CIVIL PROCEDURE CLASS 15

1. CIVIL PROCEDURE CLASS 15 Professor Fischer Columbus School of Law The Catholic University of America Sept. 30, 2002

2. WRAP-UP OF LAST CLASS • We discussed PE 11 applying rule 11 to the City of Cleveland complaint • We began our unit on joinder by considering when parties can add claims under Rule 18 and parties under Rule 20

3. What Will We Do Today? • Continue to learn about joinder • I will lecture on Rule 19 • We will learn rules for counterclaims and cross-claims (Rule 13) • You will be required to hand in Practice Exercise 12 at the end of class

4. SIMPLE JOINDER RULES IN THE FRCP • LITIGATION SOMETIMES INVOLVES MORE THAN ONE CLAIM OR MORE THAN TWO PARTIES • ISSUE: WHO ARE THE PARTIES TO THE SUIT? AND WHAT ARE THE CLAIMS IN THE ACTION? • JOINDER OF CLAIMS: FRCP 18 • JOINDER OF PARTIES: FRCP 19, 20, 21 • GENERAL TREND IN FRCP IS BROAD JOINDER • IT IS EASIER TO JOIN CLAIMS THAN PARTIES UNDER FRCP

5. REVIEW - FRCP 18: JOINDER OF CLAIMS • Can a party bring unrelated claims against another party in the same action? • Answer: Yes : A party asserting a claim to relief . . . May join, either as independent or alternate claims, as many claims, legal, equitable, or maritime, as the party has against an opposing party (FRCP 18(a)) • NOTE WE WILL DISCUSS SUPPLEMENTAL JURISDICTION OVER NON-DIVERSE STATE CLAIMS LATER

6. APPLICATION OF FRCP 18 • FRCP 18 applies to: • P v. D • Third-party P v. Third-party D • D1 v. D2 • D v. P

7. FRCP 18: PERMISSIVE OR MANDATORY? • MUST a P bring all unrelated claims against D in a single action? (please forget about counterclaims for now)Why? • Important Note: related claims may be barred by claim preclusion. We’ll learn about this later. • Another Important Note: Court can order separate trials under FRCP 42(b)

8. JOINDER OF CLAIMS HYPO • Polly files an action against David for negligence. After David serves his answer, Polly wishes to add a claim of breach of contract against David. The statute of limitations has not expired. Please advise Polly, specifying which FRCP(s) apply.

9. JOINDER OF PARTIES • Some parties MUST be joined (FRCP 19) • Other parties may be joined if permissive joinder rules apply (FRCP 20)

10. PERMISSIVE JOINDER: FRCP 20 • Parties are generally “masters of their claims” • ISSUE: When can multiple Ps sue together? • ISSUE: When can P sue several Ds together in the same action?

11. WHEN CAN Ps SUE TOGETHER? • IF: (under Rule 20(a)) • 1. Claims arise out of same transaction and occurrence or series of transactions or occurrences AND • 2. Common question of law or fact • subject to discretion of court to deny joinder where JURY CONFUSION or UNDUE DELAY (20(b)) • NOTE SUPPLEMENTAL JURISDICTION RULES MAY AFFECT THIS- WE WILL DISCUSS LATER • Special rules for CLASS ACTIONS (Rule 23) where number of parties is so large that it is impraticable for parties to sue individually. They are represented by “class representatives”. Court supervision important.

12. EXAMPLE • The 2:00 N2 metrobus collides with a car near Dupont Circle. 17 passengers are injured. One passenger, Arabella, sues the driver, Don, for damages resulting from her injuries. The remaining 16 passengers may join in the same action if they also have claims against Don arising out of the same accident and sharing common questions of law and of fact.

13. WHEN CAN P SUE MULTIPLE Ds IN SAME ACTION? • IF: (under Rule 20(a)) • 1. Claims arise out of same transaction and occurrence or series of transactions or occurrences AND • 2. Common question of law or fact • subject to discretion of court to deny joinder where JURY CONFUSION or UNDUE DELAY (20(b))

14. RULE 20 IS PERMISSIVE • Parties are not required to be joined (subject to FRCP 19) • However, courts sometimes CONSOLIDATE actions (FRCP 42(a)) where they share common questions of law or fact • Courts also have discretion to deny joinder and order separate trials (FRCP 20(b))

15. FRCP 21: MISJOINDER OF PARTIES UNDER RULE 20 • Misjoinder will not result in dismissal • Parties can be dropped (severed) or added • 1. On motion of parties • 2. Or at initiative of court • AT ANY STAGE OF THE ACTION (subject only to need to protect parties from unfair prejudice) • COURT CAN ORDER SEPARATE TRIALS OF CLAIMS UNDER RULE 21 - could also separate issues under Rule 42(b) which (unlike severed issues under Rule 21) remain part of same lawsuit.

16. Kedra case p. 315 • Why could all the different claims against the defendants be joined in this action ? • Does the application of the relevant FRCPs in this case promote the goals of Rule 1?

