action arises out of the circumstances sur-rounding plainti s discharge from defendant South-land Corporations (Southland) employment. Plainti was employed as the store manager of a 7-Eleven store owned by defendant Southland at the time of her discharge in May 1980. Plainti alleges that she was wrongfully discharged pursuant to a corporate policy implemented to cover-up top-level employees negligence. . . .

28 U.S.C. 1441(b) gives a defendant who meets certain requirements the right to remove a civil action from a state court to a federal district court on the basis of diversity of citizenship. Th e requirement of complete diversity between plainti s and defendants is fully applicable to 1441(b). A federal court, however, will not allow removal to be defeated by the collusive or fraudulent joinder of a resident defendant. . . .

In the present action, plainti s complaint alleges that Tinsley was the zone manager with ultimate

supervisory responsibility over the store where plainti worked. In support of his removal petition, defendant Tinsley submitted a davits and plainti s own deposi-tion statements to the e ect that at the time of the occurrences alleged in plainti s complaint, he was not the zone manager of the district in which plainti s store was located and that he had no involvement in the said occurrences. Plainti states in her deposition that she never spoke with defendant Tinsley. Plainti has not disputed this evidence. Th e Court concludes that defendants have met their burden of proving that defendant Tinsley was improperly joined and dismisses him pursuant to Rule 21, Fed.R.Civ.P. Accordingly, plainti s motion to remand is denied.

Th e next matter for consideration is defendants motion to dismiss for failure to state a claim. Plainti does not allege any contractual or statutory provi-sion that would bar her termination. In Missouri, it is rmly established that an at-will employee cannot maintain an action for wrongful discharge. . . .

Th e above rulings dispose of all claims in plainti s complaint against each defendant. Judgment for defendants.

Case Questions 1. Why does the plainti want the case remanded to

state court? 2. What reasons are given for denial of the petition to

remand? 3. What result does Erie achieve in this case?

but she is an at-will employee, which means that she does not have an employment contract that guarantees a period of employment, so she can be discharged at any time.

Some states allow suits for wrongful discharge by at-will employees; Missouri does not. Why is the plainti trying desperately to get into a Missouri state court? Th e answer may lie in the Erie doctrine itself. Although the federal court in a diver-sity case will be extremely reluctant to upset established Missouri precedent, the plainti might be able to persuade a Missouri court to overrule precedent in light of a trend in other states to recognize an action for wrongful discharge of an at-will employee.




CONFLICT OF LAWSSeparate state jurisdictions within one nation have also presented a special problem called con ict of laws or choice of law. Suppose two Connecticut residents are involved in an auto accident in Massachusetts. With a Connecticut plainti and a Connecti-cut defendant, suit is logically brought in Connecticut, although it could be brought in Massachusetts where the accident occurred. Should Connecticut or Massachusetts law apply? Th is is a con ict-of-laws problem. Whatever state is chosen for the suit (the forum state), its procedural laws will be followed; but a question may arise as to which forums substantive law should apply. In some respects this parallels the issue in Erie: the result of the lawsuit should not depend on the choice of the forum. Because of dif-ferences in state law, a defendant may be liable under the law of one state but not under the law of another, making the defendants state of residence the determining factor in the result.

Con ict-of-laws rules resolve this problem to some extent. Each state has its own rules to decide the choice of law. If the Connecticut plainti sues in Connecticut, Con-necticut choice of law must apply. Assuming that Connecticut is in no way involved with the accident (i.e., the accident and its causes occurred wholly within Massachu-setts), the substantive law of Massachusetts would apply, just as it would if the case were brought in Massachusetts. Connecticut law would require that the substantive law of Massachusetts govern the outcome of the case.

Th ere is logic to this result. Whether conduct is wrongful should be determined by the law of the place where the conduct occurs. Th e Connecticut driver in Massachusetts must obey Massachusetts law. To illustrate, many states allow a driver to turn right at a red light after stopping and determining that it is safe to turn. Suppose a resident of such a state follows this custom in a state that does not allow turning on red. It would certainly be no defense, either civil or criminal, that the drivers home state has a di erent rule. Suppose that the turn on red caused an accident and that an injured party sued the non-resident in his home state. Should the defendants conduct be judged di erently because it is legal in his home state, the state where the suit was brought? No, wrongful conduct should not be magically transformed into proper conduct by the choice of the forum.

Unfortunately, con ict of laws is not always this simple. Suppose, for example, that the two drivers were crossing the Connecticut-Massachusetts border as the accident occurred. Th e wrongful act of one driver may have occurred in Connecticut, but the injuries were in icted in Massachusetts. Choice of law will depend on the con ict -of-laws principles of the forum state. In tort cases like an auto accident, two rules are generally applied. Th e ancient rule, lex loci delicti, or the law of the place of the wrong, holds that choice of law will fall on the site of the last act necessary to make the actor liable, that is, where the tortious act is complete. In recent times another test, called the signi cant relationship test, has been adopted in many states. Under this test, all the circumstances of the tort are considered in deciding which state has the greatest connection with the wrong.

