civil_procedure_subject_matter_jurisdiction by wulinqing


									                               CIV PRO – SUBJECT MATTER JURISDICTION                                           7/13/2011
      A. Generally: Once PJ (including notice and opportunity to be heard) is proper, SMJ must be determined. SMJ
         simply means that a P must file suit in a court permitted by relevant law to entertain the type of claim

      B. Choice is between federal or state court: Federal district courts have limited SMJ and can only hear cases as
         prescribed by federal statutes and the Constitution. State trial courts have general SMJ and hear any
         recognizable claim.

      C. Concurrent SMJ: When a case satisfies the SMJ of both the state and federal court systems, there is
         concurrent SMJ. In this case, the P can file in either court.

      A. State court have general SMJ: While not all courts in a state can hear all cases, the courts of a particular state,
         in the aggregate, have general SMJ. Many states have specialized tribunals to hear specific cases, such as
         probate courts, juvenile courts, and traffic courts.

      B. There in one exception to the general SMJ of state courts: The federal district courts have exclusive SMJ
         over cases involving admiralty proceedings, bankruptcy matters, patent and copyright infringement claims,
         federal antitrust, and securities laws.

      C. Most grants of federal jurisdiction are not exclusive: Some civil rights cases can be brought under both
         federal and state law.

      D. Choice of law rules are the same: Whether you file in state or federal court the law will be the same. If state
         law applies then both apply state law. If federal law applies then both apply federal law.

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                                CIV PRO – SUBJECT MATTER JURISDICTION                                             7/13/2011
       A. There are a number of reasons a P may prefer a federal forum:
          1. The applicable rules governing the procedures to be followed during the trial may be more liberal than the
             state rules.
          2. Uniformity of application of federal law.
          3. The federal court may be more conveniently located than the nearest state court.
          4. In federal question cases, the federal judiciary may be in the best position to enforce federal law, especially
             when it has been unpopular in the forum state (e.g., civil rights cases).
          5. In diversity cases, to avoid prejudice to out of state litigants.
          6. Federal judges are often are perceived as having more expertise than their state counterparts.
          7. Further, they may be subject to fewer outside pressures because they are not elected but appointed for life.
             State court judges are elected.

       B. Drawbacks: Adds to the federal docket. Having to apply the substantive law of the forum state in diversity
          actions minimizes the role of the federal judiciary.

       C. The constitutional grants and role of Congress: Article III of the Constitution specifies the powers of the
          federal court:

          1. Federal judges: Federal judges are appointed for life and can never have their pay reduced. They can only
             be removed by impeachment.

          2. Constitutional grant is well settled: Most problems regarding the proper invocation of federal jurisdiction
             involve interpretation of the jurisdictional statutes passed by Congress, and not the provisions of Article III.

       D. SMJ cannot be waived or consented to: Under Rule 12(h)(3), whenever it appears by suggestion of the
          parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.

          1. Federal court must have SMJ: The parties to the litigation cannot confer SMJ on a federal court by

          2. Defense of lack of SMJ is not waivable: A federal court’s lack of SMJ is a defense that can never be
             waived, even after judgment (on appeal).

          3. Implications: If a case is dismissed for lack of SMJ, the P has to start over in state court. P may run into
             statute of limitation problems. Even the P can move to dismiss for lack of SMJ.

          4. P’s burden to establish SMJ: There is a presumption against federal jurisdiction. The P must properly
             plead that federal jurisdiction exists. If the D challenges, the P assumes the burden of proving that
             jurisdiction exists.

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                               CIV PRO – SUBJECT MATTER JURISDICTION                                             7/13/2011
      A. Alienage jurisdiction under §1332(a)(2):Alienage jurisdiction is a small percentage of cases and there is no
         movement to abolish it. Two reasons for alienage jurisdiction:

         1. Protects aliens from bias: It gives aliens involved in litigation with American citizens a forum free from
            political influence.

         2. Foreign policy: It demonstrated to foreign countries that the U.S. treats litigation involving their citizens or
            subjects as a matter of such importance as to justify a place on the dockets of the national, as opposed to
            local, courts.

      B. Reasons for diversity jurisdiction:

         1. Neutral forum: Provides a neutral forum – free from local bias or influence – for resolution of cases
            between citizens. See Pennzoil Co. v. Texaco, Inc.

         2. Access to a federal judge: Provides a federal forum for an out-of-state litigant who feared that he might be
            the victim of local bias, or be “hometowned,” if forced to litigate before the locally selected state court

         3. Encourage commerce: There was also an interest in relieving the anxiety of commercial interests. An
            impartial federal forum may have made it easier for enterprises to invest in other states, and thus may have
            fostered economic expansion.

