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| Civil Procedure Fall 1998 Mid-Term Exam Answer |
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| Sunday, 03 December 2006 | |
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1998 MID-TERM EXAM ANSWER/ANALYSIS
MEANING OF YOUR NUMERICAL GRADES You have received various numerical scores/grades written across the top of your exam. The CIRCLED score/grade at the far right is your overall "RAW SCORE," which is the sum of the scores/points you received for each portion of the exam. Your "ADJUSTED SCORE" is the number you received from the Registrar's Office as your numerical grade for the semester. That "adjusted score" is what will be weighed at thirty percent (30%) with your final exam score worth seventy percent (70%) to determine your overall final grade for the course, which may be adjusted either up or down by a half letter grade based on your class participation (a compilation of degree of preparation and performance when called upon, voluntary contribution to class discussion, turning in written assignments, attendance, punctuality, etc.). I have attached a copy of the exam score sheet I used for each of your exams. It is at the end of this analysis. By viewing it you can see the exact number of points that were possible for each portion, sub-portion, and issue on the exam. Note that, from left to right, the numbers on your bluebooks correspond to your "RAW" scores for the Four Subparts ("A" - "D") of Part I of the exam. Of the 75 "RAW" points possible for Part I, they broke down as follows: "A" = 30 pts.; "B" = 20 pts.; "C" = 12 pts.; and "D" = 13 pts. Your raw score/points for Part I (75 possible points) is added to your raw score/points for Part Two (25 possible points). You then have a total raw score for the exam (100 possible points). Again, that raw score was then adjusted upward to give you a score that corresponds with the standard McGeorge letter grade equivalents for exam scores. In order to convert your adjusted McGeorge numerical scores/grades to an approximate letter grade equivalent for your overall mid-term score/grade, you need to consult the conversion tables that follow. The reason the letter grade equivalents are "approximate" for this mid-term exam is because you will receive an official letter grade only at the end of the year, not for this mid-term. Again, your overall adjusted mid-term score/grade will remain in numerical form so that it can be averaged mathematically with your final exam score/grade at the end of the year. The average of the mid-term and final exams will then determine your final letter grade for this course (with a possible half-letter adjustment for class participation/attendance and written work -- see Course Description at beginning of "Overview and Intro"). Because the mid-term exam is worth 30% of the final grade while the final exam at the end of this semester is worth 70%, the second semester will be the most significant.. I have set forth the highest, lowest, and average adjusted overall scores/grades for the mid-term. This should provide enough relative information so you can get a sense of how you did in comparison to the rest of your classmates. If you have any questions not answered by this analysis, please see me. APPROXIMATE McGEORGE LETTER GRADE EQUIVALENTS OF ADJUSTED NUMERICAL SCORES NUMERICAL GRADE LETTER GRADE EQUIVALENT 90-100 A+ 87-89 A 83-86 A- 80-82 B+ 77-79 B 73-76 B- 70-72 C+ 67-69 C 63-66 C- 60-62 D+ 0-59 D MID-TERM OVERALL "ADJUSTED" SCORES HIGHEST GRADE LOWEST GRADE AVERAGE GRADE 93 ("A+") 66 ("C-") 74 (B-) THE TABLE ON THE FOLLOWING PAGES REFLECTS THE "ADJUSTED" SCORES -- WHAT YOU ACTUALLY RECEIVED AS YOUR SCORE/GRADE FOR THE MID-TERM. THERE WERE 91 STUDENTS WHO TOOK THE EXAM OVERALL SCORE NO. OF STUDENTS APPROXIMATE LETTER GRADE EQUIVALENT 94-100 0 A+ 93 1 92 0 91 1 90 1 89 1 A 88 2 86 2 A- 84 2 82 4 B+ 80 1 79 4 B 78 3 77 4 76 7 B- 75 5 74 3 73 5 72 4 C+ 71 5 70 7 69 11 C 68 9 67 8 66 1 C- NOTE: Please keep in mind that this mid-term grade is worth only 30% of the grade (the final is worth 70%). Typically final examination scores/grades move as students make necessary adjustments, get tutoring, etc., or become overconfident and slack off. So much can change between now and the final. The main point to remember is that you can make a dramatic move in your grades if you are unsatisfied with your mid-term score. Also, if you are satisfied, again remember that many students will be making adjustments this semester and as a result will be improving their exam performance as they become more acclimated to law school and to the study of law, so keep focused. Finally, remember classroom participation/attendance can help (or hurt) you grade by one half-letter. The exam questions appear word for word so that you can compare the analysis to the exam facts/ questions. PART ONE: ESSAY QUESTION (4 subparts) Ditch Printing & Sales Corp., ("D. Corp.") is a distributer and "bulk" seller of various magazines - it prints and sells magazines to "retail" magazine sellers in bulk (thousands of copies of magazines per sale) in New York. These New York retail sellers then sell those magazines to the public throughout the entire U.S. D. Corp. is incorporated in Oregon, has its corporate headquarters in Nevada, but its entire sales force is located in Arizona. D. Corp.'s printing and distribution plant is located in New York City. D. Corp. does none of the writing, publishing or advertising to the public of the magazines. Instead, D. Corp. does only the printing of the magazines and then sells them in bulk to the N.Y. retail seller clients. Patricia Pratt, ("Pat"), a resident of Arizona, has been employed by D. Corp. as a magazine bulk salesperson for the last ten years. Like most of the D. Corp. salespeople, her sales territory is Manhattan in New York City. Pat is the top salesperson in the whole Arizona sales office. She is the only woman in the sales office. The other 15 salespeople are men. In June of 1997, the CEO of D.Corp., Mr. Big-Shot, decided to hire his son-in-law, Tom Upstart ("Tom"), who was then living in Oregon (a 1997 graduate of Oregon State University), as the new sales manager of the entire Arizona sales office. Tom's responsibility was to make sure that profits increased over the following year by fifteen (15%) percent. As part of his efforts, he increased sales quota requirements by 50% and began to exert pressure on all sales personnel to reduce their "lead times" - that is, the time from initial contact of retail sellers in New York to the final sale to those retail sellers - by 30%. Pat immediately protested that this new "high pressure" approach showed that Tom was inexperienced and simply compensating for his lack of sales knowledge. She stated that his approach would ruin long-standing customer relationships. Tom ignored Pat's warnings. In January of 1998, after six months and many chances to increase her sales and reduce lead times, Pat failed to meet the new standards and therefore Pat was fired. No other salesman was fired, even though none of them was able to meet the new sales standards. At the time of her termination, Pat had several large deals pending. Tom promised Pat that she would receive her standard commission for those sales if they were completed. D Corp., however, closed the Arizona sales office in August of 1998 and decided to move it to Oregon following Tom's suggestion since he was planning to move back to Oregon anyway. As a result, Pat's pending sales were never completed. After closing the office in August, Tom decided to take the month of September off to travel in Colorado before moving back to Oregon for good in October of 1998. In September of 1998, after nine months and many fruitless attempts to find another job, Pat learned that at least two potential employers had refused to hire her because of extremely negative job references given by Tom. Upon learning this, Pat immediately filed suit against D. Corp. and Tom in state court in Arizona for: (1) gender discrimination in violation of Title VII of the Federal Civil Rights Act; (2) defamation for the negative job references; and (3) breach of contract based on the failure to pay her $60,000 of anticipated commissions. Before notifying D. Corp. and Tom about the lawsuit, Pat invited Tom, while he was vacationing in Colorado, to come back to Arizona. She told Tom over the phone, "I just want to discuss the possibility of receiving compensation for the commissions I never received and about getting a better job reference from you to help me in my job search, and nothing else." Tom agreed to speak with Pat about it for a few hours, so he flew back to Arizona from Colorado to talk with her. After meeting with Pat at the Arizona airport and engaging in an hour of heated and unsuccessful debate, Tom finally declared, "Look honey, you failed to meet your quota - so 'Hasta la vista, baby,' and good luck trying to find a job without my good recommendation as your former boss." Pat responded, "Well, before you go, here's a little something for you to read on the plane back to Oregon or Colorado, or wherever - my legal complaint and summons for you and D. Corp. to appear here in Arizona state court and try to tell an Arizona jury that you guys don't owe me my commissions and should not have to pay me for not being able to get a job due to your bad job references." Tom said, "Don't give me that," as he moved away from Pat. Pat then forcibly grabbed Tom's right hand, put the Arizona summons and complaint in it and said, "Hasta la vista yourself, you miserable little twerp." Tom fell down and began moaning, "My wrist, my wrist. You have broken my wrist!" "Oh, quit crying you big baby, I barely even touched you," replied Pat. After a few minutes, however, she called an ambulance on her cellular telephone. "What a wimp," she mumbled as Tom lie there holding his wrist. Tom was transported to the local hospital, had X-rays taken, and then a cast was put on from his hand up to his elbow. He took an airplane later that evening and returned to Oregon. His medical expenses totaled $2,000, but he believes Pat should pay him at least $100,000 in punitive damages for her "egregious behavior" and for "making fun of me in my hour of need." According to Arizona law: Arizona, or any company having done business in Arizona within the last five years." "Personal in-hand service of any employee of a corporation is considered valid personal service on the corporation itself as an entity in order to make it easier to sue corporations as defendants." Answer each subpart question separately. A. D. Corp. and Tom Upstart have retained you as their attorney to defend them against Pat's Arizona lawsuit. They both are extremely busy so they do not want to be bothered with this lawsuit nor do they want any bad press in Arizona. They want the suit in Arizona to be dismissed legally (no settlement). What legal options are available to your clients to meet their legal objectives and which among them would you recommend? How would a judge likely rule? I. Lack of Personal Jurisdiction - "Special Appearance." Defendant would have to make a "special appearance" (state court) to contest personal jurisdiction only, unless Arizona law allows for a Rule 12(b)(2) type of pre-answer motion. Remember, we are not in federal court, but state court. Some students mentioned a possible conflict of interest which is a possible concern but we really have no facts suggesting any appreciable conflict. Also, some students suggested ADR, but this would not get the lawsuit out of Arizona. Also, unless it would be binding, the lawsuit would remain alive. 