ANSWERS TO PROBLEMS
1. On June 15, a newspaper columnist predicted that the coast of State X would be flooded
on the following September 1. Relying on this pronouncement, Gullible quit his job and
sold his property at a loss so as not to be financially ruined. When the flooding did not
occur, Gullible sued the columnist in a State X court for damages. The court dismissed
the case for failure to state a cause of action under applicable State law. On appeal, the
State X Supreme Court upheld the lower court. Three months after this ruling, the State Y
Supreme Court heard an appeal in which a lower court had ruled that a reader could sue
a columnist for falsely predicting flooding.
(a) Must the State Y Supreme Court follow the ruling of the State X Supreme Court as a
matter of stare decisis?
(b) Should the State Y lower court have followed the ruling of the State X Supreme Court
until the State Y Supreme Court issued a ruling on the issue?
(c) Once the State X Supreme Court issued its ruling, could the United States Supreme Court
overrule the State X Supreme Court?
(d) If the State Y Supreme Court and the State X Supreme Courts rule in exactly opposite
ways, must the United States Supreme Court resolve the conflict between the two courts?
Answer: Stare Decisis in the Dual Court System. a. No. A decision of one state’s supreme
court is not binding on another state’s supreme court. It may be persuasive, but it’s not
binding.
2. State Senator Bowdler convinced the legislature of State Z to pass a law requiring all
professors to submit their class notes and transparencies to a board of censors to be sure
that no “lewd” materials were presented to students at State universities. Professor
Rabelais would like to challenge this law as being violative of his First Amendment
rights under the U.S. Constitution.
(a) May Professor Rabelais challenge this law in the State Z courts?
(b) May Professor Rabelais challenge this law in a Federal district court?
3. While driving his car in Virginia, Carpe Diem, a resident of North Carolina, struck Butt,
a resident of Alaska. As a result of the accident, Butt suffered over $80,000 in medical
expenses. Butt would like to know if he personally serves the proper papers to Diem
whether he can obtain jurisdiction against Diem for damages in the following courts:
(a) Alaska State trial court
(b) Federal Circuit Court of Appeals for the Ninth Circuit (includes Alaska)
(c) Virginia State trial court
(d) Virginia Federal district court
(e) Federal Circuit Court of Appeals for the Fourth Circuit (includes Virginia and North
Carolina)
(f) Virginia equity court
(g) North Carolina State trial court.
Answer: Jurisdiction. a. The only way that Butt could get proper service on Diem for
purposes of suing Diem in an Alaska state court would be if Diem somehow came into
the state borders and Butt served him while he was inside the state. Butt could not use a
long-arm statute to get service since there would have been no real connection between
4. Sam Simpleton, a resident of Kansas, and Nellie Naive, a resident of Missouri, each
bought $85,000 in stock at local offices in their home States from Evil Stockbrokers, Inc.
(“Evil”), a business incorporated in Delaware with its principal place of business in
Kansas. Both Simpleton and Naive believe that they were cheated by Evil Stockbrokers
and would like to sue Evil for fraud. Assuming that no Federal question is at issue, assess
the accuracy of the following statements:
(a) Simpleton can sue Evil in a Kansas State trial court.
(b) Simpleton can sue Evil in a Federal district court in Kansas.
(c) Naive can sue Evil in a Missouri State trial court.
(d) Naive can sue Evil in a Federal district court in Missouri.
Answer: Subject Matter Jurisdiction a. Yes. You can always sue for fraud in state court.
There are sufficient minimum contacts with that state, since Evil’s principal place of
business is located there.
b. Simpleton cannot successfully sue Evil for fraud in federal district court because the
only possible basis would be diversity of citizenship since no federal question is
5. The Supreme Court of State A ruled that, under the law of State A, pit bull owners must
either keep their dogs fenced or pay damages to anyone bitten by the dogs. Assess the
accuracy of the following statements:
(a) It is likely that the United States Supreme Court would issue a writ of certiorari in the
“pit bull” case.
(b) If a case similar to the “pit bull” case were to come before the Supreme Court of State B
in the future, the doctrine of stare decisis would leave the court no choice but to rule the
same way as the Supreme Court of State A ruled in the “pit bull” case..
6. The Supreme Court of State G decided that the United States Constitution requires
professors to warn students of their right to remain silent before questioning the students
about cheating. This ruling directly conflicts with a decision of the Federal Court of
Appeals for the circuit that includes State G.
(a) Must the Federal Circuit Court of Appeals withdraw its ruling?
(b) Must the Supreme Court of State G withdraw its ruling?
