Rule 4(k) Territorial Limits of Effective Service.

(1) In General. Serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant:

(A) Who is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located;

(B) who is a party joined under Rule 14 or 19 and is served within a judicial district of the United States and not more than 100
miles from where the summons was issued; or

Note: Rule 14 permits defending parties in an action to assert claims against non-parties to an action to allege their
responsibility for some or all of the claims being asserted against the defending party. Rule 19 permits the court to
force certain non-parties to become part of an action because of some prejudicial impact their absence will have on the
matters at issue in the case.

(C) When authorized by a federal statute.

(2) Federal Claim Outside State-Court Jurisdiction. For a claim that arises under federal law, serving a summons or filing a waiver
of service establishes personal jurisdiction over a defendant if:

(A) The defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and

(B) Exercising jurisdiction is consistent with the United States Constitution and laws.

Notice – service of process

Procedure for Service of Process

Rule 4 of the Federal Rules of Civil Procedure (FRCP 4) sets forth the methods for effectuating service in federal trials. Specific
procedures are outlined for various parties: individuals, infants and incompetents, corporations and associations, foreign, federal, state and
local governments, as well as individuals in foreign countries.

In federal actions, a plaintiff may serve process upon an individual, corporation or association by:

(1) delivering the summons and complaint to the individual personally;

(2) leaving the summons and complaint at the individual's dwelling house or usual place of abode with a person of suitable age
and discretion then residing therein;

(3) delivering the summons and complaint to an agent authorized by appointment or by law to receive service of process.

However, FRCP 4(d)(2) provides incentives for a defendant to agree to waive formal service and instead accept service by mail. Upon
notice of the commencement of the action and a request for waiver of service from the plaintiff, a defendant who so agrees is granted an
extended time within which to answer – 60 days instead of the 20 days granted when process is formally served. FRCP 4 imposes upon the
defendant “a duty to avoid unnecessary costs of serving the summons,” and therefore, failure to accept process by mail subjects the
defendant to liability for costs of service as well as attorney’s fees incurred in any motion to collect the costs of service.

Feasibility of Individual Notice

Alternative means of notice, publication or “posting”, may satisfy due process where individual notice is impracticable and the party
seeking to bypass individual notice can demonstrate that (1) the suit is in the interest of the absentees, (2) they will be adequately
represented by one before the court, and (3) the value of their individual interests is not too great. Where the identities and parties can be
reasonably ascertained, however, individual notice is required. (reasonableness standard) [Mullane v. Central Hanover Bank & Trust Co.,
339 U.S. 306 (1950)]

Scope of Federal Subject Matter Jurisdiction

The United States Constitution sets out the permissible scope of the judicial power of federal courts in Article III, § 2. It lists the
following types of federal subject matter jurisdiction:

• cases “arising under” the Constitution, laws of the United States, and treaties (federal question jurisdiction);
• cases affecting ambassadors and other official representatives of foreign sovereigns;
• admiralty and maritime cases;
• controversies to which the United States is a party;
• controversies between states
• controversies between a state and citizens of another state;
• cases between citizens of different states (diversity jurisdiction);
• cases between citizens of the same state claiming lands under grants of different states;
• cases between a state or its citizens and foreign states and their citizens or subjects (alienage jurisdiction).

Article III vests the Supreme Court with original jurisdiction of cases affecting ambassadors and other foreign officials and those
to which a state is a party, and such appellate jurisdiction as Congress may create. Article III vests no jurisdiction directly in
lower federal courts but authorizes Congress to create and endow them with subject matter jurisdiction. Congress has never
vested lower federal courts with as much subject matter jurisdiction as Article III permits. Today, the main sources of federal
jurisdiction are federal question jurisdiction and diversity jurisdiction, usually concurrent with state court jurisdiction.

Diversity jurisdiction – § 1332

(A) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or
value of $75,000, exclusive of interest and costs, and is between--

(1) citizens of different States;

(2) citizens of a State and citizens or subjects of a foreign state;

(3) citizens of different States and in which citizens or subjects of a foreign state are additional parties; and

(4) a foreign state, defined in section 1603(a) of this title, as plaintiff and citizens of a State or of different States.

