ERIE Flashcards
Claim preclusion general
Once a final judgment on the merits has been rendered on a particular cause of action, the claimant is barred by claim preclusion (res judicata) from asserting the same cause of action in a later lawsuit. When the claimant wins the earlier lawsuit, the cause of action is said to have been “merged” into the judgment.
Although the Erie decision made it clear that there is no general federal common law in the United States, there are still particular instances in which federal common law is applied. In particular, federal common law can be binding when a federal court sitting in diversity issues a judgment, and a state court must later decide claim preclusion effect that earlier judgment should be given.
Claim preclusion elements
When the defendant wins, the claimant is said to be “barred” by the earlier adverse judgment. Both terms simply mean that the claimant cannot sue again on the same cause. Before merger or bar apply, it must be shown that: (i) the earlier judgment is a valid, final judgment “on the merits”; (ii) the cases are brought by the same claimant against the same defendant – it is not enough that the same litigants were also parties in the previous case (it must be the same configuration of parties); and (iii) the same cause of action or claim is involved in the later lawsuit.
Dismissals that do not operate as adjudication on the merits
FRCP 41(b) further specifies that all 41(b) dismissals and “any dismissal not provided for in this rule” are to operate as adjudications on the merits except for four types of dismissals. The four exceptions are: (i) dismissal for lack of jurisdiction; (ii) dismissal for improper venue; (iii) dismissal for failure to join a party under Rule 19; and (iv) dismissal that the court in its order specifies to be without prejudice.
Choice of law
In particular, federal common law can be binding when a federal court sitting in diversity issues a judgment, and a state court must later decide claim preclusion effect that earlier judgment should be given.
The new court should use the laws from the transferred court.
In Semtek Int’l Inc. v. Lockheed Martin Corp., the Supreme Court decided that under federal common law, a diversity judgment should have whatever preclusive effect that similar judgment issued by the state court in which the diversity court sits would have. Thus, the second state court must apply federal common law to determine how and whether it is bound by the prior diversity judgment.
Semtek notably also held that as a matter of federal common law, the dismissal has whatever effect on later action in other courts as such a dismissal would have if had been issued by the state where the federal diversity court sat.
Here, the first case was decided in federal court using federal law. Therefore, the state court, hearing the second case, should apply federal law to determine if case two will be precluded. It does not matter that the judgment is in state court.
When must a federal court apply state substantive law?
When the claim is a state claim and the parties are in court under diversity.
When must a federal court apply state substantive law?
When the claim is a state claim and the parties are in court under diversity.
Under Erie and issue preclusion, When must a federal court apply the laws of a former state court?
When dealing with jurisdictional preclusion courts will apply the forum court who rendered the earlier decision. If the earlier judgment was rendered by a state court then the state preclusion applies under the full faith and credit clause. If the earlier judgement was rendered by a federal court that had federal question jurisdiction. Non mutual collateral estoppel.
Claim and issue preclusion generally apply to bind only persons who were parties to the original action, not “strangers” to the original action. However, there are exceptions to this general rule. If someone is closely linked enough to a party in the original action that there is a substantive legal relationship between them, that person may be bound by the first result for preclusive purposes, just as if that person had been a party in the original action. The substantive legal relationship puts them in privity with each other, which allows the non-party to be bound by the original action.
A judgment binds the plaintiff or defendant (or their privies) in subsequent actions on different causes of action between them (or their privies) as to issues actually litigated and essential to the judgment in the first action. This conclusive effect of the first judgment is called issue preclusion (or collateral estoppel). Note that issue preclusion is narrower than claim preclusion. Claim preclusion focuses on the scope of a cause of action and bars the claimant from asserting a second case. Issue preclusion, in contrast, focuses on the narrower issue that was litigated and determined in the first case, and that is relevant in the second case.
What if a person committed fraud In One state but the property is located in another state. What choice of law should follow?
The choice of law from where the fraud too, place to it the property because the fraud is the issue.
