Multiple Parties and Claims

Question 1

What is a permissive joinder?

Answer 1

Persons may chose to join in one action as plaintiffs if:

i) They assert any right to relief 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 plaintiffs will arise in the action.

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) A question of law or fact common to all defendants will arise in the action.

Question 2

What is the rule for permissive joinder and supplemental jurisdiction?

Answer 2

i) Joinder of defendants- Supplemental jurisdiction does not apply to defendants sought to be joined under the permissive joinder rule in a case based exclusively on diversity jurisdiction in which exercising jurisdiction would destroy diversity.
ii) Joinder of plaintiffs- Supplemental jurisdiction can exist for a claim that does not meet the statutory jurisdictional amount, provided the parties still meet the requirement of complete diversity.

Question 3

What is a compulsory joinder?

Answer 3

Circumstances in which additional parties must be joined.

A person who is subject to service of process and whose joinder will not deprive the court of subject matter jurisdiction or destroy venue must be joined as a party if:

i) Complete relief cannot be provided to existing parties in the absence of that person; or
ii) Disposition in the absence of that person may impair the person’s ability to protect his interest; or
iii) The absence of that person would leave existing parties subject to a substantial risk of multiple or inconsistent obligations.

A necessary party is therefore a person whose participation in the lawsuit is necessary for a just adjudication.

Question 4

What is the rule for compulsory joinder and jurisdiction?

Answer 4

• A plaintiff or defendant to be joined must meet the requirements of federal subject matter jurisdiction.
• Supplemental jurisdiction does not apply to the claims of a party sought to be joined u in a case based exclusively on diversity jurisdiction if the exercise of jurisdiction would be inconsistent with the diversity requirements.
• There must be personal jurisdiction over the required party. A required party may be served within 100 miles from where the summons was issued, even if the service is outside of the state and beyond its long-arm statute jurisdiction.
• If a joined party objects to venue and the joinder would make venue improper, the court must dismiss that party.

If a necessary party cannot be joined because of jurisdictional or venue concerns, then the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or be dismissed. Among the factors for the court to consider are:

i) The extent to which a judgment rendered in the person’s absence might prejudice that person or the existing parties;
ii) The extent to which any prejudice could be reduced or avoided by protective provisions in the judgment, shaping the relief, or other measures;
iii) Whether a judgment rendered in the person’s absence would be adequate; and
iv) Whether the plaintiff would have an adequate remedy if the action were dismissed for non-joinder.

Question 5

What is an intervention as of right?

Answer 5

A nonparty has the right to intervene in an action when a federal statute confers the right, and the nonparty timely moves to intervene.

Also, upon a timely motion, a nonparty has the right to intervene when:

i) The nonparty has an interest in the property or transaction that is the subject matter of the action;
ii) The disposition of the action may, as a practical matter, impair the nonparty’s interest; and
iii) The nonparty’s interest is not adequately represented by existing parties.

Question 6

What is a permissive intervention?

Answer 6

The court may allow intervention, upon timely motion, when either:

i) The movant has a conditional right to intervene under a federal statute; or
ii) The movant’s claim or defense and the original action share a common question of law or fact.

In exercising its discretion, the court must consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.

Question 7

What is the rule for timing and intervention?

Answer 7

The decision of whether the nonparty timely moved to intervene is in the discretion of the trial court, considering factors such as:

i) The length of time the movant knew or reasonably should have known that its interest was threatened before moving to intervene;
ii) The prejudice to existing parties if intervention is permitted; and
iii) The prejudice to the movant if intervention is denied.

Question 8

What is the rule for intervention and subject matter jurisdiction?

Answer 8

A claim of an intervenor must be supported by its own jurisdictional basis.

Question 9

What is an interpleader generally?`

Answer 9

Interpleader allows a person holding property (traditionally known as the “stakeholder”) to force all potential claimants to the property into a single lawsuit to determine who has a right to the property.

Question 10

What is the federal interpleader rule?

