FEDERAL CIVIL PROCEDURE QUESTION

Plaintiff, a citizen of State B, was vacationing in State A, where he visited the O.K. Bar. While he was at the bar, Plaintiff was attacked and seriously beaten by Dave, a regular bar patron and a citizen of State A. Bartender, a citizen of State A, attempted to stop the attack and was also injured by Dave.

Plaintiff sued Dave and Bartender in the United States District Court for the District of State A, properly invoking the court’s diversity jurisdiction. Plaintiff’s complaint states a state law battery claim against Dave, seeking damages from Dave in excess of $75,000. Plaintiff’s complaint also states a claim against Bartender based on Bartender’s alleged negligence in serving alcohol to Dave after Dave became visibly intoxicated and belligerent. Plaintiff’s complaint seeks damages from Bartender in excess of $75,000. Plaintiff’s damages claims are reasonable in light of the injuries Plaintiff suffered in the attack.

Dave was personally served with the summons and complaint. However, the process server could not find Bartender. He therefore taped the summons and complaint to the front door of the O.K. Bar, where Bartender found them the next day.

Bartender made a timely motion to dismiss Plaintiff’s complaint for failure to state a cause of action. When that motion was denied by the district court judge, Bartender filed a second motion to dismiss for insufficiency of service of process. The judge also denied that motion.

Bartender then filed an answer to the complaint, denying liability. The answer also stated a state law claim for battery against Dave, seeking $20,000 damages for the injuries Bartender suffered when he tried to stop Dave’s attack on Plaintiff.

Dave has moved to dismiss Bartender’s cross-claim on the grounds of improper joinder and lack of subject-matter jurisdiction.

1. Did the United States District Court for the District of State A properly deny Bartender’s motion to dismiss for insufficiency of service of process? Explain.

2. Do the Federal Rules of Civil Procedure permit Bartender to join a claim for battery against Dave in Bartender’s answer to Plaintiff’s complaint? Explain.

3. Assuming that the Federal Rules of Civil Procedure permit Bartender to join his state law claim against Dave, does the United States District Court for the District of State A have subject-matter jurisdiction over that claim? Explain.

FEDERAL CIVIL PROCEDURE ANALYSIS (Federal Civil Procedure I.A.1; IV.A. & C.)

ANALYSIS

Legal Problems

(1) May a defendant make a motion to dismiss for insufficiency of service of process when the defendant has already moved to dismiss for failure to state a claim upon which relief can be granted?

(2) Do the Federal Rules of Civil Procedure permit a defendant to join a cross-claim against a co-defendant if it arises out of the same events as the plaintiff’s claim against the defendants?

(3)(a) Does a federal district court have independent subject-matter jurisdiction over a state law cross-claim for $20,000 between two defendants who are citizens of the same state?

(3)(b) Does a federal district court have supplemental subject-matter jurisdiction over a state law cross-claim for $20,000 between two defendants who are citizens of the same state?

DISCUSSION

Summary

Because Bartender made a motion to dismiss the action against him for failure to state a cause of action without raising his defense of insufficiency of service of process, he was barred from raising that defense at a later time. The court therefore was correct in denying his motion, even if Bartender had a valid claim that the manner of service was improper. Bartender’s claim against Dave arises out of the same transaction or occurrence as Plaintiff’s claim. The claim therefore qualifies as a cross-claim under Rule 13(g) of the Federal Rules of Civil Procedure, and Bartender may state that claim in his answer to the complaint. A federal court would not have subject-matter jurisdiction over Bartender’s claim against Dave if that claim were filed as an independent action. However, Plaintiff’s original claim and Bartender’s cross-claim are sufficiently closely related to form part of the same case or controversy under Article III of the United States Constitution. Accordingly, the supplemental jurisdiction statute authorizes the federal court to take jurisdiction over Bartender’s cross-claim.

Point One (30%) The court correctly denied Bartender’s motion to dismiss for insufficiency of service of process because that defense was not raised when Bartender made his motion to dismiss for failure to state a claim.

