Procedure for Examination Review. I will discuss exams individually with students, by appointment, beginning with the 3rd week of the Fall Semester. Review will commence after Tuesday, September 18, 2001. Exams and the Feedback Memorandum will be available for pickup from my secretary beginning on that date. Examination review will take place subject to the following procedure:
1) You must obtain and review a copy of my feedback memorandum, which will be available from my secretary and on my web page.
2) You must get your examination from my secretary and review it.
3) After you review the documents, you may schedule an appointment with me.
Students who received grades of C+ or lower will have priority in scheduling exam review.
Review Policy. Examination review is a good way to learn from your mistakes, and from your successes. I encourage you to review my feedback memo and your exam. I will be happy to sit down and discuss substantive matters with each student. I will first tell each of you what you did right. I will also gladly suggest ways to improve your exam-taking abilities.
No Grade Changes. I want to make one thing perfectly clear: I have never changed an exam grade. Barring mathematical errors, your grade is not going to be changed. Grading is a time-consuming and difficult process. The only fair way to do it is to grade in the context of each class. I look for a fair overall grade distribution and follow the rank of each student within the class in awarding the final grade.
General Instructions
Select the best answer to the question presented. In this section, Do not look for "perfect" answers, just the most correct one among those alternatives available to you, in light of the question presented. No explanations are required or allowed. Your answer will either be correct or incorrect, there will be no partial credit for incorrect answers. Circle the letter of your response.
Do not assume any facts not given to you. While you are expected to draw reasonable conclusions based on the facts given, you should not assume facts. In this section of the exam, "missing facts" suggest three possibilities: (1) you need to read the question again, i.e., "it's in there somewhere," (2) the fact is not necessary to the resolution of the question, or (3) I made a mistake and you may need to alert me to it (if you are convinced that this is what is going on, do not be afraid to ask the question).
Do not look for issues that are not relevant to answering the question. The question asked determines the issues raised, read it carefully and answer the question I asked, with the best possible response among the alternatives given.
Applicable Rules. Assume that the applicable rules of procedure are the Federal Rules of Civil Procedure.
Personal Jurisdiction. Assume that corporations are at the very least subject to general personal jurisdiction at their place of incorporation and at their principal place of business.
Long-arm statutes. You should assume that the applicable long-arm statutes have extended personal jurisdiction to the maximum extent allowed by the Due Process Clause of the Fourteenth Amendment.
1. Emeril Lagasse has filed a federal suit against Wolfgang Puck in the U.S. District Court for the Central District of California, Western Division. The complaint was filed on March 22, 2000, and Mr. Puck was served on March 23, 2000. On April 3, 2000, defendant Puck appeared in the case for the first time by filing his Answer to the complaint. He did not raise any Rule 12(b) defenses in the answer. On March 15, 2001, after the pleadings were closed and discovery had been completed in the case, Mr. Puck filed a motion to dismiss for failure to state a claim upon which relief can be granted. Mr. Puck presents no matters outside the pleadings in his motion. Consideration of the motion would in no way delay the trial, which is scheduled to take place on August 10, 2001. Should the Court consider this motion?
a. No, because the time to file a 12(b)(6) motion has expired.
b. Yes, because the court must treat it as a Rule 56 motion for summary judgment.
c. Yes, because the defense has not been waived and the court can consider this a proper motion for judgment on the pleadings.
d. No, because no matters outside the pleadings are raised, the motion is untimely.
Answer: C: Failure to state a claim upon relief can be granted is a 12(h)(2) defense that can be raised at any time up to and including during trial on the merits, therefore, it has not been waived. When raised after the closing of the pleadings, but before trial, it is considered a motion for judgment on the pleadings under Rule 12(c). A was incorrect because the defense is preserved by operation of 12(h)(2). D was incorrect because the party is not required to raise matters outside the pleadings on a motion for judgment on the pleadings for failure to state a claim upon which relief can be granted. Students might be bothered by this because it suggests undue delay, but 12(h)(2) does not impose that obligation, and 12(c) speaks of delaying trial, which this motion will not do, as per the fact-pattern. B was tempting but incorrect. The decisive word in the answer that made it wrong was "must"; because no matters outside the pleadings were raised, the court was not required to treat this as a summary judgment motion and was thus free to treat it as a motion for judgment on the pleadings. Also, the mere tendering of matters outside the pleadings does not change the 12(b)(6) or 12(c) motion to dismiss for failure to state a claim into a Summary Judgment motion automatically, only if the court does not exclude them, is the motion then converted into one for Summary Judgment.
2. Mr. Jamie Oliver suffers a severe attack of food-poisoning that he alleges was caused by the negligence of Federal Express, which mishandled a shipment raw oysters sent to this London home from Louisiana, U.S.A. Mr. Oliver is a citizen of the United Kingdom, who resides in London, U.K., and has never visited the United States. Federal Express is a Delaware corporation with its principal place of business in Nashville, Tennessee. Mr. Oliver files a federal suit against Fedex in the U.S. District Court for the Middle District of Tennessee, Nashville Division. He alleges damages caused by the illness, including medical costs, pain and suffering and loss of income because he was unable to perform in his weekly television program, "The Naked Chef." These are all legitimate claims under applicable British law. The damages claimed exceed, exclusive of costs and interest, $1,000,000.00. Can the federal court hear this action?
a. No, because Mr. Oliver does not raise a claim based on U.S. law.
b. No, because the court lacks personal jurisdiction over Fedex.
c. No, because Mr. Oliver is not a permanent resident alien.
d. Yes, because there is alienage jurisdiction under 28 U.S.C. § 1332.
Answer: D. An alien is suing a U.S. citizen and the claims exceed $75,000.00, hence, there is alienage jurisdiction under 28 USC § 1332(a)(2). A is incorrect because diversity and alienage jurisdiction are not limited to the application of U.S. law, as we discussed in relation to many cases, but especially the Helicol case. Remember as well our discussion of choice of law, lex loci delici and lex loci contractus, which often takes us to foreign law. B is incorrect, in addition to instructing you to assume that corporations are subject to general personal jurisdiction in the instructions, a corporation would certainly be subject to personal jurisdiction at its principal place of business. C was the red herring here, the last sentence of 1332(a) covers the special case of permanent resident aliens, and would deem them to be citizens of the state in which they are domiciled, but Mr. Oliver is a foreign citizen who resides in a foreign country. Additionally, it would be wildly incorrect to read this provision as permitting claims by foreign citizens only if they are permanent resident aliens. The purpose of the provision is to prevent aliens who are permanent resident aliens from suing U.S. citizens who reside in the state in which they have take up residence.
3. Ally McBeal, a citizen of Massachusetts, kicks Oren Koolie, a citizen of New York, when he is visiting her law office in Boston. She mistook him for "Mr. Huggy," an imaginary dancing baby. Unfortunately, Mr. Koolie is a very real, small person, who happens to be a lawyer. Naturally, Mr. Koolie sues Ms. McBeal in the U.S. District Court for the District of Massachusetts. Ms. McBeal is the only named defendant in the suit. In addition to Ms. McBeal and Mr. Koolie, there were two eyewitnesses to this incident, John Cage, a partner in the law offices Koolie was visiting, and Elaine Vassal, a secretary at that same firm. Lloyds of Cleveland Insurance Company provides insurance coverage to Ms. McBeal. Harry Smith, an agent for Lloyds, took statements from Mr. Cage and from Ms. Vassal. Mr. Smith wrote down what Ms. Vassal and Mr. Cage said and each of them, after reading their respective statement, signed the document. While Mr. Smith was taking down the statements, Mr. Koolie could be heard outside the door to the office that Smith was using screaming "I am going to sue you for every penny you've got, McBeal." Ms. Vassal and Mr. Cage request copies of their statements from the insurance company. Are Ms. Vassal and Mr. Cage entitled to obtain copies of their respective statements under the Federal Rules of Civil Procedure?
a. Yes.
b. No, because the statements were collected in anticipation of litigation and are clearly protected "work-product."
c. No, because Vassal and Cage are not parties to the case and therefore not entitled to discovery.
d. Yes, because the statements were not collected in anticipation of litigation and are not protected "work-product."
