Recognizing Party and Nonparty Interests in Written Civil Procedure Laws

By Parness, Jeffrey A.; Sennott, Daniel J. | The Review of Litigation, Spring 2001 | Go to article overview
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Recognizing Party and Nonparty Interests in Written Civil Procedure Laws


Parness, Jeffrey A., Sennott, Daniel J., The Review of Litigation


I. Introduction

Since their inception on September 16, 1938, the Federal Rules of Civil Procedure have largely directed civil litigation procedures in American trial courts, particularly in the federal district courts. The organization of the rules chiefly reflects the natural progression of a civil case from the filing of a claim to the enforcement of a judgment. The rules have been periodically updated to meet changing practices and expectations.1 At the outset and through the years, however, the rules have ignored certain party and nonparty interests that are regularly considered during civil cases.

The Federal Rules of Civil Procedure have always been tailored chiefly to trials and more recently to settlements of claims between named parties. The rules focus on formal pleadings of alleged breaches of substantive rights involving named parties. Yet many civil cases also concern important party and nonparty interests beyond those in the presented claims. Consider, for example, personal injury cases wherein the true conflicts are often not over the pleaded claims, but over related interests including attorney's contingency fees; hospital, physician, worker's compensation or other liens; subrogation; insurance coverage; indemnification; and contribution. The absence of written rules governing party and nonparty interests has led to unfortunate misunderstandings. Given the continuing recognition and, in many instances, the expansion of party and nonparty interests in personal injury and other civil cases, it is time to rewrite the Federal Rules of Civil Procedure and other American civil procedure laws to better reflect the way the civil justice system truly operates.

This Article will demonstrate how American trial courts often deal with party and nonparty interests that are outside pleaded claims and are largely unrecognized in written civil procedure laws. The Article illustrates using Kokkonen v. Guardian Life Insurance Company of America,2 a case in which the United States Supreme Court set out guidelines for ancillary jurisdiction.

Both federal and state civil trial courts often employ ancillary jurisdiction to address party and nonparty interests outside of presented claims. Ancillary jurisdiction can cover two forms of interests: public interests such as citations for civil contempt and sanctions for litigation misconduct, and private interests such as liens and civil claim assignments. This Article will explore these private interests.

Ancillary jurisdiction is relevant to both private party and nonparty interests at many stages of civil litigation. This Article will explore four stages: (1) the early search for subject matter jurisdiction, (2) the presentation of claims for resolution, (3) the pretrial conference, and (4) the enforcement of judgments. We hope this Article will demonstrate the need for written civil procedure laws that better reflect the private interest resolutions occurring in American civil trial courts.

In Kokkonen, the named parties entered into a settlement agreement to resolve a pending federal district court diversity case.4 Upon settlement, the case was voluntarily dismissed by stipulation under Federal Rule of Civil Procedure 41.5 Kokkonen, an insurance agent, allegedly breached the settlement agreement with the defendant insurer by refusing to return certain documents. The district court enforced these settlement terms. However, in a unanimous decision, the United States Supreme Court denied enforcement because of a lack of federal court subject matter jurisdiction.6 The Court said, "Neither the Rule nor any provision of law provides for jurisdiction of the court over disputes arising out of an agreement that produces the stipulation."7 Finding that the settlement agreement required its own basis for subject matter jurisdiction, the Court found no independent basis for jurisdiction under any statute.8 Further, the Court explained that ancillary jurisdiction was possibly available but extended only to "permit disposition.

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