Civil Procedure Exam
Fall 2005- Professor Hay
Question 1
Part A- Dynamo Appeals
Subject-Matter Jurisdiction
It is not clear here why a federal court (in Ames) agreed to hear the case and did not question subject-matter jurisdiction. SMJ is not waivable by either party so even though the merits of the case have already been decided Dynamo should still collaterally attack.
A case can get into federal court one of two ways: federal question OR diversity jurisdiction. Diversity jurisdiction does not exist here. To establish diversity jurisdiction there must be both complete diversity and the amount in controversy must exceed $75,000. It seems reasonable to assume that the amount it cost to fix the convention center and the costs due to the delay are well over $75,000. However, this suit lacks complete diversity as the plaintiff and defendant are from the same state (Langdell).
Page may counter that the court has supplemental jurisdiction for state claims arising out of the same transaction where at least one claim is federal. Since the FAA regulations are federal then the court has the discretion to hear the claim for due care. Additionally, they could argue that once the federal claim drops out the court may still choose to hear the state claim(s).
Dynamo may rebut that Page brought in federal courts because they knew they would lose in Langdell. They figured that since they had already brought suit in Langdell and that Stern v. Sachs was good law in Langdell that they would cut their losses and sue in Ames Federal Court. Much like in Ritchey v. Upjohn Drug Co. where Plaintiff brought in “sham defendants,” here Page brought up a sham claim in order to get into a federal court. Dynamo could argue this quite strongly considering that Page’s legal team should have known about the three-year-old Supreme Court case Singer v. Warren which established that there is no private right of action for FAA violations. Given that, the court may re-think it’s decision to hear the other claim, reverse its decision and say must go to state court. Additionally, Dynamo could argue that under 28 U.S.C. §1367 the Court does not have to hear the state claims; §1367(c) provides additional support for this saying the Court may decline to exercise supplemental jurisdiction if the claim predominates over the claims for which the district court has original jurisdiction, or the district court has dismissed all claims over which it has jurisdiction. Dynamo could bring up this issue because the question of subject matter jurisdiction was not yet litigated.
Personal Jurisdiction
[Assuming that Ames is a state nearby to Langdell.]
The biggest obstacle to making this argument now is that the Federal Court in Ames may say that Dynamo lost the right to make a claim for personal jurisdiction after the court rendered judgment in the case. Nonetheless, Dynamo should still proceed, arguing that they were not heard on the issue before and their silence on this issue did not constitute a waiver.
The first question is if Ames’ long-arm statute even authorizes a suit over a non-resident. This question is crucial: perhaps the state statute may only authorize jurisdiction over defendants where the action has been committed within the state or has caused harm within the state. In this instance it is clear that the convention center is in Langdell and all (physical) injuries were in Langdell: the Dynamo pilot died and there was physical damage to the Convention Center (CC). The only possible damage sustained by Ames would be perhaps planned functions in the CC which were cancelled due to the delayed opening, but that seems a stretch. If the long-arm statute does not authorize any such suit then the there is no personal jurisdiction. However, in continuing the argument we will assume that the Ames long-arm statute is coextensive with the constitutional limits.
Then ask constitutional (due process) question. Does the exercise of jurisdiction exceed the constitutional limits? In determining personal jurisdiction the court should ask if Dynamo has sufficient minimum contacts with Ames to warrant “fair play and substantial justice”? That is a crucial point. Considering that Page has offices in and operates out of Langdell, aside from the possibility that Page was originally planning to sue Alto Corporation as well, it is unclear why Page would even want to file suit there unless Ames courts are more generous to negligence suit plaintiffs. Page could not argue that there would be prejudice in the Langdell courts because both parties are Langdell citizens. While it is certainly true that Dynamo flew planes for travel to nearby states and that their activities were purposefully directed to nearby states, including Ames, in this particular instance being haled into court is unreasonable and improper. Dynamo does have minimum contacts with Ames and had the accident happened in Ames and/or with an Ames-based company then it would be completely reasonable and proper for this case to be brought in a federal court in Ames. However, neither of those facts is present in this case making it improper and an unreasonable exercise of jurisdiction. Lastly, Dynamo could argue forum non-conveniens saying that litigation should occur where any witnesses and the businesses are, as well as where the accident occurred. The close proximity of Ames does not rebut this argument.
Page may concede and say that while there is no specific jurisdiction there is certainly general jurisdiction in Ames as Dynamo does generate revenue from and provide travel to Ames. This seems like an unlikely rebuttal. Their strongest argument is that Dynamo did not question the jurisdiction in the beginning. However, the overarching question is always “if this is a reasonable exercise of jurisdiction?” In this instance there appears to be none where the accident occurred in Langdell, the business are both Langdell residents, no Ames citizens were directly involved and even the first suit was brought in Langdell state court. Additionally, according to noted legal scholar Bruce Hay in practice general jurisdiction does not seem to really exist and even if it did, it is more an issue when Defendant enters the jurisdiction for an unrelated claim and is served there (Burnham v. Superior Court). This is not the case here.
Preclusion
Even if the court decided not to accept Stern v. Sachs Dynamo could argue claim preclusion. Dynamo could argue that Page already had its day in court and could have brought up the argument about the quality of Dynamo’s planes in the first suit. However, because it did not bring up that claim earlier it is (claim) precluded from bringing up that claim. Page may counter that there was new evidence. Under Rule 60 when there is new evidence that could not have been discovered at the time of trial party may move for a new trial. Dynamo could rebut that while neither party could anticipate what the FAA would say in the future, it was reasonable to anticipate that there would be further discoveries given that it is customary for the FAA to continue to investigate accidents. The clause in the prior settlement seems to bar any further action, even with new evidence. If the court could look to the settlement agreement in determining the settlement amount it seems reasonable that the court would look at what the parties agreed to. Dynamo could also argue efficiency to this respect saying it is a waste of judicial resources to continue to hear this case and to bind them to judgment.
