Quiz 6 Flashcards
Plaintiff owns a deli called Health Foods. Defendant runs a company that sells “organic” baked goods. Plaintiff entered into a contract with Defendant for the weekly delivery of organic oatmeal cookies. It turns out that the “organic” cookies are really repackaged highly-processed cookies that Defendant buys in bulk from a foreign wholesale company.
Plaintiff sued Defendant in federal court, alleging diversity jurisdiction. The complaint included a proper jurisdictional statement and adequately made a demand for judgment. It further alleged: (1) Defendant entered into a contract with Plaintiff to deliver thirty pounds of organic oatmeal cookies weekly, (2) Defendant instead fraudulently delivered non-organic cookies, and (3) Defendant engaged in fraud.
Defendant moved to dismiss the complaint for failing to state a claim. How should the court rule on the motion?
(A) The court should grant the motion, because the complaint fails to allege special matters.
(B) The court should deny the motion, because Defendant has not shown that Plaintiff can prove no set of facts in support of the fraud claim.
(C) The court should deny the motion, because Defendant was required to move for judgment on the pleadings.
(D) The court should grant the motion, because the complaint improperly joins a contract claim with a tort claim.
(A) is correct because the complaint alleges fraud and so is required to plead “special matters.” FRCP 9(b) requires that, “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Here, the complaint includes only the conclusory allegation that Defendant “fraudulently” delivered goods that did not comply with the contract and that Defendant engaged in fraud. Courts interpret the special pleading rules for fraud to require that the complaint allege the “precise misconduct” that constitutes the fraud. Generally, this heightened pleading requirement is met when the complaint alleges the who, what, when, where, and how of the fraudulent representation. Lerner v. Fleet Bank, N.A., 459 F.3d 273 (2d Cir. 2006) (to meet the requirements of FRCP 9(b) when fraud is alleged, “the complaint must: (1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent”) (citations omitted). Here, the allegations of the complaint do not meet this standard because they do not include the “when, where, and how” elements. Moreover, to allege fraud with particularity, the complaint must include specific facts to give rise to a “strong inference” of fraud, and the complaint here contains only a bare assertion that fraud occurred. Not only is this allegation insufficient to meet the heightened pleading requirement of FRCP 9(b), but also it likely would fail the general pleading rule of plausibility under FRCP 8 as interpreted by the Supreme Court in Bell Atl. Inc. v. Twombly, 550 U.S. 544 (2007).
Plaintiff is the owner of a company that rents ski equipment. Defendant is a college student who writes a weekend column in the student newspaper about sports events. Defendant wrote an uncomplimentary article about Plaintiff’s company, stating that the rental equipment “was old, shoddy, and dangerous.” In response, Plaintiff filed a diversity action in federal court against Defendant alleging libel and seeking $300,000 in damages and reasonable attorney’s fees. Defendant failed to appear. Plaintiff submitted an affidavit showing Defendant’s failure and the clerk entered a default.
Can the clerk also enter a default judgment?
(A) No, only the judge can enter the judgment and must make an independent determination of damages.
(B) Yes, the clerk can enter the judgment if Plaintiff submits an affidavit stating a sum certain for damages.
(C) The entry of default automatically converts into a judgment of default if Defendant fails to object.
(D) Yes, the clerk can enter the judgment after Defendant has been served with written notice of the application at least seven days before a hearing.
(A) is correct because under the federal rules, only the court can enter a default judgment if plaintiff’s claim is not “for a sum certain or a sum that can be made certain by computation.” FRCP 55(b)(1). When there is any doubt about the amount of damages, then only the court can enter the judgment. See FRCP 55(b)(2). Although the complaint contains an ad damnum clause, the amount of damages here are not a “sum certain” in the sense contemplated by FRCP 55. See KPS & Assocs., Inc. v. Designs By FMC, Inc., 318 F.3d 1, 19 (1st Cir. 2003) (“in the Rule 55 context, a claim is not a sum certain unless there is no doubt as to the amount to which a claimant is entitled as a result of the defendant’s default”, stating that the court cannot award the amount of the ad damnum clause in the complaint when the proper amount is uncertain). The usual example of a dispute involving a sum certain, in which resort to “extrinsic proof” is not needed to determine damages, is an action to enforce a money judgment or a negotiable instrument. Id. When the complaint does not involve a sum certain, the federal rule provides that the party seeking judgment must apply to the court for the entry of a default judgment, and the court may hold a hearing “to determine the amount of damages” or to “investigate any other matter.” FRCP 55(b)(2). It is not clear without further evidence whether the $300,000 that Plaintiff has alleged is the appropriate amount in damages for the libel; moreover, the amount of a reasonable attorney’s fee remains disputed.
