CIVIL PROCEDURE ESSAY SERIES
ESSAY QUESTION #3
MODEL ANSWER
Pat, a resident of State A, purchased an indoor hot tub from Leisure, a State B mail-order house that often advertises in State A newspapers. In the past year, Leisure has sold a dozen hot tubs to residents of State A. Dee, a corporation having its only place of business in State C, supplies pumps and heating elements for Leisure products, and occasionally fills parts replacement orders for individual tub owners, some residing in State A. A few months after Pat's purchase, his hot tub overheated, burning Pat when he entered it and cracking the tub's shell. Water poured throughout the house, damaging hardwood floors, oriental rugs, artwork, and the ceiling in the room beneath the tub's location.
Pat brought a diversity suit in Federal District Court in State A against Leisure and Dee, claiming $80,000 damages. The complaint was filed two weeks before the applicable State A statute of limitations lapsed. Service of process by mail in accord with State A's long-arm statute, which extends jurisdiction "on any basis not inconsistent with the Federal Constitution," reached Dee in six days. Because of delays caused by the Post Office, service did not reach Leisure for three weeks.
Dee moved for dismissal of the complaint as to it, on the ground that the court lacked personal jurisdiction over Dee. The motion was denied. Leisure moved for summary judgment on the ground that the claim against it was barred by the statute of limitations. The motion was denied. The applicable State A statute tolls the statute of limitations on the date service is received. Rule 3 of the Federal Rules of Civil Procedure provides that an action "is commenced by filing a complaint with the court."
Dee next sought to implead Imco Instruments, Inc., a State A firm that supplies thermostats to Dee. Dee alleged that the Imco-supplied thermostat in Pat's tub failed to regulate the water temperature properly. Over Imco's objection, the motion to implead was granted.
Pat then amended his complaint by adding Imco as a defendant. Imco moved to dismiss the entire action or, in the alternative, to dismiss Pat's claim as to Imco, contending that the court lacked subject matter jurisdiction because of Pat's amendment. The court refused to dismiss the entire action but dismissed Pat's claim against Imco. The jury returned a verdict for $70,000 in damages against Leisure and Dee. Immediately after the verdict, Leisure and Dee moved to dismiss Pat's suit, contending that the court lacked subject matter jurisdiction because the amount awarded did not exceed $75,000. The motion was granted.
Were the court's rulings correct as to:
1. Dee's pre-trial motion-to dismiss? Discuss.
2. Leisure's pre-trial motion for summary judgment? Discuss.
3. Dee's motion to implead Imco? Discuss.
4. Imco's pre-trial motion to dismiss? Discuss.
5. The post-trial motions to dismiss? Discuss.
MODEL ANSWER
I. DEE’S PRE-TRIAL MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION.
TIMELY FILING. A party must timely object to personal jurisdiction, in their original motion to dismiss, or their answer. Failure to timely object, will indicate that defendant has waived their right.
Here, it appears that Dee timely filed for dismissal due to lack of personal jurisdiction.
REASONABLE NOTICE.
The due process requirements of the Constitution require that notice and an opportunity to be heard be given to a person, before jurisdiction may be exercised over their person or property. Here, service of process was properly delivered to Dee, and Dee was afforded reasonable time for to make an appearance.
LONG-ARM / ATTACHMENT STATUES.
States are free to determine the extent to which their long-arm statute will apply, up to a Constitutional standard. A number of jurisdictions have statutes that are coextensive with the Constitution, and extend personal jurisdiction to the extent of the United States Constitution. In such jurisdictions, service of process may occur out of state.
The statute in this situation extends jurisdiction on any basis not inconsistent with the federal Constitution. Therefore, service of process to Dee, was proper in this situation.
TRADITIONAL BASIS OF JURISDICTION.
Under a traditional basis of in personamjurisdiction, in personam jurisdiction will exist where:
- Where defendant is domiciled in the forum state.
- Where defendant is present and personally served with process in the forum state without fraud, trickery or force.
- Where defendant consents to the suit in the forum state.
OR
- Where defendant enters a general appearance in the suit without raising a timely objection to personal jurisdiction.
The facts indicate that Dee, has its only place of business in State C, and there are not facts to indicate that Dee consented to jurisdiction, or made a general appearance. Inasmuch as the forum state is State A, a traditional basis of jurisdiction does not apply, here.
MINIMUM CONTACTS.
Where there is no absolute basis of in personamjurisdiction, the Constitutional due process test must be met under a minimum contacts analysis.
QUANTITY AND NATURE OF CONTACTS.
PURPOSEFUL AVAILMENT.
Defendant must have purposefully availed themselves of the benefits and protections of the forum state, and it must have been foreseeable that they could be sued in the forum state.
