JUNE 23 Flashcards
A citizen of State A asserted a state law claim of $80,000 against a citizen of State B in the federal district court. The State B citizen then brought a third-party impleader claim against another citizen of State B. After learning of the third-party action, the State A citizen decided to bring his own related state law claim against that person for $90,000, and amends his original complaint accordingly within the period for amending a claim as a matter of right.
Does the court have subject matter jurisdiction over the claim in the amended complaint?
A
No, because the amount in controversy is insufficient.
B
No, because there is no diversity of citizenship.
C
Yes, because the requirements of diversity jurisdiction have been met.
D
Yes, because the court has supplemental jurisdiction.
CORRECT ANSWER : C.
The court has subject matter jurisdiction because the requirements of diversity jurisdiction have been met. A court may not exercise supplemental jurisdiction over claims by plaintiffs against parties added as a third party. [28 U.S.C. §1367(b)] Thus, for a court to have subject matter jurisdiction over a claim by a plaintiff, the prerequisites for diversity jurisdiction must be met. Here, the State A citizen and the defendant in the amended complaint are residents of different states, and the State A citizen claims damages of more than $75,000. Thus, diversity jurisdiction exists, and the court would have subject matter jurisdiction over the claim. (A) and (B) are factually incorrect; the amount in controversy is more than $75,000, and diversity of citizenship exists. (D) is incorrect. When a basis for federal jurisdiction exists—such as diversity jurisdiction or federal question jurisdiction—supplemental jurisdiction is not needed. Furthermore, as stated previously, supplemental jurisdiction over claims by plaintiffs against third-party defendants has been withdrawn by the supplemental jurisdiction statute.
As it approached the runway at an airport, a plane struck electrical wires and crashed. An injured passenger filed an action in federal district court against the Federal Aviation Administration (“FAA”) under the Federal Tort Claims Act, alleging that the FAA was negligent in operating runway lights and performing its air traffic control functions. The passenger seeks to join in that action a state law negligence claim against the utility company that erected the power lines, alleging negligent placement of the lines. Both claims seek $1 million for the passenger’s injuries. The passenger is a citizen of State A. The utility company is a State A corporation and all its offices and operations are in State A.
Does the federal court have subject matter jurisdiction over the passenger’s claim against the utility company?
A
No, because the claim is a state law claim between two citizens of the same state.
B
No, because, while the two claims arise from the same event and same injuries, supplemental jurisdiction does not extend to claims against a different party.
C
Yes, because the court has supplemental jurisdiction over the passenger’s claim against the utility company.
D
Yes, because a plaintiff may join in an action all claims that he has against a particular defendant.
CORRECT ANSWER: C. Yes, because the court has supplemental jurisdiction over the passenger’s claim against the utility company.
The court has subject matter jurisdiction. Federal question jurisdiction is available when the plaintiff, in his well-pleaded complaint, alleges a claim that arises under federal law. Here, the claim against the FAA arises under federal law because it was brought under the Federal Tort Claims Act. Once a claim satisfies the requirements for original federal subject matter jurisdiction, the court has discretion to exercise supplemental jurisdiction over related claims that derive from the same common nucleus of fact and are such that a plaintiff would ordinarily be expected to try them in a single judicial proceeding (subject to some limitations in diversity cases). Here, the claim for negligence against the utility company for negligent placement of the power lines (resulting in the accident) is derived from the same common nucleus of fact as the Federal Tort Claims Act claim against the FAA for negligent operation of the runway lights and the air traffic control functions (resulting in the accident). Thus, the claim against the utility company falls within the court’s supplemental jurisdiction and (C) is correct. (A) is incorrect. Although it is true that the court does not have diversity of citizenship jurisdiction because the utility company and the passenger are from the same state, the answer fails to consider the applicability of supplemental jurisdiction. (B) is incorrect because supplemental jurisdiction may extend to claims by or against different parties. (D) is an incorrect statement of the law. Although it is true that the Federal Rules allow a party to join claims he has against a particular defendant in one action, it does not obviate the need for subject matter jurisdiction.