Plaintiff was driving a car and stopped at a red light. Defendant, a taxi driver, crashed into the rear end of Plaintiff’s car. Defendant was employed by Company, which owns Defendant’s taxi. Plaintiff filed a diversity action in federal court against Defendant and Company alleging negligence. Paragraph 16 of the complaint alleged, “Defendant was acting in the course of his employment when the accident took place.” Before answering the complaint, Company reviewed three internal documents: (a) a scheduling book that showed Defendant was not officially assigned to work on the day of the accident; (b) a telephone log that indicated two of the Company’s other drivers called in sick on the day of the accident; and (c) a garage receipt showing that Defendant signed the taxi out of the garage on the day of the accident. Moreover, Company requested an interview with Defendant, but Defendant’s counsel refused to make him available for questions.
How should Company plead in response to the allegation of Paragraph 16?
(A) Company should answer, “No response is required because the allegation is conclusory and without factual support.”
(B) Company should answer, “No response is required because the allegation is directed to a different party.”
(C) Company should answer, “Company is without knowledge or information sufficient to form a belief as to the truth of the allegation.”
(D) Company should answer, “No response is required because the allegation is a legal conclusion.”
(C) is correct because it appropriately applies the federal rules regarding a responsive pleading when a defendant lacks sufficient knowledge to admit or deny an allegation of the complaint. The federal rules address the responsibility of a defendant, as here, who seeks to answer the complaint, but does not have sufficient knowledge to know whether an allegation is true: “A party that lacks knowledge or information sufficient to form a belief about the truth of an allegation must so state, and the statement has the effect of a denial.” FRCP 8(b)(5). Company knows that Defendant is its employee, but does not know for sure whether Defendant was acting in the scope of his employment when it checked the taxi out of the garage on the day of the accident. From the documents that Company has found, it cannot conclude that Defendant was acting in the course of employment. Defendant was not scheduled to work that day, and so Company is not obliged to admit the allegation, and can keep its relationship with Defendant in contention. On the other hand, it is possible that Defendant was standing in for another driver who called in sick on the day of the accident, and so Company cannot conclude that Defendant was not driving in the scope of his employment, nor can Company deny this fact in good faith. Since an answer that says Company is without knowledge or information to form a belief as to the truth of the allegations “has the effect of a denial,” FRCP 8(b)(5), Company does not lose anything by not denying the allegation. Moreover, this answer satisfies the obligation of Company and Company’s attorney’s to conduct a reasonable investigation before filing the responsive pleading. Company’s position is “to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances.” FRCP 11.
Defendant, a technology company, hired Plaintiff, a technology specialist, as a part-time employee on an at-will basis. The employment contract provided that Defendant would reimburse Plaintiff for all “reasonable travel expenses in connection with work-related assignments.” After sending Plaintiff on an important assignment to Hong Kong, Defendant refused to reimburse her travel and hotel expenses, and then fired her without explanation. Two years later, Plaintiff filed a diversity action in federal court alleging breach of contract. Eight months after service of the summons and complaint and six months after service of the answer, Plaintiff was granted leave to amend the complaint to add a claim of tortious interference with contractual relations, alleging that Defendant’s actions prevented her from acquiring employment with other companies. Defendant moves to dismiss the amended claim as time-barred under the applicable state statute of limitations.
What is Defendant’s best argument in support of the motion to dismiss?
(A) The state relation-back rule does not permit relation back.
(B) The tort claim rests on a legal theory different from that of the original claim.
