Examination Number ________________





Professor Carl H. Esbeck Fall Semester 2008





Civil Procedure I, 5010L, Section 1



Directions to Part I - Essay

(1 hour and 30 minutes)


Place your examination number in the upper right-hand corner of this examination.

When finished, return these essay examination questions and submit your essay answers.


Answer only the question asked. Do not raise or answer questions not asked.


Arrange your answers in sequential order. That is, put your answer to Question 1 first, then your answer to Question 2, and etc. If you want to skip over a question and come back to it later, leave a page or two blank and begin the next question.


You may use your laptop to complete this Part I.


If you do not use your laptop, write your answer in the bluebook provided.  Use a pen with blue or black ink. Write on only one side of each page.  Do not write in the left-hand margin. Do not tear pages out of the bluebook. 


You may bring with you into the examination room your casebook, photocopied class handouts, your 2008 federal rules supplement, and your own classroom notes (not borrowed notes). You may also bring a course summary or outline provided it is entirely your own work product. It is an Honor Code violation to have any other materials with you during the examination.



* * * Part I begins on the Next Page * * *





PART I (1 hour and 30 minutes)


Question One (20 minutes): Lars and Nels are cattle ranchers both domiciled in southeastern Colorado. On October 1, 2008, Lars purchased three hundred head of cattle from Jackson Land & Cattle Company [JLCC] located near Reserve, New Mexico. JLCC is a New Mexico corporation with its principal place of business in New Mexico. Following the sale, the cattle were moved fifteen miles to Cantara Stockyards Ltd. [CSL] in Reserve and still remain there. CSL is a Delaware corporation with its principal place of business in New Mexico.


On October 10, 2008, Lars and Nels entered into an agreement for Nels to purchase half of these cattle for the price of $85,000. Nels claims that he paid Lars the $85,000 and had requested CSL to release half the cattle to truckers hired by Nels to load the cattle and to transport them to Nels' ranch. However, CSL refused to release one hundred and fifty head of cattle to Nels' truckers claiming that it was told Lars borrowed $50,000 from JLCC and pledged the cattle as collateral for the loan.


On November 10, 2008, Nels sued CSL in federal District Court in New Mexico (all New Mexico is one federal district) requesting that the Court order CSL to release one hundred and fifty head of cattle to Nels' truckers for shipment to his ranch in Colorado. CSL timely moves pursuant to FRCP 12(b)(7), arguing that Lars is a necessary and indispensable party. In reply to the motion, Nels concedes that Lars is a necessary party per Rule 19(a). And Nels concedes that he has asked Lars to return the $85,000, but Lars refuses. Lars claims that the price of cattle has dropped and he still intends to sell Nels the cattle at the agreed price. Nevertheless, Nels argues that Lars is not indispensable under Rule 19(b), thus the lawsuit can proceed in Lars' absence.


Both Colorado and New Mexico have long-arm statutes that reach to the full scope of the Due Process Clause.


Following oral argument the federal district judge confides in his law clerk (you) that he is inclined to rule that Lars is indispensable. However, the judge asks you to figure out if there is some way by which Lars can be made a party to the lawsuit.


Is there a way to involuntarily bring Lars into the New Mexico federal lawsuit and thereby avoid having the District Court dismiss pursuant to Rule 12(b)(7)? Explain.



Question Two (30 minutes): Paulsen is domiciled in North Carolina. Dirkovich is domiciled in Kentucky. They are each operating their own automobile when involved in a two-car collision on a highway in North Carolina. Paulsen sues Dirkovich for $200,000 compensatory damages for his injuries alleging Dirkovich's negligence was the cause of the accident. Paulsen also asks for $1,000,000 in punitive damages. The suit is filed in a North Carolina state court of general jurisdiction and proper venue.


