Sec. F. provisions to deter frivolous pleadings p.636
Rule 11 signing pleading, motions and other papers; representations to the Court; sanctions
- to prevent a party from instituting a claim with the sole intention of pressuring another party into settling ( - note )
Rule. 23.1 derivative actions
Surowitz v. Hilton Hotels Corp., 1966, p.636
- Petitioner shareholder brought a derivative suit ; Petitioner's son-in-law (Mr. Brilliant, counsel) began an investigation of the corporation ;
- Held that Rule 23(b) did not justify dismissal of this case merely because petitioner was uneducated about the nature of the suit and lacked an understanding of English ; holding that the case should not be dismissed because the charges of fraud were shown by the record to be based on reasonable belief from a careful investigation.
- The complaint was signed by counsel for Mrs. Surowitz in compliance with Rule 11 which provides that ‘The signature of an attorney constitutes a certificate by him that he has read the pleading; that to the best of his knowledge, information, and belief there is good ground to support it; … also pursuant to Rule 23(b), the complaint was verified by Mrs. Surowitz, the petitioner, who stated that some of the allegations in the complaint were true and that she ‘on information and belief’ thought that all the other allegations were true.
Hadges v. Yonkers Racing Corp., 48 F.3d 1320, 1995, p.642
- fact : Rule 11 sanctions on both Hadges and Kunstler (counsel) for their own misrepresentation and omissions on the ground of (1) mis-statement of the date of the alleged “scratching” incident, (2) mis-statement regarding Hadges’s lack of work in the years since the TRC ban, (3) Kunsatler’s censure on his failure to inform the court of the state court action
-
o Here, YRC denied Hadges the safe-harbor period
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o Here, the court did not state that it was imposing sanction on Hadges sua sponte
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o Calloway (p.646) whether an objectively reasonable evidentiary basis for the claim was demonstrated ; once demonstrated, no inquiry into the adequacy of the attorney’s pre-filing investigation is necessary
o Here, Kunstler (attorney) had good reason to believe the statement he made before the court
Ch. 9 . joinder of claims and parties : expanding the scope of the civil action p.652
Joinder rules fall in to one of two categories:
- (i) permissive rules, which give a litigant the option of joining parties and claims in a single lawsuit; and mandatory rules, which requires a litigant to do so
Ch. 17 the binding effect of prior decisions : res judicata and collateral estoppel p.1249
- Res judicata (claim preclusion) ; collateral estoppel (issue preclusion) – binding effect of prior judgment
- the reach of claim and issue preclusion within a single court system and closes by widening the scope to the inter-system effects of a judgment
- competing values of efficiency, repose, deterrence, dignity, and compensation
sec. 1 terminology p.1249
- if a party litigates only a portion of a “claim”, she risks losing the chance to litigate the rest
o a valid final adjudication of a claim precludes a second action on that claim or any part of it
o “true res judicata” or “merger and bar” – the effect of foreclosing any litigation of matters that never have been litigated, because of the determination that they should have been advanced in an earlier suit
- if a party litigates a issue, she cannot ask a second court to decide it differently later
o an issue of fact or law, actually litigated and resolved by a valid final judgment, binds the parties in a subsequent action, whether on the same or a different claim
- a party is entitled to at least one “full and fair” chance to litigate before being precluded
- preclusion may be waived unless it is claimed at an early stage of litigation
Rush v. Maple Heights, 167 Ohio St. 221, 1958, p.1251
- P was injured in a motorcycle accident and prevailed on a claim for property damage against defendant for failing to maintain the roadway ; P filed a second action for personal injuries
Held
- if a person suffers both personal injuries and property damage as a result of the same wrongful act, there is only a single cause of action, and the different injuries are separate items of damage, not separate causes of action, cannot split cause of action
- the second action could not be maintained ; the court reversed a judgment against D for personal injuries suffered by P and entered judgment for defendant.
