Institutional Sources of American Law

CHAPTER 3 OBJECTIVES
1. Identify the primary sources of American law.
2. Summarize each sources formal role in the making of American law.
3. Explain important aspects of our federal form of government such as federal supremacy,
the police power of the states, full faith and credit, and conflict-of-laws rules.
4. Explain the judicial doctrine known as stare decisis.
5. Describe the fundamental differences between civil law and common law legal
systems.
I
t is important to understand that the rules constituting American law derive
from several authoritative sources. The most important of these are the
federal and state constitutions; legislation produced at the federal, state, and local
levels of government; decisions of federal and state courts; and regulations and
adjudicatory rulings of federal, state, and local administrative agencies. In this
chapter we preview each of these major sources

COMMON LAW AND CIVIL LAW LEGAL SYSTEMS

From your reading of Chapter I, you have already
seen how the English common law system developed over many centuries.
1
You know that as
judges decided cases, rules slowly evolved and
became recognized as judicial precedents, which
began to be written down and followed. These
practices made it possible for cases raising a particular issue to be decided in essentially the
same way
throughout England. With its emphasis on judgemade law, this approach differs markedly from
the
legal systems found in France, Germany, and Italy.
Those countries follow a different approach, often
referred to as the civil law system.

2
Civil law systems are based upon detailed legislative codes rather than judicial precedents.
Such a
code is a comprehensive, authoritative collection of
rules covering all the principal subjects of law. Civil
law codes are often developed by academicians and
then enacted by legislative bodies. They are based
on philosophy, theory, and abstract principles. Civil
law systems usually reject the use of precedent, dispense with juries in civil cases, and avoid
complex
rules of evidence. In civil law countries, judges are
expected to base their decisions on the appropriate
provisions of the relevant code, and they do not
treat the decisions of other judges as authoritative
sources.
The civil law tradition tracesits roots to historically
famous codes of law such as ancient Romes Corpus
Juris Civilisand FrancesCode Napoleon. At present, Europe, Central and South America, the
Province of Quebec, and the former French colonies of Africa
have adopted the civil law system.
Although the common law system has had
much more impact on American law, the civil law
system has been of increasing influence. For example, early nineteenth-century American
legislatures
wanted to replace the complex and ponderous system of common law pleading, and reformers
campaigned in favor of replacing the traditional reliance
on judge-made law with legislated codes. Today,
codes of civil procedure regulate litigation in all
federal and state courts. Many states have taken a
similar approach with respect to probate law, criminal law, and commercial law. State
legislatures in
forty-nine states, for example, have adopted the
Uniform Commercial Code to replace the common
law with respect to the sale of goods. (Louisiana is
the holdout.)

CONSTITUTIONS

The United States in its Constitution has adopted a

federal form of government. Like the federal government, each of the fifty states is sovereign
with a written constitution and legislative, executive, and
judicial branches of government. The written constitution is the fundamental source of the rule of
law within each jurisdiction. It creates a framework
for the exercise of governmental power and allocates responsibility among the branches of
government. It authorizes and restrains the exercise of
governmental authority, protects fundamental
rights, and provides an orderly vehicle for legal
change. Laws and governmental actions that violate
its terms are unconstitutional.
The U.S. Constitution grants certain powers to
the federal government in Article I, such as the right
to regulate interstate commerce, operate post offices,
declare war, and coin money. The states, however,
retain many important powers and can implement
significant change by enacting statutes and by
amending their state constitutions. A strength of
our federal form of government is that states can
innovate and experiment without having to obtain
permission from other states. Nebraskas constitution, for example, provides for a unicameral
legislature (the only state to do so); Oregons laws provide
persons who are terminally ill with the option of
physician-assisted suicide; Vermont was the first state
to legalize civil unions; and Massachusetts was the
first state to issue marriage licenses to same-sex couples. Because of federalism, it is not
unusual for states
to provide their residents with greater substantive
and procedural protections as a matter of state law
than are required by the U.S. Constitution.

LEGISLATION

To maintain social harmony, society needs uniformly operating rules of conduct. The
responsibility
for determining the rules lies primarily with legislative bodies. The legislative branch creates law
by
enacting statutes. An examination of legislation

reveals the problems and moods of the nation.

Legislatures write history through the legislative process. There have been legislative reactions
to almost
all political, social, and business problems that have
faced society. Laws have been passed in response to
wars, depressions, civil rights problems, crime, and
concern for cities and the environment. Checks and
balances have been built into the system in order to
prevent overreaction by the legislature and to promote wise and timely legislation.
The process of enacting statutes is lengthy and
complex. At the federal level, it is a procedure that
involves 535 persons in the House and Senate
who represent the interests of their constituents,
themselves, and the country. A proposed bill may
encounter numerous obstacles. Mere approval by
the legislative bodies does not ensure passage, for at
both federal and state levels the executive branch has
the power to veto a bill. Another check on legislation
can come once a bill becomes law. At that point, the
constitutionality of the legislative act may be challenged in court.
With the exception of bills for raising revenue, which must originate in the House (Article I,
Section 7 of the Constitution), it makes no difference in which body a bill is introduced, because
a
statute must be approved by both houses of the
legislature. However, the legislative process varies
slightly between the Senate and House. If differences exist between the House and Senate
versions
of a bill, a joint conference committee meets to
reconcile the conflicts and draft a compromise bill.
After a bill has been approved by both houses
and certain formalities have been completed, it
must be approved and signed by the president of
the United States to become effective. If the president vetoes a billwhich rarely occursit
does not
become law unless the veto is overridden by a twothirds vote of both houses.
Defeat of a bill is far more common than
passage. More than 95 percent of all legislation
introduced is defeated at some point. Still, much
legislation is signed into law each year. Legislative
death can result at any stage of the process, and
from many sources. For legislation to be successful

in passing, assignment to the proper committee is

crucial. However, committees can be cruel. They
may refuse to hold hearings. They may alter a bill
completely. Or they may kill it outright. If a proposed statute survives the committee stage, the
House Rules Committee or the Senate majority
leader determines the bills destiny. Once a bill
reaches the floor of the House or Senate, irrelevant
proposalsknown as ridersmay be added to it.
Or drastic amendments can so alter it that it is
defeated. The possibilities are almost endless.
The need for certainty and uniformity in the
laws among the states is reflected in federal legislation
and uniform state laws. A great degree of uniformity
has been accomplished among the states on a number
of matters. An important example is the Uniform
Commercial Code (UCC). With increased interstate business operations, business firms
pressured for
uniform laws dealing with commercial transactions
among states. Judges, law professors, and leading
members of the bar drafted the UCC for adoption
by the individual states. The UCC was first adopted
by the Pennsylvania legislature in 1953, and it has
now been adopted at least partially in all fifty states.
The UCC covers sales and leasehold interests in
goods, commercial paper, bank collection processes,
letters of credit, bulk transfers, warehouse receipts,
bills of lading, other documents of title, investment
securities, and secured transactions.
The Role of Legislatures
Legislative bodies are organized in accordance with the provisions of the U.S. and state
constitutions, and are entrusted with wide-ranging responsibilities and powers. These powers
include enacting laws, raising taxes, conducting investigations, holding hearings, and
determining how public money will be appropriated. Legislatures play a major role in
determining public policy. It is widely understood, however, that todays legislatures actually
share
policymaking duties with the executive and judicial
branches and with administrative agencies.
The Federal Governments Power to Legislate
The federal government cannot exercise any

authority that is not granted to it by the Constitution, either expressly or by implication. The U.S.
Constitution, in Article I, Section 8, and in authorizing sections contained in various
constitutional
amendments, enumerates the powers granted to
the Congress (see Figure 3.1 above). The powers
that the Constitution delegates to the federal government are comprehensive and complete.
They
are limited only by the Constitution. The power
to regulate interstate commerce is one of the most
important of the expressly delegated powers.
From 1900 until 1937, the U.S. Supreme
Court often followed a formalistic approach in its
interpretations of the Commerce Clause. The justices severely limited the scope of this clause in
a
series of controversial cases. The Court, for example, rejected Congresss claim that Article I,
Section
8, permitted the federal government to address
problems resulting from indirect as well as direct
impacts on interstate commerce,
3
and it defined
interstate commerce very narrowly in cases in
which Congress sought to regulate mining,
4
protect
workers wishing to join labor unions,
5
and discourage the use of child labor in factories.
6
The Supreme Court reversed its direction in
1937 and began to defer to Congress in cases where
a rational connection existed between the legislation and commerce.
The Court often used the Necessary and Proper
Clause in conjunction with the Commerce Clause
to justify extensions of federal authority.
7
In one case
it upheld a federal act that was jurisdictionally based
on indirect effects on interstate commerce, and that
authorized the use of injunctions against companies
engaging in unfair labor practices,

8
and in a second
case it upheld minimum wage legislation.
9
The continued viability of thedeferentialstandard was
called into question because of the Courts decision
in United States v. Lopez, a case in which the U.S.
Supreme Court ruled that Congress did not have
authority under the Commerce Clause to enact the
Gun-Free School Zones Act of 1990.
In 2012 the U.S, Supreme Court decided the
case of National Federation of Independent Business v.
Kathleen Sebelius. This case required the Court
to determine whether Congress had the constitutional authority to establish an individual
mandate
within the Patient Protection and Affordable Care
Act (ACA, although more popularly known as
Obamacare). The governments position was that
Congress had authority pursuant to the Constitutions Commerce and Necessary and Proper
Clauses
to statutorily mandate that individuals purchase
health insurance policies. The Act did not excuse
from participation individuals who did not want to
participate in this program. Opponents of the legislation maintained that the government could
not
constitutionally mandate that someone had to purchase this insurance against his or her will.
The Supreme Courts associate justices were
divided 4-4 on this issue. It was up to Chief Justice
Roberts to cast the critical fifth vote, and he sided
with the government. Although the Chief Justice
agreed with Justices Ginsburg, Breyer, Sotomayor,
and Kagan that Congress had constitutional authority
to enact this mandate pursuant to the governments
power to tax, he also agreed with the four dissenting justices ( Justices Scalia, Kennedy,
Thomas, and
Alito) that there was no such authority under the
Commerce and Necessary and Proper Clauses.
Chief Justice Roberts explained his reasoning in
the excerpt from his opinion that follows this introduction. Because the Court found the
Affordable
Care Act to be constitutional and within Congresss

power to tax, the discussion of the Commerce

and Necessary and Proper Clauses was technically
dictum (a judges extraneous statement in an opinion that addresses legal issues unnecessary
to deciding
the case then before the court). The fact that five
U.S. Supreme Court justices believe that Congresss
powers to legislate based on the Commerce and
Necessary and Proper Clauses should be limited
does not have any direct legal significance and does
not establish any legal precedent (a topic addressed
later in this chapter). It will, however, have considerable informal significance beyond the
judiciary
and will influence the executive and legislative
branches of the government and members of the
bar. This opinion undoubtedly will encourage the
filing of other lawsuits where one of the parties can
claim that Congress has exceeded its constitutional
authority.
The following edited excerpt is from Part III-A
of Chief Justice Robertss opinion in National
Federation of Independent Business v. Kathleen Sebelius.

National Federation of Independent Business v. Kathleen Sebelius

567 U. S. ___ (2012)
Supreme Court of the United States
June 28, 2012
Chief Justice Roberts announced the judgment of the
Court and delivered the opinion of the Court with
respect to Parts I, II, and IIIC, an opinion with respect to
Part IV, in which Justice Breyer and Justice Kagan join,
and an opinion with respect to Parts IIIA, IIIB, and IIID.
III
A
The Governments first argument is that the individual

mandate is a valid exercise of Congresss power under

the Commerce Clause and the Necessary and Proper
Clause.
By requiring that individuals purchase health
insurance, the mandate prevents cost-shifting by those
who would otherwise go without it. In addition, the
mandate forces into the insurance risk pool more
healthy individuals, whose premiums on average will
be higher than their health care expenses. This allows
insurers to subsidize the costs of covering the
unhealthy individuals the reforms require them to
accept. The Government claims that Congress has
power under the Commerce and Necessary and Proper
Clauses to enact this solution.
1
The Government contends that the individual mandate
is within Congresss power because the failure to purchase insurancehas a substantial and
deleterious
effect on interstate commerceby creating the costshifting problem.The path of our Commerce
Clause
decisions has not always run smooth, but it is now
well established that Congress has broad authority
under the Clause. We have recognized, for example,
that[t]he power of Congress over interstate commerce
is not confined to the regulation of commerce among
the states,but extends to activities thathave a substantial effect on interstate commerce.
Congresss
power, moreover, is not limited to regulation of an
activity that by itself substantially affects interstate
commerce, but also extends to activities that do so only
when aggregated with similar activities of others.
Given its expansive scope, it is no surprise that
Congress has employed the commerce power in a wide
variety of ways to address the pressing needs of the
time. But Congress has never attempted to rely on that
power to compel individuals not engaged in commerce
to purchase an unwanted product.Legislative novelty
is not necessarily fatal; there is a first time for everything. But sometimesthe most telling
indication of [a]
severe constitutional problemis the lack of historical

precedentfor Congresss action.At the very least, we

shouldpause to consider the implications of the
Governments argumentswhen confronted with such
new conceptions of federal power.
The Constitution grants Congress the power to
regulate Commerce.Art. I, 8, cl. 3 (emphasis added).
The power to regulate commerce presupposes the existence of commercial activity to be
regulated. If the
power toregulatesomething included the power to
create it, many of the provisions in the Constitution
would be superfluous. For example, the Constitution gives Congress the power tocoin
Money,in addition
to the power toregulate the Value thereof. And it
gives Congress the power toraise and support Armies
and toprovide and maintain a Navy,in addition to
the power tomake Rules for the Government and
Regulation of the land and naval Forces. If the
power to regulate the armed forces or the value of
money included the power to bring the subject of the
regulation into existence, the specific grant of such
powers would have been unnecessary. The language of
the Constitution reflects the natural understanding that
the power to regulate assumes there is already something to be regulated.
Our precedent also reflects this understanding.
As expansive as our cases construing the scope of the
commerce power have been, they all have one thing in
common: They uniformly describe the power as reachingactivity. The individual mandate,
however,
does not regulate existing commercial activity. It
instead compels individuals to become active in commerce by purchasing a product, on the
ground that
their failure to do so affects interstate commerce.
Construing the Commerce Clause to permit Congress to
regulate individuals precisely because they are doing
nothing would open a new and potentially vast
domain to congressional authority. Every day individuals do not do an infinite number of things.
In some
cases they decide not to do something; in others they
simply fail to do it. Allowing Congress to justify federal
regulation by pointing to the effect of inaction on

commerce would bring countless decisions an individual could potentially make within the scope
of federal
regulation, andunder the Governments theory
empower Congress to make those decisions for him.
Applying the Governments logic to the familiar
case of Wickard v. Filburn shows how far that logic
would carry us from the notion of a government of
limited powers. In Wickard, the Court famously upheld
a federal penalty imposed on a farmer for growing
wheat for consumption on his own farm.That
amount of wheat caused the farmer to exceed his
quota under a program designed to support the price
of wheat by limiting supply. The Court rejected the
farmers argument that growing wheat for home consumption was beyond the reach of the
commerce
power. It did so on the ground that the farmers decision to grow wheat for his own use allowed
him to
avoid purchasing wheat in the market. That decision,
when considered in the aggregate along with similar
decisions of others, would have had a substantial
effect on the interstate market for wheat.
Wickard has long been regarded asperhaps the
most far reaching example of Commerce Clause
authority over intrastate activity, but the Governments theory in this case would go much
further.
Under Wickard it is within Congresss power to regulate the market for wheat by supporting its
price. But
price can be supported by increasing demand as well as
by decreasing supply. The aggregated decisions of
some consumers not to purchase wheat have a substantial effect on the price of wheat, just as
decisions
not to purchase health insurance have on the price of
insurance. Congress can therefore command that those
not buying wheat do so, just as it argues here that it
may command that those not buying health insurance
do so. The farmer in Wickard was at least actively
engaged in the production of wheat, and the Government could regulate that activity because of
its effect
on commerce. The Governments theory here would
effectively override that limitation, by establishing that
individuals may be regulated under the Commerce

Clause whenever enough of them are not doing

something the Government would have them do.
Indeed, the Governments logic would justify a
mandatory purchase to solve almost any problem.
To consider a different example in the health care
market, many Americans do not eat a balanced diet.
That group makes up a larger percentage of the total
population than those without health insurance.
The failure of that group to have a healthy diet
increases health care costs, to a greater extent than the
failure of the uninsured to purchase insurance. See,
e.g., Finkelstein, Trogdon, Cohen, & Dietz, Annual
Medical Spending Attributable to Obesity: Payer- and
Service-Specific Estimates,(detailing theundeniable link between rising rates of obesity and
rising
medical spending,and estimating thatthe annual
medical burden of obesity has risen to almost 10 percent of all medical spending and could
amount to $147
billion per year in 2008). Those increased costs are
borne in part by other Americans who must pay more,
just as the uninsured shift costs to the insured.
Congress addressed the insurance problem by ordering
everyone to buy insurance. Under the Governments
theory, Congress could address the diet problem by
ordering everyone to buy vegetables.
People, for reasons of their own, often fail to do
things that would be good for them or good for society.
Those failuresjoined with the similar failures of
otherscan readily have a substantial effect on interstate
commerce. Under the Governments logic, that
authorizes Congress to use its commerce power to compel
citizens to act as the Government would have them act.
That is not the country the Framers of our Constitution envisioned. James Madison explained
that the
Commerce Clause wasan addition which few oppose
and from which no apprehensions are entertained.
While Congresss authority under the Commerce Clause has of course expanded with the
growth of the
national economy, our cases havealways recognized
that the power to regulate commerce, though broad
indeed, has limits. The Governments theory would

erode those limits, permitting Congress to reach beyond

the natural extent of its authority,everywhere extending the sphere of its activity and drawing all
power into
its impetuous vortex. Congress already enjoys vast
power to regulate much of what we do. Accepting the
Governments theory would give Congress the same
license to regulate what we do not do, fundamentally
changing the relation between the citizen and the Federal Government.
To an economist, perhaps, there is no difference
between activity and inactivity; both have measurable
economic effects on commerce. But the distinction
between doing something and doing nothing would not
have been lost on the Framers, who werepractical statesmen,not metaphysical philosophers.
The Framers
gave Congress the power to regulate commerce, not to
compel it, and for over 200 years both our decisions and
Congresss actions have reflected this understanding.
There is no reason to depart from that understanding now.
The Government sees things differently. It argues
that because sickness and injury are unpredictable but
unavoidable,the uninsured as a class are active in the
market for health care, which they regularly seek and
obtain. The individual mandatemerely regulates
how individuals finance and pay for that active participationrequiring that they do so through
insurance,
rather than through attempted self-insurance with the
back-stop of shifting costs to others.
The Government repeats the phraseactive in the
market for health carethroughout its brief,but that
concept has no constitutional significance. The phrase
active in the marketcannot obscure the fact that most
of those regulated by the individual mandate are not
currently engaged in any commercial activity involving
health care, and that fact is fatal to the Governments
effort toregulate the uninsured as a class.Our precedents recognize Congresss power to
regulateclass[es]
of activities, not classes of individuals, apart from
any activity in which they are engaged.
The individual mandates regulation of the uninsured as a class is, in fact, particularly divorced
from
any link to existing commercial activity. The mandate

primarily affects healthy, often young adults who are

less likely to need significant health care and have
other priorities for spending their money. It is precisely
because these individuals, as an actuarial class, incur
relatively low health care costs that the mandate helps
counter the effect of forcing insurance companies to
cover others who impose greater costs than their premiums are allowed to reflect.
The Government, however, claims that this does not
matter. The Government regards it as sufficient to trigger
Congresss authority that almost all those who are uninsured will, at some unknown point in the
future, engage
in a health care transaction. Asserting that[t]here is
no temporal limitation in the Commerce Clause,the
Government argues that because[e]veryone subject to
this regulation is in or will be in the health care market,
they can beregulated in advance.
The proposition that Congress may dictate the conduct of an individual today because of
prophesied future
activity finds no support in our precedent. We have said
that Congress can anticipate the effects on commerce of
an economic activity. See, e.g.,Heart of Atlanta Motel,
Inc. v. United States,(1964) (prohibiting discrimination
by hotel operators); Katzenbach v. McClung,(1964)
(prohibiting discrimination by restaurant owners). But
we have never permitted Congress to anticipate that
activity itself in order to regulate individuals not currently engaged in commerce.
The Government argues that the individual mandate can be sustainedbecause health
insurance is a
unique product. According to the Government,
upholding the individual mandate would not justify
mandatory purchases of items such as cars or broccoli
because, as the Government puts it,[h]ealth insurance is not purchased for its own sake like a
car or
broccoli; it is a means of financing health-care consumption and covering universal risks. But
cars and
broccoli are no more purchased for theirown sake
than health insurance. They are purchased to cover the
need for transportation and food.
The individual mandate forces individuals into
commerce precisely because they elected to refrain

from commercial activity. Such a law cannot be sustained under a clause authorizing Congress
toregulate Commerce.