1. Jurisdictional/Long-Arm Statute 1. Tom The Arizona jurisdictional/long-arm statute may not apply to Tom because at the time Tom, an "individual" (not a corporation) is served and the lawsuit is filed (presumably it has been filed since Pat served Tom), Tom was NOT "currently doing business in the State. The D. Corp. Arizona office had been closed (moved to Oregon). Moreover, Tom clearly is not now "currently" doing business in Arizona as the lawsuit proceeds. Pat could provide three counter arguments: First, she could argue that Tom was still "doing business" in Arizona because he was there to discuss how to finish the business "loose ends" of D. Corp. in Arizona - Pat's final commissions, job recommendations, and impliedly negotiating to avoid a lawsuit against Tom's employer, D. Corp. Thus, the acts of negotiating a settlement which includes paying old commissions, revising job references and possibly avoiding a lawsuit is part of what constitutes running a business. So technically Tom was currently doing business in Arizona at the time the lawsuit begins and therefore his actions fit within the statute. Second, Pat could say that the statute implies that the contacts giving rise to the lawsuit - here, the wrongful firing and breach of contract for failure to pay the commissions and even the defamation (if the bad recommendations were made before D. Corp. closed its Arizona office) - were done at a time when the defendant was still doing business in Arizona. So he was "currently doing business in Arizona" when he committed the alleged acts giving rise to the lawsuit. Tom could respond to both of these counter arguments by pointing out that interpreting the term "currently" to mean in the past (when the acts giving rise to the lawsuit were done) would be too expansive an interpretation of the overall language contained in the jurisdictional/long-arm statute. This would be so given the statutory language that for a corporation, personal jurisdiction is provided for if the corporation has "done business in Arizona in the last five years." To give meaning to the phrase "done business in Arizona within the last five years" for corporations, Tom, as an individual, who may have done business is Arizona, but is no longer, should not be subject to that same extension. Pat's third argument would be that the statute is satisfied because Tom, and D. Corp. for that matter, are doing business currently in Arizona because, right now, they are involved in printing and selling magazines, in bulk, to New York magazine retail sellers whom they know then turn around and sell those very same magazines in Arizona. It is a "stream of commerce" (see below) type of argument that is applicable here to a long-arm statute. Tom would respond that in the context of interpreting a long-arm statute, a "stream of commerce" analysis that is usually reserved for a minimum contacts analysis. Even then, the stream of commerce argument is now subject to a 4-4 split as set forth in the Asahi case anyway, with only Brennan's concurrence supporting minimum contacts under a stream of commerce argument without any further contacts. Presumably O'Connor's concurring opinion in Asahi would not support minimum contacts here because neither Tom, nor D. Corp., has done "something more" than merely place an item (the magazines in bulk) into the stream of commerce, with the "mere awareness" that some of the magazines end up in Arizona, as well as all of the other 50 states. A judge would likely rule in favor of Pat, if the Arizona courts interpret the statute - and the term "currently" - liberally; but in favor of Tom, if they interpret the statute - and the term "currently" - narrowly. Pat's best argument to satisfy the long-arm statute with respect to Tom is to say that since he was served while physically present in Arizona, the statute would be satisfied, not under its "long-arm" portion, but in its "instate" portions. From what we are given of the Arizona jurisdictional statute, it is silent regarding in-hand presence jurisdiction, although presumably most long-arm statutes would be satisfied if jurisdiction is based on one of the traditional and/or instate bases. We would need to see the rest of the Arizona jurisdictional statute, however, but all state jurisdictional statutes have some kind of presence jurisdiction provisions. 2. D. Corp. Pat's argument that the jurisdictional/long-arm statute applies against D. Corp. is, of course, much easier. Obviously D. Corp. has "done business in Arizona in the last five years" given its main sales office location in Arizona within the last five years (in addition to its "current" business activities both through Tom's actions and the current sales of magazines), if a judge would find these arguments persuasive. D. Corp.'s only argument (and it would apply to Tom as well) would be that although D. Corp. was physically located in Arizona while 'doing business in the last five years," D. Corp. actually conducted no "business" within Arizona in any event. Remember that D. Corp.'s sales were all to New York retail magazine sellers (not to any Arizona residents). So all the business revenue generated by D. Corp. in Arizona came directly from New York. In effect, D. Corp. merely purchased office space and services (trash removal, phone lines, utilities, etc.) in Arizona and nothing else. Merely purchasing items in a state by itself is not enough and really does not constitute "doing business in Arizona.". Pat could argue that even if D. Corp.'s revenues were generated solely out-of-state, such does not mean that they were not still conducting business instate - D. Corp. was still located in Arizona when it was doing business, after all. The statute merely says "done business in Arizona" it does not state that the business's revenues must be generated, in whole or in part, from Arizona consumers. D. Corp. was taking advantage of Arizona's location, police and fire protection, and presumably it made sense economically to operate out of Arizona (perhaps lower taxes, better law for sellers, etc.), so it was doing business there. Again, a judge would likely rule in favor of Pat, if the Arizona courts interpret the statute fairly liberally, and in favor of D. Corp. only if they read into the phrase "done business" as having an implied requirement that the business revenues must be generated in whole or at least in part from other Arizona consumers or businesses (which is unlikely). 2. Minimum Contacts If a judge rules in favor of Pat on the jurisdictional/long-arm statute issues, Tom and D. Corp. would have to argue that the jurisdictional/long-arm statute is unconstitutional as applied to them in this case because to assert personal jurisdiction under the statute would violate the Due Process clause of the 14th Amendment (because we are in state court, it would be the 5th Amendment if it were federal court). 1. Tom 1. Traditional Bases Tom would argue that he certainly does not consent to jurisdiction, for which Pat really could not counter, and "in-rem" and "quasi in-rem" are now only of historical and descriptive importance as they have been absorbed into the minimum contacts test. Thus, only domicile and presence would be possible traditional bases upon which to base personal jurisdiction. (1) Domicile Pat could argue that Tom legally is still domiciled in Arizona, despite the fact that Tom no longer resides in Arizona, at the time of the lawsuit. Pat could argue that Arizona was and remained Tom's domicile, until it was affirmatively changed to Oregon after the lawsuit was filed and served. Pat would argue that Oregon was not yet his domicile at the time of the lawsuit, and as such, his domicile was still Arizona - where he definitely resided in and intended to stay for the indefinite future before his legal domicile was fully changed to Oregon. The key is that, at the time of the lawsuit, Tom did not yet reside in Oregon, he was in "limbo" - vacationing in Colorado during the month of September "before moving back to Oregon for good." So because he was not yet domiciled in Oregon (not residing therein), his domicile was still in Arizona because he had not fully changed it to Oregon. Tom would counter Pat's argument by asserting that he was no longer domiciled in Arizona at the time the lawsuit began because he no longer resided therein - which is a requirement - nor was he any longer intending to stay there for the indefinite future; indeed, he had decided to move to Oregon long before then. Before Tom was sued, he had both left Arizona (no longer resided there) and he did not intend to remain there for the indefinite future, as he had by then decided to move to Oregon, even though he was vacationing in Colorado at the time. Moreover, the Arizona sales office was closed and Tom by then intended to remain in Oregon for the indefinite future since he wanted to go back there and even had suggested, successfully, that the sales office be moved to Oregon. Although he was on vacation in Colorado at the time he was served, he essentially was residing in Oregon, not Arizona. One's domicile is not lost simply because one goes on vacation. A judge