Civil Procedure

Long Essay Question from Midterm

The following is the long essay question from the midterm, plus the key I used for grading it:

Essay Question. (42 points)

            D1 was born and raised in Madison, Wisconsin (in the Western District of Wisconsin). She also attended university in Madison, where she earned a chemistry degree. In 2000, she decided to work for the D2 Corp., which at the time had a laboratory in Madison. After the lab closed in 2010, the D2 Corp. removed all of its employees from the United States (except for a plant in Oregon). D1 became a chemist on-call for the D Corp., living out of a suitcase and moving from lab to lab on a temporary basis as needed. As a result, she sold her house in Madison and since 2010 hadn’t visited Wisconsin once. Since January of 2013, she has been working at a D2 Corp. plant in the United Kingdom, staying in a hotel. But she was promised in March of 2013 that she would be set up permanently in a new lab in Portugal when it was completed in 2014. When she visited the construction of the lab in April of 2013, she decided she liked Portugal and concluded that she wanted to make the place her home.

The D2 Corp. is a high-quality lubricant manufacturer incorporated in, and with its headquarters in, the United Kingdom. It has laboratories and plants all over the world. Its only presence in the United States is the plant in Oregon. The D2 Corp. sells its products to a single worldwide distributor—Lubricants, Inc.—a Canadian corporation, with its principal place of business in Canada. Lubricants, Inc. sells D2 Corp. lubricants, as well as many other lubricants, to many manufacturers all over the world.

The only U.S. manufacturer that Lubricants, Inc. sells its products to is Bikes Corp., which is incorporated in and has all its employees, officers and directors in California. Bikes Corp. ships its products all over the United States. 5% of its sales are in Wisconsin. But D2 Corp. lubricants also get into hundreds of other products that are sold in the United States by foreign manufacturers who have bought the lubricant from Lubricants, Inc. The value of the D2 Corp. lubricants in products in Wisconsin is about $30,000—around .09 % (that is, 9/10,000) of the D2 Corp.’s total sales.

While she was working at a D2 Corp. lab in Brazil in June, 2012, D1 invented a new compound for lubricating bearings, Chemical X. The D2 Corp. considered Chemical X an important new product and began production at the Oregon plant in December of 2012, after getting the necessary regulatory approvals from various governments, including the United States. Unfortunately Chemical X was defective and in fact resulted in the bearings being worn down prematurely. Production was stopped in May 2013, but some Chemical X had already been sold to Lubricants Inc., which sold it to Bikes Corp. Bikes Corp. put it in around 200 bikes.

One of those bikes was sold by Bikes Corp. to a bike store in Milwaukee, Wisconsin (in the Eastern District of Wisconsin). P, a citizen of Wisconsin, bought the bike, whose front wheel promptly fell off only a few blocks from the store, while P was riding it home. The accident was due to the effect of Chemical X. P suffered serious harm: she broke her arm and leg and now has permanent back pain. P filed suit under Wisconsin negligence and product liability law against D1 and the D2 Corp. in August 2013 in the Federal District Court for the Eastern District of Wisconsin. Service on the D2 Corp. was on the Chief Legal Officer of the D2 Corp. while he was in Milwaukee, Wisconsin, to inspect the bicycle that caused the accident. D1 was served in hand at her lab in the United Kingdom.

When deposed in his office in London, the CEO of the D2 Corp. admitted that he was aware that D2 Corp. lubricants were in products throughout the United States. 

Is there subject matter jurisdiction for P v. D1 & the D2 Corp.? (10 points) Is there personal jurisdiction over the defendants? (30 points) Is there venue? (2 points)

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Short Essay Question from Midterm

Here is the short essay question from the midterm with a model answer:

Short Essay Question

1. Congress is considering passing a statute to protect abortion rights by allowing for the removal to federal district court of any civil case in state court the outcome of which would ride upon abortion rights derivable from the due process clause of the 14th Amendment. In one paragraph, is the statute constitutional and why or why not? [8 points] 

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Multiple Choice from the Midterm

 Here is the answer key for the two multiple choice questions that were on the minterm:

1.     Which of the following cases is least likely to have federal subject matter jurisdiction if brought in federal court? Assume that any relevant amount in controversy requirement is satisfied.

a.         P (a German national admitted for permanent residency in the United States and domiciled in New York) sues D (a U.S. national domiciled in New York) for violation of federal securities law.

Wrong. This has federal question SMJ under 28 USC 1331.

b.         P (a German national admitted for permanent residency in the United States and domiciled in California) sues D (a U.S. national domiciled in New York) for violation of German law.

Wrong. This has federal SMJ under 28 USC 1332(a)(2). It is a suit between “citizens of a State and citizens or subjects of a foreign state.” P’s being admitted for permanent residency is irrelevant.

c.         P1 (a German national domiciled in Germany) and P2 (a U.S. national domiciled in New York) sue D1 (a U.S. national domiciled in California) and D2 (a German national domiciled in Germany) for violations of New York law.

