Civil Procedure

Final Examination

Fall, 2004

Model Answer

QUESTION I

A.                 As far as we know, Lichtman has never been to Illinois.  Therefore we must find authority for serving him out of state.  Two such sources of authority exist.  Fed. R. Civ. P. 4 (e)(1) authorizes service according to the law of the state in which the District Court is located.  Illinois Code of Civil Procedure 5/2/209 (d) permits out-of-state service in the same way that service is authorized for individuals found within the state.  Illinois Code of Civil Procedure 5/2/203 permits service on individuals by leaving a copy of the summons with the defendant personally or by leaving a copy at the defendant’s usual place of abode with some person of the family or a person residing there, age 13 or over, informing that person of the contents of the summons and mailing a copy to the defendant at his or her usual place of abode.  Under this provision, Lichtman can be served by sending a process server to Michigan and serving him personally at his farm or leaving the summons with someone else found there.

In addition, Fed. R. Civ. P. 4 (e)(2) provides that service may be made “in any judicial district of the United States” by delivering a copy of the summons and the complaint to the individual personally or by leaving copies at the individual’s dwelling house or usual place of abode with some person of suitable age and discretion residing there. 

Both sources of authority prescribe personal service out-of-state in basically similar ways. Because the Federal Rules require service of the complaint with the summons, the complaint should be included even if a state officer serves the summons pursuant to Illinois procedure.

Notice of a lawsuit must be given in a constitutional manner under Mullane.  Personal service as just discussed is the paradigm of notice reasonably calculated under the circumstances to result in actual notice and thus there will be no serious Mullane issues if this procedure is followed.

B.                 Lichtman should challenge the existence of personal jurisdiction, venue, and subject matter jurisdiction in his answer or in a motion filed before the answer is due.  Subject matter jurisdiction also can be asserted at any point, even after judgment is entered.

Lichtman’s personal jurisdiction challenges should begin with an argument that the Illinois Long Arm Statute does not affirmatively assert jurisdiction on the facts of the case.  This likely will be a losing argument.  Illinois Code of Civil Procedure 5/2-209 authorizes specific jurisdiction over claims arising from the transaction of any business within Illinois, the commission of a tortuous act within Illinois, and the making or performance of any contract or promise substantially connected with Illinois.  While Lichtman may have arguments that any fraudulent misrepresentation occurred in Michigan and not within Illinois, and that any business transacted was transacted in Michigan rather than Illinois, he almost certainly will lose his challenge to coverage by the Long Arm Statute because he made a contract and promised to perform the contract with an Illinois resident with delivery to be effected in Illinois.

That means that any successful challenge to personal jurisdiction must rest on Lichtman’s successfully arguing that jurisdiction under these provisions of the Illinois statute exceeds the limits set by the Fourteenth and Fifth Amendments of the United States Constitution as articulated in International Shoe and cases applying and interpreting it.  Lichtman will claim that he did not have minimum contacts with Illinois.  He never set foot in the state.  There is no indication that the magazine in which he placed the ad to sell his horse circulated in Illinois, and the contract was made, he would argue, and actually performed in Michigan. 

It is clear that Lichtman’s contacts with Illinois do not qualify as “systematic and general,” and therefore general jurisdiction would not be constitutional.  But the Illinois statute does not assert general jurisdiction anyway because Lichtman was not served while in Illinois and he is not domiciled or a resident in Illinois. 

So the analysis has to focus on specific jurisdiction, which exists only if contacts with Illinois occurred and the cause of action arose out of, or related to, those contacts.  Chappell will have a convincing argument that all of her claims arose from Lichtman entering into a contract with her, knowing that she was a resident of Illinois.  Nothing that happened before she responded to the ad by emailing and telephoning Lichtman qualify as a contact with Illinois.  There is no indication that the magazine advertisement was targeted at Illinois, Chappell bought the magazine in Kentucky and apparently read it before she returned to Illinois.  But even though she initiated the contact with Lichtman--in other words she reached out to him in Michigan, rather than his reaching out to her in Illinois--once they were in communication, he surely knew that he was entering into a contract, one end of which was Illinois.  Not only that, he expressly agreed to perform the contract in Illinois by delivering the horse there.  McGee and Burger King both support the proposition that entering into a contract to be performed in part in another state, constitutes sufficient contact with that other state to support personal jurisdiction there.  Lichtman may have a weak argument that his contract, unlike the contracts involved in McGee and Burger King, was a one shot deal rather than a contract intended to extend over a period of time, but that is a weak argument. He also can find cases holding that merely delivering or agreeing to deliver goods into a state is insufficient contact to support personal jurisdiction under the Constitution.