would likely rule that since Tom affirmatively decided to live in Oregon for the indefinite future, and, even though he only recently has changed his residence from Arizona to Oregon, it still was changed to Oregon before the suit was filed and served. Although he was on vacation in Colorado at the time, his residence probably was then Oregon. As a result, his domicile probably had been affirmatively changed at that point from Arizona to Oregon and therefore Tom's domicile would not be available as a constitutional basis to exercise personal jurisdiction over him. (2) Presence Pat could use Pennoyer and Scalia's concurrence in Burnham to argue that in-hand service while a defendant is physically present in the state borders is automatically considered fair/constitutional given the historical significance of this method of obtaining personal jurisdiction. Since Tom was physically present in Arizona when he was personally served, he should be subject to the personal jurisdiction of the Arizona courts. Tom would argue that basing personal jurisdiction on his being personally served it would violate due process, notwithstanding Pennoyer and Scalia's concurrence in Burnham, because Tom came to Arizona only at Pat's request and was there only for a few hours - unlike Mr. Burnham who came to the state of his own volition, not at the plaintiff's request, and stayed three days, not just a few hours. Tom agreed to come to Arizona given Pat's promises that all she wanted to do was talk to him about her alleged commissions owed and the negative job references Tom was giving "and nothing else." Tom could argue that it would be unfair to assert personal jurisdiction in this context because he was "lulled" or even "tricked" by Pat to come to Arizona "just to talk," but then he got served (which was not revealed to him until he came to Arizona). Tom had no idea he was going to be served by Pat when she in effect promised Tom that she would not do so by saying she only wanted to talk "and nothing else." Pat could argue that she "promised" no such thing and that Tom was fully aware of why he was coming to Arizona - to deal with the very legally sensitive subject of how to address Pat's claims. Tom therefore knew exactly why he was coming to Arizona and was not unfairly lulled or tricked (for example, he wasn't told he had won the lottery and should come to Arizona to pick up his winnings only to get served in a lawsuit and he certainly was not kidnaped and brought to Arizona against his will). The bottom line was that he was in Arizona when he was served and he voluntarily came to Arizona to try to negotiate Pat's claims. When that was unsuccessful, he was served. After they talked, they talked about nothing else, just like Pat said. A judge would likely wait to see how the parties would also argue regarding minimum contacts (Brennan's concurrence in Burnham) in addition to physical presence (Scalia's concurrence in Burnham) before making a decision. b. Minimum Contacts - Domicile Although Tom may not be living or working in Arizona currently, his actions giving rise to the lawsuit - that of firing Pat, not paying her commissions, giving her negative job references - all took place in Arizona. So it does not matter that Tom now may live in Oregon, or even be domiciled in Oregon now - the key is where Tom was domiciled at the time of these incidents giving rise to the lawsuit. Pat could argue that just as a nonresident who comes to a state, negligently gets into an accident, and then leaves, is still subject to jurisdiction in the state where he caused the accident based on those limited contacts (the accident) - even if at the time of the lawsuit the out-of-state defendant motorist later is long gone from the state and never to return - the key is whether he had contacts to the state at the time of the incidents giving rise to the lawsuit. Pat would make sure to point out that although domicile for subject-matter jurisdiction purposes is determined at the time of the lawsuit, for personal jurisdiction purposes, the contacts are based on the contacts giving rise to the lawsuit - even if they are past contacts, so long as they are highly related to the lawsuit, which they are here. Thus, although Tom may not be sued on any claim at all, his contacts to Arizona - head of sales office that fired Pat, did not pay her commissions, gave her bad job references allegedly defaming her - all took place in Arizona and they are highly related to this lawsuit. Tom would counter that since the court is exercising jurisdiction over him now, and that he is not now domiciled in the state, the court now has no jurisdictional argument based on his domicile to assert personal jurisdiction over Tom. Simply because he may have been domiciled in Arizona when the incidents giving rise to the lawsuit, does not mean that past domicile can serve as a basis personal jurisdiction now. Pat would counter that Tom was domiciled in Arizona at the beginning of the lawsuit and there is no requirement to remain domiciled throughout the lawsuit. If that were the case, a defendant over which there was jurisdiction based on his domicile, could always just move during a lawsuit and the court would lose personal jurisdiction. Since that is not the case, it does not matter that this change in his domicile happened quickly after the case was filed and served. A court would have to find that Tom had not affirmatively changed his domicile, which appears unlikely, given the fact that he had moved, changed his residence, and was intending to remain in Oregon. The mere fortuity that he decided to go on vacation to Colorado before returning physically to Oregon should not subject him to jurisdiction based on his domicile. 3. Minimum Contacts - General Jurisdiction Pat would also argue that (1) the fact that Tom had worked in Arizona, (2) the fact that Tom still sells to New York retailers who sell in Arizona, and (3) the fact that Tom was physically present when he was served, all provide enough contacts to be considered "substantial and pervasive" contacts and therefore such contacts support personal jurisdiction on any claim, including these particular ones (that also happen to be highly related to the contacts and therefore support specific jurisdiction as well). Pat would state that although Tom no longer runs the Arizona sales office, he ran it at one time. Moreover, using a stream of commerce theory, Pat could argue that since Tom sells in bulk to New York retailers, who then sell to Arizona consumers, that is enough to constitute substantial and pervasive contacts. Tom would counter that Brennan's concurrence in Asahi on the stream of commerce theory is not law by itself. Only when one adds the necessary requirement set forth by O'Connor's concurrence in Asahi requiring "something more" that mere awareness, such as directing advertising or direct marketing, etc., does it provide clear law. However, there is nothing in the facts to suggest that Tom was doing this "something more" and therefore the mere awareness that the magazines ultimately are sold in Arizona is not enough. Also, Tom could argue that Pat's argument would "go too far" in that if it were adopted then it would mean that Tom could be sued in every state in the U.S., and could be sued on any claim in any state, simply because the magazines make it to every state in the Union. This clearly is not right; that Tom, for example, could be sued for divorce in Florida, breach of contract in Alaska, or for a tort in Texas all based on magazines making it to these states via New York retail sellers. Lastly, Tom would argue that even if the sales in Arizona by New York retailers may justify jurisdiction over D. Corp. because it sells as an entity to New York retailers, Tom should not be subject to personal jurisdiction over him personally as an individual simply because of D. Corp.'s sales - these are not Tom's magazines . Pat would bolster her presence argument set forth above (Pennoyer and Scalia's concurrence in Burnham) by saying that it also meets minimum contacts (as required by Brennan's concurrence in Burnham). Recall the justification for minimum contacts in Burnham - that Mr. Burnham used the roads in California and had the protection of police and fire in California. The same holds true for Tom in this case, indeed it goes even further because Tom actually was able to use Arizona emergency services (ambulance) and the hospital and doctor services provided by Arizona emergency technicians to treat him for his broken wrist. d. Minimum Contacts - Specific Jurisdiction Pat would further argue that even if there is no general jurisdiction over Tom, then surely there is specific jurisdiction because Tom's contacts to Arizona were highly related to this lawsuit. Even the current sale of magazines to New York retailers who then sell to Arizona are related to the lawsuit - Pat got fired regarding sales and distribution of those magazines in bulk, not to mention the relatedness of such contacts as talking to Pat in Arizona, giving bad job references in Arizona, firing Pat in Arizona and refusing to give her any commissions in Arizona. . A judge very well might determine that there is jurisdiction for these three claims based on Tom's highly related contacts, irrespective of where he lived or was physically located there when he got served. When taken together, a judge would consider other, additional possible contacts and probably decide that there is enough different type of contacts to justify personal jurisdiction over Tom. e. Minimum Contacts - Purposeful Availment and Other Considerations Pat would argue that Tom's contacts were voluntary and it was foreseeable that he could get sued in Arizona based on them. He voluntarily came to Arizona (presence), he fired Pat in Arizona, refused to pay Pat her commissions in Arizona and he continued to give her bad job references in Arizona. It would be difficult for Tom to argue that his acts were not voluntary or were of a nature that they gave him no clue that he might be haled into court in Arizona for these actions. Pat also has strong arguments that there are no "other considerations" that would support Tom's argument for a lack of jurisdiction. 