Here, Dee, occasionally fills parts replacement orders for individual tub owners, some residing in State A, indicating that it purposefully availed itself of the benefits of doing business in stateA.
FORESEEABILITY OF SUIT.
Defendant must have foreseen that they could possibly be hailed into a federal court in the forum state based on the quantity and nature of their contacts with the forum state.
Here, Dee has offices in state C, and had only indirect contact with state A residents. Further, Dee supplies component products to Leisure in state B, and only occasionally fills parts order by owners directly, because Dee deals almost exclusively with Leisure. However, Dee was specifically aware they were dealing with products, and that such products could result in a warranty or negligence claim in the future, by any foreseeable user of a product.
RELATEDNESS OF CONDUCT TO CLAIM.
GENERAL.
General jurisdiction exists were an out-of-state defendant has had systematic and continuous dealings with the forum state, and defendant may be liable for claims that involve activity outside of the forum state.
As stated above, Dee only had limited and sporadic contacts with citizens of forum state A, and thus Pat would need to assert that specific personal jurisdiction is applicable in this instance, in order to show that there was a sufficient relatedness of the conduct of defendant to the claim.
SPECIFIC.
Specific jurisdiction occurs where defendant has had only limited and sporadic contact with the forum state. In such a situation, the cause of action must have arisen out of that activity or specific act that took place within the forum state.
The facts indicate that the situation in question in the litigation, arose out of a defect in the heating elements in State A, which may have been why the hot tub overheated, and therefore Dee would be subject to specific jurisdiction.
INTEREST OF THE FORUM STATE IN PROTECTING ITS CITIZENS.
A court will also look to how interested the forum state is in protecting the interests of its citizens in such wrongful behavior as was exhibited by defendant, and thus in providing a forum for their citizens to challenge such wrongful activity in a court action.
Hot tubs are potentially dangerous products. Here, considerable damage took place due to the faulty hot tub. The citizens of state A should have the opportunity to seek redress for the personal and property damage that they might incur through the purchase of a hot tub.
FAIR PLAY AND SUBSTANTIAL JUSTICE.
The notion of fair play and substantial justice looks to whether there are unreasonable burdens placed upon defendant in defending the claim in the forum state, such that defendant will be at a severe disadvantage in defending the claim in the forum state. This is a judicial determination, and the court may decide that a situation which otherwise meets the minimum contacts standard, should not proceed due to undue prejudice to defendant.
There are no facts indicating that Dee would be put at a severe disadvantage is defending Pat's claim.
CONCLUSION. Personal jurisdiction exists, here, and Dee may be properly hailed into court in state A, to defend against Pat's lawsuit.
II. LEISURE’S PRE-TRIAL MOTION FOR SUMMARY JUDGMENT BASED ON STATUTE OF LIMITATIONS.
Leisure's motion may only be decided after determination of the appropriate law that should be used in this situation.
THE ERIE DOCTRINE / APPLICABLE LAW.
The goals of the Erie doctrine are to discourage forum-shopping, and to avoid the inequitable administration of the laws. Under the Erie doctrine, in diversity cases, a federal court must apply state substantive law and federal procedural law.
With respect to Statutes of Limitations, Statutes of Limitations have been determined to be state substantive law, and therefore the state law regarding the Statute of Limitations should be followed, here.
However, the tougher question relates to when the tolling should be applied. In other words, was the tolling started by the filing of the complaint, or was the tolling started by the receipt of the service of process that took place three weeks later. This is significant, because Leisure did not receive their service of process until one week after the applicable Statute of Limitations. Therefore, if the state A statute is used, the Statute of Limitations will have run, and if the Federal Rules are followed, the Statute of Limitations was tolled upon filing of the complaint. Where there is no controlling federal procedural law, the judge may use a federal rule only where it is not substantive. Factors which help determine if a law is substantive, include outcome determination, determination of applicable state law, balancing of interests, and forum shopping.
DETERMINATION OF APPLICABLE STATE LAW.
A federal court will apply the state substantive law from the state's highest court. If there is no high court decision, a federal court will defer to rulings of lower state courts, or to relevant dicta and analogous decisions of that state, or neighboring states, in order to determine the applicable state law. Here, the facts indicate that there is appropriate state law that is on-point, and that provides that a Statute of Limitations is tolled only after the service of process is received.
OUTCOME DETERMINATIVE.
Where application or non-application of the state rule would affect the outcome of the case, the rule is arguably substantive, and the state law will be applied. Here, if the federal procedure rule is use, then the action will proceed. More significantly, if the state substantive law is used, the action will not proceed, because the service of process was conducted after the Statute of Limitations had run. Therefore, non-application of the state law would be outcome determinative, and thus the state law should be followed.
BALANCING OF INTERESTS.