For the purposes of this section, section 1335, and section 1441, an alien admitted to the United States for permanent residence shall be
deemed a citizen of the State in which such alien is domiciled.

Federal question jurisdiction – § 1331

28 USC 1331 gives federal courts jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United
States”. There is no precise definition as to what “arises under” means exactly, however most courts interpret it to mean that there is a
federal question when a federal law is the source of the plaintiff’s claim.

CASE: Osborn v. Bank of the US. Justice Marshall: “Congress may confer jurisdiction whenever a federal question form an
“ingredient” of the claim. Later this was interpreted to mean that Congress has the flexibility to confer jurisdiction “whenever there exists
in the background some federal proposition that might be challenged, despite the remoteness of the likelihood of actual presentation of
such a federal question”.

In order to establish federal question jurisdiction, a right or immunity created by the Constitution or the law of the United States must be
an element, and an essential one, of the plaintiff’s cause of action. In other words, the federal question must be integral to the plaintiff’s
cause of action.
Even where a cause of action arises under state law, a federal court may have jurisdiction if it appears that the right to relief rests on the
construction or application of a federal law. However, the mere presence of a federal issue in a state-created cause of action does not
automatically confer federal question jurisdiction. Its availability depends in part on “an evaluation of the nature of the federal interest at
stake”: whether it is sufficiently important to require a federal trial forum.

A plaintiff cannot invoke the original jurisdiction of the federal courts either by anticipating a federal defense or otherwise importing a
federal question into his complaint that is not essential to his case. It also is not enough for federal question jurisdiction for the
defendant’s answer to raise a federal question. The plaintiff is the “master of the complaint”.

The well-pleaded complaint rule

The well-pleaded complaint rule talks only about the complaint. We look for a federal question on the face of the
complaint. If the federal complaint, as filed by the plaintiff, does not state the federal question, then there is no federal
question. This is an efficiency rule! You get tons of cases filed every day in federal court, and we need a good solid rule to
be able to tell, from the outset, whether or not we have jurisdiction.

Why are anticipated defenses not good enough? It’s related to the efficiency argument. A good lawyer can make a lot of
different federal arguments that the defense could make. But the other side might not make that argument. In fact,
sometimes they will strategically not make that argument.

Artful Pleading Doctrine—plaintiff’s claims that seek to invoke federal jurisdiction by attempting to anticipate and refute
federal law defenses as a means of making the claim appear to raise a federal question, when it is really a state law claim,
will not succeed.

Complete pre-emption doctrine—similarly, a plaintiff who seeks to avoid federal jurisdiction by pleading state law
claims, in state court, in areas which federal law pre-empts state law will not succeed.

Supplemental jurisdiction – § 1367

To this point, we’ve looked at several ways the courts and Congress have tried to limit the number of cases getting into federal courts.
Now, we’re going to take things that wouldn’t ordinarily be in federal court and see if we can find a basis for getting them in.

[1] General Rule and its Antecedents

When a federal court possesses subject matter jurisdiction over a matter, it may exercise supplemental jurisdiction over one or more
related claims that would not independently satisfy subject matter jurisdictional requirements. Supplemental jurisdiction, a legislative
creation since 1990 [28 U.S.C. § 1367], supplants two related judicial doctrines – pendent and ancillary jurisdiction.

[2] Pendent Jurisdiction

Pendent jurisdiction refers to the courts’ extension of jurisdiction from a freestanding (usually federal question) claim to an otherwise
jurisdictionally insufficient pendent (usually state law) claim by a plaintiff or plaintiffs.

[a] Pendent Claim Jurisdiction

In United Mine Workers v. Gibbs [383 U.S. 715 (1966)] the Supreme Court was presented the question whether the federal courts had
jurisdiction over the state claim in the absence of diversity. The Court held that constitutional power exists to decide the nonfederal
claim whenever it is so related to the federal claim that they comprise “but one constitutional ‘case.’ ” It suggested a three-part test for
determining what a constitutional case is:

(1) Plaintiff must assert a federal claim that has “substance sufficient to confer subject matter jurisdiction on the court.”

