1

CIVIL PROCEDURE

CASES, MATERIALS, AND QUESTIONS

FIFTH EDITION

2011 Letter Update

RICHARD D. FREER

Robert Howell Hall Professor of Law

Emory University School of Law

Atlanta, Georgia

WENDY COLLINS PERDUE

Dean and Professor of Law

University of Richmond School of Law

Richmond, Virginia

LEXISNEXIS

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2011 Update Memorandum

This memorandum has been prepared by Richard Freer and Wendy Perdue for the

benefit of students and faculty. The closing date for materials was June 30, 2011.

Permission is granted to distribute copies free of charge to students in classes using the

casebook.

The Sixth Edition of this Casebook will be published in early Spring 2012, in time

for review and adoption for courses starting in the Fall Semester 2012.

TABLE OF CONTENTS

Note on Changes to Computation of Time .....................................................................4

CHAPTER 2: PERSONAL JURISDICTION

PART B. CONSTITUTIONAL LIMITS ON PERSONAL JURISDICITON

SECTION 3. THE MODERN ERA .......................................................6

J. McIntyre Machinery, Ltd. v. Nicastro .................................................6

Questions..................................................................................................22

SECTION 4: GENERAL JURISDICTION23

Goodyear Dunlop Tires Operations, S.A. v. Brown ...............................23

Questions .................................................................................................29

CHAPTER 3: NOTICE AND OPPORTUNITY TO BE HEARD ...........................30

PART B: NOTICE .............................................................................................30

PART C: OPPORTUNITY TO BE HEARD .....................................................30

CHAPTER 4: SUBJECT MATTER JURISDICTION ............................................31

PART C: DETERMINING CITIZENSHIP OF ENTITIES ..............................31

i. CORPORATIONS ................................................................................31

The Hertz Corporation v. Friend ...........................................................31

Notes and Questions ...............................................................................39

ii. NON-INCORPORATED BUSINESSES ...........................................40

Note on Non-Incorporated Businesses ....................................................40

SECTION 6: REMOVAL JURISDICTION ..........................................40

Note ......................................................................................................40

CHAPTER 7: PLEADINGS ........................................................................................42

PART C: THE COMPLAINT

SECTION 1 REQUIREMENTS .............................................................42

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Note on Iqbal ..........................................................................................42

Questions .................................................................................................46

PART D: DEFENDANT‘S OPTIONS IN RESPONSE ....................................47

SECTION 4: DEFAULT AND DEFAULT JUDGMENT .................... 47

PART E: AMENDED PLEADINGS

SECTION 1: BASIC PRINCIPLES UNDER RULE 15(a) ...................48

SECTION 3: AMENDMENT AND STATUTE OF LIMITATIONS ..48

CHAPTER 9: ADJUDICATION ................................................................................49

PART A: THE RIGHT TO A JURY .................................................................49

PART C: SUMMARY JUDGMENT ................................................................49

PART D: CONTROLLING AND SECOND-GUESSING JURIES .................49

CHAPTER 10: WHAT LAW APPLIES IN FEDERAL COURT ...........................50

PART B: DETERMINING WHAT LAW APPLIES ........................................50

3. THE FEDERAL RULES OF CIVIL PROCEDURE ..........................50

a. WHAT HAPPENS WHEN THERE IS A FEDERAL RULE OF

CIVIL PROCEDURE ON POINT ...............................................50

ii. DETERMINING WHETHER A FEDERAL DIRECTIVE IS

VALID .........................................................................................50

CHAPTER 11: THE PRECLUSION DOCTRINES ................................................52

PART C: ISSUE PRECLUSION

SECTION 6. AGAINST WHOM CAN ISSUE PRECLUSION BE

ASSERTED? .......................................................................................52

CHAPTER 12: SCOPE OF LITIGATION ...............................................................57

PART F: OVERRIDING PLAINTIFF‘S PARTY STRUCTURE

SECTION 2. NECESSARY AND INDISPENSABLE PARTIES ........57

CHAPTER 13: SPECIAL MULTI-PARTY LITIGATION: INTERPLEADER

AND THE CLASS ACTION .......................................................................................58

PART C: THE CLASS ACTION

SECTION 4:

PRACTICE UNDER RULE 23 ..............................................................58

CHAPTER 14: APPEALS ..........................................................................................61

PART C: APPELLATE JURISDICTION IN THE FEDERAL COURTS

SECTION 2: COLLATERAL ORDER DOCTRINE .............................61

SECTION 5: Rule 54(b) ........................................................................61

SECTION 7: APPEALABILITY OF DISCOVERY ORDERS ............62

PART E: REVIEW OF JUDGMENTS OUTSIDE THE APPEALS

PROCESS ...............................................................................................62

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NOTE ON CHANGES TO COMPUTATION OF TIME

Effective December 1, 2009, the Federal Rules changed the method for

computing time and various time limits. The changes affected these Rules:

• Civil Rules 6, 12, 14, 15, 23, 27, 32, 38, 50, 52, 53, 54, 55, 56, 59, 62, 65, 68,

71.1, 72, 81; Supplemental Rules B, C, and G; and Illustrative Civil Forms 3, 4,

and 60; and

• Appellate Rules 4, 5, 6, 10, 12, 15, 19, 25, 26, 27, 28.1, 30, 31, 39, and 41;

• Bankruptcy Rules 1007, 1011, 1019, 1020, 2002, 2003, 2006, 2007, 2007.2, 2008,

2015, 2015.1, 2015.2, 2015.3, 2016, 3001, 3015, 3017, 3019, 3020, 4001, 4002,

4004, 6003, 6004, 6006, 6007, 7004, 7012, 8001, 8002, 8003, 8006, 8009, 8015,

8017, 9006, 9027, and 9033;

• Criminal Rules 5.1, 7, 12.1, 12.3, 29, 33, 34, 35, 41, 45, 47, 58, 59, and Rules 8 of

the Rules Governing §§ 2254 and 2255 Cases.

The Rules Advisory Committee explained the reasons for the changes in the

Committee Note to the proposed amendments to Fed. R. Civ. P. 6:

Subdivision (a)(1). . . .

Under former Rule 6(a), a period of 11 days or more was

computed differently than a period of less than 11 days. Intermediate

Saturdays, Sundays, and legal holidays were included in computing the

longer periods, but excluded in computing the shorter periods. Former

Rule 6(a) thus made computing deadlines unnecessarily complicated and

led to counterintuitive results. For example, a 10-day period and a 14-day

period that started on the same day usually ended on the same day — and

the 10-day period not infrequently ended later than the 14-day period. . . .

Under new subdivision (a)(1), all deadlines stated in days (no

matter the length) are computed in the same way. The day of the event

that triggers the deadline is not counted. All other days — including

intermediate Saturdays, Sundays, and legal holidays — are counted, with

only one exception: If the period ends on a Saturday, Sunday, or legal

holiday, then the deadline falls on the next day that is not a Saturday,

Sunday, or legal holiday. An illustration is provided below in the

discussion of subdivision (a)(5). Subdivision (a)(3) addresses filing

deadlines that expire on a day when the clerk‘s office is inaccessible.

. . . .

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Periods previously expressed as less than 11 days will be shortened

as a practical matter by the decision to count intermediate Saturdays,

Sundays, and legal holidays in computing all periods. Many of those

periods have been lengthened to compensate for the change. See, e.g.,

Rule 14(a)(1).

Most of the 10-day periods were adjusted to meet the change in

computation method by setting 14 days as the new period. A 14-day

period corresponds to the most frequent result of a 10-day period under the

former computation method — two Saturdays and two Sundays were

excluded, giving 14 days in all. A 14-day period has an additional

advantage. The final day falls on the same day of the week as the event

that triggered the period — the 14th day after a Monday, for example, is a

Monday. This advantage of using week-long periods led to adopting 7-

day periods to replace some of the periods set at less than 10 days, and 21-

day periods to replace 20-day periods. Thirty-day and longer periods,

however, were generally retained without change.

Changes Made after Publication and Comment

. . . .

(2) Civil Rules Time Provisions

Many Civil Rules containing specific time periods shorter than 11

days were published for comment on amendments extending the time

periods to account for the impact of changing to a computation method

that includes every day, abandoning the former practice of excluding

intermediate Saturdays, Sundays, and legal holidays. As set out below, it

is recommended that all of the proposals be adopted as published except

for Rules 50, 52, and 59. The proposals to extend the time for motions

under Rules 50, 52, and 59 from 10 days to 30 days have been scaled back

to a 28-day period. The 28-day period was chosen in coordination with

the Appellate Rules Committee to recognize the inconveniences that

would arise from adopting the same 30-day period as the deadline for

filing notices of appeal in most civil actions.

. . . .

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CHAPTER 2: PERSONAL JURISDICTION

B. CONSTITUTIONAL LIMITS ON PERSONAL JURISDICITON

3. THE MODERN ERA

At page 83, add

J. MCINTYRE MACHINERY, LTD., v. NICASTRO

Supreme Court of the United States

2011 U.S. LEXIS 4800 (June 27, 2011)

JUSTICE KENNEDY announced the judgment of the Court and delivered an

opinion, in which THE CHIEF JUSTICE, JUSTICE SCALIA, and JUSTICE THOMAS

join.

Whether a person or entity is subject to the jurisdiction of a state court despite not

having been present in the State either at the time of suit or at the time of the alleged

injury, and despite not having consented to the exercise of jurisdiction, is a question that

arises with great frequency in the routine course of litigation. The rules and standards for

determining when a State does or does not have jurisdiction over an absent party have

been unclear because of decades-old questions left open in Asahi Metal Industry Co. v.

Superior Court of Cal., Solano Cty., 480 U.S. 102 (1987).

Here, the Supreme Court of New Jersey, relying in part on Asahi, held that New

Jersey's courts can exercise jurisdiction over a foreign manufacturer of a product so long

as the manufacturer "knows or reasonably should know that its products are distributed

through a nationwide distribution system that might lead to those products being sold in

any of the fifty states." Nicastro v. McIntyre Machinery America, Ltd., 201 N. J. 48, 76,

77 (2010). Applying that test, the court concluded that a British manufacturer of scrap

metal machines was subject to jurisdiction in New Jersey, even though at no time had it

advertised in, sent goods to, or in any relevant sense targeted the State.

That decision cannot be sustained. Although the New Jersey Supreme Court issued an

extensive opinion with careful attention to this Court's cases and to its own pre-cedent,

the "stream of commerce" metaphor carried the decision far afield. Due process protects

the defendant's right not to be coerced except by lawful judicial power. As a general rule,

the exercise of judicial power is not lawful unless the defendant "purposefully avails

itself of the privilege of conducting activities within the forum State, thus invoking the

benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253 (1958).

There may be exceptions, say, for instance, in cases involving an intentional tort. But the

general rule is applicable in this products-liability case, and the so-called "stream-of-

commerce" doctrine cannot displace it.

I

This case arises from a products-liability suit filed in New Jersey state court. Robert

Nicastro seriously injured his hand while using a metal-shearing machine manufactured

by J. McIntyre Machinery, Ltd. (J. McIntyre). The accident occurred in New Jersey, but

the machine was manufactured in England, where J. McIntyre is incorporated and

operates. The question here is whether the New Jersey courts have jurisdiction over J.

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McIntyre, notwithstanding the fact that the company at no time either marketed goods in

the State or shipped them there. Nicastro was a plaintiff in the New Jersey trial court and

is the respondent here; J. McIntyre was a defendant and is now the petitioner.

At oral argument in this Court, Nicastro's counsel stressed three primary facts in

defense of New Jersey's assertion of jurisdiction over J. McIntyre.

First, an independent company agreed to sell J. McIntyre's machines in the United

States. J. McIntyre itself did not sell its machines to buyers in this country beyond the

U.S. distributor, and there is no allegation that the distributor was under J. McIntyre's

control.

Second, J. McIntyre officials attended annual conventions for the scrap recycling

industry to advertise J. Mc-Intyre's machines alongside the distributor. The conventions

took place in various States, but never in New Jersey.

Third, no more than four machines (the record suggests only one), including the

machine that caused the injuries that are the basis for this suit, ended up in New Jersey.

In addition to these facts emphasized by petitioner, the New Jersey Supreme Court

noted that J. McIntyre held both United States and European patents on its recycling

technology. 201 N. J., at 55. It also noted that the U.S. distributor "structured [its] adver-

tising and sales efforts in accordance with" J. McIntyre's "direction and guidance

whenever possible," and that "at least some of the machines were sold on consignment

to" the distributor. Id., at 55, 56 (internal quotation marks omitted).

In light of these facts, the New Jersey Supreme Court concluded that New Jersey

courts could exercise jurisdiction over petitioner without contravention of the Due

Process Clause. Jurisdiction was proper, in that court's view, because the injury occurred

in New Jersey; because petitioner knew or reasonably should have known "that its

products are distributed through a nationwide distribution system that might lead to those

products being sold in any of the fifty states"; and because petitioner failed to "take some

reasonable step to prevent the distribution of its prod-ucts in this State." Id., at 77.

Both the New Jersey Supreme Court's holding and its account of what it called "[t]he

stream-of-commerce doctrine of jurisdiction," id., at 80, were incorrect, however. This

Court's Asahi decision may be responsible in part for that court's error regarding the

stream of commerce, and this case presents an opportunity to provide greater clarity.

II

The Due Process Clause protects an individual's right to be deprived of life, liberty, or

property only by the exercise of lawful power. This is no less true with respect to the

power of a sovereign to resolve disputes through judicial process than with respect to the

power of a sovereign to prescribe rules of conduct for those within its sphere. As a

general rule, neither statute nor judicial decree may bind strangers to the State. Cf.

Burnham v. Superior Court of Cal., County of Marin, 495 U.S. 604, 608-609 (1990)

(opinion of SCALIA, J.) (invoking "the phrase coram non judice, 'before a person not a

judge' — meaning, in effect, that the proceeding in question was not a judicial

proceeding because lawful judicial authority was not present, and could therefore not

yield a judgment")

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A court may subject a defendant to judgment only when the defendant has sufficient

contacts with the sovereign "such that the maintenance of the suit does not offend

'traditional notions of fair play and substantial justice.'" International Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463

(1940)). Freeform notions of fundamental fairness divorced from traditional practice

cannot transform a judgment rendered in the absence of authority into law. As a general

rule, the sovereign's exercise of power requires some act by which the defendant

"purposefully avails itself of the privilege of conducting activities within the forum State,

thus invoking the benefits and protections of its laws," Hanson, 357 U.S., at 253, though

in some cases, as with an intentional tort, the defendant might well fall within the State's

authority by reason of his attempt to obstruct its laws. In products-liability cases like this

one, it is the defendant's purposeful availment that makes jurisdiction consistent with

"traditional notions of fair play and substantial justice."

A person may submit to a State's authority in a number of ways. There is, of course,

explicit consent. E.g., Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee,

456 U.S. 694, 703 (1982). Presence within a State at the time suit commences through

service of process is another example. See Burnham, supra. Citizenship or domicile —

or, by analogy, incorporation or principal place of business for corporations — also

indicates general submission to a State's powers. Each of these examples reveals

circumstances, or a course of conduct, from which it is proper to infer an intention to

benefit from and thus an intention to submit to the laws of the forum State. Cf. Burger

King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985). These examples support exercise of

the general jurisdiction of the State's courts and allow the State to resolve both matters

that originate within the State and those based on activities and events elsewhere. By

contrast, those who live or operate primarily outside a State have a due process right not

to be subjected to judgment in its courts as a general matter.

There is also a more limited form of submission to a State's authority for disputes that

"arise out of or are connected with the activities within the state." International Shoe Co.,

supra, at 319. Where a defendant "purposefully avails itself of the privilege of conducting

activities within the forum State, thus invoking the benefits and protections of its laws,"

Hanson, supra, at 253, it submits to the judicial power of an otherwise foreign sovereign

to the extent that power is exercised in connection with the defendant's activities touching

on the State. In other words, submission through contact with and activity directed at a

sovereign may justify specific jurisdiction "in a suit arising out of or related to the

defendant's contacts with the forum." Helicopteros, supra, at 414, n. 8.

The imprecision arising from Asahi, for the most part, results from its statement of the

relation between jurisdiction and the "stream of commerce." The stream of commerce,

like other metaphors, has its deficiencies as well as its utility. It refers to the movement of

goods from manufacturers through distributors to consumers, yet beyond that descriptive

purpose its meaning is far from exact. This Court has stated that a defendant's placing

goods into the stream of commerce "with the expectation that they will be purchased by

consumers within the forum State" may indicate purposeful availment. World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 298 (1980) (finding that expectation

lacking). But that statement does not amend the general rule of personal jurisdiction. It

merely observes that a defendant may in an appropriate case be subject to jurisdiction

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without entering the forum — itself an unexceptional proposition — as where

manufacturers or distributors "seek to serve" a given State's market. Id., at 295. The

principal inquiry in cases of this sort is whether the defendant's activities manifest an

intention to submit to the power of a sovereign. In other words, the defendant must

"purposefully avai[l] it-self of the privilege of conducting activities within the forum

State, thus invoking the benefits and protections of its laws." Hanson, supra, at 253;

Insurance Corp., supra, at 704-705 ("[A]ctions of the defendant may amount to a legal

submission to the jurisdiction of the court"). Sometimes a defendant does so by sending

its goods rather than its agents. The defendant's transmission of goods permits the

exercise of jurisdiction only where the defendant can be said to have targeted the forum;

as a general rule, it is not enough that the defendant might have predicted that its goods

will reach the forum State.

In Asahi, an opinion by Justice Brennan for four Justices outlined a different

approach. It discarded the central concept of sovereign authority in favor of

considerations of fairness and foreseeability. As that concurrence contended, "jurisdiction

premised on the placement of a product into the stream of commerce [without more] is

consistent with the Due Process Clause," for "[a]s long as a participant in this process is

aware that the final product is being marketed in the forum State, the possibility of a

lawsuit there cannot come as a surprise." 480 U.S., at 117 (opinion concurring in part and

concurring in judgment). It was the premise of the concurring opinion that the defendant's

ability to anticipate suit renders the assertion of jurisdiction fair. In this way, the opinion

made foreseeability the touchstone of jurisdiction.

The standard set forth in Justice Brennan's concurrence was rejected in an opinion

written by Justice O'Connor; but the relevant part of that opinion, too, commanded the

assent of only four Justices, not a majority of the Court. That opinion stated: "The

'substantial connection' between the defendant and the forum State necessary for a

finding of minimum contacts must come about by an action of the defendant purposefully

directed toward the forum State. The placement of a product into the stream of

commerce, without more, is not an act of the defendant purposefully directed toward the

forum State." Id., at 112 (emphasis deleted; citations omitted).

Since Asahi was decided, the courts have sought to reconcile the competing opinions.

But Justice Brennan's concurrence, advocating a rule based on general notions of fairness

and foreseeability, is inconsistent with the premises of lawful judicial power. This Court's

precedents make clear that it is the defendant's actions, not his expectations, that

empower a State's courts to subject him to judgment.

