Joinder, Jurisdiction, & Preclusion

The joinder rules are only one factor in determining which parties and claims may (or must) be included in a single lawsuit. Joinder of parties is subject to the limits of personal jurisdiction. Joinder of claims is subject to the limits of subject matter jurisdiction. Even where joinder of a claim is merely permissive under the FRCP, claim and issue preclusion may compel a party to join the claim or risk losing it.

Basic Joinder

Permissive Joinder of Claims

Rule 18

Broad scope:

Rule 18 is the Pandora’s Box of the joinder rules:

Other parts of the FRCP provide safeguards against the pandemonium that Rule 18 might unleash:

In addition, the limits of federal subject matter jurisdiction will restrict the joinder of some claims that Rule 18 (or other joinder rules) would permit.

Permissive Joinder of Parties

Rule 20

(a) Persons Who May Join or Be Joined

(1) Plaintiffs. Persons may join in one action as plaintiffs if:

(A) they assert any right to relief jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and

(B) any question of law or fact common to all plaintiffs will arise in the action.

(2) Defendants. Persons—as well as a vessel, cargo, or other property subject to admiralty process in rem—may be joined in one action as defendants if:

(A) any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and

(B) any question of law or fact common to all defendants will arise in the action.

Same Transaction or Occurrence

“Logical relationship” standard

Common Question of Law or Fact

Only one common question of law or fact is needed to satisfy this requirement.

As a practical matter, it’s not clear that the “common question” requirement really adds much to the “same T/O” requirement.

Permissive

Rule 20 defines when multiple plaintiffs and/or defendants may be joined in a single action. But joinder under Rule 20 is not compulsory.

Rule 19 requires joinder of additional parties in certain circumstances.

Mosley v. General Motors Corp. (8th Cir. 1974)

Facts & Procedural History
Holding & Analysis

Rule 13

Compulsory Counterclaims

Rule 13(a)

(1) In General. A pleading must state as a counterclaim any claim that—at the time of its service—the pleader has against an opposing party if the claim:

(A) arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim; and

(B) does not require adding another party over whom the court cannot acquire jurisdiction.

Note the difference between the T/O requirement for party joinder under Rule 20 and for compulsory counterclaims (and crossclaims) under Rule 13.

In practice, courts generally give broad meaning to “transaction or occurrence” under the “logical relationship” approach:

’Transaction’ is a word of flexible meaning. It may comprehend a series of many occurrences, depending not so much upon the immediateness of their connection as upon their logical relationship.

Moore v. NY Cotton Exchange (US 1926) (applying pre-FRCP compulsory counterclaim rule)

Subject Matter Jurisdiction Over Compulsory Counterclaims

Compulsory counterclaim will always satisfy supplemental jurisdiction.

Consequences of Omitting a Compulsory Counterclaim

If defendant fails to assert a compulsory counterclaim, they may not assert that claim later in a separate action.

Permissive Counterclaims

Rule 13(b)

A pleading may state as a counterclaim against an opposing party any claim that is not compulsory.

A defendant does not need a compulsory (related) counterclaim to assert a permissive (unrelated) counterclaim.

Counterclaim Problems

  1. Dana is employed by Crimson Permanent Assurance Co. as a sales agent. Under the terms of her employment contract, she earns a commission on all insurance policy sales she generates. The contract states that, in the event Dana’s employment terminates, she is entitled to collect earned but unpaid commissions, unless she was fired for cause. The contract also contains a non-compete clause, providing that if Dana voluntarily quits her job, she may not go to work for any competing insurance company for one year. Having become dissatisfied with her job at Crimson, Dana quits and goes to work for Scarlet Everlasting Assurance Co., one of Crimson’s competitors. Crimson sues Dana and Scarlet in federal court (assume diversity jurisdiction is satisfied), asserting the following claims:

    • Breach of contract, against Dana, based on the non-compete clause.
    • Tortious interference with contract, against Scarlet, for improperly inducing Dana to breach her employment contract with Crimson.

    May Crimson join Dana & Scarlet as co-defendants in the same action?