Wrong. This has federal SMJ under 28 USC 1332(a)(3). It is a suit between "citizens of different States and in which citizens or subjects of a foreign state are additional parties."

d.         P1 (a German national domiciled in Germany) and P2 (a U.S. national domiciled in New York) sue D (a French national domiciled in France) for violations of New York law.

Correct. This does not have federal SMJ. In particular, it does not fall under 28 USC 1332(a)(3) because it is not a suit between "citizens of different States and in which citizens or subjects of a foreign state are additional parties" (citizens of US states are not on each side) and it is not is a suit between "citizens of a State and citizens or subjects of a foreign state" (because citizens or subjects of foreign states are on each side). This scenario was discussed in class. 

e.         P (a German national illegally in the United States but domiciled in New York) sues D (a U.S. national domiciled in New York) for violation of New York law.

Wrong. It has SMJ under 1332(a)(2), which speaks of SMJ for suits between “citizens of a State and citizens or subjects of a foreign state, except that the district courts shall not have original jurisdiction under this subsection of an action between citizens of a State and citizens or subjects of a foreign state who are lawfully admitted for permanent residence in the United States and are domiciled in the same State.” P is not admitted for permanent residence (he is here illegally). So he is a German for the purposes of 1332 and this is a suit between "citizens of a State and citizens or subjects of a foreign state under 1332(a)(2). 

2. P is considering bringing suit in federal court against two co-defendants: the D1 Corp. (incorporated in Massachusetts) and D2 (an individual). P’s suit is for damages that she received from a defective toaster. The D1 Corp. owns a chain of large hardware stores, with 30 stores in Massachusetts, 10 in the Albany, New York area (in the Northern District of New York), and 10 in the New York City area (in the Southern District of New York). The D1 Corp’s headquarters is in Massachusetts. The D1 Corp advertises and has employees or property only in areas where it has hardware stores. D2 lives in Connecticut but works in New York City (in the Southern District of New York). While visiting Albany, New York, D2 bought a toaster from a D1 Corp hardware store. D2 took it with him to Idaho, as a gift to P, who lives in Idaho. When P used the toaster, it malfunctioned, severely injuring P. Which is the most accurate list of federal districts that have venue for the case of P v. D1 and D2?

a. District of Massachusetts, District of Connecticut, Northern District of New York, Southern District of New York, District of Idaho.

b. District of Massachusetts, District of Connecticut, Northern District of New York, Southern District of New York.

c. Northern District of New York, Southern District of New York, District of Idaho.

d. Northern District of New York, Southern District of New York.

e. Northern District of New York, District of Idaho.

This involves a simple application of the venue statute, 28 USC 1391. There are two main ways to get venue in a district under 1391(b). The first, in 1391(b)(1), requires that all the defendants reside in the same state. That’s not true here. D2 clearly resides (that is, is domiciled) in the District of Connecticut. (As an individual, it does not matter for D2’s residence that it would be subject to PJ in New York.) And the D1 Corp clearly does not reside in the District of Connecticut. As a corporation it has residence in any district where it would be subject to PJ. And it clearly is not subject to PJ in Connecticut, since it has no stores or any other contact there. 

So we need to use the second method, in 1391(b)(2), which says that venue exists in the districts “in which a substantial part of the events or omissions giving rise to the claim occurred.” That includes the Northern District of New York (where the toaster was bought) and the District of Idaho (where it caused harm). So e was the right answer.

Repost of a Question about Service in Federal Enclaves

I'm not getting as many wonky questions by email these days (midterms...?) so I thought I would post some more highlights from past years' questions. Here is one from two years ago:

Whenever a student prefaces a question with “This may be a simple question but…”, I know it’s not going to be a simple question. This is what a student asked: “This may be a super simple question, but if D is tagged on a Federal reservation in a state, is that enough for D to be subject to in personam jurisdiction in that state?” My gut said yes, but my gut also said that the answer would be easy to find. Not so.

The problem is that the question tends to get muddled together with other questions, like the power of a state to extend its laws to the enclave, or the power of state officials to exercise arrests within the enclave. The question here is simpler. Can tagging of a defendant in the enclave give a state court in personam jurisdiction over the defendant (especially for a non-federal cause of action)?

After considerable searching, I got my answer. See the discussion in Richard T. Altieri, Federal Enclaves: The Impact of Exclusive Legislative Jurisdiction Upon Civil Litigation, 72 MIL. L. REV. 55, 71-78 (1976). There is in personam jurisdiction due to such service (under the 14th Amendment). This makes sense. Any relinquishment of state sovereignty due to the creation of the federal enclave does not have to extend to the state's adjudicative power over defendants within its borders. By the way, this conclusion extends beyond “tagging” jurisdiction to general in personam jurisdiction over corporations. The corporation’s contacts with the federal enclave can support personal jurisdiction over the corporation in state court.

Yet another civpro question I had never thought of before.

Suing God (or Satan)

A few years back, someone sent me the following article about someone suing God.

He asked what the proper forum would be.