A patient who was a citizen of State A died as a result of the negligence of a doctor, a citizen of State B. All treatment took place in State A. The patient’s administrator sued the doctor for malpractice in federal court in State A on behalf of the patient’s estate. After the patient’s death, but before filing suit, the administrator moved to State B. The doctor moves to dismiss for lack of subject matter jurisdiction.
Will the doctor’s motion to dismiss be granted?
A
Yes, because the administrator and the doctor are both citizens of State B.
B
Yes, because probate matters must be brought exclusively in state court.
C
No, because the administrator was a citizen of State A when the cause of action accrued.
D
No, because the legal representative of the estate of a decedent is deemed to be a citizen of the same state as the decedent.
CORRECT ANSWER: D. No, because the legal representative of the estate of a decedent is deemed to be a citizen of the same state as the decedent.
The doctor’s motion will not be granted. The legal representative of the estate of a decedent is deemed to be a citizen of the same state as the decedent. The administrator would thus be deemed to be a citizen of State A, and is thus diverse from the doctor. A similar rule applies for legal representatives of infants and incompetents. [28 U.S.C. §1332(c)(2)] (A) is incorrect because, although the administrator would be considered a citizen of State B if she were to bring suit in her own name, it is the decedent patient’s citizenship that is relevant, as discussed above. (B) is incorrect. Malpractice actions are generally not brought in probate court. Thus, the general rule that probate matters must be brought in state court is inapplicable. (C) is incorrect because diversity is determined at the time the action is commenced. Furthermore, the administrator’s citizenship is not really relevant to the case, as discussed above.
A foreign correspondent, a United States citizen, has lived in England for many years. Prior to living in England, he resided in State A. However, he no longer maintains any home in the United States and has few contacts there. The reporter falsely wrote that the plaintiff, a citizen of State B, stole a Greek artifact from a foreign museum. The plaintiff sued the reporter for libel in federal court in State B, one of the states where the false story was published. The plaintiff claimed damages of $500,000. The reporter was properly served while on a brief trip to State B. The reporter moves to dismiss for lack of subject matter jurisdiction.
Will the reporter’s motion be granted?
A
No, because the reporter is considered to be a citizen of State A.
B
No, because the reporter committed a tort in State B and is subject to jurisdiction in State B.
C
Yes, because the reporter is not a citizen of any state, and he is not an alien.
D
Yes, unless the reporter is employed by a newspaper based in the United States.
CORRECT ANSWER: C.
The reporter’s motion will be granted. A United States citizen domiciled abroad is not a citizen of any state and is not an alien, and thus cannot be sued on the basis of diversity jurisdiction. The reporter appears not to be a citizen of any state. (A) is incorrect. A person’s domicile may change to that of a foreign country. (B) is incorrect. Although the reporter may be subject to jurisdiction in state court in State B (assuming statutory authorization of jurisdiction plus constitutionality of the exercise of such jurisdiction), jurisdiction in federal court would not be authorized by statute because the requirements for diversity jurisdiction or federal question jurisdiction are not met. (D) is incorrect. The employer may be subject to jurisdiction in federal court; however, this does nothing to gain jurisdiction over an employee.
A gallery entered into a contract to sell a valuable painting to a wealthy collector. The gallery was a limited liability company formed in State A with its principal place of business in State A. It had two partners: a corporation organized and headquartered in State A and a second corporation organized and headquartered in Foreign Country A. The collector was a citizen of Foreign Country B.The collector failed to purchase the painting in accordance with the terms of the contract. When the gallery learned that the collector was visiting friends in nearby State B, the gallery commenced an action against the collector in the federal court for State B, seeking damages in excess of $75,000. A process server hired by gallery served the summons and complaint on the collector while he was dining at a restaurant with his friends.
Which of the following objections, if timely asserted, is the collector’s best ground for dismissing the gallery’s complaint?
A
Lack of subject matter jurisdiction.
B
Lack of personal jurisdiction.
C
Improper venue.
D
Improper service of process.
CORRECT ANSWER: A.