(2) Freestanding and pendent claims “must derive from a common nucleus of operative fact.”

(3) The federal and nonfederal claims must be such that the plaintiff “would ordinarily be expected to try them all in one
judicial proceeding.”
 [b] Pendent Party Jurisdiction

Modern Supplemental Jurisdiction

In 1990, Congress responded to Finley by enacting the supplemental jurisdiction statute, essentially over-ruling the case. [28 U.S.C. §
1367]

[a] Qualifying Under Section 1367(a)

Subsection 1367[a] expressly extends federal jurisdiction from freestanding claims within the original jurisdiction of the federal court to
supplemental claims that are “so related [to the freestanding claims . . . that they form part of the same case or controversy under Article
III of the United States Constitution.” (this part of the statute incorporates the “common nucleus of operative fact” standard from Gibbs).

Subsection 1367(a) overrules Finley by expressly providing that “supplemental jurisdiction shall include claims that involve joinder or
intervention of parties,” thereby authorizing jurisdiction over what were formerly called pendent party claims. Most courts have found
that claims which satisfy the same transaction or occurrence standard for joinder under FRCP 13(a) (compulsory counterclaim), 13(g)
(crossclaim), or 20 (joinder of parties) also qualify for supplemental jurisdiction.

[b] Disqualifying Under § 1367(b)

Subsection 1367(b) provides that in diversity-only cases the courts do not have supplemental jurisdiction over claims by plaintiffs against
persons made parties by FRCP 14 (third parties; claims by plaintiffs against parties impleaded under 14), 19 (necessary parties; claims by
plaintiffs against parties joined under 19, and claims by plaintiffs joined under 19), 20 (permissive parties; claims by plaintiffs against
parties joined under 20) or 24 (intervening parties; claims by plaintiffs against parties intervening under 24, and claims by plaintiffs who
intervene under 24), when exercising such jurisdiction would be inconsistent with the jurisdictional requirements of the diversity statute.
Thus, a plaintiff may not assert claims against parties in a diversity action if supplemental jurisdiction would negate complete diversity.

Note: EVALUATE BOTH 1367(a) AND (b).

CASE: Exxon Mobil v. Allapattah Services, Inc. The United States Supreme Court held that supplemental jurisdiction statute permits
exercise of diversity jurisdiction over additional plaintiffs who fail to satisfy minimum amount-in-controversy requirement, as long as
other elements of diversity jurisdiction are present and at least one named plaintiff satisfies amount-in-controversy requirement.

[c] Discretion Under § 1367(c)

Subsection 1367(c) gives courts discretion to refuse jurisdiction when it believes, in the interests of judicial economy, convenience,
fairness, and comity, that the supplemental claims would more appropriately be decided by state courts.

Generally, any action brought in state court that the plaintiff could have brought in federal court may be “removed” by the defendant to
federal district court, provided a series of requirements are met.

§ 1441

(a) Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district
courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the
United States for the district and division embracing the place where such action is pending. For purposes of removal under this
chapter, the citizenship of defendants sued under fictitious names shall be disregarded.

CASE: Hays v. Cave. To be removable, an action must be one that would fall within the original jurisdiction of the federal courts
consistent with the requirements of the well-pleaded complaint rule and the artful pleading doctrine. That means that the plaintiff
must have been able to initiate the civil action in federal court originally. Like was discussed in the federal question jurisdiction
analysis, removal must be based on the plaintiff’s case, defendant cannot create grounds for removal!!
****Plaintiff control removal and can create grounds for removal**
-Amended his complaint to include a Federal Question or dropping a party whose presence prevented diversity
-Plaintiff cannot take action to defeat federal jurisdiction a the case has been properly removed.
-Plaintiff is the “master of the claim”
(b) Any civil action of which the disftrict courts have original jurisdiction founded on a claim or right arising under the
Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties.
Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen
of the State in which such action is brought.

Note: An action is not removable if any defendant is a citizen of the state in which the plaintiff initiated that action, unless there exists
a claim that would qualify for federal question jurisdiction. Also, there is no removal from federal to state court!!!

