Ch.5 venue , transfer , and forum non convenience p.369
- Venue is a doctrine that serves to allocate cases among the same type of courts within a given judicial system
- Venue based on district ; jurisdiction on state )
Reasor-Hill Corp. v. Harrison, 220 Ark. 521, p.374
- Flying Service sued, in AK court, D (farm owner) for failure to pay for spraying insecticide on D’s crops located in MO ; D answered that the insecticide had damaged his crop (injury to property) and by cross-complaint sued P ; P filed a motion to dismiss the cross-complaint, arguing that it pertained to real property located in MO and consequently could not be sustained in AK
- < Rule> A lawsuit is maintainable for injury to real property located outside the forum state as long as the forum state has personal jurisdiction over the D (Although the general rule is that a party cannot sue another party in a state when the suit relates to injury to property outside of the state)
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28 USC 1391 venue generally
Q1 – P(NE) v. D(E.D.MO), auto accident in N.D.CA,
- à. by 1391(a)(1) – E.D.MO ; by 1391(a)(2) – N.D.CA ; by 1391(a)(3) – not kicks in, 1391(a)(3) is safety net
Q2 – building on Q1 – P(NE) v. D1(UT) and D2(MO)
- à. venue shrink coz of addition of D1, 1391(a)(1) excluded ;
Q3 – P(MO) v. D1(IL) and D2(NY), 28 USC 1331, federal anti-trust violation took place in S.D.CA
- à. 1391(b)(1) not kicks in ; by 1391(b)(2), S.D.CA ; 1391(b)(3) not kicks in coz it is safety net
Q4 – what if anti-trust took place in Japan?
- à. 1391(b)(3) kicks in
Q5 – P(MO) v. apple company (incorporated in DE, principal biz in CA), breach of contract took place in STL, MO
- ** corporation à. Start with 1391(c.) ; By 1391(c), DE and CA ;
- 1391(c) venue is based upon personal jurisdiction ; 1391(c) “reside” comes from “reside” in 1391(a) and (b) ; 1391(c) does not lay venue, (c) is to answer (a) and (b) ;
- 1441 (actions removable generally) has its own venue statute, 1391 not kicks in where 1441
Bates v. C & S Adjusters, Inc., 980 F.2d 865, 1992, p.378
- Bates (debtor) filed a suit against debt collector, (principal biz place in W.D.PA), for violation of federal statute (fair debt collection practice act)
- Bates (debtor) incurred the debt while residing in W.D.PA ; and moved to W.D.NY ; D debt collector mailed collection notice to P’s old address (W.D.PA) and postal service forwarded it to new address (W.D.NY)
- Bates sued D in W.D.NY (new address), venue is based upon 28 USC 1391(b)(2)
Issue
- 28 USC 1391(b)(2) - “a judicial district in which a substantial part of the events … giving rise to the claim occurred, …” – the meaning –
Held
- The harm under the federal statute occurs upon receipt of the collection notice ; the receipt of a collection notice is a substantial part of the events giving rise to a claim under the federal statute ; venue was proper under Fair Debt Collection Practices Act in W.D.NY
Prof.
- like Gray case, p.93, here in Bates, purposely reaching out ?
- in Burger King Corp. v. Rudzewicz, 471 U.S. 462, p.119, 1391(a)(1) à.(x) ; 1391(a)(2) à? Substantial part of the event in FL? tortuous act and injury ; it would be absurd that FL has personal jurisdiction but without venue
Sec.. B transfer of venue in federal courts
Hoffman v. Blaski, 363 U.S. 335, 1960, p.383
- § 1404. Change of venue – “where it might have been brought”
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- Ds moved, under 28 USC 1404(a), to transfer the action to IL federal court ; D waived venue
- Ps objected to the transfer on the ground that (i) IL federal court is not a forum in which P had a right to bring the action (=in which it might have been brought under 28 USC 1404(a))
Held (term : transferee court v. transferor court ) found for P
- three ways transferee courts (e.g. IL federal court) could have acquired jurisdiction over these actions
- (i) properly brought in the court
- (ii) validly transferred thereto under 28 USC 1404(a)
o The power of transferor court to transfer under 28 USC 1404(a) is made to depend not on the wish or waiver of the D, but on whether the transferee court was on in which the action might have been brought by the P
o i) IL federal court is not a forum in which P had a right to bring the action (=in which it might have been brought under 28 USC 1404(a)) ;
- (iii) venue may be waived (See Rule 12(h))
Prof.