The collector’s best defense is lack of subject matter jurisdiction. A federal court has subject matter jurisdiction over “alienage” cases, in which the dispute is between a citizen of a U.S. state and an “alien” – meaning a citizen or subject of a foreign country. It does not, however, have subject matter over cases by an alien against an alien; there must be a citizen of a U.S. state on one side of the suit to qualify for alienage jurisdiction. Here, both sides are aliens: the collector is a citizen of Foreign Country B. The gallery, a limited liability company, takes the citizenship of its two corporate partners, making it a citizen of State A and Foreign Country A. Thus, the action is an action between aliens and the federal court does not have subject matter jurisdiction over it. (B) is incorrect because serving the collector in State B conferred personal jurisdiction over him in the courts of that state. (C) is incorrect because, under federal venue rules, a defendant who is not a resident of the United States may be sued in any district. (D) is incorrect because hand delivery to the collector was effective service.
A homeowner from State A hired a builder from State B to build a summer home for her in State C. They negotiated and signed the building contract in the builder’s business office in State D. Shortly thereafter, the homeowner informed the builder that she had decided not to build the summer home and would no longer need the builder’s services.
The builder commenced an action against the homeowner for breach of contract in the federal court for State D, seeking damages in excess of $75,000. The homeowner moved for a transfer of venue to the federal court for State A. The court granted the motion, and the case was transferred to the federal court for State A.
Assuming that the contract does not contain a choice of law provision, what substantive law should the federal court for State A apply?
A
Federal common law principles of negligence, because this is a diversity action in a federal court.
B
State C law, because the summer home was to be built there.
C
The substantive law as determined by the choice of law rules of State A.
D
The substantive law as determined by the choice of law rules of State D.
CORRECT ANSWER: D.
D is Correct. The court should apply the substantive law as determined by State D’s choice of law rules. Under Erie, a federal district court sitting in diversity must apply the substantive law of the state in which it sits. A state’s substantive law includes the choice of law rules of that state. When a case in a federal court is transferred to a federal court in a different state, the transferee court applies the choice of law rules of the state in which the transferor court sits, provided that venue was proper in the transferor court and the case is not being transferred due to a forum selection clause. If venue was improper in the transferor court, then the choice of law rules of the transferee court would apply. Here, venue was proper in the federal court for State D because the contract was signed there, which is a “substantial part of the events or omissions giving rise to the claim.” Thus, the federal court for State A (the transferee court) would apply the choice of law rules of State D, where the transferor court sits. (C) is incorrect for the reasons explained above. (A) and (B) are incorrect because under Erie, a federal court in diversity must apply the substantive law (including the choice of law rules) of the state in which it sits. It may ultimately turn out that State C law applies, but if it does, it will because State D law requires it under its choice of law rules.
A food company obtained a patent for a new process to produce yogurt. One of its distributors brought an action in federal court claiming that it had invented the process five years earlier. The distributor sought a declaration that the patent was invalid and unenforceable, alleging that it was obtained by fraud and in violation of federal antitrust laws. Before the case was submitted to the jury, the food company moved for a judgment as a matter of law (“JMOL”) based on insufficiency of the evidence. The court denied the motion, and a verdict was returned for the distributor. The food company failed to renew its JMOL motion, but it did file a motion for a new trial based on the sufficiency of the evidence, which the court denied. The food company appealed.
If the appellate court finds that the evidence presented at the trial court was in fact insufficient, what action should the appellate court take?
A
Enter judgment for the food company or grant the food company a new trial.
B
Enter judgment for the food company, but the court may not grant the food company a new trial.
C
Grant the food company a new trial, but the court may not enter judgment for the food company.
D
Not grant the food company any relief because the food company has waived the issue of sufficiency of the evidence.
CORRECT ANSWER: C. Grant the food company a new trial, but the court may not enter judgment for the food company.
(C) is correct. To preserve the issue of sufficiency of the evidence, the complaining party must either object at trial by filing a motion for judgment as a matter of law (“JMOL”)—which then must be renewed post-trial in order for the appellate court to enter judgment based on the evidence—and/or file a motion for a new trial. (Ideally, both are filed to enable the appellate court to grant the appropriate relief.) Here, although the food company properly objected to the sufficiency of the evidence by means of a JMOL motion, it failed to renew the motion, which prevents the appellate court from entering judgment for the food company. However, by moving for a new trial, the food company preserved the issue of sufficiency of the evidence, although it will only be able to get a new trial. (A) and (B) are incorrect because the food company failed to renew the JMOL motion, thus preventing the appellate court from entering judgment for it on appeal. (B) and (D) are incorrect because the food company properly preserved the new trial motion based on the sufficiency of the evidence.