(c) Whenever a separate and independent claim or cause of action within the jurisdiction conferred by section 1331 [note:
federal question jurisdiction] of this title is joined with one or more otherwise non-removable claims or causes of action, the entire
case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters in which
State law predominates.

Application of 1367
(a) Claim that has not independent federal SMJ

(1)That is part of the same claim or controversy of a claim that does have independent
federal SMJ

(2)That is part of the same claim or controversy (transaction or occurrence) of a claim

that does have independent federal SMJ

If yes to both, does 1367(b) still explicitly exclude it?

-Freestanding claim based solely on diversity

-Asserted by a plaintiff

--Claim against one of the parties identified in 1367(b), joined under Rule 14, 19, 20, or
24

*If there is a “No” then stop*

(c)The district courts may

1367 (c) The district courts may decline to exercise

Federal Question can bring in any additional claim.

Exxon Mobile Corp v. Allapattah Services, Inc

REMOVAL

Who can remove a case? Only defendants may remove cases to federal court.

1446(a) A defendant or defendants desiring to remove any civil action or criminal prosecution from a State court shall file
in the district court of the United States for the district and division within which such action is pending a notice of
removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of
the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or
 defendants in such action.

How is a case removed? To remove a case, a defendant files a notice of removal “in the district court of the US for the district and
division within which such action is pending” §1446(a). Doing so automatically achieves removal, as consideration of the propriety
of the removal is handled by the federal courts (not state). Filing notice of removal does not constitute a waiver of any challenge
to personal jurisdiction by the defendants.

1446(b) The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the
defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such
action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading
has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt
by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from
which it may first be ascertained that the case is one which is or has become removable, except that a case may not be
removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the
action.

When can a case be removed? Defendant has 30 days after receiving complaint to file a notice of removal with the federal court. If a
case is originally “un-removable” but through amendments or changes in parties becomes removable, the defendant has 30 days from
the case becoming removable to file a notice of removal. Notwithstanding 30 day rule, there is a 1-year limitation on the removal of
cases based on diversity jurisdiction. §1446(b).

1447(c) A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made
within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it
appears that the district court lacks subject matter jurisdiction, the case shall be remanded. An order remanding the case
may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal. A
certified copy of the order of remand shall be mailed by the clerk to the clerk of the State court. The State court may
thereupon proceed with such case.

1447(d) An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise,
except that an order remanding a case to the State court from which it was removed pursuant to section 1443 of this title
shall be reviewable by appeal or otherwise.

What procedures govern remand? Although notice of removal removes case immediately, the plaintiff does have the opportunity to
contest the removal by making a motion to remand the case to state court. Plaintiffs have 30 days to seek remand. If the removal
was done without an “objectively reasonable basis”, party opposing it may be entitled to costs and attorneys fees associated with the
removal. 1447(c). If the court decides to remand the case to state court based on a defect in removal procedure or a lack of subject
matter jurisdiction, the defendant may not appeal the order. But, if a court denies the plaintiffs motion for remand, such a denial is
reviewable, but only on appeal of the final judgment in the case.

Class-Action removal? Class action suits (meeting the $5 million aggregate amount-in-controversy) may be removed. In addition,
these class actions are afforded certain rights other cases are not under §1553:
• CAFA actions are removable “without regard to whether any defendant is a citizen of the State in which the action is
brought”
• CAFA authorizes removal “by any defendant without the consent of all defendants”
• Class actions removed are not subject to 1-year time limit on removability that applies in diversity cases
• Class actions are not subject to the ordinary bar against appellate review of remand orders

*****CORP + VENUE =SUBJECT TO VENUE WHERE THEY HAVE PERSONAL JURISDICTION******

Venue – § 1391
Note: First task is to see if there has been a waiver of venue under Rule 12(h).

Venue specifies a specific court within a jurisdiction where parties can litigate. For example, let’s say you know you have jurisdiction
in Texas, but there are four federal district courts there. Venue tells you where exactly you’re going to do your trial. When
considering a venue problem, remember that venue is not a substitute for personal jurisdiction: fact that venue lies in a particular
judicial district does not automatically mean that suit can be brought there. Suit can only be brought in a district that satisfies both the
venue and personal jurisdiction requirements as to all defendants.
 1391(a) A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be
brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in
which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the
subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the
action is commenced, if there is no district in which the action may otherwise be brought.

