San Joaquin College of Law

Civil Procedure--Interim Exam Dec. 1998/Cartier

Question 1

Plaintiff, a resident of Missouri, filed an action against Delta Products in state court in Missouri alleging that he was contaminated with Human Immune Deficiency Virus (HIV) after being transfused with contaminated product supplied by Delta Products (a Delaware corporation with its principal place of business in Illinois). Delta Products removed the case to federal court and filed an answer denying liability and filed a third-party complaint against the American Red Cross (a federally chartered organization with its headquarters in Washington, D.C.), under whose auspices the blood used for Plaintiff’s transfusion was provided. Prior to the expiration of the applicable statute of limitations, Plaintiff filed a claim in this action against the American Red Cross based on its involvement in activities leading to his injury. After the statute of limitation expired, Plaintiff sought leave of court to amend his complaint against Delta Products to name as the correct defendant, Delta Therapeutics (an Illinois corporation with its principal place of business in Missouri). Delta Therapeutics is a wholly owned subsidiary of Delta Products. Delta Products, under its own name, markets equipment and supplies but, unlike Delta Therapeutics, is not involved in marketing blood or plasma. The American Red Cross filed an answer denying liability. Delta Therapeutics filed an answer denying liability, objecting to subject matter jurisdiction, and asserting the statute of limitations is an affirmative defense.

1.          Was this case properly removed to the federal court? DISCUSS.

2.          Does the federal court have subject matter jurisdiction over Plaintiff’s claim against the American Red Cross?   DISCUSS.

3. Does the federal court have subject matter jurisdiction over Plaintiff’s claim against Delta Therapeutics? DISCUSS.

4.          Is the statute of limitations a bar to Plaintiff’s claim against Delta Therapeutics? DISCUSS.

Question 2

P, a minor, was injured when the elastic strap on her luggage cart snapped back and hit her in the face. P, a Florida domiciliary, is temporarily living with her grandmother, a Puerto Rican national who is a permanent resident of New York. On her last trip from New York to visit her mom and dad in Florida, the hook of the cord on the luggage cart hit P in the mouth knocking out one of her front teeth, chipping the other one, and causing her to fall back onto the pavement at Kennedy Airport in New York. The manufacturer of the luggage cart is DLC, Inc. (a Puerto Rican Corporation). The cart that caused P’s injury was imported into the United States by Importer (a New York corporation with its principal place of business in Miami, Florida). The luggage cart was purchased by P’s grandmother at a Shop-Mart outlet in New Jersey, approximately 65 miles from P’s New York residence. Shop-Mart is a company that conducts business activity only in New Jersey. While DLC does not directly market its products in the United States, DLC adds “United States-specific” logos and tags to its products imported into the United States. P, with her grandmother acting as guardian ad litem, wants to file suit against DLC in the United States District Court in the Southern District of New York because the court is very close to where she lives. The long-arm statute of New York permits the exercise of personal jurisdiction over “any non-domiciliary who in person or who through an agent engages in activity that results in a tortious injury within this state.”

1.Would the federal court have subject matter jurisdiction over P’s claim against DLC? DISCUSS.

2.          Is DLC subject to personal jurisdiction in New York? DISCUSS

3.If DLC is properly before the court and files a third-party complaint (for contribution or indemnity) in this action against Importer and Shop-Mart, will the court have personal jurisdiction

             a.          over Importer? DISCUSS.

             b.          over Shop-Mart? DISCUSS.

4.          If P sues DLC and if DLC impleads both Importer and Shop-Mart, under what circumstances will the Southern District of New York be a proper venue for this case?

San Joaquin College of Law

Civil Procedure–Interim Exam 1298Q1 Sketch Answer/Cartier

1.          Was this case properly removed?

             Whether removal is proper depends on whether the federal court has subject matter jurisdiction over the claim. A defendant may generally remove a case from state court to federal court if it could have been brought by plaintiff in the federal court in the first instance. Here Plaintiff sued Delta in Missouri state court and defendant removed. DOES THE COURT HAVE SUBJECT MATTER JURISDICTION? Federal courts are empowered to decide cases which arise under federal law (Constitution , Treaties, Acts of Congress). The question before us does not arise under federal law and so does not constitute a FEDERAL QUESTION. Federal courts also have the power to decide cases if DIVERSITY JURISDICTION is satisfied. For diversity jurisdiction, there must be complete diversity of citizenship between the parties (no plaintiff can come from the same state as any defendant) AND the amount in controversy must exceed $75,000.