Answer: A, A gift, same result as last year, different people. Even though this is fairly clearly covered by the work-product doctrine, as reflected in Rule 26(b)(3), the second paragraph of that sub-section of the rule clearly indicates that any witness is entitled to a copy of their statement upon request. B is incorrect because although work-product probably applies the exemption in favor of witnesses supersedes it. C is incorrect, even though only parties are generally entitled to discovery, because of the express language of the second paragraph of 26(b)(3), which clearly allows non-party witnesses the right to examine their own statements. D is incorrect because of the express language allowing witnesses to get their statements, but it is also an incorrect characterization of the facts, which really point to work-product protection.
4. Jerry Seinfeld has sued Cosmo Cramer for the tort of assault and battery with weird hair. He claims over $750,000.00 in damages exclusive of costs and interest. He has filed the action in the US District Court for the Southern District of New York, where all the relevant acts occurred. He claims diversity jurisdiction because he is a citizen of New York, and Cosmo Cramer, for tax purposes, has chosen to retain his citizenship in Florida, where he lived before moving to New York, and where he still owns a home. Mr. Cramer has conceded that he is a citizen of Florida, therefore, he has sworn affidavits, for use in this case, indicating that he is in New York only temporarily and lacks an intention to stay there. Thus, Mr. Cramer is a citizen of Florida. Mr. Cramer has tendered to the court a Third Party Complaint impleading, for contribution only, his hair dresser, one George "Scissors" Costanza, a citizen of New York. The court has held that Mr. Seinfeld's complaint should proceed to trial, and that Mr. Costanza is not a "necessary" party as defined in Rule 19(a) because of the applicable New York joint and several liability statute; however, the court finds that, under the same statute, Mr. Costanza might be adjudged to owe contribution to Mr. Cramer, to the full extent of any judgment against him in favor of Mr. Seinfeld. Accordingly, the Court should:
a. Refuse to order the joinder of Mr. Costanza pursuant to Rule 19, and proceed with the case as filed.
b. Order the dismissal of the case pursuant to Rule 19(b), because the joinder is not feasible.
c. Grant leave to file the third-party complaint, under Rule 14(a)[3], and allow Mr. Cramer to sue Mr. Costanza under Rule 14(a)[1], for contribution only; subject-matter jurisdiction over this claim can properly be based on 28 U.S.C § 1332.
d. Grant leave to file the third-party complaint, under Rule 14(a)[3], and allow Mr. Cramer to sue Mr. Costanza under Rule 14(a)[1], for contribution only; subject-matter jurisdiction over this claim can properly be based on 28 U.S.C. § 1367.
Answer: C. The court has found that a contribution claim can properly be pleaded by Mr. Cramer against Mr. Costanza under the applicable New York law to the full extent of the original claim for $750,000.00. Thus, you have a proper 14(a)[1] contribution claim, and the leave required by 14(a)[3] should be granted. Since the claim is for full contribution for a $750,000.00 claim, it exceeds the diversity jurisdictional amount. Furthermore, Mr. Costanza is a citizen of New York and Mr. Cramer a citizen of Florida, therefore, there is diversity and the proper basis of subject-matter jurisdiction is § 1332, which makes D incorrect, since supplemental jurisdiction is only available (or really necessary) if there is a defect in original subject-matter jurisdiction. A and B are Rule 19 scenarios, not applicable to impleader, which is governed by Rule 14. Joinder of Costanza as a co-defendant by Mr. Seinfeld would in fact not be feasible because both parties are citizens of New York, but, the court has held that he is not a necessary party, meaning that his joinder is not compulsory under Rule19, even if a motion to that effect was before the court, but the question is about Rule 14(a) impleader, not Rule 19 compulsory joinder.
One person picked "B", but 38 students picked "A" which was really astonishing, since there is no Rule 19 (or really 12(b)(7)) motion before the court. The fact-pattern has evolved to now be a Rule 14 impleader question because of the tendering of the Third-Party Complaint and absence of references to a motion to dismiss for failure to join an indispensable Party (FRCP 12(b)(7) and 19). The original claim presents a substantial question of law and deserves to get to the jury, thus, Cramer cannot get rid of Seinfeld by Motion to Dismiss, Motion for Judgment on the Pleadings or Summary Judgment. The parties to the third-party complaint are diverse, Florida and New York, and the claims clearly exceeds the $75,000 since the court has found that Mr. Costanza can be held liable to the full extent of the original claim of $750,000.00.
Do not assume any facts not given to you. While you are expected to draw reasonable conclusions from the facts given, you should not assume facts. In this section of the exam, "missing facts" suggest three possibilities: (1) you need to read the question again, i.e., "it's in there somewhere," (2) I made a mistake and you may need to alert me to it (if you are convinced that this is what is going on, do not be afraid to ask the question), or (3) you need to indicate that you need to establish certain facts in order to provide a complete opinion. In this section of the exam, identifying missing facts that are necessary to a complete resolution of the issue may be precisely what you need to do in order to provide a proper response.
Do not look for issues that are not relevant to answering the question. The question asked determines the issues raised, read it carefully and answer the question I asked. Civil procedure is a broad and complex course, I have crafted the questions narrowly, do not waste your time covering issues that the question does not require you to resolve. No credit will be awarded for discussion of matters not relevant to the resolution of the question.
Citations. Since this is an open-rule exam, citation should be made to the appropriate rule, especially the Federal Rules of Civil Procedure, section of title 28, Constitutional Provision, etc. Case citations will be judged on a "close-enough" basis.
Residence and Citizenship are NOT interchangeable terms in this exam.
Michelle Goodwin, a citizen of Iowa, was seriously injured in an automobile accident that she alleges was caused by the negligence of George Miller, a citizen of Illinois who resides in the county of Winnebago in that state. The accident occurred in the city of Des Moines, Iowa.
Ms. Goodwin is the divorced mother of two children, Ana Johnson, age 14, and Douglas Johnson, Jr., age 12. She has joint custody of the children and can thus act as their legal representative, but they reside with their father in Illinois and are citizens of that state as is their father, Douglas Johnson, Sr. At the time of the accident, the children were visiting their mother for the weekend and were also victims of this accident and suffered serious injuries as a result thereof.
Mr. Miller is an employee of AKA Gourmet, a corporation that sells gift baskets via the internet. Mr. Miller delivers AKA Gourmet gift baskets in the state of Iowa only; he picks up the baskets at airports within the state of Iowa. AKA Gourmet is a Delaware corporation with its principal place of business in California. AKA Gourmet's only offices and facilities in California are located in Sonoma county.
Mr. Miller has an automobile insurance policy from the Prudential Insurance Company. The policy covers both personal and work use of his vehicle. Prudential is a Connecticut corporation with its principal place of business in Pennsylvania. All of Prudential's offices in Pennsylvania are located within the city and county of Philadelphia in that state.
