Multiple Parties and Claims Flashcards
A class action lawsuit filed in federal court was certified under Rule 23(b)(2). The complaint alleged that the defendant had engaged in gender discrimination against the class in its hiring practices, in violation of federal law. The complaint sought injunctive relief.
To what type of notice is a member of the class who is not a named representative entitled?
Appropriate notice, at the discretion of the court.
For a class action that is certified under Rule 23(b)(1) or (2), notice to the class members, other than the named representatives, is at the discretion of the court. The court may order that appropriate notice be given, which often takes the form of publication notice.
Three shareholders brought an action in federal district court for a violation of federal securities law against a corporation. The shareholders sought certification of a class of all persons who had purchased stock during a two-year period. The members of the class suffered damages that ranged from $75 to $65,000, with the total damages sought just exceeding $3 million. Some members of the class are citizens of the same state as the corporation but none of the three representative shareholders is a citizen of the same state as the corporation.
Does the court have subject matter jurisdiction over this action?
Yes, because the action is based on a violation of federal securities law.
Since this action is based on a violation of federal securities law, the court has subject matter jurisdiction on the basis of federal question rather than diversity jurisdiction.
A class action based on a state consumer protection act was removed from state court to federal court. Each of the 200 plaintiffs seeks $10,000 in damages. Each of the representative plaintiffs is a citizen of the same state as at least one of the defendants, but there are members of the class who are citizens of states of which no defendant is a citizen. The plaintiffs have filed a motion to remand the action to state court due to lack of subject matter jurisdiction under the Class Action Fairness Act.
For which of the following reasons should the district court grant this motion?
The amount-in-controversy requirement is not met.
In order to take advantage of the relaxed subject matter jurisdictional rules of the Class Action Fairness Act (CAFA), the amount-in-controversy must exceed $5 million. Here, the plaintiffs are only seeking a total of $2 million in damages ($10,000 x 200).
A bicyclist, a motorcyclist, and the driver of an automobile were involved in an accident. The bicyclist filed a complaint against the motorcyclist in federal district court. The motorcyclist filed a third-party complaint against the driver of the automobile, alleging that the automobile driver was solely responsible for the bicyclist’s injuries. The automobile driver has moved to dismiss the third-party complaint.
Should the court grant this motion?
Yes, because the motorcyclist’s complaint is not a proper third-party complaint.
A defendant may make a third-party claim against a nonparty for all or part of the defending party’s liability for the original claim made by the plaintiff against the defendant. Here, the motorcyclist is not contending that, if he is found liable to the bicyclist, the automobile driver will be liable to him under either a contribution or indemnification theory, but instead that the automobile driver is directly and solely liable to the bicyclist.
The motorcyclist is not making a claim against the automobile driver, but instead is raising the driver’s conduct as a defense to his own liability
An employee brought an action under Title VII of the Civil Rights Act of 1964 against her corporate employer in federal court for racial discrimination. The employee, from State A, alleged that the corporate employer had denied her a promotion, for which she was clearly qualified, solely on the basis of her race. The corporate employer was incorporated in State B and had its headquarters there, but its main physical presence was in State A. The employee sought $60,000 in damages. The employee sought to join an additional claim for breach of contract against the corporate employer based on a separate business transaction entered into between the employee and the corporate employer. The employee alleged $15,000 in damages arising from the breach.
Can the court hear the employee’s breach-of-contract claim?
No, because the claim does not satisfy the amount-in-controversy requirement.
If the original claim is based on federal-question jurisdiction, then a nonfederal claim may be joined only if diversity jurisdiction exists or if the two claims are part of the same case or controversy as the federal claim such that supplemental jurisdiction applies. In this case, the employee’s original claim is based on federal-question jurisdiction because it arose under Title VII of the Civil Rights Act of 1964. Accordingly, supplemental or diversity jurisdiction must exist for the court to be able to hear the employee’s additional claim. Supplemental jurisdiction does not apply here because the additional claim is based on a breach of contract relating to a separate business transaction, whereas the original claim is based on racial discrimination relating to a promotion.
Thus, the two claims are not part of the same case or controversy. Diversity jurisdiction does not exist in this case. Although the employee and the corporate employer are citizens of different states, the amount-in-controversy requirement is not met because even when all of the employee’s claims against the employer are aggregated, the amount in controversy does not exceed $75,000. Therefore, the federal court cannot hear the breach-of-contract claim.
A consumer from State A filed a $100,000 products liability action in federal court against a manufacturer incorporated and with its principal place of business in State B. The consumer claimed that a flaw in the manufacturer’s product had resulted in severe injuries to the consumer. In its answer, the manufacturer asserted a third-party complaint against the product designer, also incorporated and with its principal place of business in State B. Believing that the consumer had sued the wrong defendant, the manufacturer claimed both that the designer was solely responsible for the flaw that had led to the consumer’s injuries and that the manufacturer was not at fault. The designer is aware that the manufacturer did not follow all of the designer’s specifications when making the product.
Which of the following arguments is most likely to achieve the designer’s goal of dismissal of the third-party complaint?
The manufacturer’s third-party complaint failed to state a proper third-party claim.
Rule 14 sets out the rules governing impleader (third-party claims). Third-party claims are claims that are made by a defending party against a nonparty for all or part of the defending party’s liability on an original claim.