2
The Government next contends that Congress has the
power under the Necessary and Proper Clause to enact
the individual mandate because the mandate is an
integral part of a comprehensive scheme of economic
regulationthe guaranteed-issue and community rating insurance reforms. Under this
argument, it is
not necessary to consider the effect that an individuals
inactivity may have on interstate commerce; it is enough
that Congress regulate commercial activity in a way that
requires regulation of inactivity to be effective.
The power tomake all Laws which shall be necessary and proper for carrying into Executionthe
powers
enumerated in the Constitution, Art. I, 8, cl. 18, vests
Congress with authority to enact provisionsincidental
to the [enumerated] power, and conducive to its beneficial exercise,.Although the Clause
gives
Congress authority tolegislate on that vast mass of
incidental powers which must be involved in the constitution,it does not license the exercise of
anygreat
substantive and independent power[s]beyond those
specifically enumerated. Instead, the Clause is merely
a declaration, for the removal of all uncertainty, that
the means of carrying into execution those [powers]
otherwise granted are included in the grant.
Applying these principles, the individual mandate
cannot be sustained under the Necessary and Proper
Clause as an essential component of the insurance reforms. Each of our prior cases upholding
laws under
that Clause involved exercises of authority derivative
of, and in service to, a granted power. The individual
mandate, by contrast, vests Congress with the extraordinary ability to create the necessary
predicate to the
exercise of an enumerated power.
This is in no way an authority that isnarrow in
scope,.Rather, such a conception of the Necessary

and Proper Clause would work a substantial expansion

of federal authority. No longer would Congress be
limited to regulating under the Commerce Clause
those who by some preexisting activity bring themselves within the sphere of federal regulation.
Instead,
Congress could reach beyond the natural limit of its
authority and draw within its regulatory scope those
who otherwise would be outside of it. Even if the
individual mandate isnecessaryto the Acts insurance reforms, such an expansion of federal
power is
not apropermeans for making those reforms
effective.
The Government relies primarily on our decision
in Gonzales v. Raich. In Raich, we consideredcomprehensive legislation to regulate the
interstate market
in marijuana. Certain individuals sought an exemption from that regulation on the ground that
they
engaged in only intrastate possession and consumption. We denied any exemption, on the
ground that
marijuana is a fungible commodity, so that any marijuana could be readily diverted into the
interstate
market. Congresss attempt to regulate the interstate
market for marijuana would therefore have been substantially undercut if it could not also
regulate intrastate possession and consumption. Accordingly, we
recognized thatCongress was acting well within its
authorityunder the Necessary and Proper Clause even
though itsregulation ensnare[d] some purely intrastate activity. Raich thus did not involve the
exercise of anygreat substantive and independent
power, of the sort at issue here. Instead, it concerned only the constitutionality ofindividual
applications of a concededly valid statutory scheme.
Just as the individual mandate cannot be sustained
as a law regulating the substantial effects of the failure
to purchase health insurance, neither can it be upheld as
anecessary and propercomponent of the insurance
reforms. The commerce power thus does not authorize
the mandate. Accord,(joint opinion of SCALIA,
KENNEDY, THOMAS, and ALITO, JJ., dissenting).
Case Questions

1. Exactly what aspect of the ACA individual mandate requirement is impermissible under the
Commerce
Clause according to the Chief Justice?
2. Why does Chief Justice Roberts feel it so important to prohibit Congress from enacting
legislation such as
the ACA? What were his concerns?
3. Do you agree with the Chief Justice thatcars and broccoli are no more purchased for
theirown sakethan
health insurance. They are purchased to cover the need for transportation and food?

THE DEBATE OVER THE ACA, THE COMMERCE CLAUSE, AND BROCCOLI
A short summary of Justice Ginsburgs concurring and dissenting opinion, which was
joined in by Justice Sotomayor and in part by
Justices Breyer and Kagan (only as to the use
of the Commerce Clause to require most individuals to purchase insurance). Justice Ginsburg
disagreed with Chief Justice Roberts and Justices
Kennedy, Scalia, Thomas, and Alito (heropposing
colleagues) over whether Congress had authority
pursuant to the Commerce and Necessary and
Proper Clauses to require most people to purchase
health insurance when it enacted the ACA.
Justice Ginsburg began her opinion by using
the termthe minimum coveragerequirement
when referring to the ACA provision that obliges
most people to purchase health insurance. She rejected Chief Justice Robertss term,
theindividual mandate.She also rejected her opposing colleaguesmajor argument, which was
that Congress
had no Commerce Clause authority to require people
to purchase health insurance against their will. Justice
Ginsburg argued that U.S. Supreme Court precedents had established Congresss broad
authority to
regulate interstate commerce. She commented that
theChief Justices crabbed reading of the Commerce Clause harks back to the era in which the
Court routinely thwarted Congresss efforts to regulate the national economy in the interest of
those who

labor to sustain it.She emphasized the incredible size

of the health care market and how likely it is that
almost all those who live in this country at some point
will need such services. The justice pointed out
that an estimated 50 million people are without
health insurance and that 60 percent of them will
obtain health care for which they will be unable to
paythey will get afree ride.She also cited data
that showed that the medical care industry went
uncompensated for $43 billion worth of care in
2008 and that this sum was passed along to everyone
who does have health insurance.
Justice Ginsburg pointed out that the health
care problem cannot be solved at the state level
because no state can afford to have a health care
system that is better than its neighborssystems.
No state wants to see an in-migration of uninsured
people looking for health care unavailable to them
in the state in which they currently reside. That, she
said, would lead tohigher taxes and increased
insurance costsand wouldencourage businesses
and healthy individuals to leave the State.
The justice summarized the rationale for the
ACA thusly:
Congress passed the minimum coverage
provision as a key component of the ACA
to address an economic and social problem
that has plagued the Nation for decades:
the large number of U. S. residents who
are unable or unwilling to obtain health
insurance. Whatever one thinks of the
policy decision Congress made, it was
Congresss prerogative to make it.
Reviewed with appropriate deference,
the minimum coverage provision, allied to
the guaranteed-issue and communityrating prescriptions, should survive measurement under
the Commerce and
Necessary and Proper Clauses.
According to Justice Ginsburg,rather than
evaluating the constitutionality of the minimum
coverage provision in the manner established by

our precedents, the Chief Justice relies on a newly

minted constitutional doctrine. The commerce
power does not, the Chief Justice announces, permit Congress tocompe[l] individuals to
become
active in commerce by purchasing a product.
The Chief Justice expressed concern about
congressional overreaching and postulated that
Congress could use the Commerce Clause and
the Necessary and Proper Clause to require individuals to eat broccoli so as to lessen the need
for cost
shifting to others. Justice Ginsburg answered this
fear in footnote 9 of her opinion:
The failure to purchase vegetables in the
Chief Justices hypothetical, then, is not
what leads to higher health-care costs for
others; rather, it is the failure of individuals
to maintain a healthy diet, and the resulting obesity, that creates the cost-shifting
problem. Requiring individuals to
purchase vegetables is thus several steps
removed from solving the problem. The
failure to obtain health insurance, by
contrast, is the immediate cause of the
cost-shifting Congress sought to address
through the ACA. Requiring individuals to obtain insurance attacks the
source of the problem directly, in a
single step.
An excerpt of the portion of the joint dissent
authored by Justices Scalia, Kennedy, Thomas,
and Alito that discusses the ACAs individual
mandate.
Article I, 8, of the Constitution gives
Congress the power toregulate Commerceamong the several States.The
Individual Mandate in the Act commands
that everyapplicable individual shall for
each month beginning after 2013 ensure
that the individual, and any dependent of
the individual who is an applicable individual, is covered under minimum essential coverage.If
this provisionregulates
anything, it is the failure to maintain minimum essential coverage. One might argue
that it regulates that failure by requiring it
to be accompanied by payment of a penalty. But that failurethat abstention from

commerceis notCommerce.To be
sure, purchasing insurance isCommerce;
but one does not regulate commerce that
does not exist by compelling its existence.
In Gibbons v. Ogden,(1824), Chief
Justice Marshall wrote that the power to
regulate commerce is the powerto prescribe the rule by which commerce is to be
governed.That understanding is consistent with the original meaning ofregulateat the time of
the Constitutions
ratification, whento regulatemeant
[t]o adjust by rule, method or established
mode,2 N. Webster, An American
Dictionary of the English Language
(1828);[t]o adjust by rule or method,
2 S. Johnson, A Dictionary of the English
Language (7th ed. 1785);[t]o adjust, to
direct according to rule,2 J. Ash, New
and Complete Dictionary of the English
Language (1775).
We do not doubt that the buying and
selling of health insurance contracts is
commerce generally subject to federal
regulation. But when Congress provides
that (nearly) all citizens must buy an
insurance contract, it goes beyond
adjust[ing] by rule or method, or
direct[ing] according to rule, ; it
directs the creation of commerce.
As to Justice Ginsburgs rejection of the
broccoli analogy, the joint dissenters said:
[Justice Ginsburgs] dissent dismisses the
conclusion that the power to compel entry
into the health-insurance market would
include the power to compel entry into
thenew-car or broccoli markets. The
latter purchasers, it says,will be obliged to
pay at the counter before receiving the
vehicle or nourishment,whereas those
refusing to purchase health-insurance will
ultimately get treated anyway, at others
expense.[T]he unique attributes of the

health-care marketgive rise to a

significant free riding problem that does
not occur in other markets. Anda
vegetable-purchase mandate(or a carpurchase mandate) is notlikely to have a
substantial effect on the health-care costs
borne by other Americans. Those differences make a very good argument by
the dissents own lights, since they show
that the failure to purchase health insurance, unlike the failure to purchase cars or
broccoli, creates a national, social-welfare
problem that is (in the dissents view)
included among the unenumerated
problemsthat the Constitution
authorizes the Federal Government to
solve. But those differences do not show
that the failure to enter the healthinsurance market, unlike the failure to buy
cars and broccoli, is an activity that
Congress canregulate.(Of course one
day the failure of some of the public to
purchase American cars may endanger the
existence of domestic automobile manufacturers; or the failure of some to eat
broccoli may be found to deprive them of
a newly discovered cancer fighting chemical which only that food contains, producing healthcare costs that are a burden
on the rest of usin which case, under
the theory of Justice Ginsburgs dissent,
moving against those inactivities will also
come within the Federal Governments
unenumerated problem-solving powers.)

State Governments Power to Legislate

The authority that resides in every sovereignty to
pass laws for its internal regulation and government
is called police power. It is the power inherent in
the state to pass reasonable laws necessary to preserve public health, welfare, safety, and
morals.
The states, as sovereigns, were exercising the
police power prior to the adoption of the federal
Constitution, and they never delegated it to the

federal government in that Constitution. In fact,

the Constitution itself, in the Tenth Amendment,
explicitly reserves to the states (or to the people)
any power not delegated to the federal government. Although the police power exists without
any express limitations in the U.S. Constitution,
the federal and state constitutions set limits on its
exercise.
The basis of the police power is the states obligation to protect its citizens and provide for the
safety and order of society. This yields a broad,
comprehensive authority. The definition of crimes
and the regulating of trades and professions are
examples of this vast scope of power. A mandatory
precondition to the exercise of police power is the
existence of an ascertainable public need for a particular statute, and the statute must bear a
real and
substantial relation to the end that is sought. The
possession and enjoyment of all rights may be limited under the police power, provided that it is
reasonably exercised.
Limitations on the police power have never
been drawn with exactness or determined by a general formula. The power may not be
exercised for
private purposes or for the exclusive benefit of a
few. Its scope has been declared to be greater in
emergency situations. Otherwise its exercise must
be in the public interest, must be reasonable, and
may not be repugnant to the rights implied or
secured in the Constitution.
Powers delegated by the federal government
and individual state constitutions also serve as a basis
for state legislation. Any activity solely attributable
to the sovereignty of the state may not be restrained
by Congress.

Federal Supremacy
The U.S. Constitution divides powers between the
federal government and the states. Certain powers
are delegated to the federal government alone. Others
are reserved to the states. Still others are exercised
concurrently by both. The Tenth Amendment to

the Constitution specifies that thepowers not delegated to the United States by the
Constitutionare
reserved to the statesor to the people.Unlike the
federal power, which is granted, the state already has
its power, unless expressly or implicitly denied by the
state or federal constitutions. Each state has the power
to govern its own affairs, except where the Constitution has withdrawn that power. The powers of
both
the federal and the state governments are to be exercised so as not to interfere with each
others exercise of
power. Whenever there is a conflict, state laws must
yield to federal acts to the extent of the conflict. This
requirement is expressed by the Supremacy Clause
in Article VI of the Constitution.
Under the Supremacy Clause, Congress can
enact legislation that may supersede state authority
and preempt state regulations. The preemption
doctrine is based on the Supremacy Clause. Hence
state laws that frustrate or are contrary to congressional objectives in a specific area are invalid.
In
considering state law, one takes into account the
nature of the subject matter, any vital national interests that may be involved, the need for
uniformity between state and federal laws, and the
expressed or implied intent of Congress. It is necessary to determine whether Congress has
sought to
occupy a particular field to the exclusion of the
states. All interests, both state and federal, must be
examined.

Constitutionality of Statutes
The power to declare legislative acts unconstitutional is the province and the duty of the
judiciary,
even though there is no express constitutional grant
of the power. It is generally presumed that all
statutes are constitutional and that a statute will
not be invalidated unless the party challenging it
clearly shows that it is offensive to either a state or

the federal constitution. When a court encounters

legislation that it believes to be unconstitutional, it
first tries to interpret the statute in a narrow way
with what is called a limiting construction. An act
of the legislature is declared invalid only as a last
resort if it is clearly incompatible with a constitutional provision.

The right and power of the courts to declare

whether the legislature has exceeded the constitutional limitations is one of the highest functions
of
the judiciary. The Supreme Court declared in
Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803)
that the judicial branch has the power to declare
void an act of the legislature that conflicts with
the Constitution. The issue of the supremacy of the
U.S. Constitution, and the right of individuals to
claim protection thereunder whenever they were
aggrieved by application of a contrary statute, was
decided in Marbury. Chief Justice John Marshall
wrote the opinion for the Court, stating in part:
The question, whether an act, repugnant
to the Constitution, can become the law
of the land, is a question deeply interesting
to the United States; but, happily, not
of an intricacy proportioned to its interest.
It seems only necessary to recognize
certain principles, supposed to have been
long and well established, to decide it.
That the people have an original right
to establish, for their future government,
such principles as, in their opinion, shall
most conduce to their own happiness,
is the basis on which the whole American
fabric has been erected. The exercise of
this original right is a very great exertion;
nor can it, nor ought it, to be frequently
repeated. The principles, therefore, so
established, are deemed fundamental.
And as the authority from which
they proceed is supreme, and can

seldom act, they are designated to be

permanent.
It is a proposition too plain to be
contested, that the Constitution controls
any legislative act repugnant to it; or that
the legislature may alter the Constitution
by an ordinary act.
Between these alternatives there is no
middle ground. The Constitution is either
a superior paramount law, unchangeable
by ordinary means, or it is on a level
with ordinary legislative acts, and, like
other acts, is alterable when the legislature
shall please to alter it.
If the former part of the alternative be
true, then a legislative act, contrary to the
Constitution, is not law; if the latter part
be true, then written constitutions are
absurd attempts, on the part of the people,
to limit a power, in its own nature
illimitable.
It is, emphatically, the province and
duty of the judicial department to say what
the law is. Those who apply the rule to
particular cases must of necessity expound
and interpret that rule. If two laws conflict
with each other, the courts must decide on
the operation of each.
So, if a law be in opposition to the
Constitution; if both the law and the
Constitution apply to a particular case, so
that the court must either decide that case,
conformable to the law, disregarding the
Constitution, or conformable to the Constitution, disregarding the law; the court
must determine which of the conflicting
rules governs the case. This is of the very
essence of judicial duty.
If, then, the courts are to regard the
Constitutionand the Constitution is
superior to any ordinary act of the legislaturethe Constitution, and not such
ordinary act, must govern the case to

which they both apply.

Ex Post Facto Laws and Bills of Attainder

Article I, Section 9 of the federal Constitution prohibits Congress from enacting ex post facto
laws
or bills of attainder. The state legislatures are likewise prohibited by Article I, Section 10. An ex
post
facto law is a law that makes acts criminal that were
not criminal at the time they were committed. Statutes that classify a crime more severely than
when
committed, impose greater punishment, or make
proof of guilt easier have also been held to be
unconstitutional ex post facto laws. Such laws
deprive an accused of a substantial right provided by the law that was in force at the time when
the
offense was committed.
The Ex Post Facto Clause restricts legislative
power and does not apply to the judicial function.
The doctrine applies exclusively to criminal or penal
statutes. A laws ex post facto impact may not be
avoided by disguising criminal punishment in a civil
form. When a law imposes punishment for certain
activity in both the past and the future, even though
it is void for the punishment of past activity, it is valid
insofar as the law acts prospectively. A law is not ex
post facto if itmitigates the rigorof the law or
simply reenacts the law in force when the crime was
committed.
To determine if a legislative act unconstitutionally punishes past activity, courts examine the
intent
of the legislature. The court, after examining the text
of the law and its legislative history, makes a determination as to whether an act that imposes a
present
disqualification is, in fact, merely the imposition of a
punishment for a past event. The principle governing the inquiry is whether the aim of the
legislature
was to punish an individual for past activity, or

whether a restriction on a person is merely incident

to a valid regulation of a present situation, such as the
appropriate qualifications for a profession.
A constitutionally prohibited bill of attainder
involves the singling out of an individual or group
for punishment. Bills of attainder are acts of a legislature that apply either to named individuals
or
to easily ascertainable members of a group in such
a way as to impose punishments on them without a
trial. For example, an act of Congress that made it
a crime for a member of the Communist Party to
serve as an officer of a labor union was held unconstitutional as a bill of attainder (United States
v.Brown, 381 U.S. 437, 1965).

Statutory Construction
To declare what the law shall be is a legislative
power; to declare what the law is is a judicial
power. The courts are the appropriate body for
construing acts of the legislature. Because courts
decide only real controversies and not abstract or
moot questions, a court does not construe statutory
provisions unless doing so is required for the resolution of a case before it. A statute is open to
construction only when the language used in the act is
ambiguous and requires interpretation. Where the
statutory language conveys a clear and definite
meaning, there is no occasion to use rules of statutory interpretation.
Courts have developed rules of statutory construction to determine the meaning of legislative
acts. For interpreting statutes, the legislative will is
the all-important and controlling factor. In theory,
the sole object of all rules for interpreting statutes is
to discover the legislative intent; every other rule of
construction is secondary.
It is the duty of the judiciary in construing criminal statutes to determine whether particular
conduct
falls within the intended prohibition of the statute.
Criminal statutes are enforced by the court if worded
so that they clearly convey the nature of the proscribed behavior. Legislation must be
appropriately
tailored to meet its objectives. Therefore it cannot

be arbitrary, unreasonable, or capricious. A court

will hold a statute void for vagueness if it does not
give a person of ordinary intelligence fair notice that
some contemplated conduct is forbidden by the act.
The enforcement of a vague statute would encourage arbitrary and erratic arrests and
convictions.
Penal statutes impose punishment for offenses
committed against the state. They include all statutes that command or prohibit certain acts and
establish penalties for their violation. Penal statutes
are enacted for the benefit of the public. They
should receive a fair and reasonable construction.
The words used should be given the meaning commonly attributed to them. Criminal statutes
are to
be strictly construed, and doubts are to be resolved
in favor of the accused. Strict construction means
that the statute should not be enlarged by implication beyond the fair meaning of the language
used.
However, the statute should not be construed so as
to defeat the obvious intention of the legislature.
A literal interpretation of statutory language
can lead to unreasonable, unjust, or even absurd
consequences. In such a case, a court is justified in
adopting a construction that sustains the validity of
the legislative act, rather than one that defeats it.

Courts do not have legislative authority and

should avoidjudicial legislation.To depart from
the meaning expressed by the words of the statute
so as to alter it is not constructionit is legislative
alteration. A statute should not be construed more
broadly or given greater effect than its terms
require. Nothing should be read into a statute that
was not intended by the legislature. Courts, however, dont always adhere to the principle.
Statutes are to be read in the light of conditions
at the time of their enactment. A new meaning is
sometimes given to the words of an old statute
because of changed conditions. The scope of a statute may appear to include conduct that did
not
exist when the statute was enactedfor example,

certain activity related to technological progress.

Such a case does not preclude the application of
the statute thereto.

ADMINISTRATIVE AGENCIES
As we will see in more detail in Chapter XIII, legislative bodies often delegate some of their
authority to governmental entities called agencies, boards,
authorities, and commissions. Legislatures do this
when they lack expertise in an area requiring constant oversight and specialized knowledge.
Agencies
such as the Environmental Protection Agency; the
Securities and Exchange Commission; the boards
that license doctors, attorneys, and barbers; and
public housing authorities are other examples.
Legislative bodies often permit the agencies to
exercise investigative and rulemaking powers.
Administrative rules, if promulgated according to
law, have the same force as statutes. Some agencies
also are delegated authority to conduct adjudicatory
hearings before administrative law judges who
will determine whether agency rules have been
violated.

Judicial Decision Making

The way people today think judges go about making decisions is about the same as it was in
1940.
(See the legal realism discussion in Chapter I.)
In theory every judge in this country follows a
two-step process when making a decision. The first
step requires the judge to examine the facts of a
case, research the relevant constitutional and statutory sources, look at the case law for legal
precedents (if there are any), and consider any relevant
historical practices and principles (such as judicial
restraint), as well as philosophical notions of fairness
and justice. In step two the judge relies on reasoning to arrive at a logical and fair decision.
Over time and with experience, some appellate
court justices become linked with what are called

judicial philosophies.For example, some judges

arestrict constructionists,in that they favor literal
interpretations of statutes and constitutions. Other
judges believe injudicial restraintand make it a
point to carefully follow precedent and defer to the
political branches of government. Judges who
interpret constitutions and statutes to mean what
they meant when they were originally created favor
original intent.

Biopsychological and Sociocultural Research

Academicians today, as in the past, have engaged in
quantitative and qualitative research in an effort to
identify other factors that might influence the judicial decision-making process. They study
judicial
voting patterns and try to learn about the various
factors that influence judges.
It is unrealistic to attempt to produce a comprehensive list of the possible sociocultural factors
that could influence judicial decisions because there
are so many. But here some examples of factors
that should be included. It is likely that education
(all judges graduate from law school), religion, cultural and ethnic influences, socioeconomic
status,
and career path both prior to and subsequent to
law school are important influences. Judges, like
other people, associate with people around them.
They have families and friends, join professional
and social associations, are members of communities, and may have previous experience in
government or may have held partisan offices. They also
have opinions, which are often expressed in articles
and speeches. These and other factors help to form a persons character and may influence his
or her
judgment.
Appellate judges, unlike trial court judges, are
members of multijudge panels. And researchers
often explore how groups of judges interact and
influence each other. Some appellate judges establish voting patterns, which makes it possible
to say
that they tend vote asmembersof a block with

respect to one or more types of cases. The members

of a block generally dissent together and agree with
one another when all of their votes are considered
over time.
In recent decades prominent scholars have been
focusing on judges as human beings whosebehavior is inescapably the product of both
biopsychological and sociocultural influences.
10
The late
Glendon Schubert, this textbook authors father,
believed that the underlying biopsychological question washow and why judges (like other
human
beings) learn, modify, remember (and forget), and
sooner or later lose, their values.
11
Through the
use of statistical tools such as Guttman scaling,
researchers are learning more about the extent to
which biological factors such as gender, aging, and
race influence judicial decision making.
12
Biopolitics, although a new subdiscipline within political
science, may produce important research findings
that help to influence judicial decision making in
the future.