    • Yes. Joinder is proper under Rule 20(a)(2). Both claims arise out of the same T/O (Dana going to work for Scarlet), and there will be common questions of fact and law (the circumstances of Dana changing jobs; the terms and enforcability of Dana’s non-compete agreement).
  2. Same facts. Which of these counterclaims would be compulsory under Rule 13(a)?

    a) A claim by Dana for breach of contract, alleging that Crimson failed to pay commissions, as provided under her employment contract, on sales she generated before she quit. - Probably not. Crimson’s claim against Dana arises out of her quitting and going to work for Scarlet. Dana’s counterclaim arises from work she performed while employed at Crimson. A court will most likely regard these as distinct transactions/occurrences. - Even under the broad “logical relationship” standard, the fact that Crimson’s non-compete claim and Dana’s breach of contract claim both arise from the same employment relation and contract is probably not enough to satisfy the same T/O requirement.

    b) A claim by Dana for defamation, alleging that Crimson falsely told its customers that Dana was fired for embezzlement. - Possibly. If Dana alleges that Crimson made the defamatory statements in retaliation for Dana’s quitting and going to work for a competitor, a court might agree that the claims are logically related.

    c) A claim by Scarlet for commercial disparagement, alleging that Crimson falsely told customers that Scarlet is really a Ponzi scheme. - Possibly. Again, if Scarlet alleges that Crimson acted in response to Dana’s quitting and going to work for Scarlet, a court might agree that the claims are logically related.

  3. Debtor owes $85,000 to Lender. When Debtor falls significantly behind in the loan payments, Lender assigns the debt to Collection Agency. After making unsuccessful attempts to induce Debtor to pay up, Collection Agency sues Debtor to collect the unpaid debt. Debtor contends that Collection Agency’s tactics violated the Fair Debt Collection Practices Act (FDCPA), a federal statute. The FDCPA permits a Debtor to sue in federal court and recover damages for a debt collector’s unlawful practices. But a successful FDCPA claim does not absolve the debtor of liability for the underlying debt.

    Is Debtor’s FDCPA claim against Collection Agency a compulsory counterclaim?

    • Argument in favor: Both claims arise from the same underlying transaction, i.e. the debt.
    • Argument against: The two claims are logically independent and do not arise from the same T/O:
      • Collection Agency’s claim arises out of the underlying debt, and depends on the validity of that debt.
      • Debtor’s FDCPA claim arises out of the defendant’s collection efforts, and does not depend on the validity of the debt.
      • Most courts have accepted the second view in this scenario.

Crossclaims

Rule 13(g)

A pleading may state as a crossclaim any claim by one party against a coparty if the claim arises out of the transaction or occurrence that is the subject matter of the original action or of a counterclaim, or if the claim relates to any property that is the subject matter of the original action. The crossclaim may include a claim that the coparty is or may be liable to the crossclaimant for all or part of a claim asserted in the action against the crossclaimant.

Contrast with Counterclaims

Indemnification and Contribution

The last clause of Rule 13(g) (“a claim that the coparty is or may be liable to the crossclaimant for all or part of a claim asserted in the action against the crossclaimant”) describes claims for contribution and indemnification.

FRCP Rule 13(g) permits (but does not compel) co-parties to assert claims for indemnification/contribution as crossclaims. These claims are contingent on the outcome of the underlying claim against the party asserting a right of indemnification/contribution. The court may opt to defer adjudication of such a crossclaim until the underlying claim has been decided. If the party asserting a contribution/indemnification crossclaim is not found liable, then the crossclaim is dismissed.

Unrelated claims between co-parties

Once a party asserts a valid crossclaim against a co-party, Rule 18 then allows them to assert any other claims (related or not) against the same co-party.

Crossclaim Examples

Counterclaims & Crossclaims: Cases

Jones v. Ford Motor Credit Co. (2d Cir 2004)

Ginwright v. Exeter Finance Corp. (D. Md. 2016)

Pace v. Timmermann’s Ranch & Saddle Shop, Inc. (7th Cir. 2015)

Facts & Procedural History
Issue
Holding & Analysis

Rainbow Management Group, Ltd. v. Atlantis Submarines Hawaii, L.P. (D. Hawaii 1994)

Facts & Procedural History
Holding & Analysis

Third-Party Claims (Impleader)

Rule 14

Requirements for Impleader: Rule 14(a)(1)

(1) Timing of the Summons and Complaint. A defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim against it. But the third-party plaintiff must, by motion, obtain the court’s leave if it files the third-party complaint more than 14 days after serving its original answer.