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o (maj.) D can game the system by saying that “we moved to new place after complaint was filed” ; so make the system simple and fixed
o (dissent) willing to trust judges ; district judges can consider ‘convenience’ and ‘justice’
Q: P (NY) v. D1(TX) and D2(CA) ; breach of contract was in N.D.CA ; suit was brought in N.D.CA ; personal jurisdiction and venue all set to go ; then count against D2(CA) was dismissed ; then D1(TX) moves to transfer to TX, is it non-removable under 1404(a) , coz P1 could not have sued in TX, (there was venue problem in TX), TX was not “where it might have been brought” (DO- TX could be interpreted as “where it might have been brought”, assuming that P sued against only D1(TX)) in the first place)
- In Blaski, “where it might have been brought,” is typically interpreted to bar the transfer of a case to a district that lacks personal jurisdiction over the D (See, e.g., IL has no personal jurisdiction over D(TX))
- district court (not like the rule) look for way to go around Blaski, See, e.g., A. J. Industries, Inc. v. U.S. Dist. Court for Cent. Dist.,,,, P sued D in DE fed crt ; D sued P in CA fed crt, P moved to transfer the case to DE fed crt ; Held
o generally, ability to raise subject matter of transferred suit by counterclaim in transferee district will satisfy the “where it might have been brought”
o ** in exam, change of venue under 1404, when denied, mention counter-claim
1404(a) (change of venue) applies to cases in which P’s original venue choice is proper ;
1406(a) (cure or waiver of defects) applies to cases in which the original venue choice is improper
Goldlawr, Inc. v. Heiman, 369 U.S. 463, 1962
- suit was brought under 1331 in federal court without personal jurisdiction and with improper venue ; transferred to another district court under 1406(a) where venue was proper ; the transferee court dismissed the action on the ground that, because the transferor court lacked personal jurisdiction over the D, it had no power to transfer the action (under 1406(a))
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Sec. C. forum non convenience p.391
- (prof.) not every state court adopted FNC doctrine ; thus, parties first move the case to federal court and move FNC
Gulf Oil Corp. v. Gilbert, 330 U.S. 501, <balancing test in Gilbert for FNC analysis> p.391
Summary
- P (VA) ; D (corp. incorporated in PA, doing biz both in VA and NY) ; negligence claim, tortuous act took place in VA, destruction of warehouse ; 350 persons living in VA had goods stored in the warehouse ; D desired to implead alleged independent contractor in VA
- P sued in NY fed. crt. ; Jurisdiction of NY federal court solely depends on diversity of citizenship (DO- I guess the reason P sue in NY is that P’s lawyer is in NY)
- Held that the district court did not abuse its discretion in refusing jurisdiction on the ground of “forum non convenience”
- DO ** exam, factor (i) P, (ii) D, (iii) place injury took place, (iv) implead, (v) potential or actual parties concerned, (vi) implead
Held
- <assuming jurisdiction and venue> FNC does not apply if there is either an absence of jurisdiction or a mistake of venue
- <at least two forums> FNC presupposes at least two forums in which the defendant is amenable to process and furnishes criteria for a choice between them
- <private interests> private interests of the litigant, access to proof, availability of compulsory process for attendance of unwilling witnesses, cost of obtaining attendance of willing witnesses, possibility of view of premises, advantages and obstacles to a fair trial and … practical problems that make the trial of a case easy, expeditious and inexpensive, as well as the enforceability of any judgment obtained, ; but unless the balance of convenience is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.
- <public interests> public interest, such as relative administrative difficulties, burden of jury duty and appropriateness of forum for particular questions involved.