      C. Reasons against diversity jurisdiction:

         1. Local bias no longer an issue: Local bias and the fear of local bias have largely disappeared in the modern
            era of mass communication and travel.

         2. Choice of law is no effected: Diversity jurisdiction only change the judge who preside and not the law that
            applies, and thus cannot protect litigants from biased laws.

         3. Inefficient use of federal resources: Federal judges should be freed up to work on cases involving federal
            substantive law

      D. Must satisfy the complete diversity rule: Strawbridge v. Curtiss establishes the complete diversity rule which
         states that diversity exists only if all Ps are of diverse citizenship from all Ds.

         1. Rationale: The underlying assumption is that the presence of citizens from a particular state on both sides
            of a case will neutralize any possibility of bias affecting litigants from other states, meaning that no federal
            forum is necessary.

         2. When is diversity determined?: Citizenship (and amount in controversy) are determined at the time the
            cause of action is brought.

         3. Tactics: Validity of tactics for creating and destroying diversity:

             (a) Failure to join an indispensable party: A P cannot circumvent the statutory requirements simply by
                 failing to join a diverse party if the party is “indispensable” to the litigation. Nondiverse parties can be
                 dismissed from the suit so long as they are not indispensable

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                        CIV PRO – SUBJECT MATTER JURISDICTION                                           7/13/2011
       (b) Moving to another state: A prospective litigant can move to a state other than the one of the potential
           D. However, the P must still must establish domicile there.

       (c) Joining a non-diverse party: One possible way of destroying diversity is to join as a D a party of the
           same citizenship as the P. In response, the federal courts have been willing, upon showing that a joined,
           nondiverse D has no real connection with the litigation, to pierce the guise of non-diversity and permit
           the exercise of diversity jurisdiction by way of removal.

E. How is the citizenship of individuals determined?: Determination of one’s State citizenship is determined by
   federal law, not State law:

   1. Timing: The diverse citizenship among adverse parties must be present at the time the complaint is filed.
      Jurisdiction is unaffected by subsequent changes in the citizenship of the parties.

   2. Citizenship is determined by domicile: For diversity purposes, citizenship means domicile; mere
      residence in the state is not sufficient.

   3. Where is a person domiciled?: A person can only have one domicile at a time and thus can only be the
      citizen of one state at a time.

       (a) At birth: Your domicile at birth is your parents’ and remains so unless you affirmatively change it.

       (b) Changing domiciles: You can change your domicile by taking up residence in another state with intent
           to make that your “true, fixed, and permanent home and principal establishment. Two requirements:

          (1) Must physically move to the new state; AND

          (2) Must mentally intend to make the new state your fixed home. Subjective intent to stay may be
              determined by voter registration, purchase of a house, payment of taxes, in-state college tuition,
              place of employment.

       (c) Marriage: For diversity purposes a person does not have his domicile or State citizenship changed
           solely by reason of his marriage to an alien.

F. How is the citizenship of aliens determined?:

   1. Permanent residents: An alien admitted to the U.S. for permanent residence is, for diversity purposes, a
      citizen of the state in which he is domiciled. In this case, the alien would be nondiverse if he attempted to
      bring suit against a citizen of the state he was domiciled in. However, two diverse permanent resident aliens
      generally cannot bring suit against each other in a diversity action.

   2. Claims between two aliens: The U.S. Constitution precludes jurisdiction of claim between two aliens. The
      suit can brought in state court.

   3. Dual citizenship: In most cases where a U.S. citizens has dual citizenship, the foreign citizenship cannot
      be used to create alienage jurisdiction where diversity would not exist. Some courts even interpret
      complete diversity to mean that if a party has dual citizenship, the other side must be diverse from both of
      those citizenships.

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                            CIV PRO – SUBJECT MATTER JURISDICTION                                                              7/13/2011

   1. Pat, a citizen of NY, forms the intent to change his domicile to California, and sets out to drive to establish his new home. On the
       way, in Nevada, she is involved in an auto wreck w/ Dan, a citizen of California. She suffers damages of more than $75,000 and
       is hospitalized in Nevada. What result? Pat cannot invoked diversity jurisdiction b/c he did not physically make it to California.
       Therefore he is still a citizen of NY.

   2. Paul, a citizen of TX, properly institutes a diversity of citizenship claim against Donna, a citizen of OK. After filing, but before
       the case proceeds to trial, Paul becomes a citizen of OK. Donna them moves to dismiss for lack of SMJ. What result? There is
       proper diversity jurisdiction b/c citizenship is determined at the time the cause of action is brought.