He also may want to argue that fair play and substantial justice make the exercise of personal jurisdiction unconstitutional, even if minimum contacts exist, but this is not likely to be successful.  The burden on him of litigating in Illinois is insubstantial.  He was willing to contract to deliver a horse there, and Chicago is not that far from any point in Michigan.  Illinois has an interest in protecting its residents against fraud, violation of federal statutes, and breaches if contract.  Chappell has an interest in obtaining effective relief, and while she could probably obtain relief in Michigan court, the fact that the Seventh Circuit has not decided whether a private right of action exists under FISHA, while the Sixth Circuit apparently has rejected that possibility, makes the likelihood of relief on the FISHA claim greater if she litigates in Illinois.  The fourth, efficiency, factor of fair play and substantial justice is at least a toss up.  There may be some evidence in Michigan, but it is under Lichtman’s control and the Michigan court’s subpoena power is not necessary to bring the evidence into court.  The fifth factor is unlikely to tilt things toward Michigan because the law to be applied is the same whether the case is decided in Illinois or Michigan.

Although he has some arguments, Lichtman is likely to lose in challenging personal jurisdiction.

He also can challenge venue, but venue is proper whether for diversity or federal question cases in a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred.  Lichtman will argue that Illinois does not qualify because everything actually happened in Michigan—any fraudulent intent was formed there; she received the telephone calls and emails there; he actually delivered the horse there.  But Chappell probably can succeed in arguing that the requirements of the venue statute are satisfied because the contract explicitly was to be performed in Illinois, and the worn out horse is there now.  Section 1391 does not require that all or a majority of the acts or omissions occur in the state where the lawsuit is filed or even that a majority occurred there. 

Even if venue in Illinois is authorized by Section 1391, Lichtman can still argue that it should be declined under the forum non conveniens doctrine.  But the public and private interest factors tilt as much toward Illinois as they do toward Michigan.   Given that, the court should defer to the plaintiff’s choice of forum.

Lichtman also can argue that subject matter jurisdiction does not exist.  He must exclude the possibility of both diversity and federal question jurisdiction. 

He will argue that diversity jurisdiction does not exist under 28 U.S.C. § 1332 because, although Lichtman and Chappell are citizens of different states, the jurisdictional amount of $75,000 is not satisfied.  The value of the contract was only $10,000, and he will claim that nothing about the claims asserted can close the gap between 10 and $75,000.  Chappell probably can overcome this argument by pointing out that she’s entitled to punitive damages for fraudulent misrepresentation and unknown levels of damages for violation of the federal statute.  She can aggregate amounts claimed under her different legal theories.  She need not show probability of success; rather, Lichtman must show that there is a legal certainty that she cannot recover more than $75,000.  He likely will be unable to do that. 

If diversity jurisdiction exists, it extends to all of the claims asserted by Chappell, and supplemental jurisdictional analysis is unnecessary.

Lichtman will argue that federal question jurisdiction does not exist over the FISHA claim because most federal circuits have decided that no private right of action is authorized by the statute.  There are two problems with this argument.  First, Merrill Dow discussed the effect of an absence of a private right of action, but Merrill Dow did not involve a claim expressly and directly based on a federal statute.  Moreover, and more significantly, the judicial circuit in which this case will be tried has not decided whether a private right of action exists.  Whether one exists goes to the merits of the claim and not whether a federal statutory interpretation question is involved in deciding the merits.  Because it is necessary for the court to interpret the FISHA to decide this claim—unlike the defective product notice claim in Merrill Dow, federal question jurisdiction almost certainly exists.

If federal question jurisdiction over the FISHA claim exists, but diversity jurisdiction does not over the other claim is because Chappell cannot satisfy the jurisdictional amount requirements, subject matter jurisdiction nevertheless may exist over the common law fraudulent misrepresentation and breach of contract claims under 28 U.S.C. § 1367.  All three claims asserted by Chappell arise from a common nucleus of operative fact—Lichtman’s promising a race horse that he could not and did not deliver.  Accordingly, supplemental jurisdiction over the two state law claims is virtually a certainty. 