             Complete Diversity:      Plaintiff is a resident (and citizen) of Missouri. While citizenship for an individual is based on domicile rather that on residence, nothing in the facts suggest that he is domiciled in any other state. Delta Products, as a corporation has dual citizenship–its state of incorporation (Delaware) and its principal place of business (Illinois). Since the defendant is not a citizen of Missouri, complete diversity is established.

Amount in Controversy: The facts do not tell us how much damages plaintiff is seeking. If the amount is more than $75,000, the amount in controversy requirement is satisfied. On the other hand, if plaintiff’s claim is for less than $75K or if it appears to a substantial certainty that plaintiff cannot recover $75K, this element would not be met. While the facts are not entirely clear, it is highly probable that plaintiff is seeking more that $75,000.

             Since the court would have the power to hear this case under diversity jurisdiction (diversity of citizenship + amount in controversy), removal was proper. While a defendant may not remove a diversity action if he is sued in his home state, this limitation does not apply here since Delta Products was sued in Missouri.

2.          Does the federal court have subject matter jurisdiction over Plaintiff’s claim against the Red Cross?

             It is noted that after Plaintiff sued Delta Product, this defendant joined the American Red Cross in the suit by filing a third-party complaint seeking contribution or indemnity. As between the defendant (Delta Products) and the third-party defendant (Red Cross), supplemental jurisdiction is afforded to any third-party claim which arises from the same nucleus of operative facts so as to form part of the same constitutional case or controversy, even if the requirements for federal question or diversity jurisdiction are not met.. Supplemental jurisdiction is NOT available to a plaintiff who files a claim directly against a third-party defendant. Therefore, if plaintiff’s claim against the Red Cross is permitted, there must be original subject matter jurisdiction (diversity or federal question) over this claim.

             The American Red Cross is federally chartered and as such any suit by or against it constitutes a federal question. Consequently, the federal court has subject matter jurisdiction (federal question) over this claim. It is noted that diversity jurisdiction might exist since the Red Cross is federally charted with its principal place of business in Washington D.C. If, however, the Red Cross is treated as an association, it would be a citizen of any state where any of its members resided. In this latter case, complete diversity would not exist since the Red Cross has members in Missouri.

3.          Does the court have subject matter jurisdiction over Plaintiff’s claim versus Delta Therapeutics?

             In the original claim, Plaintiff (from Missouri) sued Delta Products (from Delaware and Illinois). Now plaintiff seeks to amend his complaint to name, as the correct defendant, Delta Therapeutics–an Illinois corporation with its principal place of business in Missouri. Because a corporation is considered to have dual citizenship as discussed above, Delta Therapeutics is a citizen of its principal place of business, Missouri. Complete diversity does not exist between Plaintiff and Delta Therapeutics since each is a citizen of Missouri. As noted above, there is no indication that this case arises under federal law so as to confer federal question jurisdiction. Even without original jurisdiction based on diversity or citizenship or federal question, the court may have the power to hear this case based on SUPPLEMENTAL JURISDICTION. Under Paragraph 2 above, it is noted that Plaintiff’s claim against the American Red Cross is a federal question. The federal court will also have supplemental jurisdiction over any other claim which arises from the same nucleus of operative facts so as to form part of the same constitutional case and controversy. While a plaintiff does not get the benefit of supplemental jurisdiction in a diversity case, this limitation does not apply when the case is based on a federal question. Since Plaintiff’s suit against Delta Therapeutics arises from the same transactions (delivery of tainted blood) which are the basis of his claim against the Red Cross, the federal court will have supplemental jurisdiction (“pendant party jurisdiction”) over Plaintiff’s claim against Delta Therapeutics.