2. D. Corp. 1. Traditional Bases (1) Domicile Pat could argue that D. Corp. was domiciled in Arizona because the entire D. Corp. sales force was located in Arizona. Thus D. Corp. is domiciled in Oregon (where it is incorporated) and Arizona (the location of its entire sales force and therefore its principle place of business). Tom would, of course, counter that Arizona is not a domicile of D. Corp. Although Oregon is a correct domicile (state of incorporation), Nevada is its "nerve center" - the location of its headquarters and therefore its principle place of business. Moreover, its real distribution center and place of production are in New York (printing and distribution plant) which would be its principle place of business if Nevada were not. Even if the domicile were considered to be Arizona at one time, it was not the domicile at the time of the lawsuit. The Arizona sales office was closed and moved to Oregon in August of 1998, a full month before Pat sued D. Corp. Pat has a weak argument here and a judge probably would not find that there is personal jurisdiction over D. Corp. based on its domicile. (2) Presence Pat might try to argue that D. Corp. was served under Arizona law because "Personal in-hand service of any employee of a corporation is considered valid personal service on the corporation itself as an entity . . ." Thus, because Pat was physically present in Arizona when served, that means D. Corp. was present in Arizona when it got served. D. Corp. could argue that the Arizona law is merely a service/notification statute regarding how to notify a corporation and has nothing to do with personal jurisdiction over a corporation based on presence. It cannot change the fundamental rule that a corporation is not an individual that can be physically present when served. Although a corporation can appoint an agent to accept service on behalf of the corporation - the jurisdictional theory in that circumstance is based on consent, not physical presence when served. A judge would likely conclude that a corporation cannot be considered "physically present" for personal jurisdiction purposes and thus cannot be the basis for asserting personal jurisdiction over D. Corp. in Arizona simply because Tom was served there on behalf of D. Corp. 2. Minimum Contacts - Specific and General Jurisdiction The same arguments made against Tom (above) regarding specific and general jurisdiction could be made against D. Corp. The only argument made above that would be stronger against D. Corp. than against Tom would the "stream of commerce" argument. Recall that is the notion that because D. Corp. is selling magazines (currently) which are then sold in Arizona to Arizona consumers, D. Corp. is benefitting from the Arizona market, more so than Tom individually benefits. Pat could again argue that not only is this substantial and pervasive contact, but it provides specific jurisdiction, because the contacts (ultimate magazine sales) are highly related to the lawsuit (firing of a salesperson, sales commissions, etc).. D. Corp. could respond that these contacts are not related to the lawsuit. It is not as though an Arizona consumer (ultimate purchaser of one of these magazines) is suing D. Corp. because the ink used in the magazines caused a skin injury in which case such a lawsuit would be highly related to the lawsuit. The employment issues making up the substance of Pat's claims are really not all that related to magazines being sold by New York retailers to Arizona consumers (D. Corp. sales are concluded long beforehand). Finally, D. Corp. Could argue that the long-arm statute is unconstitutional because its contacts are not on-going. 3. Minimum Contacts - Purposeful Availment and Other Considerations It appears that D. Corp. would have no purposeful availament argument here as it voluntarily has connected to Arizona and it was foreseeable that it could be sued in Arizona for its actions regarding Pat. D. Corp. could argue, however, that to the extent personal jurisdiction is based on its stream of commerce sales to New York, then New York sellers sell in Arizona, those contacts would not make it foreseeable that D. Corp. could be sued by a former employee in the Arizona sales office (that moved to Oregon before this lawsuit). Pat would counter that D. Corp.'s dealings with her and ultimately getting magazines to Arizona are related enough that it was foreseeable to D. Corp. that it might get sued in Arizona over them. D. Corp. could always counter that it would be "unreasonable" (Asahi) to assert personal jurisdiction over D. Corp. even if there are minimum contacts here under this situation. Pat would argue that the unique Asahi facts are not present here (foreign parties, third-party indemnification claim, etc.) and therefore it would not be unreasonable to exercise jurisdiction as it was in Asahi. D. Corp. would argue that Asahi is not limited to its exact facts but only stands for the proposition that if personal jurisdiction would seem unreasonable under the circumstances, then it should not be asserted. A judge would likely rule that D. Corp. has enough contacts with the state of Arizona that personal jurisdiction would be justified, but it may not be as easy a call as that of Tom. However, to the extent Tom is an agent of D. Corp., Pat might argue successfully to apply the same arguments against Tom against D. Corp. under the theory that the actions of Tom subjecting him to jurisdiction are also those of D. Corp. subjecting it to jurisdiction. II. Do Nothing - Then Use "Collateral Attack" Later if Necessary Assuming defendants felt very confident about the strength of their personal jurisdiction argument, they might consider doing nothing now in response to Pat's Arizona lawsuit and taking a default. It would then be up to Pat to take that Arizona default judgment against Tom and D. Corp. and get it enforced in Oregon where there most likely would be personal jurisdiction over both Tom and D. Corp. Pat could argue that under the Full Faith & Credit Clause of the U.S. Constitution, the Arizona judgment should be enforced by the Oregon court (with the power over the parties do so) as if it were an Oregon default judgment against D. Corp. and Tom. This course of action (or non-action as it were) would satisfy the objective to not have to travel to Arizona to battle in a lawsuit but the defendants would have to be very confident they would win the personal jurisdiction challenge to the Arizona court because a personal jurisdiction argument is all they would be able to argue in a later enforcement action in Oregon - so it would be very risky. Moreover, the clients want the lawsuit gone, not simply postponed until later, even if it is to enforce a default judgment in Oregon later. Presumably they want some peace of mind regarding the lawsuit. Given the fact that personal jurisdiction over the defendants in Arizona is possible and perhaps even more likely than not, the attorney for D. Corp. and Tom should not advise a default-then-collateral-attack course of action as it would be too risky and result in D. Corp. and Tom not being able to defend themselves on the merits should Pat take the Arizona default judgment and try to enforce it in Oregon. III. No Lack of Subject-Matter Jurisdiction/Venue The remaining two rings of subject-matter jurisdiction and venue are nonissues here. Remember that we are in state court, not federal. Subject matter jurisdiction is very broad in state court. The federal question (gender discrimination) is allowable in state court because of concurrent jurisdiction for §1331 federal question claims in state court. The defamation and breach of contract claims are state law claims, which obviously present no problem in state court. Thus, D. Corp. and Tom would have no argument to attack state court subject matter jurisdiction here (as they would if, for example, there was exclusive federal court jurisdiction such as a patent or copyright claim for which there is no concurrent jurisdiction in state court). Since we are not given a state venue statute to apply, venue is a nonissue. Section 1391 applies only in FEDERAL actions, but is completely inapplicable in state actions. IV. Notice 1. Statutory Test Remember again that we are in state court, so application of Federal Rule 4 would be erroneous. Instead, according to applicable Arizona state law, Pat's notification was proper service for BOTH Tom as an individual and D. Corp. as a corporation. Although Pat, a party, served Tom, this is O.K. under Arizona service law. D. Corp. would have no argument that Tom was not sufficiently high enough up in the company to be served because Federal Rule 4(h) service if the defendant is a corporation is inapplicable - the Arizona statute states clearly that service upon an employee (and Tom obviously qualifies) is service upon the corporation. It is unclear whether being "tricked" to get served might violate the statute - it would depend on how Arizona courts interpret the statute. 2. Constitutional Test D. Corp. could argue that the service statute is unconstitutional as it violates Mullane because it is service "not reasonably calculated to apprize the defendant [the corporation] of the action pending against [it]." Pat could argue that although Mullane has a constitutional requirement to give reasonable notice, that does not mean it has to be the "best" notice possible. Service on employee Tom is probably enough to give "reasonable notice under the circumstances." to D. Corp. Still, D. Corp. might argue that employees may not have the proper incentive to inform the corporation that it has been sued. Pat would counter that since Tom was also personally served and is being personally sued with D. Corp. individually, Tom had every incentive to inform D. Corp. of this lawsuit against it. V. Demurrer Another motion defendants might consider in an attempt to dismiss this Arizona lawsuit legally would be to argue that Pat has failed to state claims upon which relief can be granted - a "demurrer," or a 12(b)(6) motion if we were in federal court. Since the action contains three separate claims, each claim would have to be addressed separately. 1. Gender Discrimination Tom would have to argue that Pat was fired as a result of poor performance, not because of her gender, and therefore a claim for gender discrimination has not been made. This would be difficult given the fact that Pat was the only female salesperson and she was the only salesperson fired, even though none of the male salesmen met the new sales standards. Although she may not ultimately win on this suit (it would depend on the substantive evidence) at this point we would have to construe her allegations in a light most favorable to her. If what she says in the complaint is true, then she has stated a cognizable gender discrimination claim, and the motion should be denied with respect to this claim. 