The conclusion that jurisdiction is in the first instance a question of authority rather

than fairness explains, for example, why the principal opinion in Burnham "conducted no

independent inquiry into the desirability or fairness" of the rule that service of process

within a State suffices to establish jurisdiction over an otherwise foreign defendant. 495

U.S., at 621. As that opinion explained, "[t]he view developed early that each State had

the power to hale before its courts any individual who could be found within its borders."

Id., at 610. Furthermore, were general fairness considerations the touchstone of

jurisdiction, a lack of purposeful availment might be excused where carefully crafted

judicial procedures could otherwise protect the defendant's interests, or where the

plaintiff would suffer substantial hardship if forced to litigate in a foreign forum. That

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such considerations have not been deemed controlling is instructive. See, e.g., World-

Wide Volkswagen, supra, at 294.

Two principles are implicit in the foregoing. First, personal jurisdiction requires a

forum-by-forum, or sovereign-by-sovereign, analysis. The question is whether a

defendant has followed a course of conduct directed at the society or economy existing

within the jurisdiction of a given sovereign, so that the sovereign has the power to subject

the defendant to judgment concerning that conduct. Personal jurisdiction, of course,

restricts "judicial power not as a matter of sovereignty, but as a matter of individual

liberty," for due process protects the individual's right to be subject only to lawful power.

Insurance Corp., 456 U.S., at 702. But whether a judicial judgment is lawful depends on

whether the sovereign has authority to render it.

The second principle is a corollary of the first. Because the United States is a distinct

sovereign, a defendant may in principle be subject to the jurisdiction of the courts of the

United States but not of any particular State. This is consistent with the premises and

unique genius of our Constitution. Ours is "a legal system unprecedented in form and

design, establishing two orders of government, each with its own direct relationship, its

own privity, its own set of mutual rights and obligations to the people who sustain it and

are governed by it." U.S. Term Limits, Inc. v. Thornton, 514 U.S. 779, 838 (1995)

(KENNEDY, J., concurring). For jurisdiction, a litigant may have the requisite

relationship with the United States Government but not with the government of any

individual State. That would be an exceptional case, however. If the defendant is a

domestic domiciliary, the courts of its home State are available and can exercise general

jurisdiction. And if another State were to assert jurisdiction in an inappropriate case, it

would upset the federal balance, which posits that each State has a sovereignty that is not

subject to unlawful intrusion by other States. Furthermore, foreign corporations will often

target or concentrate on particular States, subjecting them to specific jurisdiction in those

forums.

It must be remembered, however, that although this case and Asahi both involve

foreign manufacturers, the undesirable consequences of Justice Brennan's approach are

no less significant for domestic producers. The owner of a small Florida farm might sell

crops to a large nearby distributor, for example, who might then distribute them to

grocers across the country. If foreseeability were the controlling criterion, the farmer

could be sued in Alaska or any number of other States' courts without ever leaving town.

And the issue of foreseeability may itself be contested so that significant expenses are

incurred just on the preliminary issue of jurisdiction. Jurisdictional rules should avoid

these costs whenever possible.

The conclusion that the authority to subject a defendant to judgment depends on

purposeful availment, consistent with Justice O'Connor's opinion in Asahi, does not by

itself resolve many difficult questions of jurisdiction that will arise in particular cases.

The defendant's conduct and the economic realities of the market the defendant seeks to

serve will differ across cases, and judicial exposition will, in common-law fashion,

clarify the contours of that principle.

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III

In this case, petitioner directed marketing and sales efforts at the United States. It may

be that, assuming it were otherwise empowered to legislate on the subject, the Congress

could authorize the exercise of jurisdiction in appropriate courts. That circumstance is not

presented in this case, however, and it is neither necessary nor appropriate to address here

any constitutional concerns that might be attendant to that exercise of power. See Asahi,

480 U.S., at 113. Nor is it necessary to determine what substantive law might apply

were Congress to authorize jurisdiction in a federal court in New Jersey. A sovereign's

legislative authority to regulate conduct may present considerations different from those

presented by its authority to subject a defendant to judgment in its courts. Here the

question concerns the authority of a New Jersey state court to exercise jurisdiction, so it

is petitioner's purposeful contacts with New Jersey, not with the United States, that alone

are relevant.

Respondent has not established that J. McIntyre engaged in conduct purposefully

directed at New Jersey. Recall that respondent's claim of jurisdiction centers on three

facts: The distributor agreed to sell J. McIntyre's machines in the United States; J.

McIntyre officials attended trade shows in several States but not in New Jersey; and up to

four machines ended up in New Jersey. The British manufacturer had no office in New

Jersey; it neither paid taxes nor owned property there; and it neither advertised in, nor

sent any employees to, the State. Indeed, after discovery the trial court found that the

"defendant does not have a single contact with New Jersey short of the machine in

question ending up in this state." App. to Pet. for Cert. 130a. These facts may reveal an

intent to serve the U.S. market, but they do not show that J. McIntyre purposefully

availed itself of the New Jersey market.

It is notable that the New Jersey Supreme Court appears to agree, for it could "not

find that J. McIntyre had a presence or minimum contacts in this State — in any

jurisprudential sense — that would justify a New Jersey court to exercise jurisdiction in

this case." 201 N. J., at 61. The court nonetheless held that petitioner could be sued in

New Jersey based on a "stream-of-commerce theory of jurisdiction." Ibid. As discussed,

however, the stream-of-commerce metaphor cannot supersede either the mandate of the

Due Process Clause or the limits on judicial authority that Clause ensures. The New

Jersey Supreme Court also cited "significant policy reasons" to justify its holding,

including the State's "strong interest in protecting its citizens from defective products."

Id., at 75. That interest is doubtless strong, but the Constitution commands restraint

before discarding liberty in the name of expediency.

* * *

Due process protects petitioner's right to be subject only to lawful authority. At no

time did petitioner engage in any activities in New Jersey that reveal an intent to invoke

or benefit from the protection of its laws. New Jersey is without power to adjudge the

rights and liabilities of J. McIntyre, and its exercise of jurisdiction would violate due

process. The contrary judgment of the New Jersey Supreme Court is

Reversed.

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JUSTICE BREYER, with whom JUSTICE ALITO joins, concurring in the judgment.

* * *

In my view, the outcome of this case is determined by our precedents. Based on the

facts found by the New Jersey courts, respondent Robert Nicastro failed to meet his

burden to demonstrate that it was constitutionally proper to exercise jurisdiction over

petitioner J. McIntyre Machinery, Ltd. (British Manufacturer), a British firm that

manufactures scrap-metal machines in Great Britain and sells them through an

independent distributor in the United States (American Distributor). On that basis, I agree

with the plurality that the contrary judgment of the Supreme Court of New Jersey should

be reversed.

I

In asserting jurisdiction over the British Manufacturer, the Supreme Court of New

Jersey relied most heavily on three primary facts as providing constitutionally sufficient

"contacts" with New Jersey, thereby making it fundamentally fair to hale the British

Manufacturer before its courts: (1) The American Distributor on one occasion sold and

shipped one machine to a New Jersey customer, namely, Mr. Nicastro's employer, Mr.

Curcio; (2) the British Manufacturer permitted, indeed wanted, its independent American

Distributor to sell its machines to anyone in America willing to buy them; and (3)

representatives of the British Manufacturer attended trade shows in "such cities as

Chicago, Las Vegas, New Orleans, Orlando, San Diego, and San Francisco." Id., at 54-

55. In my view, these facts do not provide contacts between the British firm and the State

of New Jersey constitutionally sufficient to support New Jersey's assertion of jurisdiction

in this case.

None of our precedents finds that a single isolated sale, even if accompanied by the

kind of sales effort indicated here, is sufficient. Rather, this Court's previous holdings

suggest the contrary. The Court has held that a single sale to a customer who takes an

accident-causing product to a different State (where the accident takes place) is not a

sufficient basis for asserting jurisdiction. See World-Wide Volkswagen Corp. v. Woodson,

444 U.S. 286 (1980). And the Court, in separate opinions, has strongly suggested that a

single sale of a product in a State does not constitute an adequate basis for asserting

jurisdiction over an out-of-state defendant, even if that defendant places his goods in the

stream of commerce, fully aware (and hoping) that such a sale will take place. See Asahi

Metal Industry Co. v. Superior Court of Cal., Solano Cty., 480 U.S. 102, 111, 112 (1987)

(opinion of O'Connor, J.) (requiring "something more" than simply placing "a product

into the stream of commerce," even if defendant is "awar[e]" that the stream "may or will

sweep the product into the forum State"); id., at 117 (Brennan, J., concurring in part and

concurring in judgment) (jurisdiction should lie where a sale in a State is part of "the

regular and anticipated flow" of commerce into the State, but not where that sale is only

an "edd[y]," i.e., an isolated occurrence); id., at 122 (Stevens, J., concurring in part and

concurring in judgment) (indicating that "the volume, the value, and the hazardous

character" of a good may affect the jurisdictional inquiry and emphasizing Asahi's

"regular course of dealing").

Here, the relevant facts found by the New Jersey Supreme Court show no "regular . . .

flow" or "regular course" of sales in New Jersey; and there is no "something more," such

13

as special state-related design, advertising, advice, marketing, or anything else. Mr.

Nicastro, who here bears the burden of proving jurisdiction, has shown no specific effort

by the British Manufacturer to sell in New Jersey. He has introduced no list of potential

New Jersey customers who might, for example, have regularly attended trade shows. And

he has not otherwise shown that the British Manufacturer "purposefully avail[ed] itself of

the privilege of conducting activities" within New Jersey, or that it de-livered its goods in

the stream of commerce "with the expectation that they will be purchased" by New Jersey

users. World-Wide Volkswagen, supra, at 297-298 (internal quotation marks omitted).

There may well have been other facts that Mr. Nicastro could have demonstrated in

support of jurisdiction. And the dissent considers some of those facts. But the plaintiff

bears the burden of establishing jurisdiction, and here I would take the facts precisely as

the New Jersey Supreme Court stated them. Insurance Corp. of Ireland v. Compagnie des

Bauxites de Guinee, 456 U.S. 694, 709 (1982); Blakey v. Continental Airlines, Inc., 164

N. J. 38, 71 (2000); see 201 N. J., at 54-56; App. to Pet. for Cert. 128a-137a (trial court's

"reasoning and finding(s)").

Accordingly, on the record present here, resolving this case requires no more than

adhering to our precedents.

II

I would not go further. Because the incident at issue in this case does not implicate

modern concerns, and because the factual record leaves many open questions, this is an

unsuitable vehicle for making broad pronouncements that refashion basic jurisdictional

rules.

A

The plurality seems to state strict rules that limit jurisdiction where a defendant does

not "inten[d] to submit to the power of a sovereign" and cannot "be said to have targeted

the forum." But what do those standards mean when a company targets the world by

selling products from its Web site? And does it matter if, instead of shipping the products

directly, a company consigns the products through an intermediary (say, Amazon.com)

who then receives and fulfills the orders? And what if the company markets its products

through popup advertisements that it knows will be viewed in a forum? Those issues have

serious commercial consequences but are totally absent in this case.

B

But though I do not agree with the plurality's seemingly strict no-jurisdiction rule, I

am not persuaded by the absolute approach adopted by the New Jersey Supreme Court

and urged by respondent and his amici. Under that view, a producer is subject to

jurisdiction for a products-liability action so long as it "knows or reasonably should know

that its products are distributed through a nationwide distribution system that might lead

to those products being sold in any of the fifty states." 201 N. J., at 76-77 (emphasis

added). In the context of this case, I cannot agree.

For one thing, to adopt this view would abandon the heretofore accepted inquiry of

whether, focusing upon the relationship between "the defendant, the forum, and the

litigation," it is fair, in light of the defendant's contacts with that forum, to subject the

defendant to suit there. Shaffer v. Heitner, 433 U.S. 186, 204 (1977) (emphasis added). It

14

would ordinarily rest jurisdiction instead upon no more than the occurrence of a product-

based accident in the forum State. But this Court has rejected the notion that a defendant's

amenability to suit "travel[s] with the chattel." World-Wide Volkswagen, 444 U.S., at 296.

For another, I cannot reconcile so automatic a rule with the constitutional demand for

"minimum contacts" and "purposefu[l] avail[ment]," each of which rest upon a particular

notion of defendant-focused fairness. Id., at 291, 297 (internal quotation marks omitted).

A rule like the New Jersey Supreme Court's would permit every State to assert

jurisdiction in a products-liability suit against any domestic manufacturer who sells its

products (made anywhere in the United States) to a national distributor, no matter how

large or small the manufacturer, no matter how distant the forum, and no matter how few

the number of items that end up in the particular forum at issue. What might appear fair

in the case of a large manufacturer which specifically seeks, or expects, an equal-sized

distributor to sell its product in a distant State might seem unfair in the case of a small

manufacturer (say, an Appalachian potter) who sells his product (cups and saucers)

exclusively to a large distributor, who resells a single item (a coffee mug) to a buyer from

a distant State (Hawaii). I know too little about the range of these or in-between

possibilities to abandon in favor of the more absolute rule what has previously been this

Court's less absolute approach.

Further, the fact that the defendant is a foreign, rather than a domestic, manufacturer

makes the basic fairness of an absolute rule yet more uncertain. I am again less certain

than is the New Jersey Supreme Court that the nature of international commerce has

changed so significantly as to require a new approach to personal jurisdiction.

It may be that a larger firm can readily "alleviate the risk of burdensome litigation by

procuring insurance, passing the expected costs on to customers, or, if the risks are too

great, severing its connection with the State." World-Wide Volkswagen, supra, at 297.

But manufacturers come in many shapes and sizes. It may be fundamentally unfair to

require a small Egyptian shirt maker, a Brazilian manufacturing cooperative, or a Kenyan

coffee farmer, selling its products through international distributors, to respond to

products-liability tort suits in virtually every State in the United States, even those in

respect to which the foreign firm has no connection at all but the sale of a single

(allegedly defective) good. And a rule like the New Jersey Supreme Court suggests

would require every product manufacturer, large or small, selling to American

distributors to understand not only the tort law of every State, but also the wide variance

in the way courts within different States apply that law. See, e.g., Dept. of Justice, Bureau

of Justice Statistics Bulletin, Tort Trials and Verdicts in Large Counties, 2001, p. 11

(reporting percentage of plaintiff winners in tort trials among 46 populous counties,

ranging from 17.9% (Worcester, Mass.) to 69.1% (Milwaukee, Wis.)).

C

At a minimum, I would not work such a change to the law in the way either the

plurality or the New Jersey Supreme Court suggests without a better understanding of the

relevant contemporary commercial circumstances. Insofar as such considerations are

relevant to any change in present law, they might be presented in a case (unlike the

present one) in which the Solicitor General participates.

15

This case presents no such occasion, and so I again reiterate that I would adhere

strictly to our precedents and the limited facts found by the New Jersey Supreme Court.

And on those grounds, I do not think we can find jurisdiction in this case. Accordingly,

though I agree with the plurality as to the outcome of this case, I concur only in the

judgment of that opinion and not its reasoning.

JUSTICE GINSBURG, with whom JUSTICE SOTOMAYOR and JUSTICE

KAGAN join, dissenting.

A foreign industrialist seeks to develop a market in the United States for machines it

manufactures. It hopes to derive substantial revenue from sales it makes to United States

purchasers. Where in the United States buyers reside does not matter to this

manufacturer. Its goal is simply to sell as much as it can, wherever it can. It excludes no

region or State from the market it wishes to reach. But, all things considered, it prefers to

avoid products liability litigation in the United States. To that end, it engages a U.S.

distributor to ship its machines stateside. Has it succeeded in escaping personal

jurisdiction in a State where one of its products is sold and causes injury or even death to

a local user?

Under this Court's pathmarking precedent in International Shoe Co. v. Washington,

326 U.S. 310 (1945), and subsequent decisions, one would expect the answer to be

unequivocally, "No." But instead, six Justices of this Court, in divergent opinions, tell us

that the manufacturer has avoided the jurisdiction of our state courts, except perhaps in

States where its products are sold in sizeable quantities. Inconceivable as it may have

seemed yesterday, the splintered majority today "turn[s] the clock back to the days before

modern long-arm statutes when a manufacturer, to avoid being haled into court where a

user is injured, need only Pilate-like wash its hands of a product by having independent

distributors market it." Weintraub, A Map Out of the Personal Jurisdiction Labyrinth, 28

U. C. Davis L. Rev. 531, 555 (1995).

I

* * *

From at least 1995 until 2001, McIntyre UK retained an Ohio-based company,

McIntyre Machinery America, Ltd. (McIntyre America), "as its exclusive distributor for

the en-tire United States." Nicastro v. McIntyre Machinery America, Ltd., 399 N. J.

Super. 539, 558 (App. 2008). 2 Though similarly named, the two companies were separate

and independent entities with "no commonality of ownership or management." In

invoices and other written communications, McIntyre America described itself as

McIntyre UK's national distributor, "America's Link" to "Quality Metal Processing

Equipment" from England..

In a November 23, 1999 letter to McIntyre America, McIntyre UK's president spoke

plainly about the manufacturer's objective in authorizing the exclusive distributorship:

"All we wish to do is sell our products in the [United] States — and get paid!" Notably,

McIntyre America was concerned about U.S. litigation involving McIntyre UK products,

in which the distributor had been named as a defendant. McIntyre UK counseled

16

McIntyre America to respond personally to the litigation, but reassured its distributor that

"the product was built and designed by McIntyre Machinery in the UK and the buck stops

here — if there's something wrong with the machine." Answering jurisdictional

interrogatories, McIntyre UK stated that it had been named as a defendant in lawsuits in

Illinois, Kentucky, Massachusetts, and West Virginia. And in correspondence with

McIntyre America, McIntyre UK noted that the manufacturer had products liability

insurance coverage. Id., at 129a.

Over the years, McIntyre America distributed several McIntyre UK products to U.S.

customers, including, in addition to the 640 Shear, McIntyre UK's "Niagara" and "Tardis"

systems, wire strippers, and can machines. In promoting McIntyre UK's products at

conventions and demonstration sites and in trade journal advertisements, McIntyre

America looked to McIntyre UK for direction and guidance. To achieve McIntyre UK's

objective, i.e., "to sell [its] machines to customers throughout the United States," 399 N.

J. Super., at 548, "the two companies [were acting] closely in concert with each other,"

McIntyre UK never instructed its distributor to avoid certain States or regions of the

country; rather, as just noted, the manufacturer engaged McIntyre America to attract

customers "from anywhere in the United States."