Transactional test
- transactional test to determine whether (same claim) P’s claim was barred by the previous litigation ; “with respect to all or any part of the transaction, or series of connected transactions, out of which the original action arose” ; “the critical issue is whether the two actions under consideration are based on the same nucleus of operative facts”
restatement p.1258
- the present trend is to see claim in factual terms and to make it coterminous with the transaction regardless of the number of substantive theories, or variant forms of relief flowing from those theories, that may be available to the P
- cannot split damage or legal theory (e.g. tort claim and contract claim arising out of same fact) e.g. assuming arising out of same auto accident, (i) negligence claim, (ii) battery (fist fight), (iii) slander (make insulting statement), all the three should be brought in an action
2. defense preclusion p.1267
- Thus far, claim preclusion from the perspective of the P ; D also need to take the doctrine into account
Mitchell v. Federal Intermediate Credit Bank, 165 S.C. 457, p.1267
- 1st suit : Bank v. Mitchell – Bank sue Mitchell coz Mitchell owes Bank $9,000 ; Mitchell’s defense that Bank got $18,000 worth of proceeds from the sale of potato, thus, rather, Bank should give money (18,000-9,000=9,000) to Mitchell ; found in favor of Mitchell, Bank lost
- 2nd suit : Mitchell v. Bank – Mitchell sue banks for the remaining $9,000 ; Bank’s defense is claim preclusion ; Bank wins
Held
- Mitchell’s (farmer) right to receive the proceeds of his potato crop from the bank ; violation by the bank of the farmer’s right is a single cause of action against bank
- In the 1st suit, - Bank v. Mitchell - , he had the option to interpose his claim as a defense or to demand judgment against the bank, by way of counterclaim, but he was barred from bringing his claim separately
- The transaction out of which the case at bar arises is the same transaction that Mitchell pleaded as a defense in the federal suit
- Mitchell cannot use the same defense, first as a shield, and then as a sword
o If Mitchell argued that the note was without consideration or fraud in 1st suit, (other than the defense of proceeds), then the defense is not barred in 2nd suit
o Because Mitchell use the defense as a shield in 1st suit, cannot use it as a sword in 2nd suit
o Claim preclusion : P raise all legal theories and damages ; same is true of defense ; once you raise defense or counter-claim, you have to all relevant ones
Kirven (K) v. Virginia-Carolina Chemical Co. (Che), 77 S.C. 493, p.1268
- K had bought from the Che $1000 worth of fertilizers and had given his note for that amount ; the Che brought action against K ; K filed answer setting up defenses, one of which was that the fertilizers were deleterious to the crops, which he later withdraw
- Thereafter, K brought an action against the Che alleging that the Che cause damage to his crop by reason of the deleterious effect of the fertilizers furnished ; Che set up defense that the issues in this action were or could have been adjudicated in the first suit
- Held – the question raised in the second suit was not actually litigated and, thus, a bar does not exist (DO- (i) purchase of fertilizer and (ii) the damage done by the fertilizer to crop is separate )
Rule 13(a) – compulsory counterclaim
Rule 8. General rules of pleading
- (c) affirmative defense
- (1) in general ; res judicata ; à. Claim preclusion – you have to raise or waive it ; court can’t sua sponte
Linderman Mach. Co. v. Hillenbrand Co., 75 Ind. App. 111, 1920, p.1270
- L sold H a machine, sued to recover the purchase price ; H answered alleging fraudulent representation as to the machine’s capacity, and notified L to remove the machine ; judgment was rendered against L
- H sued L to recover damages for fraud, alleging that H had incurred great expense in transporting … removing the machine ; L answered that the action was barred by the judgment in the first suit
Held
- It is not conclusive as to an affirmative right or cause of action of which he could have taken advantage by way of cross-complaint ; he is not compelled to file his cross-complaint, and, on his failure to do so, his rights with reference thereto will not be adjudged
P v. Heyward, p.658
- P a subcontractor on two contracts, one was a federal government contract, and the other was non-federal ; the subcontractor sued Ds, the prime contractor and its surety, under the Miller Act, (fed. Statute), to recover payments due on the government job (1331 claim) ;
- D the prime contractor counterclaimed for overpayments and the extra costs of completing both contracts ; P the subcontractor denied liability on the prime contractor's counterclaims and interposed a reply counterclaim to recover from the prime contractor monies alleged to be due on the non-federal contract
- D’s contention - the District Court had no jurisdiction over the counterclaim on non-federal job ; P’s contention – the counterclaim no non-federal job is compulsory (Rule 13(a))
-
- Held : the counterclaims were compulsory under Rule 13(a)(1)(A), giving the district court jurisdiction
Whether counterclaims were compulsory within the meaning of Rule 13(a) = a close and logical relationship = arising out of same transaction or occurrence - two among four tests p.663
- (i) are the issues of fact and law raised by the claim and counterclaim largely the same?
- (ii) will substantially the same evidence support or refute P’s claim as well as D’s counterclaim?