Federal Rules of Civil Procedure Analysis

Although it is likely that service of process was improper in this case, the district court nonetheless was correct to deny Bartender’s motion to dismiss on that basis. Bartender initially responded to Plaintiff’s complaint by making a motion to dismiss for failure to state a cause of action. FED. R. CIV. P. 12(b)(6). When that motion was denied, Bartender moved to dismiss for insufficiency of service of process. FED. R. CIV. P. 12(b)(5). When a motion pursuant to Rule 12(b) is initially made, a party may join with that motion all other motions permitted by Rule 12 that are then available to the party. If a party makes a Rule 12(b) motion and fails to join certain other available defenses or objections, the party may not later raise those objections and defenses. In particular, a party that makes a Rule 12(b) motion but omits from that motion a defense of insufficiency of service of process is deemed to have waived that defense. FED. R. CIV. P. 12(h)(1). Because Bartender made a Rule 12(b) motion to dismiss for failure to state a claim but did not join his available defense of insufficiency of service of process, Bartender waived that defense. Hence, the district court was correct to deny Bartender’s motion to dismiss on that ground. It does not matter that Bartender appears to have had a valid claim that service was improper.

Point Two (30%) Rule 13(g) of the Federal Rules of Civil Procedure permits a defendant, in the answer, to state a cross-claim against a co-defendant if it arises out of the same transaction or occurrence as the original claim.

Rule 13(g) of the Federal Rules of Civil Procedure provides that a defendant’s answer may state as a cross-claim against a co-defendant any claim that “aris[es] out of the transaction or occurrence that is the subject matter of the original action” between the plaintiff and the defendants. The policy underlying Rule 13(g) is efficiency; multiple lawsuits are avoided if defendants bring related cross-claims in the context of the plaintiff’s suit. 6 CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE CIVIL § 1431, at 267 (2010). Here, Plaintiff’s claims concern Dave’s injury of Plaintiff and Bartender’s service of alcohol to Dave. Bartender’s cross-claim concerns Dave’s injury of Bartender. The question is whether these various claims arise out of the same transaction or occurrence. To determine whether two different claims arise out of the same “transaction or occurrence” for purposes of Rule 13, federal courts look at a number of factors: (1) whether the issues of fact and law in the plaintiff’s claim and the defendant’s cross-claim are essentially the same, (2) whether the same evidence would support or refute the plaintiff’s claim and the defendant’s cross-claim, (3) whether there is a logical relationship between the plaintiff’s claim and the defendant’s cross-claim, and (4) whether res judicata would bar a subsequent suit on the cross-claim. See, e.g., Q Int’l Courier, Inc. v. Smoak, 441 F.3d 214, 219 (4th Cir. 2006) (interpreting the same words in Rule 13(a), the compulsory counterclaim rule); 6 WRIGHT ET AL., supra, §§ 1410, 1431 at 277 (stating that “the standard for asserting a cross-claim is basically the same as that for a compulsory counterclaim”). The presence of any of these factors supports a conclusion that the “transaction or occurrence” requirement is met. See Glass v. IDS Financial Serv., Inc., 778 F. Supp. 1029, 1061–62 (D. Minn. 1991); 6 WRIGHT ET AL., supra, § 1410 at 58. The most frequently considered factor is whether there is a logical relationship between the defendant’s cross-claim and the plaintiff’s original claim. 6 WRIGHT ET AL., supra, § 1410 at 61, 65. Here, the alleged batteries of Plaintiff and Bartender occurred in the same place, within seconds of one another. Bartender’s efforts to intercede in the initial battery presumably