In sum, McIntyre UK's regular attendance and exhibitions at ISRI conventions was

surely a purposeful step to reach customers for its products "anywhere in the United

States." At least as purposeful was McIntyre UK's engagement of McIntyre America as

the conduit for sales of McIntyre UK's machines to buyers "throughout the United

States." Given McIntyre UK's endeavors to reach and profit from the United States

market as a whole, Nicastro's suit, I would hold, has been brought in a forum entirely

appropriate for the adjudication of his claim. He alleges that McIntyre UK's shear

machine was defectively designed or manufactured and, as a result, caused injury to him

at his workplace. The machine arrived in Nicastro's New Jersey workplace not randomly

or fortuitously, but as a result of the U.S. connections and distribution system that

McIntyre UK deliberately arranged. 3On what sensible view of the allocation of

adjudicatory authority could the place of Nicastro's injury within the United States be

deemed off limits for his products liability claim against a foreign manufacturer who

targeted the United States (including all the States that constitute the Nation) as the

territory it sought to develop?

II

A few points on which there should be no genuine debate bear statement at the outset.

First, all agree, Mc-Intyre UK surely is not subject to general (all-purpose) jurisdiction in

New Jersey courts, for that foreign-country corporation is hardly "at home" in New

Jersey. See Goodyear Dunlop Tires Operations, S.A. v. Brown. The question, rather, is

one of specific jurisdiction, which turns on an "affiliatio[n] between the forum and the

underlying controversy." Goodyear Dunlop, post, at 2 (quoting von Mehren & Trautman,

Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121, 1136 (1966)

(hereinafter von Mehren & Trautman); internal quotation marks omitted); see also

Goodyear Dunlop.

17

Second, no issue of the fair and reasonable allocation of adjudicatory authority among

States of the United States is present in this case. New Jersey's exercise of personal

jurisdiction over a foreign manufacturer whose dangerous product caused a workplace

injury in New Jersey does not tread on the domain, or diminish the sovereignty, of any

sister State. Indeed, among States of the United States, the State in which the injury

occurred would seem most suitable for litigation of a products liability tort claim. See

World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) (if a manufacturer

or distributor endeavors to develop a market for a product in several States, it is

reasonable "to subject it to suit in one of those States if its allegedly defective [product]

has there been the source of injury"); 28 U.S.C. § 1391(a)-(b) (in federal-court suits,

whether resting on diversity or federal-question jurisdiction, venue is proper in the

judicial district "in which a substantial part of the events or omissions giving rise to the

claim occurred").

Third, the constitutional limits on a state court's adjudicatory authority derive from

considerations of due process, not state sovereignty. As the Court clarified in Insurance

Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 69 (1982):

"The restriction on state sovereign power described in World-Wide

Volkswagen Corp. . . . must be seen as ultimately a function of the individual

liberty interest preserved by the Due Process Clause. That Clause is the only

source of the personal jurisdiction requirement and the Clause itself makes

no mention of federalism concerns. Furthermore, if the federalism concept

operated as an independent restriction on the sovereign power of the court, it

would not be possible to waive the personal jurisdiction requirement:

Individual actions cannot change the powers of sovereignty, although the

individual can subject himself to powers from which he may otherwise be

protected." Id., at 703, n. 10.

See also Shaffer v. Heitner, 433 U.S. 186, 204 (1977) (recognizing that "the mutually

exclusive sovereignty of the States [is not] the central concern of the inquiry into personal

jurisdiction"). But see ante, at 7 (plurality opinion) (asserting that "sovereign authority,"

not "fairness," is the "central concept" in determining personal jurisdiction).

Finally, in International Shoe itself, and decisions thereafter, the Court has made

plain that legal fictions, notably "presence" and "implied consent," should be discarded,

for they conceal the actual bases on which jurisdiction rests. See 326 U.S., at 316, 318;

Hutchinson v. Chase & Gilbert, 45 F.2d 139, 141 (CA2 1930) (L. Hand, J.) ("nothing is

gained by [resort to words that] concea[l] what we do"). "[T]he relationship among the

defendant, the forum, and the litigation" determines whether due process permits the

exercise of personal jurisdiction over a defendant, Shaffer, 433 U.S., at 204, and "fictions

of implied consent" or "corporate presence" do not advance the proper inquiry, id., at

202. See also Burnham v. Superior Court of Cal., County of Marin, 495 U.S. 604, 618

(1990) (plurality opinion) (International Shoe "cast . . . aside" fictions of "consent" and

"presence").

18

Whatever the state of academic debate over the role of consent in modern

jurisdictional doctrines,4 the plurality's notion that consent is the animating concept draws

no support from controlling decisions of this Court. Quite the contrary, the Court has

explained, a forum can exercise jurisdiction when its contacts with the controversy are

sufficient; invocation of a fictitious consent, the Court has repeatedly said, is unnecessary

and unhelpful. See, e.g., Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (Due

Process Clause permits "forum . . . to assert specific jurisdiction over an out-of-state

defendant who has not consented to suit there"); McGee v. International Life Ins.Co., 355

U.S. 220, 222 (1957) ("[T]his Court [has] abandoned 'consent,' 'doing business,' and

'presence' as the standard for measuring the extent of state judicial power over [out-of-

state] corporations.").

III

This case is illustrative of marketing arrangements for sales in the United States

common in today's commercial world. 6 A foreign-country manufacturer engages a U.S.

company to promote and distribute the manufacturer's products, not in any particular

State, but anywhere and everywhere in the United States the distributor can attract

purchasers. The product proves defective and injures a user in the State where the user

lives or works. Often, as here, the manufacturer will have liability insurance covering

personal injuries caused by its products.

When industrial accidents happen, a long-arm statute in the State where the injury

occurs generally permits assertion of jurisdiction, upon giving proper notice, over the

foreign manufacturer. For example, the State's statute might provide, as does New York's

long-arm statute, for the "exercise [of] personal jurisdiction over any non-domiciliary . . .

who . . .

commits a tortious act without the state causing injury to person or property

within the state, . . . if he . . . expects or should reasonably expect the act to

have consequences in the state and derives substantial revenue from

interstate or international commerce." N. Y. Civ. Prac. Law Ann. §

302(a)(3)(ii) (2008).

* * *

The modern approach to jurisdiction over corporations and other legal entities,

ushered in by International Shoe, gave prime place to reason and fairness. Is it not fair

4 Compare Brilmayer, Rights, Fairness, and Choice of Law, 98 Yale L. J. 1277, 1304-1306 (1989) (hereinafter Brilmayer) (criticizing as circular jurisdictional theories founded on "consent" or "[s]ubmission to state authority"), Perdue, Personal Jurisdiction and the Beetle in the Box, 32 Boston College L. Rev. 529, 536-544 (1991) (same), with Trangsrud, The Federal Common Law of Personal Jurisdiction, 57 Geo. Wash. L. Rev. 849, 884-885 (1989) (endorsing a consent-based doctrine of personal jurisdiction), Epstein, Consent, Not Power, as the Basis of Jurisdiction, 2001 U. Chi. Legal Forum 1, 2, 30-32 (urging that "the consent principle neatly explains the dynamics of many of our jurisdictional doctrines," but recognizing that in tort cases, the victim ordinarily should be able to sue in the place where the harm occurred).

19

and reasonable, given the mode of trading of which this case is an example, to require the

international seller to defend at the place its products cause injury? Do not litigational

convenience and choice-of-law considerations point in that direction? On what measure

of reason and fairness can it be considered undue to require McIntyre UK to defend in

New Jersey as an incident of its efforts to develop a market for its industrial machines

anywhere and everywhere in the United States?12

Is not the burden on McIntyre UK to

defend in New Jersey fair, i.e., a reasonable cost of transacting business internationally,

in comparison to the burden on Nicastro to go to Nottingham, England to gain

recompense for an injury he sustained using McIntyre's product at his workplace in

Saddle Brook, New Jersey?

McIntyre UK dealt with the United States as a single market. Like most foreign

manufacturers, it was concerned not with the prospect of suit in State X as opposed to

State Y, but rather with its subjection to suit anywhere in the United States. As a

McIntyre UK officer wrote in an e-mail to McIntyre America: "American law — who

needs it?!" (e-mail dated April 26, 1999 from Sally Johnson to Mary Gaither). If

McIntyre UK is answerable in the United States at all, is it not "perfectly appropriate to

permit the exercise of that jurisdiction . . . at the place of injury"?

In sum, McIntyre UK, by engaging McIntyre America to promote and sell its

machines in the United States, "purposefully availed itself " of the United States market

nationwide, not a market in a single State or a discrete collection of States. McIntyre UK

thereby availed itself of the market of all States in which its products were sold by its

exclusive distributor. "Th[e] 'purposeful availment' requirement," this Court has

explained, simply "ensures that a defendant will not be haled into a jurisdiction solely as

a result of 'random,' 'fortuitous,' or 'attenuated' contacts." Burger King, 471 U.S., at 475.

Adjudicatory authority is appropriately exercised where "actions by the defendant

himself" give rise to the affiliation with the forum. How could McIntyre UK not have

intended, by its actions targeting a national market, to sell products in the fourth largest

destination for imports among all States of the United States and the largest scrap metal

market? But see plurality opinion (manufacturer's purposeful efforts to sell its products

nationwide are "not . . . relevant" to the personal jurisdiction inquiry).

Courts, both state and federal, confronting facts similar to those here, have rightly

rejected the conclusion that a manufacturer selling its products across the USA may

evade jurisdiction in any and all States, including the State where its defective product is

distributed and causes injury. They have held, instead, that it would undermine principles

of fundamental fairness to insulate the foreign manufacturer from accountability in court

at the place within the United States where the manufacturer's products caused injury.

12

The plurality suggests that the Due Process Clause might permit a federal district court in New Jersey,

sitting in diversity and applying New Jersey law, to adjudicate McIntyre UK's liability to Nicastro. In other

words, McIntyre UK might be compelled to bear the burden of traveling to New Jersey and defending itself

there under New Jersey's products liability law, but would be entitled to federal adjudication of Nicastro's

state-law claim. I see no basis in the Due Process Clause for such a curious limitation.

20

IV

A

While this Court has not considered in any prior case the now-prevalent pattern

presented here — a foreign-country manufacturer enlisting a U.S. distributor to develop a

market in the United States for the manufacturer's products — none of the Court's

decisions tug against the judgment made by the New Jersey Supreme Court. McIntyre

contends otherwise, citing World-Wide Volkswagen, and Asahi Metal Industry Co. v.

Superior Court of Cal., Solano Cty., 480 U.S. 102 (1987).

World-Wide Volkswagen concerned a New York car dealership that sold solely in the

New York market, and a New York distributor who supplied retailers in three States

only: New York, Connecticut, and New Jersey. 444 U.S., at 289. New York residents had

purchased an Audi from the New York dealer and were driving the new vehicle through

Oklahoma en route to Arizona. On the road in Oklahoma, another car struck the Audi in

the rear, causing a fire which severely burned the Audi's occupants. Id., at 288. Rejecting

the Oklahoma courts' assertion of jurisdiction over the New York dealer and distributor,

this Court observed that the defendants had done nothing to serve the market for cars in

Oklahoma. Id., at 295-298. Jurisdiction, the Court held, could not be based on the

customer's unilateral act of driving the vehicle to Oklahoma. Id., at 298; see Asahi, 480

U.S., at 109 (opinion of O'Connor, J.) (World-Wide Volkswagen "rejected the assertion

that a consumer's unilateral act of bringing the defendant's product into the forum State

was a sufficient constitutional basis for personal jurisdiction over the defendant").

Notably, the foreign manufacturer of the Audi in World-Wide Volkswagen did not

object to the jurisdiction of the Oklahoma courts and the U.S. importer abandoned its

initially stated objection. 444 U.S., at 288, and n. 3. And most relevant here, the Court's

opinion indicates that an objection to jurisdiction by the manufacturer or national

distributor would have been unavailing. To reiterate, the Court said in World-Wide

Volkswagen that, when a manufacturer or distributor aims to sell its product to customers

in several States, it is reasonable "to subject it to suit in [any] one of those States if its

allegedly defective [product] has there been the source of injury." Id., at 297.

Asahi arose out of a motorcycle accident in California. Plaintiff, a California resident

injured in the accident, sued the Taiwanese manufacturer of the motorcycle's tire tubes,

claiming that defects in its product caused the accident. The tube manufacturer cross-

claimed against Asahi, the Japanese maker of the valve assembly, and Asahi contested

the California courts' jurisdiction. By the time the case reached this Court, the injured

plaintiff had settled his case and only the indemnity claim by the Taiwanese company

against the Japanese valve-assembly manufacturer remained.

The decision was not a close call. The Court had before it a foreign plaintiff, the

Taiwanese manufacturer, and a foreign defendant, the Japanese valve-assembly maker,

and the indemnification dispute concerned a transaction between those parties that

occurred abroad. All agreed on the bottom line: The Japanese valve-assembly

manufacturer was not reasonably brought into the California courts to litigate a dispute

with another foreign party over a transaction that took place outside the United States.

21

* * * In any event, Asahi, unlike McIntyre UK, did not itself seek out customers in

the United States, it engaged no distributor to promote its wares here, it appeared at no

tradeshows in the United States, and, of course, it had no Web site advertising its

products to the world. Moreover, Asahi was a component-part manufacturer with "little

control over the final destination of its products once they were delivered into the stream

of commerce." A. Uberti, 181 Ariz., at 572. It was important to the Court in Asahi that

"those who use Asahi components in their final products, and sell those products in

California, [would be] subject to the application of California tort law." 480 U.S., at 115

(majority opinion). To hold that Asahi controls this case would, to put it bluntly, be dead

wrong.15

B

The Court's judgment also puts United States plaintiffs at a disadvantage in

comparison to similarly situated complainants elsewhere in the world. Of particular note,

within the European Union, in which the United Kingdom is a participant, the jurisdiction

New Jersey would have exercised is not at all exceptional. The European Regulation on

Jurisdiction and the Recognition and Enforcement of Judgments provides for the exercise

of specific jurisdiction "in matters relating to tort . . . in the courts for the place where the

harmful event occurred." Council Reg. 44/2001, Art. 5, 2001 O. J. (L. 12) 4. The

European Court of Justice has interpreted this prescription to authorize jurisdiction either

where the harmful act occurred or at the place of injury.

V

The commentators who gave names to what we now call "general jurisdiction" and

"specific jurisdiction" anticipated that when the latter achieves its full growth,

considerations of litigational convenience and the respective situations of the parties

would determine when it is appropriate to subject a defendant to trial in the plaintiff's

community. See von Mehren & Trautman 1166-1179. Litigational considerations include

"the convenience of witnesses and the ease of ascertaining the governing law." Id., at

1168-1169. As to the parties, courts would differently appraise two situations: (1) cases

involving a substantially local plaintiff, like Nicastro, injured by the activity of a

defendant engaged in interstate or international trade; and (2) cases in which the

defendant is a natural or legal person whose economic activities and legal involvements

are largely home-based, i.e., entities without designs to gain substantial revenue from

sales in distant markets. See id., at 1167-1169. * * * [C]ourts presented with von Mehren

and Trautman's first scenario — a local plaintiff injured by the activity of a manufacturer

seeking to exploit a multistate or global market — have repeatedly confirmed that

15 The plurality notes the low volume of sales in New Jersey. A $ 24,900 shearing machine, however, is unlikely to sell in bulk worldwide, much less in any given State. By dollar value, the price of a single machine represents a significant sale. Had a manufacturer sold in New Jersey $ 24,900 worth of flannel shirts, see Nelson v. Park Industries, Inc., 717 F.2d 1120 (CA7 1983), cigarette lighters, see Oswalt v. Scripto, Inc., 616 F.2d 191 (CA5 1980), or wire-rope splices, see Hedrick v. Daiko Shoji Co., 715 F.2d 1355 (CA9 1983), the Court would presumably find the defendant amenable to suit in that State.

22

jurisdiction is appropriately exercised by courts of the place where the product was sold

and caused injury.

* * *

For the reasons stated, I would hold McIntyre UK answerable in New Jersey for the

harm Nicastro suffered at his workplace in that State using McIntyre UK's shearing

machine. While I dissent from the Court's judgment, I take heart that the plurality opinion

does not speak for the Court, for that opinion would take a giant step away from the

"notions of fair play and substantial justice" underlying International Shoe. 326 U.S., at

316 (internal quotation marks omitted).

NOTES AND QUESTIONS

1. Justice Kennedy differentiates between ―targeting‖ a State and ―predicting‖

that goods will reach the state. He also observes that ―foreign corporations will often

target or concentrate on particular States, subjecting them to specific jurisdiction.‖ For a

manufacturer selling its product through a multi-state distributor what would the indicia

be of ―targeting‖ or ―concentrating‖ on a particular state? Won‘t manufacturers mostly

be concerned with the volume of sales (and getting paid), rather than the location of the

states?

2. Both the Kennedy and Breyer opinions express concern that very small

defendant whose products caused injury in far-away places might be forced to travel

great distances to defend against litigation. But couldn‘t such cases be handled through a

reasonableness inquiry? After all, in Asahi itself, although the Court fragmented on the

question of whether there were sufficient purposeful contacts, the majority of the Court

agreed that jurisdiction was unreasonable in the facts of that case.

3. Justices Breyer‘s opinion asserts that ―none of our precedents finds that a

single isolated sale . . . is sufficient [for jurisdiction].‖ On the other hand, International

Shoe, citing Hess v. Pawloski, indicated that a single act can be sufficient for jurisdiction

based on a claim arising out of that act. If J. McIntrye had sold this machine directly to

the user in New Jersey and had shipped the machine there, would that be sufficient for a

tort claim arising from the use of the machine? What about a breach of contract claim?

4. Asahi and Nicastro were twenty four years apart. Yet despite the passage of

time and an almost total change in Court personnel (only Justice Scalia was on the Court

for both cases), the Court was still unable to generate a majority opinion. Why do you

think personal jurisdiction has proved to be such a divisive area for the Court?

23

4. GENERAL JURISDICTION

At page 85, replace Helicopteros and the first three notes following that case

with:

GOODYEAR DUNLOP TIRES OPERATIONS, S. A. v.

BROWN

Supreme Court of the United States

2011 U.S. LEXIS 4801 (June 27, 2011)

GINSBURG, J., delivered the opinion for a unanimous Court.

This case concerns the jurisdiction of state courts over corporations organized and

operating abroad. We address, in particular, this question: Are foreign subsidiaries of a

United States parent corporation amenable to suit in state court on claims unrelated to any

activity of the subsidiaries in the forum State?

A bus accident outside Paris that took the lives of two 13-year-old boys from North

Carolina gave rise to the litigation we here consider. Attributing the accident to a

defective tire manufactured in Turkey at the plant of a foreign subsidiary of The

Goodyear Tire and Rubber Company (Goodyear USA), the boys' parents commenced an

action for damages in a North Carolina state court; they named as defendants Goodyear

USA, an Ohio corporation, and three of its subsidiaries, organized and operating,

respectively, in Turkey, France, and Luxembourg. Goodyear USA, which had plants in

North Carolina and regularly engaged in commercial activity there, did not contest the

North Carolina court's jurisdiction over it; Goodyear USA's foreign subsidiaries,

however, maintained that North Carolina lacked adjudicatory authority over them.