A taxi carrying four family members—a father, mother, brother, and sister—collided with a truck. All of them were injured. The parents sued the taxi company for their injuries in the federal court for State A. In that action, the jury returned a verdict in favor of the taxi company, finding that it was not negligent.
Thereafter, the brother, who suffered only minor injuries, sued the taxi company in a State A trial court. In that action, the jury returned a verdict in his favor, finding that the taxi company was negligent.
The sister suffered severe injuries. Although her parents had urged her to join them as plaintiffs in their lawsuit, she chose to sue the taxi company at a later date in the federal court for State B. After the pleadings were served, the sister moved for summary judgment against the taxi company, based on the finding of negligence against it in her brother’s action.
Assuming that State A allows the use of offensive collateral estoppel, what is the taxi company’s LEAST persuasive argument for denying the motion?
A
The injuries suffered by the brother in the state court action were minor.
B
In the parents’ action, the jury found that the taxi company was not negligent.
C
The brother’s action was in a state court.
D
The sister had the opportunity to join in the brother’s action but chose not to.
CORRECT ANSWER: C. The brother’s action was in a state court.
Generally, a party may assert issue preclusion offensively if (i) the prior action ended in a final judgment; (ii) the issue has been actually litigated and determined; (iii) the issue was essential to the judgment; (iv) the party to be bound by the prior judgment was a party to the prior action or in privity with a party to the prior action; and (v) the party asserting issue preclusion was a party to (or in privity with a party to the prior action) or, if not, is asserting issue preclusion under circumstances that are not unfair or inequitable. When determining whether offensive use of issue preclusion is fair, courts typically consider whether the defendant had an adequate incentive to litigate the first action, whether the party trying to assert issue preclusion could have intervened in the earlier suit, and whether there are prior inconsistent judgments. Because the sister was neither a party to the prior action nor in privity with one, she may only assert issue preclusion offensively if it is fair and equitable. All of the choices other than (C) are relevant to the issue of fairness. (A) is relevant because the brother’s minor injuries may show that the taxi company lacked an incentive to litigate vigorously. (B) is relevant because the finding of no negligence in the parents’ action is inconsistent with the judgment in the brother’s action. (D) is relevant because the sister’s ability to join the prior action may indicate that she was taking a wait-and-see approach, planning to use issue preclusion offensively if the brother’s lawsuit ended in a result favorable to her interests.
A man invited his partner, who resides in State B, to his mountain cabin in State A to work on a business project and enjoy a few days of relaxation. While hiking on the man’s property, the partner began to climb over a small fence. The fence broke in half because the wood had rotted. The partner fell and suffered a broken leg, which required hospitalization for several days.
The partner brought a diversity action in State A federal court against the man for $100,000 in damages. The man did not know the fence had rotted, but the dangerous condition would have been discoverable applying a reasonable person standard.
State A follows the traditional common law rules for landowners and possessors of land. State B has modified these rules by statute and applies a reasonable person standard to dangerous conditions on the land.
At trial, the partner argued that the man should be liable for failing to exercise reasonable care to inspect the fence and discover the dangerous condition. The man contended that he did not breach his duty of reasonable care under the State A traditional common law rules because he did not know the wood in the fence had rotted. Alternatively, the man argued that the partner was spending a few days of relaxation as a social guest, and that he owed neither a duty to inspect nor to repair unknown dangerous conditions on his property.
The man moved for a judgment as a matter of law (“JMOL”), claiming that, applying State A law, a reasonable jury would not have a legally sufficient basis to find for the nonmoving party. However, the judge denied the motion. The jury returned a verdict for the partner. In response, the man filed a motion for a renewed JMOL and, in the alternative, a motion for a new trial.
What is the proper response to these motions by the trial judge?
A
Deny both motions, because the moving party must elect only one of the two motions following a jury verdict.
B
Grant the motion for a renewed JMOL and exercise judicial discretion to disregard the motion for a new trial.