You may assume that corporations would be subject to general personal jurisdiction in their state of incorporation and at their principal place of business. A corporation would also be subject to specific personal jurisdiction in any state in which an employee of the corporation would be subject to personal jurisdiction on the basis of acts that were performed within the scope of their corporate employment. An insurance company will be subject to specific personal jurisdiction in any state where its insured would be subject to personal jurisdiction. Assume that general and specific personal jurisdiction over corporations are treated equally for federal venue purposes.
Assume that there are no compulsory parties in this scenario.
Assume that claims arising out of the accident pursued by any potential plaintiff exceed, as to each plaintiff and each defendant, $75,000.00 exclusive of costs and interest.
The so-called Iowa long-arm statute is in Rule 56.2 of the Iowa Rules of Civil Procedure, which, in pertinent part, reads as follows:
56.2. Alternate method of service.
Every corporation, individual, personal representative, partnership or association that shall have the necessary minimum contact with the state of Iowa shall be subject to the jurisdiction of the courts of this state, and the courts of this state shall hold such corporation, individual, personal representative, partnership or association amenable to suit in Iowa in every case not contrary to the provisions of the Constitution of the United States.
***
Based on the facts described above, and taking into account any modifications made by the question, answer the following questions by writing your answer in the space provided. In references to statutory provisions, you must identify the specific sub-section that applies. In references to the Federal Rules of Civil Procedure, you must identify any specific subsections, as precisely as they were identified in class.
Questions one (1), two (2), three (3), four (4), and seven (7), will each account for 4% of the exam grade. Questions five (5) and six (6) will each account for 8% of the exam grade.
The Answers in General.
In the initial questions in which no explanation was required, just identifying the District(s) and pertinent provisions of title 28, was enough, and less was definitely more. Explanations were not required, but if one was offered and it was wrong, that cost points. The most common errors were references to section 1332(c)(1) equating citizenship and residence, which were not interchangeable terms in this exam, as per the instructions, because you were given the facts needed to establish the residence of the corporations. Additionally, and this is a repeated mistake that I warn about in feedback memos, using 1391(c) as a source of venue is incorrect; 1391(a)(1) (and (b)(1)) are the source of venue, 1391(c) is the definition of corporate residence.
Identifying the district was all that the question required, but it also required precision in citation. Therefore, while I was not looking for precision in identifying the Division within the District, I was looking for precision in the citation to title 28. Here, students who mentioned the right division, but provided the wrong numerical citation received partial credit on the citation points. A couple of examples of why this was important: Winnebago county in Illinois is in the Northern District of Illinois, Western Division, 28 USC § 93(a)(2), is not to be confused with Winnebago county in Iowa's Northern District, Central Division, 28 USC § 95(a)(4). The city of Des Moines, the seat of, i.e., where court is held for, the Central Division in the Southern District of Iowa, 28 USC § 95(b)(1), is not to be confused with the county of Des Moines in the Southern District of Iowa, Eastern Division, 28 USC § 95(b)(2). There were quite a few errors on the city vs. county of Des Moines. Only one student referred to Winnebago County Iowa rather than to Winnebago county, Illinois. As you have seen in my old exams, and as I repeatedly demonstrated in class, the cities are picked not because I expect you to carry a U.S. county map to the exam, but rather because they are District seats specifically mentioned in the pertinent statute.
1. Ms. Goodwin, as the sole plaintiff, files a federal suit to pursue claims arising out of the accident, using section 1332 as the only basis of subject-matter jurisdiction. She names Mr. Miller, AKA Gourmet, Inc., and Prudential Insurance Co., as defendants. In which district(s) of the U.S. courts would venue be appropriate for this action? Identify the pertinent provision(s) of the venue statute and any other applicable provision(s) from title 28. [Seven Lines to Answer]
Answer: Only in the Southern District of Iowa. 28 USC § 95(b)(1), pursuant to 1391(a)(2).
Maybe add: 1391(a)(1) and 1391(c) [to establish that all defendants do not reside in the same district. But this was risky, as indicated below].
Explanation:
As to all defendants, only in the Southern District of Iowa, 95(b)(1) (Central Division, City of DeMoines is where court for the central division is held) NOT 95(b)(2) (Eastern Division, County of DeMoines), based on the occurrence of the accident "the only really identifiable "substantial part of the events or omissions giving rise to the claim" pursuant to 1391(a)(2).
RED HERRINGS: What was left out of this answer was as important as what was put in. The problem is that all defendants do not reside in the same State. If students stated that and made reference to 1391(a)(1) and then to 1391(c), this was good, but references to 1391(c) alone were not enough. It was designed to catch the true understanding of section 1391(a)(1) and 1391(c). Misunderstanding section 1391(a)(1) or misconstruing the facts, would produce a series of erroneous answers based on the "residence" of the defendants. Initially, as detailed in the next paragraph, only districts in a state in which all defendants reside would be appropriate under 1391(a)(1). Here there were only two possibilities, districts in the States of Iowa, and districts in the State of Illinois. The State of Iowa, and more specifically the Southern District of Iowa, would have been tempting, both corporations can reasonably deemed to "reside" there based on the facts and instructions. But the individual, Mr. Miller, is not an Iowa resident, he is a resident of Illinois only. Which brings me to Illinois, and to the Northern District of Illinois, 93(a)(2) (Central Division), based on the residence of Miller, which is also then deemed to be the residence of Prudential, for auto accident claims that might be covered by the policy (specific jurisdiction). But, AKA would not be deemed to reside in Illinois under the fact-pattern, because it would be subject to specific personal jurisdiction in the state where its employee, Miller, would be subject to personal jurisdiction based on acts within corporate employment, which under the facts can only be in Iowa, i.e., where the accident occurred, particularly since Mr. Miller only performs his job in Iowa, according to the fact-pattern. Under the fact-pattern, Mr. Miller can be subject to general personal jurisdiction in Illinois, and to specific personal jurisdiction for accident claims in Iowa.
Also, let me repeat what I stated in the memo for the 2000 exam: CUTE, BUT NO. What About the District of Delaware, or the Northern District of California, or the Eastern District of Pennsylvania or the District of Connecticut, i.e., the districts in which the corporations are deemed to reside under 1391(c) because they are subject to personal jurisdiction there under the fact-pattern? Even if the defendants had one state in common, those districts would not be proper venues for this action. "Plaintiffs aver a novel argument in support of the applicability of 28 U.S.C. § 1391(a)(1) to the present case. Plaintiffs claim that an investigation has revealed that defendant Sunrise is also a resident of South Carolina. See 28 U.S.C. § 1391(c). Assuming this is true, plaintiffs argue that because Sunrise and Timms both "reside in the same State [i.e. South Carolina]," the Southern District of New York, "a judicial district where [at least one] defendant resides," constitutes a proper venue. Plaintiffs' reading is an interesting argument, but an unfair one. 28 U.S.C. § 1392(a) clarifies any ambiguity. It provides that "any civil action, not of a local nature, against defendants residing in different districts in the same State, may be brought in any of such districts." Id. (emphasis added); 15 Charles A. Wright et al., Federal Practice and Procedure § 3807 (Supp. 1995) (explaining that section 1392(a) became superfluous upon the enactment of section 1391(a)(1)). Accordingly, section 1391(a)(1) applies only when the multiple defendants are residents of the same multi-district state and suit is brought in a judicial district of that common State. Gerety, et al., v. Sunrise Express, Inc., 1996 U.S. Dist. LEXIS 378 (Southern District of New York).