17. FRCP 19: COMPULSORY JOINDER • Some parties MUST be joined • Class actions are an exception: 19(d) • Old distinction: • A. Necessary parties - should join if feasible BUT failure to join will not result in dismissal of action • B. Indispensable parties - MUST join these parties. Failure to join results in dismissal of action

18. RULE 19(a): WHO MUST BE JOINED IF FEASIBLE? • Parties w/overlapping interest in property: 19(a)(2)(ii) • Persons with an interest that the action may legally/practically impair : 19(a)(2)(i) • Persons who, if not parties to action, make it impossible for court to grant complete relief to existing parties: 19(a)(1)

19. HOW DOES A PARTY CHALLENGE A PARTY’S ABSENCE UNDER RULE 19? • Opposing party can move to dismiss (Rule 12(b)(7) motion • Is failure to join an indispensable party under 12(b)(7) a waivable defense? • Court can also order joinder sua sponte - at trial or on appeal.

20. CONSEQUENCES OF FAILURE TO JOIN AN ABSENT PARTY WHO SATISFIES 19(a) • Party must be joined if feasible • Court will order joinder - court will not dismiss action for misjoinder • What if it is not feasible to join that party?

21. FRCP 19(b): WHERE JOINDER IS NOT FEASIBLE • Joinder might not be feasible because it would defeat diversity jurisdiction, or court can’t obtain personal jurisdiction over the absent party or absent party has a valid venue objection • In this case, what should the court do?

22. FACTORS THE COURT TAKES INTO ACCOUNT UNDER 19(b) • 1. Potential prejudice of proceeding wihtout a person e.g. inconsistent judgments • 2. Possibility of avoiding adverse consequences by shaping relief • 3. Adequacy of judgment in person’s absence • 4. Availability of another forum whereh P can get relief

23. HYPO • A & B have the same formal name, Martin Smith. Both A and B claim to be the beneficiaries of a life insurance policy issued by insurance carrier L on the life of C, who has died. A sues L. L fears that if the court orders L to pay the policy to A, B may file another suit against L and L might be again ordered to pay the policy amount to B. Can A be required to include B in his lawsuit vs. L?

24. ADDING ADDITIONAL CLAIMS BY COUNTERCLAIM/CROSS-CLAIM • SEE FRCP 13 • These are additional claims made by parties to the action

25. HYPO • Erin sues Sheila and Sheila files an answer. Sometime thereafter, events occur that are related to Erin’s claim against Sheila and that entitle Sheila to assert a claim against Erin. Must Sheila assert this claim in the lawsuit? May Sheila do so?

26. COUNTERCLAIMS • What is a counterclaim? What provisions of the FRCP govern counterclaims? • What are the two kinds of counterclaims?

27. Permissive Counterclaims • What provision of the FRCP governs permissive counterclaims? • What is the test for when a counterclaim will be permissive? • How does a defendant assert a permissive counterclaim?

28. Compulsory counterclaims • What provision of the FRCP governs? • A counterclaim is not compulsory UNLESS _______________ [please fill in the blank] • Different standards: significant logical relationship (broadest), overlap in evidence (less broad) • What, if any, exceptions are there for compulsory counterclaims?

29. Exceptions to compulsory counterclaims • 1. Party had counterclaim that would otherwise be compulsory but never filed responsive pleading (e.g. successful 12(b)(6) motion) • 2. Counterclaim doesn’t mature until after pleading served • 3. Court lacks jurisdiction over indispensable third parties that would have to be joined for counterclaim • 4. Counterclaim is subject of a pending lawsuit • 5. Where plaintiff’s complaint rests on court’s in rem or quasi in rem jurisdiction • 6. In some cases, where D who has been sued for injunction or equitable claims seeks money damages in counterclaim

30. FAILURE TO ASSERT A COMPULSORY COUNTERCLAIM • What happens if a COMPULSORY COUNTERCLAIM is not asserted? • BUT see FRCP 13(f) and 15(a) • What happens if a PERMISSIVE COUNTERCLAIM is not asserted?

31. RESPONDING TO A COUNTERCLAIM • What response must a P make to a D’s counterclaim? FRCP 7(a) • Does it matter whether the defendant has correctly identified the counterclaim as such in the answer?

32. BANQUE INDOSUIEZ V. TRIFINERY p. 324 CB • State or federal court? • D executed promissory note payable to P and guaranteed by B • D do not dispute liability under the note • P argues that D owes P money and seeks summary judgment • What does D argue? • What does P argue in response?

33. BANQUE INDOSUEZ CONT’D • Why does the court hold that it is unfair to enforce a contractual waiver of D’s counterclaim IF that counterclaim is compulsory -- even where under the applicable N.Y. law such contracts of waiver are enforceable? Note that in NY all counterclaims are permissive (NY CPLR section 3019) • Does the court find D’s counterclaim compulsory or permissive? Why?

34. CROSS-CLAIMS • What is a cross-claim? • What provision of the FRCP governs cross-claims? • Are cross-claims compulsory? • Can any cross-claim be brought?