A state court's assertion of jurisdiction exposes defendants to the State's coercive

power, and is therefore subject to review for compatibility with the Fourteenth

Amendment's Due Process Clause. International Shoe Co. v. Washington, 326 U.S. 310,

316 (1945) (assertion of jurisdiction over out-of-state corporation must comply with

"'traditional notions of fair play and substantial justice'" (quoting Milliken v. Meyer, 311

U.S. 457, 463 (1940))). Opinions in the wake of the pathmarking International Shoe

decision have differentiated between general or all-purpose jurisdiction, and specific or

case-linked jurisdiction. Helicopteros Nacionales de Colombia, S. A. v. Hall, 466 U.S.

408, 414, nn. 8, 9 (1984).

A court may assert general jurisdiction over foreign (sister-state or foreign-country)

corporations to hear any and all claims against them when their affiliations with the State

are so "continuous and systematic" as to render them essentially at home in the forum

State. See International Shoe, 326 U.S., at 317. Specific jurisdiction, on the other hand,

depends on an "affiliatio[n] between the forum and the underlying controversy,"

principally, activity or an occurrence that takes place in the forum State and is therefore

subject to the State's regulation. von Mehren & Trautman, Jurisdiction to Adjudicate: A

Suggested Analysis, 79 Harv. L. Rev. 1121, 1136 (1966) (hereinafter von Mehren &

24

Trautman); see Brilmayer et al., A General Look at General Jurisdiction, 66 Texas L.

Rev. 721, 782 (1988) (hereinafter Brilmayer). In contrast to general, all-purpose

jurisdiction, specific jurisdiction is confined to adjudication of "issues deriving from, or

connected with, the very controversy that establishes jurisdiction." von Mehren &

Trautman 1136.

Because the episode-in-suit, the bus accident, occurred in France, and the tire alleged

to have caused the accident was manufactured and sold abroad, North Carolina courts

lacked specific jurisdiction to adjudicate the controversy. The North Carolina Court of

Appeals so acknowledged. Brown v. Meter, 57-58, 681 S. E. 2d 382, 388 (2009). Were

the foreign subsidiaries nonetheless amenable to general jurisdiction in North Carolina

courts? Confusing or blending general and specific jurisdictional inquiries, the North

Carolina courts answered yes. Some of the tires made abroad by Goodyear's foreign

subsidiaries, the North Carolina Court of Appeals stressed, had reached North Carolina

through "the stream of commerce"; that connection, the Court of Appeals believed, gave

North Carolina courts the handle needed for the exercise of general jurisdiction over the

foreign corporations. Id., at 67-68.

A connection so limited between the forum and the foreign corporation, we hold, is

an inadequate basis for the exercise of general jurisdiction. Such a connection does not

establish the "continuous and systematic" affiliation necessary to empower North

Carolina courts to entertain claims unrelated to the foreign corporation's contacts with the

State.

I

* * *

Goodyear Luxembourg Tires, SA (Goodyear Luxembourg), Goodyear Lastikleri T.

A. S. (Goodyear Turkey), and Goodyear Dunlop Tires France, SA (Goodyear France),

petitioners here, were named as defendants. Incorporated in Luxembourg, Turkey, and

France, respectively, petitioners are indirect subsidiaries of Goodyear USA, an Ohio

corporation also named as a defendant in the suit. Petitioners manufacture tires primarily

for sale in European and Asian markets. Their tires differ in size and construction from

tires ordinarily sold in the United States. They are designed to carry significantly heavier

loads, and to serve under road conditions and speed limits in the manufacturers' primary

markets.

In contrast to the parent company, Goodyear USA, which does not contest the North

Carolina courts' personal jurisdiction over it, petitioners are not registered to do business

in North Carolina. They have no place of business, employees, or bank accounts in North

Carolina. They do not design, manufacture, or advertise their products in North Carolina.

And they do not solicit business in North Carolina or themselves sell or ship tires to

North Carolina customers. Even so, a small percentage of petitioners' tires (tens of

thousands out of tens of millions manufactured between 2004 and 2007) were distributed

within North Carolina by other Goodyear USA affiliates. These tires were typically

custom ordered to equip specialized vehicles such as cement mixers, waste haulers, and

boat and horse trailers. Petitioners state, and respondents do not here deny, that the type

of tire involved in the accident, a Goodyear Regional RHS tire manufactured by

Goodyear Turkey, was never distributed in North Carolina.

25

Petitioners moved to dismiss the claims against them for want of personal

jurisdiction. The trial court denied the motion, and the North Carolina Court of Appeals

affirmed. Acknowledging that the claims neither "related to, nor . . . ar[o]se from,

[petitioners'] contacts with North Carolina," the Court of Appeals confined its analysis to

"general rather than specific jurisdiction," which the court recognized required a "higher

threshold" showing: A defendant must have "continuous and systematic contacts" with

the forum. Id., at 58 (internal quotation marks omitted). That threshold was crossed, the

court determined, when petitioners placed their tires "in the stream of interstate

commerce without any limitation on the extent to which those tires could be sold in North

Carolina." Id., at 67.

Nothing in the record, the court observed, indicated that petitioners "took any

affirmative action to cause tires which they had manufactured to be shipped into North

Carolina." Id., at 64. The court found, however, that tires made by petitioners reached

North Carolina as a consequence of a "highly-organized distribution process" involving

other Goodyear USA subsidiaries. Id., at 67. Petitioners, the court noted, made "no

attempt to keep these tires from reaching the North Carolina market." Id., at 66. Indeed,

the very tire involved in the accident, the court observed, conformed to tire standards

established by the U.S. Department of Transportation and bore markings required for sale

in the United States. Ibid.2 As further support, the court invoked North Carolina's

"interest in providing a forum in which its citizens are able to seek redress for [their]

injuries," and noted the hardship North Carolina plaintiffs would experience "[were they]

required to litigate their claims in France," a country to which they have no ties. Id., at

68. The North Carolina Supreme Court denied discretionary review. Brown v. Meter, 364

N. C. 128 (2010).

We granted certiorari to decide whether the general jurisdiction the North Carolina

courts asserted over petitioners is consistent with the Due Process Clause of the

Fourteenth Amendment.

II

A

The Due Process Clause of the Fourteenth Amendment sets the outer boundaries of a

state tribunal's authority to proceed against a defendant. Shaffer v. Heitner, 433 U.S. 186,

207 (1977). The canonical opinion in this area remains International Shoe, 326 U.S. 310,

in which we held that a State may authorize its courts to exercise personal jurisdiction

over an out-of-state defendant if the defendant has "certain minimum contacts with [the

State] such that the maintenance of the suit does not offend 'traditional notions of fair

play and substantial justice.'" Id., at 316 (quoting Meyer, 311 U.S., at 463).

Endeavoring to give specific content to the "fair play and substantial justice" concept,

the Court in International Shoe classified cases involving out-of-state corporate

defendants. First, as in International Shoe itself, jurisdiction unquestionably could be

asserted where the corporation's in-state activity is "continuous and systematic" and that

2 Such markings do not necessarily show that any of the tires were destined for sale in the United States. To

facilitate trade, the Solicitor General explained, the United States encourages other countries to "treat

compliance with [Department of Transportation] standards, including through use of DOT markings, as

evidence that the products are safely manufactured." Brief for United States as Amicus Curiae 32.

26

activity gave rise to the episode-in-suit. 326 U.S., at 317. Further, the Court observed, the

commission of certain "single or occasional acts" in a State may be sufficient to render a

corporation answerable in that State with respect to those acts, though not with respect to

matters unrelated to the forum connections. Id., at 318. The heading courts today use to

encompass these two International Shoe categories is "specific jurisdiction." See von

Mehren & Trautman 1144-1163. Adjudicatory authority is "specific" when the suit

"aris[es] out of or relate[s] to the defendant's contacts with the forum." Helicopteros, 466

U.S., at 414, n. 8.

International Shoe distinguished from cases that fit within the "specific jurisdiction"

categories, "instances in which the continuous corporate operations within a state [are] so

substantial and of such a nature as to justify suit against it on causes of action arising

from dealings entirely distinct from those activities." 326 U.S., at 318. Adjudicatory

authority so grounded is today called "general jurisdiction." Helicopteros, 466 U.S., at

414, n. 9. For an individual, the paradigm forum for the exercise of general jurisdiction is

the individual's domicile; for a corporation, it is an equivalent place, one in which the

corporation is fairly regarded as at home.

Since International Shoe, this Court's decisions have elaborated primarily on

circumstances that warrant the exercise of specific jurisdiction, particularly in cases

involving "single or occasional acts" occurring or having their impact within the forum

State. As a rule in these cases, this Court has inquired whether there was "some act by

which the defendant purposefully avail[ed] itself of the privilege of conducting activities

within the forum State, thus invoking the benefits and protections of its laws." Hanson v.

Denckla, 357 U.S. 235, 253 (1958). See, e.g., World-Wide Volkswagen Corp. v.

Woodson, 444 U.S. 286, 287, 297 (1980) (Oklahoma court may not exercise personal

jurisdiction "over a nonresident automobile retailer and its wholesale distributor in a

products-liability action, when the defendants' only connection with Oklahoma is the fact

that an automobile sold in New York to New York residents became involved in an

accident in Oklahoma"); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-475 (1985)

(franchisor headquartered in Florida may maintain breach-of-contract action in Florida

against Michigan franchisees, where agreement contemplated on-going interactions

between franchisees and franchisor's headquarters); Asahi Metal Industry Co. v. Superior

Court of Cal., Solano Cty., 480 U.S. 102, 105 (1987) (Taiwanese tire manufacturer

settled product liability action brought in California and sought indemnification there

from Japanese valve assembly manufacturer; Japanese company's "mere awareness . . .

that the components it manufactured, sold, and delivered outside the United States would

reach the forum State in the stream of commerce" held insufficient to permit California

court's adjudication of Taiwanese company's cross-complaint); id., at 109 (opinion of

O'Connor, J.); id., at 116-117 (Brennan, J., concurring in part and concurring in

judgment).

In only two decisions postdating International Shoe * * * has this Court considered

whether an out-of-state corporate defendant's in-state contacts were sufficiently

"continuous and systematic" to justify the exercise of general jurisdiction over claims

unrelated to those contacts: Perkins v. Benguet Consol. Mining Co., 342 U.S. 437 (1952)

(general jurisdiction appropriately exercised over Philippine corporation sued in Ohio,

where the company's affairs were overseen during World War II); and Helicopteros, 466

27

U.S. 408 (helicopter owned by Colombian corporation crashed in Peru; survivors of U.S.

citizens who died in the crash, the Court held, could not maintain wrongful-death actions

against the Colombian corporation in Texas, for the corporation's helicopter purchases

and purchase-linked activity in Texas were insufficient to subject it to Texas court's

general jurisdiction).

B

To justify the exercise of general jurisdiction over petitioners, the North Carolina

courts relied on the petitioners' placement of their tires in the "stream of commerce." The

stream-of-commerce metaphor has been invoked frequently in lower court decisions

permitting "jurisdiction in products liability cases in which the product has traveled

through an extensive chain of distribution before reaching the ultimate consumer." 18 W.

Fletcher, Cyclopedia of the Law of Corporations § 8640.40, p. 133 (rev. ed. 2007).

Typically, in such cases, a nonresident defendant, acting outside the forum, places in the

stream of commerce a product that ultimately causes harm inside the forum.

Many States have enacted long-arm statutes authorizing courts to exercise specific

jurisdiction over manufacturers when the events in suit, or some of them, occurred within

the forum state. For example, the "Local Injury; Foreign Act" subsection of North

Carolina's long-arm statute authorizes North Carolina courts to exercise personal

jurisdiction in "any action claiming injury to person or property within this State arising

out of [the defendant's] act or omission outside this State," if, "in addition[,] at or about

the time of the injury," "[p]roducts . . . manufactured by the defendant were used or

consumed, within this State in the ordinary course of trade." N. C. Gen. Stat. Ann. § 1-

75.4(4)(b) (Lexis 2009). As the North Carolina Court of Appeals recognized, this

provision of the State's long-arm statute "does not apply to this case," for both the act

alleged to have caused injury (the fabrication of the allegedly defective tire) and its

impact (the accident) occurred outside the forum. See 199 N. C. App., at 61, n. 6.

The North Carolina court's stream-of-commerce analysis elided the essential

difference between case-specific and all-purpose (general) jurisdiction. Flow of a

manufacturer's products into the forum, we have explained, may bolster an affiliation

germane to specific jurisdiction. See, e.g., World-Wide Volkswagen, 444 U.S., at 297

(where "the sale of a product . . . is not simply an isolated occurrence, but arises from the

efforts of the manufacturer or distributor to serve . . . the market for its product in

[several] States, it is not unreasonable to subject it to suit in one of those States if its

allegedly defective merchandise has there been the source of injury to its owner or to

others" (emphasis added)). But ties serving to bolster the exercise of specific jurisdiction

do not warrant a determination that, based on those ties, the forum has general

jurisdiction over a defendant. See, e.g., Stabilisierungsfonds Fur Wein v. Kaiser Stuhl

Wine Distributors Pty. Ltd., 647 F.2d 200, 203, n. 5 (CADC 1981) (defendants'

marketing arrangements, although "adequate to permit litigation of claims relating to

[their] introduction of . . . wine into the United States stream of commerce, . . . would not

be adequate to support general, 'all purpose' adjudicatory authority").

A corporation's "continuous activity of some sorts within a state," International Shoe

instructed, "is not enough to support the demand that the corporation be amenable to suits

unrelated to that activity." 326 U.S., at 318. Our 1952 decision in Perkins v. Benguet

28

Consol. Mining Co. remains "[t]he textbook case of general jurisdiction appropriately

exercised over a foreign corporation that has not consented to suit in the forum."

Donahue v. Far Eastern Air Transport Corp., 652 F.2d 1032, 1037 (CADC 1981).

Sued in Ohio, the defendant in Perkins was a Philippine mining corporation that had

ceased activities in the Philippines during World War II. To the extent that the company

was conducting any business during and immediately after the Japanese occupation of the

Philippines, it was doing so in Ohio: the corporation's president maintained his office

there, kept the company files in that office, and supervised from the Ohio office "the

necessarily limited wartime activities of the company." Perkins, 342 U.S., at 447-448.

Although the claim-in-suit did not arise in Ohio, this Court ruled that it would not violate

due process for Ohio to adjudicate the controversy. Ibid.; see Keeton v. Hustler

Magazine, Inc., 465 U.S. 770, 779-780, n. 11 (1984) (Ohio's exercise of general

jurisdiction was permissible in Perkins because "Ohio was the corporation's principal, if

temporary, place of business").

We next addressed the exercise of general jurisdiction over an out-of-state

corporation over three decades later, in Helicopteros. In that case, survivors of United

States citizens who died in a helicopter crash in Peru instituted wrongful-death actions in

a Texas state court against the owner and operator of the helicopter, a Colombian

corporation. The Colombian corporation had no place of business in Texas and was not

licensed to do business there. "Basically, [the company's] contacts with Texas consisted

of sending its chief executive officer to Houston for a contract-negotiation session;

accepting into its New York bank account checks drawn on a Houston bank; purchasing

helicopters, equipment, and training services from [a Texas enterprise] for substantial

sums; and sending personnel to [Texas] for training." 466 U.S., at 416. These links to

Texas, we determined, did not "constitute the kind of continuous and systematic general

business contacts . . . found to exist in Perkins," and were insufficient to support the

exercise of jurisdiction over a claim that neither "ar[o]se out of . . . no[r] related to" the

defendant's activities in Texas. Id., at 415-416 (internal quotation marks omitted).

Helicopteros concluded that "mere purchases [made in the forum State], even if

occurring at regular intervals, are not enough to warrant a State's assertion of [general]

jurisdiction over a nonresident corporation in a cause of action not related to those

purchase transactions." Id., at 418. We see no reason to differentiate from the ties to

Texas held insufficient in Helicopteros, the sales of petitioners' tires sporadically made in

North Carolina through intermediaries. Under the sprawling view of general jurisdiction

urged by respondents and embraced by the North Carolina Court of Appeals, any

substantial manufacturer or seller of goods would be amenable to suit, on any claim for

relief, wherever its products are distributed. But cf. World-Wide Volkswagen, 444 U.S., at

296 (every seller of chattels does not, by virtue of the sale, "appoint the chattel his agent

for service of process").

Measured against Helicopteros and Perkins, North Carolina is not a forum in which it

would be permissible to subject petitioners to general jurisdiction. Unlike the defendant

in Perkins, whose sole wartime business activity was conducted in Ohio, petitioners are

in no sense at home in North Carolina. Their attenuated connections to the State, fall far

short of the "the continuous and systematic general business contacts" necessary to

29

empower North Carolina to entertain suit against them on claims unrelated to anything

that connects them to the State. Helicopteros, 466 U.S., at 416.5

* * *

For the reasons stated, the judgment of the North Carolina Court of Appeals is

Reversed.

NOTES AND QUESTIONS

1. Helicopteros held that regular purchases are not enough for general

jurisdiction and Goodyear held that regular sales are also not enough. Are other, more

extensive and ongoing business activities ever sufficient for general jurisdiction? Justice

Ginsburg noted that ―petitioners are in no sense at home in North Caroline.‖ Should

general jurisdiction available only at the defendant‘s ―home‖?

5 As earlier noted, the North Carolina Court of Appeals invoked the State's "well-recognized interest in

providing a forum in which its citizens are able to seek redress for injuries that they have sustained." 199 N.

C. App., at 68. But "[g]eneral jurisdiction to adjudicate has in [United States] practice never been based on

the plaintiff's relationship to the forum. There is nothing in [our] law comparable to . . . article 14 of the

Civil Code of France (1804) under which the French nationality of the plaintiff is a sufficient ground for

jurisdiction." von Mehren & Trautman 1137; see Clermont & Palmer, Exorbitant Jurisdiction, 58 Me. L.

Rev. 474, 492-495 (2006) (French law permitting plaintiff-based jurisdiction is rarely invoked in the

absence of other supporting factors). When a defendant's act outside the forum causes injury in the forum,

by contrast, a plaintiff's residence in the forum may strengthen the case for the exercise of specific

jurisdiction. See Calder v. Jones, 465 U.S. 783, 788 (1984); von Mehren & Trautman 1167-1173.

30

CHAPTER 3: NOTICE AND OPPORTUNITY TO BE HEARD

B. NOTICE

1. THE CONSTITUTIONAL REQUIREMENT

At page 150, add to the end of n.5:

You should note that while actual receipt of notice is not always constitutionally

necessary, it is constitutionally sufficient. See United Student Aid Funds Inc. v.

Espinosa, 130 S.Ct. 1367, 1378 (2010). However, as you will see in the next section,

there may be statutory requirements concerning the manner and form of notice that go

beyond the constitutional minimum.