Doctrine of Stare Decisis

In this portion of the chapter, we will learn about
the use of common law precedents and how judges
determine which body of substantive law to apply
when the facts of a case involve the laws of more
than one state.
One of the most fundamental principles of the
common law is the doctrine of stare decisis. A
doctrine is a policyin this case a judicial policy
that guides courts in making decisions. The doctrine normally requires lower-level courts to
follow
the legal precedents that have been established by
higher-level courts. Following precedent helps to

promote uniformity and predictability in judicial

decision making. All judges within a jurisdiction
are expected to apply a rule of law the same way
until that rule is overturned by a higher court.
Literally, stare decisis means that a court will
stand by its decisionsor those of a higher court.
This doctrine originated in England and was used in
the colonies as the basis of their judicial decisions.
A decision on an issue of law by a court is
followed in that jurisdiction by the same court or
by a lower court in a future case presenting the
sameor substantially the sameissue of law. A
court is not bound by decisions of courts of other
states, although such decisions may be considered in
the decision-making process. A decision of the U.S.
Supreme Court on a federal question is absolutely
binding on state courts, as well as on lower federal
courts. Similarly, a decision of a state court of final
appeal on an issue of state law is followed by lower
state courts and federal courts in the state dealing
with that issue.
The doctrine of stare decisis promotes continuity, stability, justice, speed, economy, and
adaptability within the law. It helps our legal system to
provide guidelines so that people can anticipate
legal consequences when they decide how to
conduct their affairs. It promotes justice by establishing rules that enable many legal disputes to
be
concluded fairly. It eliminates the need for every
proposition in every case to be subject to endless
relitigation. Public faith in the judiciary is increased
where legal rules are consistently applied and are
the product of impersonal and reasoned judgment.
In addition, the quality of the law decided on is
improved, as more careful and thorough consideration is given to the legal questions than would
be
the case if the determinations affected only the case
before the court.
Stare decisis is not a binding rule, and a court
need not feel absolutely bound to follow previous
cases. However, courts are not inclined to deviate
from it, especially when the precedents have been

treated as authoritative law for a long time. The

number of decisions announced on a rule of law
also has some bearing on the weight of the precedent. When a principle of law established by
precedent is no longer appropriate because of changing
economic, political, and social conditions, however, courts sometimes recognize this decay and
overrule
the precedent to reflect what is best for society.

The Holding of the Case

Under the doctrine of stare decisis, only a point of
law necessarily decided in a reported judicial opinion is binding on other courts as precedent. A
question of fact determined by a court has no binding
effect on a subsequent case involving similar questions of fact. The facts of each case are
recognized as
being unique.
Those points of law decided by a court to
resolve a legal controversy constitute the holding
of the case. In other words, the court holds (determines) that a certain rule of law applies to the
particular factual situation present in the case being
decided and renders its decision accordingly.
Sometimes, in their opinions, courts make
comments that are not necessary to support the
decision. These extraneous judicial expressions are
referred to as dictum. They have no value as precedent because they do not fit the facts of the
case.
The reason for drawing a distinction between holding and dictum is that only the issues before
the
court have been argued and fully considered.
Even though dictum is not binding under the doctrine of stare decisis, it is often considered
persuasive. Other judges and lawyers can determine what
the decision makers are thinking and gain an indication of how the problem may be handled in
the
future.
It is the task of the lawyer and judge to find the
decision or decisions that set the precedent for a
particular factual situation. In court, lawyers argue
about whether a prior case should or should not be
recognized as controlling in a subsequent case.

The Ohio Supreme Court had to make such a

decision in the following 1969 case. Did the prosecution violate Butlers federal due process
rights
when it used his voluntary, in-custody statement
(which was obtained without prior Miranda warnings) to impeach his trial testimony? The U.S.
Supreme Court had ruled in a 1954 case (Walder v.
United States) that prosecutors could impeach a
testifying defendant with illegally obtained
evidence once the defendant hadopened the
doorwith false testimony. The U.S. Supreme
Courts Miranda v. Arizona (1966) opinion seemed
to suggest that constitutional due process prevented
the government from using such statements for any
purpose. In Miranda, however, the prosecution had
used the defendants statement to prove guilt, not to
impeach the defendants testimony. Butlers lawyer
argued to the Ohio Supreme Court that (1) the language contained in Miranda applied to
impeachment
uses, (2) Miranda should be recognized as controlling, and (3) Butlers statement was
inadmissible.
The lawyers for the State of Ohio disagreed. They
argued that (1) Miranda was not controlling, because
Butlers facts were distinguishable from the facts in
Miranda, (2) the Walder case was controlling, and
(3) Butlers statement was admissible for purposes of
impeachment.

State v. Butler
19 Ohio St. 2d 55, 249 N.E.2d 818
Supreme Court of Ohio
July 9, 1969

Schneider, Justice.
The offense for which appellant was indicted, tried,
and convicted occurred on August 30, 1964. He struck
Annie Ruth Sullivan with a jack handle, causing an
injury which resulted in loss of sight [in] her left eye.

Appellant was apprehended and arrested by the

Cincinnati police, and while in custody he was interrogated by police officers. Prior to the
questioning, the
police gave no explanation to appellant as to his rights
to remain silent and have an attorney present. The
interrogation was recorded and reduced to writing.
Over objection by appellants counsel, these questions
and answers were repeated by the prosecutor at trial
to impeach statements made by appellant during crossexamination.
Appellant appeared before the municipal court of
Hamilton County on November 22, 1965. Probable
cause was found and appellant was bound over to the Hamilton County grand jury. Bond was
set at $500,
which appellant posted. The grand jury returned an
indictment for the offense ofmaiming.Appellant
was arraigned and pleaded not guilty, after which the
court appointed counsel. Trial was set. A jury was
waived and appellant was found guilty by the court of
the lesser included offense of aggravated assault. The
court of appeals affirmed the judgment of conviction.
Appellant raises [the question in this appeal as to]
whether, in cross-examination of a defendant the
prosecutor may use prior inconsistent statements of
the defendant, made to police without Miranda warnings, in order to impeach his credibility.
Appellantscontention is that the prosecution
violated his Fifth Amendment right against selfincrimination by using statements of his which
were
made to police during in-custody interrogation with no
warning of his right to silence or to counsel. The
United States Supreme Courtin Miranda v. Arizona
[1966]held there that the prosecutions use of
statements of an accused, made to police without prior
warnings of his rights to remain silent, to counsel and
appointed counsel if indigent, was a violation of the
accuseds Fourteenth and Fifth Amendment right
against self-incrimination.
The appellant took the stand and, on crossexamination by the prosecution, he made assertions
as
to the facts surrounding the crime. A recorded statement appellant made to a detective after
arrest was

then read to him to show a prior inconsistent statement. Counsel objected, but the court allowed
the
statement to be used as evidence to impeach the witnesss credibility. Appellant contends that
this use of
the statements, made without cautionary warnings,
violated his Fifth Amendment rights as defined by
Miranda v. Arizona, supra.
We cannot agree. First, the statements used by
the prosecution were not offered by the state as part
of its direct case against appellant, but were offered
on the issue of his credibility after he had been sworn
and testified in his own defense. Second, the statements used by the prosecution were
voluntary, no
claim to the contrary having been made.
The distinction between admissibility of wrongfully obtained evidence to prove the states case in
chief and its use to impeach the credibility of a defendant who takes the stand was expressed in
Walder v.
United States [1954].It is one thing to say that the
government cannot make an affirmative use of evidence unlawfully obtained. It is quite another
to say
that the defendant can turn the illegal method by
which evidence in the Governments possession was
obtained to his own advantage, and provide himself
with a shield against contradiction of his untruths.
Those words of Justice Frankfurter were uttered in
regard to evidence inadmissible under the Fourth
Amendment exclusionary rule. In the case of the Fifth
Amendment, even greater reason exists to distinguish
between statements of an accused used in the prosecutions direct case and used for
impeachment in crossexamining the accused when he takes the stand. We
must not lose sight of the words of the Fifth Amendment: nor shall be compelled to be a
witness against
himself.This is a privilege accorded an accused not to
be compelled to testify, nor to have any prior statements
used by the prosecution to prove his guilt. We cannot
translate those words into a privilege to lie with impunity once he elects to take the stand to
testify.
We do not believe thatMirandadictates a
conclusion contrary to ours. In Miranda, the court
indicated that statements of a defendant used to
impeach his testimony at trial may not be used unless

they were taken with full warnings and effective

waiver. However, we note that in all four of the convictions reversed by the decision, statements
of the
accused, taken without cautionary warnings, were
used by the prosecution as direct evidence of guilt in
the case in chief.
We believe that the words of Chief Justice
Marshall regarding the difference between holding
and dictum are applicable here.It is a maxim not to
be disregarded, that general expressions, in every
opinion, are to be taken in connection with the case in
which those expressions are used. If they go beyond
the case, they may be respected, but ought not to
control the judgment in a subsequent suit when the
very point is presented for decision. The reason of this
maxim is obvious. The question actually before the
court is investigated with care, and considered in its
full extent. Other principles which may serve to illustrate it are considered in their relation to the
case
decided, but their possible bearing on all other cases is
seldom completely investigated.
The court, in Miranda, was not faced with the
facts of this case. Thus, we do not consider ourselves
bound by the dictum of Miranda.
Thelinchpin(as Mr. Justice Harlan put it)
of Miranda is that police interrogation is destructive of
human dignity and disrespectful of the inviolability
of the human personality. In the instant case, the use
of the interrogation to impeach the voluntary testimony of the accused is neither an assault on
his dignity
nor disrespectful of his personality. He elected to testify, and cannot complain that the state
seeks to demonstrate the lack of truth in his testimony.
Finally, we emphasize that the statements used by
the prosecution were voluntarily made. The decision
in Miranda did not discard the distinction between voluntary and involuntary statements made by
an
accused and used by the prosecution.Lack of cautionary warnings is one of the factors to
consider in
determining whether statements are voluntary or not.
However, appellant here has never claimed that the
statements used to impeach were involuntary. Thus,

we assume they were voluntary, and hold that voluntary statements of an accused made to
police without
cautionary warnings are admissible on the issue of
credibility after defendant has been sworn and testifies
in his own defense.
Judgment affirmed.
Duncan, Justice, dissenting.
The use of statements made by the defendant for
impeachment without the warnings set forth in
Miranda v. Arizonahaving been given, is reversible
error.
In Miranda, Chief Justice Warren stated
The warnings required and the waiver necessary
in accordance with our opinion today are, in the
absence of a fully effective equivalent, prerequisites to the admissibility of any statement made
by a defendant. No distinction can be drawn
between statements which are direct confessions
and statements which amount toadmissionsof
part or all of an offense. The privilege against selfincrimination protects the individual from being
compelled to incriminate himself in any manner; it
does not distinguish degrees of incrimination.
Similarly, for precisely the same reason, no distinction may be drawn between inculpatory
statements and statements alleged to be merely
exculpatory.If a statement made were in fact
truly exculpatory, it would, of course, never be
used by the prosecution. In fact, statements
merely intended to be exculpatory by the defendant are often used to impeach his testimony at
trial or to demonstrate untruths in the statement
given under interrogation and thus to prove guilt
by implication. These statements are incriminating
in any meaningful sense of the word and may not
be used without the full warnings and effective
waiver required for any other statement.
[Emphasis supplied.]
This specific reference to impeachment, I believe,
forecloses the use of defendants in-custody statement
in the instant case.
The United States Court of Appeals for the Second
Circuitarrived at a decision contrary to that arrived
at by the majority in this case. Judge Bryanstated:
These pronouncements by the Supreme Court

may be technically dictum. But it is abundantly

plain that the court intended to lay down a firm
general rule with respect to the use of statements
unconstitutionally obtained from a defendant in
violation of Miranda standards. The rule prohibits
the use of such statements whether inculpatory or
exculpatory, whether bearing directly on guilt or
on collateral matters only, and whether used on
direct examination or for impeachment.
I would reverse.
Case Questions
1. Explain the difference between holding and dictum.
2. Can the holding of a case be broader than the precedent relied on?
3. Why should dictum not be considered binding under the doctrine of stare decisis?
4. Was Miranda properly relied on by the majority in the Butler case?
5. If this same case had been decided by the United States Court of Appeals for the Second
Circuit, would the
decision have been different or the same? Why?

Requirements for a Precedent

Only a judicial opinion of the majority of a court
on a point of law can have stare decisis effect. A
dissent has no precedential value, nor does the fact
that an appellate court is split make the majoritys
decision less of a precedent. When judges are
equally divided as to the outcome of a particular
case, no precedent is created by that court. This is
true even though the decision affirms the decision
of the next-lower court.
In addition, in order to create precedent, the
opinion must be reported. A decision by a court
without a reported opinion does not have stare
decisis effect. In the great majority of cases, no opinion is written. Appellate courts are
responsible
for practically all the reported opinions, although
occasionally a trial judge will issue a written opinion
relating to a case tried to the court. Trial judges do
not write opinions in jury cases.
Once a reported judicial precedent-setting

opinion is found, the effective date of that decision

has to be determined. For this purpose, the date of
the court decision, not the date of the events that
gave rise to the suit, is crucial.

The Retroactive Versus Prospective Application Question

A court has the power to declare in its opinion
whether a precedent-setting decision should have
retroactive or prospective application. Retroactive
effect means that the decision controls the legal consequences of some causes of action arising
prior to the
announcement of the decision. Prospective effect
means that the new rule will only apply to cases subsequently coming before that court and the
lower
courts of the jurisdiction. Prior to the U.S. Supreme
Courts 1993 decision in Harper v. Virginia Dept of
Taxation, the general rule in civil cases was that unless
a precedent-setting court had expressly indicated
otherwise, or unless special circumstances warranted
the denial of retroactive application, an appellate
court decision was entitled to retroactive as well as
prospective effect in all actions that were neither
res judicata (i.e., had been previously decided)
nor barred by a statute of limitations (meaning
the plaintiffs lawsuit cannot go forward because of
the plaintiffs failure to start the action within the
period of time allowed for that purpose by state
statute. (This topic is more thoroughly discussed in
Chapter VI). This pre-Harper approach was based on
the U.S. Supreme Courts decision in a 1971 case,
Chevron Oil Co. v. Huson. The U.S. Supreme Courts
decision in Harper prohibited federal courts from
applying a decision prospectively. Each state then
had to decide whether or not to continue following
the Chevron approach. This was the question before
the Montana Supreme Court in the 2004 case of
Dempsey v. Allstate Insurance Company.
The following excerpt from the majority opinion in Dempsey provides an excellent summary of
the evolution of the law as it relates to retroactivity.

Readers may recall from Chapter I references to Sir

William Blackstone as an important figure in the
development of the common law and to the philosophical school known as legal realism. Notice
how Justice Leaphart in the Dempsey opinion contrasts Blackstones belief that judgesdiscover
law with the view of the legendary legal realist, Justice
Oliver Wendell Holmes, that judges make law.

Dempsey v. Allstate Insurance Company

104 P.3d. 483
Supreme Court of Montana
December 30, 2004
Justice W. William Leaphart delivered the Opinion
of the Court.
[TheFactual and Procedural Backgroundsegment of
this opinion has been omitted in order to focus on the
courts discussion about whether decisions should
apply prospectively.]
DISCUSSION
In 1971 the United States Supreme Court announced
Chevron Oil Co. v. Huson (1971), 404 U.S. 97. Chevron
laid out a flexible three-factored test for whether a
decision applies prospectively only. We adopted the
Chevron test for questions of Montana lawand
subsequently applied it several times.In the
meantime, the United States Supreme Court revisited
the question of prospective application several times
and eventually overruled Chevron in Harper v. Virginia
Dept of Taxation (1993).
[I]t appeared that we would follow the rule
of the United States Supreme Courts Harper decision. However, subsequent decisions did not
bear
that out[as] we applied the Chevron test to
determine whether prospective application was
appropriate. Given our long history of applying
decisions prospectively we cannot ignore these

recent decisions applying the Chevron test.

As we explain later in this opinion, the two lines of
cases may be comfortably merged into a rule of retroactivity in keeping with the last seventy
years of this Courts jurisprudence.
A. A Brief History of Retroactivity
The retroactive/prospective distinction is relatively new
to our common law tradition. In the days of Blackstone
the law was understood as something that the courts
applied, not something that they made. Accordingly, it
made no sense for a court to comment on whether its
ruling applied retroactively or not. Its ruling was simply
the law as it is and always was([T]he Blackstonian
model takes law as a timeless constant, always [optimistically] assuming the correctness of the
current decision. Prior inconsistent decisions are and always
were incorrect.)
This view, of course, is no longer even remotely fashionable in todays climate of legal realism
and aversion to castles in the clouds. Justice Holmes, the great realist of his time, was one of
the first to see past Blackstone and spy the retroactive/prospective distinction. In endorsing what
we now callretroactivityhe characterized common law adjudication not as a search
for an entity separate from the courts, but as an act of creation, stating[t]he law of a State does
not become something outside of the state court and independent of it by being called the
common law. Whatever it is called it is the law as declared by the state judges and
nothing else.Kuhn v. Fairmont Coal Co. (1910) (Holmes, J., dissenting).
After flirting with the issue of prospective decisions in a handful of now defunct. common law
cases, the Court ruled in 1932 that a state supreme
court does not violate the United States Constitution
by giving a decision mere prospective effect. Great
N. Ry. Co. v. Sunburst Oil & Ref. Co. (1932),
(A state in defining the limits of adherence to precedent may make a choice for itself between
the
principle of forward operations and that of relation
backward.).
After receiving the United States Supreme
Courts blessing in Great Northern this Court used its
power to prospectively apply its decisions when it saw
fit. The United States Supreme Court fully endorsed
and justified its own use of prospective application in

1965 with Linkletter v. Walker. In Linkletter the

Warren Court was faced with an extraordinarily
explosive issue. Four years before, [in] Mapp v. Ohio
(1961)the Court had ruled that the exclusionary
rule applies against the states. Linkletter argued that
his conviction was obtained through evidence that
should have been inadmissible under the exclusionary
rule. Even though he was convicted and his case
became final before the Mapp ruling, he reasoned
that because the decisions of the United States
Supreme Court apply retroactively he must be
granted habeas corpus relief.
If the Court had granted Linkletters request,
thousands of otherwise properly obtained convictions
would have immediately become suspect. The Court
found such retroactive application too great a disruption of the criminal justice system. Also,
applying Mapp to cases closed before its issuance would
do nothing to further the policy behind the exclusionary ruledeterrence of unconstitutional
police
actions.
Therefore, after weighing these factors and
others, the Court concluded it was prudent to rule that
cases final before the Mapp decision were unaffected
by it.
In 1971 the Court extended this flexible approach
to civil cases in Chevron Oil Co. v. Huson (1971). In
applying a prior decision that had greatly changed the
operation of statutes of limitations under the Outer
Continental Shelf Lands Act, the Court adopted a version of the nonretroactivity test used in its
criminal
cases. In the context of criminal appeals, the three
factors of the test were as follows:
First, the decision to be applied nonretroactively
must establish a new principle of law, either by
overruling clear past precedent on which litigants
may have relied or by deciding an issue of first
impression whose resolution was not clearly foreshadowed. Second, it has been stressed
thatwe
mustweigh the merits and demerits in each
case by looking to the prior history of the rule in
question, its purpose and effect, and whether

retrospective operation will further or retard its

operation.Finally, we have weighed the inequity
imposed by retroactive application, for[w]here a
decision of this Court could produce substantial
inequitable results if applied retroactively, there is
ample basis in our cases for avoiding the injustice
or hardship by a holding of nonretroactivity.
With this test in place the federal courts had flexibility to grant nonretroactive relief to litigants
who had justifiably relied on old rules of law
when there was no indication that the rule would
change. Gone was any pretense that the law that
the courts announce is the law as it has always
been.

B. The Decline and Fall of Chevron

The United States Supreme Courts tolerance of prospective decisions did not last long. After
indicating
several times that it was not satisfied with current
doctrine, the Court finally overruled itself in
1987, jettisoning the Linkletter approach.
Griffith v. Kentucky (1987).The Court announced a
new rule requiring that all criminal decisions apply
retroactively to all casespending on direct review or
not yet final. It reasoned that it was unfair to
announce a new rule that would affect some defendants and not others merely because of the
timing of
their prosecutions.
It was only a matter of time before this approach
to retroactivity in criminal cases found its way into the
Courts civil jurisprudence. [T]he Court announced
[in Harper v. Virginia Dept of Taxation, 509 U.S. 86
(1993)] that due to the inequities inherent in a flexible
Chevron approach, federal rules of law may not be
selectively applied prospectively.
After Harper, the Chevron test no longer had any
applicability to interpretations of federal law, whether
in federal or state court. The Harper decision is

grounded in fairness and the arbitrariness oftemporal barriers,rather than a renewed embrace
of Blackstones theory of lawexistingindependently of a
courts decisions.
C. Revolt in the Provinces: Chevron Is Alive and Well in
the State Courts
Chevron concerned a federal question, and thus only
governed issues of federal law. Therefore, although
the United States Supreme Court has rejected
Chevron, the states are free to continue employing
the Chevron criteria in deciding questions of
retroactivity of state law. Prior to Harper, the
Chevron approach proved popular in state
courts.
The state courtsreactions to Harper have been
decidedly mixed, with many expressing disagreement,
if not open hostility. For example, the Supreme Court
of New Hampshire voiced support for the rejection of
Chevron. However, inspired by Justice OConnors
dissent in Harper, the court reserved for itself the
authority to give new rules prospective effect, but that
if a rule is applied retroactively to the parties before
the court, it must be given uniform retroactive
effect. In contrast, the New Mexico Supreme Court
took great issue with much of Harper,[constructing]
a presumption in favor of retroactivityin lieu of the
hard-and-fast rule prescribed for federal cases in
Harper.Many states are uncomfortable with the
harsh results that might follow if they abandon
Chevron and completely disallow prospective
decisions.
D. Reserving Chevron as an Exception
Our precedent allows for a compromise between the
powerful arguments of the Harper court and the compelling need for prospective application in
limited
circumstances.
We agree with the Harper court that limiting a
rule of law to its prospective application creates an
arbitrary distinction between litigants based merely on
the timing of their claims. Interests of fairness are not
served by drawing such a line, nor are interests of
finality. In the interests of finality, the line should be

drawn between claims that are final and those that are
not (the line drawn in Harper). We have already
recognized the arbitrary nature of prospective decisions in the criminal context[and]in
keeping
with the United States Supreme Courts opinion in
Griffith, we overruled all of our prior decisions which
limited a new judicial rule of criminal procedure to
prospective application.
We also understand, however, that what follows
from civil litigation is different in kind from the consequences inherent in a criminal prosecution
and conviction. On many occasions we have noted the
disruption that a new rule of law can bring to existing
contracts and to other legal relationships. Therefore
today we reaffirm our general rule that[w]e give
retroactive effect to judicial decisions,.We will,
however, allow for an exception to that rule when
faced with a truly compelling case for applying a new
rule of law prospectively only.
The Chevron test is still viable as an exception
to the rule of retroactivity. However, given that
we wish prospective applications to be the exception,
we will only invoke the Chevron exception when a
party has satisfied all three of the Chevron
factors.
Therefore, we conclude that, in keeping with our
prior cases, all civil decisions of this court apply retroactively to cases pending on direct review
or not yet
final, unless all three of the Chevron factors are satisfied. For reasons of finality we also
conclude that the
retroactive effect of a decision does not applyto
cases that became final or were settled prior to a
decisions issuance.
Case Questions
1. Based on what you have read about the history of the rule of retroactivity, do you see any
fundamental problems with the Harper v. Virginia Department of Taxation decision that could
in the future threaten its survival as a precedent?
2. Think about the positions advocated by Sir William Blackstone and Justice Oliver Wendell
Holmes with respect to whether judgesdiscover lawormake law.How would you characterize

the decision-making process followed by the Montana Supreme Court in reaching its
conclusions in Dempsey?
Do you believe that ethical considerations played any role in the Montana Supreme Courts
decision not to follow exclusively the rule promulgated by the U.S. Supreme Court in Harper v.
Virginia Department of Taxation?

