Subject Matter Jurisdiction
Subject Matter Jurisdiction
· Plaintiffs can almost always file in an appropriate state court; except:
o admiralty and maritime cases
o bankruptcy cases
o patent, plant variety protection, copyright/trademark
o antitrust
o securities
· Why? All of these have a certain national significance that requires a certain uniformity of deciding
· When can they file in federal courts if Congress chooses to extend federal jurisdiction to them?
o arising under the Constitution, the Laws of the US, and Treaties”
o “between citizens of different states”
o Congress believes that these implicate national concern, so parties should have the right to a federal judge
· Concurrent jurisdiction: if either a fed or state court can hear a particular case
· Exclusive jurisdiction: if only a fed court can hear a case
Diversity Jurisdiction
· Article III, Section 2 permits Congress to vest federal courts with jurisdiction to hear cases between “citizens of different states.” Congress did so in 28 U.S.C. §1332(a)(1).
· Goal to eliminate bias against out of state D
· To be a “citizen”:
o Must be a citizen of the US
o Must be domiciled in that particular state (a person can only be domiciled in one state)
· Domicile:
o Determined at date of filing
o animo manendi: intention of remaining
o change of residence +
o intent to remain indefinitely (no definite plans to leave)
o Tests that ARENT used
§ change of residence + intent to remain permanently
§ change of residence + intent not to return to original state of residence
· Gordon v. Steele
o Gordon files in Fed/Western District of Penn
o D moves to dismiss on grounds of DJ; say that she is not diverse, and a resident of Penn
o Court finds that she had no intention of returning to Penn
o domicile test: residence + the intent to remain “indefinitely”
Complete diversity: Each P must be from a different state than each D; co-Ps and co-Ds can be from the same state
· Vt + Mass vs. NH + Maine
Minimal diversity: When one of the Ps or Ds are from the same state
· Vt. + Mass vs. NH + Mass
**Although Article III, Section 2 and Section 1332(a)(1) use the same language: “citizens of different states,” the Supreme Court has held that Article III permits minimal diversity, but that Section 1332 requires complete diversity. The latter is the famous Strawbridge rule.
**Mas v. Perry
§ Are Mr. Mas and Mr. Perry diverse? Why? Yes. Mr. Mas is domiciled in France, and Mr. Perry is in LA
§ Are Ms. Mas and Mr. Perry diverse? Why? Yes. Ms. Mas was domiciled in Miss. and Perry in LA
§ Married in Miss with Judy’s family, then return to teaching at LSU
§ Move to Park Ridge, Ill.
§ They filed in LA then moved to Ill
§ Jury finds in favor of Mass, but Perry appeals and files motion to dismiss based on DJ (a party or court can raise an issue of Subject Matter Jurisdiction at ANY time)
§ Court uses same test, but rules differently than in Gordon
o Ms. Mas is considered a domiciliary of Miss when she is a student in LA
Citizenship of corporations
· Some chose to incorporate in a different state than their new business
o Delaware: favorable corp. laws
o this is a concern to Congress: meant that more cases would be filed in fed. ct.
o 1928, corp. citizenship for DJ
o can be citizen in two states (where it is incorporated and where is its Principal Place of Business (PPB) (1332a and c)
o Where is PPB? Harder; “nerve center” test (where are the offices that control and coordinate the corp’s activities?
· Hertz v. Friend
o Friends filed a state claim for violation of wage and hour law
o Hertz moves to get it “removed” (removal: in general permits defendant, and only them, to file notice with state ct. in which D says there is fed jurisdiction in this case; case will be removed to US district court in the geographic proximity of the trial court); corps prefer to have it in fed ct. usually
o Ps argue that Hertz is citizen of Cali; file for a “remand”; Hertz says no, we’re in NJ (incorporated in Delaware)
o Judge in San Fran uses the “business activity” test; find that the amt of business found in Cali was significantly more than in any other state
§ what activities are included? and how are they weighted? at war with administrative simplicity
o Supreme ct. reversed and said that they were actually a citizen of NJ
§ s/b determined by “nerve center” test, usually main headquarters, is often a single place
§ say it’s consistent with the language of the statute
§ simplicity of the test; more consistent
· Entity citizenship:
o unincorporated associations and partnerships are treated diff. they are considered to be citizens of every state in which their members (or partners) are domiciled
o AARP, law firm, labor union
· LLC, PLLC, LLP? They share characteristics of both partnerships and corporations; inquiry is governed by how the entity is treated under state law (is it more like a citizen, or more like a partnership, etc)
Amount in Controversy
· **This rule does not apply to federal question cases.
