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.
Permissive Joinder of Claims
Any claims, whether related or unrelated
But must satisfy subject-matter jurisdiction for each claim
Independent SMJ, or
Supplemental Jursidiction, if claims are related
No distinction between “compulsory” and “permissive” claims
But claim preclusion will apply to claims arising out of the same T/O
Rule 18 is the Pandora’s Box of the joinder rules:
To open the box, a party must have a key, i.e. at least one claim against a party.
For any party other than an initial plaintiff (who, by definition, begins with at least one claim against one opposing party), another joinder rule must provide the key (e.g. counterclaims & crossclaims under Rule 13; third-party claims under Rule 14).
Once the box is opened, Rule 18 permits joinder of unlimited additional claims against the same opposing party.
Other parts of the FRCP provide safeguards against the pandemonium that Rule 18 might unleash:
Rule 20 and Rule 42 allow a court to order separate trials for some parties or claims.
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
(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
“… the essential facts of the various claims are so logically connected that considerations of judicial economy and fairness dictate that all issues be resolved in one lawsuit.” Harris v. Steinem (2d Cir. 1978) (interpreting similar “transaction or occurrence” provision for compulsory counterclaims under Rule 13(a))
“Absolute identity of all events is unnecessary”. Mosley v. General Motors (8th Cir. 1974)
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.
In practice, where claims arise out of the same T/O, there will almost inevitably be at least one such common question (and usually more).
The common question(s) are typically (part of) the basis for treating the claims as arising from the same T/O in the first place.
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
10 plaintiffs sue GM & UAW for employment discrimination (Title VII & § 1981).
8 plaintiffs worked for GM’s Chevrolet Division.
2 plaintiffs worked for GM’s Fisher Body division.
All plaintiffs asserted the same legal theory and alleged similar facts about the nature of the discrimination.
District court severed on motion by GM.
Holding & Analysis
Joinder was proper, and trial court erred in severing actions, where plaintiffs asserted transactionally-related claims sharing common issues of law and fact.
Logical relationship standard is satisfied where plaintiffs allege defendant(s) acted as part of a company-wide system or policy
Fact that plaintiffs worked in different locations for different corporate sub-divisions does not negate commonality.
Practical lawyering issue
Why did plaintiffs want to join cases?
Why did GM want to sever cases?
(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.
Rule 20(a): same T/O, or series thereof
Rule 13(a) & (g): same T/O (but not “series”)
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
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.
Not res judicata, because a defendant who asserts no counterclaim is not a “claimant”.
Purpose of compulsory counterclaim rule is to place defendant and plaintiff on even footing with regard to which claims they must assert in the same action.
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.
Cf. Crossclaims: Limited to claims arising from same T/O.
But once a co-party asserts a valid crossclaim against another co-party, Rule 18 then permits them to join any other (unrelated) claims as well.
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).
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.
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.
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
Crossclaims must arise from the same transaction/occurrence as the underlying plaintiff’s claims.
Cf. Counterclaims, which may be related (compulsory) or unrelated (permissive) to the underlying plaintiff’s claims.
Crossclaims are permissive (i.e. they may be asserted in the same action or in a separate action).
Cf. Compulsory counterclaims.
But if a party brings any crossclaim against a co-party, they must then bring all related claims against that party (because claim prelusion will then apply).
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.
Rule 14 (see below) permits a party to join an additional “third-party” defendant to assert a claim for contribution or indemnification.
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.
Cf. Counterclaims: Defendant may assert a permissive (unrelated) counterclaim, even without a compulsory (related) counterclaim.
But, as with permissive counterclaims, unrelated Rule 18 claim(s) require an independent basis for SMJ.
No supplemental jurisdiction, because different T/O = no CNOF
P1 (driver) and P2 (passenger in P1’s car) sue D for negligence arising out of car accident.
P2 may also assert a crossclaim against P1 alleging that P1’s negligence caused P2’s injuries.