Piper Aircraft Co. v. Reyno, 454 U.S. 235, 1981, p.392
- (plaintiffs find out plane crash expert lawyer in CA, filed suit in CA, Reyno is staff at the firm the expert work at)
- Petitioners (DO-Ds) removed the suit to C.D.CA (federal court) under 28 USC 1441
- Piper moved for transfer to M.D.PA, pursuant to 28 USC 1404(a) ; transferred to M.D.PA
- both Piper and Hart moved to dismiss the action on the ground of FNC ; the M.D.PA granted the motions, relying on balancing test in Gulf Oil Corp. v. Gilbert
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- both are not equivalent ; dismissal v. change of venue ; more discretion to transfer than to dismiss
- (fed.) district court ordinarily must apply choice-of-law rules of state in which it sits ; however, where case is transferred under federal statute, court must apply choice-of-law rules of state from which case was transferred. 28 U.S.C.A. § 1404(a).
See p.310, Merrell Dow case : tried to make the claim 1331, then remove to federal court, then move to dismiss on ground of FNC doctrine
Chap. 6. Ascertaining the applicable law p.404
Erie R. Co. v. Tompkins, 304 US 64, 1938, p.408
- Tompskins (the injured) brought a negligence action against petitioner Erie railroad company, seeking damages for injuries sustained when he was hit by a door projecting from petitioner's train while he was walking along a railroad right of way in PA (P in PA ; tortuous act took place in PA ; D railroad company was NY-based)
- Under PA (tort) law, railroad company owed a duty to avoid wanton negligence to trespasser ; in most of states, railroad company owed a duty of ordinary care
- P sued in NY federal court to avoid the harsh PA rule ( if P sue in state court in PA, P prove D’s wanton negligence according to PA’s common law, whereas if P sue in federal court, the federal court will apply general common law )
Held
- Swift - ** federal court, based upon s.1332, if (i) general matters, (not local matters) and (ii) without state statute, then, federal court is free to apply general common law
- Defect in applying the Swift
o Swift expect state court to follow general common law declared by federal court ; but (failure to encourage uniformity )
o Uncertainty created by the blurred line b/w general matters and local matters
o Discrimination : jurisdiction based upon s.1332 was designed to prevent apprehended discrimination in state court against non-citizens of the state ; however, e.g. Tompkin sued in NY fed. crt. not in PA state court, whereby Erie was discriminated (different outcome whether in federal or state court)
- There is no federal general common law
- Federal court applies PA common law ; P recovered nothing from Erie
Note
Federal common law =/ federal general common law
Why strike down Swift? (i) forum shopping, P can sue in state court or federal court, (ii) discrimination, only P can choose venue
Guaranty Trust Co. v. York, 326 U.S. 99 , p.416
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o Since a federal court adjudicating a state-created right solely because of the diversity of citizenship of the parties is .. only another court of the state, it cannot afford recovery if the right to recover is made unavailable by the state, nor can it substantially affect the enforcement of the right as given by the state
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- (here, statute of limitation) as to consequences that so intimately affect recovery or non-recovery, a federal court in a diversity case should follow state law
o Rationale of diversity jurisdiction – on assurance to non-resident litigants of courts free from susceptibility to potential local bias
- Here, The judgment that a federal diversity court was not bound by a state statute of limitations was reversed
BYRD v. BLUE RIDGE RURAL ELEC. COOP., 356 U.S. 525
- question is the issue of whether the respondent was a statutory employer, should be decide by jury or judge ; state court (SC) concluded it be decided by judge ;
- here the question is whether federal court should follow the state court’s decision
- if “outcome” is the only consideration, federal court should follow the state court decision
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- the federal system … an essential characteristic of that system is the manner in which .. it distributes trial functions between judge and jury and, under the influence, if not the command, of the Seventh Amendment, assigns the decisions of disputed questions of fact to the jury
- the federal policy favoring jury decisions of disrupted fact questions should NOT yield to the state rule,, in the interest of furthering the objective that the litigation should not come out one way in the federal court and another way in the state court
DO
- outcome determination test in York is not dispositive , here, the federal policy favoring jury decisions of disrupted fact questions (the 7.th Amend.) is another consideration
Hanna v. Plumer, 380 U.S. 460, p.431
- question is whether, federal court in a diversity case, service of process shall be made in the manner prescribed by state law or that in Rule 4(d)(1)
o s.9 of MA law requires “delivery in hand”