4.         Will the statute of limitations bar Plaintiff’s claim against Delta Therapeutics?

             The claim against Delta Therapeutics is a state law claim (based on state rather that on federal law). While federal courts may decide state law matters, under the ERIE DOCTRINE, the federal court should sit as “another state court” in deciding state law claims. While federal courts may apply their own procedural rules, the federal courts should apply the applicable state substantive law. According to the facts, Plaintiff amended his complaint to name Delta Therapeutics after the statute of limitations expired. Delta Therapeutics is asserting the statute of limitations as an affirmative defense. In the state court, the statute of limitations would bar this action. Under FRCP 15, however, federal courts permit relation-back (to permit an amendment of a complaint after the running of the statute of limitations to relate back in time to a time before the statute expired) to correct a misnaming of a defendant, if the defendant to be joined 1) had knowledge of the suit so the defendant will not be prejudiced by having to defend, 2) knew or should have known that but for the mistake he would have been named as the defendant, and 3) provided process is served on the new defendant within 120 days. Because the Federal Rules of Civil Procedure are procedural, the federal courts may apply the federal rules even if there is a conflict with state law.

             In this case, Plaintiff originally sued Delta Products instead of its wholly owned subsidiary Delta Therapeutics. Since Delta Products was not involved in marketing blood products, it knew or should have known its subsidiary, Delta Therapeutics, was the intended defendant. The identity of interest between Delta Products and Delta Therapeutics suggest that there is no prejudice in permitting plaintiff to amend his complaint to name the correct defendant–if the amendment is timely. As noted above, the amendment under Rule 15(c) is permitted if made within 120 days. It is not clear whether the 120 days runs from the date of the service of the original complaint against Delta Products OR from the expiration of the statute of limitations. Assuming the 120 day requirement is satisfied, plaintiff should be permitted to amend his complaint to name Delta Therapeutics.

San Joaquin College of Law

Civil Procedure–Interim Exam 1298Q2 Sketch Answer/Cartier

1.          P v. DLC–Subject Matter Jurisdiction

             Plaintiff seeks to file suit in federal court. Since federal courts are of limited jurisdiction, it is necessary to determine whether the federal court has the power to hear the claim. Federal courts are empowered to decide cases that arise under federal law (Constitution, Treaties, Acts of Congress) AND cases which satisfy the requirements of diversity jurisdiction (complete diversity of citizenship + an amount in controversy exceeding $75,000). Nothing in the facts suggest that this case arises under federal law, therefore subject matter jurisdiction, if it exists, must rest in diversity. As regards complete diversity, the plaintiff cannot be a citizen of the same state as the defendant. Here P, a minor, while living with grandmother in New York, is a domiciliary of Florida. For purposes of establishing diversity of citizenship, P is a citizen of Florida. The fact that grandma is bring the suit on behalf of P is not relevant on this issue since the domicile of the minor is determinative. DLC, as stated in the facts, is a Puerto Rican corporation. For purposes of establishing diversity jurisdiction, Puerto Rico is considered a state. While it is recognized that a corporation has dual citizenship (it state of incorporation and its principal place of business), absent a showing that DLC has its principal place of business in Florida, complete diversity exists. As regards the amount in controversy, so long as P alleges more than $75K in damages, this requirement is met UNLESS defendant can show to a substantial certainty that P cannot recover that amount. The federal court will have subject matter jurisdiction over this claim if P seeks more that $75,000 in damages.