P sues D1 and D2 for breach of contract arising out of a transaction among P, D1, & D2
D1 may assert a crossclaim against D2 for breach of contract arising out of the same transaction.
D1 may assert a crossclaim against D2 asserting that D2 has a duty to indemnify D1 in the event D1 is found liable to P.
D2’s duty to indemnify may be based on (the same or separate) contract, or may be imposed by law.
P alleges that a painting in D1’s possession really belongs to P and that D1 acquired the painting from D2, who stole it from P. P files a suit, joining D1 and D2 as co-defendant under Rule 20.
P seeks an order compelling D1 to return the painting to P or, in the alternative, damages against D2 for the value of the painting.
D2 denies stealing the painting and instead contends it was a gift from P. D2 also alleges they did not sell or give the painting to D1 but merely left it with D1 for cleaning and reframing.
D2 may assert a crossclaim against D1 for return of the painting.
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
Pace sued Timmermann’s (her former employer) and its employees for abuse of process, false arrest, intentional infliction of emotional distress, and related tort claims.
Timmermann’s had previously sued Pace for conversion and other claims based on her alleged theft of merchandise and cash.
District court dismissed all of Pace’s claims, concluding that she should have asserted them as compulsory counterclaims in the previous suit.
Pace appealed the dismissal of her claims against the individual defendants and the dismissal of her abuse of process claim against Timmermann’s.
She conceded that her other claims against Timmermann’s were properly dismissed as unasserted compulsory counterclaims in the prior suit.
Whether the abuse of process claim against Timmermann’s was a compulsory counterclaim that should have been asserted in the company’s suit?
Whether claims against the individual defendants were compulsory counterclaims that should have been asserted in the company’s suit?
Holding & Analysis
Pace’s abuse of process claim against Timmerman’s was a compulsory counterclaim,
It arose from the same events as the prior suit by Timmermann’s against Pace.
The court rejected Pace’s argument that this claim did not come into existence until she was criminally charged with theft, which didn’t happen until after Timmermann’s brought its prior suit against her.
Under the applicable law, an indictment was not a necessary element of the abuse of process claim.
All the facts necessary to establish the elements of that claim occured (and were known to Pace) before Timmermann’s commenced its prior suit.
Pace’s claims against the individual defendants were not compulsory counterclaims, because they were not parties to the prior suit.
Neither Rule 13(a) nor Rule 20 requires joinder of additional parties.
Rainbow Management Group, Ltd. v. Atlantis Submarines Hawaii, L.P. (D. Hawaii 1994)
Facts & Procedural History
A boat operated by Rainbow Management collided with a boat operated by Haydu.
Haydu’s boat was destroyed and his passengers were injured.
Rainbow’s boat was damaged and repaired.
At the time, Rainbow’s boat was carrying passengers who were boarding a submarine operated by Atlantis.
Berry, one of the passengers injured in the collision, sued Rainbow & Atlantis, alleging their negligence was responsible for the collision and his resulting injuries.
Atlantis & Rainbow asserted crossclaims against each other for contribution and indemnification on Berry’s claim.
Atlantis & Rainbow also asserted third-party claims against Haydyu for indemnification and contribution on Berry’s claim.
Haydu filed counterclaims against Atlantis & Rainbow for the damage to his boat.
Rainbow did not assert any claims against Atlantis or Haydu for the damage to its boat.
While Berry’s suit was pending, Rainbow filed a separate suit against Atlantis & Hayduk, alleging their negligence was responsible for the collision and the resulting damage to Rainbow’s boat.
Rainbow’s motion to consolidate its suit with Berry was denied, based on delay and prejudice to the other parties.
A settlement in the Berry suit disposed of all claims involving Atlantis & Rainbow.
Atlantis moved for summary judgment in the Rainbow suit, asserting that Rainbow should have asserted its property damage claims as a compulsory counterclaim in the Berry suit (triggered by Atlantis’s crossclaim against Rainbow for contribution and indemnification), and that it was now barred.