Of course, Chappell is obligated to plead jurisdiction, and Lichtman may challenge her failure to do so.  But we know from the text of the question that Chappell “asserted” violation of a federal statute, which probably constitutes enough to plead federal question jurisdiction.  Even if she failed to assert facts supporting personal jurisdiction and diversity jurisdiction, she surely could amend her complaint to do so, and so this is not likely to be a very powerful line of attack for Lichtman

Lichtman also may have other defenses based on the pleading, such as failure to plead fraud with specificity as required by Rule 9, and other 12 (b)(6) arguments, but even if successful, these would not divest the court of power over the claims, and that’s what the question asked for. 

C.                 I would explain to Lichtman that if he ignores the lawsuit, he risks entry of a default judgment against him.  If a valid default judgment is entered by the federal court in Illinois, it must be enforced by the federal court in Michigan, which would issue a writ of execution, which would permit sale of his farm, garnishment of his bank account, and any debts do him, including wages. 

By not appearing, he would waive challenges to venue and sufficiency of service and process, because those are waived if not presented in a motion or answer, whichever is filed first.

He would not give up his personal and subject matter jurisdiction arguments if he defaults.  He could present them as due process challenges to issuance of the writ of execution.  But he would give up any challenges he has to the merits of the claims, and those may well be stronger than his jurisdictional arguments.  Accordingly, he would be better off by authorizing me to enter a special appearance in the federal court in Illinois now to challenge personal and subject matter jurisdiction.  Even if we lose on those challenges, we then can proceed to defend on the merits.

D.                 Lichtman can remove Chappell’s action from state to federal court if he can demonstrate that either federal question jurisdiction or diversity jurisdiction would have existed if the claim had been filed in federal court in the first place.  Under this scenario, Lichtman would be arguing in favor of subject matter jurisdiction, while in the answer to sub question (B), he was arguing against both types of subject matter jurisdiction.  As my answer to sub question (B) indicated, there are fairly strong arguments that both diversity and federal question jurisdiction exist.  Accordingly, Lichtman can remove the entire case, and as a good prospect for keeping the entire case in federal court, either because diversity jurisdiction exists as to all three claims, or because federal question jurisdiction exists over the FISHA claim, and the two state claims, arising out of a common nucleus of operative fact, are thus within supplemental jurisdiction of the federal court.  The federal court would have discretion to remand claims as to which state law predominates, although it is unclear whether remand is authorized absent the grounds for declining jurisdiction under 28 U.S.C. § 1367 (c).

QUESTION II

A.                 Sadler’s counterclaim for negligence may be litigated in the same lawsuit.  The negligence claim (presumably) arises from the same facts that gave rise to Ashton’s claim and therefore qualifies as a compulsory counterclaim under Fed. R. Civ. P. 13 (a) Sadler must assert this counter claim in this lawsuit or be barred from suing on it separately.  Supplemental jurisdiction exists over the claim because it shares a common nucleus of operative fact with the anchor (so to speak) admiralty claim, which is within federal question jurisdiction.

B.                  

(1)                                       The latest that Ashton may make his Rule 26 (a)(1) disclosures is 113 days after service of the summons and complaint on Sadler.  The Rule 16 scheduling order must issue no later than 120 days after service on a defendant—and Sadler is the only defendant—the Rule 26 (f) conference must be held no later than 21 days before the scheduling order is due.  The Rule 26 (a)(1) disclosures must be made no later than 14 days after the Rule 26 (f) conference.  So:  120, minus 21, plus 14 equals 113.

(2)                                       Ashton must include in his Rule 26 (a)(1) disclosures:

·        His own name and contact information (address and telephone number)

·        Duvall’s name and contact information, and a brief description of what relevant information Duvall knows

·        Copies, or description of categories and location, of any documents data compilations or tangible objects (such as the boat involved in the collision) under his control that might support his position

·        A calculation of damages, and

·        For inspection and copying, any insurance policies that might satisfy any judgment on the counterclaim.

He would not disclose information about Rudnick.  Rudnick apparently does not support his version of the facts and therefore he would not intend to call Rudnick as a witness.  He doesn’t know what Collens and Gordon will say and therefore he has no present intention to use their testimony to support his claims.  If it turns out later, after he interviews and/or deposes them, that he may call them as witnesses, he must amend his Rule 26 (a)(1) disclosures pursuant to Rule 26 (e) to add them.