2. Defamation If Tom told the truth about pat being a poor salesperson, he could not have defamed Pat as a matter of law (if I say O.J. Simpson was accused of hitting his ex-wife it would not be defamation because that statement is true). Thus, it depends what Tom has said exactly about pat and we are not told that. Again, at this point we have to construe the allegations in a light most favorable to Pat, and if Tom has made disparaging comments that defame Pat unjustifiably (they are not true), then she has stated a claim upon which relief can be granted. 3. Breach of Contract - Sales Commissions This has the most promise of dismissal for defendants. First, although no contract is referenced, we would have to see the exact wording of the contract. If the contract was oral, you know from contracts that it would not satisfy the statute of frauds (more than $500, could not be performed in a year, etc., but it would depend on Arizona law). She may still be able to recover the commissions, but it would have to be on a different theory of recovery than breach of what would be a nonexistent or non enforceable contract. Moreover, defendants could argue that Tom merely promised that Pat would be paid her commissions, but only if the pending sales were ever completed. To the extent there was any contract, it was conditional and the critical condition - the necessary completion of the pending sales - was never fulfilled. We are told the Arizona office closed and the pending sales were never completed. Thus, the defendants have a strong argument that the commissions are not due and owing and therefore should be dismissed because Pat has failed to state that the sales were completed and therefore recoverable. Why should Pat be able to recover non-existent commissions that she never earned and were never made and for which defendants never benefitted? Pat may have an argument that she should be able to recover because defendants negligently failed to consummate her pending sales in her absence, but again the theory of recovery would be different from a straight breach of contract (again it would depend upon Arizona substantive tort and contract law). A judge would likely dismiss this particular claim, but not the other two. B. Assume your clients are willing to take on Pat's Arizona law suit, but they believe their best chance would be in federal court for the District of Oregon rather than state court in Arizona. Your clients know the federal judges in Oregon are all "pro-big business," unlike Arizona's state judges, whom they feel "do not like it when corporations pull out of their state and leave people jobless." What would you legally have to do in order to get the case out of Arizona State Court and into Federal Court in Oregon - would you be successful? 1. Indirectly - Removal and then Transfer Motions Under §1441, a defendant may remove an action from state court to the federal court in the state where the state action is pending - in this case, federal court in Arizona, if all defendant agree to remove, which would not appear to be a problem. From federal court in Arizona, defendants could then request a transfer of venue to federal court in Oregon, which, if granted, would achieve the defendants' legal objective to get to federal court in Oregon. This removal/transfer could be done provided all three rings (personal and subject-matter jurisdiction and venue) could be met in federal court in Oregon. There are three transfer possibilities depending upon whether the three rings have been met in Arizona: (1) under §1404 (assuming all three rings can be met in Arizona federal court) or (2) §1406 (if Arizona federal court is an improper venue, but Oregon is not) or (3) §1631 (if personal jurisdiction is missing in Arizona, but not in Oregon). 1. Step One: §1441 Removal From State Court To Federal Court 1. Timing - Removal The defendants would have to seek removal within 30 days of Pat's serving them with the Arizona state lawsuit under §1441. 2. Subject-Matter Jurisdiction To be "removable" to federal court, there must be federal subject-matter jurisdiction over the matter such that the lawsuit originally could have been brought in federal court. a. 1332 Diversity Jurisdiction (1) Citizenship Pat could argue removal is unavailable if the subject-matter jurisdiction of the case is based on diversity because the parties are not diverse. Pat is domiciled in Arizona while Tom and D. Corp. are also arguably Arizona domiciliaries. See arguments above regarding using domicile for personal jurisdiction purposes. Just as Pat would argue that personal jurisdiction is available in Arizona because at the time of the lawsuit, both Tom and D. Corp. were Arizona domiciliaries, Pat could argue that there is no diversity of citizenship. Tom and D. Corp. would use the same arguments set forth above that they are NOT Arizona domiciliaries. Therefore, because they are Oregon domiciliaries, diversity with Pat (AZ) exists. Also, the case cannot be removed if they are from Arizona, if subject-matter jurisdiction is based on diversity because a defendant cannot remove from their own home state court in diversity cases. D. Corp. has the strongest argument that it is not domiciled in Arizona. Even if its domicile were based on the Arizona sales force, rather than its corporate headquarters (Nevada) or its plant and distribution center (New York) being considered its "principle place of business," and therefore its domicile, in addition to the state of incorporation (Oregon), D. Corp. pulled out of Arizona a full month before this lawsuit was served. A judge would likely rule that there is diversity of citizenship. (2) Amount in Controversy Although the claim for breach of contract is for $60,000, we do not know the amount claimed for the gender discrimination/civil rights claim and the defamation claim - however, assuming they amount to more than $75,000, the amount in controversy requirement would be met. Defendants should wait to try to dismiss the breach of contract claim (demurrer/12(b)(6)) until after removal - to keep the breach of contract $60,000 claim around for amount in controversy purposes. That way they could remove based on diversity if the gender discrimination and defamation claims do not reach the amount in controversy amount (the $60,000 could be aggregated thereto, so the claim may be of help to get into federal court, before trying to dismiss it). A judge would likely rule the amount in controversy has been met as there is not a "legal certainty" that it has not been met. Before determining if it is removable, a judge would also consider whether federal question and supplemental jurisdiction might be a better way to go than diversity. b. §1331 Federal Question Jurisdiction There clearly is federal question jurisdiction over the gender discrimination claim as it is an alleged violation of Title VII of the Federal Civil Rights Act of 1964. Although that allows removal of that claim, all claims must be removed and two other claims exist: defamation and breach of contract. These are state law claims for which §1331 federal question jurisdiction is unavailable. Thus, unless diversity exists, these two state law claims cannot be heard in federal court (provided there is no supplemental jurisdiction available under §1367. c. §1367 Supplemental Jurisdiction Defendants would argue that the two state law claims (breach of contract and defamation) form the "same case or controversy" as the federal civil rights claim - the gender discrimination, firing claim - for which there is already independent, free-standing subject-matter jurisdiction (§1331 federal question). As such, under §1367(a), which codified the Gibbs case, allows supplemental jurisdiction over these additional claims against the same defendants. If Pat wishes to avoid removal, which we can assume given the stated strategic concerns (Arizona state judges being pro consumer anti-business), Pat should argue that the breach of contract claim and the defamation claim are not part of the same case or controversy as the gender discrimination claim (and no diversity exists). Although they involve the same parties, Pat could argue that the firing based on her gender occurred much earlier than the defamation and the unfulfilled promise to pay her commissions. Defendants could argue that there is no simultaneity requirement - that for claims to form part of the same case or controversy they have to occur simultaneously. A case or controversy - such as a discrimination suit - can involve many manifestations of discrimination that may give rise to other theories of recovery, such as defamation, refusal to pay commissions A judge would likely rule that these claims are closely related enough to form the same case or controversy generally arising out of the employment relationship which forms the basis of this whole lawsuit. Section 1367(b) would be inapplicable because no new party is being added which might possibly destroy diversity (assuming the main claim were based on diversity, not federal question). However, Pat may try to use §1367© to convince the judge, in her discretion, to dismiss the additional state law claims. Pat would have to convince the judge that although the claims are not novel, nor overly complex, nor has the federal claim been dismissed, they do seem to predominate the case. Defendants would of course argue otherwise, especially if they dismiss the breach of contract claim. There really is no strong argument that the defamation and breach claim predominate over the gender discrimination claim simply because they are additional claims - much of the case still will be about the disparate treatment Pat received as the only female salesperson. A judge likely would not dismiss the additional state law claims under §1367(c). 2. Step Two: Transfer Statutes - If Oregon Is a Proper Venue 1. §1391 Venue Defendants would have to argue that Oregon is a proper venue into which the case could be transferred from Arizona federal court. This would be an easy showing with respect to Tom, because he resides in Oregon, so §1391(a)(1) or (b)(1) would be satisfied, as long as D. Corp. also resides in Oregon. Defendants would argue that D. Corp. is subject to personal jurisdiction in Oregon because D. Corp. is domiciled there since it was incorporated in Oregon. 