Jurisdiction & Indemnity in Product Liability Lawsuit: Hughesamoto & Pewjomatsu, Exams of Civil procedure

Download Jurisdiction & Indemnity in Product Liability Lawsuit: Hughesamoto & Pewjomatsu and more Exams Civil procedure in PDF only on Docsity! UNIVERSITY OF MARYLAND SCHOOL OF LAW LEGAL METHOD-PROCEDURE (3 Hours) Day Division ( D) Monday, December 16, 1985 Professor Condlin 9:10 a.m. - 12:10 p.m. No.____ Signature:_________________________ Printed Name:________________________________ INSTRUCTIONS: Sign and print your name in the blanks above. Put the number found above on each of your blue books on the outside cover and on the envelope. Answer each question in a separate blue book and number the blue books by question. Do not put your name on the blue books or on the envelope at any place. When you turn in your blue books, return the questions. Each student is responsible for ensuring that all the completed examination papers and the examination question sheets are handed in to the examination administrator. No examination papers will be accepted after the examination administrator has collected the materials. Upon completion of the examination, put your answers to the examination in the envelope, fasten the flap with the clasp, and hand in the envelope to the exam administrator. Be sure to enclose all of your answers -- you will be graded only on what is inside the envelope. Do not put the exam questions in the envelope. Hand in the questions separately to the exam administrator. Do not put your name anywhere on the envelope or on your answers. Both the envelope and your answers should contain your exam number, the course name and the instructor EACH ANSWER COUNTS FOR ONE-THIRD OF THE TOTAL GRADE, SO BUDGET YOUR TIME ACCORDINGLY. - - - - - - - - - - - - I (70 minutes) In January 1985 William Donald Schaffer ("Bill," or B. S. if you prefer) pulled his nephew's ten year old Pewjoe "Majestic" (a bicycle) out from under a pile of oily rags and back issues of Boy's Life magazine in the basement of his South Baltimore rowhouse, in order to ride it to City Hall to enter it in the Baltimore's Best Bicycle Contest. He had last ridden as a youth but expected that everything he needed to know would come back; after all, he was Mayor, and soon he would be Governor. The ride went as planned until the cobblestones between the Science Center and what used to be called Rash Field (the cobblestones were a detour, but the Mayor had extra time and wanted to retrace the route of The Great Baltimore Bike Race), where the bike's rear tire and tube exploded, sending both the bike and the Mayor out of control and crashing into "Yuai," the shrine of Baltimore's sister city of Kawasaki, Japan. The Mayor suffered extensive internal injuries and spent six weeks in University hospital recovering; the shrine was totaled. His first reaction upon regaining consciousness was that somebody was going to pay. After an extensive investigation into the cause of the accident, conducted by city employees on their own time and paid for by a Urban Development Action Grant, the Mayor filed a products liability lawsuit in Maryland State Court against Pewjomatsu Rubber Industrial Company, Limited, a Taiwanese company that had manufactured the bicycle, and The Great Wall Transportation Company, a Baltimore County retailer that had sold the bicycle to the Mayor's nephew in 1975. Personal jurisdiction over Pewjomatsu was based on the "transacting business" section of the Maryland long arm statute, the full text of which is set out below. (Pewjomatsu has not contested jurisdiction.) Pewjomatsu, in turn, filed a cross-complaint seeking indemnity from its co-defendant (Great Wall), and a third-party complaint seeking indemnity from the Hughesamoto Metal Industry Company, Limited, a Japanese company that manufactured the bicycle tire tube's valve assembly. Hughesamoto is a major producer of valve assemblies for tire tubes sold throughout the world, including the tubes of all major international bicycle, motorcycle and automobile manufacturers. Hughesamoto moved to dismiss Pewjomatsu's third-party complaint for lack of in personam jurisdiction. The third party complaint established that Hughesamoto has the following contacts with Maryland. For five years, from 1970 to 1975, Hughesamoto supplied all of the valve assemblies for Pewjomatsu bicycle tire tubes. This amounted to a total sale of approximately 1,350,000 valve assemblies, sold in roughly equal yearly increments. Approximately 7% of the Pewjomatsu bicycles sold during that five year period were sold in Maryland. Profits from the sale of valve assemblies to Pewjomatsu represented 1.24 % of Hughesamoto's gross income for 1974 and .44 % of its gross income for 1975. After 1975, Hughesamoto stopped selling valve assemblies to Pewjomatsu when the latter found an American