Absence of Precedent
When judges are confronted by a novel fact
situation, they must rely on their own sense of justice and philosophy of law. The public interest,
tradition, prevailing customs, business usage, and
moral standards are important considerations in the
decision-making process. Judges encountering a
case of first impression first look for guidance within
the forum state. When precedent is lacking in the
forum state, decisions of other state and federal
courts, as well as English decisions, may be considered persuasive on the legal point at issue.
The trial court in the following case encountered a problem that was unique. The trial and
appellate courts were required to make decisions
without being able to benefit from the experience
of others as reflected in statutory law and common
law opinions. They had to create new law when life
and death were at stake. Note that three of the
seven members of the appellate court dissented.

Strunk v. Strunk
445 S.W.2d 145
Court of Appeals of Kentucky
September 26, 1969
Osborne, Judge.
The specific question involved upon this appeal is: Does
a court of equity have power to permit a kidney to be
removed from an incompetent ward of the state upon
petition of his committee, who is also his mother, for
the purpose of being transplanted into the body of his
brother, who is dying of a fatal kidney disease? We are
of the opinion it does.

The facts of the case are as follows: Arthur L.

Strunk, 54 years of age, and Ava Strunk, 52 years of
age, of Williamstown, Kentucky, are the parents of
two sons. Tommy Strunk is 28 years of age, married, an
employee of the Penn State Railroad and a part-time
student at the University of Cincinnati. Tommy is now
suffering from chronic glomerus nephritis, a fatal kidney disease. He is now being kept alive by
frequent
treatment on an artificial kidney, a procedure that
cannot be continued much longer.
Jerry Strunk is 27 years of age, incompetent, and
through proper legal proceedings has been committed
to the Frankfort State Hospital and School, which is a
state institution maintained for the feeble-minded. He
has an IQ of approximately 35, which corresponds with
the mental age of approximately six years. He is further handicapped by a speech defect, which
makes it
difficult for him to communicate with persons who are
not well acquainted with him. When it was determined
that Tommy, in order to survive, would have to have a
kidney, the doctors considered the possibility of using
a kidney from a cadaver if and when one became
available, or one from a live donor if this could be
made available. The entire family, his mother, father,
and a number of collateral relatives, were tested.
Because of incompatibility of blood type or tissue,
none was medically acceptable as a live donor. As a last
resort, Jerry was tested and found to be highly
acceptable. This immediately presented the legal
problem as to what, if anything, could be done by the
family, especially the mother and the father, to procure a transplant from Jerry to Tommy. The
mother as
a committee petitioned the county court for authority
to proceed with the operation. The court found that the operation was necessary, that under the
peculiar
circumstances of this case, it would not only be
beneficial to Tommy but also beneficial to Jerry
because Jerry was greatly dependent on Tommy, emotionally and psychologically, and that his
well-being
would be jeopardized more severely by the loss of his
brother than by the removal of a kidney.

Appeal was taken to the Franklin Circuit Court

where the chancellor reviewed the record, examined
the testimony of the witnesses, and adopted the findings of the county court.
A psychiatrist, in attendance to Jerry, who testified in the case, stated in his opinion the death of
Tommy under these circumstances would havean
extremely traumatic effect upon him [Jerry].
The Department of Mental Health of this commonwealth has entered the case as amicus curiae
and
on the basis of its evaluation of the seriousness of the
operation as opposed to the traumatic effect on Jerry
as a result of the loss of Tommy, recommended to the
court that Jerry be permitted to undergo the surgery.
Its recommendations are as follows:It is difficult for
the mental defective to establish a firm sense of identity with another person. The acquisition of
this necessary identity is dependent on a person whom one can
conveniently accept as a model and who at the same
time is sufficiently flexible to allow the defective to
detach himself with reassurances of continuity. His
need to be social is not so much the necessity of a formal and mechanical contact with other
human beings
as it is the necessity of a close intimacy with other men,
the desirability of a real community of feeling, an
urgent need for a unity of understanding. Purely
mechanical and formal contact with other men does
not offer any treatment for the behavior of a mental
defective; only those who are able to communicate
intimately are of value to hospital treatment in these
cases. And this generally is a member of the family.
In view of this knowledge, we now have particular interest in this case. Jerry Strunk, a mental
defective,
has emotions and reactions on a scale comparable to
that of a normal person. He identifies with his brother
Tom. Tom is his model, his tie with his family. Toms life
is vital to the continuity of Jerrys improvement at
Frankfort State Hospital and School. The testimony of
the hospital representative reflected the importance to
Jerry of his visits with his family and the constant
inquiries Jerry made about Toms coming to see him.
Jerry is aware he plays a role in the relief of this tension.
We the Department of Mental Health must take all
possible steps to prevent the occurrence of any guilt

feelings Jerry would have if Tom were to die.

The necessity of Toms life to Jerrys treatment
and eventual rehabilitation is clearer in view of the
fact that Tom is his only living sibling and at the death
of their parents, now in their fifties, Jerry will have no
concerned, intimate communication so necessary to his
stability and optimal functioning.
The evidence shows that at the present level of
medical knowledge, it is quite remote that Tom would
be able to survive several cadaver transplants. Tom has
a much better chance of survival if the kidney transplant from Jerry takes place.
Upon this appeal, we are faced with the fact that
all members of the immediate family have recommended the transplant. The Department of
Mental
Health has likewise made its recommendation. The
county court has given its approval. The circuit court has
found that it would be to the best interest of the ward
of the state that the procedure be carried out.
Throughout the legal proceedings, Jerry has been represented by a guardian ad litem, who has
continually
questioned the power of the state to authorize the
removal of an organ from the body of an incompetent
who is a ward of the state. We are fully cognizant of the
fact that the question before us is unique. Insofar as we
have been able to learn, no similar set of facts has come
before the highest court of any of the states of this
nation or the federal courts. The English courts have
apparently taken a broad view of the inherent power of
the equity courts with regard to incompetents. Ex parte
Whitebread (1816)holds that courts of equity have
the inherent power to make provisions for a needy
brother out of the estate of an incompetent. The
inherent rule in these cases is that the chancellor has the
power to deal with the estate of the incompetent in the
same manner as the incompetent would if he had his
faculties. This rule has been extended to cover not only
matters of property but also to cover the personal affairs of the incompetent.
The right to act for the incompetent in all cases
has become recognized in this country as the doctrine
of substituted judgment and is broad enough not only
to cover property but also to cover all matters touching

on the well-being of the ward.

The medical practice of transferring tissue from
one part of the human body to another (autografting)
and from one human being to another (homografting)
is rapidly becoming a common clinical practice. In
many cases, the transplants take as well when the tissue is dead as when it is alive. This has
made practicable the establishment of tissue banks where such
material can be stored for future use. Vascularized
grafts of lungs, kidneys, and hearts are becoming
increasingly common. These grafts must be of functioning, living cells with blood vessels
remaining
anatomically intact. The chance of success in the transfer of these organs is greatly increased
when the donor and the donee are genetically related. It is recognized
by all legal and medical authorities that several legal
problems can arise as a result of the operative techniques of the transplant procedure.
The renal transplant is becoming the most common of the organ transplants. This is because
the normal body has two functioning kidneys, one of which it
can reasonably do without, thereby making it possible
for one person to donate a kidney to another. Testimony in this record shows that there have
been over
2,500 kidney transplants performed in the United
States up to this date. The process can be effected
under present techniques with minimal danger to both
the donor and the donee.
Review of our case law leads us to believe that the
power given to a committee under KRS 387.230 would
not extend so far as to allow a committee to subject his
ward to the serious surgical techniques here under
consideration unless the life of his ward be in jeopardy.
Nor do we believe the powers delegated to the county
court by virtue of the above statutes would reach so
far as to permit the procedure which we [are] dealing
with here.
We are of the opinion that a chancery court does
have sufficient inherent power to authorize the operation. The circuit court having found that the
operative procedures are to the best interest of Jerry Strunk
and this finding having been based on substantial evidence, we are of the opinion the judgment
should be
affirmed. We do not deem it significant that this case
reached the circuit court by way of an appeal as
opposed to a direct proceeding in that court.

Judgment affirmed.
Hill, C.J., Milliken, and Reed, JJ., concur.
Neikirk, Palmore, and Steinfeld, JJ., dissent.

Steinfeld, Judge, dissenting.

Apparently because of my indelible recollection of a
government which, to the everlasting shame of its
citizens, embarked on a program of genocide and
experimentation with human bodies, I have been more
troubled in reaching a decision in this case than in any
other. My sympathies and emotions are torn between
a compassion to aid an ailing young man and a duty to
fully protect unfortunate members of society.
The opinion of the majority is predicated on the
authority of an equity court to speak for one who
cannot speak for himself. However, it is my opinion
that in considering such right in this instance, we must
first look to the power and authority vested in the
committee, the appellee herein. KRS 387.060 and KRS
387.230 do nothing more than give the committee the
power to take custody of the incompetent and the
possession, care, and management of his property.
Courts have restricted the activities of the committee
to that which is for the best interest of the incompetent. The authority and duty have been to
protect
and maintain the ward, to secure that to which he is
entitled and preserve that which he has.
The wishes of the members of the family or the
desires of the guardian to be helpful to the apparent
objects of the wards bounty have not been a criterion.
A curator or guardian cannot dispose of his wards
property by donation, even though authorized to do so
by the court on advice of a family meeting, unless a gift
by the guardian is authorized by statute.Two Kentucky cases decided many years ago reveal
judicial policy. In W. T. Sistrunk & Co. v. Navarras Committee,
105 S.W.2d 1039 (1937), this court held that a committee was without right to continue a
business which the

incompetent had operated prior to his having been

declared a person of unsound mind. More analogous is
Baker v. Thomas,114 S.W.2d 1113 (1938), in which a
man and woman had lived together out of wedlock.
Two children were born to them. After the man was
judged incompetent, his committee, acting for him,
together with his paramour, instituted proceedings to
adopt the two children. In rejecting the application and
refusing to speak for the incompetent, the opinion
stated:The statute does not contemplate that the
committee of a lunatic may exercise any other power
than to have the possession, care, and management of
the lunatics or incompetents estate.The majority
opinion is predicated on the finding of the circuit court
that there will be psychological benefits to the ward but
points out that the incompetent has the mentality of a
six-year-old child. It is common knowledge beyond dispute that the loss of a close relative or a
friend to a
six-year-old child is not of major impact. Opinions concerning psychological trauma are at best
most nebulous.
Furthermore, there are no guarantees that the transplant will become a surgical success, it
being well known
that body rejection of transplanted organs is frequent.
The life of the incompetent is not in danger, but the
surgical procedure advocated creates some peril.
It is written in Prince v. Massachusetts, 321 U.S.
158 (1944), thatParents may be free to become martyrs themselves. But it does not follow they
are free, in
identical circumstances, to make martyrs of their children before they have reached the age of
full and
legal distinction when they can make the choice for
themselves.The ability to fully understand and consent is a prerequisite to the donation of a part
of the
human body.
Unquestionably, the attitudes and attempts of the
committee and members of the family of the two young
men whose critical problems now confront us are commendable, natural, and beyond reproach.
However, they refer us to nothing indicating that they are privileged to
authorize the removal of one of the kidneys of the
incompetent for the purpose of donation, and they cite
no statutory or other authority vesting such right in

the courts. The proof shows that less compatible donors

are available and that the kidney of a cadaver could be
used, although the odds of operational success are not as
great in such cases as they would be with the fully compatible donor brother.
I am unwilling to hold that the gates should be
open to permit the removal of an organ from an
incompetent for transplant, at least until such time
as it is conclusively demonstrated that it will be
of significant benefit to the incompetent. The evidence here does not rise to that pinnacle. To
hold
that committees, guardians, or courts have such
awesome power, even in the persuasive case before
us, could establish legal precedent, the dire result
of which we cannot fathom. Regretfully I must
say no.
Neikirk and Palmore, JJ., join with me in this
dissent.

Case Questions
1. The Court of Appeals of Kentucky is the court of last resort in that state. The Strunk decision
is now Kentucky law. Does the decision make mental institutions a storehouse of human bodies
available for distribution to the more productive members of society whenever the state decides
that someones need outweighs
the danger to the incompetent?
2. Which opinion, the majority or dissent, was more persuasive?
3. Where no legal cases have a direct bearing on the issue of a case, should the court turn to
other disciplines for authority?
What ethical considerations do you think convinced the dissenters in this case to oppose the
operation on Jerry Strunk?
RECOGNIZING LAWS OF OTHER STATES
Every person within the territorial limits of a government is bound by its laws. However, it is
wellrecognized that law does not of its own force have
any effect outside the territory of the sovereignty
from which its authority is derived. Because each
of the fifty states is an individual sovereignty that
creates its own common and statutory law, there
are often inconsistencies among the laws of the various states.
When the facts of a case under consideration

have occurred in more than one state or country,

and a court must make a choice between the laws
of different states or nations, a conflict-of-laws
issue is presented. Another type of conflictof-laws problem exists where an event occurred
in one state and the suit is brought in another state.
For example, a driver from Michigan might bring
suit in Kentucky regarding an automobile collision
in Ohio involving a driver from Kentucky. In this
situation, the court must decide whether to apply
its own substantive law, the law of the state in
which the events occurred, or possibly the law of
some other state.
Conflict-of-Laws Rules
Conflict-of-laws rules have been developed by each
state to assist its courts in determining whether
and when foreign substantive law (i.e., some other
states contract law, tort law, property law, etc.)
should be given effect within the territory of
the forum. Remember that a state court always
follows its own procedural law, even when it decides to apply the substantive law of some other
state. The rules afford some assurance that the same substantive law will be used to decide the
case irrespective of where the suit is tried.

Tort Cases
The traditional approach in tort cases is to apply the
law of the place where the wrong was committed
lex loci delicti commissi. The place of the wrong is
where the last event necessary to make the actor liable
takes place or where the person or thing harmed is
situated at the time of the wrong. The following
case exemplifies a trend that has been occurring in
recent years. The Indiana Supreme Court used the
Hubbard case to replace the traditional lex loci delicti
commissi rule with the significant relationship
rule. The significant relationship approach is more
flexible than a rigid lex loci approach. A court following the significant relationship rule can apply
the law of the place that has the most significant contacts with

the incident or event in dispute.

Hubbard Manufacturing Co., Inc., v. Greeson

515 N.E.2d 1071
Supreme Court of Indiana
December 1, 1987
Shepard, Chief Justice.
The question is whether an Indiana court should apply
Indiana tort law when both parties are residents of Indiana and the injury occurred in Illinois.
Plaintiff Elizabeth Greeson, an Indiana resident,
filed a wrongful death action in Indiana against
defendant Hubbard Manufacturing Co., Inc., an Indiana corporation. The defendant corporation
built lift
units for use in cleaning, repairing, and replacing
streetlights.
On October 29, 1979, Donald Greeson, plaintiffs
husband and also a resident of Indiana, happened to
be working in Illinois maintaining street lights. He died
that day while using a lift unit manufactured by Hubbard in Indiana.
Elizabeth Greesons suit alleged that defective
manufacture of Hubbards lift unit caused her husbands death. When she raised the possibility
that Illinois products-liability law should be applied to this
case, Hubbard moved the trial court for a determination of the applicable law. The trial court
found that
Indiana had more significant contacts with the litigation but felt constrained to apply Illinois
substantive
law because the decedents injury had been sustained
there. The Court of Appeals expressed the opinion that
Indiana law should apply but concluded that existing
precedent required use of Illinois law.
We grant transfer to decide whether Indiana or
Illinois law applies.
Greesons complaint alleged two bases for her
claim:the defective and unreasonably dangerous
condition of a lift type vehicle soldby the defendantandthe negligence of the defendant.Both
theories state a cause for liability based on Hubbards
manufacture of the vehicle in Indiana.
The differences in Indiana law and Illinois law are

considerable. First, in Indiana a finding that the product represented an open and obvious
danger would
preclude recovery on the product liability claimto
impress liability on manufacturers the defect must be
hidden and not normally observable. Under Illinois
law, the trier of fact may find product liability even if
the danger is open and obvious. Second, under
Indiana law misuse would bar recovery.In Illinois
misuse merely reduces a plaintiffs award. These differences are important enough to affect
the outcome
of the litigation.
Choosing the applicable substantive law for a
given case is a decision made by the courts of the
state in which the lawsuit is pending. An early basis
for choosing law applicable to events transversing (sic)
several states was to use the substantive law of the
statewhere the wrong is committedregardless of
where the plaintiff took his complaint seeking
relief.
The historical choice-of-law rule for tortswas
lex loci delicti commissi, which applied the substantive
law where the tort was committed. Burns v. Grand
Rapids and Indiana Railroad Co. (1888). The tort is
said to have been committed in the state where the
last event necessary to make an actor liable for the
alleged wrong takes place.
Rigid application of the traditional rule to this
case, however, would lead to an anomalous result. Had
plaintiff Elizabeth Greeson filed suit in any bordering
state the only forum which would not have applied the
substantive law of Indiana is Indiana. To avoid this
inappropriate result, we look elsewhere for guidance.
Choice-of-law rules are fundamentally judge-made
and designed to ensure the appropriate substantive law applies. In a large number of cases, the
place of the tort
will be significant and the place with the most
contacts. In such cases, the traditional rule serves well.
A court should be allowed to evaluate other factors
when the place of the tort is an insignificant contact.
In those instances where the place of the tort bears little
connection to the legal action, this Court will permit the

consideration of other factors such as:

1. the place where the conduct causing the injury
occurred;
2. the residence or place of business of the parties;
and
3. the place where the relationship is centered.
Restatement (Second) of Conflicts of Laws 145(2)
(1971). These factors should be evaluated according to
their relative importance to the particular issues being
litigated.
The first step in applying this rule in the present
case is to consider whether the place of the tortbears
little connectionto this legal action. The last event
necessary to make Hubbard liable for the alleged tort
took place in Illinois. The decedent was working in Illinois at the time of his death and the
vehicle involved
in the fatal injuries was in Illinois. The coroners inquest
was held in Illinois, and the decedents wife and son
are receiving benefits under the Illinois Workmens
Compensation Laws. None of these facts relates to the
wrongful death action filed against Hubbard. The
place of the tort is insignificant to this suit.
After having determined that the place of the tort
bears little connection to the legal action, the second
step is to apply the additional factors. Applying these
factors to this wrongful death action leads us to the
same conclusion that the trial court drew: Indiana has
the more significant relationship and contacts. The
plaintiffs two theories of recovery relate to the manufacture of the lift in Indiana. Both parties are
from
Indiana; plaintiff Elizabeth Greeson is a resident of
Indiana and defendant Hubbard is an Indiana corporation with its principal place of business in
Indiana.
The relationship between the deceased and Hubbard
centered in Indiana. The deceased frequently visited
defendants plant in Indiana to discuss the repair and
maintenance of the lift. Indiana law applies.
The Court of Appeals decision is vacated and the
cause remanded to the trial court with instructions to
apply Indiana law.

Case Questions
1. Under lex loci delicti commissi, how should a court determine where a tort was committed?
2. Why did the Indiana Supreme Court decide to replace the traditional lex loci delicti commissi
approach?
3. What contacts were evaluated by the court in determining which state had a more significant
relationship
with the occurrence and with the parties?

Contract Cases
All states have developed their own conflict-of-laws
rules for contractual disputes, which differ from the
rules that apply to tort cases. In contractual disputes,
depending on the facts involved and jurisdictional
preferences, courts have historically applied the law
of place in any of the following ways: (1) where
the action was instituted (lex fori), (2) where the
contract was to be performed (lex loci solutionis),
(3) which law the parties intended to govern their
agreement, (4) the law of the state where the last act
necessary to complete the contract was done and
which created a legal obligation (lex loci contractus),
and (5) the law of the state that has the greatest
concern with the event and the parties (significant
relationship rule). A court may choose to follow
its own substantive law of contracts and will do so if
the application of the foreign law would offend its
public policy.
Courts often honor the law intended by the
parties to be controlling. The state chosen usually
has a substantial connection with the contract, but
courts have held that no such connection is necessary if the parties intended that that states
laws
govern the agreement. For example, automobile
and house insurance contracts generally included a
choice-of-law clause, usually a forum selected by
the lawyers for the insurance company andagreed
toby the insured. If a contract fails to include a

choice-of-law clause, courts still may determine the

partiesintent by examining the facts surrounding
the contract.

