Insurers as necessary parties
Multiple Choice Question from the 2007 CivPro Exam

Long Essay Question from the 2010 CivPro Exam


Essay Question 8. 

D has lived her whole life in New York. She is employed by the X Corp., which is incorporated in Delaware, but has its headquarters and 5% of its employees in New York. All of its factories (and about 95% of its employees) are in Vermont. On the morning of Nov. 11, 2008, a manager at the X Corp. told D to deliver some documents to Vermont in a truck owned by the X Corp. D had never been to Vermont before. D agreed to make the deliveries and set off that same morning. While D was driving in Massachusetts, she hit P, who was hitchhiking, seriously injuring him. P was able to make out “X Corp.” on the side of the truck that hit him. Instead of stopping, D kept on driving, made her delivery in Vermont, and returned home to New York on the evening of Nov. 11.

P lived in New York, but he decided to move to Vermont immediately after the accident because he thought the disability care was better there. On Nov. 9, 2010, P filed a complaint in the Federal District Court for the District of Vermont, listing “the X Corp. and an unknown driver for the X Corp.” as defendants. P had the X Corp. served on Nov. 10, 2010 by having an 18 year-old process server deliver a copy of the summons and complaint in hand to the X Corp.’s chief legal officer (CLO). After investigating the matter, the CLO uncovered on Nov. 20 that D was the driver. That same day, the CLO told D about the suit and called P to let him know that D was the driver. On Nov. 22, P served D with an amended complaint, by having the same 18-year old process server give D a copy of the summons and complaint while D was staying at a vacation rental on Long Island (in New York).

Under Vermont's choice-of-law rules, Massachusetts tort law would apply to an accident that occurred in Massachusetts. Because Vermont has a generous 3-year statute of limitations for tort actions, Vermont state courts do not apply Vermont's statutes of limitations to tort actions brought under other states' law. They instead borrow the statute of limitations of the state whose tort law applies. Massachusetts's statute of limitations for tort is 2 years. Under Vermont and Massachusetts law a statute of limitations is tolled upon service.

Are D and/or the X Corp. likely to get the actions against them dismissed under Fed. R. Civ. P. 12(b)? Are the actions against D and/or the X Corp. barred by the applicable statute of limitations? [NOTE: My students this year will not be able to answer the question of the statute of limitations concerning D.]

The following (in italics) would have been an ideal answer:

Let us begin with the statute of limitations question. Under York, a federal court sitting in diversity is obligated to use state statutes of limitations rather than fashioning a federal common law limitation. (There is no reason that the question would be answered differently given Hanna's formulation of the outcome determinative test used in York.) But which state's statute of limitations should be used? This is a horizontal (state-state) choice of law question.  Under Klaxon, a federal court sitting in diversity should use the horizontal choice-of-law rules of the state where the federal court is located. Since a Vermont state court would choose Massachusetts's statute of limitations, our federal court should too. Likewise under Ragan (and Walker) a federal court should use state tolling rules. We don't know what tolling rules a Vermont state court would choose, although probably Massachusetts's - but answering the question does not matter since the Vermont and Massachusetts tolling rules are the same (namely at service).

With this out of the way, we can see that the X Corp cannot get the action brought against it dismissed on statute of limitations grounds. It was served just one day before the expiration of Massachusetts's two-year statute of limitations. What about D? This is a question of whether the amendment to include D relates back to the original complaint. [NOTE: My students this year would not be able to answer this part of the question.] Since this amendment changed the name of the party, 15(c)(1)(C) applies. Under 15(c)(1)(c), the first question is whether 15(c)(1)(B) is satisfied. It is, since the amendment "asserts a claim ... that arose out of the conduct, transaction, or occurrence set out ... in the original pleading." The transaction (namely the hit and run) is the same in both the original and the amended complaint. The next question is whether "within the period provided by Rule 4(m) for serving the summons and complaint" (that is within 120 days after the filing of the original complaint) D "received such notice of the action that [he] will not be prejudiced in defending on the merits" and "knew or should have known that the action would have been brought against [him], but for a mistake concerning the proper party's identity." D received notice via the X Corp.'s CEO only 10 days after filing, within the 4(m) period. This notice should have been sufficient to not prejudice D in defending on the merits. After all, at that point D should have expected a lawsuit against him and started mounting a defense.