supplier. Information on the extent to which Hughesamoto valve assemblies are incorporated into the bicycle tubes of other manufacturers sold in Maryland is sketchy. Rough estimates by counsel for Pewjomatsu, based on a survey of tubes offered for must decide and then stops. I would like you to complete the opinion by answering the questions at the end of the excerpt. "This case comes to us on appeal from the District Court's decision to grant defendants' motion to dismiss under the doctrine of forum non conveniens. Plaintiffs claim that under the doctrine of Erie v. Tompkins, the District Court was required to apply the state forum non conveniens rule, and that this rule would have precluded dismissal. "Plaintiffs are fifty-eight Costa Rican agricultural workers. They claim to have been sterilized as a result of their exposure in Costa Rica to pesticides manufactured by either Dow Chemical Company or Shell Oil Company. In May 1983, they sued these companies in Florida state court seeking damages under product liability theories of negligence, strict liability in tort and implied warranty. The Florida court had personal jurisdiction over the defendants because they were qualified to transact business in the State of Florida and thus considered residents of the state for jurisdictional purposes. Fla. Stat. s. 48.091 (1983). "Defendants removed the case to the U.S. District Court for the Southern District of Florida, pursuant to 28 U.S.C. s. 1332(a)(2) (1982), and, thereafter, moved to dismiss the action on the ground of forum non conveniens. They argued that plaintiffs should prosecute their claims in the courts of Costa Rica: the plaintiffs are Costa Rican citizens; they were injured in Costa Rica; and substantially all of the evidence and witnesses are in Costa Rica. Furthermore, Florida's choice of law rule would require the district court to apply the substantive law of Costa Rica. “Plaintiffs, in response, argued that the Erie doctrine requires a federal district court, sitting in a diversity case, to apply the state forum non conveniens rule rather than the federal rule. The Florida rule precludes a dismissal of an action under the doctrine of forum non conveniens when one of the parties to a litigation is a resident of Florida. Other states of the Union apparently have adopted the substance of the federal rule as their own and would dismiss plaintiffs case under the circumstances presented here. See, e.g., Alcoa Steamship Co. v. M/V Nordic Regent, 654 F.2d 147, 155 n.10 (2nd Cir. 1980) (“[a]pparently the only state were the court of last resort has continued to reject the federal doctrine [of forum non conveniens] as a matter of law is Florida"). Therefore, the plaintiffs continued, the district court transgressed the Erie rule in dismissing the present action. "The district court, after weighing the traditional forum non conveniens factors as described by the federal rule, concluded that the convenience of the parties, the witnesses and the court, and the interests of justice, dictated that the case be dismissed, and it granted the defendants' motion. In appealing, the plaintiffs do not dispute the district court's interpretation of the doctrine as it has been developed in the federal courts, and they do not dispute the court's weighing of the relevant factors assuming that the federal rule was the proper one to apply. Their argument is simply that Erie requires the application of the state rule, and under the Florida rule the plaintiff' action may not be dismissed." a) State whether you agree or disagree with the plaintiff's argument and give your reasons for that decision. b) If the federal rule of forum non conveniens was a Federal Rule of Civil Procedure would your decision be different? If so, why? If not, why not? - - - - - - - - - - - - QUESTION III (70 minutes) This question asks you to rule on a motion to remand in the United States District Court case of Paine v. Drillco. Plaintiff, Phillip Paine, a former employee of defendant Drillco Corporation, is a citizen of the United States and a resident of Maryland. Drillco is incorporated in the state of Delaware, transacts business in all fifty states, and has its principle place of business in Washington, D.C.. Plaintiff began work for Drillco in September, 1971, as a general purpose electrician at its McMillan Refinery in the Tacoma Park section of the District. As a result of an exemplary work record, he was promoted at regular intervals, reaching the highest possible rank of Supervisor in September, 1978. He remained in the position of Supervisor until August of 1984, when he was offered an opportunity to go to Venezuela for one year to work for a subsidiary of Drillco on a refinery upgrading project. He decided to take the assignment. Prior to going to Venezuela, the plaintiff was promised an increase in salary, a cost of