2.          Does NY have personal jurisdiction over DLC?

             Personal jurisdiction is acquired over an out-of state defendant by giving notice within the grasp of the state’s long arm statute. Assuming proper service of process can be effected, the initial question is whether DLC is within the grasp of the NY long-arm statute that confers jurisdiction over any person who engages is activity that results in tortious injury within its borders. While P’s injury did occur in NY, it is not entirely clear that DLC “engaged in activity that resulted in the injury” within the meaning of the statute. In this case, DLC’s activity was essentially passive as regards NY and may not be within the grasp of the long-arm statute. Even if it is determined that the conduct is within the long-arm statute, the exercise of personal jurisdiction must also satisfy the constitutional requirements of due process (based on minimum contacts so as not to offend traditional notions of fair play and substantial justice). In determining whether minimum contacts exists we look to the nature and quality of defendant’s contacts with the forum state. Here DLC is a Puerto Rican corporation that apparently has no continuous and systematic activities in NY. Still, jurisdiction may be based on an isolated contact with the forum if that contact is related to the suit. For “specific jurisdiction” over a dispute related to the contact, the contact itself must be the result of some purposeful act on the part of the defendant. Nothing in the facts suggest that DLC has purposefully directed its business activity into NY or that DLC otherwise takes the benefits and protections of the laws of that state. That DLC has marketed a product that made its way into NY and resulted in an injury there is not enough to subject DLC to personal jurisdiction in NY unless DLC engaged in specific activity that would make it foreseeable that it could be haled into court there. Merely putting a product into the “stream of commerce” is not enough. Knowledge that its products might (or even would) end up in NY is not enough. Personal jurisdiction depends on an act of the defendant, not on an act of a third party. The facts tell us that DLC puts “US specific logos on products for the U.S. market. While this evidences an act directed at the U.S., it is not sufficient to show an act directed at New York. For want of minimum contacts, personal jurisdiction over DLC in New York is improper. It would be unfair to compel DLC to defend in NY when it has not directed its activity there.

3.a.       If DLC impleads Importer, will NY have personal jurisdiction over Importer?

             It is noted that Importer is incorporated in New York. Consequently the long-arm statute that, on its face, applies to non-domiciliaries is not relevant to this defendant. As a New York corporation, importer is likely amenable to suit in New York. While it is generally understood that a corporation may be sued for related activities where it has its principal place of business, it is not so clear that a corporation is subject to general jurisdiction (based on pervasive presence) in its state of incorporation. On the facts stated, however, the suit against Importer in New York is based on an injury that occurred in New York. There appears to be a sufficient nexus to permit New York to exercise personal jurisdiction over a New York corporation for an injury that happened there. Traditional notions of fair play are not offended by this result.

3.b.       If DLC impleads Shop-Mart, will NY have personal jurisdiction over Shop-Mart?

             Here grandmother bought the suitcase that injured P at Shop-Mart in New Jersey. The facts tell us that Shop-Mart conducts business only in New Jersey. This defendant appears to have no contacts with New York to satisfy due process. There are no stated continuous and systematic activities and no stated isolated activities indicated other than the fact that Shop-Mart sold the suitcase to a New Yorker who took the product to New York where an injury occurred. As discussed above, even if Shop-Mart knew the suit case was going to New York (in the stream of commerce or otherwise), Shop-Mart would not be subject to personal jurisdiction there unless it engaged in some purposeful act directed at the forum that would make it foreseeable that it could be haled into court there. Since there is no purposeful activity presented in the facts, Shop-Mart (whether or not within the grasp of the New York long-arm statute) would not be subject to personal jurisdiction in New York if sued directly by P. Here, Shop-Mart is not being sued by P . Shop-Mart is being sued as a third-party defendant by DLC. A party properly joined under Rule 14 (for contribution or indemnity) is specifically subject to personal jurisdiction if served within 100 miles of the federal courthouse where the action is pending. The facts, while ambiguous, suggest that this “bulge rule,” allowing personal jurisdiction within 100 miles may apply. The Shop-Mart is 65 miles form P’s residence and the federal courthouse is very close to where he lives. If very close is within 35 miles, it appears that the bulge rule would permit the exercise of personal jurisdiction over Shop-Mart if joined as a third-party defendant. Since this rule permitting service is set forth in FRCP 4, it is applicable as a procedural rule in the federal courts.

4.          VENUE–

             The original action is between P and DLC (a Puerto Rican corporation). The general rule states that venue is appropriate where the defendant resides or where the cause of action arose. Venue is appropriate for a corporation, based on residence, in any district where the defendant corporation would be subject to personal jurisdiction if that district was a state. Venue would be appropriate in the Southern District of New York if DLC would be subject to personal jurisdiction in that district if it were a state.

             If venue is appropriate in the original suit by plaintiff versus defendant, venue will be appropriate for any transactionallly related third-party claims.

Note:    If defendant fails to object to a defect in personal jurisdiction or venue in the first motion or pleading, any such defect is waived.