Holding & Analysis
Rule 13 permits, but does not require, co-defendants to assert crossclaims against one another arising from the same T/O as the plaintiff’s claims against them.
Once Atlantis asserted a crossclaim against Rainbow for indemnification & contribution in that prior suit, Rainbow’s claim against Atlantis arising out of the accident became compulsory counterclaims.
By asserting its claim against Atlantis for contribution and indemnification on Berry’s claim, but not its claim for damage to its boat, Rainbow waived the latter claim and was barred from asserting it in a subsequent suit.
Third-Party Claims (Impleader)
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.
In cases where the plaintiff has sued some, but not all, potential joint tortfeasors, Rule 14 allows the named defendant(s) to bring in the other potential joint tortfeasors for the purpose of asserting a right of contribution.
In cases where a defendant claims a (common law, statutory, or contractual) right to indemnification from a third-party (who may or may not also be directly liable to the plaintiff), Rule 14 allows the defendant to bring in the third-party for that purpose.
Under FRCP Rule 14, a defendant may not implead a third-partie to assert only a claim for the third-party’s liability to the defendant.
But once a defendant properly impleads a third-party under Rule 14, Rule 18 then allows the defendant to assert any other claims it has against the third-party defendant. See Lehman v. Revolution Portfolio LLC (1st Cir. 1999)
Some state rules permit joinder of a third-party defendant to assert a claim for the third-party defendant’s liability to the defendant/third-party plaintiff (arising from the same T/O as an underlying claim against the defendant/third-party plaintiff), even without a claim for contribution or indemnification.
Lehman v. Revolution Portfolio LLC (1st Cir. 1999)
Facts & Procedural History
Trust borrows $2.8 million from bank
Lehman & Roffman, co-beneficiaries of trust, each guarantee loan
Bank forecloses on Lehman’s property
Lehman sues Bank in state court to stop sale of his property, claiming Roffman had perpetrated a fraud, and Bank failed to exercise due diligence
Bank is placed in receivership and FDIC, as receiver, substituted as defendant in place of Bank
FDIC removes to federal court
Asserts counterclaim against Lehman for outstanding loan balance
Asserts third-party claims against Roffman, seeking indemnification & contribution on Lehman’s claims
Also seeks recovery of outstanding loan balance from Roffman as guarantor
Action stayed when Lehman files for bankruptcy
Court eventually allows FDIC to proceed with third-party claims against Roffman
FDIC moves to substitute Revolution as defendant
FDIC had assigned its interests to Revolution
Was joinder of Roffman as third-party defendant proper
Third-party claim against Roffman for contribution & indemnification is proper
Roffman & Bank were allegedly joint tortfeasers on Lehman’s claim arising from Roffman’s fraud & Bank’s negligence.
Even though Lehman only sought to stop the sale of his property, and not money damages, he might have been awarded damages, so FDIC could implead against that possibility.
Rule 18(a) then permitted FDIC to assert any other claim it had against Roffman (provided there is jurisdiction).
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
Erkins died while operating a backhoe.
Estate sued manufacturer of backhoe (Case) in strict liability for failure to warn.
Case sought to implead the contractors responsible for the job (Fitzpatrick & ECRACOM), alleging accident resulted from their failure to conduct safety meetings.
Why didn’t Erkins sue the contractors in the first place?
Possibly because of workers compensation bar (Erkins worked for subcontractor of Fitzpatrick and ERACOM).
Whether Rule 14 allows defendant to implead joint tortfeasers.
Turns on whether NJ law provides a right of contribution among joint tortfeasers in this case.
NJ law provides right of recovery against joint tortfeasers.
Defines “joint tortfeasers” as “two or more persons jointly or severally liabile in tort for the same injury to person or property”.