Dirkovich's attorney is contemplating removing the claim to federal district court. Some preliminary legal research determined that shortly before the accident the State of North Carolina enacted a tort reform statute providing that a plaintiff seeking punitive damages: (1) must "plead with particularity the facts and circumstances upon which a claim for punitive damages is based," (2) must not plead "punitive damage allegations unless the complaint is verified" (i.e., signed under oath) by the plaintiff; and (3) must pay the "reasonable attorneys' fees of the defendant if a demand for punitive damages is ultimately unsuccessful." The legislative history recites findings that meritless demands for punitive damages are often made to intimidate defendants into settling, tend to substantially enlarge the time and cost of litigation, and unnecessarily raise insurance premiums for everyone.


Counsel for Dirkovich seeks your advice. If the case is removed to federal court, will the provisions of the tort reform statute apply? Explain.



Question Three (40 minutes): Randall Bead is domiciled in Greenfield, Massachusetts. He takes his 2005 Ford Escape to Ultimate Auto & Tire Co., a retail store located in Keene, New Hampshire. Bead's parents have recently retired to Keene, and Bead's dad recommended Ultimate. Bead purchases a new set of four Bridgestone tires from Ultimate, whose employees also balance and mount the tires. A few weeks later Bead is driving his car on the Boston freeway when a front tire blows out. This causes Bead to lose control of his vehicle and plunge over a guardrail and into Boston harbor. Bead is seriously injured and his car is a total loss.


Bead sues Ultimate for negligence in federal district court in Boston claiming the tire blowout caused the accident. Ultimate is a New Hampshire corporation with its only place of business in Keene. Ultimate timely files a motion to dismiss pursuant to FRCP 12(b)(2). A few days later Ultimate files an Answer denying liability. Ultimate also timely files a third-party complaint against Bridgestone Tire, Inc., alleging that the tire in question was defective and stating a claim for products liability. Bridgestone timely files a Third-Party Defendant Answer denying liability; the Answer also states as an affirmative defense a lack of personal jurisdiction. Bridgestone is a Japanese corporation with its principal place of business in Japan.


In discovery by Bead's legal counsel, Ultimate provides the following information under oath. Its corporate officers all live in Keene, New Hampshire (approximately 14 miles from the Massachusetts border), except for the Vice President, Hillary Marconi, who lives in Greenfield, Massachusetts. Marconi commutes to Keene for work, but some nights she brings work back to her apartment in Greenfield to work on during evenings and weekends. Ultimate advertises in southern New Hampshire newspapers, and on two Keene radio stations. The advertising copy states: "Buy Ultimate, the ultimate in tires. Our tires will take you safely from the streets of Keene through the White and Green Mountains, to the Berkshires and over the Alleghenies, in cities as tough on tires as Boston, New York, and Chicago, prairies as beautiful as Iowa and as rolling as Missouri. Our expertise and prices will not be beat throughout New England. We are the ultimate in tires." When one drives in Greenfield, Massachusetts, which is about 40 miles from Keene, you can pick up one of the two radio stations which carry the Ultimate ads. One of the New Hampshire newspapers (The Manchester Guardian) which carries Ultimate's ad can be purchased at some newsstands, coffee houses, and bookstores in Greenfield.


Ultimate keeps no records of the percentage of its sales to people who, like Randall Bead, reside outside of New Hampshire. Ultimate's sales manager says that "more than a few out-of-state folks buy from us. There's no state sales tax here." Six years ago Ultimate made the 110 mile trip to Boston and paid to set up a booth to promote its Keene store at the Fall Auto Show.


Massachusetts' long-arm statute reaches to the full scope of the Due Process Clause. Ultimate was personally served at its corporate offices in Keene. Bridgestone was personally served at its corporate offices in Japan.


(A)  How should the court rule on Ultimate's motion to dismiss? Explain.


(B) Assume Ultimate settles with Bead for the sum of $300,000, and Bead is dismissed from the lawsuit. Bridgestone promptly moves to dismiss for lack of personal jurisdiction, calling the court's attention to its affirmative defense stated in its Answer as a Third-Party Defendant. How should the court rule on Bridgestone's motion to dismiss? Explain.




* * * END OF PART I * * *


Turn in both these examination Questions and your Answers.


After a 10 minute break, all students will begin Part II together.