(b) A civil action wherein jurisdiction is not founded solely on diversity of citizenship may, except as otherwise provided by law, be
brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in
which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the
subject of the action is situated, or (3) a judicial district in which any defendant may be found, if there is no district in which the
action may otherwise be brought.

(c) For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in
which it is subject to personal jurisdiction at the time the action is commenced. In a State which has more than one judicial district
and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such
corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to
personal jurisdiction if that district were a separate State, and, if there is no such district, the corporation shall be deemed to reside
in the district within which it has the most significant contacts.

(d) An alien may be sued in any district.

CASE: Bates v. C & S Adjustors, Inc. Venue was proper in debtor's action under Fair Debt Collection Practices Act in Western District
of New York, in which debtor resided and to which Pennsylvania bill collector's demand for payment was forwarded; receipt of
collection notice, which was substantial part of events giving rise to claim, occurred in New York, even though collection agency did not
deliberately direct notice to New York.

Notes on Venue:
1. The venue analysis may and can give you multiple different possible venues. When this occurs, the plaintiff is free to
choose among any of the options, constrained only by the fact that the venue chosen must be able to assert personal jurisdiction over
all defendants. This called forum shopping.

2. Sections 1391(a)(3) & (b)(3)—the fallback provisions—permit venue in any district having personal jurisdiction over any
defendant only if “there is no district in which the action may otherwise be brought”.( if neither 1391(a) or (b) apply)
-used when nearly all of the events occurred abroad
-

3. How is residency determined? For individuals, residency is based on domicile. For corporations, residency is based on
any district where personal jurisdiction would apply. (If a state has more than one district, a corporation is a resident of any district
in which it could be subject to personal jurisdiction were that district a state.) Unlike in the personal jurisdiction analysis,
residency of unincorporated associations is determined by looking to the residence of the association itself, rather than its
individual members. Also, the general removal statute indicates the district in which cases must be heard, making those districts
proper venue.
4. Real Property Disputes: the proper venue for real property disputes is the state where property is located.

CASE: Dee-K Enterprises, Inc. v. Heveafil Sdn. Bhd. – The plaintiffs are American companies suing foreign companies. The defendants
challenged personal jurisdiction and venue. Court holds that Indonesian company had sufficient intentional contacts with United
States to be subject to personal jurisdiction in antitrust action, even though it had no offices or agents in United States, held no assets
in this country, never entered into any contracts for sale of rubber thread in United States, and sold its products and delivered title to
distributor in Indonesia, where it chose to employ exclusive distributor in United States and, in so doing, purposefully availed itself
of forum. Further, Indonesian company could be sued in any district, even if they were not “found” or did not “transact business” in
forum district; general statute governing venue in actions involving aliens overrode special venue provision of Clayton Act. However,
further proceedings were ordered necessary to determine whether any American distributors of extruded rubber thread were found in or
transacted business in Eastern District of Virginia or whether it was necessary to transfer venue of antitrust conspiracy action to Western
District of Virginia; not all American distributors objected to venue and if any of them were present in forum, all could be sued there.

Transfer of Venue
1404(a) For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other
district or division where it might have been brought.

Note: Federal courts may transfer cases to other federal judicial districts—even though venue in the first district might be proper—on
the ground that doing so is in the “interest of justice” or better for “convenience of parties and witnesses”.

1406(a) The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the
interest of justice, transfer such case to any district or division in which it could have been brought.

Note: Choosing an incorrect venue can be “cured” by dismissal, or if in the interest of justice, transferring to a court which is proper
venue.

Forum non conveniens

State courts have no power to transfer cases to the courts of other states, and neither state nor federal courts have the power to
transfer cases to the courts of foreign countries. In such cases, most judicial systems permit dismissal of suits under the common
law doctrine of forum non conveniens (forum is inconvient) , in anticipation that the plaintiff will recommence the suit in the
alternative foreign venue. To obtain a forum non conveniens dismissal, the defendant must:

(1) demonstrate that an adequate alternative forum is available. [Gulf Oil Corp. v. Gilbert, 330 U.S. 501
(1947)]

(2) show that considerations of party and forum convenience override the plaintiff’s choice of forum and
justify dismissal. Typical such considerations include: relative ease of access to proof, availability of
compulsory process for attendance of witnesses, the cost of obtaining their attendance, the possibility of
obtaining a jury view of the scene of the accident or property which is the subject of the action, and the
enforceability of any eventual judgment in the original forum.

