Dispute

Shady Grove, a Maryland corporation, sued Allstate, a New York corporation, in diversity for unpaid statutory interest in a class action. Under New York law, class actions may not be maintained for any “action to recovery a penalty, or minimum measure of recovery created or imposed by statute.” The federal trial court dismissed for lack of jurisdiction, arguing class actions were barred and the amount did not meet controversy requirements for subject matter jurisdiction in diversity. The Second Circuit affirmed and the case was appealed to SCOTUS.

Questions of law

Does FRCP 23 answer the question of whether a class action can be maintained for a statutory penalty? If so, would it exceed statutory authorization or Congressional rulemaking power? Is the eligibility of a class in a federal class action in diversity dependent on a specific state cause of action?

Conclusions

The trial court and the Second Circuit believed that FRCP 23 on class actions touched on a different issue than New York law. SCOTUS, however, ruled that the federal rule on class actions was dispositive with respect to the formation of a class action.

SCOTUS further ruled that Rule 23’s “[a] class action may be maintained” was different from “may be permitted” because the litigants maintain the action, not the court. Discretion rests with the litigants, not with the court.

SCOTUS said that the federal rules permit all class actions that meet Rule 23 requirements, and a state cannot structure its statutes to limit that permission. No argument grounded in the New York legislative purpose could override the clear text of the federal rule, and such a basis would only confuse because it could result in two states with identical statutes, one which overrides federal law and one which does not.

The test is not whether a rule affects a litigant’s substantive rights, but what it regulates. “If it governs only “the manner and the means” by which the litigants’ rights are “enforced,” it is valid if it alters “the rules of decision by which [the] court will adjudicate [those] rights,” it is not.” Rules allowing multiple claims to be litigated together are valid because they neither change plaintiffs’ separate entitlements to relief nor abridge defendants’ rights. The fact that some plaintiffs would not bring individual suits for relatively small sums has no bearing on substantive rights.

It is not the substantive or procedural nature or purpose of the affected state law, but the substantive or procedural nature of the Federal Rule.

The forum-shopping potential of this decision would be unacceptable if it resulted from judge-made law, but because it arises from the FRCP, it is the inevitable and “one might say the intended” result of the uniform system of federal procedure enacted by Congress.

Dispute

Tompkins was injured by an object protruding from a train as he walked beside the tracks in PA. He brought a New York action under diversity.

Questions of law

What law does a federal court apply? Does U.S.C. 1652 apply only to statute or to common law as well? Under Swift, the federal court sitting in diversity applies only state statutes, not state common law. The railroad argued that PA precedent regards persons walking beside tracks as trespassers and permits recovery only for wanton negligence. Thompkins argued the question should be decided under federal common law under Swift.

Conclusions

In a landmark decision, the Court overruled Swift, holding that the creation of a federal common law over state common law was unconstitutional judicial overreach and denied equal protection. It remanded to the trial court for a decision based on state common law.

Dispute

In 1977, a California probate court appointed a legal secretary the administratrix of five Scottish victims killed in a plane crash in Scotland in 1976, for the purposes of bringing a wrongful death action against the airplane manufacturer, Piper Aircraft Co., and the propeller manufacturer, Hartzell Propeller, Inc., using California’s laws. Piper removed to federal district under diversity, then moved for transfer of venue to Pennsylvania under §1404(a). Once in Pennsylvania, Hartzell and Piper moved for dismissal on forum non conveniens.

The District Court granted the motion on the argument that the case could be brought in Scotland if Piper and Hartzell both agreed to waive statute and jurisdiction. Reyno appealed, and the Third Circuit reversed on the argument that dismissal is never appropriate where the law of the alternative forum is less favorable to the plaintiff, whose choice of law should be protected. Piper and Hartzell appealed to SCOTUS.

Questions of law

What discretion does a Federal District Court have in dismissal for forum non conveniens? Does law in an alternative forum that disadvantages the plaintiff bar dismissal? What test should be followed, and how?

Conclusions

SCOTUS reversed, affirming the original District Court dismissal. The Third Circuit had erred, it said, in considering the change in substantive law to be conclusive or even substantial in evaluating a motion for dismissal. The Gilbert test used by the District Court, which considers the burden on the defendant and the convenience for the plaintiff, would be meaningless if the possibility of an unfavorable change in law was the controlling factor. Because there are often multiple forums where venue and jurisdiction are proper, allowing the plaintiff’s choice of law to control would make transfers all but nonexistent, regardless of considerations of justice and convenience. Such a situation would also require courts to analyze the laws of other forums to determine the advantages and disadvantages of differences in law.

Note that §1404(a) transfers do not change choice of law, but dismissal for forum non conveniens does.

SCOTUS agreed with the District Court’s reasoning that while there is ordinarily a strong presumption in favor of the plaintiff’s choice of forum, this is reduced when the plaintiff or actual parties are foreign. The central purpose of any forum non conveniens inquiry is convenience.

Dispute

Plaintiff Bates sued defendant C & S Adjusters, Inc. under the Fair Debt Collection Practices Act. Personal and subject matter jurisdiction were proper. Plaintiff sued in the Western District of New York, his residence, where he had received allegedly unfair collection notices forwarded from a prior address. The district court granted defendant’s motion to dismiss for improper venue, and plaintiff appealed to the Second Circuit.

Questions of law

What does “a judicial district in which a substantial part of the events…giving rise to the claim occurred” include?

Conclusions

The 1966 law change was intended to close venue gaps and should not be read more broadly than necessary to close those gaps. The 1990 amendment was a marginal expansion but permits multiple possible venues.

The statutory standard for venue depended not on whether the defendant made a deliberate contact, as it would with an analysis of personal jurisdiction, but on the location where the event occurred, which was the Western District of New York. Reversed and remanded.