C
Grant the motion for a renewed JMOL, but rule hypothetically on the new trial motion in the event the JMOL is reversed on appeal.
D
Set aside the verdict and remand the case for a redetermination of the applicable law.
CORRECT ANSWER: C. Grant the motion for a renewed JMOL, but rule hypothetically on the new trial motion in the event the JMOL is reversed on appeal.
(C) is correct. The proper response by the trial judge is to grant the motion for a renewed JMOL, but rule hypothetically on the new trial motion in the event the JMOL is reversed on appeal. A renewed motion for a JMOL is permitted provided the moving party moved for a JMOL at some time during the trial. The moving party is permitted to raise only those issues raised in the initial motion for JMOL. It is apparent from the facts that the jury did not apply traditional common law rules in arriving at its verdict, which the federal court in State A would be required to follow. Because of this error, the trial judge should grant the motion for a renewed JMOL. Furthermore, when a renewed motion for a JMOL and a motion for a new trial are made in the alternative, and the renewed motion is granted, the court must rule hypothetically on the new trial motion so that no remand is required if the ruling on the JMOL is subsequently reversed on appeal. For this reason, (B) is incorrect. Likewise, (A) is incorrect because the moving party may assert both a motion for a renewed JMOL and a motion for a new trial without needing to elect only one or the other. (D) is incorrect. The proper response for the trial judge would be to reverse the jury verdict and grant the motion by directing a judgment for the moving party.
A citizen of State A visited his elderly mother, a citizen of State B. While there, the son borrowed her expensive vintage car to buy groceries. While he was driving to the store, a pedestrian, a citizen of State C, darted into the street in front of him. Unable to stop the car in time to avoid hitting the pedestrian, the son veered into a tree. The son was seriously injured and the car heavily damaged.
The son sued the pedestrian in the federal court for State B for his injuries, properly invoking the court’s diversity of citizenship jurisdiction. The son invited his mother to join him as a co-plaintiff but the mother, citing her poor health, declined. In his answer, the pedestrian maintained that the son was contributorily negligent because he was driving at an excessive speed and because he was driving a car with faulty brakes.
The jury returned a special verdict, finding that the pedestrian was negligent, that the son was not driving at an excessive speed, and that the failure to maintain the brakes was a result of the mother’s negligence, not the son’s. The court entered judgment in favor of the son and the pedestrian did not appeal.
Three months later, the mother sued the pedestrian in the federal court for State B, seeking to recover damages in excess of $75,000 for the damage to her vintage car. In his answer, the pedestrian raised the defense of claim preclusion, on the ground that the mother failed to join her son in the prior action, and the defense of issue preclusion, based on the jury’s finding in the prior action that the mother negligently failed to maintain the car’s brakes. The pedestrian thereafter moved for summary judgment dismissing the mother’s claim based on his two defenses. State B follows the same preclusion principles that federal courts follow in federal question cases.
How is the court likely to decide the motion?
A
The court will grant the motion because both of the pedestrian’s defenses are valid.
B
The court will grant the motion because the pedestrian’s defense of claim preclusion is valid.
C
The court will grant the motion because the pedestrian’s defense of issue preclusion is valid.
D
The court will deny the motion.
CORRECT ANSWER: D. The court will deny the motion.
The pedestrian’s motion for summary judgment should be denied because both of his defenses are invalid. First, the claim preclusion defense is invalid. The pedestrian is essentially arguing that the mother may not now assert her claim because she had the opportunity to assert it by joining her son’s action. However, for a party to be bound by claim preclusion, the party to be bound must have been a party (or in privity with a party) in the prior action. The mother was not a party in the prior action. Further, she was not in privity with her son because he did not represent her interests in the prior action. He was only seeking to recover for his personal injuries. Second, the issue preclusion defense is invalid. For a party to be bound by issue preclusion (i) there must have been a final judgment; (ii) the issue must have been actually litigated and determined; (iii) the issue must have been essential to the judgment; and (iv) the party to be bound by the prior judgment must have been a party to the prior action or in privity with a party to the prior action. Here, it is the last element that is missing. The mother was not a party to the prior action, and as discussed above, the mother was not in privity with her son. The fact that the mother was invited to join the son’s action is irrelevant. Although a person’s ability to join in a prior action is sometimes relevant in determining whether issue preclusion may be asserted by that person, it is irrelevant to the question of whether issue preclusion may be asserted against that person.