7. Thomas Clements brought an action to recover damages for breach of warranty against
defendant, Signa Corporation. (A warranty is an obligation that the seller of goods
assumes with respect to the quality of the goods sold.) Clements had purchased a
motorboat from Barney’s Sporting Goods, an Illinois corporation. The boat was
manufactured by Signa Corporation, an Indiana corporation with its principal place of
business in Decatur, Indiana. Signa has no office in Illinois and no agent authorized to
do business on its behalf within Illinois. Clements saw Signa’s boats on display at the
Chicago Boat Show. In addition, literature on Signa’s boats was distributed at the
Chicago Boat Show. Several boating magazines, delivered to Clements in Illinois,
contained advertisements for Signa’s boats. Clements also had seen Signa’s boats on
display at Barney’s Sporting Goods Store in Palatine, Illinois, where he eventually
purchased the boat. A written warranty issued by Signa was delivered to Clements in
Illinois. Although Signa was served with a summons, it failed to enter an appearance in
this case. The court entered a default order and, subsequently, a judgment of $6,220
against Signa. Signa appealed. Decision?
Answer: Personal Jurisdiction. Judgment for Clements. Under Section 17 of the Illinois
Long-Arm Statute, a nonresident corporation which transacts business within the State of
Illinois is subject to personal jurisdiction in the Illinois state courts in any lawsuit arising
out of business. The assertion of personal jurisdiction, however, must satisfy the due
8. Mariana Deutsch worked as a knitwear mender and attended a school for beauticians.
The sink in her apartment collapsed on her foot, fracturing her big toe and making it
painful for her to stand. She claims that as a consequence of the injury she was
compelled to abandon her plans to become a beautician because that job requires long
periods of standing. She also asserts that she was unable to work at her current job for a
month. She filed a tort claim against Hewes Street Realty for negligence in failing
properly to maintain the sink. She brought the suit in Federal district court, claiming
damages of $25,000. Her medical expenses and actual loss of salary were less than
$1,500; the rest of her alleged damages were for loss of future earnings as a beautician.
Hewes Street moved to dismiss the suit on the basis that Deutsch’s claim fell short of the
jurisdictional requirement, which then was $10,000, and that the Federal court therefore
lacked subject matter jurisdiction over her claim. Decision?
Answer: Federal Jurisdiction. Judgment for Deutsch. The general rule for determining the
$10,000 jurisdictional amount in controversy requirement (as it was at the time of this
case; the requirement now is $75,000) is that an amount alleged in good faith to exceed
$10,000 will satisfy the requirement, unless it appears to be a legal certainty that the
9. Vette sued Aetna under a fire insurance policy. Aetna moved for summary judgment on
the basis that the pleadings and discovered evidence showed a lack of an insurable
interest in Vette. (An “insurable interest” exists where the insured derives a monetary
benefit or advantage from the preservation or continued existence of the property or
would sustain an economic loss from its destruction.) Aetna provided ample evidence to
infer that Vette had no insurable interest in the contents of the burned building. Vette also
provided sufficient evidence to put in dispute this factual issue. The trial court granted
the motion for summary judgment. Vette appealed. Decision?
Answer: Summary Judgment. Judgment for Vette. Summary judgment should not be
entered unless the pleadings, stipulations, affidavits, and admissions in the case show that
there exists no genuine issue as to any material fact. In passing upon a motion for
10. Mark Womer and Brian Perry were members of the US Navy and were stationed in
Newport, Rhode Island. On April 10, Womer allowed Perry to borrow his automobile so
that Perry could visit his family in New Hampshire. Later that day, while operating
Womer’s vehicle, Perry was involved in an accident in Manchester, New Hampshire. As
a result of the accident, Tzannetos Tavoularis was injured. Tavoularis brought this
action against Womer in a New Hampshire superior court, contending that Womer was
negligent in lending the automobile to Perry when he knew or should have known that
Perry did not have a valid driver’s license. Womer sought to dismiss the action on the
ground that the New Hampshire courts lacked jurisdiction over him, citing the following
facts: (a) he lived and worked in Georgia; (b) he had no relatives in New Hampshire; (c)
he neither owned property nor possessed investments in New Hampshire; and (d) he had
never conducted business in New Hampshire. Did the New Hampshire courts have
jurisdiction? Explain.
Answer: Personal Jurisdiction. Yes, judgment affirmed. The long-arm statute in New
Hampshire provides that any person who “in person or through an agent . . . commits a
tortious act within this state . . . submits himself . . . to the jurisdiction of the courts of this
state as to any cause of action arising from or growing out of the [tortious] act . . .”