   3. Pam a citizen of the U.S. domiciled abroad in New Zealand, sues Doris, asserting a state law claim for $100,000. What result?
       There cannot be alienage jurisdiction because Doris is still a citizen of the U.S. In addition she is not domiciled in any state.
       Therefore, she is not a citizen of any state and there is no diversity jurisdiction. However, Doris can still be sued in state court.

G. How is the citizenship of entities determined?:

   1. Unincorporated entities: Non-corporate entities such as labor unions, insurance associations, joint ventures
      and partnerships are considered citizens of every state in which one or partners is a citizen. Tactics: If has
      members in every state, cannot be sued under diversity jurisdiction.

   2. Corporations (SOI and PPB): The citizenship of corporations is determined by §1332(c)(i), which states
      that “a corporation shall be deemed a citizen of any state by which it has been incorporated and of the State
      where it has its principal place of business.”

       (a) Tactics: To obtain diversity jurisdictions both the state of incorporation (SOI) and principal place of
           business (PPB) must be diverse.

       (b) Procedure must be followed: A complaint needs to allege both the corporation’s PPB and SOI. A P
           suing in a federal court must show in his pleading the existence of whatever is essential to federal
           jurisdiction; failure to do must result in dismissal unless corrected by amendment.

       (c) Policy discussion: Should a corporation be a citizen of any state in which it does business?:

            (1) Pros: There would be more suits in states court b/c less chance of diversity jurisdiction. Wouldn’t
                burden the federal courts with more cases. No bias b/c it is a citizen of all the states in which it
                could sued.

            (2) Cons: What does it mean to do business in a state? Vague standard. Difficult to administer. PPB
                may not always be clear but usually can narrow down to a few states. Just doing business may not
                mean close connection with the community. May still be subject to bias.

       (d) How do you determine PPB?: Every corporation has one and only one PPB. The PPB of business can
           be determined by looking at following two models:

            (1) Nerve center: Consider the exclusivity of decision making of the nerve center and the degree of
                autonomy delegated to other locations. Take on added significance when the activities of the
                corporation are far-flung or passive or management-oriented as opposed to labor intensive

            (2) Place of activity: Corporate headquarters in one state and its single activity in another will
                generally be in the state of its operations.

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                          CIV PRO – SUBJECT MATTER JURISDICTION                                          7/13/2011
      (e) Other factors in determining PPB:

          (1) The nature of the activity: Whether it is active or passive and whether it is labor-intensive or

          (2) The number of locations where the corporation carries on its activities: obviously, the place of
              operations of a corporation that carries on a single activity is more significant than one of many
              places of operations of a corporation with diffuse activities.

          (3) Importance of the particular activity: Consider the importance of a particular activity to the
              corporate purpose and to the corporation as a whole; significant indicators of an activity's
              importance include:

              (i)        Assets: the proportionate share of corporate assets, both of money and time, devoted to the

              (ii)      Income: the proportion of its income that the corporation derives from that activity

          (4) Community contacts: Consider the degree to which the corporation's activities bring it into contact
              with the community.

H. Is the amount in controversy requirement satisfied?: Amount in controversy must exceed $75,000.

   1. Rationale: This requirement was established in statutes and serve two functions: (1) Federal tribunal should
      not be a small claims court and (2) is a method of docket control.

   2. Does not apply to federal question cases: Only applies to alienage and diversity cases and not to federal
      question cases.

   3. Only allegation must satisfy the requirement: A P’s good faith allegation that the jurisdictional amount is
      satisfied will invoke jurisdiction unless it appears to a legal certainty that the claim is really for less than
      the jurisdictional amount (e.g., asking for punitive damages in a contract breach). Federal jurisdiction is not
      lost because a judgment of less than the jurisdictional amount is awarded. Prevailing P who has recovered
      less than $75K may be ordered to pay D’s costs, which do not include attorney’s fees.

   4. Aggregation of claims to satisfy amount in controversy requirement:

      (a) One P v. One D: May aggregate all claims, even those unrelated legally or transactionally.

      (b) Multiple parties on either side: Generally, aggregation is not allowed. However, if the case involves
          joint liability then allowed. P gets into a car accident with D1 and D2. P’s personal injury damages are
          over $75K. Amount in controversy is satisfied. Either D may be liable for the whole amount. In
          essence, there is only one claim

   5. Equitable or injunctive relief: Was the P harmed to the extent of $75K+? Or would the injunction cost
      the D $75K+? Most courts uphold jurisdiction if the amount in controversy satisfies either test.