A man domiciled in State A commenced a class action in a State A court against an auto company and an airbag manufacturer. The auto company was incorporated and headquartered in State A, and the airbag manufacturer was incorporated and headquartered in State B.
The complaint asserted state law claims for negligence and strict liability, alleging that the air bags in a new car model sold by the auto company were defective. The action was brought on behalf of all owners of that car model and was composed of approximately 2,000 members living throughout the United States. It sought damages aggregating $10 million.
The auto manufacturer timely removed the action to the federal court for State A. The airbag manufacturer, however, did not consent to removal. The man then timely filed a motion to remand the action to the State A state court on the ground that the action was not removable.
How should the court decide the motion?
A
The court should sever the claims against the airbag manufacturer and remand those claims to the State A court.
B
The court should not remand because removal is proper.
C
The court should remand the entire action because the airbag manufacturer did not consent to removal.
D
The court should remand the entire action because the auto manufacturer is a citizen of State A.
CORRECT ANSWER: B. The court should not remand because removal is proper.
The Class Action Fairness Act (“CAFA”) relaxes federal jurisdictional requirements for some class actions in an effort to make it easier for class action plaintiffs to file in federal court and for class action defendants to remove class actions from state to federal court. Under CAFA, subject matter jurisdiction is established if: (i) any class member (not just the representative, but anyone in the plaintiff class) is of diverse citizenship from any defendant; (ii) the amount in controversy in the aggregate (adding all the class claims together) exceeds $5 million; and (iii) there are at least 100 members in the proposed class or classes. Additionally, in a case falling under CAFA, any defendant, rather than all defendants, may remove the case from state to federal court. Moreover, there is no in-state defendant limitation on removal—the case may be removed under CAFA even if a defendant is a citizen of the forum. Here, the federal court for State A has subject matter jurisdiction because (i) the man, a citizen of State A, is diverse from the airbag manufacturer, a citizen of State B; (ii) the amount in controversy is $10 million; and (iii) the class has about 2,000 members. Moreover, removal by the auto manufacturer is proper because CAFA, unlike the general removal statute, does not require consent to removal by all defendants. Nor does it prohibit removal when a defendant is a citizen of the state where the action was commenced. (C) and (D) are incorrect for the reasons discussed above. (A) is incorrect because if the action is properly removable under CAFA, the claims against all of the defendants, not just the defendant that consented to removal, are removed to the federal court, provided the court has subject matter jurisdiction of the claims. Because there is subject matter jurisdiction under CAFA for the claim against the airbag manufacturer, it is removable even though the airbag manufacturer did not consent to removal.
To avoid an accident with a motorcyclist from State A, a truck driver from State B drove his truck off the road, damaging the front porch of a home in State C. Immediately after the accident, the truck driver and the homeowner got into a heated argument, and the truck driver assaulted the homeowner.
The homeowner sued the truck driver in a federal court in State C, seeking $50,000 for property damage caused by the truck driver’s negligent driving and $30,000 for personal injuries caused by the assault. The truck driver then impleaded the motorcyclist, alleging that the motorcyclist’s negligent driving caused the truck driver to swerve into the homeowner’s porch. Under the law of State C, joint tortfeasors are jointly and severally liable for the entirety of the plaintiff’s loss regardless of each tortfeasor’s degree of fault.
May the homeowner assert a claim for $50,000 against the motorcyclist in this case, based on the motorcyclist’s negligent driving?
A
Yes, because the claim arises out of the transaction or occurrence that is the subject matter of one of the homeowner’s claims against the truck driver.
B
No, because the homeowner waived his right to assert a claim against the motorcyclist by not asserting the claim in his original complaint.
C
No, because the motorcyclist has not asserted a claim against the homeowner.
D
No, because the claim does not exceed $75,000.
CORRECT ANSWER: D.