(C) The tort claim arises out of a different pattern of conduct than the original claim.
(D) Plaintiff engaged in undue delay in amending the complaint.
(C) is the best argument because it recognizes that an untimely amended claim will “relate back” to the date of the original pleading only if it is factually related to the original claim—so that it does not, in effect, present a new and independent action. The federal rule thus treats an amended claim as if it were filed on the date of the original pleading if it “asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out … in the original pleading.” FRCP 15(c). Determining whether the amended and original claim are transactionally related often involves an inquiry into whether the claims share and are united by a “common core of operative facts.” Mayle v. Felix, 545 U.S. 644, 646 (2005). For example, relation back has been permitted when the original complaint alleged that a defendant union breached the duty of fair representation by inadequately representing plaintiff because of gender, and the amended claim alleged a gender discrimination claim under federal law, but was not permitted when the amended claim alleged retaliation. Maegdlin v. Int’l Ass’n of Machinists & Aerospace Works, 309 F.3d 1051, 1052 (8th Cir. 2002). Critical to this inquiry is whether the “opposing party is not unduly surprised or prejudiced.” Hill v. Shelander, 924 F.2d 1370, 1377 (7th Cir.1991); accord Schiavone v. Fortune, 477 U.S. 21 (“The linchpin [of Rule 15(c)] is notice …”). A pertinent question, therefore, is whether the breach-of-contract claim alleged in the original complaint—relating to unpaid reimbursable expenses—put Defendant on notice that it might be tortiously liable for Plaintiff’s inability to obtain subsequent employment. Arguably, the amended tort claim depends on “new and distinct conduct, transactions, or occurrences not found in the original complaint,” but the question is a close one. McGregor v. Louisiana State Univ. Bd. of Supervisors, 3 F.3d 850, 864 (5th Cir. 1993) (original claim alleging violation of the federal Rehabilitation Act did not put defendant on notice of amended claim alleging due process violation).
Plaintiff owns a company that manufactures edible decorations used by commercial bakers for holiday cakes. Defendant owns a company that distributes food coloring. Plaintiff enters into a two-year contract with Defendant for the purchase of red and blue food coloring, both of which are essential for cakes baked for the Fourth of July. Defendant is late shipping the food coloring, and as a result Plaintiff loses out on a number of important contracts. Three years later, Plaintiff sues Defendant in federal court for breach of contract. After the requisite jurisdictional allegations, including that the court may exercise diversity jurisdiction, the complaint avers: “Defendant entered into a contract with Plaintiff and Defendant failed to deliver the goods on time.” Defendant enters a general denial.
Five months after filing its answer, Defendant moves to amend its answer by raising the statute of limitations as an affirmative defense. May the court grant the motion?
(A) No, because more than 21 days have passed since Defendant’s service of its original answer.
(B) No, because the failure to plead an affirmative defense results in waiver of that defense and cannot be cured by amendment.
(C) No, because the defense of the statute of limitations can be raised only by denial, and not by affirmative defense.
(D) Yes, in the court’s discretion and if justice so requires
(D) is the correct answer because it correctly states the standard that governs amendment under the federal rules when a responsive pleading omits an affirmative defense. Under the liberal amendment procedure of the federal rules, a party may amend once as a matter of right within 21 days of serving a pleading, or, if the pleading is one that requires a response, once within 21 days “after service of either a responsive pleading or a motion under Rule 12(b), (e), or (f), whichever is earlier.” FRCP 15(a)(1)(A) & (B). Here, however, Defendant cannot file its proposed amendment as a matter of right, and so must seek leave to do so. FRCP 15(a)(2). The motion is directed to the court’s discretion, and the rule recites that “[t]he court should freely give leave when justice so requires.” Id. In exercising its discretion the district court will be guided by a number of factors. These include a showing of bad faith on the part of the movant, undue delay, the substantive futility of the proposed amendment, or the movant’s continued failure to cure deficiencies in the pleading after previously permitted amendments have been filed. These factors do not appear to be present in the problem. This analysis also does not trigger the relation-back doctrine which governs an amendment to add a substantive claim, not the statute of limitations defense.