Contract cases present far more problems for con ict of laws. As a somewhat absurd, but not impossible, example, consider the following:

Two corporations with nationwide activities negotiate a complex contract. One corporation is incorporated in California, the other in New York. Th e contract is

con ict of lawsAlso called choice of law; concerns the problem that arises when there is a ques-tion about which states law should apply in a particular case.

lex loci delicti (Latin)The law of the place of the wrong. In a con ict-of-laws ques-tion in a tort action, this ancient rule held that the court would apply the law of that place (state) where the last act necessary to complete the tort occurred or the last act necessary to make the actor liable occurred.

signi cant relationship testThe modern rule followed in a con ict-of-laws setting; it is used in both tort and contract contexts and makes the court apply the law of the state that had the most sig-ni cant relationship to the cause of action.



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negotiated and signed in Illinois. Th e contract is to be performed primarily in Texas but is breached in Louisiana. Th e contract speci cally provides, in case of breach, this contract will be construed under the law of Michigan. Th e California corpora-tion sues the New York corporation in New Jersey, its principal place of business.Th eoretically, the law of one of several states might be chosen. If suit is brought

in New Jersey and the New Jersey court agrees that it has jurisdiction, the choice of law would depend on New Jersey rules concerning con ict of laws. New Jersey con ict-of-laws rules may be very di erent from those of Texas or Illinois. Most states give great weight to the agreement of the parties to specify the law that governs, here that of Michigan. Many contracts are silent in this regard, though, and there may be policy reasons for not enforcing that part of the contract.

Th ere are several con ict-of-laws principles with regard to contracts, and frequently di erent rules apply to di erent circumstances. Like torts, there has been a strong trend toward the signi cant relationship test, which aims at choosing the state having the greatest connection with the contract. Except for those rare experts on con ict of laws, anyone with a problem in this area can anticipate doing considerable research. To achieve the best results, one should consider which states law might apply, which would be most favorable, and which of the possible forum states has con ict rules that would invoke the favorable states law.

In the Newman case, a con ict-of-laws problem becomes a pivotal issue because the plainti might well lose in New York and win in Illinois. Note that the case was led in a federal court in New York, which under Erie followed New York law, speci cally New York con ict-of-laws rules, to determine whether New York or Illinois law should apply. Newman, a suit for damages for the cost of re-creating a lost manuscript, was decided in the days before photocopying and word processing. Today the court might hold the plainti contributorily negligent for not making a copy of the valuable lost manuscript.

Although the court does not discuss them in detail, it uses two of the traditional bases for choice of law in contract cases: (1) the place where the contract was made and (2) the place where the contract was performed.

NEWMANv.

CLAYTON F. SUMMY CO.Circuit Court of Appeals, Second Circuit133 F.2d 465 (1943)

Appellee, a composer, sent a manuscript, insured for $500, by Railway Express from Florida to appellant, a music publisher, in Chicago. Appellant later procured appellees permission to send the manuscript to appellants New York o ce. But, unknown to

appellee, appellant, in shipping the script to New York, also by Railway Express, described the package as containing merely sheet music. Th e script was lost in transit. Appellee, having retained no copy, spent considerable time in reproducing the script and later contracted with another publisher who published it under a royalty agreement.

* * *Th e manuscript had no market value and was

unique, so that it was proper to measure its value by the reasonable worth of the time and e ort spent by appellee in reproducing it. On the basis of evidence,




LAW AND EQUITYHistory has left the American legal system with an arbitrary division of remedies into legal and equitable. Legal remedies refer to relief granted by common law courts, and equitable remedies to those a orded by courts of equity, also called chancery. Although this subject is usually treated under the heading of remedies, it is related to jurisdiction because many states restrict equitable jurisdiction to their highest trial courts.

legal remedyA remedy under the common law, as distinguished from an equitable remedy.

the verdict was not excessive. And appellees failure to keep a copy of her script did not bar recovery. . . .

Appellant asserts that the trial judge erred in instructing the jury as follows: What is the duty which the bailee, the Summy Company, owed to the bailor, Miss Newman? Being a bailment, the Summy Company owed the plainti the duty of exercising reasonable care in handling her manuscripts and in dealing with her manuscripts. * * * Negligence is usually de ned in these words: Negligence is the failure to exercise a care commensurate to the hazard. Th at is, the amount and kind of care that would be exercised by an ordinarily prudent person in the same or similar circumstances, or that degree of diligence which the manner and the nature of the employment make it reasonable to expect. Th e question, therefore, that you must decide is whether the defendant failed in its duty to observe that degree of care in looking after the manuscript which had been entrusted to it. Appellant maintains that the judge should have instructed the jury that it was not liable unless it was grossly negligent because, appellant claims under Erie R.R. v. Tompkins, 304 U.S. 64 . . . New York law gov-erns. By the law of New York where the trial was held, appellant was a gratuitous bailee, and a gratuitous bailee is not liable except for gross negligence. Th ere is, however, no need for us to consider what would be the law of New York applicable to such a transac-tion occurring in New York, for here we must apply the New York doctrine of con ict of laws and that doctrine is to the e ect that the applicable legal rules are those of Illinois. Th ere can be no doubt that the arrangements for the bailment were made in Illinois, and that performance, i.e., the shipment of the manuscripts, occurred in that state. In such circum-stances, the New York courts hold that the Illinois law as to bailments should be applied.