A party may not assert a claim in a federal action unless (i) the Federal Rules allow for such a claim and (ii) there is subject matter jurisdiction for the claim. Under the Federal Rules, a plaintiff may assert a claim against a third-party defendant so long as that claim arises out of the transaction or occurrence that is the subject matter of plaintiff’s claim against the third-party plaintiff (i.e., the defendant). Thus, the homeowner may assert his claim against the motorcyclist because the claim is related to his claims against the truck driver; hence, (B) and (C) are incorrect. However, there is no subject matter jurisdiction for the claim. First, there is no federal question jurisdiction because the claims are state law negligence claims. Second, there is no diversity of citizenship; although the homeowner (from State C) and the motorcyclist (from State A) are diverse, the claim for $50,000 fails to meet the amount in controversy requirement of more than $75,000. Third, there is no supplemental jurisdiction for the claim. Supplemental jurisdiction exists for a claim if it meets two requirements: (i) the claim must be sufficiently related to claims in the action for which federal question or diversity jurisdiction exists; and (ii) the claim must not be excluded under 28 U.S.C. 1367(b), which prohibits the use of supplemental jurisdiction when it would be contrary to requirements of diversity jurisdiction. Claims excluded under section 1367(b) include, among other things, claims by plaintiffs against persons made parties under Rule 14. Although the homeowner’s claim against the motorcyclist is closely related to his claims against the truck driver’s diversity claims, the grant is withdrawn under section 1367(b) because the homeowner’s claim is a claim by a plaintiff against a person (the motorcyclist) made a party under Rule 14.
A skateboarder from State A collided with a cyclist from State B in a State A park. Both were injured. The skateboarder commenced a negligence action against the cyclist in a State A court. The cyclist raised the defense of contributory negligence, which was a complete defense under State A law. The cyclist did not assert a counterclaim against the skateboarder, as counterclaims were not compulsory under State A’s civil procedure laws.After a trial, the jury returned a special verdict, finding that both the skateboarder and the cyclist were negligent. Based on those findings, the judge entered judgment dismissing the skateboarder’s claim. The skateboarder did not appeal the verdict, and the time to do so expired.
Thereafter, the cyclist commenced a negligence action against the skateboarder in the federal court for State A, seeking damages for his injuries in the accident in excess of $75,000. The skateboarder timely raised the defense of contributory negligence. State A follows the same preclusion principles that federal courts follow in federal question cases.
What effect should be given to the findings of negligence and contributory negligence in the first action?
A
Both have preclusive effect.
B
Neither has preclusive effect.
C
Only the finding regarding the cyclist’s negligence has preclusive effect.
D
Only the finding regarding the skateboarder’s negligence has preclusive effect.
CORRECT ANSWER: D. Only the finding regarding the skateboarder’s negligence has preclusive effect.
In the first action, the jury found that the plaintiff skateboarder was contributorily negligent and that the defendant cyclist was negligent. However, only the finding of the plaintiff skateboarder’s contributory negligence was essential. Therefore, only it has preclusive effect. Issue preclusion prevents a party from re-litigating an issue in a case if that issue was resolved in a prior case. In order for a party to be bound by issue preclusion, (1) there must have been a final judgment in the prior case; (2) the same issue must have been actually litigated and determined in the prior case; (3) the issue must have been essential to the judgment; and (4) as a due process concern, the party to be bound by the prior judgment must have been a party to the prior action or in privity with a party to the prior action. All of these elements are met with respect to the skateboarder’s contributory negligence. First, the action ended in a final judgment. Second, the issue of his negligence was litigated (the case went to trial) and determined by the jury by special verdict. Third, the finding was essential to the verdict in the case: if the jury had made the opposite finding (that is, if the jury had found that the skateboarder was not contributorily negligent), the judge would not have dismissed his case. Thus, the finding was essential to the jury’s verdict. Fourth, the skateboarder was a party to the prior action. Because these four requirements are met, the cyclist may assert issue preclusion as to the skateboarder’s negligence, thereby preventing him from re-litigating the issue in the second action; hence, (B) is incorrect. (A) and (C) are incorrect because the skateboarder may not assert issue preclusion against the cyclist. Here, the third element – that the finding on the issue was essential to the judgment – is missing. Although jury determined the issue of the cyclist’s negligence in the first action, that finding was not essential to the judgment. The finding that the skateboarder was contributorily negligent basically mooted the issue of the cyclist’s negligence. Because the third requirement is not met, the skateboarder may not assert issue preclusion as to the cyclist’s contributory negligence in the second action, and therefore this issue must be tried and determined by the jury in the second action.
