Civil Procedure Class Notes 9/23/03


A bit more on Carnival


What’s the big deal about forum selection clauses?


How would they have applied in the other cases we’ve done?


How about Burger King?  There was a choice-of-law clause in it, and there just as well could have been a forum selection clause in it instead, except for the fact that Michigan statutes prohibit such clauses.


How about World-Wide?  In particular, what about Seaway?  Could there have been a forum selection clause that would have settled the jurisdiction issue?  There could have been a forum selection provision in the sales contract that said all disputes about the car must be settled in New York.  So at least some part of the dispute could have been haled into New York.


What about Mitchell v. Neff in Pennoyer?  Could Mitchell have included a forum selection clause to guarantee personal jurisdiction over Neff in the service contract?  You could easily do that!


This all goes back to the concept of consent.  Forum selection clauses and other forms of consent are an important part of any jurisdictional analysis.


That’s it for personal jurisdiction (proper)!  Now we’ll see some little additional topics that add layers to our understanding of personal jurisdiction.


Next up is:


Notice – Mullane v. Central Hanover Bank & Trust Co.


What’s a trust?  It’s a legal entity created by a grantor for the benefit of somebody else.  These are established by state statutes.


A grantor puts money into a trust and then gives up control over it to a trustee, who manages the trust not for the grantor or trustee, but rather for the beneficiary.  (In practice, the grantor, trustee, and beneficiary may be the same person.)


Recall that Hanson dealt with a trust.


In New York, we have lots of little baby trusts.  They’re expensive to manage.  So, what New York decided is that it would be more efficient to manage small trusts in a common trust fund.  In essence, one trustee manages lots of little baby trusts, which is more efficient and preserves more money for the trusts and their beneficiaries.


Under New York Banking Law, what must be done periodically with these common trust funds?  They must notify people about a certain judicial proceeding called an accounting.  Every 12-15 months the beneficiaries must be informed that you’re going to do an “accounting” and judicial settlement of accounts.  It’s not like CPA-type accounting.


Under New York law, we have to notify the beneficiaries, and it’s okay to do so by publishing notice in a newspaper.


Inter vivos trusts are ones where you get the benefits during your lifetime.  Testamentary trusts give you benefit after you’re dead.


Who is Mullane?  He was the appointed guardian of the people who have an interest in income from the trust.  Some of the people are known, and some are unknown.  How could they be unknown?  You can have the beneficiaries of your trust be your children who are alive when you die.  You don’t know which children will be alive, or even which ones you’ll have.


Vaughan is protecting the people who have an interest in the principal.


What does it mean to have an interest in the “body” or (principal) of this trust?  You want the principal to grow and not be depleted because you’re going to get it in the end.  (You’d want to invest the money in aggressive growth funds, for example.)


If you have an interest in the income, you don’t care about the principal, you just want to get current income.  (You’d want the money in high-yield bonds, for example.)


Procedural posture of Mullane


Where does this case start?  It starts in the Surrogate Court.  It’s sort of like a probate court.


Who challenges the notice provision?  It’s Mullane.  He says that his folks didn’t get adequate notice.  However, the Surrogate’s Court says that the notice is sufficient.  The next two courts affirm (the Appellate Division of the Supreme Court and the Court of Appeals of New York).  Then it goes to the United States Supreme Court.  They reverse and remand.  We discover that the form of notice used in this case is not okay.  But why?


Jurisdiction in Mullane


Is this case about personal jurisdiction?  There’s a lot of personal jurisdiction stuff in this case.  This is a classic in rem type case.  The Court says we could probably have in rem jurisdiction.  (Note that this case comes before Shaffer.)


They basically say that if the process is decent, states will have jurisdiction.  They base this view of jurisdiction, including transient jurisdiction, more or less on tradition.  Yeazell calls this “jurisdiction by necessity”.


But this case isn’t about jurisdiction at all.  It’s about notice.


Notice in Mullane


Where did the legislature get the idea that constructive service of process would be okay?  They got the idea from Pennoyer!  We were told by the Court that constructive service of process is okay with in rem actions.


What are the elements of due process in this context?  The defendant must know about the suit and be able to defend yourself.


How do we decide if notice is constitutionally okay?  The notice must be “reasonably calculated, under all circumstances, to apprise interested parties of the pendency of the action”.  It will depend on the circumstances!


Let’s apply the rule to the facts of this case.  What if a person’s whereabouts are unknown?  If the person’s whereabouts are unknown, then constructive service of process by publication is okay because it’s the best we can do.


What about someone whose interests are unknown?  Same deal.  Publication is okay because it’s the best we can do.


What about known beneficiaries with a known address?  Publication is no good.  Here are people that you know, and you know where they are.  How so?  We’ve been sending them money!  So why can’t we send them notice, too?


The Court says publication notice is not reasonably calculated to inform them of their rights if you know who they are and where they live.


Does that mean that if we mail notice, we’ll get everybody’s attention?  No, in reality we won’t.  Does that matter?  No.  Why not?  Well, we get some of them.  Why is that okay?  All these people basically have the same interests, so the people we get in touch with will be able to protect the interests of the people we miss.


This is not perfect notice.  Even if we know the people and have their address, mail might get lost.  What could we do instead that would be more sure?  We could personally serve all these people.  The Court, however, says that this is not required.


The limits of Mullane


Are there limits to what the Court says here?  Does Mullane require personal service?  Not always, though sometimes.


Does Mullane require mail notice?  Again: not always, but sometimes.  Other means of notice are okay for unknown people.  Mullane requires “reasonable notice calculated under the circumstances”, which will vary from group to group.


Does Mullane forbid publication notice?  Nope.


How do we do notice today?  We do certified mail with a receipt request.  This is certainly “reasonably calculated”.  That doesn’t mean that you have to do it that way.  FRCP Rule 4 tells you the different ways you can serve process.


Think back to Pennoyer.  Was Mitchell’s publication notice reasonably calculated to apprise Neff of the lawsuit?  Nope.  He could have just mailed it.  Applying modern stuff, Neff might get out of the original judgment based on notice even if he can’t based on minimum contacts.


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