In this case, the manufacturer’s third-party complaint alleged that the designer was responsible for the flaw and that the manufacturer was not at fault. The manufacturer’s claim against the designer was not based on an assertion that the designer would be liable to the manufacturer for the manufacturer’s liability on the consumer’s claim. Rather, the manufacturer argued that he was not at fault and the consumer sued the wrong defendant. Because the manufacturer did not claim the designer would be liable to it on the basis of indemnification or contribution if the manufacturer was found liable to the consumer, the manufacturer has failed to state a proper third-party claim.
The purchaser of a condominium unit properly filed an action in federal district court to void the sale of the unit on the basis of fraud. Prior to filing an answer, one of the defendants to this action, the lender, responded by filing a motion to dismiss the complaint against itself, alleging that it was not a party to any fraud. The court granted this motion. Subsequently, the lender brought suit in federal district court against the purchaser to collect on the note that the purchaser had given the lender. The purchaser has filed an answer asserting that the lender’s claim is barred.
Assume that the lender’s claim arose out of the same transaction that was the subject matter of the prior action by the purchaser. Is the purchaser’s defense valid?
No, because the lender did not file a pleading in the prior action.
In the prior action brought by the purchaser, the lender’s claim for payment of the note would have been a counterclaim to the purchaser’s claim. Because it arose out of the same transaction that was the subject matter of this claim, it would have been a compulsory counterclaim that the lender would have been required to assert in its pleadings in that action.
However, the lender, instead of filing a pleading (i.e., an answer) in that action, filed a motion to dismiss, which was granted. As a consequence, the lender’s failure to raise its demand for payment of the note in the prior action does not bar the lender from bringing a suit to collect on the note.
An engineer brought suit against her former employer, a large technology company, in federal district court for violating a patent that she owned. She claimed $50,000 in damages. The engineer also sought to join a state law breach-of-contract claim against the company; the claim was based on the engineer’s assertion that the company had not paid her a $10,000 bonus she had earned one year before leaving the company. The engineer and the company are citizens of the same state.
Does the court have subject-matter jurisdiction over the contract claim?
No, because the engineer’s contract claim does not arise out of the same set of facts as the patent claim.
A party asserting a claim may join with it as many independent or alternative claims of whatever nature against the opposing party so long as the court has subject-matter jurisdiction over the new claims.
If the original claim is based on federal-question jurisdiction, as it is here, then a non-federal claim (such as the state law breach-of-contract claim here) may be joined only if diversity jurisdiction exists or if the new claim arises out of the same case or controversy as the federal claim such that supplemental jurisdiction applies. In this case, the requirements for diversity jurisdiction are not satisfied because the engineer and the company are citizens of the same state.
The claims are also not part of the same case or controversy because one concerns the company’s patent violation, while the breach-of-contract claim is a separate cause of action based on the company’s failure to pay the engineer a bonus and does not arise from the same operative facts as the patent claim.
An insurer issued a homeowner’s policy that covered collectible historical documents. The documents, valued at and insured for $70,000, were lost in a fire that destroyed the home. Prior to paying the homeowner, the insurer received a demand from a third party that the insurer pay the $70,000 to the third party. The third party contended that the documents had been stolen from the third party. The insurer and third party were citizens of the same state, while the homeowner was a citizen of a different state.
The insurer would like to file a federal statutory interpleader action in the federal district court for the state of which the homeowner is a citizen. Although this state has a long-arm statute, neither that statute nor the general service of process rules would permit service of process on the third party. The insurer does not wish to deposit the $70,000 with the court or post a bond pending resolution of this matter.
Of the following, which is a valid reason for advising against the filing of a federal statutory interpleader action in the federal district court?
The insurer does not wish to deposit the $70,000 with the court or post a bond pending resolution of the matter.
In order to file a federal statutory interpleader action, the stakeholder must be willing to either deposit the property at issue with the court or to post a bond in an appropriate amount. Here, because the insurer does not wish to deposit the $70,000 with the court or post a bond, this deposit requirement provides a valid reason for advising against filing a federal statutory interpleader action.
A trademark holder that markets clothing has filed a complaint in the federal district court for State A. The complaint names two defendants, an individual who operates a sole proprietorship and a corporation. The complaint alleges that each has infringed upon the holder’s trademark and that the holder has suffered $80,000 in damages due to the individual selling the holder’s clothing without the trademark and $50,000 in damages due to the corporation’s use of a name and symbol that is confusingly similar to the trademark on the clothing the corporation sells. In addition to damages, the holder seeks injunctions prohibiting each from engaging in the alleged infringing conduct. The holder is a citizen of State B, the individual is a citizen of State A, and the corporation is incorporated in State A but its principal headquarters is located in State B.
The corporation seeks to file, as part of its answer, a motion to sever the claim against it due to improper joinder.
Of the following, which is best grounds upon which the corporation can base this motion?
The trademark holder’s right to relief, if any, does not arise out of the same series of transaction or occurrences.
Persons may be joined in one action as defendants if (i) any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and (ii) any question of law or fact common to all defendants will arise in the action.
Although each of the trademark holder’s claims against the two defendants will require the trademark holder to establish its trademark, the claims against each defendant do not arise from the same transaction or occurrence, or series of transactions or occurrences: the plaintiff’s claims against the defendant arose from two unrelated incidents of infringement. Consequently, joinder of these two defendants is improper.