One of the important developments in contract

law has been the enactment by all states of at least
some provisions of the Uniform Commercial Code
(UCC). This code was created in order to enhance
the uniformity of state laws regulating certain commercial transactions. The UCC does not apply
to
all types of contracts. It does not apply, for example,
to employment contracts, services, or the sale of
real property. With respect to conflicts of law, the
UCC basically follows the significant relationship
rule when parties to contracts have not specified a
choice of law.
Full Faith and Credit
Prior to learning about full faith and credit, readers
may find it helpful to reread theProcedural
Primerthat begins on page 12 of Chapter I. There
can be found a simplified overview of civil procedure, a topic that will be explored in much
greater
detail in Chapter V.
When beginning a discussion of full faith and
credit, it is important to emphasize that each state in
the United States is a distinct sovereignty. In the
absence of a federal constitutional requirement to
the contrary, each state would be entitled to totally
disregard the constitutions, statutes, records, and
judgments of other states. Clearly, the refusal of
some states to recognize and enforce the judgments
issued by other states would deny justice to those
who had taken their disputes to court. A judgment
debtor, the party ordered in the judgment to pay
money to the winner of the lawsuit (thejudgment
creditor), could flee to a state that refuses to recognize and enforce judgments from the issuing
state, undermining public confidence in the law.
The authors of the U.S. Constitution anticipated this problem and addressed it in Article IV,

Section 1, which provides thatfull faith and

credit shall be given in each state to the public
acts, records, and judicial proceedings of every other
state.Thus the Constitution requires the states to
cooperate with each other and binds them together
into one nation. As final judgments of each state are
enforceable in every other state, irrespective of differences in substantive law and public policy,
the
full-faith-and-credit requirement also helps to
preserve the legal differences that exist from state
to state. There are some exceptions to the fullfaith-and-credit requirement. For example, the
requirement does not apply if the judgmentissuing court lacked jurisdiction over the subject
matter or person or if the judgment was fraudulently obtained.
Another important benefit of the full-faithand-credit requirement is that it puts teeth into
the doctrine of res judicata. Once a valid judgment
has been rendered on the merits in one jurisdiction, the claims adjudicated in that lawsuit cannot
be relitigated by the same parties in some other
jurisdiction.
A state can justifiably refuse to grant full faith
and credit to another states judgment under limited
circumstances: for example, when the issuing court
has failed to follow the mandates of the U.S. Constitution regarding due process of law. Full faith
and
credit can be denied when the issuing court did
not have minimum contacts with the person of
the judgment debtor, or when the judicial proceedings denied the judgment debtor the
constitutionally required elements of notice and an opportunity
for a hearing.
Article IV, Section 1 of the U.S. Constitution
only requires that the states provide full faith and
credit to other states. The federal Full Faith and
Credit Act (28 U.S.C. Section 1738), however,
also requires all federal courts to afford full faith
and credit to state court judgments.
INTERNET TIP
You can read the excerpt from the federal Full Faith and
Credit Act (28 U.S.C. Section 1738)), online at the textbooks website.
Although a properly authenticated judgment
of an issuing state is presumptively valid and binding in all other states, it is not selfimplementing. A judgment creditor who has to go to some other

state to enforce a judgment will have to begin an

action against the judgment debtor in the nonissuing state. Normally, the courts of the
nonissuing state will then have to enforce the foreign judgment in the same manner as they
would one of their own judgments, even if enforcing the judgment would contravene the
enforcing states public policy. This was the problem presented in the
following case, in which three same-sex adoptive
couples sought to overturn an Oklahoma statute
that denied them recognition as the adoptive parents of their children. The parents ofE.D.sued
to obtain a supplemental birth certificate, claiming
that Oklahoma was obligated under the Full Faith
and Credit Clause of the Constitution to recognize
the judgment of adoption rendered by a California
court.

Finstuen v. Crutcher
496 F.3d 1139
United States Court of Appeals, Tenth Circuit
August 3, 2007

Ebel, Circuit Judge.

Defendant-Appellant Dr. Mike Crutcher, sued in his
official capacity as the Commissioner of Health (hereinafter referred to asOklahoma State
Department of
Health (OSDH)) appeals a district court judgment
that a state law barring recognition of adoptions by
same-sex couples already finalized in another state is
unconstitutional. OSDH also appeals the district courts
order requiring it to issue a revised birth certificate for
E.D., a Plaintiff-Appellee who was born in Oklahoma
but adopted in California by a same-sex couple.
I
Three same-sex couples and their adopted children
have challenged the following amendment to
Oklahomas statute governing the recognition of
parent-child relationships that are created by
out-of-state adoptions.
7502-1.4. Foreign adoptions
A. The courts of this state shall recognize a

decree, judgment, or final order creating the relationship of parent and child by adoption, issued
by a court
or other governmental authority with appropriate
jurisdiction in a foreign country or in another state or
territory of the United States. The rights and obligations of the parties as to matters within the
jurisdiction of this state shall be determined as though the decree,
judgment, or final order were issued by a court of this
state. Except that, this state, any of its agencies, or any
court of this state shall not recognize an adoption by
more than one individual of the same sex from any
other state or foreign jurisdiction.
Okla. Stat. tit. 10, 7502-1.4(A) (theadoption
amendment).
Each of the three families has a different set of
circumstances. Mr. Greg Hampel and Mr. Ed Swaya are
residents of Washington, where they jointly adopted
child V in 2002. V was born in Oklahoma, andthe men
agreed to bring V to Oklahoma to visit her mother
from time to time.However, they do nothave
any ongoing interactions with the state of Oklahoma.
After Vs adoption, Mr. Hampel and Mr. Swaya
requested that OSDH issue a new birth certificate for
V. OSDH did sobut named only Mr. Hampel as Vs
parent. Mr. Hampel and Mr. Swaya contested that
action, prompting OSDH to seek an opinion from the
Oklahoma attorney general. The attorney general
opined that the U.S. Constitutions Full Faith and Credit
Clause required Oklahoma to recognize any validly
issued out-of-state adoption decree. OSDH subsequently issued V a new birth certificate
naming both
men as parents. The state legislature responded one
month later by enacting the adoption amendment.
Lucy Doel and Jennifer Doel live with their
adopted child E in Oklahoma. E was born in Oklahoma.
Lucy Doel adopted E in California in January 2002.
Jennifer Doel adopted E in California six months later.
OSDH issued E a supplemental birth certificate naming
only Lucy Doel as her mother. The Doels have requested
a revised birth certificate from OSDH that would
acknowledge Jennifer Doel as Es parent, but OSDH

denied the request.

Anne Magro and Heather Finstuen reside in
Oklahoma with their two children. Ms. Magro gave birth
to S and K in New Jersey in 1998. In 2000, Ms. Finstuen
adopted S and K in New Jersey as a second parent, and
New Jersey subsequently issued new birth certificates for
S and K naming both women as their parents.
These three families brought suit against the state
of Oklahoma seeking to enjoin enforcement of the
adoption amendment, naming the governor, attorney
general and commissioner of health in their official
capacities. The Doels also requested a revised birth
certificate naming both Lucy Doel and Jennifer Doel as
Es parents.
On cross-motions for summary judgment, the district court found that Mr. Hampel, Mr. Swaya
and their
child V lacked standing to bring the action. However, the district court granted summary
judgment for the
remaining plaintiffs, determining that they had standing and that the Oklahoma adoption
amendment violated the Constitutions Full Faith and Credit, Equal
Protection and Due Process Clauses. The court
enjoined enforcement of the amendment, and ordered
that a new birth certificate be issued for E.D.
OSDH appeals from the district courts conclusion
that the Doels and the Finstuen-Magro family have
standing and its ruling that the adoption amendment
is unconstitutional. The Oklahoma governor and
attorney general did not appeal. In addition,
Mr. Hampel, Mr. Swaya and their child V timely appeal
from the denial of standing, and reassert their claim
that the Oklahoma amendment violates their constitutional right to travel.
II
A. Jurisdiction
[The courts expansive discussion of standing, a topic
examined in Chapter VI of this text, is omitted. The
Court concluded that it could not decide the case
brought by Hampel and Swaya (child V), primarily
because this family had minimal connections with
Oklahoma, and didnot establish the circumstances in
which the non-recognition of the adoption would
arise,and therefore lacked standing to sue. The court

also found that Finstuen and Magro lacked standing.

Magro was the childrens birth mother and not an
adoptive parent, and Finstuen, who was an adoptive
mother, could point tono encounter with any public
or private official in which her authority as a parent
was questioned.The court ruled that Lucy Doel and
Jennifer Doel, the adoptive parents of child E.D., did
have standing to maintain their suit.]
B. Full Faith and Credit Clause
Having established jurisdiction, we proceed to consider
the merits of OSDHs appeal. The district court concluded that the adoption amendment was
unconstitutional because the Full Faith and Credit Clause requires
Oklahoma to recognize adoptionsincluding same-sex
couplesadoptionsthat are validly decreed in other
states. We affirm, because there isno roving `public
policy exceptionto the full faith and credit due judgments and OSDH presents no relevant
legal argument as to why the Doelsout-of-state adoption
judgments should not be recognized under the Full
Faith and Credit Clause.
The Constitution states thatFull Faith and Credit
shall be given in each State to the public Acts, Records,
and judicial Proceedings of every other State.U.S.
Const. art. 4, 1. The Supreme Court has often
explained the purpose and policies behind the Full
Faith and Credit Clause.
The very purpose of the Full Faith and Credit
Clause was to alter the status of the several states as
independent foreign sovereignties, each free to ignore
obligations created under the laws or by the judicial
proceedings of the others, and to make them integral
parts of a single nation throughout which a remedy
upon a just obligation might be demanded as of right,
irrespective of the state of its origin.
The Clause is designedto preserve rights
acquired or confirmed under the public acts and judicial proceedings of one state by requiring
recognition
of their validity in other states.The Clauseis one
of the provisions incorporated into the Constitution by
its framers for the purpose of transforming an aggregation of independent, sovereign States into
a nation.
If in its application local policy must at times be

required to give way, such is part of the price of our

federal system. To vest the power of determining
the extraterritorial effect of a States own laws and
judgments in the State itself risks the very kind of
parochial entrenchment on the interests of other
States that it was the purpose of the Full Faith and
Credit Clause and other provisions of Art. IV of the
Constitution to prevent.
In applying the Full Faith and Credit Clause, the
Supreme Court has drawn a distinction between statutes and judgments. Specifically, the
Court has been
clear that although the Full Faith and Credit Clause
applies unequivocally to the judgmentsof sister
states, it applies with less force to their statutory
laws. Nevada v. Hall, 440 U.S. 410(1979).
However, with respect to final judgments entered in a
sister state, it is clear there is nopublic policy
exception to the Full Faith and Credit Clause:
Regarding judgmentsthe full faith and credit
obligation is exacting. A final judgment in one State, if
rendered by a court with adjudicatory authority over
the subject matter and persons governed by the judgment, qualifies for recognition throughout
the land.
For claim and issue preclusion (res judicata) purposes,
in other words, the judgment of the rendering State
gains nationwide force.
In numerous cases th[e] [Supreme] Court has held
that credit must be given to the judgment of another
state although the forum would not be required to
entertain the suit on which the judgment was
founded; that considerations of policy of the forum
which would defeat a suit upon the original cause of
action are not involved in a suit upon the judgment
and are insufficient to defeat it.
OSDH stops short of arguing that the Full Faith
and Credit Clause permits states to invoke apolicy exception,but contends that requiring
Oklahoma to
recognize an out-of-state adoption judgment would
be tantamount to giving the sister state control over
the effect of its judgment in Oklahoma.
Full faith and creditdoes not mean that States

must adopt the practices of other States regarding the

time, manner, and mechanisms for enforcing judgments. Enforcement measures do not travel
with the
sister state judgment as preclusive effects do; such
measures remain subject to the even-handed control of
forum law.
A California court made the decision, in its own
state and under its own laws, as to whether Jennifer
Doel could adopt child E. That decision is final. If Oklahoma had no statute providing for the
issuance of
supplementary birth certificates for adopted children,
the Doels could not invoke the Full Faith and Credit
Clause in asking Oklahoma for a new birth certificate.
However, Oklahoma has such a statutei.e., it
already has the necessarymechanism[] for enforcing
[adoption] judgments.The Doels merely ask
Oklahoma to apply its own law toenforcetheir
adoption order in aneven-handedmanner.
Oklahoma continues to exercise authority over
the manner in which adoptive relationships should be
enforced in Oklahoma and the rights and obligations
in Oklahoma flowing from an adoptive relationship.
And Oklahoma has spoken on that subject:
After the final decree of adoption is entered, the
relation of parent and child and all the rights, duties,
and other legal consequences of the natural relation of
child and parent shall thereafter exist between the
adopted child and the adoptive parents of the child
and the kindred of the adoptive parents. From the
date of the final decree of adoption, the child shall be
entitled to inherit real and personal property from and
through the adoptive parents in accordance with the
statutes of descent and distribution. The adoptive parents shall be entitled to inherit real and
personal
property from and through the child in accordance
with said statutes.
After a final decree of adoption is entered, the
biological parents of the adopted child, unless they are
the adoptive parents or the spouse of an adoptive
parent, shall be relieved of all parental responsibilities
for said child and shall have no rights over the adopted

child or to the property of the child by descent and

distribution. By way of illustration, the right of a
parent in Oklahoma to authorize medical treatment
for her minor childextendsto adoptive parents
as well. Whatever rights may be afforded to the Doels
based on their status as parent and child, those rights
flow from an application of Oklahoma law, not
California law.
The rights that the Doels seek to enforce in
Oklahoma are Oklahoma rights.
We hold today that final adoption orders and
decrees are judgments that are entitled to recognition
by all other states under the Full Faith and Credit
Clause. Therefore, Oklahomas adoption amendment is
unconstitutional in its refusal to recognize final adoption orders of other states that permit
adoption by
same-sex couples. Because we affirm the district court
on this basis, we do not reach the issues of whether the
adoption amendment infringes on the Due Process or
Equal Protection Clauses.
We reverse the district courts order in this matter
to the extent it held that the Magro-Finstuen plaintiffs
had standing and directed OSDH to issue new birth
certificates for the Magro-Finstuen plaintiffs. The order
and judgment of the district court in all other respects
is affirmed.
Case Questions
1. Why did the authors of the Constitution create the Full Faith and Credit Clause?
2. Why did Oklahoma refuse to recognize the California judgment?

CHAPTER SUMMARY
In this chapter readers have learned that federal and
state constitutions, statutes, judicial opinions, and
administrative rules constitute the primary sources
of American law. Summary explanations were provided as to how each primary source
contributes to

the making of American law.

The importance of the federal and state constitutions as the fundamental sources of the rule of
law
was emphasized. Because of the federal constitution, Congresss right to legislate is confined,
and because it is limited, the state legislatures, as sovereigns, retained the constitutional right to
pass laws pursuant to the police power. But where state laws
directly conflict with a constitutionally enacted
federal statute, the federal law is supreme.
There was a major emphasis in this chapter on
judicial decision making and the important role of
the doctrine of stare decisis. Laws can vary from
state to state both procedurally and substantively.
Federal and state laws also can differ. States, for
example, can elect to provide a higher level of procedural protections than is required either
under the
U.S. Constitution or by federal statute. Last, we
have seen that state choice-of-law rules provide
methods for ensuring cooperation between states
and that the Full Faith and Credit Clause of the
U.S. Constitution helps to preserve differences
between the states.
CHAPTER QUESTIONS
1. Elizabeth Fedorczyk slipped and fell in a bathtub in her cabin on board the M/V Sovereign, a
cruise ship sailing in navigable waters. She
brought a negligence suit against the ships
owners and operators in a state court in New
Jersey. The defendants removed the case to the
U.S. District Court for the District of New
Jersey on the basis of diversity jurisdiction.
Neither party addressed the admiralty issue in
their pleadings. The trial court entered summary judgment in favor of the defendants.
The plaintiffs appealed to the U.S. Court of
Appeals. The appeals court, in order to rule on
the appeal, had to determine whether it should
apply admiralty law to this dispute or follow
instead the substantive law of the state of New
Jersey. Which option should the Court of
Appeals choose, and why?
Fedorczyk v. Caribbean Cruise Lines, LTD, No. 95-54622,
U.S. Court of Appeals (3rd Circuit 1996)
2. Sludge, Inc., entered into a contract with

XYZ, Inc., whereby Sludge was to build a

building for XYZ in Detroit, Michigan, at the
price of $1 million. Sludge was incorporated in
Ohio; its principal place of business was in
Chicago, Illinois. XYZ is a Delaware corporation with its home office in New York. The
contract was negotiated primarily in Chicago
but became effective when it was signed at
XYZs home office. There was a dispute concerning the agreement, and XYZ sued Sludge
in a federal district court in Ohio. Which state
law would govern the dispute if the court
follows (1) the lex fori approach, (2) the lex loci
contractus approach, or (3) the lex loci solutionis
approach?
3. Lorretta Klump, at the time a resident of Illinois, was injured in an automobile collision in
which her vehicle was struck by a vehicle
driven by Curt Eaves, also an Illinois resident.
This incident occurred in Illinois. After the
accident, Lorretta moved to North Carolina,
where she retained a local attorney, J. David
Duffus Jr., to represent her in a lawsuit she
wanted to file in Illinois against Mr. Eaves. She
subsequently moved back to Illinois, where she
maintained regular contact with Attorney
Duffus. Lorrettas doctor and her insurance
carrier were both situated in Illinois. She filed a
malpractice suit against Duffus when he failed
to file her Illinois suit prior to the lapsing of the
Illinois statute of limitations. The jury awarded
a judgment in plaintiffs favor in the amount of
$424,000. The defendants appealed on the
grounds that the trial court did not have jurisdiction over them personally because his
allegedly negligent acts occurred in North
Carolina. Duffus maintained that, he could not
be subject to personal jurisdiction in Illinois.
Is Duffus correct? Why or why not?
Klump v. Duffus, Jr., No. 90-C-3772, U.S. Court of Appeals
(7th Circuit 1995)
4. Evian Waters of France, Inc., a New York
corporation, was an importer of natural spring
water from France. Evian contracted in 1987
with Valley Juice Limited, of Boston,

Massachusetts, to become Evians exclusive

New England distributor. Valley came to
believe that Evian was violating its exclusivity
rights in New England and alleged breach of
contract and other claims in a suit it filed in
Massachusetts state court. Evian, believing that
Valley had not paid it for contract water it had
delivered, filed suit in Connecticut. Both
suits were removed to federal court on the basis
of diversity jurisdiction, and the two suits were
consolidated in the U.S. District Court for the
District of Connecticut. The case was tried to a
jury, which found in favor of Evian. Valley
appealed to the U.S. Court of Appeals for the
Second Circuit. Before reviewing the appellants claims, the appeals court had to determine
what states law applied when two suits,
which were initially filed in different states,
were consolidated for trial, as in this case. Evian
argued that a provision in its agreement with
Valley provided that New York law should
apply. Valley contended that if the stateslaws
conflict, Massachusetts law should apply. How
should the court of appeals resolve this dispute?
Valley Juice Ltd., Inc. v. Evian Waters of France, Inc., Nos.
94-7813, 94-7817, 95-7709, U.S. Court ofAppeals (2nd
Circuit 1996)
5. On May 20, Arnie Walterss car crashed into a
train owned and operated by the Regional
Transit Authority at its crossing in Smithville.
As a matter of law, the court found that the
Smithville crossing is extremely hazardous.
On December 1 of that same year, Ole and
Anna Hanson ran into an RTA train at the
same crossing while George was driving them
home from a party. Does the doctrine of stare
decisis require that the court in Hanson accept
the conclusion announced in the Walters case?
6. While en route to jury duty, Evans sustained a
personal injury as a result of carelessness on the
part of the county commissioners in permitting

the concrete steps at the El Paso, Colorado,

county courthouse to deteriorate. The lower
court dismissed the complaint under the doctrine of governmental immunity. On appeal,
the Supreme Court of Colorado, in its opinion
dated March 22, 1971, decided to abolish
governmental immunity for that state. The
court stated,Except as to the parties in this
proceeding the ruling here shall be prospective
only and shall be effective only as to causes of
action arising after June 30, 1972.Why might
a court make its decision effective as a precedent some fifteen months after the date of its
decision?
Evans v. Board of County Commissioners, 174 Colo. 97, 482
P.2d 968 (1971)
7. P. Whitney, a West Virginia contractor, was
under contract with the state of West Virginia
to construct State Route 2 near East Steubenville, just across the border from Steubenville,
Ohio. Because the area was very hilly, Whitney
used high explosives, such as dynamite and
nitroglycerin, to clear the way for the road.
One particularly large blast damaged a storeroom of the Steubenville Plate and Window
Glass Company, located across the border in
Ohio. The damage was extensive, and most of
the stored glass was broken and rendered
unusable. Keeping in mind that the blasting
was done in West Virginia and the damage
occurred in Ohio, which states law will govern
the action brought in a West Virginia court by
Steubenville Plate Glass against Whitney?
Dallas v. Whitney, 118 W. Va. 106 (1936)

The Judicial System

CHAPTER OBJECTIVES
1. Understand the basic underlying common law heritage from England.

2. Describe how the federal and state court systems are organized.
3. Identify the functions of the trial and appellate courts.
4. Summarize the procedural differences between cases tried to juries and cases tried to
judges.
5. Summarize the fundamental requirements for jurisdiction and venue in the federal and
state judicial systems.
6. Describe when cases can be removed from state court to federal court.
7. Understand the policy reason underlying the Erie doctrine.

COURTS
A court is a governmental body that is empowered to resolve disputes according
to law. Courts are reactive institutions. They do not undertake to adjudicate disputes on their
own initiative and can only act when someone files suit.
Courts are created in accordance with constitutional provisions and legislative
acts. The legislative branch of the government usually has the right to establish and
change courts, to regulate many of their procedures, and to limit their jurisdiction.
In the United States, we have a separate judicial system for each of the states,
and yet another for the federal government. These systems vary in size and complexity,
although they usually have hierarchical structures. Since federal and state

judicial systems function simultaneously throughout the nation, conflicts can arise with respect
to
jurisdictional issues, substantive law, supremacy,
and the finality of decisions.

Trial Courts
Courts are classified by function: there are trial
courts and appellate courts. A trial court hears and
decides controversies by determining facts and
applying appropriate rules. The opposing parties
to a dispute establish their positions by introducing
evidence of the facts and by presenting arguments
on the law.
The right of a trial by jury provides litigants
with a choice of trying the case to a single judge
or to a jury of peers. When a case is litigated before

a judge instead of a jury, it is called a bench trial.