C. OPPORTUNITY TO BE HEARD

At page 176, add to the end of note 10:

In Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008), the

Supreme Court held that ―[a] plaintiff seeking a preliminary injunction must establish that

he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the

absence of preliminary relief, that the balance of equities tips in his favor, and that an

injunction is in the public interest.‖ The Court stressed that the ―possibility‖ of harm is

not sufficient but that the plaintiff must demonstrate a ―strong likelihood‖ of irreparable

harm. In that case, the district court had granted a preliminary injunction imposing

restrictions on the Navy‘s use of sonar training because of concern that it would cause

irreparable harm to certain marine mammals. The Supreme Court reversed, finding that

the injunction was outweighed by the public interest and the Navy‘s interest in effective,

realistic training.

31

CHAPTER 4: SUBJECT MATTER JURISDICTION

PART C: DETERMINING CITIZENSHIP OF ENTITIES

i. CORPORATIONS

At pages 194-199, replace J.A. Olson Co. v. City of Winona and Notes and

Questions with:

Congress passed § 1332(c)(1) in 1958. Before that, federal courts treated

corporations as citizens of the state(s) in which they were incorporated. But corporations

are often incorporated in states in which they do essentially no business. Indeed, most of

the Fortune 500 companies are incorporated in Delaware (to take advantage of what

historically has been thought pro-management business law). Their primary activity,

however, is not in that state. Because diversity of citizenship jurisdiction is apparently

aimed at allowing access to federal court to avoid fear of local bias, the state-of-

incorporation definition of citizenship is under-inclusive. For example, a Delaware

corporation that only does business in California, in theory, need not fear local bias of

California state courts. It should be deemed a citizen of California.

Section 1332(c)(1) reflected that concern. It deems a corporation to be a citizen

of ―any‖ state where incorporated. It is possible for a corporation to incorporate in more

than one state. Because of the word ―any‖ in § 1332(c)(1), such a business would be a

citizen of each state in which it did so. This is mostly a theoretical issue, though, because

today there are only a handful of companies that actually incorporate in more than one

state.

Section 1332(c)(1) provides that a corporation is also a citizen of ―the‖ state in

which it has its principal place of business. The word ―the‖ implies that there can only be

one principal place of business. No corporation can have more than one principal place

of business. The problem is that the statute gives no clue what that place is. Lower

federal courts wrestled with the issue for decades. Some emphasized the place where

business decisions are made – the ―nerve‖ center. Some emphasized the place where the

company engaged in more activity than anywhere else – the ―muscle‖ center. Most used

a combination of the two under the ―total activities‖ test. After 52 years of uncertainty,

the Supreme Court finally defined the statutory term in the following case.

THE HERTZ CORPORATION v. FRIEND

Supreme Court of the United States

130 S. Ct. 1181 (2010)

JUSTICE BREYER delivered the opinion of the Court.

The federal diversity jurisdiction statute provides that "a corporation shall be

deemed to be a citizen of any State by which it has been incorporated and of the State

where it has its principal place of business." 28 U.S.C. § 1332(c)(1) (emphasis added).

We seek here to resolve different interpretations that the Circuits have given this phrase.

32

In doing so, we place primary weight upon the need for judicial administration of a

jurisdictional statute to remain as simple as possible. And we conclude that the phrase

"principal place of business" refers to the place where the corporation's high level officers

direct, control, and coordinate the corporation's activities. Lower federal courts have

often metaphorically called that place the corporation's "nerve center." We believe that

the "nerve center" will typically be found at a corporation's headquarters.

I

[Two employees of the Hertz Corporation – Friend and Nhieu – sued Hertz for

alleged violation of California‘s wage and hour laws. They sought to bring a class action

on behalf of other Californians who had allegedly suffered the same harm. Friend and

Nhieu were citizens of California. The issue is whether Hertz‘s principal place of

business was in California. If it were, there would be no diversity jurisdiction.

It may seem odd, but in this case the plaintiffs are not trying to invoke diversity.

They wanted to sue in state court. Under the doctrine of ―removal jurisdiction‖ – which

we will address in § 6 of this Chapter – a defendant sued in state court may ―remove‖ the

case to federal court. It may do so, though, only if the case invokes federal subject matter

jurisdiction. Hertz did not want to litigate in state court and removed it to federal court.

This procedural posture does not change the diversity-of-citizenship analysis. As you

read the case, however, remember that it is the defendant (not the plaintiff) who is

arguing in favor of diversity. Specifically, Hertz is arguing that its principal place of

business is not in California.]

* * * Hertz claimed that the plaintiffs and the defendant were citizens of different

States. Hence, the federal court possessed diversity-of-citizenship jurisdiction. Friend and

Nhieu, however, claimed that the Hertz Corporation was a California citizen, like

themselves, and that, hence, diversity jurisdiction was lacking.

To support its position, Hertz submitted a declaration by an employee relations

manager that sought to show that Hertz's "principal place of business" was in New Jersey,

not in California. The declaration stated, among other things, that Hertz operated

facilities in 44 States; and that California — which had about 12% of the Nation's

population — accounted for 273 of Hertz's 1,606 car rental locations; about 2,300 of its

11,230 full-time employees; about $811 million of its $4.371 billion in annual revenue;

and about 3.8 million of its approximately 21 million annual transactions, i.e., rentals.

The declaration also stated that the "leadership of Hertz and its domestic subsidiaries" is

located at Hertz's "corporate headquarters" in Park Ridge, New Jersey; that its "core

executive and administrative functions . . . are carried out" there and "to a lesser extent"

in Oklahoma City, Oklahoma; and that its "major administrative operations . . . are

found" at those two locations.

The District Court of the Northern District of California accepted Hertz's

statement of the facts as undisputed. But it concluded that, given those facts, Hertz was a

citizen of California. In reaching this conclusion, the court applied Ninth Circuit

precedent, which instructs courts to identify a corporation's "principal place of business"

by first determining the amount of a corporation's business activity State by State. If the

amount of activity is "significantly larger" or "substantially predominates" in one State,

then that State is the corporation's "principal place of business." If there is no such State,

33

then the "principal place of business" is the corporation's "'nerve center,'" i.e., the place

where "'the majority of its executive and administrative functions are performed.'"

Applying this test, the District Court found that the "plurality of each of the

relevant business activities" was in California, and that "the differential between the

amount of those activities" in California and the amount in "the next closest state" was

"significant." Hence, Hertz's "principal place of business" was California, and diversity

jurisdiction was thus lacking. * * *

* * * The Ninth Circuit affirmed in a brief memorandum opinion. Hertz filed a

petition for certiorari. And, in light of differences among the Circuits in the application of

the test for corporate citizenship, we granted the writ. Compare Tosco Corp., supra, at

500-502, and Capitol Indemnity Corp. v. Russellville Steel Co., 367 F.3d 831, 836 (CA8

2004) (applying "total activity" test and looking at "all corporate activities"), with

Wisconsin Knife Works, supra, at 1282 (applying "nerve center" test).

II

[The Court here concluded that the lower court orders were appealable.]

III

We begin our "principal place of business" discussion with a brief review of

relevant history. The Constitution provides that the "judicial Power shall extend" to

"Controversies . . . between Citizens of different States." Art. III, § 2. This language,

however, does not automatically confer diversity jurisdiction upon the federal courts.

Rather, it authorizes Congress to do so and, in doing so, to determine the scope of the

federal courts' jurisdiction within constitutional limits.

Congress first authorized federal courts to exercise diversity jurisdiction in 1789

when, in the First Judiciary Act, Congress granted federal courts authority to hear suits

"between a citizen of the State where the suit is brought, and a citizen of another State." §

11, 1 Stat. 78. The statute said nothing about corporations. In 1809, Chief Justice

Marshall, writing for a unanimous Court, described a corporation as an "invisible,

intangible, and artificial being" which was "certainly not a citizen." Bank of United States

v. Deveaux, 9 U.S. 61, 5 Cranch 61, 86, 3 L. Ed. 38 (1809). But the Court held that a

corporation could invoke the federal courts' diversity jurisdiction based on a pleading that

the corporation's shareholders were all citizens of a different State from the defendants, as

"the term citizen ought to be understood as it is used in the constitution, and as it is used

in other laws. That is, to describe the real persons who come into court, in this case,

under their corporate name." Id., at 91-92, 5 Cranch 61, 86, 3 L. Ed. 38.

In Louisville, C. & C. R. Co. v. Letson, 43 U.S. 497, 2 How. 497, 11 L. Ed. 353

(1844), the Court modified this initial approach. It held that a corporation was to be

deemed an artificial person of the State by which it had been created, and its citizenship

for jurisdictional purposes determined accordingly. Id., at 558-559, 2 How. 497, 11 L.

Ed. 353. Ten years later, the Court in Marshall v. Baltimore & Ohio R. Co., 57 U.S. 314,

16 How. 314, 14 L. Ed. 953 (1854), held that the reason a corporation was a citizen of its

State of incorporation was that, for the limited purpose of determining corporate

citizenship, courts could conclusively (and artificially) presume that a corporation's

shareholders were citizens of the State of incorporation. Id., at 327-328, 16 How. 314, 14

34

L. Ed. 953. And it reaffirmed Letson. 16 How., at 325-326, 14 L. Ed. 953. Whatever the

rationale, the practical upshot was that, for diversity purposes, the federal courts

considered a corporation to be a citizen of the State of its incorporation.

In 1928 this Court made clear that the "state of incorporation" rule was virtually

absolute. It held that a corporation closely identified with State A could proceed in a

federal court located in that State as long as the corporation had filed its incorporation

papers in State B, perhaps a State where the corporation did no business at all.

Subsequently, many in Congress and those who testified before it pointed out that this

interpretation was at odds with diversity jurisdiction's basic rationale, namely, opening

the federal courts' doors to those who might otherwise suffer from local prejudice against

out-of-state parties. Through its choice of the State of incorporation, a corporation could

manipulate federal-court jurisdiction, for example, opening the federal courts' doors in a

State where it conducted nearly all its business by filing incorporation papers elsewhere.

* * * Although various legislative proposals to curtail the corporate use of diversity

jurisdiction were made, none of these proposals were [sic] enacted into law.

At the same time as federal dockets increased in size, many judges began to

believe those dockets contained too many diversity cases. A committee of the Judicial

Conference of the United States studied the matter. * * *

Among its observations, the committee found a general need "to prevent frauds

and abuses" with respect to jurisdiction. The committee recommended against

eliminating diversity cases altogether. Instead it recommended, along with other

proposals, a statutory amendment that would make a corporation a citizen both of the

State of its incorporation and any State from which it received more than half of its gross

income. If, for example, a citizen of California sued (under state law in state court) a

corporation that received half or more of its gross income from California, that

corporation would not be able to remove the case to federal court, even if Delaware was

its State of incorporation.

During the spring and summer of 1951 committee members circulated their report

and attended circuit conferences at which federal judges discussed the report's

recommendations. Reflecting those criticisms, the committee filed a new report in

September, in which it revised its corporate citizenship recommendation. It now proposed

that "'a corporation shall be deemed a citizen of the state of its original creation . . . [and]

shall also be deemed a citizen of a state where it has its principal place of business.'" * *

* The committee wrote that this new language would provide a "simpler and more

practical formula" than the "gross income" test. It added that the language "ha[d] a

precedent in the jurisdictional provisions of the Bankruptcy Act."

In mid-1957 the committee presented its reports to the House of Representatives

Committee on the Judiciary. [During committee hearings, one witness, Judge Maris,

discussed ―principal place of business‖ as it had been interpreted in bankruptcy cases:]

* * * I think the courts have generally taken the view that where a

corporation's interests are rather widespread, the principal place of business

is an actual rather than a theoretical or legal one. It is the actual place where

its business operations are coordinated, directed, and carried out, which

35

would ordinarily be the place where its officers carry on its day-to-day

business, where its accounts are kept, where its payments are made, and not

necessarily a State in which it may have a plant, if it is a big corporation, or

something of that sort.

"But that has been pretty well worked out in the bankruptcy cases, and

that law would all be available, you see, to be applied here without having to

go over it again from the beginning."

* * * Subsequently, in 1958, Congress both codified the courts' traditional place of

incorporation test and also enacted into law a slightly modified version of the Conference

Committee's proposed "principal place of business" language. A corporation was to "be

deemed a citizen of any State by which it has been incorporated and of the State where it

has its principal place of business."

IV

The phrase "principal place of business" has proved more difficult to apply than

its originators likely expected. Decisions under the Bankruptcy Act did not provide the

firm guidance for which Judge Maris had hoped because courts interpreting bankruptcy

law did not agree about how to determine a corporation's "principal place of business." *

* *

After Congress' amendment, courts were similarly uncertain as to where to look to

determine a corporation's "principal place of business" for diversity purposes. If a

corporation's headquarters and executive offices were in the same State in which it did

most of its business, the test seemed straightforward. The "principal place of business"

was located in that State. See, e.g., Long v. Silver, 248 F.3d 309, 314-315 (CA4 2001);

Pinnacle Consultants, Ltd. v. Leucadia Nat. Corp., 101 F.3d 900, 906-907 (CA2 1996).

But suppose those corporate headquarters, including executive offices, are in one

State, while the corporation's plants or other centers of business activity are located in

other States? In 1959 a distinguished federal district judge, Edward Weinfeld, relied on

the Second Circuit's interpretation of the Bankruptcy Act to answer this question in part:

Where a corporation is engaged in far-flung and varied activities which are

carried on in different states, its principal place of business is the nerve

center from which it radiates out to its constituent parts and from which its

officers direct, control and coordinate all activities without regard to locale,

in the furtherance of the corporate objective. The test applied by our Court of

Appeals, is that place where the corporation has an 'office from which its

business was directed and controlled' — the place where ―all of its business

was under the supreme direction and control of its officers.‖ Scot Typewriter

Co., 170 F. Supp. , at 865.

Numerous Circuits have since followed this rule, applying the "nerve center" test

for corporations with "far-flung" business activities. * * *

Scot's analysis, however, did not go far enough. For it did not answer what courts

should do when the operations of the corporation are not "far-flung" but rather limited to

36

only a few States. When faced with this question, various courts have focused more

heavily on where a corporation's actual business activities are located.

Perhaps because corporations come in many different forms, involve many

different kinds of business activities, and locate offices and plants for different reasons in

different ways in different regions, a general "business activities" approach has proved

unusually difficult to apply. Courts must decide which factors are more important than

others: for example, plant location, sales or servicing centers; transactions, payrolls, or

revenue generation.

The number of factors grew as courts explicitly combined aspects of the "nerve

center" and "business activity" tests to look to a corporation's "total activities," sometimes

to try to determine what treatises have described as the corporation's "center of gravity."

A major treatise confirms this growing complexity, listing Circuit by Circuit, cases that

highlight different factors or emphasize similar factors differently, and reporting that the

"federal courts of appeals have employed various tests" — tests which "tend to overlap"

and which are sometimes described in "language" that "is imprecise." 15 Moore's §

102.54[2], at 102-112. See also id., §§ 102.54[2], [13], at 102-112 to 102-122

(describing, in 14 pages, major tests as looking to the "nerve center," "locus of

operations," or "center of corporate activities"). Not surprisingly, different circuits (and

sometimes different courts within a single circuit) have applied these highly general

multifactor tests in different ways. Id., §§ 102.54[3]-[7], [11]-[13] (noting that the First

Circuit "has never explained a basis for choosing between 'the center of corporate

activity' test and the 'locus of operations' test"; the Second Circuit uses a "two-part test"

similar to that of the Fifth, Ninth, and Eleventh Circuits involving an initial determination

as to whether "a corporation's activities are centralized or decentralized" followed by an

application of either the "place of operations" or "nerve center" test; the Third Circuit

applies the "center of corporate activities" test searching for the "headquarters of a

corporation's day-to-day activity"; the Fourth Circuit has "endorsed neither [the 'nerve

center' or 'place of operations'] test to the exclusion of the other"; the Tenth Circuit

directs consideration of the "total activity of the company considered as a whole"). See

also 13F Wright & Miller § 3625 (describing, in 73 pages, the "nerve center," "corporate

activities," and "total activity" tests as part of an effort to locate the corporation's "center

of gravity," while specifying different ways in which different circuits apply these or

other factors).

This complexity may reflect an unmediated judicial effort to apply the statutory

phrase "principal place of business" in light of the general purpose of diversity

jurisdiction, i.e., an effort to find the State where a corporation is least likely to suffer

out-of-state prejudice when it is sued in a local court, Pease v. Peck, 59 U.S. 595, 18

How. 595, 599, 15 L. Ed. 518 (1856). But, if so, that task seems doomed to failure. After

all, the relevant purposive concern — prejudice against an out-of-state party — will often

depend upon factors that courts cannot easily measure, for example, a corporation's

image, its history, and its advertising, while the factors that courts can more easily

measure, for example, its office or plant location, its sales, its employment, or the nature

of the goods or services it supplies, will sometimes bear no more than a distant relation to

the likelihood of prejudice. At the same time, this approach is at war with administrative

37

simplicity. And it has failed to achieve a nationally uniform interpretation of federal law,

an unfortunate consequence in a federal legal system.

V

A

In an effort to find a single, more uniform interpretation of the statutory phrase,

we have reviewed the Courts of Appeals' divergent and increasingly complex

interpretations. * * * We conclude that "principal place of business" is best read as

referring to the place where a corporation's officers direct, control, and coordinate the

corporation's activities. It is the place that Courts of Appeals have called the corporation's

"nerve center." And in practice it should normally be the place where the corporation

maintains its headquarters — provided that the headquarters is the actual center of

direction, control, and coordination, i.e., the "nerve center," and not simply an office

where the corporation holds its board meetings (for example, attended by directors and

officers who have traveled there for the occasion).

Three sets of considerations, taken together, convince us that this approach, while

imperfect, is superior to other possibilities. First, the statute's language supports the

approach. The statute's text deems a corporation a citizen of the "State where it has its

principal place of business. " 28 U.S.C. § 1332(c)(1). The word "place" is in the singular,

not the plural. The word "principal" requires us to pick out the "main, prominent" or

"leading" place. 12 Oxford English Dictionary 495 (2d ed. 1989) (def. (A)(I)(2)). And the

fact that the word "place" follows the words "State where" means that the "place" is a

place within a State. It is not the State itself.

A corporation's "nerve center," usually its main headquarters, is a single place.

The public often (though not always) considers it the corporation's main place of

business. And it is a place within a State. By contrast, the application of a more general

business activities test has led some courts, as in the present case, to look, not at a

particular place within a State, but incorrectly at the State itself, measuring the total

amount of business activities that the corporation conducts there and determining whether

they are "significantly larger" than in the next-ranking State.