2. Ms. Goodwin, as the only plaintiff, files a federal suit to pursue claims arising out of the accident, using section 1332 as the only basis of subject-matter jurisdiction. She names Mr. Miller as the only defendant. In which district(s) of the U.S. courts would venue be appropriate for this action? Identify the pertinent provision(s) of the venue statute and any other applicable provision(s) from title 28. [Seven (7) lines to answer].
Answer: The Northern District of Illinois, 28 USC § 93(a)(2), pursuant to1391(a)(1). AND The Southern District of Iowa, 28 USC § 95(b)(1), pursuant to 1391(a)(2).
Explanation: The Northern District of Illinois, 28 USC § 93(a)(2) (Winnebago County is listed in the Western Division; not to be confused with Winnebago county in Iowa's Northern District, Central Division, 28 USC § 93(a)(4)), because the only defendant resides there, 1391(a)(1). OR
The Southern District of Iowa, 95(b)(1) (Central Division, City of DeMoines) NOT 95(b)(2) (Eastern Division, County of DeMoines), based on the occurrence of the accident 'the only really identifiable "substantial part of the events or omissions giving rise to the claim"' pursuant to 1391(a)(2).
3. Ms. Goodwin, as plaintiff in her personal capacity and in her capacity as the legal representative of her minor children, files a federal suit to pursue claims arising out of the accident, using section 1332 as the only basis of subject-matter jurisdiction. She names AKA Gourmet, Inc., as the sole defendant, alleging that Mr. Miller was acting within the scope of his employment. In which district(s) of the U.S. courts would venue be appropriate for this action? Identify the pertinent provision(s) of the venue statute and any other applicable provision(s) from title 28. [Seven (7) lines to answer].
Answer: The Southern District of Iowa. 28 USC § 95(b)(1) pursuant to 1391(a)(2). The District of Delaware, § 87, Northern District of California, § 84(a), Southern District of Iowa, § 95(b)(1). Pursuant to 1391(a)(1) (establishing venue at defendant's residence) & 1391(c) (defining corporate defendant's residence).
Explanation:
The Southern District of Iowa, 95(b)(1) (Central Division, City of Des Moines) NOT 95(b)(2) (Eastern Division, County of Des Moines), based on the occurrence of the accident --the only really identifiable "substantial part of the events or omissions giving rise tothe claim"-- pursuant to 1391(a)(2).
Pursuant to 1391(a)(1), venue would also be appropriate at the place(s) of "residence" of the corporation. 1391(c) defines corporate "residence" "a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. In a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State." I harshly punished any incorrect descriptions of what 1391(c) does. 1391(c) does not provide venue. 1391(a)(1) provides venue based on the residence of the defendant, and 1391(c) defines the residence of corporate defendants.
This is one example where less in the answer would have been more. That would be the because the most significant acts, the accident, occurred there as per the instructions, and the corporation was thus subject to specific personal jurisdiction there (remember as well that you were instructed that no distinction was made between general and specific jurisdiction for venue purposes); the district of Delaware, § 87, their place of incorporation, and the Northern District of California, § 84(a) (since all their operations are in Sonoma county), because you were instructed to assume that the corporation was subject to personal jurisdiction at its place of incorporation and principal place of business; references to 1332(c)(1) were thus incorrect, particularly since you were specifically instructed that residence and citizenship were not treated equally in this exam. Finally, some references were made that 1391(c) would make any district in a state the proper venue. This is of course incorrect. 1391(c) expressly requires you to pick one district in a multi-district state. I did however award partial credit for identifying the issue about personal jurisdiction over AKA in Iowa based on Miller's acts there. Note as well that Illinois would not be a place where AKA would have been subject to personal jurisdiction because Miller performed his corporate work only in Iowa.
For reasons that were mystifying to me, some persons concluded that there was a conflict between an imaginary AKA Illinois citizenship and the represented plaintiffs' Illinois citizenship that destroyed diversity. AKA is a citizen of Delaware (Inc.) and California (PPB), that is it under the facts, 1332 does not provide for corporate employee citizenship.
4. Ms. Goodwin, as the sole plaintiff, files a federal suit in an appropriate U.S. District Court in Iowa to pursue claims arising out of the accident, using section 1332 as the only basis of subject-matter jurisdiction. She names Mr. Miller as the only defendant. Assuming that Mr. Miller was not personally served with process while physically present within the state of Iowa, and setting aside constitutional concerns, what would be the basis for the exercise of personal jurisdiction over Mr. Miller? Why? [Seven (7) lines to answer].
Answer: FRCP 4(k)(1)(A) requires federal district courts to follow the law of the state in which they sit to determine the territorial limits for service of process to establish personal jurisdiction over the defendant. Mr. Miller is a non-resident defendant who has not been personally served within Iowa, and there is no evidence of voluntary appearance, therefore, Iowa Rule of Civil Procedure 56.2 is the applicable Iowa law for effecting the required substituted service on a non-resident defendant. Therefore, FRCP 4(k)(1)(A), the Iowa statute, the occurrence of the accident and Mr. Miller's other regular activities in and contacts with Iowa, would constitute the basis for the exercise of Personal jurisdiction over non-resident Mr. Miller in a Federal District Court in the State of Iowa. [Explanations are included in the answer because here, unlike previous questions, you were asked to explain why.]
Note that FRCP 4(k)(1)(B) does not apply because Mr. Miller was not made a party pursuant to Rule 19 or 14. Rule 4(e) is about manner of service, not about territoriality and personal jurisdiction, which are covered by 4(k).
5. Ms. Goodwin, as plaintiff in her personal capacity and in her capacity as the legal representative of her minor children, files a federal action in a U.S. District Court in Iowa that would be a proper venue for her suit, to pursue claims arising out of the accident, using section 1332 as the only pleaded basis of subject-matter jurisdiction. She names Prudential Insurance Co., as the only defendant. Does the court have subject-matter jurisdiction over the claims in this action? Explain your answer and identify the citizenship of each party and the pertinent provision(s) of title 28. [Nineteen (19) lines to answer].
Answer: No, absent severance, the court would lack subject-matter jurisdiction over the action as filed because there is a lack of complete diversity as required by Strawbridge v. Curtiss in interpreting section 1332. Ms. Goodwin in her personal capacity is a Citizen of Iowa, as you are instructed; in her representative capacity on behalf of the minors, under 1332(c)(2)[b], she is a citizen of Illinois, the citizenship of the children. So you have one plaintiff from Iowa and two from Illinois. Because this is a direct action against an insurer to which the insured has not been joined, Prudential, under 1332(c)(1)[i-3] is a citizen of Pennsylvania (PPB) and Connecticut (Inc., 1332(c)(1)[i-2]), and of Illinois because the insured, Miller, is a citizen of Illinois (1332(c)(1)[i-1].
Notes:
Identifying the applicability of the direct action provision, and the facts that made it applicable was important. Accordingly, I was relatively strict about requiring citations to be precise, in accordance with the annotated version of section 1332 that is in the web materials and which I repeatedly used, though I gave partial credit for more idiosyncratic citations. Additionally, you had to be careful in references to Ms. Goodwin as Plaintiff in her own right, and as representative of her children. As indicated in Palmer v. Hospital Authority, each plaintiff is treated individually. You have three plaintiffs here, one from Iowa and two from Illinois. No citizenship is shared by them. On the other hand the defendant Prudential is one defendant with three different citizenships. One student mused that picking a different representative would solve the problem. This is puzzling since the citizenship of the representative is irrelevant, just the citizenship of the represented is considered under 1332(c)(2)[b].
