NB: I will not test you on this material or really cover it in any depth in class but you should read it. It is on the line of "Civ Pro" and "Advanced Civ Pro" (if that course ever exists) and I want you to know about this for your practice.
Compulsory Joinder of Parties.
(Note: In the older terminology “necessary part[ies]” are the kind discussed in FRCP 19(a), who really should be joined as parties. Then a further subset of people “indispensable parties,” those who should be joined, but can’t, and in their absence the case will be dismissed.)
The Theoretical Problem: When should litigant autonomy in shaping the lawsuit give way to efficiency or justice concerns, such that we’ll override it? Imagine you wanted to throw me a birthday party and selected a particular date, my birthday. Now imagine one member of class can’t make the party that day, but the other 79 or so of you can. You’d probably stick with the original date. Now imagine I can’t come to my own birthday party. You’d cancel it. This is how this issue works except it is a lawsuit not a birthday party. Who should be invited to join? Who can’t be joined who should? And of the people who can’t be joined but should, who are so important that we would dismiss the lawsuit altogether if they can’t be joined?
The Doctrinal question: When MUST you join another party, and when does the inability to do so pose a problem?
- Should the absent party be joined? [FRCP 19(a)]
- If the outside absent should be joined, can s/he be joined? [Deals with problems of personal and subject matter jurisdiction.]
- If the outside absent should be joined and cannot be joined, what happens?
1. Should the absent party be joined?
3 kinds of required parties:
First, R. 19(a)(1)(A) party “in that person's absence, the court cannot accord complete relief among existing parties.” AKA situations where not bringing the outsider in would be unfair those already in the action.
Example: Doc enters a contract to buy plutonium for his time machine/car from Biff and George McFly. He subsequently learns that they misrepresented the grade of the plutonium and sues Biff to rescind the contract (i.e. make it void). Rescinding the K as to Biff would not be be helpful to Doc if the contract isn’t also rescinded as to McFly. So we’d want McFly joined too, if feasible. McFly is an FRCP 19(a)(1)(A) party.
Example: The Martin Flemmer Company (“Flemmer”) leases office space to Charlie Kaufman Productions (“Kaufman”), who in turn subleases the 7 and a half floor to LesterCorp. After Lester Corp takes possession, it discovers that the elevator does not properly stop on the 71/2 floor and asks for a minor alteration. Kaufman is required, under the sublease, to make reasonable accommodations. But under the original lease it cannot make changes without Flemmer’s approval and does nothing. Lestercorp sues Kaufman for specific enforcement of the sub-lease. Here too you cannot get full relief without joining the absentee. The court can order Kaufman to fix the elevator, but Kaufman cannot do so without Flemmer’s permission, so it makes sense to join Flemmer in order to get complete relief between the original parties in the case.
Other examples: Let's say you have five people party to the contract, each of whom is supposed to supply a different element of a device, and you want specific performance. Well, unless you can get all five of them before the court, you're not going to get effective specific performance. Similarly, you're not going to get effective reformation of the contract, if that's what you're trying to do. Similarly, if you have five owners of a piece of property, and you're trying to subdivide the property, or partition the property, or determine whether a security interest on the property is valid, you really need all five co- owners. This should strike you as being very commonsensical. If you want to distribute an estate or an insurance policy, you really need everybody before the court. Otherwise, you can't do effective relief for those who are before the court.
Second, FRCP 19(a)(1)(B)(i) party: “that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may: (i) as a practical matter impair or impede the person's ability to protect the interest.” AKA situations where it would be unfair to the outsider.
(Note: as a “practical matter impair or impede the person's ability to protect the interest” is somewhat problematic language. If I ran a school that was segregated pre-Brown, is there an argument that Brown as a practical matter impaired or impeded my interest such that I’d have to be joined? The problem with this language is that it appears as though it can be read such that everyone or no one will be a necessary party. Very tangled jurisprudence. For our purposes it is enough that you get the stock “common fund” problem application.)
Example: With the stock market collapsing, the federal government creates (through statute) a common fund to distribute money to investment banks based on an established formula that takes into account, inter alia, the number of employees they maintain, how much of their investment is in stocks, etc. One such bank, Gekkobank sues claiming its allotment under the fund is inadequate. The other banks would be required parties under this section. Giving more to Gekkobank means less for everyone else. Unless they are part of the lawsuit, they may, as a practical matter, not have their interests in getting their money protected.