Dispute

Defendant Darue Engineering & Manufacturing purchased property seized from plaintiff Grable & Sons Metal Products, Inc. by the IRS to satisfy tax delinquency. Five years later, plaintiff sued for title in state court alleging that the notice provided by the IRS did not satisfy federal law. Defendant removed to federal court to address the federal question, and SCOTUS granted certiorari on the jurisdictional issue.

Questions of law

When no federal cause of action exists for a claim which nonetheless turns on a disputed issue of federal law, may the case be removed to federal court?

Conclusions

The question asked by the court is whether the state-law claim necessarily raises a stated federal issue which is both disputed and substantial and which a federal court may entertain without disturbing congressional boundaries placed on it. The court held that the notice required by federal statute was an essential element of its claim and the meaning of the federal statute was actually in dispute, and therefore it was appropriate to grant jurisdiction. The court also found that the government had an interest in determining uniform answers to such questions, particularly when they could impact government action.

Dispute

A railroad had given Mr. and Mrs. Mottley lifetime rail passes to settle a prior claim, but after a federal law made lifetime rail passes illegal, they stopped honoring them. The Mottleys sued in federal court for breach of contract.

Questions of law

What level of relatedness to a federal law is required for subject matter jurisdiction?

Conclusions

Although the Mottleys anticipated that the federal law would be brought as a defense, this anticipation did not satisfy subject matter jurisdiction in their claim, and it was remanded for state courts to handle.

Fact pattern and procedural history

Plaintiff Young, a Virginia jailer, sued the New Haven Advocate in the Western District of Virginia for libel on the basis of articles it published about a Connecticut incarceration program. The program placed Connecticut inmates in Virginia prisons, and the articles alleged that the practice was harmful to inmates and their families, including statements which implied Young was racist. Defendant made a special appearance to contest jurisdiction under the federal rules of civil procedure.

Questions of law

If members of a jurisdiction read articles on the internet which defame a member of that jurisdiction, but the articles were published outside of the state, what is required for that jurisdiction to assert personal jurisdiction?

Finding

The court held that the defendants’ articles concerned the Connecticut incarceration policy and its impact on Connecticut inmates and Connecticut families. The court determined that the articles, despite any adverse impact they might have had on the plaintiff, were not directed into the jurisdiction of Virginia and accordingly did not give rise to personal jurisdiction.

Fact pattern and procedural history

The state of Washington attempted to force a Delaware corporation with primary offices in Missouri to pay into a statutorily-formed state-level unemployment compensation fund. The corporation had no offices or warehouses in the state of Washington but employed a number of salespeople who were permanent residents of Washington State. The corporation resisted on the basis of a lack of jurisdiction. A chain of courts affirmed on the way up to SCOTUS.

Questions of law

What level of business conducted enables a state to claim jurisdiction over a corporation outside its borders?

Finding

The court agreed with the appellant that “the casual presence of the corporate agent or even his conduct of single or isolated items of activities in a state in the corporation’s behalf are not enough to subject it to suit.” However, it argued, “to the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state.” It held that the activities carried out by the agent employees of the corporation were “systematic and continuous” over a lengthy period of time. Therefore the findings of the lower court were affirmed.

Fact pattern and procedural history

Defendant Hess, a resident of Pennsylvania, caused a motor vehicle accident on a public highway in Massachusetts, injuring plaintiff Pawlowski, who sued for personal injury. Massachusetts law provided for an altered service of process for nonresidents who operate motor vehicles on state highways, and Hess was so served. Hess appeared to contest jurisdiction and moved to dismiss on constitutional grounds, which the trial court denied. The case proceeded to SCOTUS.

Questions of law

Can a state enact legislation which gives it jurisdiction over corporations who conduct business in it or nonresidents who operate motor vehicles in it?

Finding

SCOTUS affirmed, finding that because motor vehicles were “dangerous machines” and a State naturally had the authority to make and enforce regulations governing their use, it also had the authority to require the appointment of an agent for service of process before permitting the use of its highways. States do not have the right to exclude natural persons, but they do have the right to restrict the use of its highways, and so the state was not violating constitutional rights by declaring that use of a state’s highways was consent to service of process upon the registrar, provided that certain notice requirements were met and that the implied consent was limited to proceedings growing out of accidents or collisions on the highway.

Fact pattern and procedural history

Oregon resident J. H. Mitchell brought a suit in state district court against Marcus Neff, a nonresident of Oregon, using publication service, and obtained a default judgment. Neff owned property in Oregon, and Mitchell used a writ of execution from his default judgment to auction the property, then purchased it himself. He later sold the property to Sylvester Pennoyer.

Nine years later, Neff sued Pennoyer in federal court under diversity jurisdiction for eviction. Neff prevailed in the trial court, as the judge pointed to irregularities in Mitchell’s service. Pennoyer appealed to SCOTUS.

Questions of law

What are the limits of state sovereignty? Should one state’s service requirements apply to a defendant outside that state who owns property there? What remedy does a plaintiff have for a person who is outside of the state? Does it matter when property is attached? What are the limitations of the full faith and credit clause?

Finding

In a lengthy opinion, the justices found for Neff. They determined that the sovereignty of a state does not extend beyond its borders, except insofar as a party outside that state has contracted in some way within that state. An action in rem, against property, can prevail against the property alone, but not against a person who has not been personally served; while an action in personam, against the person, is without any validity unless service has been completed upon him or his appearance.

The court decided that if Mitchell had attached the property and proceeded in rem against the property, he could have legally prevailed, as an owner of property is ordinarily expected to retain enough control over that property to be aware that it is attached. The attempt to bring the suit in personam, against Neff directly, was an attempt to obtain a default judgment enforceable against any property owned by Neff, and this was invalid without personal service on Neff.