Impleader under Rule 14 is limited to claims for contribution or indemnification.

Lehman v. Revolution Portfolio LLC (1st Cir. 1999)

Facts & Procedural History
Issue
Analysis

Third-Party Defendant’s Claims and Defenses: Rule 14(a)(2)

The person served with the summons and third-party complaint—the “third-party defendant”:

(A) must assert any defense against the third-party plaintiff’s claim under Rule 12;

(B) must assert any counterclaim against the third-party plaintiff under Rule 13(a), and may assert any counterclaim against the third-party plaintiff under Rule 13(b) or any crossclaim against another third-party defendant under Rule 13(g);

(C) may assert against the plaintiff any defense that the third-party plaintiff has to the plaintiff’s claim; and

(D) may also assert against the plaintiff any claim arising out of the transaction or occurrence that is the subject matter of the plaintiff’s claim against the third-party plaintiff.

Plaintiff’s Claims Against a Third-Party Defendant: Rule 14(a)(3)

The plaintiff may assert against the third-party defendant any claim arising out of the transaction or occurrence that is the subject matter of the plaintiff’s claim against the third-party plaintiff. The third-party defendant must then assert any defense under Rule 12 and any counterclaim under Rule 13(a), and may assert any counterclaim under Rule 13(b) or any crossclaim under Rule 13(g).

Impleader by a Plaintiff: Rule 14(b)

When a claim is asserted against a plaintiff, the plaintiff may bring in a third party if this rule would allow a defendant to do so.

Again, the limitation on supplemental jurisdiction under § 1367(b) applies to claims by a plaintiff against a third-party defendant joined under Rule 14.

Erkins v. Case Power & Equip. Co. (D.N.J. 1995)

Facts & Procedural History
Issue
Analysis

Complex Joinder: Required Parties, Interpleder, & Intervetion

Required Joinder of Parties

Rule 19(a): Persons Required to Be Joined if Feasible

1) Required Party. A person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if:

(A) in that person’s absence, the court cannot accord complete relief among existing parties; or

(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person’s absence may:

(i) as a practical matter impair or impede the person’s ability to protect the interest; or

(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.

Examples:

Rule 19(b): When Joinder is Not Feasible

If a person who is required to be joined if feasible cannot be joined, the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed. The factors for the court to consider include:

(1) the extent to which a judgment rendered in the person’s absence might prejudice that person or the existing parties;

(2) the extent to which any prejudice could be lessened or avoided by:

(A) protective provisions in the judgment;

(B) shaping the relief; or

(C) other measures;

(3) whether a judgment rendered in the person’s absence would be adequate; and

(4) whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder.

The primary reason that joinder would not be feasible is where the party to be joined is not within the reach of the court’s personal jurisdiction, or where the claim to be asserted against that party is not within the court’s subject matter jurisdiction. Another reason that sometimes arises is sovereign immunity. See, e.g., Dine Citizens Against Ruining our Environment v. Bureau of Indian Affairs, (9th Cir. 2019) (dismissing case where Navajo Nation had an interest making it a party required to be joined under Rule 19(a), but where joinder was not feasible because of tribal sovereign immunity).

Camacho v. Major League Baseball (S.D. Cal. 2013)

Facts & Procedural History
Issue
Holding & Analysis

Interpleader

Rule Interpleader: FRCP Rule 22

(a) Grounds.

(1) By a Plaintiff. Persons with claims that may expose a plaintiff to double or multiple liability may be joined as defendants and required to interplead. Joinder for interpleader is proper even though:

(A) the claims of the several claimants, or the titles on which their claims depend, lack a common origin or are adverse and independent rather than identical; or

(B) the plaintiff denies liability in whole or in part to any or all of the claimants.

(2) By a Defendant. A defendant exposed to similar liability may seek interpleader through a crossclaim or counterclaim.