All three results
- (1) same transaction or transaction under Rule 13(a) compulsory counterclaim
- (2) same transaction under claim preclusion
- (3) same case or controversy under s.1367 (a) supplemental jurisdiction
Lasa v. Alexander, p.668
- Rule 13 cross-claim , counter-claim
- Rule 42(b) separate trials
B… Rule 19 , required joinder p.693
- A counterclaim is a claim by a defendant against a plaintiff
- A cross claim is where either the defendant or plaintiff bring in a third party under claims that are related to facts in the original case
- Interpleader is when you have property and you want to bring in everyone with a stake in it for the court to determine who gets what.
- Impleader is a procedural device before trial in which one party joins a third party into a lawsuit because that third party is liable to an original defendant ; this (original D’s) complaint alleges that the third party is liable for all or part of the damages that the original plaintiff may win from the original defendant. ; include indemnity, subrogation, contribution, and warranty
Provident Tradesmens Bank &, 390 U.S. 102,
- a diversity action ; three tort actions were brought arising out of traffic accident ; three P, two D (driver of a automobile, insurer of the owner of the auto) ; action for a declaratory judgment that the driver's use of the automobile had been with the permission of the owner within the coverage of the insurance policy ;
- the Court of Appeals reversed on the ground that the owner, who was an indispensable party, was absent ; the Court reversed, Held
- assume “joined if feasible” under Rule 19(a) ; here, not feasible, for the owner could not be made a D without destroying diversity
- under Rule 19(b), question is, applying the “equity and good conscience” test under Rule 19(b), whether to dismiss or proceed without the absent party
- factors : four interests under Rule 19(b) –
o (i) P : whether P would have had an “adequate” remedy had the action been dismissed
o (ii) D : stake in the joinder of the absent party
o (iii) outsider, the absent party, : here, if the auto owner is not foreclosed by his failure to intervene, he is not bound by the judgment, he has not been harmed
o (iv) court in complete, efficient, and consistent settlement of controversies
- Whether Rule 19(b) is inapplicable when absent party’s substantive rights are involved
o Held : the question is whether it was proper to proceed to adjudicate as between the parties, regardless of whether the substantive involvement of the outsider(e.g. absent party)
Smuck v. Hobson , p.734
- a class action brought on behalf of Black and poor children, against Board of Education, alleging discrimination ; the court found for P ; the board of edu. Voted not to appeal ; nonetheless, former superintendant of schools, dissenting board members, and parents filed notice of appeals, in addition to that, motions to intervene were made in the district court and in the court of appeals ; in appellate court, D (board of edu.) was absent, the three would-be appellants were present
Held
- the former superintendant - he already resigned ; thus, the supposed impact of the decision upon his tenure is irrelevant ; no “interest” under Rule 24(a) ; no intervention
- current dissenting board member – he had an opportunity to participate in D’s defense and in the decision not to appeal (through internal discussion) ; no separate interest as an individual ; thus, no intervention allowed
- parents
o Rule 24(a)(2)(intervention) parallels Rule 19(a)(1)(B)(required joinder of parties, if feasible) ; parallels, but not imply an “interest” for the purpose of one is precisely the same as for the other ; parents have a “interest” in the education of their children ;
o Intervention involves accommodation b/w two conflicting goals – to achieve judicial economy by resolving related issues in a single lawsuit v. to prevent the single lawsuit from becoming fruitlessly complex
o Test – (i) the applicant (for intervention) may be impeded in protecting his interest by the (current) action, (negative impact on his interest, if not intervene) ; (ii) his interest is not adequately represented by others (other parties)(See, Rule 24(a)(2) “unless the applicant’s interest is adequately represented by existing parties”) (when not intervene, whether others can represent his interest)
o Holding that (i) the appellants parents would be disadvantaged by a decision without appeal, and that (ii) they are not otherwise adequately represented, (i) and (ii) necessitate a closer scrutiny of their interest
DO
- There might be not (black and poor) student, e.g. white and rich, who might oppose the class action, thus, not common interest, not certified as the class
- The white and rich student can file a suit after final judgment is made, coz different party is not precluded by the former claim
- The black and poor student can structure the first suit (class action) by joining white and rich student as D ; the D can’t challenge the final judgment later
Ch. 10 class action p.741
A.. Rule 23(a) : pre-requisite ; Rule 23(c)(1)(A) – court, by order, certify
Gen. Tel. Co. of the Southwest v. Falcon, 457 U.S. 147, p.751