The complete diversity rule would prevent you from reaching 1367. Though some interesting scenarios might have occurred if the children had appeared in an amended complaint after Ms. Goodwin sued all three defendants in her original complaint. This is why the joinder question was limited to the facts of question six (6)!
Also, references to the venue statute in this section cost students points, especially when a party was identified as being a citizen of anything other than a State, e.g., one is not a citizen of Winnebago county, Illinois, one is a citizen of Illinois; one is not a citizen of Sonoma county, California, one is a citizen of California.
6. Ms. Goodwin, as the sole plaintiff, files a federal action in a U.S. District Court in Iowa that would be a proper venue for her suit, to pursue claims arising out of the accident, using section 1332 as the only pleaded basis of subject-matter jurisdiction. She names Mr. Miller, AKA Gourmet, Inc. and Prudential Insurance Co., as defendants. She also includes in her complaint a claim, against AKA Gourmet only, for $300.00 for a fruit basket that she ordered which was delivered so late that all the fruit had spoiled. Does the court have subject-matter jurisdiction over the claims in this action? Explain your answer and identify the citizenship of each party and the pertinent provision(s) of title 28. [Seventeen (17) lines to answer].
Answer: Yes. Ms. Goodwin, you are instructed, is a citizen of Iowa. Mr. Miller is a citizen of Illinois as per the instructions as well. The corporations, under 1332(c)(1)[a] and [b] (since Mr. Miller is a party, the "i" subsections did not come into play), are citizens as follows: AKA, of California (PPB), Delaware (Inc.); Prudential, Pennsylvania (PPB) and Connecticut (Inc.). The parties are completely diverse. The claims arising out of the accident exceed the 1332(a) jurisdictional amount as to each defendant, you are instructed. Additionally, because she is diverse with AKA, Ms. Goodwin may join her $300.00 claim by aggregating it for 1332(a) purposes with her accident claims against AKA to exceed $75K. You have to be careful to note that Rule 18(a) allows joinder but NOT aggregation; aggregation is allowed for claims joined under Rule 18(a) because of the interpretation of the jurisdictional amount provision of section 1332(a).
Note that in this one and the previous question I took off points when students started to talk about individual citizenship being made up of physical domicile and intent to remain. You were given as a fact the citizenship of the individuals who were potential parties, nothing more was required or allowed.
Additionally, 1367(a) would not come into play because you have no commonality information and because aggregation is a rule interpreting section 1332.
7. Can all the claims being pursued in the action described in question number six (6) properly be joined in one action under the Federal Rules of Civil Procedure? Explain and identify the applicable rule(s). [Seven (7) lines to answer].
Answer: Yes. As to accident claims, Ms. Goodwin can pursue claims against multiple defendants pursuant to Rule 20(a) FRCP, the accident constituting "the same transaction or occurrence or series of transactions or occurrences". As to each defendant, Ms. Goodwin can pursue multiple claims arising out of the accident against each defendant, pursuant to Rule 18(a), which requires no commonality other than the same plaintiff vs. the same defendant. As to the $300.00, she can pursue that claim against AKA pursuant to Rule 18(a), as just explained.
Note that this was a joinder of claims question, so references to other rules were a waste of time and space, though I did not take points off unless the references were clearly incorrect applications of the rule (e.g., references to Rule 19 or Rule 13 to apply to Ms. Goodwin's claims --someone called Ms. Goodwin's $300.00 AKA Gourmet basket claim a permissive counterclaim under Rule 13(b), which was just scary).
Extra Space: You may use this space to supplement any answer in this section. [This section gave fourteen (14) extra lines].
I was very pleased by the use of this space. It was helpful to students with large handwriting and to students who felt that they had to start over on some answers or that they had to add something particularly important to elaborate on one or more the answers.
After law school graduation, you have been hired as a law clerk by the Honorable Joel Dubina, a judge on the United States Court of Appeals for the 11th Circuit. The judge has given you the file in the case of Lloyds of London v. Weisberg, with instructions to draft a reasoned opinion for his signature ruling that a Florida Statute allowing the court to award attorney's fees to the prevailing party in insurance contract litigation is applicable in Federal Courts sitting in maritime jurisdiction. The judge summarizes the case and the law for you as follows:
Appellant, Mark Weisberg ("Weisberg" or "Appellant"), entered into a marine insurance contract with Appellee, Underwriters at Lloyds, London ("Lloyds"), to insure Appellant's 32 foot motor vessel named "After Hours." The policy provided hull and machinery coverage for $50,000, beginning on September 27, 1996, and extending for a one-year period. Underwriters issued the policy pursuant to Florida's Surplus Lines Law and delivered it to Weisberg's residence in Miami, Florida.
On November 16, 1996, the After Hours sank as a result of heavy winds and storm surge. Appellant made a claim for constructive total loss of the After Hours within four days of the sinking. After conducting an investigation, Lloyds filed a declaratory judgment action in the United States District Court for the Southern District of Florida seeking to have the contract deemed void ab initio due to alleged misrepresentations by Appellant in his application for insurance. Lloyds invoked the district court's admiralty jurisdiction pursuant to 28 U.S.C. § 1333. Appellant filed a counter-claim against Lloyds for breach of contract.
In his Answer and Counterclaim, Appellant demanded attorney's fees pursuant to Fla. Stat. § 627.428. The district court struck Appellant's demand for attorney's fees, finding that "any Florida law awarding attorney's fees to a prevailing party in the absence of bad faith clearly conflicts with federal law and cannot be applied."
After the district court denied Lloyds' summary judgment motion, the Parties agreed to settle Appellant's claim for the full contractual value of Appellant's loss, plus costs and interest. In the settlement agreement, Appellant specifically reserved the right to appeal the district court's order striking the demand for attorney's fees and reserved the right to seek attorney's fees. After the district court entered judgment in favor of Appellant on the counter-claim, Appellant filed a timely appeal on the issue of attorney's fees. Because this is a matter of law, the review of the District Court's decision is de novo, meaning that the Court of Appeals must make its own determination about the Erie questions.
Fla. Stat. § 627.428 provides:
(1) Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured's or beneficiary's attorney prosecuting the suit in which the recovery is had.
The Florida state courts have viewed Fla. Stat. § 627.428 as substantive law. See Bitterman v. Bitterman, 714 So. 2d 356, 363 (Fla.1998) ("The ability to collect attorney's fees from an opposing party, as well as the obligation to pay such fees, is substantive in nature."); L. Ross, Inc. v. R.W. Roberts Constr. Co., Inc., 481 So. 2d 484, 485 (Fla.1986) ("The right to attorney fees is a substantive one ....").
Lloyds contends that Fla. Stat. § 627.428 is procedural law, and thus, a federal court sitting in admiralty cannot apply it. See Gasperini v. Center for Humanities, Inc., 518 U.S. 415, 427, 116 S. Ct. 2211, 135 L. Ed. 2d 659 (1996) ("Under the Erie doctrine, federal courts sitting in diversity apply state substantive law and federal procedural law."). Appellant argues that the district court erred in holding that a practice applicable in federal maritime law cases existed on the issue of attorney's fees, thereby preempting the application of Fla. Stat. § 627.428.