Statutory Interpleader: 28 U.S.C. § 1335

(a) The district courts shall have original jurisdiction of any civil action of interpleader or in the nature of interpleader filed by any person, firm, or corporation, association, or society having in his or its custody or possession money or property of the value of $500 or more, or having issued a note, bond, certificate, policy of insurance, or other instrument of value or amount of $500 or more, or providing for the delivery or payment or the loan of money or property of such amount or value, or being under any obligation written or unwritten to the amount of $500 or more, if

(1) Two or more adverse claimants, of diverse citizenship as defined in subsection (a) or (d) of section 1332 of this title, are claiming or may claim to be entitled to such money or property, or to any one or more of the benefits arising by virtue of any note, bond, certificate, policy or other instrument, or arising by virtue of any such obligation; and if (2) the plaintiff has deposited such money or property or has paid the amount of or the loan or other value of such instrument or the amount due under such obligation into the registry of the court, there to abide the judgment of the court, or has given bond payable to the clerk of the court in such amount and with such surety as the court or judge may deem proper, conditioned upon the compliance by the plaintiff with the future order or judgment of the court with respect to the subject matter of the controversy.

(b) Such an action may be entertained although the titles or claims of the conflicting claimants do not have a common origin, or are not identical, but are adverse to and independent of one another.

Rule v. Statutory Interpleader

Rule 22 defines the basic elements of an interpleader action:

§ 1335(a)(1) echoes this definition, and grants the federal courts subject matter jurisdiction over interpleader claims that would not satisfy the usual requirements for diversity jurisdiction under § 1332:

Other statutes provide further procedural advantages to § 1335 interpleader action:

§ 1335 requires that the plaintiff deposit the money or property at issue with the court, or pay a bond as security. - This is not required in an interpleader action brought only under Rule 22. - Consider how the deposit requirement supports the exercise of jurisdiction over the defendants, even if they do not otherwise have the degree of contacts with the forum state normally required for personal jurisdiction. In effect, an interpleader action is an in rem action (i.e. a suit to establish the rights of the parties on some property). In such cases, the defendant’s claimed interest in property located within the forum state will satisfy the minimum contacts requirement.

These procedural differences will guide the decision whether to bring an interpleader action under § 1335 or under Rule 22.

Deutsch v. Schoelkopf (W.D. Wash. 2016)

Facts & Procedural History
Holding & Rationale

Intervention

FRCP Rule 24

(a) Intervention of Right. On timely motion, the court must permit anyone to intervene who:

(1) is given an unconditional right to intervene by a federal statute; or

(2) claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant’s ability to protect its interest, unless existing parties adequately represent that interest.

(b) Permissive Intervention.

(1) In General. On timely motion, the court may permit anyone to intervene who:

(A) is given a conditional right to intervene by a federal statute; or

(B) has a claim or defense that shares with the main action a common question of law or fact.

(2) By a Government Officer or Agency. [ * * * ]

(3) Delay or Prejudice. In exercising its discretion, the court must consider whether the intervention will unduly delay or prejudice the adjudication of the original parties’ rights.

Sevier v. Lowenthal (D.D.C. 2018)

Facts & Procedural History
Holding & Rationale

Misjoinder, Separate Trials, & Other Case-Management Measures

Rule 20

(b) Protective Measures. The court may issue orders—including an order for separate trials—to protect a party against embarrassment, delay, expense, or other prejudice that arises from including a person against whom the party asserts no claim and who asserts no claim against the party.

Rule 21

Misjoinder of parties is not a ground for dismissing an action. On motion or on its own, the court may at any time, on just terms, add or drop a party. The court may also sever any claim against a party.

Rule 42

(a) Consolidation. If actions before the court involve a common question of law or fact, the court may:

(1) join for hearing or trial any or all matters at issue in the actions;

(2) consolidate the actions; or

(3) issue any other orders to avoid unnecessary cost or delay.

(b) Separate Trials. For convenience, to avoid prejudice, or to expedite and economize, the court may order a separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third-party claims. When ordering a separate trial, the court must preserve any federal right to a jury trial.

These rules give courts broad discretion in case management to promote goals of efficiency & consistency (consolidation) or to avoid confusion & prejudice (severance & separate trials).

Joinder Review Problem

Claypool v. Gottlieb & Dritwood

Diagram of Claims