CASE: Piper Aircraft v. Reyno – Wrongful death action, stemming from airplane crash in Scotland, was brought in California state
court against Pennsylvania plane manufacturer and Ohio propeller manufacturer. The action was removed to federal district court
which, in turn, transferred the suit to Pennsylvania. The United States District Court for the Middle District of Pennsylvania
dismissed the action on ground of forum non conveniens, and plaintiff appealed. The Court of Appeals for the Third Circuit reversed
and remanded. Certiorari was granted. The Supreme Court, Justice Marshall, held that: (1) plaintiffs may not defeat a motion to
dismiss on ground of forum non conveniens merely by showing that the substantive law that would be applied in the alternative
forum is less favorable to the plaintiff than that of the chosen forum; (2) the district court properly decided that the presumption in
favor of the plaintiff's forum choice applied with less than maximum force where the plaintiff or the real parties in interest were
foreign; (3) the district court did not act unreasonably in concluding that fewer evidentiary problems would be posed if the trial were
held in Scotland, a large proportion of the relevant evidence being located there; and (4) the district court properly determined that
the public interest factors favored trial in Scotland.

The Gilbert balancing test is the black letter law of forum non conveniens. It weighs “private” and “public” factors. The private factors
are: (1) The relative ease of access to proof, (2) the availability of witness subpoenas, (3) the cost of getting witnesses, and (4) the
possibility of viewing of the premises if called for. The public factors are: (1) Court congestion, (2) local interest in having local
controversies decided at “home”, (3) the forum’s familiarity with substantive law, and (4) unfairness of burdening citizens with jury duty
for case unrelated to forum.

What happens after dismissal? Plaintiffs have the option to re-file in an alternative forum. When there is a possibility that the plaintiff
will face challenges to personal jurisdiction or statute of limitations following a dismissal, the dismissing court typically dismisses only
on condition that the defendant will not contest the ability of the subsequent court to hear the case.

The Erie Doctrine—what law (state or federal) must govern in an action??

Doctrine discourages forum shopping!
§1652. State laws as rules of decision (Rules of Decision Act or RDA)

The laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise
require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they
apply.
 • According to the clear language of the RDA, the federal Constitution, treaties, and constitutional statutes enacted by
Congress always take precedence, where relevant, over state provisions.

• The RDA also clearly provides that in the absence of a federal constitutional or statutory provision on point, the federal
courts must follow state constitutions and statutes

• However, the RDA is silent on what federal courts should do where there is no controlling constitutional or statutory
provision, federal or state. What should federal courts follow where what is at issue is common or judge-made law?

CASE: Swift v. Tyson. Interpreted the RDA as requiring federal courts to apply state constitutional and statutory law
but not state common law.

--The Swift doctrine permitted federal judges to displace state common law with federal general common law in
diversity cases. This allowed non-citizens to discriminate against citizens of the state where the federal court sat.

CASE: Erie Railroad v. Tompkins. (Overruled Swift, above) P, a PA citizen, was injured while walking on the right
of way maintained by D, a NY railroad. Under PA judge-made law, P would probably have lost his negligence suit
because P was a trespasser, to whom D would be liable only for gross, not ordinary negligence. P sued in NY federal
district court, expecting the court to follow Swift and make its own common law, which P hoped would make the
railroad liable to him for ordinary negligence.

The United States Supreme Court ruled in favor of the defendant and, in so doing, overruled Swift’s by concluding that there is
no federal general common law. The Court found that the Rules of Decision Act did not distinguish between state law that is
legislatively created and state law that is judicially created, and thus the Act did not confer upon federal courts the power to
determine substantive common law. Erie established that in federal diversity cases, matters characterized as substantive would
be governed by state law, and those characterized as procedural would be governed by federal law. This became known as the
“substance versus procedure” test.