Answer 10

Persons with claims that may expose a plaintiff to double or multiple liability may be joined as defendants and required to interplead. Such joinder is proper even though the claims of the claimants, or the titles on which their claims depend, lack a common origin or are adverse and independent rather than identical, or even though the plaintiff denies liability in whole or in part to any or all of the claimants. A defendant who is exposed to similar liability may seek interpleader through a cross-claim or counterclaim.

The primary standard is whether the party bringing the action legitimately fears multiple claims against the property.

Does not create subject matter jurisdiction in interpleader actions. Rather, the court must already have jurisdiction over all parties.

Question 11

What is a federal statutory interpleader, and how does it differ from the federal interpleader rule?

Answer 11

For statutory interpleader, only need minimal diversity.

With regard to the amount in controversy in a statutory interpleader action, the property at issue must merely be $500 or more in value, not meet the $75,000 threshold required for regular diversity matters.

Statutory interpleader provides for nationwide personal jurisdiction and service of process and permits the federal court to enjoin other federal and state proceedings that may affect the property that is subject to dispute.

Venue is proper in any federal judicial district where one of the claimants resides.

Question 12

What is a counterclaim?

Answer 12

A claim for relief made against an opposing party after an original claim has been made.

Question 13

What is a compulsory counterclaim?

Answer 13

A pleading is required to state as a counterclaim any claim that, at the time of service, the pleader has against an opposing party if the claim arises out of the same transaction or occurrence that is the subject matter of the opposing party’s claim and does not require adding another party over whom the court cannot acquire jurisdiction.

A party who fails to assert a compulsory counterclaim waives the right to sue on the claim and is generally precluded from ever suing on the claim in federal court.

A federal court must have subject matter jurisdiction over the counterclaim. By definition, though, a compulsory counterclaim arises out of the same transaction or occurrence as does the original claim before the court. Thus, a compulsory counterclaim (unlike a permissive counterclaim) will likely fall under the supplemental jurisdiction of the federal court and not need independent subject matter jurisdiction from the original claim.

Question 14

What is a permissive counterclaim?

Answer 14

Aparty has discretion as to whether to raise the counterclaim in the action before the court or in a separate action.

A permissive counterclaim does not necessarily fall within the supplemental jurisdiction of the federal court, as it does not arise out of the same transaction or occurrence as the original claim. Thus, a permissive counterclaim must on its own meet the requirements for federal subject matter jurisdiction.

Question 15

What is a cross-claim?

Answer 15

A claim made against a co-party, as when one defendant makes a claim against another defendant. A pleading may state as a cross-claim any claim by one party against a co-party that arises out of the same transaction or occurrence that is the subject matter of the original action or of a counterclaim, or if the claim relates to any property that is the subject matter of the original action.

A party is never required to assert a cross-claim against a co-party.

A cross-claim must fall within the subject matter jurisdiction of the federal court. This requirement is generally not a problem because, by definition, a cross-claim must arise out of the same transaction or occurrence as the subject matter of the original action or of a counterclaim or it must relate to the property at issue, and therefore it would fall under the court’s supplemental jurisdiction.

Because the parties are already before the court, personal jurisdiction is satisfied. Additionally, if venue was proper over the original claim, then a party cannot object to venue with regard to the cross-claim.

Question 16

What is an impleader?

Answer 16

• These 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. The plaintiff may also assert related claims against the impleaded party. In both cases, the impleaded claim must relate to the original claim against the defending party. The court may sever any third-party claim if justice demands it.
• May assert a third-party claim at any time after the complaint is filed. The “third-party plaintiff,” must serve a summons and third-party complaint on the nonparty. The third-party plaintiff must obtain the court’s permission if he files more than 14 days after service of his original answer.
• A third-party claim must fall within the federal court’s subject matter jurisdiction. Because, by definition, a third-party claim will be closely related to the original claim, the court generally will have supplemental jurisdiction over the matter. If the original claims are based exclusively on diversity jurisdiction, however, supplemental jurisdiction will not apply to claims by the plaintiff against a third-party defendant brought in under Rule 14. Such claims need to meet diversity or federal question jurisdiction requirements on their own.
• There must be personal jurisdiction over the third-party defendant for impleader to apply. Third parties joined by impleader may be served within 100 miles of where the summons was issued, even if the service is outside of the state and beyond its long-arm statute jurisdiction

Question 17

What are the four requirements for representative members of a class to sue or be sued on behalf of all members of the class?