The final question is whether D knew or should have known, at the time he got notice from the CLO, that there was a mistake concerning the proper party's identity. Arguably there was no mistake. P was not calling D by the wrong name, but simply did not know D's name at all. [Here I would expect you to take a stand on the matter. Some courts have indeed concluded that 15(c)(1)(C) should not apply in such a case. See Cox v. Treadway, 75 F.3d 230 (6th Cir. 1996). Others have disagreed, see Sendobry v. Michael, 160 F.R.D. 471 (M.D. Pa. 1995). See generally Wright & Miller, Federal Practice and Procedure § 1498.3.]

Let us move on to the 12(b) defenses. We have no information relevant to deciding whether 12(b)(4), (6), or (7) (process, failure to state a claim, failure to join a necessary party) are available. Furthermore, we know that 12(b)(5) (service) won't work. R 4(e) was satisfied with respect to D (he was served in hand) and 4(h) was satisfied with respect to the X Corp. (there was delivery to an "officer" - the CLO - of the X Corp.). Plus the process server was a nonparty at least 18 years old, satisfying 4(c).

What about SMJ? D's state of citizenship is clearly New York, since he is domiciled there. The X Corp.'s states of citizenship are Delaware (its state of incorporation) and New York (its principal place of business under what we now know from Hertz is the applicable nerve-center test - the New York headquarters is its nerve center, despite the fact that the bulk of its employees and its manufacturing is in Vermont). What about P's state of citizenship? What is relevant is his state of citizenship at the time of filing. At that point he had moved to Vermont. The question is only whether he intends to make it is home for the indefinite future. It would appear that he does since "disability care" appears to refer to care for a permanent condition. We are not talking of D moving to Vermont until he recovers from his injuries. Since parties are completely diverse and the jurisdictional minimum is surely satisfied given the nature of P's injuries, dismissal on SMJ grounds by either D or the X Corp. should fail.

What about PJ? The question, due to R 4(k)(1)(A), is whether a Vermont state court would have PJ over the defendants. (We can ignore the effect of the Vermont Constitution or its long-arm statute, since we don't know about those.) There is obviously general PJ over the X Corp. It has substantial continuous contacts with Vermont (as a result of having all its factories and 95% of its employees there). The real question is whether there is specific PJ over D. In a sense, of course, D reached out to the state of Vermont, since she agreed to drive there. The cause of action, furthermore, would not have arisen but for the act of reaching out to Vermont. If D had not driven to Vermont, the accident in Massachusetts would not have occurred. But in all of the special jurisdiction tort cases we have read, the act of reaching out to the forum state brought about harm that occurred in the forum state, not harm that occurred in another state. [Here I expected you to take a stand on this question of whether the Massachusetts cause of action was sufficiently related to D's act of reaching out to Vermont for there to be power over D. Courts have not agreed on such scenarios.]

Furthermore, even if there is power over D, the question remains whether the McGee-convenience factors are satisfied. This might be a case like Asahi, where a majority of the SCt concluded that there was power over Asahi, but nevertheless decided that there was no PJ over it because convenience factors were not sufficient to satisfy 14th Amendment due process. P is disabled and residing in Vermont, so the burden on the plaintiff does argue for the McGee factors being satisfied. There is also arguably no serious burden on D defending in Vermont (especially if he is provided counsel by the X Corp.). The most serious problem is that Vermont does not seem to have much of an interest in adjudicating an accident occurring in Massachusetts, although arguably the fact that the plaintiff currently resides in Vermont (and is possibly a ward of the state) would give it an interest. Furthermore, the witnesses are most likely to be in Massachusetts rather than Vermont. [Here I would expect you to take a stand on the matter.]

Finally there is the question of venue. 1391(b)(1) won't work because the defendants do not both reside in Vermont. The X Corp. resides there because it would be subject to PJ there, but D clearly does not reside in Vermont (no matter whether "reside" is understood as domicile or residence). What about transactional venue under 1391(b)(2)? Did a "substantial part of the events or omissions giving rise to the claim" occur in the District of Vermont? This is similar to our problem with specific PJ over D. The trip to Vermont gave rise to the claim in the sense that there would not have been the accident in Massachusetts but for the trip to Vermont. Is that enough? [Here I would expect you to take a stand on the matter.] Fallback venue under 1391(b)(3) is clearly unavailable, because there are other districts that would have venue (e.g. the District of Massachusetts, where the accident occurred).



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