The judge controls the entire trial and determines
the outcome. In a jury trial, the decision-making
functions are divided between the judge and the
jury, which provides a safeguard of checks and balances. The judge rules on the admissibility of
evidence, decides questions of law, and instructs the
jury. The jury listens to the testimony, evaluates
the evidence, and decides what facts have been
proven. In many instances, the testimony of witnesses is contradictory. In such cases, the jury
can
determine the facts only after deciding which witnesses should be believed. It then applies the
law to
those facts in accordance with the judges instructions. The judge supervises the entire process.
This
includes ruling on pretrial motions, supervising discovery, and conducting the trial, matters that
are
addressed in Chapter V.
When the jurys verdict is submitted, the jury
decides who wins and what the recovery will be.
Over half of the states permit a less-than-unanimous
verdict in civil cases. The usual requirement in such
states is five jurors in agreement out of six. Unless the
parties stipulate otherwise, the rule in federal civil
trials is that the jury verdict must be unanimous.
The three types of verdicts in civil cases are a general
verdict, a special verdict, and a combination of the
general and special verdicts, which is called a hybrid
verdict. Where the jury returns with a general verdict
it indicates whether it finds for the plaintiff or for the
defendant.
Where the law authorizes the jury to return
with a special verdict, the jury answers specific
questions related to the most important factual
issues in the case. For example:
We the juryfind the following special
verdict on the issues submitted to us:
Issue 1: Was the defendant negligent?
(Answeryesorno.)
Answer: _______
If you answeredyesas to
Issue 1, then answer Issue 2.

Issue 2: Was the negligence of the

defendant a proximate cause
of the plaintiffs injury?
(Answeryesorno.)
Answer ________
If you answeredyesas to
Issue 2, then answer Issue 3.
Issue 3 etc.
A special verdict is used to focus the jurys
attention on the evidence and the factual disputes
in the case. It discourages jurors from determining
the cases outcome by deciding which party they
would like to see win the lawsuit. When the jury
returns a special verdict, the judge applies the law to
the jurys answers and reaches a final judgment.
It is often said that questions of fact are for the
jury and questions of law are for the judge. A factual
issue is presented when reasonable people could
arrive at different conclusions in deciding what happened in an actual event. When an inference
is so
certain that all reasonable people must draw the
same conclusion, it becomes a question of law for
the judge. It is often difficult to make a distinction
between questions of fact and questions of law.
There is no need for a trial (either to a jury or
to the court) unless there is a factual dispute
between the parties. If the parties agree about the facts, but disagree about the law, the judge
can
determine the applicable law and dispose of the
case by motion for summary judgment.
A jury was traditionally composed of twelve
people. Today, many jurisdictions have authorized
six-person juries. Jurors are chosen from the community, and their qualifications are reviewed
before
they are accepted and seated. At trial, they make
their decision in the privacy of the jury room.
Although federal and state constitutions guarantee the right to a trial by jury, there is some
dispute
about the effectiveness of the jury system. Jury trials
take more time to conduct than bench trials and
contribute to the congestion of court dockets. Jury

trials also are expensive. Because jurors do not know

how to evaluate evidence, rules of evidence and trial
procedures have been developed so that they are
exposed only to competent evidence and permissible argument. In a bench trial, many of these
procedures and rules can be eliminated or relaxed.
In addition, juries are known to be very unpredictable and sometimes arbitrary, and add
uncertainty to the adjudication process. Lawyers deal
with this uncertainty by attempting to discover jurorshidden tendencies, biases, and attitudes.
More
and more, trial attorneys employ jury research firms
in big cases to help them select the jury and prepare
and present their clientscases. Attorneys who try
such cases develop special skills and strategies to
sway juries that would be inappropriate to use in
a bench trial before an experienced judge.
One of the most important benefits of the jury
system is that it allows citizens to participate in the
legal process. A jury is supposed to represent a cross
section of the public, whereas a judge does not.
Despite the weaknesses of the jury system, it is
not likely that the right to a trial by jury will be
eliminated in the near future.
Appellate Courts
Appellate courts review the decisions of trial courts.
Usually, an appeal can only be taken from a lower
courts judgment. In the case of Du Pont v. Christopher
(a case you can read in the textbooks appendix),
however, readers learn that some jurisdictions permit
a limited interlocutory appeal to be made prior to a
trial in some circumstances. That is, appellate review
may be permitted to resolve a controlling question of
law before the case itself is actually decided. In a civil
action, any dissatisfied party generally may appeal to a
higher court. In criminal cases, the defendant usually
may appeal, but the prosecution generally may not.
The appellate court reviews the proceedings of
the trial court to determine whether the trial court
acted in accordance with the law, and whether the
appellant properly preserved the error. This means
that an attorney cannot observe error occurring in a
trial court and do nothing. The attorney must

inform the judge of the error and request specific

relief. Failure to object results in a waiver of the
right to raise the matter subsequently on appeal.
An appellate court bases its decision solely on
the theories argued and evidence presented in the
lower court. There are no witnesses or jurors at the
appellate level. The appellate court does not retry
the facts of the case, and no new arguments or proof
is permitted. The appellate court reaches its decision
by using only the record of the proceedings in the
lower court, the written briefs filed by both parties to
the appeal, and the partiesoral arguments given
before the appellate judges. The record of the proceedings in the lower court includes the
pleadings,
pretrial papers, depositions, and a transcript of the
trial proceedings and testimony.
STATE COURT SYSTEMS
The power to create courts is an attribute of every
sovereignty. The various states of the United States
have exercised this power either by constitutional
provisions or by statutory enactments. The power
to create courts includes the authority to organize
them, including the establishment of judgeships,
and to regulate their procedure and jurisdiction.
Although each of the states has developed its own unique structure, substantive law, rules, and
procedures, there is an underlying common law heritage. In our nations formative years
Americans were greatly influenced by English structures, procedures, and substantive law. Yet
from the earliest
days, the states modified or replaced both substantive
law and legal structures when necessary, and created
new ones. Each of the various states was independently charged with dispensing justice in its
courts.
Each system had the capacity to adapt, reform, and
experiment. From those early days down to the
present, the states have borrowed from each other
in order to improve the administration of justice.
Even though fifty-one judicial systems are available to resolve disputes, very few cases actually
go to
trial. Disputes are usually settled outside the courtroom on the basis of the lawyers predictions
of
what would happen if the case were tried. Litigation

is very expensive and time consuming, which

encourages litigants to settle cases without a trial.

JURISDICTION
Jurisdiction is the power or authority of a court
to determine the merits of a dispute and to grant
relief. A court has jurisdiction when it has this
power over the subject matter of the case (subjectmatter jurisdiction), and over the persons of
the
plaintiff and defendant (personalin personam
jurisdiction) or the property that is in dispute
(in rem jurisdiction). The court itself must determine whether it has jurisdiction over a
controversy
presented before it. This is true even if neither party
questions the courts jurisdiction. Once a court has
acquired jurisdiction, it keeps it throughout the case,
even if a party changes domicile or removes property
from the state. When more than one court has a basis
for jurisdiction, the first to exercise it has exclusive
jurisdiction until the case is concluded. Questions
about jurisdiction should be resolved before the court
concerns itself with other matters involved in the case.
The primary function of trial courts is to exercise original jurisdiction. This term refers to the
courts power to take note of a suit at its beginning,
try it, and pass judgment on the law and the facts
of the controversy. In many states, trial courts
also exercise appellate jurisdiction over decisions
of courts of limited subject-matter jurisdiction.
Some state judicial systems provide that appeals
from the decisions of trial courts go directly to the
states highest court (usually, but not always, called
the supreme court). Many states, however, usually
require review by an intermediate appellate court
(often called a court of appeals) before the matter
can be heard by the states highest court. The states
highest court reviews appeals of major questions
emanating from the lower state courts, and at the
state level, its decision is final. A typical example of
a state court system can be seen in Figure 4.1.

Subject-Matter Jurisdiction in State Court

Legislatures, in accordance with state constitutions,
have the right to allocate the workload throughout
the states judicial system. This means that the legislature usually enacts statutes that define
each
courts subject-matter jurisdiction (the types of controversies that can be litigated in that court).
The
parties to a lawsuit cannot by consent confer
subject-matter jurisdiction on a court.
Legislatures often create specialized trial courts,
including the land court, probate court (which handles
deceased personsestates), juvenile court, environmental court, and housing court, to exercise
original
subject-matter jurisdiction over particular types of
controversies. Subject-matter jurisdiction may also
be limited by the dollar amount involved in the controversy, as in small claims court, or by
territory, as in
municipal courts. All these courts would be possessed
of limited subject-matter jurisdiction.
Legislatures also create trial courts to exercise
original subject-matter jurisdiction over all other
controversies. These courts, which go by various
names such as the court of common pleas, district
court, superior court, circuit court, county court, or
evenin New York Statethe trial division of the
supreme court, are classified as courts of general or
residual jurisdiction.

Introduction to Cheap Escape Co., Inc. v. Haddox LLC

In the following case, the plaintiffappellant filed
suit in the Franklin County Municipal Court against the defendantappellee for breach of
contract and was awarded a default judgment when the
defendant failed to answer the plaintiffs complaint.
Approximately eleven months later, the defendant

filed a motion asking the municipal court to vacate

its own judgment, claiming that the court lacked
subject-matter jurisdiction to rule in the case. The
case was brought before the Ohio Supreme Court.
Notice how Judge Moyers opinion refers to an
Ohio court known as the Court of Common Pleas.
The first court bearing this name was established in
1178 by Englands King Henry II. Besides Ohio,
courts of common pleas also exist in Delaware,
Pennsylvania, and South Carolina. The Court of
Common Pleas in Ohio is a court with general
jurisdiction over civil and criminal matters.

Cheap Escape Co., Inc. v. Haddox, LLC

900 N.E.2d 601
Supreme Court of Ohio
December 11, 2008

Moyer, C. J.
I.
This appeal requires us to determine whether municipal courts have subject-matter jurisdiction
over matters
lacking connections to their geographical territories.
II.
Appellant, Cheap Escape Company, Inc., d.b.a.
JB Dollar Stretcher (Cheap Escape), produces a magazine that features business
advertisements. Haddox,
L.L.C., a construction firm located in Summit County,
entered into two contracts with Cheap Escape to run ads in this magazine; appellee, Jeffrey L.
Tessman,
signed both agreements as a guarantor. The contracts
provided that in the event either party is in noncompliance with any provision of this Agreement
the
proper venue for litigation purposes will be in the
Franklin County Municipal Court or Franklin County

Common Pleas. The parties agree that the events relevant to these transactions occurred
outside Franklin
County and that the only connection to that forum
arises from the forum-selection clauses in the contracts
between them.
After Haddox allegedly defaulted on the agreements, Cheap Escape filed a breach-of-contract
action
against Haddox and Tessman in the Franklin County
Municipal Court, seeking $1,984 in damages. Neither
defendant filed a responsive pleading, and the municipal court eventually entered default
judgment for
Cheap Escape. Nearly 11 months later, Tessman moved
to vacate the default judgment, arguing that the
municipal court lacked subject-matter jurisdiction
because none of the relevant events occurred in
Franklin County. The municipal court denied this
motion.
Tessman appealed. The court of appeals held
that the municipal court did not have subject-matter
jurisdiction over the case, regardless of the forumselection clause. The court of appeals
therefore
reversed the municipal courts decision and remanded
the case for dismissal.
III.
This case requires us to examine the limits of municipal
court jurisdiction. Unfortunately, jurisdiction is a vague
term. Several distinct concepts, including territorial
jurisdiction, monetary jurisdiction, personal jurisdiction, and subject-matter jurisdiction, must be
demonstrated for a municipal court to be able to hear a
specific case.
While the parties agree that the Franklin County
Municipal Court had territorial jurisdiction [because
the municipal court deciding the case was situated in
Columbus Ohio, which is geographically within Franklin County], monetary jurisdiction [because
the amount
in dispute was less than the $15,000 monetary statutory ceiling for breach of contract cases],
and personal
jurisdiction in this case, they disagree sharply on the
issue of municipal court subject-matter jurisdiction.
Subject-matter jurisdiction of a court connotes the
power to hear and decide a case upon its merits and

defines the competency of a court to render a valid

judgment in a particular action.Morrison v. Steiner
(1972).
Unlike courts of common pleas [which in Ohio is
the name given to what other states call the county
courts], which are created by the Ohio Constitution
and have statewide subject-matter jurisdiction,
municipal courts are statutorily created,and their
subject-matter jurisdiction is set by statute. R.C.
1901.18(A) provides the applicable law in this regard:
Except as otherwise provided in this division or
section 1901.181 of the Revised Code, subject to the
monetary jurisdiction of municipal courts as set
forth in section 1901.17 of the Revised Code, a
municipal court has original jurisdiction within its
territory in all of the following actions or
proceedings.The list of enumerated actions includes breach-of-contract cases, which is the
cause of
action here.
To resolve this case, we must specifically determine what the phrase original jurisdiction within
its
territory means. Appellant interprets the phrase to
mean that a municipal court has subject-matter jurisdiction over any statutorily prescribed
action, regardless of where the underlying events occurred.
Conversely, appellee argues that the phrase limits
subject-matter jurisdiction to those actions with a territorial connection to the court (e.g., the
relevant
events occurred within the territorial limits of the
court).
Appellant argues that the words within its territoryrefer tojurisdiction and not the various
types of actions listed in R.C. 1901.18(A)(1) through
(12). Under this reading, R.C. 1901.18(A) grants a
municipal court subject-matter jurisdiction to hear
one of those actions if the court convenes within its
geographical territory, regardless of whether the case
has a territorial connection to the forum. Thus,
appellant claims that the Franklin County Municipal
Court had jurisdiction over this case because it was
operating in Columbus, as required by R.C.
1901.02(A), even though the relevant events occurred
in Summit County.

Appellee argues that this approach renders the

phrase within its territory irrelevant and that R.C.
1901.18 should instead be read to give municipal
courts subject-matter jurisdiction only over events
having a territorial connection to the court. This interpretation requires us to read within its
territory as
referring to the types of actions that a municipal court
may hear.
After reviewing these arguments and the plain
text of R.C. 1901.18(A), we find the statute to be
ambiguous. It is simply unclear from the statutory
language whether the General Assembly intended to
limit municipal court subject-matter jurisdiction to territorial matters or to give municipal courts
subjectmatter jurisdiction over all matters suitable for municipal court review so long as the court
sits within its territory when it disposes of a dispute. Both interpretations are reasonable.
To resolve this ambiguity, we must rely on
additional methods of statutory interpretation.
Because R.C. 1901.18 is part of a complex series of
statutes related to jurisdiction, it is appropriate to
review the statutes in pari materia. Under this
canon of construction, we read all statutes relating
to the same general subject matter together and
interpret them in a reasonable manner thatgive[s]
proper force and effect to each and all of the
statutes.
As noted above, appellant argues that within its
territory means that a municipal court may hear any
of the actions enumerated in R.C. 1901.18(A)(1)
through (12) so long as it sits within its geographical
territory.
Thus, appellants interpretation would make the
phrase within its territory in R.C. 1901.18 mere surplusage. If the General Assembly had
intended to
merely repeat the provisions of these statutes, it could
have incorporated them by reference
However, the General Assembly chose to use the
unique phrase original jurisdiction within its territory in R.C. 1901.18, and we must afford those
words
some meaning. It is axiomatic in statutory construction that words are not inserted into an act
without
some purpose. Because within its territory does

not refer to the areas in which a municipal court may

sit, the only other logical way to read the phrase is as a
limit on the types of actions that a court may hear.
Thus, the phrase original jurisdiction within its territory in all of the following actions means that
a
municipal court may hear only those matters listed in
R.C. 1901.18(A)(1) through (12) that have a territorial
connection to the court.
This reading makes sense in view of R.C.
1901.20 [which] provides that municipal courts have
subject-matter jurisdiction in criminal matters only
when the crime was committed within its territory or
within the limits of its territory. R.C. 1901.20(A)(1)
and (B). We find no reason that the General Assembly
would have granted municipal courts statewide
subject-matter jurisdiction over civil matters but only
territorial subject-matter jurisdiction over criminal
matters. Further, the fact that the General Assembly
used the words within its territory in both sections
suggests that the phrase should carry the same meaning in both.
We therefore hold that R.C. 1901.18(A) limits
municipal court subject-matter jurisdiction to actions
or proceedings that have a territorial connection to
the court. Because the parties admittedly did not
have territorial connections to the Franklin County
Municipal Court, the court lacked subject-matter
jurisdiction in this matter. Although the parties
entered into contracts with what appear to be valid
forum-selection clauses, such clauses may be used
only to choose from among venues that have
subject-matter jurisdiction; litigants cannot vest a
court with subject-matter jurisdiction by
agreement.
Case Question
1. The parties to this case contractually agreed that in the event of a breach, suit could be
brought in either
the Franklin County Municipal Court or the Franklin County Court of Common Pleas. Why did
the Ohio Supreme Court conclude that this contractual term could not be enforced?

Jurisdiction over the Person

The establishment of personal jurisdiction is constitutionally required for a court to impose
binding
liability on a person.
Imagine what would happen in our country if
there were no jurisdictional limits on a state judicial
systems ability to exercise personal jurisdiction over
nonresidents. Every state would try to maximize its
power, and total chaos would result. It was for this
reason that jurisdictional rules were created: to
prevent courts from deciding the merits of a case
unless they have jurisdiction over the particular
parties to the suit.
In the 1860s there were two methods of establishing a basis for jurisdiction over a person (in
personam jurisdiction). The first involved showing that
the party had been served within the boundaries of
the state in which the lawsuit was filed (called the
forum state) with a summons originating from
within the forum state (see Figure 4.2).
The constitutionality of this method was
upheld by the U.S. Supreme Court in the 1990
case of Burnham v. Superior Court. The Court
rejected Burnhams argument that basing personal
jurisdiction on someones mere presence within the
forum state when served is unfair where minimum
contacts between the person and the forum state do
not exist. California, said the Court, was entitled to exercise personal jurisdiction over a
nonresident from New Jersey who voluntarily traveled to
California and was served with a California
summons while he was in San Francisco for the
weekend to visit his children.
1
The summons had
nothing to do with his actions within California.
2
A second traditional method of establishing
personal jurisdiction not involving the existence of

sufficient minimum contactswas based on consent. For example, a plaintiff implicitly consents
to
personal jurisdiction in a state when he or she files a
lawsuit with a clerk of court. Defendants also can
consent to personal jurisdiction in the following
circumstances:
1. The defendant makes a general appearance in a
case. If the defendant argues the substantive
facts of the case, he or she is implicitly consenting to personal jurisdiction. Thus, a defendant
wishing to challenge in personam
jurisdiction must notify the court that she or he
is making a special appearance for the limited
purpose of contesting jurisdiction.
2. A nonresident defendant allegedly commits a
tortious act within the forum state.
3. A nonresident drives a motor vehicle on the
roads of the forum state and becomes involved
in a collision. Under the laws of most states, the
motorist impliedly appoints an official of the
forum state to be his agent for receiving service
of the plaintiffs summons arising from the
accident.
Because nonresident defendants rarely consent
to being sued and can avoid being served within the
forum state by never going there, a new theory for
jurisdiction was necessary. To remedy this problem,
the U.S. Supreme Court developed itssufficient
minimum contactsrule.
The sufficiency of the defendants contacts
with the forum state is determined by looking at
the particular facts of each case. Sufficient minimum contacts, for example, exist in the state in
which the defendant is domiciled. A persons
domicile is the state in which the defendant has
established his or her permanent home and to
which the defendant returns after temporary absences. Factors such as where a person is
licensed
to drive, votes, and is employed are considered in
determining domicile.
The consequences of not establishing personal jurisdiction are significant. Assume, for
example, that a plaintiff has won a lawsuit and
been awarded a judgment (the court document

declaring the plaintiff the victor and specifying

the remedy) entitling the plaintiff (now called
the judgment creditor) to collect money damages
from the defendant (now called the judgment
debtor) and the judgment debtor fails to pay. If
the trial court had proper personal jurisdiction
over the defendant, the judgment creditor would
be entitled to take the judgment to any state in
which the judgment debtor owns property and
there have it enforced. If the court issuing the
judgment lacked in personam jurisdiction over
the defendant, however, that judgment would be
unenforceable.
Long-Arm Statutes
Every state has enacted what are called long-arm
statutes (see Figure 4.3 below) that permit the
exercise of personal jurisdiction over nonresident
defendants who have had sufficient minimum contacts with the forum state. A long-arm statute
allows the plaintiff to serve the forum states
summons on the defendant in some other state.
When a plaintiff successfully uses the long-arm
statute, the defendant can be required to return to
the forum state and defend the lawsuit. If the defendant fails to do so, he or she risks the entry
of a
default judgment.
Introduction to Swoboda v. Hero Decks
The parties in Swoboda v. Hero Decks disagreed
about whether in personam jurisdiction existed
over the defendant, Parody Productions. Parody,
an Ohio company, offered playing cards for sale
on its Internet website. Parody had no connections with Louisiana other than the operation of a

454.210. Personal jurisdiction of courts over nonresidentProcess, how servedVenue

(1) As used in this section, person includes an individual, his executor, administrator, or other
personal
representative, or a corporation, partnership, association, or any other legal or commercial
entity, who is a
nonresident of this Commonwealth.

(2) (a) A court may exercise personal jurisdiction over a person who acts directly or by an agent,
as to a claim arising
from the persons:
1. Transacting any business in this Commonwealth;
2. Contracting to supply services or goods in this Commonwealth;
3. Causing tortious injury by an act or omission in this Commonwealth;
4. Causing tortious injury in this Commonwealth by an act or omission outside this
Commonwealth if he
regularly does or solicits business, or engages in any other persistent course of conduct, or
derives
substantial revenue from goods used or consumed or services rendered in this Commonwealth,
provided
that the tortious injury occurring in this Commonwealth arises out of the doing or soliciting of
business or a
persistent course of conduct or derivation of substantial revenue within the Commonwealth;
5. Causing injury in this Commonwealth to any person by breach of warranty expressly or
impliedly made in
the sale of goods outside this Commonwealth when the seller knew such person would use,
consume, or be
affected by, the goods in this Commonwealth, if he also regularly does or solicits business, or
engages in
any other persistent course of conduct, or derives substantial revenue from goods used or
consumed or
services rendered in this Commonwealth;
6. Having an interest in, using, or possessing real property in this Commonwealth, providing the
claim arises
from the interest in, use of, or possession of the real property, provided, however, that such in
personam
jurisdiction shall not be imposed on a nonresident who did not himself voluntarily institute the
relationship,
and did not knowingly perform, or fail to perform, the act or acts upon which jurisdiction is
predicated;
7. Contracting to insure any person, property, or risk located within this Commonwealth at the
time of
contracting;

(3) (a) When personal jurisdiction is authorized by this section, service of process may be made
on such
person, or any agent of such person, in any county in this Commonwealth, where he may be
found, or on the

Secretary of State who, for this purpose, shall be deemed to be the statutory agent of such
person;

(4) When the exercise of personal jurisdiction is authorized by this section, any action or suit
may be brought in
the county wherein the plaintiff resides or where the cause of action or any part thereof arose.
(5) A court of this Commonwealth may exercise jurisdiction on any other basis authorized in the
Kentucky
Revised Statutes or by the Rules of Civil Procedure, notwithstanding this section.

website from which residents of any state could

interactivelypurchase its products. The cards in
question in this lawsuit included images of baseball players (one of whom was the plaintiff,
Ronald Swoboda, a former member of the New
York Mets Baseball Team). Swoboda claimed
that Parody had used his likeness without his permission and filed suit in Louisiana. Swobodas
legal position in the trial court was that his attorneys online purchase from Parody of cards that
contained Swobodas likeness was enough of a
connection between Louisiana and Parody to satisfy the minimum contacts requirements of the
Due Process Clause. The trial court disagreed
and ruled that the court lacked personal jurisdiction to decide the merits of the case. Swoboda
then appealed the trial courts decision to the
Louisiana intermediate court of appeals.