Other examples: in any case in which you're adjudicating the rights to a limited fund, say an insurance policy. You have four people before the court on a $100,000 policy, and a fifth person is outside the courthouse. Well those four people before the court may exhaust the insurance policy, leaving nothing for the outsider.
Notice the rule says as a “practical matter” not as a legal matter. Bad precedent for you could be enough to give you an interest in the case, as a legal matter, but that’s not the test.
Third, FRCP 19(a)(1)(B)(ii) party: “that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may:... (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.”
Example: Alfred owns a California hotel. He sells it to Norman, who plans on running it with his mother. As part of the sale $50,000 is put in escrow with the Bank of America, on the condition that it will be released to Alfred if he completes all specified repairs by a fixed date. Alfred sues the bank claiming the repairs that were done were adequate, and so he is entitled to the escrow money. Norman believes that the repairs to the showers were inadequate, and therefore the funds should be released to him. Here is a case where the bank is damned if it does and damned if it doesn’t. Imagine that Alfred wins his suit and the court orders the bank to shell the money out to Alfred, who is suing it. Well then ten days later Norman sues asking for the funds. The bank is at risk of being subject to inconsistent obligations. The wisest course would be to bring both Alfred and Norman before the same court in one suit, the judgment that would enter would be binding as to both of them.
Note: Some cases fall within more than one subdivision of FRCP 19(a)(1). That’s fine.
Note: Where there is joint and several liability among joint tortfeasors (you can sue anyone of them for the full amount), joint tortfeasors are not required parties (Temple v. Synthes Corp., S. Ct. 1990). Your torts professor will teach you more about joint and several liability.
2. Can that party be joined?
Example: Doc (CA) enters a contract to buy plutonium for his time machine/car from Biff (MA) and George McFly (CA). He subsequently learns that they misrepresented the grade of the plutonium and sues Biff to rescind the contract (i.e. make it void). Assume no AIC problems. The court concludes that George is an FRCP 19(a) required party. Can that party be joined? No, there is an SMJ problem in that adding him would destroy diversity. Notice also that supplemental jurisdiction is not going to help here because § 1367(b) lists claims “by Pls against persons made parties under . . . Rule 19.”
There may also be cases where there is no PJ over the party to be joined, though this is one place where the bulge rule of FRCP 4(k)(1)(b) comes in handy.
3. If that party cannot be joined, what should you do?
3 Options: (i) Let the case go on without the absent party. (ii) Dismiss the case. (iii) Go forward without the absent party, but try the judgment to provide appropriate relief to the parties.
In the old days: you would just dismiss the action for want of an indispensable party. This was done through FRCP 12(b)(7): Every defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required. But a party may assert the following defenses by motion . . . (7) Failure to join a party under Rule 19.
So in the old days, if there were a hundred people who owned Blackacre, and you could only join 99 of them when apportioning, you threw out the whole case.
As litigation became increasingly complex (i.e., multi-party) this had to be softened. If we can’t divide blackacre the action is stalemated, and sometimes division is critical (e.g., someone desperately needs the money from a sale) and this caused proceduralists to re-think the issue. This is the realist story, the formalist story has to do with a move away from thinking of the lack of FRCP 19 required parties as a deficit in SMJ and thus power of the court, and into something else.
The softened modern approach version is shown by FRCP 19(b):
(b) When Joinder Is Not Feasible. If a person who is required to be joined if feasible cannot be joined, the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed. The factors for the court to consider include:
(1) the extent to which a judgment rendered in the person's absence might prejudice that person or the existing parties;
(2) the extent to which any prejudice could be lessened or avoided by: (A) protective provisions in the judgment; (B) shaping the relief; or (C) other measures;
(3) whether a judgment rendered in the person's absence would be adequate; and
(4) whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder.
This just screams “discretion.” “Equity and good conscience.” Judges are encouraged to be creative. For example, if you have people entitled to a settlement and one is truly unavaivable, a trial court judge COULD divide the settlement and hold one share in escrow for the missing claimant. But judge could still just dismiss if he preferred. This is very fact intensive analysis.