Federal courts have long considered actions involving marine insurance policies to be within the admiralty jurisdiction of the federal courts and governed by federal maritime law. See Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 321, 75 S. Ct. 368, 99 L. Ed. 337 (1955); New England Mut. Marine Ins. Co. v. Dunham, 78 U.S. (11 Wall.) 1, 33-34, 20 L. Ed. 90 (1870); Morewitz v. West of England Ship Owners Mut. Protection & Indem. Ass'n, 896 F.2d 495, 498-99 (11th Cir.1990); Morrison Grain Co., Inc. v. Utica Mut. Ins. Co., 632 F.2d 424, 428 n. 4 (5th Cir.1980). However, marine insurance contracts do not fall under the exclusive grant of admiralty jurisdiction to the federal courts, rather, they constitute an exception to section 1333 of Title 28. Marine insurance contract litigants are therefore permitted to choose between the concurrent federal and state jurisdiction over litigation of marine insurance contracts. Additionally, state law is never completely preempted even in admiralty cases within the exclusive jurisdiction of the federal courts. "[W]hen neither statutory nor judicially created maritime principles provide an answer to a specific legal question, courts may apply state law provided that the application of state law does not frustrate national interests in having uniformity in admiralty law." Coastal Fuels Mktg., Inc. v. Florida Express Shipping Co., Inc., 207 F.3d 1247, 1251 (11th Cir.2000); see also Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 222-23, 106 S. Ct. 2485, 91 L. Ed. 2d 174 (1986) (the extent to which state law may be used to resolve maritime disputes is governed by the Erie doctrine); Steelmet, Inc. v. Caribe Towing Corp., 779 F.2d 1485, 1488 (11th Cir.1986) ("One must identify the state law involved and determine whether there is an admiralty [or any other federal] principle with which the state law conflicts, and, if there is no such principle, consideration must be given to whether such [a] rule should be fashioned.").
The parties in this case differ as to whether an applicable federal principle governs the question at issue.
Lloyds argues that there exists a well-established maritime law practice of prohibiting any award of attorney's fees in an admiralty action absent a contract provision, a federal statute, or bad faith in the litigation process. See Coastal Fuels, 207 F.3d at 1250; Noritake Co., Inc. v. M/V Hellenic Champion, 627 F.2d 724, 730 n. 5 (5th Cir.1980). Because Fla. Stat. § 627.428 allows an insured to collect attorney's fees based solely on whether he prevailed, Lloyds asserts that § 627.428 conflicts with established maritime law and with general federal procedural practices.
Appellant agrees that, in general, attorney's fees are not recoverable in federal actions. However, he contends that this general rule does not apply in the context of this marine insurance contract action because the Federal Court must apply the Florida statute. The Supreme Court has held that in the absence of a specific and controlling federal rule, the interpretation or construction of a marine insurance contract is to be determined by state law. See Wilburn Boat, 348 U.S. at 321, 75 S. Ct. 368 ("We, like Congress, leave the regulation of marine insurance where it has been--with the States."); see also Steelmet, 842 F.2d at 1244 n. 9 ("Admiralty courts will generally look to appropriate state law in determining questions involving a marine insurance contract.") (quoting Gulf Tampa Drydock Co. v. Great Atlantic Ins. Co., 757 F.2d 1172, 1174 (11th Cir.1985)).
But the court must further determine whether there exists an established federal policy addressing the specific issue of whether attorney's fees lie in the context of marine insurance contract disputes. Because the matter is not expressly covered in federal maritime legislation or rules, the court must determine if there is federal maritime common law on point.
Two other courts of appeal have addressed this issue and have reached opposite results from each other. In INA of Texas v. Richard, 800 F.2d 1379 (5th Cir. 1986), the Fifth Circuit held that "there is no specific and controlling federal rule of law relating to attorney's fees in maritime insurance litigation." Id. at 1381. To the contrary, the court concluded that the Fifth Circuit has consistently found state law to govern the issue of whether or not attorney's fees lie in the context of a marine insurance contract dispute. See id. In contrast, the Second Circuit, in American National Fire Insurance Co. v. Kenealy, 72 F.3d 264 (2nd Cir. 1995), held that there exists an established federal practice applicable in maritime law cases that prohibits attorney's fees in marine insurance contract disputes. See id. at 270. (Assume that 5th and 2nd Circuit decisions are not binding on the 11th Circuit, they carry only persuasive authority). The Kenealy court concluded that the Second Circuit in Ingersoll Milling Machine Co. v. M/V Bodena, 829 F.2d 293 (2d Cir.1987), held that the general prohibition on attorney's fees in admiralty suits applies in a suit over a marine insurance contract. See 72 F.3d at 270. Next, the Kenealy court rejected the Richard decision by noting that the First and Third Circuits, writing after Ingersoll, reached the same conclusion as Ingersoll.
Lloyds argues that this court should reject the Fifth Circuit's decisions and follow the decision in Kenealy as signifying the emergence of an established federal practice in maritime cases. Lloyds further agues that § 627.428 also conflicts with the general federal policy of not awarding attorney's fees in litigation in the U.S. courts that is reflected in Rule 54(d) of the Federal Rules of Civil Procedure.
Judge Dubina and the other two members of the panel have agreed that they will hold that the district court must award attorney's fees pursuant to Fla. Stat. § 627.428 against an insurer, even in a maritime insurance contract case. Judge Dubina and his colleagues are not unmindful of the federal interests discussed above, but they simply do not believe that these principles, and any rules derived thereunder, need to displace the Florida law on awarding attorney's fees at issue here. Accordingly, draft the opinion to reverse the district court's judgment and remand this case for further proceedings consistent with the opinion.
In addition to the information described above, in drafting the proposed opinion, you must consider the U.S. Constitution, Erie and its progeny, the Rules Enabling Act (28 USC § 2072), the Rules of Decision Act (28 USC § 1652), our class discussion, and your sound judgment.
Unless otherwise expressly indicated, assume only that the Federal Rules of Civil Procedure apply in this situation. Accordingly, you must ignore the Supplemental Rules for certain Admiralty and Maritime claims.
Modified from All Underwriters v. Weisberg, 222 F.3d 1309 (11th Cir. 2000). The facts were slightly modified, arguments and legal rules and parentheticals were modified to fit the question. Legal rules in the real world outside the Civil Procedure course may vary. In other words, don't try this at home!
GENERAL COMMENTS
Most students wrote 4 or five pages. The shortest answer was two pages, the longest 11 pages.
This was a tough essay question with a lot of information, but it also offered a good opportunity to discuss the issues, which is how I crafted it.
I was puzzled by many incorrect references to the Rules Enabling Act, particularly to part B. You are avoiding a conflict in order to avoid reaching 2072(b) and thus Hanna's "rationally classifiable as procedure" ergo "procedure" part and its "incidental" effect on rights. I was also surprised that very few students even remembered our discussion regarding attorneys fees related to the Venegas case and the "American" rule and Rule 54(d)(1). I was disappointed that only a few students recognized the obvious relevance of Venegas v. Mitchell to crafting a good answer. Venegas discussed the general American Rule and then engaged in detailed policy analysis of fee-shifting statutes. Arguments about the policies behind the Florida law could easily have come from references to Venegas.