Ronald A. Swoboda v. Hero Decks, A Division of Parody Productions, LLC

36 So.3d 994
Court of Appeal of Louisiana, Fourth Circuit
March 31, 2010
Roland L. Belsome, Judge.
This Court is presented with the question of whether
an internet merchandiser has established sufficient
minimum contacts with Louisiana to be subjected to
personal jurisdiction. For the following reasons, we
affirm the trial courts finding that personal jurisdiction cannot be extended.
Parody Productions, LLC is a company that publishes novelty playing cards, which are sold over
the
internet. The product at issue for this appeal is referred

to as the Hero Decks line which portrays well known

players from a sports teams history. One such deck includes fifty-two (52) past and present
players from the
New York Mets baseball team. The plaintiff in this suit,
Ronald Swoboda, is included in the New York Mets
Hero Deck.
Mr. Swoboda claims that he has never given
Parody permission to use his image. He further contends that through his attorney he sent
Parody a cease
and desist letter. Parody refused to stop selling cards
featuring Mr. Swobodas name and likeness. In
response, Mr. Swoboda filed the instant lawsuit to
enjoin Parody from the continued use of his name and
likeness and for damages for violating his right to
publicity, and, alternatively, damages for unjust
enrichment. Subsequently, Parody filed exceptions of
lack of personal jurisdiction. The trial court sustained
the exception [or objection] of lack of personal
jurisdiction and this appeal followed.
The party that seeks to invoke personal jurisdiction bears the burden of establishing such
jurisdiction exists. This burden is satisfied upon a prima facie
[legally adequate] showing that jurisdiction is
appropriate.
Our authority to exercise jurisdiction over a nonresident defendant is granted under the
Louisiana
Long-arm Statute.This authority is limited by
the due process requirements of the Fourteenth
Amendment. The due process test was first established by the United States Supreme Court
in International Shoe Co. v. Washington, 326 U.S. 310
(1945). Two prongs of the due process test must be
satisfied before personal jurisdiction can be exercised. First, the non-resident defendant must
have
minimum contactswith the forum state; and secondly, the exercise of personal jurisdiction in
the
forum state must not violate the basic notions of
fair play and substantial justice.When applying the
test the quality and nature of the activity must be
considered.
Mr. Swoboda argues that because Parody
maintains an interactive website that has allowed
Louisiana residents to purchase the cards, jurisdiction is warranted.

In order for a plaintiff to satisfy its burden of

proving minimum contacts with the forum state, there
must be a showing that the defendant purposefully
availed itself of the laws and protections of the forum
state
In general, questions of personal jurisdiction are
factual determinations that must be weighed on a case
by case basis. There are no clear-cut rules or a set
jurisdictional formula that can be applied in determining whether personal jurisdiction conforms
with the
notion of fair play and substantial justice. To the
contrary, any inquiry into fair play and substantial
justice necessarily requires determinations in which
few answers will be written in black and white.
The greys are dominant and even among them the
shades are innumerable. As relevant as that statement was at the time it was written, the
world wide
use of the internet has expanded the grey areas of
personal jurisdiction.
The Zippo court employed a sliding scale
approach to determine whether a website has minimum contacts with a forum state sufficient to
invoke
personal jurisdiction. Zippo Mfg. Co. v. Zippo Dot
Com, Inc. The sliding scale categorizes the websites activities as passive or interactive.
Passive
websites disseminate information and do not provide the minimum contacts that warrant the
exercise
of personal jurisdiction. On the other side of the
scale is the interactive website where business is
clearly done through the website. Those websites
typically have repeated contacts and transmissions
and may also allow participants to enter into contracts. Under those circumstances personal
jurisdiction is warranted. However, when a website falls
somewhere in the midrange of the scale and
information is exchanged between the host and
user, but not on an ongoing basis, the court must
look to the extent of the interactivity and commercial nature of the exchange of information to
determine whether personal jurisdiction should be
exercised.
For instance, in Quality Design & Constr. v. Tuff

Coat Mfg., Inc., and later in Crummey v. Morgan, .

the Louisiana First Circuit Court of Appeal utilized the
Zippo sliding scale approach as a guide for determining personal jurisdiction. In both cases the
cause of
action arose from an allegedly defective product purchased by a Louisiana citizen.
Tuff Coat manufactured a polyurethane coating
for cement. Tuff Coats product, Ultra Tuff, was
used in a Louisiana water park. The pigment from
the Ultra Tuff leaked and damaged the water purification system. The construction company
filed suit
against Tuff Coat and Tuff Coat excepted on the
grounds of personal jurisdiction. Tuff Coat operated a website that provided a telephone
number for
ordering the products and a list of other Louisiana
businesses that had used the products. Tuff Coat
argued that their website was purely informational
and thus, passive. The First Circuit, using the Zippo
sliding scale, found that Tuff Coats website was passive and even though Tuff Coats products
had been
purchased by at least five Louisiana businesses, there
was no purposeful availment of Louisianas law such
that it could expect to be hailed into a Louisiana
court.
The Crummey court was presented with a defendant that used a third-party website to advertise
and sell a recreational vehicle. The defendants and
the vehicle were located in Texas. The record indicated that Crummey found the vehicle
online, had
communicated with the seller over the telephone, and
used telephone contact to place a deposit on the
vehicle with a credit card. The defendants offered to
deliver the vehicle to Louisiana, but Mr. Crummey
chose to travel to Texas to pick it up. The transfer of
ownership took place in Texas and Mr. Crummey
took possession of the vehicle and began his drive back
to Louisiana. Prior to crossing the TexasLouisiana
border, the vehicle stopped running. The defendants
refused to submit a full refund for the vehicle
and Mr. Crummey filed suit in Louisiana. The defendants filed an exception of lack of personal
jurisdiction.
Using the Zippo sliding scale and distinguishing
the Tuff Coat decision, the First Circuit found that

there were appropriate minimum contacts to exercise

personal jurisdiction. The Crummey court found
that the repeated contact the defendant had with
Louisiana beginning with the advertising of the vehicle over the internet, then the negotiations
and the
tender of money over the telephone supported its
finding that the defendants had purposefully
availed themselves to the laws and protections of
Louisiana. The court also noted that the defendants
had delivered two other vehicles to buyers in Louisiana. In dicta the court raised its concern for
online
buyers who would have no recourse in their home
state against sellers who misrepresent products and/
or sell defective products.
Although the Zippo sliding scale is a useful guide
when examining the extent to which websites are
present in a forum state, it does not eliminate the
necessity of this Court to independently review the
relationship among the forum, the defendant, and the
litigation when determining personal jurisdiction. As
an internet merchandiser, Parody sells playing cards on
an interactive website that would fall midrange on the
Zippo sliding scale. The record indicates that the playing cards can be purchased directly from
the site. Other
than the ability of Louisiana residents to access the
website and purchase the merchandise, the record is
void of any other contact Parody had with Louisiana.
Once Parody refused to stop using Mr. Swobodas likeness, his attorney purchased a deck of
the Mets
playing cards over the internet shortly before filing suit
against Parody.
The pivotal question in this case is whether the
plaintiffs counsels purchase from this website or the
mere ability of Louisiana citizens to access the merchandise from the website constitutes
Parody purposefully availing itself of the benefits and laws of
Louisiana for this cause of action. The United States
Supreme Court has maintained that the mere unilateral activity of those who claim some
relationship
with the nonresident defendant cannot satisfy the
requirement of contact with the forum state.
Further, although the cause of action complained

of in the plaintiffs petition stems from Parodys

manufacturing and selling of the playing cards,
Mr. Swobodas cause of action as plead in his petition
arose prior to his attorneys purchase of the Mets
cards in Louisiana. Thus, we find that the connexity
between Parodys contact with Louisiana and
Mr. Swobodas cause of action are too attenuated to
constitutionally exercise personal jurisdiction over
Parody. Accordingly, under the facts and circumstances of this case, extending personal
jurisdiction
over Parody would not comport with the notions of
fair play and substantial justice. Therefore, we affirm
the trial courts ruling.
Affirmed.
Case Questions
1. Why did the Louisiana Court of Appeals conclude that the courts of that state did not have the
right to
exercise personal jurisdiction in this case?
2. In your opinion, might Swoboda be able to establish personal jurisdiction in Ohio?
3. What is your reaction to the decision in this case?

In Personam Jurisdiction over Corporations

Every corporation has been incorporated by one of
the fifty states and is therefore subject to the in
personam jurisdiction of that states courts. A corporation also may consent to in personam
jurisdiction in other states. Generally, a state will require
that all corporations doing business within its borders register with it and appoint an in-state
person
or company as its agent. Many states also designate a
state government official, often the secretary of
state, as the default agent if no appointed agent
can be found. The default agent will be authorized
to receive service of process relating to litigation
arising from an in-state businesss presence and
commercial activities conducted within that state.
Soliciting orders, writing orders, and entering
into contracts would establish a corporate presence
that would be sufficient for in personam jurisdiction. The mere presence of corporate officers

within the forum state or the occasional shipping

of orders into the forum is not sufficient for personal jurisdiction.

Jurisdiction over PropertyIn Rem Jurisdiction

A state has jurisdiction over property located within
the state. The property may be real (land and buildings) or personal (clothes, cars, televisions,
checking
accounts, antique clocks, etc.). This is called in rem
jurisdiction, or jurisdiction over things. An in personam decision imposes liability on a person
and is
personally binding. A decision in rem, however, is
directed against the property itself and resolves disputes about property rights. A court can
determine
the rights to property that is physically located
within the forum state, regardless of whether the
court has personal jurisdiction over all interested individuals. For example, if two partiesone of
whom is from out of statedispute the ownership
of a piece of land in Montana, the courts of
Montana can determine ownership because it
relates to property located within that state.

Procedural Due Process Requirements

In addition to establishing a basis for jurisdiction
over the person or the property that is in dispute,
a court must give proper notice to a defendant. The
statutes of each jurisdiction often make distinctions
between the types of notice required for in personam actions and in rem actions. This subject is
covered in more detail in Chapter V.

Venue
Venue requirements determine the place where
judicial authority should be exercised. Once personal jurisdiction has been established, a
plaintiff
has to litigate in a court that has subject-matter
jurisdiction over the controversy and in a place

that the legislature says is a permissible venue.

State legislatures enact venue statutes to distribute the judicial workload throughout the system.
They often provide for venue in the county or district where the cause of action arose, the county
or
district in which the defendant resides, and the
county or district in which the plaintiff resides. In
cases where the venue requirements can be satisfied
in more than one district, the plaintiffs choice usually will prevail.
Parties wishing to challenge venue must assert
their objections promptly, or they may be waived.
In both civil and criminal cases, venue may be considered improper for several reasons. A court
may
decline to hear a case for fear of local prejudice, for
the convenience of litigants and witnesses, or in the
interests of justice.
In a civil case, the most common reason given
for a court to decline to exercise jurisdiction is that
it believes the case can proceed more conveniently
in another court. This is known as the doctrine of
forum non conveniens. The doctrine is applied with
discretion and caution. One frequent ground for
applying the doctrine occurs when the event that
gave rise to the suit took place somewhere other
than in the forum state. The difficulties of securing
the attendance of out-of-state witnesses and applying foreign law may make decision making
inconvenient. The court balances the conveniences
between the forum court and another court and
weighs the obstacles to a fair proceeding against the
advantages.

INTERNET TIP
You can see an example of a venue statute and read
Massey v. Mandell, a Michigan venue case, on the
textbooks website.

THE FEDERAL COURT SYSTEM

Article III, Section 1 of the U.S. Constitution is the

basis of our federal court system. It provides that

the judicial power of the United States shall be
vested in one supreme court, and in such inferior
courts as the Congress may, from time to time,
ordain and establish.Congress first exercised this
power by passing the Judiciary Act of 1789, which
has been amended and supplemented many times in
order to establish the various federal courts, as well
as their jurisdiction and procedures.
The federal court system consists of the district
courts, exercising general, original jurisdiction; the
courts of appeals, exercising intermediate appellate
jurisdiction; and the U.S. Supreme Court, sitting as
the highest court for both federal and state cases
involving federal questions. Federal courts of limited jurisdiction include the U.S. Court of
Federal
Claims, which decides nontort claims filed against
the United States; the U.S. Tax Court, which reviews decisions of the secretary of the treasury
with
respect to certain provisions of the Internal Revenue Code; the U.S. Court of International
Trade,
which has jurisdiction over civil actions relating to
embargoes on imports, customs duties, and revenues from imports or tonnage; the Federal
Bankruptcy Court, which hears bankruptcy cases; and the Court of Appeals for the Armed
Forces, which
is a court of last resort in military criminal appeals.
An organizational chart of the federal judiciary can
be seen in Figure 4.4.

THE U.S. DISTRICT COURTS

There are ninety-four federal district courts, with at
least one in each state and territory in the United
States. They are courts of original jurisdiction and
serve as the trial court in the federal court system.
The federal district courts are given limited subjectmatter jurisdiction by the Constitution and by
Congress. Article III provides that federal courts
have jurisdiction overall casesarising under
the laws of the United States.

Because there are no federal common law

crimes, all federal criminal actions must be based
on federal statutes. In civil actions, Congress has
authorized federal courts to exercise subjectmatter jurisdiction in two categories of cases:
1. Federal question jurisdiction exists where the
case involves claims based on the Constitution,
laws, or treaties of the United States. Such
claims would include suits by the United
States and civil rights, patent, copyright,
trademark, unfair competition, and admiralty
suits.
2. Diversity of citizenship jurisdiction exists if a
suit is between citizens of different states or
between a citizen of a state and an alien, and if
the amount in controversy exceeds $75,000
(the jurisdictional amount). Diversity jurisdiction provides qualifying plaintiffs with a choice
of a federal or state forum for many types of
civil actions. However, federal courts traditionally have declined to exercise diversity
jurisdiction in divorce actions, child custody
cases, and probate matters.

State citizenship is a key concept in diversity cases.

For natural citizens, state citizenship is closely related
to the establishment of a principal residence (domicile). Thus, a person who presently makes
her home
in Texas is a citizen of Texas. If she spends the summer
working in Colorado and plans to return to Texas in
September, she would still be a citizen of Texas.
Federal diversity jurisdiction requires that the
diversity of citizenship be complete. This means that
in a multiple-party suit, no one plaintiff and one defendant can be citizens of the same state.
Thus, if a citizen
of New York brings suit against two defendants, one a
citizen of Wisconsin and one a citizen of Michigan,
there would be total diversity of citizenship. A federal
district court would have jurisdiction over the subject
matter if the plaintiff were suing in good faith for over
$75,000. If, however, one of the defendants were a
citizen of New York, there would not be complete

diversity of citizenship necessary for federal court jurisdiction and the plaintiff would be limited to
bringing
an action in an appropriate state court.
Congress has provided special citizenship rules
for corporations. A corporation is considered a citizen in the state where it is incorporated, as
well as in
the state of its principal place of business. For example, a corporation incorporated in Delaware
with its
principal place of business in New York cannot sue
or be sued by citizens of either of the two states in a
diversity case in a federal district court.
Diversity jurisdiction avoids exposing the defendant to possible prejudice in the plaintiffs state
court.
Many argue against diversity jurisdiction, claiming that
the fear of possible prejudice does not justify the
expense of the huge diversity caseload in federal courts.
See Figure 4.5 for data regarding civil cases brought in
the U.S. District Courts from 2007 to 2011.

INTERNET TIP
It is unusual for Foreign Intelligence Surveillance Court
opinions to be published in the Federal Reports. However
both of the cases appealed by the government to the
Foreign Intelligence Surveillance Court of Review, In re:
Sealed Case, 310 F.3d 717 (2002), and In re Directives,
551 F.3d 1004 (2009), have been so reported. They can be
found by searching for those citations online.

The Plaintiffs Choice of Forum

Various factors influence plaintiffs in their choice of a
federal or state forum. One forum may be more attractive than another because it is closer and
more convenient for the plaintiff. The plaintiffs attorney may be
influenced by the reputation of the county or court in
terms of the size of verdicts awarded there, by whether
the forum is rural or urban, by socioeconomic factors,
or by the reputations of the plaintiff and defendant
within the forum. Plaintiffs may also be influenced

to file in a federal forum if the federal procedural rules

are more liberal than the corresponding state rules.

Introduction to St. James Apartments, LLC v. Coinmach Corporation

Coinmach, the defendant corporation, sought dismissal of a diversity suit on the grounds that
the parties were not totally diverse. It alleged that it had citizenship in both New Jersey and
Delaware and argued
that the plaintiffs were also citizens of New Jersey,
despite their claims of citizenship in Florida. If this
were true, the federal court would have had to dismiss
the case for lack of subject-matter jurisdiction.

St. James Apartments, LLC v. Coinmach Corporation

Civil Action No. 10-6778 (GEB)
United States District Court, D. New Jersey
July 13, 2011

MEMORANDUM OPINION
Garrett Brown Jr., District Judge.
This matter comes before the Court on the motion of
Defendant Coinmach Corporation (Defendant) to
dismiss the Complaint filed by Plaintiffs St. James
Apartments, LLC, Hackensack Associates L.P., and
Jasontown Apartments, LLC (Plaintiffs) for lack
of subject matter jurisdiction. Plaintiffs oppose
Defendants motion.

I. BACKGROUND
This case arises out of a dispute regarding the execution and validity of certain lease
agreements between

Plaintiffs and Defendant. Plaintiffs assert that federal

jurisdiction under 28 U.S.C. 1332 exists based upon
their allegation that Plaintiffs and Defendant are citizens of different states (Florida for the
Plaintiffs and
Delaware and New Jersey for the Defendant), and the
total amount in controversy exceeds $75,000. Defendant does not contest that it is a citizen of
Delaware
and New Jersey or that the amount in controversy
exceeds $75,000. In its present motion to dismiss,
however, Defendant argues that Plaintiffs are actually
citizens of New Jersey and have misrepresented their
New Jersey citizenship in an attempt to manufacture
diversity jurisdiction. Defendant bases this argument
upon records that list a business address for Plaintiffs in
New Jersey. It appears undisputed that Plaintiffs St.
James Apartments, LLC and Jasontown Apartments,
LLC are limited liability companies, and Plaintiff
Hackensack Associates, L.P. is a limited partnership.
It also appears undisputed that the sole member of all
three Plaintiffs is James Nuckel (Nuckel). In response
to Defendants present motion, Nuckel argues that he
is a domiciliary of Florida, and thus, that diversity
jurisdiction is appropriate.

II. DISCUSSION
Subject matter jurisdiction is established under 28 U.S.C.
1332 where the amount in controversy exceeds
$75,000, and the controversy is between citizens of different states. In establishing diversity of
citizenship,
the burden of proving, by preponderance of the evidence, that such jurisdiction is proper lies on
the party
claiming diversity. Limited liability companies are
considered citizens of each state in which their members are citizens, rather than their state of
incorporation or the companys principal place of business.
An individual is considered a citizen of the state in
which he is domiciled. The domicile of an individual is
his true, fixed and permanent home and place of habitation. It is the place to which, whenever
he is absent,
he has the intention of returning. Courts consider

numerous factors when determining an individuals

domicile, including house of residence, payment of
personal taxes, vehicle registration, place of business,
and the exercise of political rights. Obviously, ties to
the community that cannot be easily formed or broken
are afforded more weight than those easily established. The party asserting diversity
jurisdiction bears
the burden of proving that their citizenship is diverse
from that of the adverse party.
Here, the Court concludes that Plaintiffs have
carried that burden through the certification of their
managing partner, James Nuckel. In Nuckels
Certification he states that he and his immediate
family reside in a primary residence in Florida.
Further, Nuckel states that his children attend school in
Florida, his vehicle is registered in Florida, he is registered to vote in Florida, and he will be filing
his income
taxes as a Florida resident.
In contrast, Defendant has failed to successfully
rebut Nuckels assertion that he is a citizen of Florida,
rather than New Jersey. It appears that Nuckel reported a New Jersey business address in order
to register his business in New Jersey. Nuckel was given the
option to provide a New Jersey business address or a
place of residence for the managing partner in order
to register as a New Jersey business entity. Nuckel
chose his New Jersey business address, rather than that
of his Florida residence, in order to fill out the form.
Defendant also alleges that Nuckel owns an owner
occupied home in New Jersey. These two factual allegations alone, however, fail to persuade
the Court that
Nuckel is a New Jersey citizen when viewed in light of
Nuckels Certification.
Therefore, the Court concludes by a preponderance of the evidence presented that Nuckel is a
Florida
citizen. It is undisputed that Nuckel is the sole managing party of the three Plaintiffs. As such,
Plaintiffs are
deemed Florida for purposes of establishing diversity
jurisdiction, and diversity jurisdiction is appropriate.
III. CONCLUSION
For the foregoing reason, Defendants motion to dismiss the complaint for lack of subject matter
jurisdiction will be denied. An appropriate form of order

accompanies this memorandum opinion.