   6. Call actions: In class actions, the claim of each class member must satisfy the amount in controversy

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                         CIV PRO – SUBJECT MATTER JURISDICTION                                           7/13/2011
I. Representative suits and assignment of claims: Cannot collusively or improperly do so under §1359. Can
   assign if adequate consideration. Single litigant can change domicile to create diversity; statute only applies to
   collusive behavior.

J. The domestic relations and probate exceptions: Even if diversity requirements are met, federal courts refuse
   to hear “domestic relations” cases. However, only will refuse to hear if involves issues of divorce, alimony and
   child custody. Also will not probate a decedent’s estate or appoint an executor.

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                              CIV PRO – SUBJECT MATTER JURISDICTION                                              7/13/2011
     A. Generally: General federal question jurisdiction is provided for under §1331, which states that “[t]he district
        courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the
        United States.”

        1. Rationale: Federal judges are expected to be more sympathetic to policies underlying federal legislation
           and would develop an expertise in the interpretation of federal law. State court judges, on the other hand,
           might be less likely to do the former or have time to do the latter.

        2. Grant of jurisdiction only exclusive in certain cases: Grant of jurisdiction under §1331 is not exclusive to
           federal courts, and can be filed in state court, unless otherwise specified (supra II.B. of the SMJ outline)

        3. Other specialized federal grants: §1337 – federal antitrust cases; §1338 – patent and trademark cases;
           §1343 – civil rights claims.

        4. NO amount in controversy requirement.

     B. Must satisfy the “well-pleaded complaint” rule: A suit arises under the Constitution or federal statute only
        when the P’s statement of his own cause of action shows that it is based upon the Constitution or that statute.

        1. Court only looks to the P’s claim: A well-pleaded complaint is one that sets forth only a claim, unadorned
           by anticipated defenses or other extraneous material. If the court determines that a complaint contains
           matter beyond the claim itself, it ignores the surplus language and looks only to what would have been
           included had the complaint been well-pleaded.

        2. Anticipation of defense is not sufficient: It is not enough that the P alleges some anticipated defense to his
           cause of action and asserts that the defense is invalidated by federal statute or the Constitution. Although
           such allegations show that very likely, in the course of the litigation, a question under the Constitution
           would arise, they do not show that the suit, that is, the P’s original cause of action, arises under the

        3. Counterclaim or cross-claim is not sufficient: A suggestion of one party, that the other will or may set up
           a claim under the Constitution or laws of the United States, does not make the suit one arising under that
           Constitution or those laws.

        4. Does not bar diversity: Remember, diversity jurisdiction can still be invoked if the citizenship and the
           amount in controversy requirements are met.

        5. What about cases where federal courts have exclusive SMJ?: Must still satisfy well-pleaded complaint

        6. Can still reach the Supreme Court: Any case can be appealed from state court to the Supreme Court as
           granted by §1257. Must be a federal issue either by complaint or defense.

        7. Rationale for “well-pleaded complaint” rule: Given the limited nature of federal SMJ, it is essential that
           the existence of jurisdiction be determined at the outset, rather than being contingent on what may occur at
           later stages in the litigation.

     C. Supplemental jurisdiction: A case that invokes federal SMJ might include individual claims that do not.
        Federal courts have long recognized the power to hear such claims, as long as they are closely related to the
        underlying dispute as to constitute part of the same “case of controversy.”
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                              CIV PRO – SUBJECT MATTER JURISDICTION                                             7/13/2011
      A. Generally: The P has the option of filing in state or federal court (if permitted), but only a D can remove (not a
         P defending a counterclaim). Removal permits a D to have a case originally filed in state court to be removed
         to a federal court. Removal only goes one way, from state to federal court, and pertains only to civil actions.

      B. Reasons for having removal: Why might a D choose to remove a case to federal court?:

         1. Local bias: Usually to avoid possible bias of a local state court with its locally elected judge.

         2. Consistency: Perhaps also to preclude problems of interpretation of federal law.

         3. Protect the D: Also in cases where the line between D and P is not clear, D should have a chance to take
            advantage of the federal courts. Removal statutes give the D some say in whether a case will proceed in
            state court or federal court. The D does not have to ask the federal court’s permission to remove; he
            simply removes the case under §1446(d).

      C. The federal court must have had SMJ: Could the P have originally filed this case in federal court under

         1. Federal question jurisdiction: Remember well-pleaded complaint rule.

         2. Diversity: Diversity must have existed at the time when the notice of removal is filed and at the time the
            original cause of action was brought. Tactics: This requirement prevents the D from acquiring a new
            domicile after commencement of the suit, and then removing on the basis of diversity. Remember the
            amount in controversy requirement.

