Exam Number _______________
HAMLINE UNIVERSITY SCHOOL OF LAW
Date of Examination: Tuesday, May 19
Professor J. Pielemeier
Violations of the Code of Conduct include: (1) unauthorized conversation among students concerning the examination; (2) giving, receiving, or soliciting unauthorized aid; (3) using materials which are not specifically permitted by the written examination instruction; (4) exceeding the examination time limit; or (5) any other dishonest conduct in connection with the examination.
a. This examination consists of one “Question” that consists of five short answer questions, and two other Questions. There are suggested amounts of time for each question, which total three hours, which is the total amount of time permitted for the exam.
b. Taking into account the amount of suggested times, discuss all issues reasonably raised by each question, even though your resolution of one issue may seem to render the others moot.
c. Unless otherwise indicated, assume that a “state” or “F-1,” etc. is one of the United States.
(Five short answer questions--Total Suggested Time: 60 minutes)
1. Carla, a resident of state X, works as a computer support specialist for Abco., Inc. Abco’s headquarters are in state X, and Carla does most of her work there. Occasionally, however, she is asked to work at Abco’s branch office in the adjacent state Y. After finishing work at the branch office one day and while driving back to state X, Carla was injured in a traffic accident in state Y. She sought workers’ compensation benefits from Abco in state Y, but state Y’s workers’ compensation board denied them, holding that her injuries were not incurred in the course of her employment. This finding was affirmed on her appeal to state Y’s courts. Under the law of state X, her injuries would likely be deemed to have been incurred in the course of her employment and she would be entitled to workers’ compensation benefits. If Carla now seeks workers’ compensation benefits in state X, do you think its award of benefits to Carla would be constitutionally permissible? Briefly explain
2. The “last in time” rule is to the effect that if F-2 renders a judgment and in doing so fails to give F-1's judgment full faith and credit, F-3 should give full faith and credit to F-2's judgment rather than to F-1's. This is the case even though it may appear that F-2's failure to give F-1's judgment full faith and credit violated accepted constitutional principles. Briefly discuss what you understand to be the reasoning underlying the rule, and whether you think it is sound.
3. Briefly describe the distinction between “procedural” and “substantive” statutes of limitation under traditional conflicts principles, what difference the distinction makes in application, and briefly discuss whether this different treatment is appropriate.
4. Smith sued Jones in federal court in state X. Smith’s claims were based on state law, and subject matter jurisdiction was based on diversity of citizenship. Jones moved to dismiss for lack of personal jurisdiction, and alternatively to transfer the case to a federal court in state Y (Jones’ home state) pursuant to 28 U.S.C. §1404. The federal court in state X transferred the case to the federal court in state Y and did not rule on Jones’ personal jurisdiction defense. If, in ruling on a choice of law issue, Jones persuades the court in state Y that the court in state X lacked personal jurisdiction over him, which state’s conflicts rules should apply? Briefly explain.
5. A and B, who were both from Minnesota, entered into a contract whereby B agreed to sell A a lakeside cabin B owned in Wisconsin. When B learned that A planned to use the property to raise pit bull terriers, B refused to go through with the deal. Failure by A to disclose this intended use would make the contract voidable by B under Wisconsin law, but would not make it voidable under Minnesota law. A sued B for specific performance of the contract in a Minnesota court. The court applied Minnesota law and rendered judgment for specific performance for A. B still refused to convey, and moved to Wisconsin. A then brought an action against B in Wisconsin to obtain a judgment for specific performance of the contract. Does the Wisconsin court have to give full faith and credit to the Minnesota judgment and grant A’s request for relief? Briefly explain.
In 1988, Steven Jones and six other individuals founded ICO Corp., which was incorporated and had its principal place of business in state A. All of the founders were from state A. In 1990, the Board of Directors, on the recommendation of others in the corporate world, decided to hire John Apple, an attorney practicing in New York City, to provide it with advice on corporate matters. The agreement was oral, providing that Apple would bill ICO at his normal hourly rates. There was no written retainer agreement.
Apple assisted in several corporate transactions, including the reincorporation of ICO as a Delaware corporation in 1990. ICO’s principal place of business has always remained in state A. Although there was frequent correspondence between Apple and ICO’s officers and directors, Apple did all of his work for ICO at his New York City office. He is not licensed to practice law in state A and has never visited the state.
In 1995, ICO was having financial difficulties, and the bank that supplied its main credit line threatened to discontinue the credit line and initiate foreclosure proceedings unless ICO’s officers would personally guarantee ICO’s outstanding debt. ICO’s board of directors met at Apple’s New York City office to discuss options. Apple was present and reminded everyone that he was present only in his capacity as attorney for ICO, and that he did not undertake to represent the interests of any individual.
At the meeting, it appeared that Jones was the only person who could afford to personally guarantee ICO’s debt. An agreement was made, in part based on Apple’s advice, that he would make the guarantee in exchange for the Board’s issuing him additional stock that would give him effective voting control of ICO and also for the Board’s appointing him Chief Executive Officer (CEO). Apple drafted appropriate documents to effectuate the transaction, and all were appropriately signed.