1. §§1404, 1406, or 1631 Transfer The particular transfer statute used will depend upon whether Arizona federal court is a proper venue (§1404 would be applicable), improper venue (§1406 would be applicable), or if personal jurisdiction is missing (§1631 would be applicable). Strategically this decision to pursue one particular transfer statute could be significant if Arizona state law is better than Oregon state law on the breach of contract and defamation claim (where Oregon and Arizona are both in the 9th Circuit so it would not matter of the federal civil rights gender discrimination claim). Since we are not told if Arizona law is any better or worse, the parties would not try to cast this as any particular transfer statute. If defendants thought Oregon state law were better, they would argue that §1406 or §1631 applies because then Oregon law (the law of the transferee court would apply). Pat would argue that §1404 should apply (if she would lose on the transfer in general) because then Arizona law would apply (the law of the transferor court would apply) not Oregon law. Defendants would argue that Oregon is the most convenient venue because all of the Arizona sales office is now located there, many witnesses are probably now in Oregon and, with the corporate headquarters there, it makes more sense for the parties to try there case in Oregon. The only one in Arizona now is Pat, and although she originally sued there, she should not control. Defendants would have to apply the public and private factors in such a way to get the judge, applying her discretion, to grant the transfer. Pat would counter that transfer statutes are not there for judges to find the most convenient venue, only to choose one venue over another if one is clearly more favorable than another. Pat could argue that all the defamation witness are located in Arizona, and it would be much more burdensome on Pat to have to go to Oregon than it would be for Tom and D. Corp. to defend in Arizona. Defendants would counter that such discriminates against them simply because they have more money than Pat. A judge would likely not grant the transfer request in her discretion because defendants probably cannot demonstrate how Arizona is so inconvenient for the parties and witnesses that a transfer is required in the interest of justice. However, it is a discretionary decision, so if a judge granted the motion, it likely would not be seen as an abuse of discretion by any appellate court. 1. Directly - Joint Motion of the Parties Of course, if defendants could get Pat to agree, they might file a joint motion to request transfer, but that would be unlikely - Pat would have no incentive simply to agree to this and give up her advantage in Arizona (even if it is successfully removed to federal court). Also, there is likely to be no agreement on which transfer statute would apply, which might make a huge difference unless Arizona and Oregon law are identical on breach of contract, and defamation. 2. Directly - Forum Non Conveniens Motion If defendants are concerned that two different judges would have to agree with them (§1441 removal to get to federal court, in Arizona), and a second judge to grant the §§1404, 1406 or 1631 motion (to get from Arizona federal court to Oregon federal court), they might go for a "one-shot deal" and simply ask the Arizona state court to dismiss and send it to federal court in Oregon and bypass removal and transfer. It is unlikely an Arizona state judge would exercise her discretion this way (as it would be a bit of an affront to the federal court judges involved). Moreover, defendants simply do not have compelling arguments as to why the case should be heard in Oregon federal court rather than Arizona state court. Another possibility would be to ask for a motion to dismiss from Arizona state court to Oregon federal court, then remove to Oregon Federal court, but that would seem to involve an unnecessary step once the Arizona state court judge would agree to send it to Oregon state court from Arizona, why not simply ask to go to Oregon federal court? C. Assume you successfully get the case out of Arizona State Court and into Federal Court in Oregon. Tom, who always said he wanted to go to law school before he took the job with D. Corp., informs you that you can "dismiss the case easily now that it is in federal court given the Erie case and its progeny, and in light of applicable Arizona law." You think about it, and then proceed to explain to Tom why he EITHER: "Is hopelessly confused, and should stick to selling magazines," OR, "Is strategically brilliant, and should have gone to law school!" Which one do you say, and EXPLAIN WHY? You should tell Tom that he is hopelessly confused. 1. No Real Conflict Between State Law and Federal Law -- Erie. Tom is mistaken on several levels. Whether the case is based on diversity or federal question/supplemental jurisdiction, federal substantive law applies to the federal question claim (gender discrimination) and state law would apply to the state law claims (defamation and breach of contract). Federal procedural law would apply because we are in a federal forum. 1. Tom's Mistaken Notion of an Erie Conflict Tom apparently believes that Arizona law is in conflict with federal law but since we are now in federal court, the federal law should apply to dismiss the case for improper service and improper notice. "Personal in-hand service can be made by any party upon any other party in the lawsuit" under Arizona law whereas under federal law, Rule 4(c)(2), Fed.R.Civ.Proc., a party cannot be the one to serve the other party in the lawsuit and therefore we have a conflict, and under Rule 4(h)(1), service on any old employee is not enough, it must be on an "officer, a managing or general agent, or any other agent authorized by appointment or by law to receive process" - which Tom arguably is not. Defendants believes that since Tom was served incorrectly under federal procedural law and now that we are in federal court, federal procedural law applies, and the case can be dismissed because service was improper under federal law. 1. Service Was Made While this Was Still a State Court Case One big problem. This was proper service because when service was made, this was a state court case that was filed in state court - it had yet to be removed. If Tom were right, cases filed and served in state court according to state law would always have to be reserved according to federal procedural law and the removal statute nor logic dictate that result. 2. No Conflict - Federal Law Incorporates State Service Law Another big problem. Even if Tom were right on that previous score, the "conflict" is hallow and is easily "harmonized." Rule 4(e)(1) provides that one valid basis of service in federal court is to serve according to state service law. So there is no conflict - since he was served in accordance with state law. Defendants would respond that Rule 4(e) (for individuals) and 4(h) (for corporations) may provide for different methods of service than those in Arizona, but they do NOT incorporate the allowance for service by a party, which is a more fundamental tenant of Rule 4(c)(2). Pat would argue that the allowance for service according to state law includes any provision of Rule for, not just the methods listed in Rule 4(e) and (h) - which most likely what a judge would rule. The reference to the policy under Arizona state law for corporations - the fact that the Arizona state legislature wants corporations served in a specific manner was a classic "red herring." We are not talking about a federal practice conflicting with a state rule so the Erie, York Byrd, out-come determinative test, as modified, to take into account the "bound up" interests of the state is completely inapplicable. At most, if there were an unavoidable conflict, Hanna v. Plumer would control because we are talking about a federal Rule of Civil Procedure that should apply over conflicting state law because it is by definition procedural yet it is not unconstitutional nor does it violate the Rules Enabling Act. NOTE: Of all the portions of the exam, students by far did the worst on this question. Many gave convoluted, unnecessary, and overly long analyses and therefore wasted much valuable time that could have been used to spot issues on other portions of the exam. D. Assume again that you were successful in getting the case into Oregon Federal Court, and out of Arizona State Court. Briefly answer the following three inquiries: (1) Assume none of the claims are dismissed, could Tom legally counterclaim for $102,000 for his wrist injury? If so, would you advise him to do so? Rule 13(a) or (b): Rule Authorization Defendants need to determine whether this is a compulsory counterclaim (31(a)) or a permissive counterclaim (13(b)) because if it is the former, Tom MUST plead it now or lose it forever according the rules application of res judicata if not plead. So the question becomes: Does it "arise out of the same transaction or occurrence" as the main claim(s)? Arguably it is not the same transaction and occurrence as the main claims because the main claims "occurred" much earlier, months earlier, and Pat's alleged tort against Tom was a different transaction than the main claims regarding the firing of Pat, her job recommendations and unpaid commissions. On the other hand, the injury to Tom's wrist arises out of this whole lawsuit - Pat and Tom were discussing the various claims that formulate the lawsuit. The wrist injury occurred as a result of Pat and Tom trying to resolve all of these matters. A judge would likely find that the counterclaim does not arise out of the same transaction or occurrence of Tom and D. Corp. firing her and giving her bad job references if she interprets Rule 13(a) narrowly. If the judge instead focuses on the "arising out of" language, she might determine that although the tort occurs later and is not itself the same transaction or occurrence it still arises from the same transaction or occurrence. Rule 13(a) or (b): Subject-Matter Jurisdiction If the subject-matter jurisdiction for the main claims is based on diversity, then Tom's counterclaim