Federal and state interests and policies, are balanced against each other, to see if one dominates over the other. There is no indications that federal interests would be harmed through application of the state statute in this situation, and thus there is no significant federal interest in applying the federal rule.
FORUM SHOPPING.
Where non-application of state law would prompt future claimants to forward their claims in federal court, the court will most likely apply the state law, in order to discourage forum shopping. Here, plaintiffs that are late with their claims, might be prompted to file their claims in federal court, rather than in state court, and thus they might prevail due to forum shopping. Therefore, in this instance, the court is likely to conclude that forum shopping would militate against use of the federal rule, in this instance.
CONCLUSION. Since there is an on-point state law that is outcome determinative, there are no federal significant federal interests, and a decision in favor of following the federal rule would promote forum shopping, the court erred in denying Leisure's motion to dismiss.
SUMMARY JUDGMENT. The issue related to the Erie Doctrine, is raised with the context of summary judgment. Leisure will prevail in their summary judgment motion, if they can show, based on evidence, that there is no controverted issue of material fact, and that they are entitled to judgment as a matter of law. As long as Leisure submits evidence, and does not rely on the pleadings, they will be able to show that they received their service of process after the Statute of Limitations had run. They will prevail on their motion.
III. DEE’S MOTION TO IMPLEAD IMCO.
IMPLEADER.
An impleader allows a party to bring in a third-party defendant in a vicarious liability action. The claim against the third-party defendant must be derivative, such as through contribution or indemnification. The plaintiff may assert a claim against the third-party defendant if the new claim arises out of the same transaction or occurrence as plaintiff's original claim, and the new claim meets the requirements of subject matter jurisdiction / or supplemental ancillary jurisdiction.
Here, Dee is attempting to implead Imco, claiming that if Leisure is liable to Pat, then Imco is liable to Leisure. Therefore, this would indicate a viable derivative suit, because Dee is seeking indemnification or contribution against Imco, because Imco provided the thermostat for the hot tub.
The derivative claim must arise out of the same transaction or occurrence as plaintiff's original claim. Here, the same facts are at issue, inasmuch as they relate to Pat's faulty hot tub, and a thermostat that may have been faulty.
SUPPLEMENTAL JURISDICTION / ANCILLARY. Subject matter jurisdiction must be show for most claims, however, some claims that cannot satisfy subject matter jurisdiction on their own may still be heard. In diversity claims, a federal court may exercise ancillary jurisdiction, allowing the court to join parties that would otherwise have been non-diverse, or that would have lacked sufficient amount in controversy, if their claim is so related to the original claim that they form part of the same case or controversy.
Here, Imco is a state A corporation, and state A is the forum state. Normally, joinder of a forum state defendant would destroy diversity subject matter jurisdiction. However, impleaders allow for ancillary jurisdiction, if the claim is so related to the original claim as to form the same case or controversy.
As stated above, the claims are almost identical, and ancillary jurisdiction will solidify this impleader.
CONCLUSION. The court property granted Dee's impleader of Imco.
IV. IMCO’S PRE-TRIAL MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION BASED ON THE AMENDMEND COMPLAINT.
FILING. Subject matter jurisdiction may be contested through appeal, and therefore Imco's pre-trial motion to dismiss is proper.
AMENDMENT OF THE CLAIM. Plaintiff may amend their pleadings as of right one time prior to defendant's filing of an answer, and defendant may amend their answer one time within twenty days of filing their answer. After defendant's answer, plaintiff may seek leave of court to amend the complaint, and leave of court to amend will be granted where justice so requires, and there is no unnecessary delay or prejudice, or if defendant consents in writing to the amendment.
Here, there are no facts indicating that allowing Pat to amend the complaint, was in any manner improper.
JOINDER OF PARTIES.
Any plaintiff or defendant may be joined if their claims arise from the same transaction or occurrence as the original claim, and raise at least one common question or fact or law, as long as subject matter jurisdiction is satisfied. Joinder of parties helps to prevent a multiplicity of lawsuits related to the same claim. Therefore, Pat may properly join Imco, if Pat meets the requirements of proper subject matter jurisdiction.
SUBJECT MATTER JURISDICTION.
DIVERSITY OF CITIZENSHIP.
SECTION 1332.
Where plaintiff asserts diversity of citizenship subject matter jurisdiction, plaintiff must meet the amount in controversy and full diversity requirements.
CITIZENSHIP REQUIREMENT.
The cause of action must be between citizens of different states, or a citizen of a state and a citizen of a foreign country, at the time that the case is filed.
Here, if Pat is successful in joining Imco as a defendant, full diversity will be destroyed, because Imco is a state A corporation, and state A is the forum state. Lacking an independent grounds of subject matter jurisdiction between Pat and Imco, it would be improper for the court to allow Pat's joinder of parties, in this instance.