Parties act together in causing injury, or
Parties act independently of one another, but their actions combine to cause a single injury
Doesn’t matter whether theory of liability is different for each tortfeasor (e.g. strict liability v. negligence)
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.
Parties to contract, where suit seeks to void the contract.
Joint owners of property in dispute.
Third-persons whose interest would be adversely affected by an injunction.
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
The plaintiffs, a baseball player (Pesqueira) and his agent (Gonzalez Camacho), alleged that Major League Baseball (MLB) had conspired with the Mexican Baseball League to prevent the player from signing with an MLB team.
MLB allegedly told Gonzalez Camacho that Pesqueira was ineligible because he was contractually bound to a Mexican League team, Diablos Rojos del México (Mexico City Red Devils).
Pesqueira denied signing the contract with Diabolos Rojos.
The suit asserted claims against MLB for for tortious intereference with economic relations and unfair business practices.
The relief sought included “a declaration of the Court ordering that Pesqueira is free to train, to contract … and/or play with any team in the major or minor leagues in the United States, and is not beholden in any way to the Association of Professional Baseball Teams of the Mexican Leagues and the Red Devils of Mexico”
Whether the suit should be dismissed for failure to join parties required to be joined under Rule 19, i.e. the Mexican League and Diablos Rojos.
Holding & Analysis
The Mexican League & Diablos Rojos were parties required to be joined if feasible, under Rule 19.
An essential issue in the case was the validity of the purported contract between Pesquiera and Diablos Rojos.
The validity of that contract was relevant to MLB’s liability (because if the contract was valid, then MLB’s conduct was neither tortious nor an unfair business practice).
As part of the relief sought, the plaintiffs were asking the court to declare the contract invalid.
The Meixcan League and Diablos Rojos had an interest in the contract, and a declaration that the contract was invalid would impair their interest.
There was also a risk of “multiple, or otherwise inconsistent obligations” if the Mexican League and Diablos Rojos were not bound by any judgment in the case.
Diablos Rojos might bring their own suit (in the US or Mexico) to enforce the team’s interest in the contract. Because
A judgment in the Gonzalez Camacho suit would not be binding on Diablos Rojos, and thus neither claim nor issue preclusion would apply against the team in a subsequent suit, if they were not a party to that suit.
If a court in a subsequent suit held that the contract was valid and enforceable, “That would produce inconsistent obligations for all of the parties in this action in addition to the Red Devils because operating under one court’s determination would then necessarily cause the parties to breach another court’s determination regarding the same issue, i.e., the validity of the Red Devils contracts.”
Joinder of the Mexican League & Diablos Rojos was not feasible.
The MLB argued that the court could not exercise personal jurisdiction over the Mexican League and Diablos Rojos and that their joinder as defendants would deprive the court of subject matter jurisdiction.
Because the plaintiffs did not contest this issue, the court did not analyze the jurisdictional issues but simply accepted MLB’s position.
Absent joinder of the Mexican League & Diablos Rojos, the case could not proceed & must be dismissed
Any judicial determination regarding the validity of the contract would affect the interests of the Mexican League and Diablos Rojos.
The court did not analyze the options under Rule 19(b)(2) for lessenening or avoiding prejudice to the absent party. But under the facts of the case, it is unlikely any of those measures would have sufficed.
Rule Interpleader: FRCP Rule 22
(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:
There are multiple adverse claimants to some property in the possession or custody of the party bringing the action (the interpleader plaintiff).
The interpleader plaintiff may face multiple liability if the adverse claims are not adjudicated in a single action.
This is because a judgment in an action involving only some of the competing claimants would not be binding on other (actual or potential) claimants who were not joined as parties.
§ 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:
§ 1335 requires only minimal diversity between the interpleader plaintiff and the defendants (i.e. at least one defendant must be a citizen of a different state than the plaintiff, but other defendants may be citizens of the same state as the plaintiff). In contrast, jurisdiction under § 1335 requires complete diversity between the plaintiff(s) and defendant(s) (i.e. there may not be any common state of citizenship on the opposing sides).