3 Federal Rules of Civil Procedure Analysis

prompted Dave to injure Bartender. There appears to be a causal link, and thus a logical relationship, between the two claims. In addition, the two claims involve almost identical factual and legal issues. Both Plaintiff’s claim against Dave and Bartender’s cross-claim against Dave are claims for battery arising under State A’s law. Both claims involve factual questions about the cause and course of the fight in which Dave, Bartender, and Plaintiff were involved. Even though the factual issues may differ—whether Dave battered Plaintiff is a distinct question from whether Dave battered Bartender—the substantial overlap between the legal and factual issues supports the conclusion that the claims arise from the same transaction or occurrence. The identity-of-issues inquiry does not require a complete overlap between the claim and the cross-claim. Id. § 1410, at 59. The “same evidence” test is also likely to be satisfied. To prove the battery claim against Dave, Plaintiff will need the testimony of witnesses to the brawl. It is likely that the patrons of the bar who witnessed Dave’s alleged battery of Plaintiff also witnessed Dave’s alleged battery of Bartender. Thus, a substantial amount of the evidence (i.e., the testimony of the witnesses to the event) will be the same. The only factor that militates against allowing Bartender to bring a cross-claim is that a judgment on Plaintiff’s claim against Dave would not preclude Bartender, who is not in privity with either Dave or Plaintiff, from suing on his own claim. Denying Bartender the ability to bring the claim would not prevent him from having his case heard at some future point. Id. § 1431, at 275–76. However, given that Bartender’s claim against Dave is logically related to Plaintiff’s claims, that it raises overlapping factual and legal issues, and that the same evidence is relevant to both claims, a court should allow Bartender’s claim to be included as a cross-claim in Bartender’s answer.

Point Three(a) (20%) A federal district court would not have independent subject-matter jurisdiction over a state law cross-claim for $20,000 between two defendants who are citizens of the same state because the claim does not arise under federal law, the claimants are not diverse, and the amount-in- controversy requirement for diversity cases is not satisfied.

The federal question statute grants the federal district courts original jurisdiction “of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. A claim arises under federal law if federal law creates the cause of action. Merrell Dow Pharms. Inc. v. Thompson, 478 U.S. 804, 808 (1986); Am. Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260 (1916) (Holmes, J.) (“A suit arises under the law [that] creates the cause of action.”). Here, state law creates Bartender’s battery claim against Dave. Under this test, Bartender’s cross-claim does not arise under federal law, and therefore the court would not have jurisdiction under the federal question statute, 28 U.S.C. § 1331. Nor would a federal court have diversity jurisdiction over Bartender’s claim. First, there is no diversity. Bartender and Dave are both citizens of State A. Second, Bartender is seeking damages of only $20,000, well below the $75,000 jurisdictional minimum in diversity actions. See 28 U.S.C. § 1332(a)(1).

Point Three(b) (20%) A federal district court would have supplemental subject-matter jurisdiction over a state law cross-claim for $20,000 between citizens of the same state as long as it is so related to the Federal Rules of Civil Procedure Analysis

plaintiff’s claim against the defendants, of which the court has original jurisdiction, that the claims form part of the “same case or controversy” under Article III of the Constitution.

In the instant case, the federal district court has original diversity jurisdiction over Plaintiff’s claims against Bartender and Dave. 28 U.S.C. § 1332. Each claim is for an amount in excess of $75,000, and Plaintiff, a citizen of State B, is diverse from both defendants, who are citizens of State A. The supplemental jurisdiction statute permits federal district courts that have original jurisdiction of a civil action to assert “supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367(a). Claims form part of the “same case or controversy” under Article III if they “derive from a common nucleus of operative fact.” United Mine Workers of America v. Gibbs, 383 U.S. 715, 725 (1966). Cross-claims that satisfy Rule 13(g)’s “transaction or occurrence” test presumptively satisfy the Gibbs “common nucleus of operative fact” test and are within the court’s supplemental jurisdiction. 13 WRIGHT ET AL., supra, § 3523, at 165–73. As noted in Point One, Bartender’s claim and Plaintiff’s claims arise out of the same occurrence, raise many of the same factual and legal issues, and will be proved, in part, by the same evidence. These claims clearly arise out of a “common nucleus of operative fact”—the bar fight that gave rise to all the claims in the case. Because Bartender’s claim is part of the “same case or controversy” as Plaintiff’s original claims, it falls within the federal court’s supplemental jurisdiction.

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