This approach invites greater litigation and can lead to strange results, as the

Ninth Circuit has since recognized. Namely, if a "corporation may be deemed a citizen of

California on th[e] basis" of "activities [that] roughly reflect California's larger

population . . . nearly every national retailer — no matter how far flung its operations —

will be deemed a citizen of California for diversity purposes." Davis v. HSBC Bank Nev.,

N. A., 557 F.3d 1026, 1029-1030 ([9th Cir.] 2009). But why award or decline diversity

jurisdiction on the basis of a State's population, whether measured directly, indirectly

(say proportionately), or with modifications?

Second, administrative simplicity is a major virtue in a jurisdictional statute.

Complex jurisdictional tests complicate a case, eating up time and money as the parties

litigate, not the merits of their claims, but which court is the right court to decide those

claims. Complex tests produce appeals and reversals, encourage gamesmanship, and,

again, diminish the likelihood that results and settlements will reflect a claim's legal and

factual merits. Judicial resources too are at stake. Courts have an independent obligation

38

to determine whether subject-matter jurisdiction exists, even when no party challenges it.

So courts benefit from straightforward rules under which they can readily assure

themselves of their power to hear a case.

Simple jurisdictional rules also promote greater predictability. Predictability is

valuable to corporations making business and investment decisions. Cf. First Nat. City

Bank v. Banco Para el Comercio Exterior de Cuba, 462 U.S. 611, 621, 103 S. Ct. 2591,

77 L. Ed. 2d 46 (1983) (recognizing the "need for certainty and predictability of result

while generally protecting the justified expectations of parties with interests in the

corporation"). Predictability also benefits plaintiffs deciding whether to file suit in a state

or federal court.

A "nerve center" approach, which ordinarily equates that "center" with a

corporation's headquarters, is simple to apply comparatively speaking. The metaphor of a

corporate "brain," while not precise, suggests a single location. By contrast, a

corporation's general business activities more often lack a single principal place where

they take place. That is to say, the corporation may have several plants, many sales

locations, and employees located in many different places. If so, it will not be as easy to

determine which of these different business locales is the "principal" or most important

"place."

Third, the statute's legislative history, for those who accept it, offers a simplicity-

related interpretive benchmark. The Judicial Conference provided an initial version of its

proposal that suggested a numerical test. A corporation would be deemed a citizen of the

State that accounted for more than half of its gross income. The Conference changed its

mind in light of criticism that such a test would prove too complex and impractical to

apply. That history suggests that the words "principal place of business" should be

interpreted to be no more complex than the initial "half of gross income" test. A "nerve

center" test offers such a possibility. A general business activities test does not.

B

We recognize that there may be no perfect test that satisfies all administrative and

purposive criteria. We recognize as well that, under the "nerve center" test we adopt

today, there will be hard cases. For example, in this era of telecommuting, some

corporations may divide their command and coordinating functions among officers who

work at several different locations, perhaps communicating over the Internet. That said,

our test nonetheless points courts in a single direction, towards the center of overall

direction, control, and coordination. Courts do not have to try to weigh corporate

functions, assets, or revenues different in kind, one from the other. Our approach

provides a sensible test that is relatively easier to apply, not a test that will, in all

instances, automatically generate a result.

We also recognize that the use of a "nerve center" test may in some cases produce

results that seem to cut against the basic rationale for 28 U.S.C. § 1332. For example, if

the bulk of a company's business activities visible to the public take place in New Jersey,

while its top officers direct those activities just across the river in New York, the

"principal place of business" is New York. One could argue that members of the public in

New Jersey would be less likely to be prejudiced against the corporation than persons in

New York — yet the corporation will still be entitled to remove a New Jersey state case

39

to federal court. And note too that the same corporation would be unable to remove a

New York state case to federal court, despite the New York public's presumed prejudice

against the corporation.

We understand that such seeming anomalies will arise. However, in view of the

necessity of having a clearer rule, we must accept them. Accepting occasionally

counterintuitive results is the price the legal system must pay to avoid overly complex

jurisdictional administration while producing the benefits that accompany a more uniform

legal system.

The burden of persuasion for establishing diversity jurisdiction, of course,

remains on the party asserting it. When challenged on allegations of jurisdictional facts,

the parties must support their allegations by competent proof. And when faced with such

a challenge, we reject suggestions such as, for example, the one made by petitioner that

the mere filing of a form like the Securities and Exchange Commission's Form 10-K

listing a corporation's "principal executive offices" would, without more, be sufficient

proof to establish a corporation's "nerve center." Such possibilities would readily permit

jurisdictional manipulation, thereby subverting a major reason for the insertion of the

"principal place of business" language in the diversity statute. Indeed, if the record

reveals attempts at manipulation — for example, that the alleged "nerve center" is

nothing more than a mail drop box, a bare office with a computer, or the location of an

annual executive retreat — the courts should instead take as the "nerve center" the place

of actual direction, control, and coordination, in the absence of such manipulation.

VI

Petitioner's unchallenged declaration suggests that Hertz's center of direction,

control, and coordination, its "nerve center," and its corporate headquarters are one and

the same, and they are located in New Jersey, not in California. Because respondents

should have a fair opportunity to litigate their case in light of our holding, however, we

vacate the Ninth Circuit's judgment and remand the case for further proceedings

consistent with this opinion.

It is so ordered.

NOTES AND QUESTIONS

1. Under what circumstances might using the ―nerve center‖ not be consistent

with the underlying theory of diversity of citizenship jurisdiction? Does the Court leave

open the possibility that some other test might be used? Under what circumstances? If

so, does the Court undermine its desire for uniform jurisdictional rules?

2. Although it is Congress‘s job (within Article III) to define the subject matter

jurisdiction of the federal courts, sometimes its efforts create uncertainty. Section

1332(c)(1) is an example. It became obvious soon after its passage in 1958 that

―principal place of business‖ was an imprecise term. Why did Congress not act to fix the

problem? What could it have done? When it passes imprecise jurisdictional statutes and

does not amend them, does Congress essentially delegate to the judiciary the

responsibility of determining the limits of its jurisdiction? Is there a problem with that?

40

ii. NON-INCORPORATED BUSINESSES

At pages 202-203, add to Note 1. All Courts of Appeals to have addressed the

issue agree that the citizenship of an LLC is to be determined by looking to the

citizenship of all its members. V&M Star, LP v. Centimark Corp., 596 F.3d 354, 35F.3d

412, 418 (3d Cir. 2010); Zambelli Fireworks Mfg. Co., Inc. v. Wood, 592 F.3d 412, 418

(3d Cir. 2010); Ferrell v. Express Check Advance of SC, LLC, 591 F.3d 698 (4th Cir.

2010); Rolling Hills MHP, LP v. Comcast SCH Holdings, LLC, 374 F.3d 1020 (11th

Cir.

2004); GMAC Commercial Credit LLC v. Dillard Dept. Stores, Inc., 357 F.3d 827 (8th

Cir. 2004).

g. The Domestic Relations and Probate Exceptions

At page 206, add. Five years later, the Supreme Court held that the Bankruptcy

Court lacked power under Article III to determine Smith‘s claim. Stern v. Marshall, 131

S. Ct. 2594 (U.S. 2011).

6. REMOVAL JURISDICTION

At pages 232-233, at the end of note 2, please insert:

This is no longer true. The majority sentiment has shifted, and rejects the

approach applied in Noble. The issue has proved surprisingly difficult, as courts have

now adopted three approaches.

The traditional approach, adopted in Brown v. Demco, Inc., 792 F.2d 478, 481-

482 (5th

Cir. 1986), and applied in Noble, held that D-1‘s failure to remove the case bars

D-2 from removing. The Fifth Circuit has not rejected the holding, so it is presumably

good law there.

The clear majority rule today – adopted by the Sixth, Eighth, Ninth, and Eleventh

Circuits – is that a later-joined defendant has 30 days from being served with process in

which to get the original defendant to join her notice of removal. Thus, the original

defendant‘s failure to remove within 30 days of service on her does not rule out later

removal. Destfino v. Reiswig, 630 F.3d 952, 956 (9th

Cir. 2011)(―We adopt the later-

served rule as the wiser and more equitable approach‖); Bailey v. Janssen Pharmaceutica,

Inc., 536 F.3d 1202, 1205-1208 (11th Cir. 2008); Marano Enterprises of Kansas v. Z-

Teca Restaurants, LP, 254 F.3d 753, 757 (8th Cir. 2002); Brierly v. Alusuisse Flexible

41

Packaging, Inc. 184 F.3d 527, 533 (6th Cir. 1999). Because Noble was decided by a

district court in the Eleventh Circuit, it would no longer come out the way it did.

The Fourth Circuit takes an ―intermediate approach.‖ It permits the second

defendant to remove the case within 30 days of service of process on her, but only if the

original defendant also removes within 30 days of service on her. Barbour v.

International Union, 640 F.3d 599 (4th

Cir. 2011)(en banc).

To summarize: Plaintiff sues D-1 and D-2 on July 1. Process is served on D-1

the same day. Process is served on D-2 on July 30. Under the tradition approach, the

case will be removed only if D-1 and D-2 remove no later than July 31 (30 days after

service on D-1. The fact that D-2 was served later does not extend the time for removal,

which runs from the date of service on D-1.

Under the majority view, D-2 can remove within 30 days after she was served –

that is, on or before August 29 (30 days after D-2 was served on July 30). She will have

to get D-1 to join her notice of removal, but can remove even if D-1 did not do so on her

own before.

Under the Fourth Circuit approach, D-2 can remove within 30 days of service on

her, but only if D-1 gets around to removing within 30 days of service on her. So if D-1

removes no later than July 31 (30 days after service on D-1), then D-2 can join the

removal anytime through August 29 (30 days after service on D-2).

This all seems more complicated than it should be. Could Congress have

addressed the issue in the removal statutes? How?

42

CHAPTER 7: PLEADINGS

C. THE COMPLAINT

1. Requirements

At page 310, following the Notes and Questions, please insert the following:

Note on Iqbal

The Court revisited Twombly in Ashcroft v. Iqbal, 556 U.S. ___, 129 S.Ct. 1937

(2009). Many observers viewed the Court‘s decision to grant certiorari in Iqbal as an

opportunity to clarify and restrict some of the questionable implications of Twombly.

Instead, in a fractured five-to-four decision, the majority of the Court strongly reaffirmed

and arguably expanded Twombly‘s main themes.

The plaintiff in Iqbal was a Muslim citizen of Pakistan. He alleged that after the

terrorist attacks of September 11, 2001, federal officials arrested and detained him under

restrictive conditions. Two of the defendants were John Ashcroft, the former Attorney

General of the United States, and Robert Mueller, the Director of the FBI. Iqbal

attempted to allege a claim for violation of his constitutional rights under Bivens v. Six

Unknown Federal Narcotics Agents, 403 U.S. 388 (1971). Specifically, Iqbal alleged

that Ashcroft and Mueller violated the First and Fifth Amendments by adopting policies

that led to his designation as a person "of high interest" and subjected him to harsh

conditions of confinement on account of his race, religion, or national origin.

Ashcroft and Mueller moved to dismiss the complaint on the ground that it failed

sufficiently to allege that their conduct violated Iqbal's clearly established constitutional

rights, and they therefore were entitled to immunity from suit. The district court and the

Second Circuit rejected the defendants‘ arguments and upheld the complaint.

The Supreme Court reversed, and held that the complaint failed to state a claim.

Justice Kennedy wrote the majority opinion, in which he was joined by Chief Justice

Roberts and Justices Scalia, Thomas, and Alito. In applying Twombly, the majority

noted, a court must first identify the elements of a viable claim. In actions alleging

unconstitutional discrimination by government officials, those officials may not be held

liable for the unconstitutional conduct of their subordinates under a theory of respondeat

superior. Rather, the plaintiff must allege that each defendant official's own actions have

violated the Constitution:

The factors necessary to establish a Bivens violation will vary with the

constitutional provision at issue. Where the claim is invidious

discrimination in contravention of the First and Fifth Amendments, our

decisions make clear that the plaintiff must plead and prove that the

defendant acted with discriminatory purpose. . . . Under extant precedent

purposeful discrimination requires more than ―intent as volition or intent

43

as awareness of consequences.‖ Personnel Administrator of Mass. v.

Feeney, 442 U. S. 256, 279 (1979). It instead involves a decision maker‘s

undertaking a course of action ―‗because of,‘ not merely ‗in spite of,‘ [the

action‘s] adverse effects upon an identifiable group.‖ Ibid. It follows

that, to state a claim based on a violation of a clearly established right,

respondent must plead sufficient factual matter to show that petitioners

adopted and implemented the detention policies at issue not for a neutral,

investigative reason but for the purpose of discriminating on account of

race, religion, or national origin.

Id. at 1948-1949.

The majority then concluded that Iqbal's allegations against Ashcroft and Mueller

were insufficient under Twombly:

Two working principles underlie our decision in Twombly. First,

the tenet that a court must accept as true all of the allegations contained in

a complaint is inapplicable to legal conclusions. Threadbare recitals of the

elements of a cause of action, supported by mere conclusory statements,

do not suffice. . . . Rule 8 marks a notable and generous departure from

the hyper-technical, code-pleading regime of a prior era, but it does not

unlock the doors of discovery for a plaintiff armed with nothing more than

conclusions. Second, only a complaint that states a plausible claim for

relief survives a motion to dismiss. Determining whether a complaint

states a plausible claim for relief will, as the Court of Appeals observed,

be a context-specific task that requires the reviewing court to draw on its

judicial experience and common sense. . . .

. . .

We begin our analysis by identifying the allegations in the

complaint that are not entitled to the assumption of truth. Respondent

pleads that petitioners ―knew of, condoned, and willfully and maliciously

agreed to subject [him]‖ to harsh conditions of confinement ―as a matter of

policy, solely on account of [his] religion, race, and/or national origin and

for no legitimate penological interest.‖ The complaint alleges that

Ashcroft was the ―principal architect‖ of this invidious policy, and that

Mueller was ―instrumental‖ in adopting and executing it. These bare

assertions, much like the pleading of conspiracy in Twombly, amount to

nothing more than a ―formulaic recitation of the elements‖ of a

constitutional discrimination claim, namely, that petitioners adopted a

policy ―‗because of,‘ not merely ‗in spite of,‘ its adverse effects upon an

identifiable group.‖ As such, the allegations are conclusory and not

entitled to be assumed true. To be clear, we do not reject these bald

allegations on the ground that they are unrealistic or nonsensical. . . . It is

the conclusory nature of respondent‘s allegations, rather than their

extravagantly fanciful nature, that disentitles them to the presumption of

44

truth.

We next consider the factual allegations in respondent‘s complaint

to determine if they plausibly suggest an entitlement to relief. The

complaint alleges that ―the [FBI], under the direction of Defendant

Mueller, arrested and detained thousands of Arab Muslim men . . . as part

of its investigation of the events of September 11.‖ It further claims that

―[t]he policy of holding post-September-11th detainees in highly

restrictive conditions of confinement until they were ‗cleared‘ by the FBI

was approved by Defendants Ashcroft and Mueller in discussions in the

weeks after September 11, 2001.‖ Taken as true, these allegations are

consistent with petitioners‘ purposefully designating detainees ―of high

interest‖ because of their race, religion, or national origin. But given more

likely explanations, they do not plausibly establish this purpose.

The September 11 attacks were perpetrated by 19 Arab Muslim

hijackers who counted themselves members in good standing of al Qaeda,

an Islamic fundamentalist group. Al Qaeda was headed by another Arab

Muslim—Osama bin Laden—and composed in large part of his Arab

Muslim disciples. It should come as no surprise that a legitimate policy

directing law enforcement to arrest and detain individuals because of their

suspected link to the attacks would produce a disparate, incidental impact

on Arab Muslims, even though the purpose of the policy was to target

neither Arabs nor Muslims. On the facts respondent alleges the arrests

Mueller oversaw were likely lawful and justified by his nondiscriminatory

intent to detain aliens who were illegally present in the United States and

who had potential connections to those who committed terrorist acts. As

between that ―obvious alternative explanation‖ for the arrests, Twombly,

and the purposeful, invidious discrimination respondent asks us to infer,

discrimination is not a plausible conclusion.

But even if the complaint‘s well-pleaded facts give rise to a

plausible inference that respondent‘s arrest was the result of

unconstitutional discrimination, that inference alone would not entitle

respondent to relief. It is important to recall that respondent‘s complaint

challenges neither the constitutionality of his arrest nor his initial detention

in the [Metropolitan Detention Center in Brooklyn]. Respondent‘s

constitutional claims against petitioners rest solely on their ostensible

―policy of holding post-September-11th detainees‖ in the ADMAX SHU

[Administrative Maximum Special Housing Unit, in which detainees are

in 23-hour-a-day lockdown] once they were categorized as ―of high

interest.‖ To prevail on that theory, the complaint must contain facts

plausibly showing that petitioners purposefully adopted a policy of

classifying post-September-11 detainees as ―of high interest‖ because of

their race, religion, or national origin.

45

This the complaint fails to do. Though respondent alleges that

various other defendants, who are not before us, may have labeled him a

person of ―of high interest‖ for impermissible reasons, his only factual

allegation against petitioners accuses them of adopting a policy approving

―restrictive conditions of confinement‖ for post-September 11 detainees

until they were ―‗cleared‘ by the FBI.‖ Accepting the truth of that

allegation, the complaint does not show, or even intimate, that petitioners

purposefully housed detainees in the ADMAX SHU due to their race,

religion, or national origin. All it plausibly suggests is that the Nation‘s

top law enforcement officers, in the aftermath of a devastating terrorist

attack, sought to keep suspected terrorists in the most secure conditions

available until the suspects could be cleared of terrorist activity.

Respondent does not argue, nor can he, that such a motive would violate

petitioners‘ constitutional obligations. . . .

. . .

Respondent offers three arguments that bear on our disposition of

his case, but none is persuasive.

. . .

Respondent first says that our decision in Twombly should be

limited to pleadings made in the context of an antitrust dispute. This

argument is not supported by Twombly and is incompatible with the

Federal Rules of Civil Procedure. Though Twombly determined the

sufficiency of a complaint sounding in antitrust, the decision was based on

our interpretation and application of Rule 8. That Rule in turn governs the

pleading standard ―in all civil actions and proceedings in the United States

district courts.‖ Fed. Rule Civ. Proc. 1. Our decision in Twombly

expounded the pleading standard for ―all civil actions,‖ and it applies to

antitrust and discrimination suits alike.

. . .

Respondent next implies that our construction of Rule 8 should be

tempered where, as here, the Court of Appeals has ―instructed the district

court to cabin discovery in such a way as to preserve‖ petitioners‘ defense

of qualified immunity ―as much as possible in anticipation of a summary

judgment motion.‖ We have held, however, that the question presented by

a motion to dismiss a complaint for insufficient pleadings does not turn on

the controls placed upon the discovery process. Twombly, supra, at 559

(―It is no answer to say that a claim just shy of a plausible entitlement to

relief can, if groundless, be weeded out early in the discovery process

through careful case management given the common lament that the

success of judicial supervision in checking discovery abuse has been on

46

the modest side.‖).