§ 1335 requires an amount in controversy of at least $500. In contrast, § 1332 requires an amount in controversy exceeding $75,000.
Other statutes provide further procedural advantages to § 1335 interpleader action:
By implication, this also means that the court may assert personal jurisdiction over defendants on a nationwide basis. See FRCP 4(k)(1)(C) (providing that service of a summons authorized by federal statute establishes personal jurisdiction over a defendant); Mudd v. Yarbrough, 786 F.Supp.2d 1236 (E.D. Ky. 2011) (“Courts are clear that service of process *1373 pursuant to the Federal Interpleader Act is sufficient to establish personal jurisdiction over [the defendant]”)
Authorization of injunctions against other suits, whether in federal or state court, affecting the money or property that is the subject of the interpleader action. 28 USC § 2361
An interpleader action brought only under Rule 22 is subject to the normal restrictions on federal court injunctions against pending state court actions under the Anti-Injunction Act, 28 U.S. Code § 2283.
§ 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
Deutsch, an art dealer, was in possession of a sculpture by artist John Storrs.
At some point before 1977, after Storrs’ death, his estate placed the sculpture on consignment with the Schoelkopf Gallery. In 1977, the Schoelkopf Gallery informed the Storrs estate that the sculpture had been stolen. The Schoelkopf Gallery paid the Storrs estate $2,250 (the amount the estate would have received from the sale of the sculpture) in compensation.
At some point after the reported theft, Deutsch’s father, who owned an art gallery, came into possession of the sculpture. Deutsch inherited the sculpture after her father’s death.
In an effort by Deutsch to sell the sculpture, Valerie Carberry contacted Monique Storrs Booz, Storrs’s sister and sole remaining heir. They concluded that the sculpture belonged to Andrew Schoelkopf (son and heir to the Schoelkopf Gallery’s owner) by virtue of the $2,250 payment to the Storrs estate after the reported theft. Carberry and Schoelkpf each wrote to Deutsch, confirming their belief that Schoelkopf was the rightful owner of the sculpture.
Deutsch asserted that she was the rightful owner of the sculpture, because the reported theft had not been conclusively established.
Deutsch brought an interpleader action against Schoelkopf, Storrs Booz, Carberry, and other defendants to resolve the competing interests.
Holding & Rationale
The court granted the defendants’ motion to dismiss on the grounds that Deutsch had not asserted a proper interpleader action under Rule 22 or § 1335.
An interpleader action must involve “multiple adverse claims or potential adverse claims … to th[e] same property,” and “the plaintiff stakeholder must have a reasonable fear of multiple liability.”
Deutsch could not satisfy these criteria, because the only defendant to claim an interest in the sculpture was Schoelkopf.
The only other potential claimants (Storrs Booz and the other heirs to the Scholkopf estate) all renounced any claims to the sculpture.
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
Sevier sued four members of Congress, alleging that the display of Gay Pride flags outside their offices in the U.S. Capitol violated the Establishment clause of the 1st Amendment.
Three others, “self-identified polygamists”, sought to intervene as plaintiffs, asserting similar Constitutional claims.
Holding & Rationale
The court denied the motion to intervene.
The allegations of the proposed intervenors did not show any injury sufficient to establish standing to sue, which is a prerequisite for intervention.
The intervenors failed to establish that Sevier would not adequately represent their interests, as required for intervention as of right.
Courts have “wide latitude” in deciding whether to allow permissive intervention.
While the intervenors’ claims shared questions of law and fact with Sevier’s nearly-identical claims, they were facially baseless.
In the same opinion, the court also granted the defendants’ Rule 12(b)(6) motion to dismiss, holding that Sevier’s allegations were legally insufficient to state an Establishment Clause, Equal Protection Clause, or Due Process Clause claim.
Misjoinder, Separate Trials, & Other Case-Management Measures
(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.
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.
(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).