Agenda for 15th Class

1. Agenda for 15th Class • Admin • Name plates • Handouts • Slides • Court Visit Information (A-E only) • Polinsky • Section F-J only • Court visit canceled • Trying to reschedule • Perhaps for Monday afternoon 10/20, as originally scheduled • Regular class on Monday, 2PM, unless I email otherwise • Secction F-J only • F 10/24. Class rescheduled 8-9:50 in Rm 103 • M 10/27. Class rescheduled to 1:45-3:35 in Rm 7 • Class canceled Friday Nov 7 • Rescheduled for Wednesday Nov 5, 6-8PM in Rm 3 • Supplemental Jurisdiction • Introduction to settlement and ADR

2. Assignment. Section A-E • Monday – Court Visit • See Court Visit handout for detailed information • Skim documents at top of webpage • Need not read very carefully • Try to understand what each motion is about • Try to understand what each document is • Must be at court by 9:40AM • Friday – Settlement and ADR • Yeazell pp. 523-24,531-44, 548-50, 555-58 • You do not need to read these materials carefully • Handout (Polinsky) • If you are not quantitatively inclined, you will need to read this carefully. Polinsky is extremely clear, but it will take time. • Questions on last page of Polinsky handout • This is writing assignment for Group 3

3. Assignment. Section F-J • Monday – Settlement and ADR • Check email, in case court visit is rescheduled for Monday • Yeazell pp. 523-24,531-44, 548-50, 555-58 • You do not need to read these materials carefully • Handout (Polinsky) • If you are not quantitatively inclined, you will need to read this carefully. Polinsky is extremely clear, but it will take time. • Questions on last page of Polinsky handout • This is writing assignment for Writing Group 3

4. Review of Subject Matter Jurisdiction • Constitution, Article III, Section 2 • Federal courts may have jurisdiction over • Cases that raise a federal question • Cases between citizens of different [U.S.] states, even if not based on federal law • Cases between U.S. citizen and foreigner, even if not based on federal law • Does not mention, and therefore no jurisdiction over • Cases between two foreigners, if not based on federal law • Statute can and usually is narrower than constitution • 1332. Amount in controversy requirement • 1332. No jurisdiction in suit between US citizen and foreigner, if foreigner is permanent resident domiciled in same US state as US citizen • Judicial interpretation often is narrower than text of statute • Fed Q J. -- well pleaded complaint rule • Diversity J. -- complete diversity rule

5. Review of Federal Question Jurisdiction • “Well pleaded complaint rule” • Does cause of action arise under federal statute or US constitution? • Would minimally adequate complaint invoke federal law • E.g. plead facts that would satisfy elements required by federal law • Not sufficient that federal issue in answer or reply • Cannot get around rule by pleading more than necessary • Federal statute or constitutional provision does not need to be mentioned in “short and plain statement of claim” FRCP 8(a)(2) • Federal statute or constitutional provision does need to be in jurisdictional statement. FRCP 8(a)(1)

6. Review of Diversity Jurisdiction • Problem if statute is broader than constitution • Turkish citizen sues Egyptian citizen who is a permanent resident domiciled in a US state • Unconstitutional, because constitution does not authorize jurisdiction over cases involving two foreigners, unless based on federal law • So pre-2011 statute needed to be interpreted narrowly • Textualist interpretation of pre-2011 statute also violated purpose of section deeming permanent resident to be citizen of state where domiciled • Purpose of that provision was to restrict jurisdiction • Interpreting section to apply to hypothetical about would expand jurisdiction • So purposivist interpretation would also interpret pre-2011 statute not to apply to above hypothetical • Statute amended in 2011 • To avoid constitutional problem • To bring text in line with purpose • To bring text in line with way most courts interpreted it.

7. Court personnel • Outlining advice • Do your own • But good to consult other outlines for • Structure • Completeness • One page summary / list of topics • Supplemental Jurisdiction • Exception to general rule that need to show independent ground for subject matter jurisdiction over each claim and each plaintiff-defendant pair. • Need to serve process on each defendant separately following FRCP 4 • Each defendant must serve an answer • See problems on handout

8. Intro to Settlement I • Most cases settle • Roughly 2/3rds of filed cases settle • Some cases settle even before complaint filed • Roughly 5% go to trial • Roughly 20% dismissed (Rule 12) or terminated by summary judgment • Roughly 10% other – default judgment, plaintiff failed to prosecute, referred to arbitration, etc. • Settlement is contract by which plaintiff dismisses case in return for something valuable from the defendant • Usually money • Can be almost anything – job, house, letter of recommendation, apology • Often non-monetary terms -- Confidentiality/secrecy, return of discovery documents, payment of costs • Economic analysis of settlement • Settlement is attractive to parties because it enables them to save on the cost of litigation • Settlements is sometimes not possible, because parties are sometimes too optimistic about trial outcomes • Settlement is sometimes not reached, if the parties are too stubborn (strategic) in their negotiations

9. Intro to Settlement II • Economic analysis of settlement • Settlement attractive to parties because saves on litigation costs • Total litigation costs often equal net amount plaintiff recovers • Suppose plaintiff wins $90,000 • Usually pays one third to lawyer. • So plaintiff’s lawyer gets $30,000 • So plaintiff nets $60,0000 = $90,000 - $30,000 • Defendant usually pays lawyers roughly same amount: $30,000 • So lawyers get $60,000 ($30,000 + $30,000) and plaintiff gets $60,0000 • Defendant pays $120,000 = $90,000 + $30,000 • If settle early, parties can both be better off • E.g. Defendant settles with plaintiff for $80,000 • Of course, depends in part on how much parties have already invested in litigation

10. Intro to Settlement III • Economic analysis of settlement (cont.) • Settlement possible if it makes both sides better off than trial • Need to calculate outcome if case did not settle • Easy if trial outcome known with certainty • Plaintiff. Judgment minus lawyers fees. 90K -30K=60K • Defendant. Judgment plus lawyer’s fees. 90K+30K=120K • So any settlement amount between 60K and 120K would make both parties better off • Of course, may fail to settle because of hard bargaining • If trial outcome uncertain, need to calculate expected value • Expected value = probability that plaintiff will prevail x judgment amount if plaintiff prevails • Suppose 50% probability that plaintiff will get 100K • Plaintiff better off with settlement greater than: • (50% x 100K) – 30K = 50K – 30K = 20K • Defendant better off with settlement less than: • (50% x 100K) + 30K = 50K + 30K = 80K • So any settlement between 20K and 80K would make both parties better off • Of course, lots of simplifying assumptions….

11. Intro ADR • ADR = Alternative Disputes Resolution • Mediation. Settlement negotiations with assistance from neutral person • Mediator does not have power to imposed settlement • Used with increasing frequency • Arbitration. Adjudication by private judge • Settlement is sometimes classified as ADR