In the news article the suit was brought in Nebraska state court (which is a court of general subject matter jurisdiction). But how about a suit in federal court? Federal question? Unlikely. Didn't look like he was suing under federal law. Diversity or alienage jurisdiction? I don't think so (God is not a citizen of a State nor is he a citizen or subject of a foreign state). The suit would probably have to be in state court.

By the way, there was a case in which someone sued Satan in federal court. Mayo v. Satan and his Staff, 54 F.R.D. 282 (W.D. Pa. 1971). (The opinion is a denial of an application to proceed in forma pauperis.) Federal subject matter jurisdiction in this case was federal question, since Satan was being sued under 42 USC 1983 for violation of the plaintiff's constitutional rights. One problem noted by the court was service, although I suppose you could ask it to approve service by publication. (Or is service unnecesssary because Satan is omniscient...?)

What about PJ over God in Nebraska? The state senator suggested that God, being omnipresent, would be subject to the power of a Nebraska state court. It is good that the senator appealed to a theory that would give the court general PJ. It needs general PJ, because the suit is (at least in part) about stuff God did outside Nebraska. Specific PJ would not work.

The scenario brings up the interesting issue of whether there can be general in personam jurisdiction, on the basis of the defendant's presence within the state at the initiation of the suit, when there is not actually service on the defendant in the state. We know from Milliken that there can be general in personam personal jurisdiction over a defendant who is domiciled in a state even if there is no service in the state, but I don't think the senator is claiming that God is domiciled in Nebraska. He is just present there.

If one looks for guidance in the language of § 78 of First Restatement of Conflicts, presence in the state at the beginning of the suit, without service in the state, would apparently be enough: “A state can exercise through its courts jurisdiction over an individual voluntarily within its territory whether he is permanently or only temporarily there.” And indeed, in hand service of the summons and complaint on the defendant in the forum state has been held to be unnecessary provided that the defendant is present in the state at the beginning of the suit. The cases that say this are those where there was some sort of substituted service (such as publication) and the defendant was present in the forum state at the time of the substituted service. So maybe the senator is right about PJ, although there remains the problem of providing service.


Repost of a Question from Last Year about Fraudulent Joinder

Last year I got the following question in an email:

Do you know of a case that had a claim for monetary relief, but was successfully removed to federal court because the non-diverse defendant was the result of a fraudulent joinder?

The reason he asked this question is that in Rose v. Giamatti the main reason that the district court found fraudulent joinder was that there was no way that the diversity-destroying defendants could provide the injunctive relief requested by Pete Rose. But anyone can pay damages. 

Well courts certainly have found fraudulent joinder in damages cases. One example among many is Smith v. Amoco Corp., 113 Fed. Appx. 19 (5th Cir. 2004), in which the plaintiff was asking for damages due to unsafe conditions at a store, which resulted in an armed robbery that caused him harm. To defeat diversity, the plaintiff joined a mid-level supervisor of a number of stores, including the one that was robbed. The district court held that under Mississippi law, the supervisor could not be held liable personally for unsafe conditions at the robbed store and the 5th Circuit affirmed. Notice that the court did look a bit at the evidence of the supervisor’s responsibilities (conducting “remand discovery”).

It is important to note, however, that this is not the same as summary judgment. There isn't anything like full discovery (since the district court is trying to find out whether the case should proceed at all). Thus, courts are (usually) careful to distinguish a determination of fraudulent joinder from  summary judgment. E.g. Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir.1997) ( “While ‘the proceeding appropriate for resolving a claim of fraudulent joinder is similar to that used for ruling on a motion for summary judgment under Fed.R.Civ.P. 56(b),’ the jurisdictional inquiry ‘must not subsume substantive determination.’ ”)

Other examples of damages actions where fraudulent joinder is found are those in which no conceivable cause of action against the non-diverse defendant can be found in the facts pleaded by the plaintiff. This sounds like failure to state a claim, but once again, the standard for fraudulent joinder is more deferential to the plaintiff. E.g., Casias v. Wal-Mart Stores, Inc., 695 F.3d 428, 433 (6th Cir. 2012) ("When deciding a motion to remand, including fraudulent joinder allegations, we apply a test similar to, but more lenient than, the analysis applicable to a Rule 12(b)(6) motion to dismiss."). When deciding a motion to dismiss for failure to state a claim, a court will sometimes make very difficult judgments about the scope of the plaintiff's cause of action. That would be inappropriate in a fraudulent joinder determination.

TwIqbal Sua Sponte?

In the review session, Shutao Zhang asked whether a federal court may dismiss an action, on  its own motion, for failure to satisfy TwIqbal standards. They certainly have done so. E.g., Macronix Intern. Co., Ltd. v. Spansion Inc., 2014 WL 934505 (E.D. Va., March 10, 2014). Sua sponte dismissal makes sense if TwIqbal is understood as indirectly enforcing Rule 11 standards concerning evidentiary support for factual allegation. After all, a court can bring up Rule 11 on its own motion. The idea is that the court, and not merely the defendant, suffers when a plaintiff makes factual allegations that do not satisfy the TwIqbal standard, so the court can bring the matter up itself.