CIVIL PROCEDURE CLASS 37

1. CIVIL PROCEDURE CLASS 37 Professor Fischer Columbus School of Law The Catholic University of America November 20, 2002

2. WRAP-UP OF LAST CLASS • We discussed two more aspects of personal jurisdiction: • 1. General jurisdiction (Helicopteros case) • 2. Jurisdiction through consent especially via forum selection clauses (Carnival Cruise Lines v. Shute)

3. WHAT WILL WE DO TODAY • Continue with personal jurisdiction unit. • We will consider the due process guarantee of notice and the opportunity to be heard by studying the Mullane case.

4. GENERAL JURISDICTION • What is the difference between general and specific jurisdiction?

5. Did the Shutes Have Notice of the Forum Selection Clause?

6. Did the Shutes Have Notice of the Forum Selection Clause? • Supreme Court doesn’t address this issue because it is conceded in the respondents’ brief. • What if they had not had notice?

7. Arguments the Forum Selection Clause Unenforceable • What are the Shutes’ arguments in support of their contention that the forum selection clause is unenforceable? • Did any of them convince Justice Blackmun, who wrote the Supreme Court’s majority opinion? If so, which arguments?

8. Arguments the Forum Selection Clause Unenforceable • Based on The Bremen, clause not the product of business negotiation. In the Bremen, the Supreme Court held that a freely negotiated forum selection clause between international parties should be enforced as long as it is not the product of fraud, undue influence, and overweening bargaining power. Also, it is an inconvenient forum and • Clause violates The Limitation of Vessel Owner’s Liabilitty Act, 46 U.S.C. App. 183c.

9. Justice Blackmun’s Reasoning • Blackmun: some nonnegotiated forum-selection clauses can be enforceable • Cruise ships have special interest in limiting for a where they can be sued • Such a clause spares expense of pretrial motions to determine correct forum and conserving judicial resources • Passengers benefit in light of reduced fares that reflect savings cruise line enjoys by limiting forum where it can be sued. • Do you buy any of these?

10. More of Blackmun’s Reasoning • Shutes have not satisfied the heavy burden of proof required to set aside the clause on grounds of inconvenience (they had notice and Florida is not a remote alien forum especially given where accident took place) • NO evidence of bad faith or overreaching • Since Shutes had notice of contract, they could have rejected it.

11. Dissent • Who wrote the dissent? • Who joined in it? • Describe the reasoning in the dissent. Do you agree with it? Why or why not?

12. Dissent • Inadequate notice • Unenforceable under under traditional principles of federal admiralty law, and is "null and void" under the terms of Limited Liability Act, 49 Stat. 1480, as amended, 46 U.S.C. App. 183c, which was enacted in 1936 to invalidate expressly stipulations limiting shipowners' liability for negligence.

13. Forum Selection Clauses: Jurisdiction By Express Consent • Remember that it is possible to consent to jurisdiction • Consequently, lack of personal jurisdiction is one of the waivable defenses under Rules 12(g) and 12(h)(1) • Contrast this with lack of subject matter jurisdiction, which can never be waived.

14. Forum Selection Clauses After Carnival • Prior to Carnival, some courts refused to enforce forum selection clauses that barred jurisdiction in other courts. Now, forum-selection clauses generally have a strong presumption of enforceability, especially where there is equal bargaining power between the parties and they are represented by counsel. • The burden is on the person challenging the enforcement of the clause to show it was unreasonable or unfair in the circumstances. This is a difficult burden, even where the clause is in a standard-form contract.

15. Notice and the Opportunity to Be Heard • Federal and state courts judgments can only bind if they satisfy the Due Process clause of the V and XIV Amendments of the Constitution respectively • The Due Process clause limits courts’ personal jurisdiction over defendants. • It also requires that D be given prior notice and an opportunity to be heard. • Mullane is the leading Supreme Court case that sets the modern standard for notice that satisfies due process.

16. Mullane Facts • Mullane involved a judicial settlement in the NY Surrogates Court of a common trust fund established by a NY bank under a NY banking statute. • Who was the common trustee of this fund? • What is the purpose of a common trust fund? • Who were the beneficiaries?

17. Beneficiaries • Many • Not all residents of New York • Some could not be identified/located with reasonable effort • Some could be identified/located but had conjectural or future interests so it would cost a lot to identify/locate them • Some were known present beneficiaries

18. Judicial Settlement of Trust Account • Why would the common fund trustee want to have an accounting approved?

19. Parties • Who is Mullane?

20. Parties • Who is Mullane? Mullane is the special guardian/attorney appointed by the court for all beneficiaries known or unknown not otherwise appearing with a present or future interest in the income of the common trust fund. • Why was Mullane appointed? • Because the Surrogates Court knew that the beneficiaries would not have been notified. • Why not?

21. Constructive Notice • Because the law allowed constructive notice by publication • The only notice of the proceeding for judicial settlement of accounts was in the legal columns of NY newspapers. • Mullane appears specially. What does he object to?

22. Mullane’s Special Appearance • Mullane objects to the NY Banking Law’s constructive notice provisions as violating due process. Argues that this lack of notice has the result that the Surrogates Court lacks jurisdiction to render a final, binding adjudication on the judicial settlement of the common trust accounts.

23. Procedural History • Surrogates Court finds notice was sufficient and enters final decree accepting accounts • NY Court of Appeals (highest NY court) finds notice was sufficient • Supreme Court must decide whether Surrogates Court has power to adjudicate the judicial settlement of the accounts. • How do they decide?

24. Supreme Court’s Ruling • Reverses NY Court of Appeals finding that notice was insufficient in certain respects • Why did the NY legislators think they could enact such ineffective notice provisions? • Statute views trust as a res; under Pennoyer constructive notice appeared acceptable for in rem proceedings

25. 3 categories of beneficiary: was notice acceptable? • Some could not be identified/located with reasonable effort • Some could be identified/located but had conjectural or future interests so it would cost a lot to identify/locate them • Some were known present beneficiaries

26. General Notice Requirement • “An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections…”

27. Standard for Notice in Mullane • “…The notice must be of such nature as reasonably to convey the required information . . . And it must afford a reasonable time for those interested to make their appearance . . .But if with due regard to the practicalities and peculiarities of the case these conditions are reasonably met, the constitutional requirements are satisfied.”

28. Published Notice • Can published notice ever be adequate under the Mullane standard?

29. Mullane Changes Historical Notice Requirement • Notice by publication is greatly cut back • Publication will not be sufficient notice if it would be reasonably practicable to provide individual notice • But Mullane makes clear that oficial notice does not always have to be personal service

30. Importance of Mailings • Would this case have come out differently if the bank had not been sending regular mailings to the beneficiaries?

31. After Mullane • Court decisions after Mullane have found that notice by mail is the constitutional minimum for D who can be found by reasonably diligent efforts. • Mullane paves the way for reforms to service in R. 4

32. Don’t Forget R. 4: Service Rule • R. 4(e) • R.4(h)

33. Hypo • State K has service of process rules under which notice of eviction proceedings can be left at the homes of Ds. It is very possible that the notice might be removed before the Ds ever saw it. • Does this satisfy Mullane?