Choice of Law/Erie
In this case considering that both parties are from the same state, Langdell, it seems like a simple decision to invoke Langdell state law, yet the forum state is not the place of citizenship of either party. This issue is hard to look at in isolation because the choice of law seems clear in light of the evidence, however since they are in Ames (the forum state) Ames law applies and Stern v. Sachs does not. However, if the court were to decide state law of Langdell applies, there would be a conflict between state and federal law. Langdell law says settlement agreements are binding unless evidence was suppressed and Rule 60 says new evidence warrants a new trial under Rule 59. There is a conflict that would seem to be a Hanna question where Rules of Civil Procedure wins out, however here it seems that this rule is completely outcome determinative. In this case the granting of a new trial based on evidence is outcome determinative so state law would seem to apply (Guaranty Trust Co.). Additionally, given that the Stern v. Sachs case is a 2001 case, when the parties decided to settle the case was good law already in the books and they knew that they would not be able to bring up new evidence unless Dynamo suppressed. So they should have relied on that fact and perhaps they did in negotiating a new agreement. It seems wholly unfair and unreasonable that Page would be able to sidestep this Langdell state procedural rule by going to a different jurisdiction and then claiming reliance on federal rules.
Part B:
1) Motion to Dismiss
Subject-Matter Jurisdiction
Kline brought a suit against the flyer, manufacturer of plane and altimeter manufacturer. Kline is justified in suing in Griswold federal court on diversity grounds. The plaintiff is not from the same state as any of the defendants. Dynamo, Flyte and Alto (DFA) and Areedaville filed motions to dismiss the negligence claim brought against them by Kline’s estate (Kline) in Griswold federal courts. Dynamo, Flyte and the city of Areedaville are citizens of Langdell and Alto is a citizen of Ames. Therefore complete diversity is meet. It can be assumed that the amount in controversy for each is at least $75,000. This is especially supported since the prior rulings against Dynamo were in the millions. So therefore there is no question of subject-matter jurisdiction.
Personal Jurisdiction
Does the state long arm statute permits reaching into another state to exercise jurisdiction over a non-resident? We will assume that the Griswold state long-arm statute is co-extensive with that of the constitution. Therefore, are there sufficient minimum contacts with Griswold to justify suit there? Given that pilot was on his way back from dropping passengers off in Griswold, there are sufficient minimum contacts with the state to justify “fair play and substantial justice.” Dynamo purposefully directed activity to the state of Griswold on a regular basis (“several times a week”).
Dynamo purchased its planes from Flyte. Given that Flyte was also located in Langdell it knew that the planes were making interstate trips and was receiving the benefit of such actions, accordingly it there are minimum contact and can brought into federal court in Griswold. In fact, Flyte should reasonably expect to be brought into court in not just Langdell but any state to which Dynamo flies on a regular basis.
Alto may have an argument regarding minimum contacts since it is located in Ames and may not know about where the altimeters go. You should consider if it is reasonable for a manufacturer to know to whom the distributor sells it products. In other words, is Alto required to know that Langdellian company Flyte uses the altimeters in its planes and then sells they to another Langdellian company? If the court find it reasonable that the product will end up in a nearby state then there is jurisdiction. While there is no majority opinion, it seems reasonable that Alto should know that its product would be taken to nearby state. If this were a case where the plaintiff was from a place not close by then it would be an unreasonable exercise of jurisdiction. However, here where the altimeter is entered into the stream of commerce in a nearby state it seems reasonable. Alto may be able to persuade you based on Asahi and the fact that not even general jurisdiction, as fictional as that may be, exists here.
Minimum contacts also exist between the city of Areedaville and Griswold. Areedaville has benefited from Griswold citizens coming into the city to visit the convention center in fact the city recently began to purchase ads in Griswold. This establishes that Areedaville was receiving revenue from the citizens of Griswold and that it was purposefully directing activities there, all of these are enough to establish minimum contacts. Alto is the defendant with possible dismissal on personal jurisdiction grounds.
Defendant-Specific Arguments
Dynamo could claim in this motion to dismiss that on these facts that no reasonable jury could find for Kline. This seems like a losing argument given that Dynamo settled in two cases, indicating perhaps that there was a fear that the jury would find them liable/negligent. Additionally, issue preclusion (even though prior cases were settled and were in other states) would seem to say that Dynamo cannot claim that it was not liable or that it had no liability because of prior cases. While, Dynamo does seem to be able to claim issue preclusion in the reverse saying that the issue of negligence was litigated previously and could have joined suit with Page. However, Kline could argue that they wanted further rulings from the FAA and that is different than “strategically waiting” until someone litigates and then taking advantage of the verdict. Additionally, Kline could say those cases were in other jurisdictions and they were not invited to join in. Granting a dismissal in this case for negligence seems completely unwarranted.
Flyte could argue that on the facts either Dynamo and/or Alto should be held negligent but not them because: Flyte was just the conduit that was sold a defective product; Flyte did not fly the plane, nor did it manufacture that product and on those facts it should be granted a dismissal because no reasonable jury could hold them liable. While this does seem like a strong argument, if the court has upheld the case against them saying sufficient personal jurisdiction (including minimum contacts, purposefully directed actions, etc.), it would also seem reasonable for them to send the case to the jury because there is enough evidence to go forward. Also you, the judge, could say that it is reasonable for the jury to find the middle-man is just as liable for defects as the operator (Dynamo), if not more.