Case Questions
1. What factors did the court say it considered in determining where a party is domiciled (and
therefore has
citizenship for purposes of diversity jurisdiction in federal courts)?
2. Assume that a student who graduated from high school in Hawaii attends college in Oregon.
What factors
should influence the determination of where that student is domiciled?
3. Can you think of any policy reasons for the need for the federal courts to have subject-matter
jurisdiction in
diversity of citizenship cases, as these cases could be decided in state courts?
In Rem and In Personam Jurisdiction
In order for a district court to hear a civil case, it
must have, in addition to jurisdiction over the subject matter, jurisdiction over the property in an

In rem proceeding or over the person of the defendant

in an in personam proceeding. Jurisdiction over the
person is normally acquired by serving a summons
within the territory. In an ordinary civil action, the
summons may be properly served anywhere within
the territorial limits of the state in which the district court is located. A federal summons also may
be
served anywhere that a state summons could be
served pursuant to the states long-arm statute.

Venue in Federal Courts

Congress has provided that venue generally exists in

the federal district where any defendant resides, if
all defendants reside in the same state. It also exists
where the claim arose or the property is located.
If these choices are inappropriate, venue will exist
in a diversity case in the federal district in which

the defendant is subject to personal jurisdiction

at the time the action is filed. In federal question
cases, the alternative venue is the federal district in
which any defendant can be found.
3
A corporate defendant is subject to suit in any
federal district in which it is subject to personal
jurisdiction when the suit is filed.

Removal from State to Federal Courts (Removal Jurisdiction)

Except in those areas in which federal courts have
exclusive jurisdiction, a suit does not have to be
brought in a federal district court just because that
court could exercise jurisdiction over the subject
matter and over the person or property. A plaintiff
may bring a dispute in any state or federal court that
has jurisdiction.
A defendant sued in a state court may have a
right to have the case removed to the federal district
court. Any civil action brought in a state court that
could originally have been filed in a district court is
removable. Thus, removal jurisdiction is permissible
where a federal question is raised or where the requirements for diversity of citizenship
jurisdiction
are met. Where the basis of removal jurisdiction is
diversity of citizenship, that basis must exist at the
time of filing the original suit and also at the time of
petitioning for removal. To initiate the removal
process, the defendant must file notice of removal
with the federal court within 30 days after service of
the complaint. In recent years, U.S. District Court
judges have approved the removal of approximately
31,000 cases per year from state to federal court
(see Figure 4.6).

Introduction to Abigail Frump v. Claires Boutiques, Inc.

The plaintiff in the following case, Abigail Frump, a
minor, was detained by store security personnel in
conjunction with an alleged theft while shopping at
defendants store with some friends. After the criminal charges against the plaintiff were
dismissed, this
civil action was brought against the defendant in
state court in Missouri. The plaintiff estimated the
damages as being in excess of $25,000 for each of
three countsfalse imprisonment, negligent supervision by store management, and malicious
prosecution. She also sought an unspecified amount of
punitive damages. The defendant responded by filing a removal motion in federal court alleging
that the court had diversity subject-matter jurisdiction.
The plaintiff opposed the removal motion and asked
the federal judge to remand the matter to the
Missouri state courts. She argued that as of the date
of her motion for remand, theknowndamages in
the case could not exceed $75,000.
You are about to read the U.S. District Courts
ruling on the remand motion. In the memorandum
opinion, the federal judge explains her ruling and
the rationale that supports her conclusions.

Abigail Frump v. Claires Boutiques, Inc.

Case No. 10-1106-CV-W-SWH
United States District Court, W.D. Missouri, Western Division
March 22, 2011
ORDER
Sarah Hays, Magistrate Judge.
This matter is before the Court on Plaintiffs Motion
for Remand to State Court. Defendant opposes the
motion. At issue is whether the amount in controversy requirement of 28 U.S.C. 1332(a) is
satisfied so
that the Court may assert jurisdiction over the case or
whether it must be remanded to state court.
I. BACKGROUND
On September 22, 2010, plaintiff filed a three count
Petition in the Circuit Court of Jackson County,

Missouri. The Petition alleges that on or about

April 18, 2009, plaintiff, a minor, was shopping at the
Claires store located at the Oak Park Mall in Overland
Park, Kansas, and was accused of theft. Plaintiff
alleges that a Claires employee would not let plaintiff
and the girls she was with leave the store. The Overland Park Police Department was called
and plaintiff
was issued a citation for theft as well as a citation directing that she not return to Oak Park Mall
for one
year. Plaintiff was later charged with a Class A
Misdemeanor which was subsequently dismissed.
Plaintiff alleges that numerous people were present
who witnessed the event and who laughed and pointed
at plaintiff. The Petition alleges false imprisonment
(Count I); negligent supervision (Count II); and malicious
prosecution (Count III). As a result of defendants
actions, plaintiff alleges she experienced mental suffering, injury to feelings, injury to reputation,
embarrassment, humiliation, fear, indignity, disgrace, stress and
loss of liberty. For each count, plaintiff prays for
actual damages in excess of $25,000, for reasonable
punitive or exemplary damages against defendant,
interest, attorneys fees, costs and for such other relief
as the Court deems just and proper.
On November 5, 2010, defendant removed this
case to federal court claiming jurisdiction is proper
pursuant to 28 U.S.C. 1332(a) because the parties are
diverse and the amount in controversy, exclusive of
interest and costs, exceeds $75,000. Thereafter,
plaintiff requested that the case be remanded to state
court because as of the day of filing this Motion for
Remand, all known damages are less than $75,001.
Defendant opposes the motion arguing that the
petition clearly states damages which could exceed
$75,000.
II. LEGAL STANDARDS FOR DETERMINING THE
AMOUNT IN CONTROVERSY
A defendant may remove an action from state court to
federal court if the action is within the courts original
jurisdiction. Here, defendant removed the case on
the basis of diversity jurisdiction. Diversity jurisdiction

exists where there is (1) complete diversity of citizenship and (2) the amount in controversy
exceeds the
jurisdictional minimum of $75,000, exclusive of interest
and costs. In this case, there is no dispute that there
is complete diversity of citizenship between the parties. The issue is whether the amount in
controversy
exceeds the $75,000 statutory requirement.
The starting point for analyzing whether the
jurisdictional limit is satisfied is the Supreme Courts
decision in St. Paul Mercury Indemnity Co. v. Red Cab
Co., (1938):
The rule governing dismissal for want of jurisdiction in cases brought in the federal court is that,
unless
the law gives a different rule, the sum claimed by the
plaintiff controls if the claim is apparently made in
good faith. It must appear to a legal certainty that the
claim is really for less than the jurisdictional amount to
justify dismissal. The inability of plaintiff to recover an
amount adequate to give the court jurisdiction does
not show his bad faith or oust the jurisdiction. Nor
does the fact that the complaint discloses the existence
of a valid defense to the claim. But if, from the face of
the pleadings, it is apparent, to a legal certainty, that
the plaintiff cannot recover the amount claimed or if,
from the proofs, the court is satisfied to a like certainty
that the plaintiff never was entitled to recover that
amount, and that his claim was therefore colorable for
the purpose of conferring jurisdiction, the suit will be
dismissed. Events occurring subsequent to the institution of suit which reduce the amount
recoverable
below the statutory limit do not oust jurisdiction.
(the general federal rule is to decide the amount in
controversy from the complaint itself). Following this
directive, numerous courts have held that when the
amount in controversy claimed in the plaintiffs state
court complaint exceeds $75,000, the complaint generally is determinative of the amount in
controversy
for purposes of federal jurisdiction upon removal.
If, after the removal of an action to federal court,
the plaintiff seeks a remand to state court, the defendant bears the burden of establishing
federal jurisdiction by a preponderance of the evidence. Any doubt

about the courts removal jurisdiction should be

resolved in favor of a remand to state court.
A. Determining the Amount of Compensatory
Damages
Plaintiff alleges that her petition does nothing more
than set forth the jurisdictional requirement for circuit
court jurisdiction, and thus, defendant has not demonstrated that the federal jurisdictional
amount
requirement has been satisfied. Rule 55.05 of the
Missouri Rules of Civil Procedure prohibits pleading a
specific dollar amount in tort actions except as is necessary to determine the proper
jurisdictional authority.
The Missouri pleading rules further require that every
filing be signed [by] at least one attorney of record.
The signature is the attorneys representation to the
court that the claim is not presented for an improper
purpose, that the claims are warranted by existing law
and that the allegations have evidentiary support or
are likely to have evidentiary support after a reasonable opportunity for further investigation.
Thus,
while counsel may have been required to plead that
the claim involved an amount either above or below
the $25,000 amount which divides circuit from associate circuit jurisdiction, the decision to plead
damages
in excess of $25,000 is counsels representation of the
value of the case, based upon counsels knowledge at
the time the petition was filed, and cannot be ignored.
Plaintiff has three claims against defendant, each
seeking an amount in excess of $25,000 for actual damages and, in addition, punitive damages,
costs and
attorneys fees. When separate claims are brought by a
sole plaintiff against a sole defendant, as in this case,
the totality of the claims is the determining jurisdictional factor rather than the damages set forth
in each
claim.
However, when aggregating claims to determine
if more than $75,000 is at issue, the court may not
aggregate claims that merely assert different theories
of recovery for the same damages.
In the circumstances of this case, the claims for

false imprisonment and malicious prosecution can

clearly be aggregated as each claim has an independent basis for damages. These claims are
not merely
different theories of recovery for the same damages.
Each claim relies on different facts and the damages
sought arise out of different actions taken at different
time periods. The false imprisonment claim arises out
of events occurring at the store on April 18, 2009,
when plaintiff alleges she was called back into the
store and was not allowed to leave for a period of at
least ninety minutes following which she was required
to provide information and be photographed by both
the Overland Park Police Department and mall
security. The malicious prosecution claim arises out
of the misdemeanor charges that were ultimately dismissed. Other courts have allowed
plaintiffs to
recover separate damages for false imprisonment and
malicious prosecution claims.
While Missouri courts have recognized a cause of
action for negligent supervision, it would appear
that this would provide an alternative theory on which
to recover the same damages sought under the false
imprisonment and, possibly, the malicious prosecution
claims. Thus, based on the face of the Petition, plaintiff
has alleged actual damages in excess of $25,000 for
each count, which damages may be aggregated as to
at least two of the counts, for a total claim in excess of
$50,000 in actual damages.
B. Determining the Amount of Punitive Damages
In addition to the claims for actual damages, plaintiff
claims punitive damages under each theory of recovery. Punitive damages are included in
determining the
amount in controversy, unless it is apparent to a legal
certainty that punitive damages may not be recovered. The court explained this general
principle in
Miller v. Progressive Casualty Insurance Co. (M.D. Pa.
Apr. 17, 2008):
In calculating the jurisdictional amount, [c]laims
for punitive damages may be aggregated with
claims for compensatory damages unless the former are patently frivolous and without
foundation. Such claims are per se patently

frivolous and without foundation if they are

unavailable as a matter of state substantive
law. If a plaintiff has authority under state law
to seek punitive damages, however, the claim
will generally satisfy the amount in controversy
requirement because it cannot be stated to a legal
certainty that the value of the plaintiffs claim is
below the statutory minimum.
Causes of action for malicious prosecution and
false arrest or imprisonment are intentional torts supporting the submission of punitive damages
on these
claims. The issue then is how to value plaintiffs
punitive damage claims for the purpose of determining whether the jurisdictional amount
requirement
is met.
The Supreme Court has been reluctant to establish
a concrete constitutional limit on the ratio between
harm, or potential harm, to a plaintiff and a punitive
damage award. However, the Court has commented
that: few awards exceeding a single-digit ratio
between punitive and compensatory damages, to a
significant degree, will satisfy due process.
the existence of compensatory damages in excess of
$25,000 as to each of the counts of the petition. For
jurisdictional purposes, the Court has treated the petition as stating two causes of action for
independent
damages for total compensatory damages in an
amount in excess of $50,000. Thus, an award of punitive damages, on even one of these
counts, in an
amount of $25,000 would establish the requisite
amount in controversy. Moreover, a punitive damage
award of $25,000, a ratio of 1 to 1, would be well
within the constitutional ratio accepted by other
courts. Accordingly, the Court finds that when the
compensatory and punitive damages, as pled in the
petition, are aggregated, the amount in controversy
requirement for federal diversity jurisdiction has been
satisfied.
III. CONCLUSION
For the reasons set forth herein, it is ORDERED that

Plaintiffs Motion for Remand to State Court is

denied.
Case Questions
1. What is the general federal rule in a diversity case as to how judges should decide whether
the amount in
controversy exceeds $75,000?
2. Under what circumstances should a U.S. District Court judge in a diversity case conclude that
the plaintiffs
allegations as to the amount in controversy should be rejected?
3. Assume that the defendant in a diversity action has removed the case to federal court and
that the plaintiff
wants the federal court to remand the matter back to the state court. Assume also that the
parties disagree
as to whether the amount in controversy exceeds $75,000. Which party has the burden of
proving the existence of federal jurisdiction?
The Erie Doctrine
In adjudicating state matters, a federal court is guided
by a judicial policy known as the Erie doctrine. In the
1938 landmark case of Erie Railroad Company v.
Tompkins, 304 U.S. 64, the U.S. Supreme Court
decided that federal questions are governed by federal
law. In other cases, however, the substantive law that
should generally be applied in federal courts is the law
of the state. The law of the state was defined as including judicial decisions as well as statutory
law. In addition, no federal general common law governs state
matters. A federal district court is bound by the statutes and precedents of the state in which it
sits.
This restriction prevents a federal court and a
state court from reaching different results on the
same issue of state law.
The Erie doctrine, which goes to the heart of
relations between the state and federal courts, is one
of the most important judicial policies ever adopted
by the U.S. Supreme Court. Many of the civil cases
brought subsequent to this landmark case have been
affected by the decision.
Where state and federal procedural rules differ,
the Erie doctrine does not normally apply. Federal
courts do not generally apply state procedural
rules. Instead, the Federal Rules of Civil Procedure

apply in federal courts unless they would significantly affect a litigants substantive rights,
encourage
forum shopping, or promote a discriminatory application of the law. The Federal Rules of Civil
Procedure were not designed to have any effect upon
the rules of decision.
It is important to remember that the Erie doctrine does require that federal judges apply the
same
conflict-of-law rule that would be applied in the
courts of the state in which the federal court is
situated. In the following case, a U.S. District Court
sitting in Indiana had to determine whether it
should apply Indiana law or that of California in
reaching its decision.
INTERNET TIP
Interested readers will find an excellent case that illustrates the Erie doctrine, Carson v. National
Bank, on the
textbooks website. This case was retired in the ninth
edition after initially appearing in the second edition of
the textbook, twenty-eight years ago. It can be found
with other Retired Cases.

Readers may recall reading the Chapter III

conflict-of-law case from Indiana of Hubbard
Manufacturing Co. v. Greeson. In that 1987 case the
Indiana Supreme Court decided to apply the significant relationship rule in tort cases where a
conflict
of law issue is raised but the place where the tort
was committed was an unimportant fact in the case.
We see that precedent followed in the next
2001 federal appeals case, which illustrates the
working of the Erie doctrine.
The U.S. District Court sitting in Indiana, at
the request of Yamaha Motor Corporation, granted
Yamahas motion for summary judgment, thereby
declaring Yamaha the prevailing party in this lawsuit. Summary judgment is granted only if no
genuine issues of material fact exist.. This pretrial
motion is not granted if important facts are in dispute between the parties, because it would
deprive
them of their right to a trial.
The key issue at trial and on appeal was whether

Indiana or California law should be applied to this

product liability case. Yamaha argued that Indiana
law should be applied, and Charles and April Land
maintained that California law should control. As we
learned in Chapter III, the outcome of disputes as to
which states law should be applied in a case depends
on the conflict-of-laws rule (also known as
choice-of-law rule) that has been adopted in the
forum state. The District Court, following the principles of the Erie doctrine, concluded after
applying Indianas choice-of-law rule that Indiana law should
apply. It determined that an Indiana statute required
that product liability suits like this one be brought
within ten years of the date when the product was first
purchased from the manufacturer (here, Yamaha). Therefore,
said the District Court, inasmuch as the Lands had not
started their suit within that time period, there was no
way that they could prevail at trial. Yamaha, the court
concluded, was entitled to summary judgment. The
Lands subsequently appealed to the Seventh Circuit,
arguing that the District Court had wrongfully applied
Indiana law instead of California law.
Charles and April Land v. Yamaha Motor Corporation
272 F.3d 514
U.S. Court of Appeals for the Seventh Circuit
December 10, 2001
Flaum, Chief Judge.
The district court granted summary judgment in favor
of defendants Yamaha Motor Corporation, U.S.A.
(YMUS) and Yamaha Motor Co., Ltd. (YMC),
holding plaintiffs Charles and April Lands product
liability suit [was] barred by the Indiana Statute of
[Limitations].
When appellant Charles Land, an Indiana resident,
attempted to start a Yamaha WaveRunner Model
WR500G on Heritage Lake in Indiana on June 25, 1998,
the vehicle exploded and caused Land permanent back
injury. The plaintiffs contend that the WaveRunner
was defective in design: it allowed fuel fumes to accumulate in the hull of the boat, posing
serious risk of
fire upon ignition. For purposes of the summary
judgment motion, the district court assumed that the

plaintiffs could prove their product liability claim on

the merits. That is, it assumed that when the Wave
Runner left the possession and control of the defendants, it was in a defective condition
unreasonably
dangerous to anticipated users. Furthermore, it is
undisputed that the Lands filed suit on December 23,
1999, and that both the injury and the filing of the suit
occurred more than ten years after the WaveRunner
was delivered to Wallace Richardson, the first user.
The Indiana Statute of Repose provides in relevant
part that product liability actions must be commenced
within ten years after the delivery of the product to the
initial user or consumer. YMC, a Japanese corporation
with its principal place of business in Japan, designed,
manufactured, and tested the WaveRunner in Japan.
It petitioned for an exemption from the United States
Coast Guards requirement that every vehicle like the
WaveRunner have a fan to ventilate fuel fumes out of
the hull of the boat. YMUS knew of the test results, and,
according to the Lands, gave false information to the
Coast Guard as to the known danger of the WaveRunner design in order to keep its exemption
from the fan
requirement. YMUS, which maintains its principal place
of business in California, participated in developing the
WaveRunner and imported it to the United States.
YMUS, while it has no office in Indiana, is authorized
and does business in the state. On July 7, 1987, YMUS
sold and shipped the vehicle to a boating store in
Kentucky. On July 28, 1987, Wallace Richardson, an
Indiana resident, purchased the WaveRunner.

Larry Bush, another Indiana resident, subsequently

bought the WaveRunner in 1989 or 1990. Bush was the
registered owner when the WaveRunner caused Lands
injury. From the time of Bushs purchase, the boat was
registered, garaged, and serviced in Indiana.
Between 1988 and 1998, 24 other WaveRunners
were reported to have exploded. YMUS twice recalled
certain models of WaveRunners for modifications to
reduce the likelihood of fuel leakage. It never recalled

the WR500 series.

Appellants argue that although they did not
commence their action until well over ten years after
delivery to the initial user, their case is not barred
because California law, which includes no statute of
repose, governs the action.
We review a grant of summary judgment de novo
[i.e., take a fresh look at the evidence], construing the
evidence in the light most favorable to the nonmoving
party. Summary judgment is appropriate if there is
no genuine issue as to any material fact and the moving party is entitled to judgment as a matter
of law.
Choice of Law
A federal court sitting in diversity jurisdiction must apply
the substantive law of the state in which it sits, 304 U.S.
64 (1938). The Erie doctrine extends to choice-of-law
principles and requires the court to apply the conflicts
rules of the forum state. Therefore, the district court
properly applied the choice-of-law rule of Indiana.
Indiana applies a two-step conflicts analysis.
Hubbard Mfg. v. Greeson (Ind. 1987). First, the court
must determine if the place where the last event necessary to make the defendant liablethat
is, the place
of the injuryis insignificant. If it is not, the law of
that state applies. Only if the court finds that the
place of injury is insignificant does it move to step two
which requires the court to consider other factors
such as: 1) the place where the conduct causing the
injury occurred; 2) the residence or place of business of
the parties; and 3) the place where the relationship is
centered. In the instant case, we, like the district
court, arrive at the inevitable conclusion that the place
of the injuryIndianais not insignificant. Therefore,
we apply Indiana law and need not address the second
prong in Indianas choice-of-law analysis.
Charles Land was injured while operating the
WaveRunner in Indiana. He was a resident of Indiana,
the owner of the boat was a resident of Indiana, and
the boat had been garaged and serviced in Indiana for
a decade before it caused Lands injury. No evidence
exists in the record that the WaveRunner was ever

used outside of Indiana. It was not mere fortuity that

the injury occurred in Indiana, as the Lands suggest by
comparing this choice-of-law determination with those
involving pass-through automobile or airplane accidents in which the place of the injury is given
little
weight, and the argument that Indianas contacts have
little or no relevance to the legal action simply cannot
withstand scrutiny. Therefore, our analysis of Indiana
choice-of-law policy must end with step one.
The Lands argue that California, where YMUS was
incorporated and where the defendants tortious conduct
occurred, has greater relevance. Maybe so. This analysis
belongs in step two of the Indiana conflicts policy, however, which we cannot reach. Some states
use themost
significant relationshipapproach suggested by the
Restatement (Second) of Conflict of Laws. If Indiana did
so, we would skip step one of our analysis and instead
isolate the pertinent issue, examine each states connection to the occurrence, identify the
governmental policies
espoused by each state relevant to the issue, and proclaim
applicable the law of the state with the superior
interest.That case might have a different outcome
from the one at hand. Indiana does not adhere to the
most significant relationship analysis, however, and the
Supreme Court of Indiana has not signaled that it intends
to overrule Hubbard. Although Hubbard does note some
discomfort with the rigid place of injury, or lex loci delicti,
approach, it still adheres to an analysis that uses the place
of injury as a baseline. If the place of injury is not insignificant, we must apply its law
regardless of the greater
interest another state may have. The Lands propose an
approach whereby the law of the place of the tortious
conduct is controlling in product liability cases. The state
of Indiana has given us no indication that it intends to
change its choice-of-law policy to reach such a result, and
we decline to make that policy decision for it. Indianas
contacts to this case are not insignificant. Therefore, its
law, including the Statute of Repose, applies.
Because Indiana law governs this case and
because the Indiana Statute of Repose bars product
liability actions that, like this one, are brought more

than ten years after delivery of the product to the initial user or consumer, we find that the district
court
properly granted summary judgment in favor of the
defendants. We AFFIRM.
Case Questions
1. What was the basis for federal jurisdiction in this case?
2. Since the case was heard in federal court, why didnt the judge apply the law as generally
applied in the
nation, rather than the law of Indiana?