- Held – Rule 4(d)(1), designed to control service of process in diversity action, neither exceeded the congressional mandate embodied in the Rules Enabling Act, nor transgressed constitutional bounds, and thus, the Rule is the standard against which the federal district court should have measured the adequacy of the service
- the message of York itself is that choices between state and federal law are to be made not by application of any automatic, "litmus paper" criterion, but rather by reference to the policies underlying the Erie rule
- The “outcome-determination” test (in York) therefore cannot be read without reference to the twin aims of the Erie rule : (1) discouragement of forum-shopping and (2) avoidance of inequitable administration of the laws
o Here, outcome determinative in that, if MA rule is applicable, respondent prevails, whereas if Rule governs, litigation will continue ; but in this sense, every procedural variation is outcome determinative
o (1) The choice of the federal or state rule is NOT relevant to the choice of forum ; adherence to the state rule only altered the way in which process was served
o (2) permitting the service to replace the “delivery in hand” will NOT “substantially” raise the equal protection problem, (to which the Erie alluded)
o DO- when adopting federal rule, though outcome determinative, not encourage forum-shopping, nor substantially raise the equal protection problem
- The Erie rule has never been invoked to void a Federal Rule
- the court has been instructed to apply the Federal Rule, and can refuse to do so only if the Advisory Committee, this Court, and Congress erred in their prima facie judgment that the Rule in question transgresses neither the terms of the Enabling Act nor constitutional restrictions
- Erie and its offspring cast no doubt on the long-recognized power of Congress to prescribe housekeeping rules for federal courts even though some of those rules will inevitably differ from comparable state rules
Walker v. Armco Steel Corp., 446 U.S. 740, p.442
- whether federal court in a diversity case should follow state law or Rule 3 in determining when an action is commenced for the purpose of tolling the state statute of limitations
o state law – measured by service of summon, within 60 days ; Rule 3 – action is commenced by filing a complaint with the court
- Held - relying on Erie and York. “We cannot give [the cause of action] longer life in the federal court than it would have had in the state court without adding something to the cause of action à. Decided to apply State law
- The first question must therefore be whether the scope of the Federal Rule in fact is sufficiently broad to control the issue before the Court ; if yes, the Hanna analysis applies
o Application of the Hanna analysis is premised on a “direct collision” between the Federal Rule and the state law
o Here, Rule 3 simply states that “[a] civil action is commenced by filing a complaint with the court.” .. no indication that the Rule was intended to toll a state statute of limitations, much less .. displace state tolling rules for purposes of state statutes of limitations à. Hanna not kicks in here
- Here, Erie controls ;
o although in this case failure to apply the state service law might not create any problem of forum shopping, the result would be an “inequitable administration” of the law”
o (DO- when Erie controls, two prong test – (i) whether create forum shopping problem, (ii) whether result in inequitable administration of the law )
Burlington Northern R. Co. v. Woods, 480 U.S. 1 , p.447
- A jury verdict in a personal injury action in AL (Alabama) federal court ; AL federal court assessed the penalty (10% of damage) prescribed by AL law for all unsuccessful appeals of money judgment
- Issue – whether Rule 38 controls the case – penalty only if appeal is frivolous
- Held – Rule 38 controls
- In Hanna, ... test for resolving conflicts between state law and the Federal Rules, ..the initial step is to determine whether, .. the scope of Federal Rule 38 is “sufficiently broad” to cause a “direct collision” with the state law or, implicitly, to “control the issue before the court” before the court
o Here, Rule 38 affords a court of appeals plenary discretion to assess “just damages” in order to penalize an appellant who takes a frivolous appeal … Thus, the Rule's discretionary mode of operation unmistakably conflicts with the mandatory provision of Alabama's affirmance penalty statute
Stewart Organization, Inc. v. Ricoh Corp. , 487 U.S. 22 , p.448
- Relying on the parties' contractual forum-selection clause, the nationwide manufacturer filed a motion to transfer the company's action under 28 U.S.C.S. § 1404(a) , OR to dismiss the case for improper venue 28 USC 1406
- The district court – whether the contractual forum-selection clause is enforceable, depend on state law ; the intermediate appellate court reversed, holding that whether the contractual forum selection-clause is enforceable, depends on federal law ; the clause is enforceable as a matter of federal law
- The Court disagreed with the intermediate appellate court that the relevant inquiry was whether the choice of forum clause was enforceable ; Instead, the relevant inquiry was whether § 1404(a) controlled the nationwide manufacturer's request to give effect to the forum-selection clause and transfer the case. In answering that inquiry, the Court held that § 1404(a) governed the parties' venue dispute.