A rancher purchased cattle from a breeder. As payment for the cattle, the rancher gave the breeder a promissory note that obligated the rancher to pay the breeder a lump sum of $80,000 18 months after the purchase. During the course of the year that he had the cattle, however, the rancher discovered that the cattle were diseased, so a year after the purchase the rancher filed an action against the breeder in federal district court for breach of warranty, alleging that the cattle were diseased at the time of sale the previous year. The breeder will file his answer within three weeks.
May the breeder assert in his answer a counterclaim against the rancher seeking payment of the promissory note?
A
Yes, the breeder may assert the claim on the promissory note as a counterclaim or he may assert it in a separate action.
B
Yes, the claim on the promissory note is a compulsory counterclaim because it arises from the same transaction or occurrence as the rancher’s initial claim.
C
No, because it does not arise from the same transaction or occurrence as the rancher’s initial claim.
D
No, because the claim will not yet be mature when the breeder files his answer.
CORRECT ANSWER: D. No, because the claim will not yet be mature when the breeder files his answer.
D is Correct. At the time the rancher filed his complaint and at the time the breeder files his answer, the breeder will have no claim. One year has passed since the purchase. The rancher has no obligation to pay until the note matures 18 months after the purchase. In order for a counterclaim to be compulsory it must not only arise out of the same transaction or occurrence as the plaintiff’s claim, the defendant must have the claim at the time the plaintiff serves his pleading. The breeder will have no claim until 18 months after the purchase. (A), (B), and (C) are incorrect because, although the promissory note claim arises from the same transaction or occurrence, it is not a compulsory counterclaim because the breeder did not have the claim at the time the rancher filed his action.
In exchange for future royalty payments, an inventor sold a developer a license to use the inventor’s patented technology. The inventor and the developer are citizens of different states. A month later, the inventor and developer were in a traffic accident entirely unrelated to their patent licensing transaction. A few months after that, the inventor filed a breach of contract action against the developer seeking $250,000 in royalty payments. The developer then filed two counterclaims, one alleging that the inventor’s licensed product did not work properly and one alleging negligence and seeking $150,000 in damages for injuries sustained in the traffic accident. The inventor was also injured in the accident and believes the developer’s negligence was the cause of the accident.
May or must the inventor file a counterclaim against the developer to recover $50,000 in damages he sustained in the accident?
A
The inventor must assert the claim as a counterclaim or he will be barred from later asserting it because the inventor’s tort claim is a compulsory counterclaim.
B
The inventor may assert the tort claim as a counterclaim, or he may wait and assert it in an independent action.
C
The inventor may not assert a counterclaim because the inventor is the original plaintiff and only defendants may assert counterclaims.
D
The inventor may not assert a counterclaim because the federal court lacks subject matter jurisdiction over the inventor’s tort claim since the amount of the claim is too small.
CORRECT ANSWER: A. The inventor must assert the claim as a counterclaim or he will be barred from later asserting it because the inventor’s tort claim is a compulsory counterclaim.
The inventor must file a counterclaim against the developer to recover the $50,000 in damages from the accident. As between the plaintiff and the defendant, any claim that arises from the same transaction or occurrence as a claim asserted against a party is a compulsory counterclaim—even if the party asserting the counterclaim is a plaintiff. (C) is therefore incorrect. The court also has jurisdiction over both claims. The way to think about these claims is that the plaintiff, the inventor, is essentially asserting two claims against the developer, and a single plaintiff may aggregate his claims against a single defendant. (Had the inventor included both claims in his original complaint, the claims could have been aggregated, giving the court subject matter jurisdiction based on diversity.) (B) is incorrect because the inventor’s counterclaim is compulsory and must be asserted. If he does not, he will be barred from doing so later. (D) is incorrect because compulsory counterclaims generally do not have to meet the jurisdictional amount requirement for diversity jurisdiction, and as explained above, the court does have subject matter jurisdiction over both claims.