. . .

We decline respondent‘s invitation to relax the pleading

requirements on the ground that the Court of Appeals promises petitioners

minimally intrusive discovery. That promise provides especially cold

comfort in this pleading context, where we are impelled to give real

content to the concept of qualified immunity for high-level officials who

must be neither deterred nor detracted from the vigorous performance of

their duties. Because respondent‘s complaint is deficient under Rule 8, he

is not entitled to discovery, cabined or otherwise.

. . .

Respondent finally maintains that the Federal Rules expressly allow

him to allege petitioners‘ discriminatory intent ―generally,‖ which he

equates with a conclusory allegation. It follows, respondent says, that his

complaint is sufficiently well pleaded because it claims that petitioners

discriminated against him ―on account of [his] religion, race, and/or

national origin and for no legitimate penological interest.‖ Were we

required to accept this allegation as true, respondent‘s complaint would

survive petitioners‘ motion to dismiss. But the Federal Rules do not

require courts to credit a complaint‘s conclusory statements without

reference to its factual context. It is true that Rule 9(b) requires

particularity when pleading ―fraud or mistake,‖ while allowing ―[m]alice,

intent, knowledge, and other conditions of a person‘s mind [to] be alleged

generally.‖ But ―generally‖ is a relative term. In the context of Rule 9, it is

to be compared to the particularity requirement applicable to fraud or

mistake. Rule 9 merely excuses a party from pleading discriminatory

intent under an elevated pleading standard. It does not give him license to

evade the less rigid—though still operative—strictures of Rule 8. . . .

Justice Souter, who had written the majority opinion in Twombly, dissented,

joined by Justices Stevens, Breyer, and Ginsburg. To them, Twombly was distinguishable

because that case involved allegations of antitrust conspiracy based on parallel conduct,

and such conduct was just as consistent with lawful business behavior as with conspiracy.

Here in contrast, "the allegations of the complaint are neither confined to naked legal

conclusions nor consistent with legal conduct." Id. at 1960.

Questions

1. Is Iqbal consistent with Erickson (discussed in Note 5 above)? After all,

Erickson also engaged deprivation of constitutional rights – but successfully alleged.

Why the different result in Iqbal?

47

2. In his dissent in Twombly, Justice Stevens reviewed the efforts of the drafters

of the Federal Rules to rid federal pleading of the distinction between allegations of

―conclusions‖ and allegations of ―facts.‖ See pages 305-306 of the casebook. Has Iqbal

resurrected that distinction?

3. How does the majority deal with the fact that Rule 9(b) expressly allows

allegations of state of mind to be made generally?

4. Does Iqbal, for all practical purposes, make it impossible to state a claim for

unconstitutionally motivated conduct by government officials? It not, what must a

plaintiff alleging such a complaint include in the complaint that was not included in

Iqbal?

D. DEFENDANT’S OPTIONS IN RESPONSE

At page 325, after the first paragraph, note that the 2009 amendments to Rule 12

change the time in which a defendant must respond to avoid default – from 20 days to 21

days after being served with process.

At page 328, concerning affirmative defenses, note that there is an emerging split

of authority on whether the plausibility standard of Twombly and Iqbal applies to

affirmative defenses. In those cases, the Supreme Court interpreted Rule 8(a), and

affirmative defenses are governed by Rule 8(c), so some courts refuse to apply the

increased detail requirement here. See, e.g., Lane v. Page, 272 F.R.D. 581, 591 (D. N.M.

2011)(providing citations to numerous cases on both sides in footnotes 5 and 6); Shaw v.

Prudential Ins. Co. of Am., 2011 U.S. Dist. LEXIS 29203 at *7 (W.D. Mo. 2011);

Charleswell v. Chase Manhattan Bank, N.A., 2009 U.S. Dist. LEXIS 116358 (D. V.I.

2009); Romantine v. CH2M Hill Eng‘rs, 2009 U.S. Dist. LEXIS 98699 (W.D.Pa. 2009);

First Nat‘l Ins. Co. of America v. Camps Servs, 2009 U.S. Dist. LEXIS 149 (E.D. Mich

2009).

On the other hand, some courts apply the standard to affirmative defenses. See,

e.g., Bradshaw v. Hilco Receivables, LLC, 725 F.Supp.2d 532, 536 (D. Md. 2010);

Hayne v. Green Ford Sales, Inc., 363 F.R.D. 647, 650 (D. Kan. 2009).

SECTION 4: DEFAULT AND DEFAULT JUDGMENT

At page 332, Note 3, change 20 days to 21 days.

48

E. AMENDED PLEADINGS

1. BASIC PRINCIPLES UNDER RULE 15(a)

The 2009 amendments not only changed the time in which defendant must

respond – from 20 to 21 days after being served with process – but also changed the rules

for amendment of right under Rule 15(a). They thus changed the answers to the

hypotheticals on page 334 of the Casebook.

1. (a) Rule 15(a) traditionally allowed the plaintiff to amend of right before the

defendant served her ―responsive pleading.‖ Because a motion is not a responsive

pleading, the plaintiff in this hypothetical would have retained the right to amend. As

amended in 2009, Rule 15(a)(1)(A) now allows a plaintiff to amend of right once within

21 days after the defendant serves her answer or a motion under Rule 12(b), (e), or (f).

Thus, under the old rule, the defendant had the power to cut off the plaintiff‘s right to

amend by serving her answer. Now that is not true. The plaintiff has 21 days after the

defendant responds by serving an answer or motion in which to amend. So in this

hypothetical, assuming Plaintiff amends within 21 days after Defendant‘s service of the

motion, she would have a right to amend.

(b) Again, assuming Plaintiff amended no later than 21 days after Defendant

served her motion, she would have a right to amend.

(c) The 2009 amendments change the timing here from 10 to 14 days after

service of the amended pleading. Rule 15(a)(3).

(d) The 2009 amendments changed the timing during which Defendant has a

right to amend – from 20 days after service of her answer to 21 days. The amendment in

this hypothetical is timely under either version.

(e) This hypothetical is not affected by the 2009 amendments.

3. AMENDMENT AND THE STATUTE OF LIMITITIONS

b. AMENDMENTS CHANGING A PARTY

At page 342, end of the § b., add: In Krupski v. Costa Crociere S. p. A., 130 S.Ct.

2485 (2010), the Court held that relation back depends upon the knowledge of the party

to be joined, and not the plaintiff. Thus, it is the party to be joined that must know,

within the period under Rule 4(m) that it should have been named but for a mistake. The

plaintiff‘s knowledge or lack thereof is not the test.

49

CHAPTER 9: ADJUDICATION WITH AND WITHOUT A TRIAL OR JURY

A. THE RIGHT TO A JURY

At page 435, after the first paragraph concerning Scope of the Constitutional

Right, add:

Professor Madison has detailed the constitutional evolution of the jury, recounting

federalist and anti-federalist writings. He concludes that ―[i]n the Anglo-American

tradition, . . . persons of all political stripes have agreed on one thing: the jury system

serves justice by allowing average citizens to serve as a check within the broader scheme

of governmental checks and balances.‖ Benjamin V. Madison, III, Trial by Jury or by

Military Tribunal for Accused Terrorist Detainees Facing the Death Penalty? An

Examination of the Principles That Transcend the U.S. Constitution, 17 U. Fla. J.L.&

Pub. Pol. 347, 391 (2006).

SECTION C: SUMMARY JUDGMENT – ADJUDICATION WITHOUT TRIAL

OR JURY

At page 496, note 9, add:

In Ortiz v. Jordan, 131 S.Ct. 884 (2011), the Supreme Court answered this

question and held that in federal court a party may not appeal a denial of summary

judgment after a full trial on the merits.

SECTION D: CONTROLLING AND SECOND-GUESSING JURIES

At page 532, end of page, add: To set aside a judgment as ―void‖ under Federal

Rule 60(b)(4), there must be a fundamental flaw; a merely erroneous decision is not

enough (if the decision were merely erroneous, the aggrieved party should have

appealed). A judgment is void if there was not even an ―arguable basis‖ for subject

matter jurisdiction. United Student Aid Funds v. Espinoza, 130 S.Ct. 1367 (2010).

Because the bankruptcy court that entered judgment had jurisdiction, its judgment could

not be set aside as void.

50

CHAPTER 10: WHAT LAW APPLIES IN FEDERAL COURT

B.DETERMINING WHAT LAW APPLIES

3. THE FEDERAL RULES OF CIVIL PROCEDURE

a. WHAT HAPPENS WHEN THERE IS A FEDERAL RULE OF CIVIL

PROCEDURE ON POINT — THE RULES ENABLING ACT PRONG

ii. DETERMINING WHETHER A FEDERAL DIRECTIVE IS VALID

In Shady Grove Orthopedic Assoc. v. Allstate Ins. Co., 130 S.Ct. 1431 (2010), the

Court again considered a conflict between state law and a Federal Rule of Civil

Procedure. Under New York law, insurance companies have 30 days to pay or refuse a

claim and are required to pay a statutorily set interest rate on overdue benefits. The

plaintiff, a medical provider, brought a class action in federal court against Allstate

Insurance, alleging that Allstate routinely refused to pay interest on overdue amounts.

Rule 23 of the Federal Rules of Civil Procedure specifies the criteria for certification of a

class action in federal court. The district court refused to apply Rule 23, however, and

concluded that New York law on class actions governed. That law provides:

Unless a statute creating or imposing a penalty, or a minimum measure of

recovery specifically authorizes the recovery thereof in a class action, an

action to recover a penalty, or minimum measure of recovery created or

imposed by statute may not be maintained as a class action.

N.Y. Civ. Prac. Law Ann § 901 (West 2006). The Second Circuit affirmed. It conceded

that if there were a valid Federal Rule on point that conflicted with state law, the Federal

Rule would control. It concluded, however, that § 901 and Rule 23 did not conflict

because the former addresses eligibility for class certification while the latter addresses

the specific criteria for certification.

A divided the Supreme Court reversed, and held that the issue was governed by

Rule 23 of the Federal Rules of Civil Procedure. Justice Scalia, writing for a five Justice

majority, first rejected the argument that § 901 and Rule 23 do not conflict observing that

―the line between eligibility and certifiability is entirely artificial.‖ 130 S.Ct. at 1438.

Having found a conflict between the two provisions, the majority next considered

whether Rule 23 was valid under the Rules Enabling Act. In making this determination,

Justice Scalia, writing for only four members of the Court, stressed that the focus must be

on the Federal Rule not on the state law: ―[I]t is not the substantive or procedural nature

or purpose of the affected state law that matters, but the substantive or procedural nature

of the Federal Rule. We have held since Sibbach, and reaffirmed repeatedly, that the

validity of a Federal Rule depends entirely upon whether it regulates procedure.‖ 130

S.Ct. at 1444.

51

Justice Stevens, who joined in the first part of Scalia‘s opinion, offered a different

approach to determining the validity of a Federal Rule of Civil Procedure. Justice

Stevens emphasized the provision in the Rules Enabling Act requiring that such rules

―not abridge, enlarge or modify any substantive right.‖ He argued that because of this

language it was necessary to considered the substantive nature of the state law. In the

end he concurred in the holding that Rule 23 controlled because he concluded that the

substantive character of § 901 was not sufficiently clear to invalidate a Federal Rules of

Civil Procedure.

Unlike the majority, the dissent found that Rule 23 can and should be read to

avoid a conflict with state law. After considering the legislative history of § 901, the

dissent concluded that the N.Y. law was intended to have the substantive effect of

limiting damages and therefore should be applied.

52

CHAPTER 11: THE PRECLUSION DOCTRINES

C. ISSUE PRECLUSION

6. AGAINST WHOM CAN ISSUE PRECLUSION BE ASSERTED?

At pages 622-624, in lieu of Notes 3 through 10, please insert:

The Supreme Court sounded the death knell of virtual representation in Taylor v.

Sturgell, 553 U.S. 880 (2008). Although the case involved claim preclusion, its

discussion of against whom a judgment may be enforced is relevant in issue preclusion as

well. In Taylor, Herrick, an antique aviation enthusiast, sought release of technical

documents from the Federal Aviation Administration (FAA). He wanted the documents

to help him restore such a plane to its original condition. After the FAA the request on

the basis that they constituted trade secrets. Herrick then sued the FAA and lost on

summary judgment.

Less than a month later, Taylor, who is a friend of Herrick and also an aircraft

enthusiast, sought the same documents from the FAA. Ultimately, Taylor sued the

agency. The corporation that succeeded to the interests of the airplane‘s manufacturer

intervened and sought to block release of the documents. The lower courts held that

Taylor‘s suit was barred by claim preclusion. Although Taylor was not a party in

Herrick‘s suit, the courts applied virtual representation to hold that Taylor was bound by

the judgment in Herrick‘s case. The district court adopted the Eighth Circuit‘s test from

Tyus, which is discussed in Note 2 at page 622 of the Casebook. On appeal, the District

of Columbia Circuit fashioned its own test for virtual representation.

The Supreme Court reversed. First, it reviewed the lower courts‘ reasoning:

The Eighth Circuit's seven-factor test for virtual representation,

adopted by the District Court in Taylor's case, requires an "identity of

interests" between the person to be bound and a party to the judgment.

Six additional factors counsel in favor of virtual representation under the

Eighth Circuit's test, but are not prerequisites: (1) a "close relationship"

between the present party and a party to the judgment alleged to be

preclusive; (2) "participation in the prior litigation" by the present party;

(3) the present party's "apparent acquiescence" to the preclusive effect of

the judgment; (4) "deliberat[e] maneuver[ing]" to avoid the effect of the

judgment; (5) adequate representation of the present party by a party to the

prior adjudication; and (6) a suit raising a "public law" rather than a

"private law" issue. These factors, the D. C. District Court observed,

"constitute a fluid test with imprecise boundaries" and call for "a broad,

case-by-case inquiry."

The record before the District Court in Taylor's suit revealed the

following facts about the relationship between Taylor and Herrick: Taylor

is the president of the Antique Aircraft Association, an organization to

53

which Herrick belongs; the two men are "close associate[s]"; Herrick

asked Taylor to help restore Herrick's F-45, though they had no contract or

agreement for Taylor's participation in the restoration; Taylor was

represented by the lawyer who represented Herrick in the earlier litigation;

and Herrick apparently gave Taylor documents that Herrick had obtained

from the FAA during discovery in his suit.

Fairchild and the FAA conceded that Taylor had not participated in

Herrick's suit. App. to Pet. for Cert. 32a. The D. C. District Court

determined, however, that Herrick ranked as Taylor's virtual

representative because the facts fit each of the other six indicators on the

Eighth Circuit's list. Accordingly, the District Court held Taylor's suit,

seeking the same documents Herrick had requested, barred by the

judgment against Herrick.

The D.C. Circuit affirmed. It observed, first, that other Circuits

"vary widely" in their approaches to virtual representation. Taylor v.

Blakey, 490 F.3d 965, 971 (2007). In this regard, the D. C. Circuit

contrasted the multifactor balancing test applied by the Eighth Circuit and

the D. C. District Court with the Fourth Circuit's narrower approach,

which "treats a party as a virtual representative only if the party is

'accountable to the nonparties who file a subsequent suit' and has 'the tacit

approval of the court' to act on the nonpart[ies'] behalf." Ibid. (quoting

Klugh v. United States, 818 F.2d 294, 300 (CA4 1987)).

Rejecting both of these approaches, the D.C. Circuit announced its

own five-factor test. The first two factors—"identity of interests" and

"adequate representation"—are necessary but not sufficient for virtual

representation. 490 F.3d at 971-972. In addition, at least one of three

other factors must be established: "a close relationship between the

present party and his putative representative," "substantial participation by

the present party in the first case," or "tactical maneuvering on the part of

the present party to avoid preclusion by the prior judgment."

Applying this test to the record in Taylor's case, the D. C. Circuit

found both of the necessary conditions for virtual representation well met.

As to identity of interests, the court emphasized that Taylor and Herrick

sought the same result—release of the F-45 documents. Moreover, the D.

C. Circuit observed, Herrick owned an F-45 airplane, and therefore had "if

anything, a stronger incentive to litigate" than Taylor, who had only a

"general interest in public disclosure and the preservation of antique

aircraft heritage." Id., at 973.

Turning to adequacy of representation, the D. C. Circuit

acknowledged that some other Circuits regard notice of a prior suit as

essential to a determination that a nonparty was adequately represented in

that suit. See id., at 973-974 (citing Perez v. Volvo Car Corp., 247 F.3d

303, 312 (CA1 2001), and Tice v. American Airlines, Inc., 162 F.3d 966,

973 (CA7 1998)). Disagreeing with these courts, the D. C. Circuit deemed

54

notice an "important" but not an indispensable element in the adequacy

inquiry. The court then concluded that Herrick had adequately

represented Taylor even though Taylor had received no notice of Herrick's

suit. For this conclusion, the appeals court relied on Herrick's "strong

incentive to litigate" and Taylor's later engagement of the same attorney,

which indicated to the court Taylor's satisfaction with that attorney's

performance in Herrick's case. See 490 F.3d at 974-975.

The D.C. Circuit also found its "close relationship" criterion met,

for Herrick had "asked Taylor to assist him in restoring his F-45" and

"provided information to Taylor that Herrick had obtained through

discovery"; furthermore, Taylor "did not oppose Fairchild's

characterization of Herrick as his 'close associate.'" Id., at 975. Because

the three above-described factors sufficed to establish virtual

representation under the D. C. Circuit's five-factor test, the appeals court

left open the question whether Taylor had engaged in "tactical

maneuvering." See id., at 976 (calling the facts bearing on tactical

maneuvering "ambigu[ous]")

We granted certiorari to resolve the disagreement among the

Circuits over the permissibility and scope of preclusion based on "virtual

representation.‖3

553 U.S. at 888-891.

The Court then summarized the circumstances in which a non-party may be

bound by a judgment.

Though hardly in doubt, the rule against nonparty preclusion is

subject to exceptions. For present purposes, the recognized exceptions can

be grouped into six categories.

First, "[a] person who agrees to be bound by the determination of

issues in an action between others is bound in accordance with the terms

of his agreement." 1 Restatement (Second) of Judgments § 40 (1980)

(hereinafter Restatement). For example, "if separate actions involving the

same transaction are brought by different plaintiffs against the same

defendant, all the parties to all the actions may agree that the question of

the defendant's liability will be definitely determined, one way or the

3 The Ninth Circuit applies a five-factor test similar to the D. C. Circuit's. See Kourtis v.

Cameron, 419 F.3d 989, 996 (2005). The Fifth, Sixth, and Eleventh Circuits, like the

Fourth Circuit, have constrained the reach of virtual representation by requiring, inter

alia, the existence of a legal relationship between the nonparty to be bound and the

putative representative. See Pollard v. Cockrell, 578 F.2d 1002, 1008 (CA5 1978);

Becherer v. Merrill Lynch, Pierce, Fenner, & Smith, Inc., 193 F.3d 415, 424 (CA6 1999);

EEOC v. Pemco Aeroplex, Inc., 383 F.3d 1280, 1289 (CA11 2004). The Seventh Circuit,

in contrast, has rejected the doctrine of virtual representation altogether. See Perry v.