I was also puzzled by many incorrect references to party alignment. Many students referred to the insured as the plaintiff, even though he was the defendant-appellant. It would have been better to talk about insured (Weisberg) and insurer (Lloyds), this fit better into the categories of people about whom you had to be concerned when it came to bad forum shopping, insurers (out of state or in-state) and Florida insureds, or insureds covered by contracts subject to Florida law, for whom the availability of the Federal forum as an alternative should not change the applicable law.
Finally, many answers read like transcripts of outlines without any reference to the facts, or with only token references inserted at the end. These answers scored very poorly. Boilerplate answers were not really responsive, answers had to be customized to fit the fact-pattern.
Using my traditional structure, here is an annotated outline of the answer. Given the result that you were instructed to reach and to justify, the structure of analysis should come from the Walker v. ARMCO steel case. More fleshing out could come from Erie and its progeny of course, but the majority opinion in Gasperini would provide very good guidance for a more complete answer.
ABSTRACT OF THE ANSWER ACCORDING TO WALKER:
I have inserted here the annotated sections of the discussion in Walker v. ARMCO Steel Corp. opinion from your casebook, which, as we discussed in class, includes the blueprint for constructing an opinion like the one required by my question. I will modify it to fit the facts of the question, to provide you an idea of what a correct part of the answer would look like. After this, I elaborate on the areas that could have been discussed in detail.
Introduction: What is the Erie doctrine and why does it apply to this maritime situation?
[[I. Possible Conflict] (1) The general "American Rule" that provides that prevailing parties in federal litigation are not entitled to attorneys fees among reimbursable cots; (2) reflected in Rule 54(d)(1) and 28 USC § 1928; (3) a general maritime common law rule that costs are not recoverable in maritime cases generally; and (4) in federal maritime insurance contract litigation more generally]
[II. CONFLICT?] There is no indication that [Rule 54(d)(1), or the general federal prohibition of attorney fee awards for prevailing parties, or simply "The American Rule" on attorneys fees] was intended *** to displace state attorneys fees award rules. In our view, in diversity and maritime contract actions Florida Statute 627.428 constitutes an exception to the general rule stated in Rule 54(d)(1).
[From Gasperini, page 979] The dispositive question, therefore, is whether federal courts can give effect to the substantive thrust of § 5501(c) without untoward alteration of the federal scheme for the trial and decision of civil cases.
[SUBSTANCE?] In contrast to Rule 54(d)(1) [which is obviously procedural], the Florida statute is a statement of a substantive decision by that State that attorneys fees award to prevailing insured parties is an integral part of the several policies served by the statutory protection of the rights of insured individuals (reflected in the Florida Surplus Lines Law under which Lloyds issued the policy or general Florida insurance contract law). *** [Discussion] *** It is these policy aspects which make the attorney fee award requirement an "integral" part of the statutory scheme both in this case and in Walker and Ragan. *** [NO CONFLICT + SUBSTANCE = CO-EXISTENCE] Rule 54(d)(1) [and the "American Rule"] does not replace such policy determinations found in state law. Rule 54(d)(1) and [state law] can exist side by side, therefore, each controlling its own intended sphere of coverage without conflict. Moreover, Rule 54(d)(2)(A), though not directly applicable here, nonetheless provides an indication that 54(d)(1) is not an insurmountable obstacle to the recover of attorneys fees in the federal system. Additionally we do not interpret Rule 54(d)(1) and the federal exceptions thereto to be incompatible with, or exclusive of, state legislation in this area. Additionally, we decline to adopt the Kenealy decision (or we adopt Kenealy as a an express application of the American rule to maritime cases, but, as we did with Rule 54(d)(1), we find that when state law provides otherwise, the federal court should award attorneys fees).
[II. CONLICT? OR ERIE, ERIE = SUBSTANTIVE] Since there is no direct conflict between the Federal Rule and the state law, the Hanna [Rules Enabling Act] analysis does not apply. Instead, the policies behind Erie and Ragan control the issue whether, in the absence of a federal rule directly on point, state Attorneys Fees award requirements which are an integral part of the state law governing insurance contracts should control in an action based on state law which is filed in federal court under maritime jurisdiction. *** It is sufficient to note that *** in this case failure to apply the state fee-shifting law will create a serious problem of forum shopping because maritime insurers with Florida insureds will prefer the federal over the state forum, AND, the result would be an "inequitable administration of the law." Hanna v. Plummer. There is simply no reason why, in the absence of a controlling federal rule, an action based on state substantive law which in the state courts would be required to result in an award of attorneys fees to the prevailing insured should proceed through litigation to judgment in federal court without such an award solely because of the fortuity that there is concurrent federal jurisdiction available to the litigants.
MORE DETAILED DESCRIPTIONS:
Introduction: What is the Erie doctrine and why does it apply here?
The better answers included a brief statement about the Erie doctrine and why it might apply in this scenario. I also reserved a few points to reward persons for actually phrasing their answer in the form of an opinion or a memorandum to the judge. I was remarkably unimpressed by long diatribes about the Erie doctrine that read like transcripts of outlines and which only tangentially referred to the fact-pattern (and sometimes almost not at all). One in particular reached the opposite conclusion from what I instructed, by almost completely ignoring the fact-pattern, which I found quite astonishing.
The question presented is if in this maritime case the state statute should be considered substantive and applied by the federal court. Because state law is expressly applicable in maritime cases, and because federal jurisdiction over maritime insurance contracts is concurrent with state jurisdiction, this matter is analogous to diversity and thus Erie and its progeny must guide the decision. Erie RR v. Tompkins reiterated that federal courts sitting in diversity had to apply state law as the "rules of decision" (28 U.S.C. § 1652) and, overruling Swift v. Tyson, included state decisional law within the "rules of decision" that had to be applied by the federal courts. Prior to Erie, only state statutes were ruled to fall within the requirements of section 1652. Here we have a state statute, which even under Swift v. Tyson would have come under the requirement of the Rules of Decision Act. But what happens when there is a possible conflict between a state substantive rule and a federal procedural rule? Guaranty Trust introduces the "countervailing federal interest in procedure" but gives it short shrift with outcome determination absolutely favoring state law. Byrd v. Blue Ridge introduces some balance to this conflict by displacing state practice with a federal practice. Hanna v. Plummer creates a test that pretty much guarantees the validity of Federal Rules of Procedure. But, as footnote 7 in Gasperini explains: "Concerning matters covered by the Federal Rules of Civil Procedure, the characterization question is usually unproblematic: It is settled that if the Rule in point is consonant with the Rules Enabling Act, 28 U.S.C. § 2072, and the Constitution, the Federal Rule applies regardless of contrary state law. See Hanna v. Plumer; Burlington Northern R. Co. v. Woods. Federal courts have interpreted the Federal Rules, however, with sensitivity to important state interests and regulatory policies. See, e.g., Walker v. Armco Steel Corp., ***". Accordingly, its is correct to refer to the "Erie doctrine" as providing that federal courts sitting in diversity generally apply federal procedure and state substantive law, but incorrect to attribute that to the Erie decision itself, which, other than the concurrence by Justice Reed, makes no procedure / substance distinction.
I. Is there a Federal rule or Practice that is POSSIBLY on point?
Note that this means a federal practice or a specific rule; including, but not limited to:
(1) Constitutionally-based, e.g., 7th amendment, or supremacy, or necessary and proper, or Due Process.
(2) Strong Federal Policy, Byrd. Yes, Federal Procedure and Maritime Admiralty.
(3) Federal Rule of Civil Procedure, etc., Hanna, Ragan, Burlington, Armco, § 2072. The General "American Rule," and Rejection of Kenealy or the adoption of Kenealy "light".