CASE: Guaranty Trust Co. of NY v. NY. Court concluded that the substance-versus-procedure test would not be
adequate to resolve all issues arising under the Rules of Decision Act where a state law is both substantive and
procedural in purpose, such as statutes of limitations. In Guaranty Trust the defendant argued that Erie required
application of the state statute of limitations, which would have barred the action, while the plaintiff argued that federal
law, under which the action was timely filed, governed.

Agreeing with the defendant, the Supreme Court found the intent of the Erie doctrine to be that in diversity cases “the
outcome of the litigation in the federal court should be substantially the same, so far as legal rules determine the
outcome of litigation, as it would be if tried in a State court.” Under this “outcome-determination” test, state law
controls if the choice between state or federal law could be outcome-determinative in the case.

Guaranty Trust method: Outcome Determination Test

CASE: Byrd v. Blue Ridge Rural Electric Cooperative. In Byrd, a negligence case, the defendant argued that the
plaintiff’s claim was covered by workers’ compensation, for which South Carolina precluded a jury trial. Noting that
the outcome of the case could be substantially affected by the issue of whether the case was tried by a judge or a jury,
the Supreme Court nevertheless concluded that the Guaranty Trust outcome-determination test did not suffice in close
cases. The Court added a step to the analysis that involved a balancing of the governmental interests behind the rules
contending for application. On the facts at issue in Byrd, the Court held that the plaintiff was entitled to a jury trial,
finding that the federal policy supporting jury trials was stronger than any policy beneath South Carolina’s rule
precluding jury trials in such cases.

Byrd method: Balance State and Federal Policies

§ 2072. The Rules Enabling Act

(a) The Supreme Court shall have the power to prescribe general rules of practice and procedure and rules of evidence for cases
in the United States district courts (including proceedings before magistrate judges thereof) and courts of appeals.
 (b) Such rules shall not abridge, enlarge or modify any substantive right. All laws in conflict with such rules shall be of no
further force or effect after such rules have taken effect.

Note: This statute authorized the FRCP to take precedence over all competing state rules.

CASE: Hanna v. Plumer. P sues D in diversity in MA federal court. D is the executor of an estate. P causes process to
be served on D’s wife, by leaving copies of the summons and complaint with her at D’s dwelling place. Federal Rule
4(d)(1) at the time allowed service on a D by leaving copies of the summons and complaint at the D’s dwelling place
with a person of suitable age and discretion, which P did. But a MA statute sets special standards for service on an
executor of an estate, which was not complied with in this action.

The Court held that federal procedural rules are not overridden by state law or policy. Thus, Erie does not control when there
exists an applicable federal rule that conflicts with the state law or policy. Since the Federal Rule clearly applied here, P
prevails.

Two step-process applied here: (1) Does a Federal Rule Apply? (remembering that the rules are construed narrowly), and
(2) Is the rule valid? (rule must not abridge, enlarge, or modify the substantive rights of any litigant, per 2072)

Summary of Erie Analysis Under Modern Law

Modern Erie doctrine invokes all three tests — substance-versus-procedure, modified outcome determination, and the balancing test of
state and federal interests — depending on the circumstances of individual cases.

(1) The substance-versus-procedure test serves as a first-stage screening device in Erie analysis. An issue that clearly addresses
legal rights is substantive and is to be resolved according to state law; issues that clearly pertain to the judicial process alone are
procedural and invoke federal law.

(2) Where the issue is not grounded entirely on substantive or procedural policies but instead derives from both, such as a statute
of limitations, the next level of analysis of the Erie doctrine is the outcome-determination test, under which state law controls
where it serves substantive interests at least in part and where refusal to do so would affect the outcome of the case.

(3) Erie doctrine does not apply if there exists a federal rule that addresses the issue at hand, and it conflicts with state law. In
such cases, the federal procedural rule controls.

(4) When the issue invokes the Erie doctrine but is not adequately resolved by the substance-versus-procedure and modified
outcome-determination tests, the policies underlying both the federal law and state law are examined, with weight given to the
policy of greater importance.