Question
- When the federal law sought to be applied is a congressional statute (here, 28 USC 1404),, the first question is whether the statute is “sufficiently broad to control the issue before the court” à. here, yes
- (If so, next question is) whether the (federal) statute represents a valid exercise of Congress’ authority under the Constitution ; if so, the end of the matter à. here, yes
Reasoning
<28 USC 1404, (federal statute), is sufficiently broad to control the issue before the court – i.e., whether to transfer the case to a court in Manhattan in accordance with the forum-selection clause >
- 28 USC 1404 is intended to place discretion in the district court, weighing, in balance, many case-specific factors, e.g. convenience of the forum (transfree, transferor), the fairness of transfer, the parties relative bargaining power in forum selection clause,
- The forum-selection clause, which represents the parties’ agreement as to the most proper forum, should receive neither dispositive consideration, nor no consideration ;
<28 USC 1404 falls comfortably within Congress’ powers under Art.III as augmented by the N&P Clause>
Gasperini v. Ctr. for Humanities, 518 U.S. 415, p.454
- Under the law of NY, appellate courts are empowered to review the size of jury verdicts and to order new trials when the jury's award "deviates materially from what would be reasonable compensation." (CPLR) § 5501(c)
- Under the Seventh Amendment, which governs proceedings in federal court, but not in state court, "the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the US .. U.S. Const., Amdt. 7
- The compatibility of these provisions, in an action based on NY law but tried in federal court by reason of the parties' diverse citizenship, is the issue here
- We hold NY's law (controlling compensation awards for excessiveness..) can be given effect, without detriment to the Seventh Amendment,, if the review standard set out in CPLR § 5501(c) is applied by the federal trial court judge, with appellate control of the trial court's ruling, limited to review for "abuse of discretion."
- if federal courts ignore the change in the New York standard and persist in applying the "shock the conscience" test to damage awards on claims governed by New York law,, "'substantial' variations between state and federal [money judgments]" may be expected.
o thus, under outcome determination test, outcome turns out to be different
o "shock the conscience" test – test in federal court ;; NY’s check on excessive damage
- ..therefore .. New York's check on excessive damages implicates what we have called Erie's "twin aims." (in Hanna)
o Just as the Erie principle precludes a federal court from giving a state-created claim "longer life . . . than [the claim] would have had in the state court,", so Erie precludes a recovery in federal court significantly larger than the recovery that would have been tolerated in state court
- Problem – NY’s law (5501) shifts fact finding responsibility from the jury and the trial judge to the appellate court, which is incompatible with the 7.th. (which governs federal court, not state)
- here, (unlike in Byrd, where one-or-the-other choice – trial by judge as in state court, or trial by jury according to the federal practice -),, a choice of that order is not required, appellate review for abuse of discretion is reconcilable with the 7.th.
- the NY’s 5501, is procedural, an allocation of decision-making authority regarding damage, not a hard cap on the amount recoverable
o DO- if it is a hard cap on the amount recoverable, unarguably meet outcome determination test in York , as well as the twin aims in Hanna