Arguably, this case concerns the exclusive federal maritime jurisdiction which is granted to it by the Constitution (Art. II, Sec. 2, Cl. 1, [iii, in my annotated version, "to all Cases of admiralty and maritime Jurisdiction"], though that was not very clear from the fact-pattern and, in fact, I was trying to steer you away from this by specifically mentioning only section 1333 and expressly creating concurrent jurisdiction for maritime insurance contract cases. This made it much easier to apply the Hanna "twin aims of Erie" analysis. Nevertheless, more generally, this case concerns the Federal Court's interest in procedure, which is arguably heightened because of the specific often-exclusive federal admiralty jurisdiction. There are at least two important strong federal policies here, one the federal policy in controlling maritime jurisdiction, and the general uniformity of federal maritime law, and the second the general federal interest in procedure.
As to possible specific rules of practices more specifically, we have the general federal prohibition against the award of attorneys fees and the general rule in admiralty cases that attorneys fees are not recoverable. This is not a situation in which the federal courts simply do nothing, rather, the established federal practice is that attorneys fee awards are prohibited for prevailing parties. Federal Rule 54(d), specifically 54(d)(1), which includes the general American rule that prevailing parties in Federal litigation are not entitled to attorneys fees. Since this is a well established rule, which both parties at least partially recognize, you have to interpret it so as not to conflict or preempt the state rule. This would also include your analysis of the general federal policy against attorney fee awards.
Secondly, you have to consider whether to adopt the Kenealey decision and rule that in maritime cases attorneys fees are not recoverable as a matter of federal maritime common law. For this to be a logical opinion, you have to refuse to adopt Kenealy and rule that in this circuit there will not be such a rule for maritime contract cases, or take a middle ground between Kenealy and Richards by adopting the general rule but allowing state law to be applied when it expressly allows the awards.
II. Is there IN FACT a conflict between POSSIBLY applicable state law and a federal rule? (§ 2072). OR if there is no federal rule THAT CONFLICTS, can we [or alternately should we] ignore state law? [Hanna] (Erie, Guaranty?, §1652). This was not a 2072 case, because you were avoiding a conflict.
(1) Balancing Byrd factors, which Gasperini indicates should guide the court's determination of conflict. In other words, the court must show deference to the state. Fn. 07. No Conflict with Federal Rules, No Kenealy.
(2) Conflict with federal rule can and should be avoided by narrow construction of the federal rule and superimposition of the state law. No Conflict, No Kenealy.
Finally, the court can speak about the lack of conflict and about the fact that state rule is substantive, use Hanna to support its decision. Hanna (i) bad forum shopping and (ii) unfairness.
Ignoring the state law, even in the absence of a conflicting federal practice, would produce a significantly different result in the federal court than would accrue in the state court.
As Gasperini indicates, in making these determinations the court engages in balancing the federal interest in procedure and any other federal interest, against the state interest in its legislation. The best source for this analysis, in addition to Gasperini, is Byrd v Blue Ridge. Many students used the Byrd three-interests analysis and the vertical/horizontal uniformity concerns very effectively.
Initially, you need to find that there is no conflict with federal practice generally, and federal maritime practice specifically. Rule 54(d)(1) and 28 USC § 1928 which define costs that are recoverable by prevailing parties as a matter of course specifically exclude attorneys fees, thus reflecting the general "American Rule" that prevailing parties are not automatically entitled to attorneys fees. Therefore, there is indeed a general federal prohibition against the award for attorneys fees to prevailing parties, but there are exceptions and the rule does not preempt state law.
As the fact-pattern suggests, the rules themselves create exceptions, and it would have been a good idea to find and to cite some of them. We covered this in class when we discussed the Costs and Rewards of Litigation, especially the Venegas v. Mitchell case. For example: sanctions for discovery violations (Rule 26, R. 37); Rule 11(c)(2) Sanction for bad faith filings; section 1927 allowing fee awards for unreasonably delaying or extending the proceedings. You could also use an example of federal law that expressly allows the prevailing party to recover attorneys fees, such as 42 U.S.C. § 1988 which we saw several times, but especially in the Venegas case. (To the extent that this might then become a "may" vs. "must" scenario it might have been reminiscent of the difference between Alabama automatic affirmance penalty and Federal Rule 38, in Burlington, but better not think about that!).
Additionally, Rule 54(d)(2) expressly contemplates claims for attorney fee awards. 54(d)(2)(A) even mentions that the procedure establishe''d by the rule does not apply if incompatible with applicable substantive law making fee award an element of the damages determination. While that is not the situation here, the section could properly be used to recognize exceptions to the American Rule, and exceptions that might even allow or require application of state law. (Many students went to Rule 54(d)(2)(A) but few remembered the general American Rule discussion that we had early in the semester.)
Note that 54(d)(2)(D)'s reference to "local rules" does not imply state law, but rather local district court rules established pursuant to Rule 83.
Therefore, it would be unreasonable to adopt the view that Lloyds argues, that attorneys fees can only be awarded in "a contract provision, a federal statute, or bad faith in the litigation process." Moreover, the exceptions are not limited to federal law.
In maritime cases because the matter of marine insurance contract interpretation and regulation is left to the states, the adoption of a Rule like Kenealy, or its interpretation to preempt state law, would be unwise. The general federal rule is not iron-clad and admits many exceptions. State law is adopted in maritime contract cases specifically and in admiralty cases generally when not incompatible with express legislation or common law. Here the court will not create a common law rule that displaces the state law because one is not required by Federal Procedure generally, or by maritime litigation specifically. (One alternative might have been to adopt Kenealy as the general rule in maritime cases, except, when state law expressly allows it. A parallel to the narrow construction of the "American Rule".) 1333(a)(1) "saving to suitors all remedies to which they may otherwise be entitled." Moreover, section 627.428 is a substantive legal rule that must be followed by the federal courts.
Here you could use the Florida decisions determining that the statute is substantive. While these decisions are not binding on the federal courts, they can be called a strong indication that the statutory scheme set up by the Florida legislature is substantive.
In this case, Florida law applies and that should include section 627.428 because it is part of a legislative scheme in insurance contracts that is intended to discourage the insurance companies, like Lloyds, from engaging in warrantless litigation, and, fully to compensate the insured when such litigation takes place. Ensuring full compensation is part of a substantive statutory scheme applicable to Florida insurance contracts, including marine insurance contracts. The state is clearly trying to protect the little insured from the big bad insurance companies.
Failing to apply the state law, even in the absence of a conflicting federal practice, would produce the twin evils identified by the Hanna case: bad Forum Shopping, as in this case, a class of people regulated by the law, i.e., insurers, will prefer Federal courts in Florida over Florida state courts when litigating with Florida insured parties (the class of people that the legislature was trying to protect) which constitutes a difference in the rights of the parties rather than in available remedies (the Hanna argument was challenging because you had to focus on the identity of the parties rather than on their citizenship when constructing your argument). Many students effectively inserted discussions of the bad forum shopping Taxi cab cases here. This will lead to unfairness towards the insureds, most of whom are likely to be state residents who litigate against out of state insurance companies in diversity cases, and against any insurance in maritime insurance cases for which the federal forum is also an alternative. Some students also made decent arguments that it was particularly important to apply this law in marine insurance contract situations given the reasonable assumption that such insurance was especially prevalent in this state (that was nice!). I noticed that many students stated the Hanna twin aims analysis backwards (that was not nice).