would also qualify under diversity because the parties are still of diverse citizenship. The amount in controversy is obviously no problem - $102,000. However, Pat may argue that punitive damages of $100,000 for simply mumbling that Tom was "a wimp" seems outlandish given medical expense of only $2,000 for a broken wrist (50 times the actual damages). Pat also helped Tom, called the ambulance for him and did not appear to act all that egregious and depraved by simply placing the summons and complaint in his hand. Still, it is not a legal certainty that Tom cannot as a matter of law collect punitive damages that might put him over $75,000 even though it is extremely unlikely and a judge would most likely reduce the award as excessive. Moreover, some courts allow a counterclaim to be aggregated to the main claim, so the amount in controversy may already be met in any event. If the subject-matter jurisdiction for Pat's main claims is determined to be federal question and supplemental jurisdiction, that supplemental jurisdiction might be extended to cover Tom's state law counterclaim. If it is determined to be a compulsory counterclaim ("same transaction or occurrence") then it probably satisfies § 1367(a)'s "same case or controversy." If it is deemed a Rule 13(b) permissive counterclaim (NOT the "same case or controversy"), then there is an argument that it would not satisfy §1367(a)'s "same case or controversy." There is an argument, however, that even if it is not the same transaction or occurrence, it might still fall within §1367's "same case or controversy" because the tort arises from the overall controversy involved. There might be a possible Rule 11 violation for filing a frivolous punitive damages claim for the improper purpose of generating diversity (amount in controversy) subject-matter jurisdiction when none truly exists for this $2,000 battery just to get into federal court, especially if Pat is not rich and punitive damages would not be justified. Rule 13(a) or (b): Strategy If the counterclaim is a Rule 13(a) compulsory counterclaim, then it would be malpractice not to include it so no real big strategy decision there. If it is permissive, meaning it can be brought later, then defendants have a decision to make. It is advantageous in either event to bring it - now means Pat doesn't look like such a victim, it may minimize her overall claims. The threat of bringing the tort suit means Pat will have to come to Oregon only for her own claim, because it is questionable whether there would be personal jurisdiction over Pat in Oregon. Pat probably would do better defending in Arizona and it would be harder on Tom. Defendants should be advised to bring the lawsuit in Oregon now, instead of waiting. There is a possibility, however, that this particular claim might "backfire" by making the jury think that Tom is not only "a wimp" but that defendants are illegitimately trumping up this claim in an unfair attempt to intimidate Pat legally. Tom could argue however, that Pat broke his wrist after all and simply because a trot victim suffers a serious injury at the hands of an angry tortfeasor does not make the victim a "wimp," if it did, then all tort victims could never recover because they all would be just a "bunch of wimps." (2) As Tom and D. Corp.'s attorney, how would you argue to Pat and to her attorney that they should drop the case, or settle it only for a few dollars? Arguments included: addition to her attorney's fees. With a settlement, no need to worry about that. she gets anything) - if she settles now at least she limits her attorney's fees to what they are at this time (assuming she is paying on an hourly basis, if its a contingency fee, then it might not make a difference to her at this point). counsel might feel unfamiliar in Oregon federal court, not to mention the ideological disadvantage for Pat in Oregon as opposed to Arizona state court -- she can be portrayed as a "sue happy" plaintiff, just trying to "shake down" a "deep pocket" corporation. more to cover whatever her attorney takes. Arguments generally along these same lines received credit. (3) Assume Pat generally would rather settle and get on with her life than go through a lawsuit. As Pat's attorney (now switching your role), what is the least amount you would advise Pat to accept in settlement of all of her claims, and explain why? Arguments included: And Tom would escape a potentially embarrassing lawsuit so there should be somewhat of a premium for that. were never completed, so she very well might not be able to recover any damages fees if she wins - gender discrimination. This would expose D. Corp. And Tom to even more liability so Pat should try to argue for more to compensate for that claim. settlement are confidential so that the bad publicity of the lawsuit, and the attraction of other female plaintiffs is minimized - again, D. Corp. And Tom should pay something for a confidentiality clause in the settlement agreement. hourly basis or contingency fee, although ethically it should not come into play. PART TWO: SHORT ANSWER (10 questions) 1. How is Rule 11 a counterbalance to Rule 8? Rule 11 serves as a counter to Rule 8's liberal notice pleading where the plaintiff need only write very basic unsubstantiated claims, assertions and allegations at this point simply to give the defendant a basic idea of what plaintiff's lawsuit is about. Rule 11 requires the attorney to substantiate the legal and factual claims of a plaintiff to make sure they are made in good faith and for no improper purpose. This makes the attorney, and to some extent the plaintiff, take responsibility for the statements made in the pleading. 2. P sues D for negligence (running a red light and hitting P at an intersection). There is a jury verdict for D. A, who was riding with P, later sues D, also for negligence. D pleads res judicata/claim preclusion and Rule 19 failure to join a necessary party -- P -- in a motion to dismiss A's lawsuit. A argues that neither res judicata nor Rule 19 is applicable in A's lawsuit. Who is right, why? A is correct. Res judicata/claim preclusion is inapplicable because A was not a party to the P v. D lawsuit. Simply because D prevailed over P's claims does not mean that A might not have a valid claim against D and should not get his own day in court. P and A are not "in privity" because they may have different claims and/or different defenses to a counterclaim of contributory negligence or assumption of the risk. Although D may have an argument that collateral estoppel/issue preclusion may be applicable (for example, that D was not speeding, was not drunk, etc.) - D has not advanced it as an argument here. Rule 19 is also inapplicable because P cannot be joined as a party in this second lawsuit because he already was a party in the first suit. Although P should be and can be called as a witness in the second A v. D lawsuit, it would be improper to add him as a party and thus dismissing for failure to join him would be error. 3. Is a Rule 57 declaratory judgment a "legal," "equitable," "substitutionary," or "compensatory" remedy - why or why not for each one of these listed types of remedies? It is an EQUITABLE REMEDY because the court is providing relief by directing the parties to either do something or refrain from doing something in accordance with their legal rights and responsibilities as "declared" by the court. It is not "legal" because no money damages are paid to the plaintiff. It is not "substitutionary" because it is not given to the aggrieved plaintiff in place of something else (like money in place of a lost limb). It is not "compensatory" because it is not be given to put the plaintiff in the position she would have been in had it not been for the wrong of the defendant - declaratory judgments are usually requested BEFORE any wrong is done, where the parties simply want "clarification" of their legal rights and responsibilities. Students had great difficulty with this one, often ignoring, guessing (very creatively, or even arguing it is all four simultaneously). 4. P sues D for breach of contract in state court. D files a summary judgment motion which is denied because the court rules that a factual dispute exists based on the fact that P asserts that at trial he will be able to prove D is lying about breaching the contract and that it is up to the jury, not the judge, to decide if D is lying. D immediately appeals. As an appellate judge, how would you rule - affirm or reverse - and why? The trial court ultimately should be REVERSED because the plaintiff failed to produce any evidence supporting a factual dispute. That defendant MAY BE lying is not proof and therefore the plaintiff failed to meet her burden of production like Mrs. Houchens failed to provide any proof that her husband died accidently in the Houchens case. Mere surmise and allegations are not evidence and therefore the burden of production is not met. However, an appellate court should dismiss the appeal at this point because it would be premature. Recall the final judgment rule - in order to appeal, the party must appeal an adverse and final judgment. This is not a final judgment. The defendant may go on to prevail at trial. It would only become appealable if defendant loses at trial, because then it would be final and adverse to the defendant. There were no facts to suggest that an interlocutory (non final) appeal should be available. 5. Same case as #4, only assume D does not appeal after the denial of the Rule 56 summary judgment motion. The trial goes forward. P calls no witnesses except P who asserts that the defendant breached the contract. At that point, D files a Rule 50(a) motion for judgment as a matter of law, which is denied. D then gets on the witness stand and denies breaching the contract. After a vigorous cross-examination, P fails to prove that D is lying. D's case is over and closing arguments begin. D files a Rule 50(a) motion again, which is denied. The jury then deliberates and finds for P. At that point, D files a Rule 50(b) renewed motion for judgment as a matter of law. This time, the judge grants the motion and the defense wins a judgment. Was the judge wrong for denying the Rule 56 and Rule 50 (a) motions, but nevertheless, granting the Rule 50(b) motion? Assume this is all legally allowable, does it violate the concern for judicial economy? Not necessarily, although it is difficult to see what possible "proof" there was to support P's allegations, and therefore the judge probably should have granted the motions to dismiss, sometimes a trial judge will allow the jury to decide the case since the case has gotten that far (trial) anyway. This does not necessarily violate the concern for judicial economy if we take into account a possible appeal by P. Suppose P appeals and the appellate court reverses. If the trial court had granted the Rule 50 (a) directed verdict motions, although the trial would have been cut short, ultimately it would have taken much more time to have a new trial (plaintiff is entitled to a jury verdict). However, if a Rule 50(b) motion (so the judge waits until after a verdict for plaintiff is obtained) gets reversed, no new trial would be necessary, we simply would reinstate the jury's verdict for plaintiff. 