         3. Alienage: Remember that opposing aliens do not apply.

             (a) Lack of SMJ by state court doesn’t matter: Under §1441(e), the fact that the state court did not have
                 SMJ does not prevent the case from being removed to federal court

      D. Where can a case be remove to?: A D can only remove to the federal district court for the district “embracing
         the place where such action is pending.” Venue is not considered in removed cases. If removal is proper, then
         venue is proper. For example:

         1. A case pending in state court in St. Louis can be removed only to the Eastern District of Missouri, which
            encompasses St. Louis.

         2. The case could not be removed to the district court in Kansas City, which is in the Western District of

      E. Effect of improper removal: If removal is improper, the federal court remands the case to state court. Reasons
         for doing so include the failure to follow procedures for removal and because the federal court lack SMJ.

      F. Timing requirements for a case that was originally removable:

         1. How long can the D wait before removing?: Under §1446(b), the D has 30 days after receiving service to
            remove the case.

         2. Multiple Ds: Generally, all Ds must agree to remove.

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                            CIV PRO – SUBJECT MATTER JURISDICTION                                                           7/13/2011
   3. Addition of a D: The addition of a new D in an amended complaint does not start the time for removal
      anew when the original complaint itself was removable. The failure of the original Ds to remove during
      the original 30 day time period is deemed a waiver of the right of removal which is binding on
      subsequently added Ds.

G. Timing requirement when a case becomes removable: If the original case was not removable, but then
   becomes removable, the D can remove the case within 1 year of the commencement of the action.

   1. Requirement only applies to diversity cases: Only applies to cases becoming removable due to diversity
      of citizenship being created (§1332), not to federal question cases. Rationale: If state courts had the case for
      a year then don’t want to mess with it.

   2. 30 day limit still applies: Removal must still be effectuated within 30 days of the case becoming

H. Validity of certain tactics: A review of the tactics a P can use to create or destroy the circumstances in which
   removal can be applied:

   1. Voluntary dismissal of non-diverse D: If a P voluntarily drops a non-diverse D from the action, the P or
      D then gains the right to remove (cannot do so if a if the non-diverse D is eliminated by an action of the
      court due to chance of reversal on appeal).

       Example: P from GA is suing D-1 from GA and D-2 from TX. This suit cannot be filed on grounds of diversity. However, if P
       drops his case against D-1 from GA, then the case becomes removable. But removal must be occur within 1 year of the
       commencement of the action and within 30 days of it becoming removable. [Adding a federal claim would also suffice?]

       Example: Pat a citizen of North Carolina, sues D-1, a citizen of Oklahoma, and D-2 a citizen of Wyoming, in an appropriate state
       court in Wyoming. Pat asserts that the two Ds are joint tortfeasors and seeks $500,000 in damages. The case is not removable b/c
       of the home state exception. But suppose the claim against D-2 is dismissed from the case two months after it was filed in state
       court. Can D-1 remove the case? Under 28 U.S.C. §1446(b), most courts will allow D-1 to remove the case only if Pat
       voluntarily dismissed the claim against D-2. If the court dismissed the case against D-2, the dismissal might be reversed on

   2. Defeating federal jurisdiction after removal: A P cannot take action to defeat federal jurisdiction after
      the case has been properly removed (such as reducing the claim to less than the jurisdictional amount or
      joining a non-diverse party)

       Example: Perry, a citizen of Missouri, sues Dale, a citizen of NY, for $100,000 tort damages in state court in St. Louis. Dale can
       remove to federal court because of diversity. What happens if, after removal, Perry seeks to add David as a D, and David is a
       citizen of Missouri? A P cannot defeat removal by joining a non-diverse D against which he has no bona fide claim. Such
       joinder is said to be “fraudulent”, which is a term of art.

   3. Artful pleading doctrine: Another limitation of the P’s choice of forum is the artful pleading doctrine,
      which bars a P from defeating “removal by omitting to plead necessary federal questions.”

I. Does the “home state exception” apply?: In diversity cases, a D cannot remove a case to federal court in his
   home state. The rational is that there is no issue of bias. D can still remove on the basis of federal question

   Example: Suppose the case above was originally filed in state court in NY. Why can Dale not remove this case to federal court. In
   diversity cases, a D can not remove the case to the federal court in his home state if the claim is originally filed there.

   Example: P, a citizen of Florida, sues D, a citizen of Arizona, in state court in Arizona, seeking $25,000 in damages for D’s alleged
   violation of P’s rights under the federal civil rights laws. D can remove to federal court b/c there is federal question jurisdiction.
   Home state exception does not apply.

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