Answer 17

i) The class must be so numerous that joinder of all members is impracticable (numerosity);
ii) There must be questions of law or fact that are common to the class (commonality);
iii) The claims or defenses of the representatives must be typical of the class (typicality); and
iv) The representatives must fairly and adequately protect the interests of the class (adequacy).

Question 18

Before a class action can be certified, what are the three situations it must either fit into?

Answer 18

1) Risk of prejudice

The class is maintainable if the prosecution of separate actions would create the risk that the class opponent would become subject to incompatible standards of conduct resulting from inconsistent adjudications, or if prosecution of the claims through separate actions would, as a practical matter, impair the interests of the class members.

2) Final equitable relief

A class seeking final injunctive or declaratory relief may be certified if the class shares a general claim against the opposing party. An additional claim for monetary damages may not be sought, at least when the monetary relief is not incidental to the injunctive or declaratory relief. Moreover, a claim for individualized monetary relief is not available.

3) Common legal or factual questions

Under Rule 23(b)(3), a class can be certified if questions of law or fact that are common to the class members predominate over any questions affecting only individual members, and a class action is the superior method for bringing about a fair and efficient adjudication of the controversy. In making this determination, the court must consider, among other things:

i) The class members’ interests in individually controlling the prosecution or defense of separate actions;
ii) The extent and nature of any litigation concerning the controversy already begun by or against class members;
iii) The desirability or undesirability of concentrating the litigation of the claims in the particular forum; and
iv) The likely difficulties in managing a class action.

Question 19

What is the Class Action Fairness Act of 2005 (CAFA)?

Answer 19

Made it easier to satisfy federal subject matter jurisdiction for certain large class actions. Subject matter jurisdiction will be met if:

i) The class action involves at least 100 members;
ii) The primary defendants are not states, state officials, or other government entities against whom the district court may be foreclosed from ordering relief;
iii) The action does not involve certain securities-related cases, or litigation concerning the internal affairs or governance of a corporation;
iv) The amount in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs; and
v) Minimum diversity exists. Minimum diversity is satisfied when any member of a class of plaintiffs is a citizen of a state different from any defendant.

Question 20

What is the rule for notice and class actions?

Answer 20

Notice of the class action is required only for class actions under Rule 23(b)(3) (common legal and factual questions)

The notice must be the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort. The notice must clearly and concisely state in plain, easily understood language:

i) The nature of the action;
ii) The definition of the class;
iii) The class claims, issues, or defenses;
iv) That a class member may enter an appearance through an attorney if the member so desires;
v) That the court will exclude from the class any member who requests exclusion;
vi) The time and manner for requesting exclusion; and
vii) The binding effect of a class judgment on members.

Note: If under a different scenario, notice is up to court’s discretion.

Question 21

What is the rule for settlement or dismissal of a class action?

Answer 21

When a proposal for settlement or dismissal is made to the court, the court must direct notice in a reasonable manner to all class members who would be bound by the proposal.

If the proposal would bind class members, then the court may approve it only after a hearing and on finding that it is fair, reasonable, and adequate. The parties seeking approval must file a statement identifying any collateral agreements made in connection with the proposal.

Any class member may object to the proposal if it requires court approval. Once the named representative class members reach a settlement that is approved over the objections of a class member who was not a named representative, the objecting class member’s interests diverge from those of the class representatives, and the class member who objects may appeal the court’s approval of a settlement.