The financial troubles of ICO continued. Jones began negotiating a merger that all the Board members disagreed with. When Jones persisted despite their disagreement, they had an emergency meeting without him where they found that Jones had violated his fiduciary duties to ICO, and voted to remove him as CEO. In response, Jones called Apple and asked Apple if he could use his voting power to remove the present directors from the Board and appoint his own Board. Apple told him that he thought he could, whereupon Jones did so, appointing himself and his wife as the new Board of Directors.
The ousted Board members sought relief in court, filing suit in Delaware. In that litigation, the court determined that the arrangement making Jones CEO and issuing him additional stock was invalid. As a result, Jones lost his position and control of ICO, as well as losing the value of the additional stock he had been issued.
After all of this occurred, Jones filed suit against Apple in state A, alleging legal malpractice. (He also filed a complaint about Apple’s alleged malpractice with the New York Professional Responsibility Board.) In Jones’ suit against Apple, Apple did not contest the court’s personal jurisdiction over him. During the course of this litigation, the following choice of law issue arose.
Under the law of New York, with some exceptions not applicable here, attorneys are not liable to a party for economic injury arising from the attorney’s negligence unless there was privity (an attorney-client relationship) between the injured party and the attorney. (Assume this is the rule applied by a majority of states.) Under New York decisions, it was clear that no such privity existed between Apple and Jones. Under recent decisions from the highest court of State A, however, attorneys may be found liable to a third party where it was reasonably foreseeable that negligent service or advice to or on behalf of the client could cause harm to others. (Assume that a handful of other states have also recently adopted this position.) The parties did not argue, and you need not concern yourself with, Delaware law.
Apple filed a motion for summary judgment, asserting that New York law governed the issue of liability to third persons such as Jones, and that it therefore barred the suit. Accompanying Apple’s motion were affidavits reflecting the facts stated above, plus an affidavit from an insurance executive stating that, in part because of these different liability rules, malpractice insurance premiums were thirty-three per cent higher for corporate attorneys in state A than they were for corporate attorneys in New York. Jones opposed the motion, contending that state A law should apply on the issue.
The Supreme Court of state A recently adopted interest analysis as its methodology for resolving conflicts issues. It has stated that it will consider arguments based on precedent from any other states that have adopted interest analysis. Discuss reasonably plausible ways in which courts using interest analysis (including, but not limited to, New York and California) would analyze and resolve this choice of law issue. After doing so, state which manner of resolving it seems most appropriate to you, and your reasons for that conclusion.
In 1947, the federal Food and Drug Administration approved the manufacture and marketing of the drug diethylstilbestrol (“DES”) for use in preventing miscarriages. Several drug companies marketed the drug throughout the United States until 1971, when medical researchers established a possible link between exposure to DES while in utero and the development in young women of some forms of cancer. DES was then removed from the market.
Numerous law suits have been filed throughout the United States by women with medical problems that are alleged to have been caused by their mothers’ ingestion of DES while pregnant. Many such suits have been dismissed because of the inability of the plaintiff to satisfy the traditional tort requirement that she identify a specific tortfeasor as causing her injury. This inability stems from the fact that these plaintiffs’ mothers ingested the drug decades before the injury manifested itself and the lack of records or memory of the precise manufacturer of the drug that was actually ingested.
Since 1980, however, some courts have permitted such actions to continue by adopting what is known as the “market share” theory of liability. Under this theory of liability, the plaintiff need only establish that the named defendant or defendants produced and marketed DES during the time period it was ingested by her mother, and may recover from each defendant a portion of her damages proportionate to the share of the market each defendant held.
In 1997, Susan Smith brought suit in New York against five different major drug manufacturers who had marketed DES nationwide (including within New York) during the year preceding her birth in 1959. She alleged that her mother ingested DES in Pennsylvania, where she was born and resided until she moved to Massachusetts in 1984, where she has lived to the present time. She also alleged that she is suffering medical problems caused by her mother’s ingestion of DES. She is unable to identify the manufacturer of the DES her mother ingested, but, in response to the defendants’ motion for summary judgment based on that fact, has asked the court to apply the “market share” theory of liability.
The courts of Pennsylvania and Massachusetts have declined to adopt the market share theory, and they would dismiss Smith’s claim. The New York courts, however, have adopted this theory in cases brought by women who were born in New York and whose mothers ingested DES there. Smith’s case is the first of this type to be brought in New York by a non-resident whose states of birth and residence have not adopted the theory.
Smith’s connections with New York consist of a few brief visits to visit relatives there, and a half dozen visits to a New York physician, to whom her Massachusetts physician had referred her for advice and treatment in connection with her present medical problems. Each of the defendants has a permanent office in New York, where they employ between six and twelve persons. However, New York is neither their state of incorporation nor their principal place of business.
Briefly discuss (no more than fifteen minutes) whether it is constitutionally permissible for New York to assert personal jurisdiction over these defendants in Smith’s suit. Then, assuming the New York courts can assert personal jurisdiction, discuss any constitutional issues you see regarding New York’s potential application of its law on market share liability to Smith’s case. (You need not discuss what law New York would probably apply under its choice of law approach.)