living bonus, and adequate housing for himself and his family. The housing was described in elaborate detail, and the plaintiff was even shown pictures of the particular type of house he and his family could expect to live in. Upon their arrival in Venezuela, however, plaintiff and his family were assigned to substandard housing, not at all of the type promised. Other Drillco workers also taking the Venezuela assignment, even those arriving at the Drillco Compound on the same day as the plaintiff, were assigned to the promised housing. Plaintiff objected strongly, and was told that something would be done, but nothing was. In November of 1984, about two months after their arrival, while the plaintiff and his family were still waiting for the housing problem to be corrected, plaintiff learned of a medical emergency affecting his wife's mother, and a problem with the mortgage on his Maryland house. He approached his Venezuelan supervisors and asked for permission to return to Maryland to deal with these problems. Plaintiff alleges that he and his family were given permission to return to Maryland at Company expense for two weeks, and they did so during the last two weeks of December, 1984. When the plaintiff returned to Venezuela in January of this year, however, he was told that he had been fired for leaving Venezuela without permission. Plaintiff protested that other employees of Drillco were regularly given permission to return to the United States to deal with personal emergencies, but again, to no avail. Plaintiff then filed suit against Drillco in Maryland state court, alleging that he had been given substandard housing and not allowed to return to the United States for emergency purposes because he was black, (he was the only black employee of Drillco in Venezuela), and that his firing was in retaliation for exercising the same rights that white employees of Drillco were regularly given. He alleged that such treatment was employment discrimination within the terms and in violation of Title VII of the United States Civil Rights Act, and the Maryland and District of Columbia employment discrimination statutes. Title VII gives original jurisdiction over employment discrimination actions brought pursuant to its provisions to federal district courts, but does not make this jurisdiction exclusive, so Paine was perfectly within his rights in filing his complete action, including his federal claim, in state court. Drillco answered on the merits, contending that its treatment of the plaintiff was excused by specific sections of both the federal and state statutes dealing with behavior by United States corporations operating in foreign countries. Its position, in effect, was that both federal and state statutes gave Drillco a defense to the plaintiff's claims. At the same time that it answered on the merits, Drillco also filed a third party complaint, pursuant to FRCP 14, against the Great Baltimore Whitewash Insurance Company, which had agreed, in the form of an insurance contract, to indemnify Drillco for any damages assessed against it by a court of competent jurisdiction, for a violation of any employment discrimination statute, state or federal. The Great Whitewash Company, incorporated in Maryland and having its principle place of business in Baltimore, answered on the merits, alleging that its liability to Paine was derivative, extending only to the limits of Drillco's liability. It also filed a third-party defendant claim against Paine, pursuant to FRCP 14, arising out of an employment discrimination claim successfully prosecuted against Drillco in 1983, for which it had to indemnify the corporation, and for which Paine had been responsible. Paine was the Drillco employee guilty of the discriminatory behavior but the company had been found liable on a theory of respondeat superior. Great Whitewash was now seeking to recover the damages it had to pay on that prior claim from Paine. Paine answered this third party defendant claim on the merits. Drillco then moved to remove the entire action, including the state employment discrimination claim and the third party proceedings against Great Whitewash and Paine, to Maryland federal district court pursuant to 28 U.S.C. s. 1441(c). The district court granted the motion. Drillco than moved to dismiss plaintiff's claims in their entirety, arguing that the claims were barred as a matter of law. The District Court agreed with respect to the Title VII claim and dismissed it, but it allowed the state and third-party claims to proceed. In the Court's view, the state statutes did not contain the same "acting abroad" defense as the federal statute. Paine then moved to remand the case, or what was left of it, to the Maryland state court. What action should the federal district judge take on this motion? In giving your answer, please discuss all of the