BigTech, Inc. sued one of its former software developers in federal district court for copyright infringement and for violating a noncompete agreement. The court took federal question jurisdiction over BigTech’s federal copyright claim and took supplemental jurisdiction over BigTech’s noncompete claim, which is governed by state statutory law. Eight months after the lawsuit was filed, the legislature in the state where the case arose and was filed passed a law making noncompete agreements illegal. The law was retroactive, applying to noncompetes signed even before the law’s passage. After the law was passed, BigTech argued the noncompete claim’s merits in its written response to the former employee’s summary judgment motion. Assume the law’s retroactivity does not pose any constitutional problems. Which of the following is true about Rule 11’s application to BigTech’s summary judgment response?
(A) BigTech violated Rule 11(b)(2)’s requirement that legal contentions be warranted by existing law or by a non-frivolous argument for changing the law.
(B) BigTech violated Rule 11(b)(3)’s requirement that factual contentions have evidentiary support.
(C) BigTech did not violate Rule 11(b)(2) or 11(b)(3), because its noncompete claim has sufficient factual and legal support.
(D) BigTech did not violate Rule 11(b)(2) or 11(b)(3), because those provisions do not apply to a party’s responses to motions.
A is correct. The state legislature’s retroactive law invalidated BigTech’s noncompete agreement, so the claim is no longer warranted by existing law. There is no wiggle room for a non-frivolous argument against the law, as there might be with precedent that is non-binding or that leaves room for interpretation. See Rule 11(b)(2). Because Rule 11 applies to “written motion[s] or other paper[s]” and to “later advocating” matters presented in the pleadings, it applies to BigTech’s continued pursuit of the noncompete claim in its summary judgment response. See Rule 11(b).
- The plaintiff sued a car manufacturer, a tire manufacturer, and a tire valve manufacturer alleging that the three defendants’ products were defectively manufactured, causing a car accident that resulted in severe injuries to the plaintiff. After the defendants removed the case to federal court, the tire valve manufacturer filed an answer denying that it manufactured the tire valve involved in the accident. But a reasonable investigation of the valve, as preserved after the accident, would have revealed unique identifying marks showing that the valve was made by this defendant. In response to the plaintiff’s timely and proper Rule 11 motion, the court determines that the tire valve manufacturer’s denial violated Rule 11. Which of the following sanctions would exceed the court’s power under Rule 11?
(A) Levying a fine against the tire valve defendant, payable from the company’s assets
(B) Ordering the tire valve defendant’s attorney to conduct training at his firm on the proper investigation of pleadings
(C) Ordering the tire valve defendant to pay costs and attorneys’ fees in the amount that the plaintiff has spent on the litigation so far
(D) Ordering the tire valve defendant’s attorney to draft a letter of apology to the plaintiff
C is correct because it is the only option that clearly exceeds the court’s authority to issue a sanction “limited to what suffices to deter repetition of the conduct.” Rule 11(c)(4). Attorneys’ fees are a permitted sanction, but only in an amount “directly resulting from the violation.” Rule 11(c)(4). The sanction described in C goes well beyond reimbursing plaintiff for fees incurred in having to deal with the violation, which is the tire valve manufacturer’s inaccurate denial. It extends to the fees plaintiff has incurred in suing all three defendants for every piece of attorney work along the way. A is incorrect because Rule 11(c)(1) generally allows the court to impose a sanction on any “party,” and the violation here is a lack of evidentiary support for the answer’s denial under Rule 11(b)(3), not a frivolous legal contention under 11(b)(2). Although a Rule 11(b)(2) violation cannot result in a client’s monetary sanction, see Rule 11(c)(5)(A), an 11(b)(3) violation can result in monetary sanctions on a client. And under 11(c)(4), one of the acceptable sanctions is “an order to pay a penalty into the court.” B is incorrect because the training session the lawyer must hold is aimed at deterring the same conduct as the Rule 11 violation and so is “limited to what suffices to deter repetition of the conduct.” Rule 11(c)(4). D is incorrect for the same reason that B is incorrect—a letter of apology is a discrete sanction that does not exceed what is needed for future deterrence.