- P sued his company alleging that he had been denied promotion because of his national origin ; P moved to certify a class of “all hourly Mexican-American employees who had been employed, were employed, or who were to apply for employment or who had applied or who would have applied”
- (at trial) discrimination against P in promotion, not in hiring ; as to class, discrimination in hiring, not in promotion
- (5th Cir.) reversed the finding as to class in hiring for lack of evidence
Held
- “ a class representative must be part of the class and possess the same interest and suffer the same injury as the class member”
- across-the-board rule : that racial discrimination is by definition class discrimination
- distinction b/w (a) an individual’s claim that he was denied promotion on discriminatory ground, and his unsupported allegation that the company has a policy of discrimination, (b) the existence of a class of persons who have suffered the same injury as that individual, such that the individual’s claim and the class claims will share common questions of law or fact and (such) that the individual’s claim will be typical of the class claims
o here, P failed to reach (b)
- To reach (b), e.g. prove (i) there is practice such as the discriminatory treatment of the P, (ii) policy, (iii)
- Here, insufficient evidence for concluding that the adjudication of P’s claim would require the decision of common question
B.. Rule 23(b) : types of class action p.757
six pre-requisites ; three categories of class actions under Rule 23(b)
- (i) prejudice class actions under Rule 23(b)(1) ; (ii) injunctive and declaratory relief under Rule 23(b)(2) ; (iii) damage class action under Rule 23(b)(3)
(1). Prejudice class action under Rule 23(b)(1)
- Individual actions might cause prejudice, without class action ; a mandatory class action ; the absentee cannot opt-out of the class
- (A) prejudice to the non-class party – “incompatible standards of conduct” ; e.g. not Pan Am case where some Ps recover, others not recover ;
o e.g. voting rights dispute, by Ps similarly situated who have not brought suit yet, involving a question of eligibility for registration ; where the judgment will bind all of the class members, whether brought suit or not
- (B) prejudice to members of the class – “would be dispositive of the interests” or “substantially impair the ability of non-parties to protect their interests” ; “as a practical matter”
o E.g. multiple claimants to a limited fund, e.g. the proceeds of an insurance policy, the risk that those who sue first will deplete the fund and leave nothing for the latecomers
(2). Injunctive and declaratory relief under Rule 23(b)(2)
- E.g. injunction suit, e.g. civil right, employment discrimination, environmental cases, where the goal is to change D’s policy prospectively, rather than seeking compensation to class member
- e.g.
o Notice is not essential in this type ; D’s conduct need only be “generally applicable,” not necessarily damaging to every class member ; e.g. enjoin the enforcement of a school dress code, not necessarily every student is offended by the dress code
(3). Damage class actions under Rule 23(b)(3)
- Adjudicating a wide range of damage actions, e.g. mass torts,
- Two pre-requisite (i) question of law or fact common to the class members must “predominate” , (ii) a class action is superior to other available methods
- Four factors
o The efficiency and economy of common adjudication outweigh the interest each class member may have in an individual adjudication
Castano v. American Tobacco Co., 84 F.3d 734, p.759
- Ps filed this class complaint, seeking compensation solely for the injury of nicotine addition, alleging novel and wholly untested theory that the Ds fraudulently failed to inform consumers that nicotine is additive and manipulated the level of nicotine in cigarette
- The district court granted P’s motion for class certification
- The court reversed, holding that (i) it failed to consider how variations in state law affect predominance and superiority, (ii) its predominance inquiry did not include consideration of how a trail on the merits would be conducted
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-
-
o Such problems include difficult choice of law determinations, sub-classing of eight claims with variations in state law, Erie guesses, notice to millions of class members, further sub-classing to take account of transient plaintiffs, and the difficult procedure for determining who is nicotine-dependent. Cases with far fewer manageability problems have given courts pause
o Judicial efficiency – savings in judicial resources by certifying is speculative
Hansberry v. Lee, 311 U.S. 32, p.777
Fact
- a racially restrictive covenant involving land, to be effective only when signed by the owners of 95% of the frontage ; one owner entered into a contract to sell his land to black ;
- a class of landowners brought a suit to enjoin the sale by enforcing the covenant ; in so doing, alleged res judicata – IL state court held that 95% of all the landowners involved had signed the agreement
Held
- the decree in the earlier suit was not res judicata as to petitioners (black who purchased the land) because in seeking to enforce the agreement in the previous case, plaintiffs were not representing petitioners, whose substantial interest was in resisting performance.