Globe Auto Recycling, Inc., 227 F.3d 950, 953 (2000).

55

other, in a 'test case.'" D. Shapiro, Civil Procedure: Preclusion in Civil

Actions 77-78 (2001) (hereinafter Shapiro). See also California v. Texas,

459 U.S. 1096, 1097 (1983) (dismissing certain defendants from a suit

based on a stipulation "that each of said defendants . . . will be bound by a

final judgment of this Court" on a specified issue).

Second, nonparty preclusion may be justified based on a variety of

pre-existing "substantive legal relationship[s]" between the person to be

bound and a party to the judgment. Shapiro 78. See also Richards, 517

U.S., at 798. Qualifying relationships include, but are not limited to,

preceding and succeeding owners of property, bailee and bailor, and

assignee and assignor. See 2 Restatement §§ 43-44, 52, 55. These

exceptions originated "as much from the needs of property law as from the

values of preclusion by judgment." 18A C. Wright, A. Miller, & E.

Cooper, Federal Practice and Procedure § 4448, p 329 (2d ed. 2002).8

Third, we have confirmed that, "in certain limited circumstances,"

a nonparty may be bound by a judgment because she was "adequately

represented by someone with the same interests who [wa]s a party" to the

suit. Richards, 517 U.S., at 798 . Representative suits with preclusive

effect on nonparties include properly conducted class actions, see Martin,

490 U.S., at 762, n. 2 (citing Fed. Rule Civ. Proc. 23), and suits brought by

trustees, guardians, and other fiduciaries, see Sea-Land Services, Inc. v.

Gaudet, 414 U.S. 573, 593.

Fourth, a nonparty is bound by a judgment if she "assume[d]

control" over the litigation in which that judgment was rendered.

Montana, 440 U.S., at 154. Because such a person has had "the

opportunity to present proofs and argument," he has already "had his day

in court" even though he was not a formal party to the litigation.

Fifth, a party bound by a judgment may not avoid its preclusive

force by relitigating through a proxy. Preclusion is thus in order when a

person who did not participate in a litigation later brings suit as the

designated representative of a person who was a party to the prior

adjudication. See Chicago, R. I. & P. R. Co. v. Schendel, 270 U.S. 611,

620, 623. And although our decisions have not addressed the issue

directly, it also seems clear that preclusion is appropriate when a nonparty

later brings suit as an agent for a party who is bound by a judgment.

8 The substantive legal relationships justifying preclusion are sometimes

collectively referred to as "privity." See, e.g., Richards v. Jefferson County, 517

U.S. 793, 798 (1996); 2 Restatement § 62, Comment a. The term "privity,"

however, has also come to be used more broadly, as a way to express the

conclusion that nonparty preclusion is appropriate on any ground. To ward off

confusion, we avoid using the term "privity" in this opinion.

56

Sixth, in certain circumstances a special statutory scheme may

"expressly foreclos[e] successive litigation by nonlitigants . . . if the

scheme is otherwise consistent with due process." Martin, 490 U.S., at

762, n. 2. Examples of such schemes include bankruptcy and probate

proceedings, and quo warranto actions or other suits that, "under [the

governing] law, [may] be brought only on behalf of the public at large,"

Richards, 517 U.S., at 804.

553 U.S. at 893-895.

The Court found that none of these exceptions applied, and thus concluded that

Taylor‘s suit against the FAA could proceed.

57

CHAPTER 12: SCOPE OF LITIGATION –

JOINDER AND SUPPLEMENTAL JURISDICTION

F. OVERRIDING PLAINTIFF’S PARTY STRUCTURE

SECTION 2. NECESSARY AND INDISPENSABLE PARTIES

At page 702, please insert:

7. In Republic of Philippines v. Pimentel, 553 U.S. 851 (2008), the Supreme

Court applied Rule 19(b) to compel dismissal in an interesting context. The case was an

interpleader action. As we will study in Chapter 13, interpleader allows someone in

possession of money or other property to join all potential claimants to the property.

Pimentel involved billions of dollars in assets stolen from various sources by the late

ruler of the Philippines, Ferdinand Marcos. A corporation founded by Marcos held the

assets and instituted interpleader in federal court in California, in an effort to return them

to their rightful owners.

Thousands of claimants were joined. Two claimants – the Republic of the

Philippines and a commission created by it – could not be joined, however, because of

sovereign immunity. The Court concluded that the interpleader proceeding could not

proceed without these two claimants, and that it had to be dismissed under Rule 12(b)(7).

First, the Philippines and its commission were necessary under Rule 19(a)(1)(B)(i). If

they did not participate, the assets to which they were entitled would be distributed to

others. Second, under Rule 19(b), the Court confirmed that judges routinely must

consider the merits of claims and defenses. Rule 19(b), after all, requires a court to

assess whether it is likely that a party or absentee will be harmed by nonjoinder. The

lower courts had done so and had concluded that the claims by the Philippines and its

commission were frivolous. The Court disagreed. In equity and good conscience, the

interpleader case had to be dismissed, at least in part to allow a sovereign nation to

determine in its own courts who owns the assets absconded by its former leader.

58

CHAPTER 13: SPECIAL MULTI-PARTY LITIGATION: INTERPLEADER

AND THE CLASS ACTION

C. CLASS ACTION

4. PRACTICE UNDER RULE 23

c. REQUIREMENTS FOR CERTIFICATION

On June 20, 2011, the Supreme Court issued its decision in In Wal-Mart Stores,

Inc. v. Dukes, 2011 U.S. LEXIS 4567. It reversed the Ninth Circuit, which had upheld a

class of potentially 1.5 million members. The class consisted of women employees of

Wal-Mart, and alleged discrimination on the basis of sex in violation of Title VII. Wal-

Mart permits managers to exercise great discretion in setting pay (within ranges) and

promotion, and sought injunctive and declaratory relief, punitive damages, and back pay.

Plaintiffs assert that the discretion is exercised disproportionately in favor of men, which

causes an unlawful disparate impact on women employees. The majority, led by Justice

Scalia, concluded (1) that the class failed to satisfy Rule 23(a)(2) and (2) that back pay

claims could not be sought under Rule 23(b)(2).

On Rule 23(b)(2), the holding was unanimous, and emphasized two points. First,

the injunctive or declaratory relief sought must be the same for each class member. The

Rule ―does not authorize class certification when each individual class member would be

entitled to a different injunction or declaratory judgment against the defendant.‖ Id. at

*39 (emphasis original). Indeed, the Court noted, because half the class was no longer

employed at Wal-Mart, only the remaining half had any claim for equitable relief. And

their claims were not susceptible to vindication by a single order. Second, Rule 23(b)(2)

does not authorize a class action when ―each class member would be entitled to an

individualized award of monetary damages.‖ Id. This is true even if the award is of back

pay, notwithstanding that back pay may be considered equitable relief. The Rule does

not speak of equitable relief, but of injunctive and declaratory relief.

In this part of the opinion, the Court tipped its hand on two potentially important

points. First, it says that due process (as interpreted in Phillips Petroleum Co. v. Shutts,

472 U.S. 797 (1985)), requires notice and opt-out for any class action ―predominantly for

money damages.‖ Id. at 43. It is not at all clear that Shutts so held. Second, the Court

shreds what it calls ―Trial by Formula,‖ which the Ninth Circuit had pioneered in Hilao v.

Estate of Marcos, 103 F.3d 767, 782-787 (1996), and applied below. In Hilao, the court

dealt with about 10,000 damages claims by selecting 137 at random for reference to a

master for valuation. It then extrapolated the value of the other claims, without further

proceedings. ―We disapprove that novel project,‖ said the majority. Id. at *50.

On the Rule 23(a)(2) holding, the Court split five-to-four. The majority‘s

reasoning is found in Part II of Justice Scalia‘s opinion, from which Justice Ginsburg

leads the dissenters. The holding is critical, because it means that the plaintiffs will not

59

be able to pursue a Rule 23(b)(3) class for their damages claims, because they cannot

meet this prerequisite to certification.

The majority recognized that Rule 23(a)(2) requires only that there be a single

question of law or fact in common to the class, but held that there was none. Saying that

all plaintiffs suffered a violation of Title VII was insufficient, because that provision can

be violated in different ways. Rather, the members must have suffered the same injury,

so ―their claims can productively be litigated at once.‖ Id. at *19. The substantive law

required a showing of a general policy of discrimination. In assessing certification, the

Court recognized the necessity and propriety of a court‘s addressing the merits.

The Court concluded that the plaintiffs had no support for their assertion that

Wal-Mart operated under a general policy of discrimination. Plaintiffs had presented

―social framework‖ analysis of a sociologist, who concluded that Wal-Mart‘s structure

and corporate culture made it ―vulnerable‖ to ―gender bias.‖ The expert conceded,

though, that he could not calculate what percentage of employment decisions might be

affected by ―stereotyped thinking.‖ Accordingly, the Court ―can safely disregard what he

has to say.‖ (Here, by the way, the majority noted that the district court concluded that

Daubert does not apply to expert testimony proffered in motions for certification. ―We

doubt that is so,‖ said the Court, without so holding. Id. at 27-28.)

That left the Wal-Mart policy of allowing local managers to exercise discretion

over pay and promotion. Plaintiffs failed to identify a ―common mode of exercising

discretion that pervades the entire company.‖ Because they could not show an

employment practice that ―ties all their 1.5 million claims together,‖ plaintiffs failed to

demonstrate the existence of a common question under Rule 23(a)(2). Anecdotal

evidence did not suffice; plaintiffs provided only one affidavit for every 12,500 class

members, relating to only 235 of the 3400 Wal-Mart stores. ―[A] few anecdotes selected

from literally millions of employment decisions prove nothing at all.‖ In sum, because

plaintiffs ―provide no convincing proof of a company-wide discriminatory pay and

promotion policy, we have concluded that they have not established the existence of any

common question.‖ Id. at *32.

The dissent criticizes the majority‘s emphasis of dissimilarities among class

members. It would emphasize what the members have in common – whether Wal-Mart‘s

discretionary policies are discriminatory. It characterizes the majority‘s effort as

engrafting the predominance requirement of Rule 23(b)(3) into the analysis of Rule

23(a)(2). Id. at *65.

Both opinions quote from work by the late professor Richard Nagareda, Class

Certification in the Age of Aggregate Proof, 84 N.Y.U. L.Rev. 97, 131-132. For

example:

Any competently crafted class complaint literally raises common

―questions.‖ What matters to class certification, however, is not the raising

of common ―questions‖ – even in droves – but, rather, the capacity of a

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class-wide proceeding to generate common answers apt to drive the

resolution of the litigation. Dissimilarities within the proposed class are

what have the potential to impede the generation of common answers.

According to the dissent, Professor Nagareda was discussing predominance of common

questions in a Rule 23(b)(3) class, which is irrelevant to the application of Rule 23(a)(2).

The majority responded by saying: ―We consider dissimilarities not in order to determine

(as Rule 23(b)(3) requires) whether common questions predominate, but in order to

determine (as Rule 23(a)(2) requires) whether there is ‗[e]ven a single [common]

question. And there is not here.‖ Id. at *36-37.

After Dukes, then, it seems clear that very few Rule 23(b)(2) classes will be -

permitted to seek monetary relief. The Rule 23(b)(2) class must seek a single, class-wide

injunctive or declaratory remedy. It is clear that courts may address the merits as needed

to assess class certification. In addition, all nine justices joined that part of the opinion

rejecting trial by statistics and embracing the notion that due process requires notice and

opt-out for monetary claims.

Several things are unclear after Dukes. Most importantly, it remains to be seen

how lower courts will assess Rule 23(a)(2). Heretofore, it has been the least discussed of

class prerequisites; indeed, many courts seem to assume that it is satisfied from the very

nature of the class action. Will courts see Dukes as applying to all Rule 23(a)(2)

assessments, or only to those in Rule 23(b)(2) cases? How will courts view

dissimilarities in this regard? More broadly, will courts use Dukes to rethink

commonality as required in other Rules, including joinder under Rule 20? Another

looming question is whether Daubert applies at the certification stage. The majority

certainly thought so, but did not make it part of its holding. Moreover, note the

majority‘s requirement of ―convincing proof‖ of a common question. That phrase is not

found in Rule 23.

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CHAPTER 14: APPEALS

C. APPELLATE JURISDICTION IN THE FEDERAL COURTS

2. COLLATERAL ORDER DOCTRINE

At page 778, please insert:

(f) In Mohawk Indus., Inc v. Carpenter, 130 S.Ct. 599 (2009), the Court held that an

order requiring a party to disclose material that it consider protected under the attorney-

client privilege is not immediately appealable under the collateral order doctrine. The

appealing party had argued that disclosure of privileged material is not effectively

reviewable on appeal because the privilege protects against not only the use of privileged

material at trial but the disclosure of material in the first place. The Court rejected this

argument explaining: ―Appellate courts can remedy the improper disclosure of privileged

material in the same way they remedy a host of other erroneous evidentiary rulings: by

vacating an adverse judgment and remanding for a new trial in which the protected

material and its fruits are excluded from evidence.‖ Id. at 606-07. As to concerns that

delayed review might undermine the core purposes of the attorney-client privilege, the

Court noted: ―Mohawk is undoubtedly correct that an order to disclose privileged

information intrudes on the confidentiality of attorney-client communications. But

deferring review until final judgment does not meaningfully reduce the ex ante incentives

for full and frank consultations between clients and counsel.‖ Id. at 607. The Court also

observed that if confronted with a ―particularly injurious or novel privilege ruling‖ a

litigant does have several other options including seeking review under § 1292 or

mandamus (discussed below), or defying the order and appealing the punishment for

criminal contempt of court.

At page 779, please add:

5. The denial of a motion for summary judgment is an interlocutory order and is

immediately appealable only in the relatively rare circumstance that it meets the criteria

of the collateral order doctrine. If the denial of a motion for summary judgment can‘t be

appealed immediately, can it be appealed after a trial on the merits? In Ortiz v. Jordan,

131 S.Ct. 884 (2011), the Court held that an appeal of the summary judgment motion

following trial came too late. The losing party could, of course, appeal the denial of a

motion for judgment as a matter of law, provided that the party made a timely motion

both before and after the verdict.

5. RULE 54(b)

At page 784, please add:

4. Rule 54(b) vests authority in the district to permit the appeal. Suppose the

court dismisses some but not all of the claims, but refuses to authorize the appeal. If the

plaintiff voluntarily dismisses the remaining claims, can the court‘s ruling on the other

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claims be immediately appealed? Courts have split on this issue. Several circuits have

held there is no final judgment when unresolved claims are voluntarily dismissed without

prejudice, see, e.g., Rabbi Jacob Joseph School v. Province of Mendoza, 425 F.3d 207

(2d Cir. 2005); Marshall v. Kansas City Southern Ry. Co., 378 F.3d 495 (5th

Cir. 2004),

while the Federal Circuit has rejected a categorical approached and focused on whether

there is ―evidence of intent to manipulate our appellate jurisdiction.‖ Doe v. United

States, 513 F.3d 1348, 1353 (Fed, Cir. 2008).

7. APPEALABILITY OF DISCOVERY ORDERS

At pages 785-786, please replace the second and third paragraphs of the section

with:

As noted above, in Mohawk Indus., Inc v. Carpenter, 130 S.Ct. 599 (2009), the

Court held that an order denying protection to material allegedly protected under the

attorney-client privilege is not immediately appealable under the collateral order doctrine.

The Court noted that if confronted with a ―particularly injurious or novel privilege

ruling,‖ immediate review might be available under § 1292 or by means of mandamus.

Cf. Agster v. Maricopa County, 422 F.3d 836 (9th

Cir. 2005) (allowing interlocutory

appeal of order to produce document claimed to be privileged). See Cassandra Burke

Robertson, Appellate Review of Discovery Orders in Federal Court: A Suggested

Approach for Handling Privilege Claims, 81 WASH. L. REV. 733 (2006). A further

option is to defy the order and be held in contempt of court. Because the courts treat the

contempt judgment as a separate proceeding, that judgment is immediately appealable.

You will recall that this is the route used in Hickman v. Taylor and Ager, Chapter 8.

There, the lawyers and clients refused to turn over material that they believed was

protected from discovery. They were convicted of contempt and ordered to jail by the

trial judge. Although they were allowed to appeal immediately, this is obviously a risky

mechanism for securing an appeal.

At page 793, please add the following new section:

E. Review of Judgments Outside of the Appeal Process

This chapter focuses on the review of judgments by means of an appeal to a

higher court. Earlier in the book we have seen two other mechanisms be which a

judgment might be reexamined. The first is a collateral attack where a second court

declines to enforce a prior judgment because the second court determines that the first

judgment is void. See Chapter 6 (C).

The second mechanism is to seek to reopen a judgment by means of Rule 60(b).

See Chapter 10 (C). Rue 60(b) (4) allows a party to seek relief from a judgment if it is

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―void,‖ but as the Supreme Court has explained, the fact that a judgment is wrong does

not make it void.. United Student Aid Funds Inc. v. Espinosa, 130 S.Ct. 1367 (2010). The

case involved a bankruptcy judgment that discharged the debtor‘s student loan

obligations. Contrary to the requirements of the bankruptcy code, this discharge occurred

without the court finding ―undue hardship.‖ The creditor received notice of the discharge

but did not object. Later, after the credit sought to collect the discharged and the debtor

filed a motion to enforce the discharge, the creditor sought to reopen the judgment. The

Court held that even though the bankruptcy court‘s failure to find an undue hardship was

―legal error,‖ ―the order remains enforceable and binding on [the creditor] because [it]

had notice of the error and failed to object or timely appeal. Id. at 1380.

―A judgment is not void,‖ for example, ―simply because it is or

may have been erroneous.‘ Similarly, a motion under Rule 60(b)(4) is not

a substitute for a timely appeal.. Instead, Rule 60(b)(4) applies only in the

rare instance where a judgment is premised either on a certain type of

jurisdictional error or on a violation of due process that deprives a party of

notice or the opportunity to be heard. Cf. Chicot County Drainage Dist. v.

Baxter State Bank, 308 U.S. 371, 376 (1940);. The error United alleges

falls in neither category.

* * *

Rule 60(b)(4) strikes a balance between the need for finality of

judgments and the importance of ensuring that litigants have a full and fair

opportunity to litigate a dispute. Where, as here, a party is notified of a

plan‘s contents and fails to object to confirmation of the plan before the

time for appeal expires, that party has been afforded a full and fair

opportunity to litigate, and the party‘s failure to avail itself of that

opportunity will not justify Rule 60(b)(4) relief. We thus agree with the

Court of Appeals that the Bankruptcy Court‘s confirmation order is not

void

Id. at 1377-80.