Turning then to the Illinois decisions, it appears that the rule is that, regardless of whether or not there was a gratuitous bailment or one for mutual bene t, the bailee must use the same care as he would with respect to his own property; there is no discussion of gross negligence. . . .

Th e instruction given by the trial court in the instant case was not literally in accord with the language used in those cases. Perhaps the di erences are not substan-tial. But even if they are, that is of no import, since, in the trial court, appellant did not except to the instruc-tion on the ground of any such di erences but only because of the failure to give instructions as to gross negligence. Accordingly there was no reversible error.

Th e judgment of the trial court is a rmed.

Case Questions 1. Why is a di erent standard of care applied to gratu-

itous bailment and bailment for hire in New York? 2. To what law (and why) does the federal court look to

determine what substantive law to apply? 3. What would be an example of a bailment for hire? A

gratuitous bailment?

Case Glossarybailment

When the owner of personal property delivers pos-session without intent to pass title, such as when one leaves an automobile with an auto mechanic.

gross negligenceNegligence re ecting a reckless disregard for the rights of others; in contrast to ordinary negligence, which is commonly characterized by simple care-lessness or inattention.

gratuitous bailmentA bailment for which no compensation is made.



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Th e existence of legal and equitable remedies can be adequately understood only in historical context. Anglo-American law began with the administrative organization of England in the aftermath of the Norman Conquest (a.d. 1066). Although the Normans left local tribunals in operation, often applying principles of former English law, the organiza-tion of a centralized kingdom included the establishment of laws common to the entire kingdom; hence the name common law. Courts were established that had jurisdiction over the common law. In these courts, actions were initiated by writs, a word that does not have an exact counterpart in modern law. A writ stated a cause of action, so it is simi-lar to the modern pleading we now call a complaint. But writs had speci c names, such as the writ of trespass quare clausum fregit, which corresponds to our modern cause of action for trespass to land, or the writ de ejectione rmoe, corresponding to modern eject-ment or eviction. Th e writs were essentially formulas applied to recognized legal wrongs, almost like a catalog of actions in which a party would ll in the blanks. Each action was required to t precisely into a speci c writ. In the rst years of the common law courts, new writs were constantly created as di erent disputes arose that varied from already established actions. Gradually, however, the system crystallized, and the common law courts became formal and rigid, resisting the establishment of new writs so that novel cases that did not fall within established writs were rejected by the courts.

Th is development did not leave litigants without a remedy, however, because from the beginning subjects of the kingdom enjoyed the right of petitioning the king for jus-tice. As more and more cases arose that were not recognized by the common law courts, parties sought relief from the king, who then presented these cases to the chancellor, originally an ecclesiastical o ce sta ed by priestsnot to be confused with ecclesiasti-cal courts under the authority of the church that applied the principles of canon law. Because of a gradually mounting caseload, chancery developed its own courts indepen-dent of the common law courts and referred to as courts of equity. Courts of law and equity existed side by side until recent times, when the states merged law and equity into a single court having authority to order both legal and equitable remedies. Despite the merger, features of the historical di erences between the two courts are still impor-tant in modern legal practice.

Courts of equity treated the cases before them somewhat di erently than the common law courts. Because petitions in equity sought special justice and presented novel situations, equity courts required greater exibility and discretion than common law courts. Th e aim of equity was to provide relief appropriate to merits of the case; thus, courts of equity were described as courts of conscience, governed by the moral issues of the case rather than stare decisis. Th eoretically this is still true today: a judge sitting in equity is not bound by precedent. As a practical matter, modern judges rule in equity on the basis of authority (that is, prior equity cases), and expect attorneys to pro-vide precedential authority in their arguments. Nonetheless, because judges sitting in equity sometimes exercise discretion and ignore precedent, appeal from a case in equity is frequently premised on the basis of abuse of discretion by the lower court judge. If a judge departs from well-established principles of equity as revealed by prior cases, an appellant may use this e ectively to persuade an appellate court that the lower court judge abused discretion. Th us, justices sitting in equity are urged to follow consistent principles in a manner similar to stare decisis in the common law.

equitable remedyA special remedy, such as an injunction or speci c performance, not available at common law.

equityA system for ensuring justice in circumstanc-es where the remedies customarily available under conventional law are not adequate to ensure a fair result. Also see chancery.

chanceryEquity, equitable jurisdiction, a court of equity; a court that administers justice and decides controversies in accordance with the rules, principles, and precedents of equity and that follows the forms and procedure of chancery; as distin-guished from a court having the jurisdiction, rules, principles, and practice of the com-mon law.

writA written order direct-ing that a speci c act be performed.

complaintThe initial pleading in a civil action in which the plaintiff alleges a cause of action and asks that the wrong done to the plaintiff be remedied by the court.


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