(3)                                       Ashton has no recourse against Collens and Gordon if they fail to answer his interrogatories because they are not obligated to answer interrogatories.  Only parties must answer interrogatories under Rule 33.  If he wants to compel them to give information, he must send them each a notice of deposition and a subpoena under Rule 45. If they fail to cooperate in the depositions, they may be cited for contempt. Almost all the other Rule 37 sanctions are ineffective against non-parties.

C.                 Sadler almost certainly cannot call the neighbor as a witness because the witness has not been disclosed under Rule 26 (a)(3) and presumably is not covered in the final pretrial order.  Assuming he wants the neighbor’s testimony, Sadler’s only recourse is to move to amend his Rule 26 (a)(3) final pretrial disclosure and the final pretrial order to add the neighbor.  Although final pretrial orders are amendable only to prevent “manifest injustice,” he may have a persuasive argument that he could not have not found out about the neighbor’s testimony until now, after discovery was closed.

He can anticipate that Ashton will want to depose or otherwise take discovery of this last-minute witness.  Therefore, Sadler should be prepared to stipulate to a reopening of discovery and to cooperate in arranging the witness’s deposition or other discovery so as not to delay trial.  Whether the amendment of the final pretrial disclosures and the final pretrial order is allowed is up to the judge’s discretion, as is allowing Ashton to take discovery of this witness.

D.                  

(1)                    Ashton probably will be permitted to amend his complaint to add a battery claim based on the surprise testimony by the defendant.  Rule 15 permits pleadings to be amended to conform to the evidence at trial if it is consented to.  Sadler’s testimony represents implied consent.  If Sadler objects to amending the pleadings he must show prejudice because of the late addition of a new claim.  Ashton will argue that Sadler hardly can be surprised since he knew of his intent to cause Ashton to fall overboard all along.  He should have told his lawyer, and if he did, they were prepared for a possible battery claim. 

Sadler will argue that Ashton has ample opportunity to take discovery of Sadler and should have discovered the possible battery claim long before now.  Of course, if Sadler concealed his intent to cause Ashton to fall overboard during discovery that argument will not be at all persuasive.

A possible additional complication arises from the fact that the final pretrial order controls the course of the trial, superseding the pleading.  But the final pretrial order does not limit the content of testimony by parties.  Once Sadler has testified as to his intent, whatever limitations may exist in the pretrial order are moot.

Ashton further can argue that manifest injustice would result from a refusal to amend the complaint and the pretrial order because his battery claim likely will be barred by the res judicata effect of any judgment in the lawsuit because it arises out of the same transaction that support the other claims.

(2)                    The court would have jurisdiction over the battery claim because it qualifies for supplemental jurisdiction under 28 U.S.C. § 1367, inasmuch as it shares a common nucleus of operative fact with the original claims, arising from the boat collision.

E.                  Ashton need not disclose the the existence of the computer program or the simulation results unless he intends to use them at trial to support his case.  Because some of the results show that Ashton was at fault, he presumably never intended to use them and therefore was under no obligation to disclose them under Rule 26.

If Ashton is asked about the computer program and simulations at his deposition, his lawyer should object and instruct Ashton not to answer on the grounds that the computer program and the simulation results constitute work product and are privileged from discovery under Rule 26 (b)(3).  He has a strong argument that the computer simulation results qualify as work product because they were prepared in anticipation of litigation and for trial.  Even though Ashton’s lawyer did not himself produce the simulations, work product includes things prepared by another for a lawyer. 

As to the simulation results, Ashton must describe the simulations so that Sadler and the court can determine that the work product privilege applies, though he need not disclose the content of the simulations.  Fed. R. Civ. P. 26 (b)(5).

On the other hand, Ashton wrote the computer program in anticipation of the race, not in anticipation of the litigation.  Therefore, the computer program itself does not qualify for work product protection and he must testify about it and, if requested, produce it. 

Sadler could overcome the work product nature of the simulations only by showing that he is unable to conduct his own simulations.  He almost certainly cannot make such a showing.  He could write his own computer program—or more likely hire and expert to do it.  And, because he is entitled to the computer program, he need not write his own program; he can simply run his own simulations using the same program that Ashton used.

All of this will be sorted out pursuant to a motion for a protective order under Rule 26 (c) filed by Ashton’s lawyer, or a motion to compel Ashton to answer the deposition question, under Rule 37.  Either motion can be made after the deposition is concluded or upon either party’s adjourning the deposition after Ashton’s lawyer instructs him not to answer the question about the computer program and the simulation results.