6. What is the policy reason behind the Rule 26(a) mandatory disclosure scheme regarding discovery - why not simply require parties to request this information? The policy reason is to make parties produce key information right from the beginning of the case without being asked by the other side. Parties might otherwise not request this information (oversight) or request it in such a way as perhaps to allow the other side to not be completely forthcoming in their production. This is an attempt to remove the gamesmanship and simply make this a standard production request. 7. What is the difference between "impleader," "intervention," and "interpleader"? Impleader - Rule 14 third-party practice - where the defendant brings in another defendant where the original defendant is saying if I (the original defendant) am liable to the plaintiff, then this impleaded third-party defendant is liable to me (e.g., indemnification, contribution, joint liability, etc.). Intervention - Rule 24 - where an outside non-party wants to get into the lawsuit as a party aligned as either a plaintiff or defendant. The outside non-party is the one taking the initiative to get involved in the lawsuit as a party, unlike an impleaded third-party defendant who is involved due to the action of defendant. Interpleader - Rule 22 and §1335 statutory interpleader - where a defendant or potential defendant is about to, or actually gets, sued by two or more plaintiffs and is, or would be, subject to double or multiple liability. Interpleader allows the defendant, or potential defendant, to file an interpleader action in which that defendant, or potential defendant, becomes a "stakeholder" and the plaintiffs, or potential plaintiffs, become "claimants" all in one action instead of several separate actions. The idea is that if the stakeholder is liable, she should only be liable up to the amount of the "stake' - the property or fund in question that the various claimants want. The claimants would have to share the amount at stake, instead of one claimant suing first and getting all or nearly all the money simply because they sued first, before other competing claimants. 8. What is a "plurality" opinion and how is it different from a "concurring" opinion and how are both of those different from a "majority" opinion? Majority opinion: this opinion is the law (both result and reasoning), where more than 50% of the judges or justices sign onto the opinion. Concurring opinion: this opinion is also the law, but in the result only, the reasoning is different from the majority's opinion -- that is why there is a separate opinion (to explain how that concurring judge got to the same result using different reasoning). Plurality opinion: this opinion is where there is no numerical majority (no more than 50% of the judges or justices) but where there is the most agreement. For example, if there are five judges total, and two judges write an opinion, there is one concurrence and two separate dissents, the plurality opinion would be that of the two justices' reasoning (it would be a 2-1-1-1 opinion regarding result and reasoning). However, only the result would be the majority (three judges on that and two dissents). 9. Assume Defendant is domiciled in California. Explain how Justice Scalia, given his opinion in the Burnham case might differ from Justice Brennan, given his opinion in the Burnham case - (Burnham case: divorce, husband served in California). Scalia would say we do not need to consider the minimum contacts test because historically under Pennoyer domicile has always been a legitimate basis to find jurisdiction and has always been considered automatically "fair/constitutional." Therefore, there would be no need to do an International Shoe minimum contacts analysis (which was for out-of-state defendants, not instate defendants anyway) to see if it would be fair/constitutional. Brennan would say that after Shaffer v. Heitner, the minimum contacts test absorbed all of the traditional tests (no instate/out-of-state distinction), including domicile. However, domicile, by definition, would almost always satisfy the minimum contacts test (living in a state probably almost always satisfies minimum contacts). So just like in Burnham, Scalia and Brennan would find jurisdiction, but for very different reasons (hence, why there were two concurring opinions) - there was a majority only as to the result. 10. What is the difference between the "Rules of Decision Act" and the "Rules Enabling Act"? Which one would a federal judge be more likely to rule that it has been violated - why? The Rules of Decision Act "RDA" requires a federal court to apply state substantive law (state statutes as well as state common law) in federal court diversity cases. If there is a conflict between state and federal law, the RDA applies when the source of the conflicting federal law is federal common law or a federal practice. The Rules Enabling Act "REA," on the other hand, applies when the source of the conflicting federal law is a Federal Rule of Civil Procedure or federal statute. The RDA applies in the Erie, York, Byrd line of cases while the REA applies in the Hanna v. Plumer line. J END OF EXAM J COPY OF EXAM SCORE SHEET: EXAM NUMBER__________________ QUESTION "A." ISSUE POINTSRECEIVED POINTSPOSSIBLE I. Lack of Personal Jurisdiction - "Special Appearance."A. Jurisdictional/Long-Arm Statute1. Tom 3 2. D. Corp. 1 2. Minimum Contacts1. Tom a. Traditional Bases(1) Domicile 2 (2) Presence 2 b. Minimum Contacts - Domicile 2 c. Minimum Contacts - General Jurisdiction 2 d. Minimum Contacts - Specific Jurisdiction 1 e. Minimum Contacts - Purposeful Availment and Other Considerations 1 1. D. Corp.a. Traditional Bases(1) Domicile 1 (2) Presence 1 b. Minimum Contacts - Specific and General Jurisdiction 2 c. Minimum Contacts - Purposeful Availment and Other Considerations 2 II. Do Nothing - Then Use "Collateral Attack" Later if Necessary 1 III. No Lack of Subject-Matter Jurisdiction/Venue 1 IV. NoticeA. Statutory Test 1 B. Constitutional Test 1 V. DemurrerA. Gender Discrimination;B. Defamation 1 C. Breach of Contract - Sales Commissions 1 ADDITIONAL ISSUES 2 ORGANIZATION/OVERALL 2 "A"SUBTOTAL SCORE 30 QUESTION "B." ISSUE POINTSRECEIVED POINTSPOSSIBLE I. Indirectly - Removal and then Transfer Motions 2 A. Step One: §1441 Removal1. Timing - Removal 1 2. Subject-Matter Jurisdictiona. 1332 Diversity Jurisdiction(1) Citizenship(2) Amount in Controversy 2 b. 1331 Federal Question Jurisdiction 1 c. §1367 Supplemental Jurisdiction 2 B. Step Two: Transfer Statutes - If Oregon Is a Proper Venue 1. §1391 Venue 2 2. §§1404,1406 1631 Transfer 3 II. Directly - Joint Motion of the Parties 1 III. Directly - Forum Non Conveniens Motion 2 ADDITIONAL ISSUES 2 ORGANIZATION/OVERALL 2 "B"SUBTOTAL SCORE 20 QUESTION "C." ISSUE POINTSRECEIVED POINTSPOSSIBLE I. No Real Conflict Between State Law and Federal Law -- Erie. 2 A. Tom's Mistaken Notion of an Erie Conflict 2 1. Service Was Made While this Was Still a State Court Case 2 2. No Conflict - Federal Law Incorporates State Service Law 3 ADDITIONAL ISSUES 2 ORGANIZATION/OVERALL 1 "C"SUBTOTAL SCORE 12 QUESTION "D." ISSUE POINTSRECEIVED POINTSPOSSIBLE (1) Assume none of the claims are dismissed, could Tom legally counterclaim for $102,000 for his wrist injury? If so, would you advise him to do so? Rule 13(a) or (b): Rule Authorization 2 Rule 13(a) or (b): Subject-Matter Jurisdiction 2 Rule 13(a) or (b): Strategy 1 (2) As Tom and D. Corp.'s attorney, how would you argue to Pat and to her attorney that they should drop the case, or settle it only for a few dollars? 3 (3) Assume Pat generally would rather settle and get on with her life than go through a lawsuit. As Pat's attorney (now switching your role), what is the least amount you would advise Pat to accept in settlement of all of her claims, and explain why? 3 ADDITIONAL ISSUES 1 ORGANIZATION/OVERALL 1 "D"SUBTOTAL SCORE 13 PART TWO: SHORT ANSWERS ISSUE POINTSRECEIVED POINTSPOSSIBLE 1. How is Rule 11 a counterbalance to Rule 8? 2 2. A is correct. Res judicata/claim preclusion is inapplicable because A was not a party in P v. D lawsuit. 3 3. Is a Rule 57 declaratory judgment a "legal," "equitable," "substitutionary," or "compensatory" remedy . . . ? 2 4. The trial court ultimately should be REVERSED because the plaintiff failed to produce any evidence . However, it would be premature 3 5. Same case as #4, assume D does not appeal after the denial of the Rule 56 summary judgment motion. The trial goes forward. Not necessarily, This does not necessarily violate the concern for judicial economy if we take into account a possible appeal by P. 3 6. What is the policy reason behind the Rule 26(a) mandatory disclosure scheme regarding discovery 2 7. What is the difference between "impleader," "intervention," and "interpleader"? 3 8. What is a "plurality" opinion and how is it different from a "concurring" opinion and how are both of those different from a "majority" opinion? 2 9. Assume Defendant is domiciled in California. Explain how Justice Scalia, given his opinion in the Burnham case might differ from Justice Brennan, given his opinion in the Burnham case - (Burnham: divorce, husband served in California). 2 10. What is the difference between the "Rules of Decision Act" and the "Rules Enabling Act"? 3 "PART II"SUBTOTAL SCORE 25 TOTAL RAW SCORE POINTSRECEIVED POINTSPOSSIBLE PART I. SUBPART A. 30 SUBPART B. 20 SUBPART C. 12 SUBPART D. 13 PART II. 25 TOTAL RAW SCORE 100 |
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