11. Kenneth Thomas brought suit against his former employer, Kidder, Peabody &
Company, and two of its employees, Barclay Perry and James Johnston, in a dispute
over commissions on sales of securities. When he applied to work at Kidder, Peabody &
Company, Thomas had filled out a form, which contained an arbitration agreement
clause. Thomas had also registered with the New York Stock Exchange (NYSE). Rule 347
of the NYSE provides that any controversy between a registered representative and a
member company shall be settled by arbitration. Kidder, Peabody is a member of the
NYSE. Thomas refused to arbitrate, relying on Section 229 of the California Labor Code
which provides that actions for the collection of wages may be maintained “without
regard to the existence of any private agreement to arbitrate.” Perry and Johnston filed
a petition in a California State court to compel arbitration under Section 2 of the
Federal Arbitration Act. Should the petition of Perry and Johnson be granted?
Answer: Arbitration. Yes, the petition should be granted. Judgment for Perry and Johnston.
When it passed the Federal Arbitration Act, Congress declared a national policy favoring
12. Steven Gwin bought a lifetime Termite Protection Plan for his home from the local
office of Allied-Bruce, a franchise of Terminix International Company. The plan
provided that Allied-Bruce would “protect” Gwin’s house against termite infestation,
reinspect periodically, provide additional treatment if necessary, and repair damage
caused by new termite infestations. Terminix International guaranteed the fulfillment of
these contractual provisions. The plan also provided that all disputes arising out of the
contract would be settled exclusively by arbitration. Four years later, Gwin had
Allied-Bruce reinspect the house in anticipation of selling it. Allied-Bruce gave the
house a “clean bill of health.” Gwin then sold the house and transferred the Termite
Protection Plan to Dobson. Shortly thereafter, Dobson found the house to be infested
with termites. Allied-Bruce attempted to treat and repair the house, using materials from
out of state, but these efforts failed to satisfy Dobson. Dobson then sued Gwin,
Allied-Bruce, and Terminix International in an Alabama state court. Allied-Bruce and
Terminix International asked for a stay of these proceedings until arbitration could be
carried out as stipulated in the contract. The trial court refused to grant the stay. The
Alabama Supreme Court upheld that ruling, citing a state statute that makes predispute
arbitration agreements unenforceable. The court found that the Federal Arbitration Act,
which preempts conflicting state law, did not apply to this contract because its
connection to interstate commerce was too slight. Was the Alabama Supreme Court
correct? Explain.
Answer: Arbitration. No, the Alabama Supreme Court was wrong in upholding the trial
court’s refusal to grant a stay. The trial court should have granted the stay to allow
arbitration to be carried out. The Federal Arbitration Act provides that written arbitration
ANSWERS TO “TAKING SIDES” PROBLEMS
John Connelly suffered personal injuries when a tire manufactured by Uniroyal failed while
his 1969 Opel Kadett was being operated on a highway in Colorado. Connelly’s father
had purchased the automobile from a Buick dealer in Evanston, Illinois. The tire bore the
name “Uniroyal” and the legend “made in Belgium” and was manufactured by
Uniroyal, sold in Belgium to General Motors, and subsequently installed on the Opel
when it was assembled at a General Motors plant in Belgium. The automobile was
shipped to the United States for distribution by General Motors. It appears that between
the years 1968 and 1971 more than 4,000 Opels imported into the United States from
Antwerp, Belgium, were delivered to dealers in Illinois each year; that in each of those
years between 600 and 1,320 of the Opels delivered to Illinois dealers were equipped
with tires manufactured by Uniroyal, and that the estimated number of Uniroyal tires
mounted on Opels delivered in Illinois within each of those years ranged from 3,235 to
6,630. Connelly brought suit in Illinois against Uniroyal to recover damages for personal
injuries. Uniroyal asserted that it was not subject to the jurisdiction of the Illinois courts
because it is not registered to do business and has never had an agent, employee,
representative, or salesperson in Illinois; that it has never possessed or controlled any
land or maintained any office or telephone listing in Illinois; that it has never sold or
shipped any products into Illinois, either directly or indirectly; and that it has never
advertised in Illinois.
a. What arguments could Connelly make in support of its claim that Illinois courts have
jurisdiction over Uniroyal?
b. What arguments could Uniroyal make in support of its claim that Illinois courts do
not have jurisdiction over it?
c. Who should prevail? Explain.
ANSWER:
a. Connelly could argue that Uniroyal was subject to the jurisdiction of the Illinois
courts under that state’s long-arm statute because Uniroyal had transacted
business in Illinois and that business is the subject matter of Connelly’s lawsuit.
Uniroyal argues that the requirements of due process are not satisfied unless a corporation
has exercised the privilege of conducting activities within the state and thereby enjoyed
the benefits and protections of the laws of that state and that there has been no action on
its part by which it purposely availed itself of the privilege of conducting activities within
“A manufacturer whose products pass through the hands of one or more middlemen
before reaching their ultimate users cannot disclaim responsibility for the total
distribution pattern of the products. If the manufacturer sells its products in circumstances
such that it knows or should reasonably anticipate that they will ultimately be resold in a
particular state, it should be held to have purposefully availed itself of the market for its