Reasoning
- <requirements for res judicata and due process> the binding force and effect of res judicata - turns on whether the litigant (whose rights have thus been adjudicated in earlier suit) has been afforded such notice and opportunity to be heard as are requisite to the “due process of law” which the 14th prescribes
- <principle> One is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process ; in which case, a judgment is not entitled to the full faith and credit ;
- <exception> the judgment in a “class” or “representative” suit, to which some members of the class are parties, may bind members of the class or those represented who were not made parties to it
o < requirement to be class or representative> Where the interests of persons not joined as parties are of the same class as the interests of those who are joined, (common interest) and where the latter fairly represent the former in the litigation of the issues in which all have a common interest, the court will proceed to a decree.
o
o
§ Here, the procedure and the course of litigation do not satisfy there requirements (the parties in first suit was for racially discriminatory covenant ; party in second suit was against racially discriminatory covenant ; the party against it had (i) no common interest, (ii) nor was fairly represented )
Here
- The restrictive agreement was not a joint obligation or liability, several obligations of the signers, the promise ran severally to every other signers ; thus, it is not class
- Because of the dual and potentially conflicting interest of those who are putative parties to the agreement in compelling or resisting its performance, it is not class
- The selection of representative does not afford the protection to absent parties which due process requires
Martin v. Wilks, 490 U.S. 755, p.1321 (See note at 1321)
- Respondents were white firefighters who sued the city of Alabama, and alleged that they were discriminated against when they were passed over for promotions in favor of less qualified African-American firefighters
- The trial court dismissed their claims based on prior adjudications on the same subject (DO- the white firefighters were not parties to the prior adjudication)
- The Court of Appeals held because the white firefighters were not parties to the earlier litigation, their discrimination claims could not be precluded
Held
- that white firefighters had not been afforded an opportunity to present their arguments and that they should not be prevented from raising their claims based on an action to which they were not parties (DO- requirements for res judicata)
reasoning
-
- Petitioner argue - because respondents white firefighter failed to timely intervene in the initial proceeding (prior suit) à. Held : the argument is inconsistent with Rule 19 and Rule 24
-
o
o
o Thus, a burden of bringing in additional parties, is on the parties to a lawsuit to join, rather than potential additional parties to intervene ; the “impermissible collateral attack” is inconsistent with Rule 19 and Rule 24
- A settlement in the form of a consent decree between one group of employees and their employer cannot settle the conflicting claims of another group of employees who do not join in the agreement
Here
- P who seek to alter existing employment policy are best able to designate those who would be adversely affected if P prevail
2., personal jurisdiction
Phillips Petroleum Co. v. Shutts, 472 U.S. 797, p.786
Fact
- Philips produced natural gas from leased land located in 11 states ; Shutts and other royalty owners possessing rights to leases brought class action against the company in KS state court ;
- The trial court certified a class consisting of 33,000 royalty owners
- The class representative provided each class member with a notice by first-class mail, informing that class members would be bound by the judgment unless they opted out of the action by returning a request for exclusion ;
- Most of P class members had no apparent connection to KS ; the KS trial court applied KS law to every claim
(1), Held : Philips (D) had standing to assert that KS did not possess jurisdiction over P class members who were scatted across the globe and who were had no connection to KS
- Assuming KS state court has no personal jurisdiction over P class members à. not entitled to full faith and credit à. No res judicata à. No binding effect ; thus, D has standing to assert that the court has no personal jurisdiction over P class member
(2) Held : procedure followed by KS court (whereby fully descriptive notice was sent first-class mail to each member with explanation of right to opt out) satisfied due process ; thus, the lack of minimum contact (personal jurisdiction concern) is overcome
- (DO- personal jurisdiction over out-of-state D ; minimum contact requirement ; why? Due Process à. Once due process is satisfied, minimum contact requirement is not necessary)
-
-
o International shoe “upon the quality and nature of the activity in relation to the fair and orderly administration of the laws” , “reasonable and just, according to our traditional conception of fair play and substantial justice” – to protect a D from the travail of defending in a distant forum, unless minimum contact
o Woodson (p.105) the minimum contact should be “he should reasonably anticipate being haled into the forum”
o Minimum contact requirement comes from due process protection of the D’s personal liberty interest
-
o absent out-of-state D – have to hire counsel, discovery, or default judgment
o absent class action P – can sit back,
§ a “class” or “representative” suit was an exception to the principle that one could not be bound by judgment in personam unless one was made fully a party in the traditional sense,, so long as the named party (i) fairly represented the absent class and the litigation was within the (ii) common interest
-
o Due process clause need not afford absent class action P much protection
(3), Held : Kansas law was not applicable to claims of all class members.