· The party seeking federal jurisdiction must show that his claim was made in good faith and that it is possible the amount in controversy is over $75,000. The party is not required to prove the actual value of the amount in controversy.
· The party challenging the jurisdiction will only prevail if he shows with “legal certainty” that the claim will be adjudicated for less than $75,000
· St. Paul Mercury: Plaintiff’s good faith allegations control unless it is clear to a legal certainty that the p cannot recover more than the amount in controversy requirement
· ***Diefenthal v. CAB
· The jurisdiction may not be challenged if the actual recovery turns out to be less than $75,000
· Aggregation
o One plaintiff may aggregate several claims against a single defendant to reach the $75,000 minimum
o One plaintiff may not aggregate several claims against several defendants nor may he join claims against other defendants when he has aggregated several claims against one defendant to reach the minimum
o Multiple plaintiffs will qualify for federal jurisdiction when at least one plaintiffs claim is valued at $75,000
o Jurisdiction will not be allowed when several plaintiffs’ claims total $75,000 but no single claim is $75,000. Exception: Two or more plaintiffs enforcing the same right or interest that they share or own
o The same rules apply for class action suits
o A counterclaim may satisfy the $75,000 requirement.
Federal Question Jurisdiction
· Article 3, secton 2:
· The judicial power shall extend to all cases arising under this constitution, the laws of the US, and Treaties made…
· 28 U.S.C. Section 1331: Federal Question Jurisdiction
· The district courts shall have original jurisdiction of all civil actions arising under the constitution, laws, or treaties of the US
o The federal question must be part of the well-pleaded complaint. Mottley
o The complaint must raise a central question of federal law. Grable/Gunn
Well-pleaded complaint
o In Osborn v. Bank of the United States, the Supreme Court held that Art III only requires that the federal question only potentially form an ingredient of the claim or defense of the case.
o This formulation would allow the federal courts to hear cases which never, in fact, raised a federal issue. This might not be seen as a wise use of federal judicial resources
o One might reasonably expect Congress, then, to narrow the scope of federal question jurisdiction by statute, but it used the same language in Section 1331
o So where can you find fed issue?
o Federal issue cannot reside only in the defendant’s defense or answer
o Nor can it even reside in the plaintiff’s complaint if it is there only to anticipate a defense
o One way to present the question is to ask yourself: “What allegations would the plaintiff have to plead and prove in order to win if the defendant said absolutely nothing?”
Mottley:
o Got free passes for life (35 ys), but then federal statute prohibited free passes
o claim was for breach of contract, started in fed court (no diversity jurisdiction)
o state law claim
o Mottley’s lawyer did more than just say breach of K;
o “The railroad will argue”
§ the railroad refused to honor the passes because of a 1906 fed law
o “if the railroad arruges that, we will argue”
§ the 1906 federal statute was not intended to apply retroactively to previously awarded passes
o Or, alternatively:
§ the 1906 fed statute is unconstitutional because it takes our property without just compensation
o Therefore, we pray for specific performance of the contract
o Supreme court said that fed didn’t have jurisdiction (raised issue by themselves; was never an issue before)
o Ps complaint referred to federal law, but it did not RELY on federal law to win
o Federal law was not an element of their claim (but NONE are federal law issues)
o Ironic that the only disputed issues are federal issues
Centrality
o 99% of these cases are very easy because they follow a simple rule created by Justice Holmes in American Well Works v. Layne & Bowler (1916): a case “arises under federal law when federal law creates the cause of action asserted”:
o Employee sues employer under the federal ERISA law which governs things like pension benefits.
o Environmental group sues company under federal clean water laws.
o Disabled tenant sues landlord under federal Americans with Disabilities Act or Fair Housing Act statutes.
o Company sues rival under federal patent law.
o Man sues police department under 42 USC 1983 for federal civil rights violations
Minton/Gunn:
· Patent case: Minton v. NASD et al = exclusive federal jurisdiction
· GRABLE TEST: federal question if:
· federal issue is necessarily raised
· federal issue is actually disputed
· federal issue is substantial
· federal issue is capable of resolution in federal court without disrupting the federal state balance approved by congress
· Nature of claim: state quiet title; Grable is suing Derue saying that you didn’t get the land validly; deals with if the service of the notice was proper
o Facts:
§ Grable owes fed taxes and doesn’t pay
§ U.S. seizes its property and provides notice of seizure and right to redeem by certified mail, rather than personal service
§ grable does not respond and US sells property to Darue
§ Five years, Grable files state law “quiet title” action against Darue, arguing that the seizure was unlawful because service violated the IRS Code
§ 26 USC 6335 (a): as soon as practicable after seizure of property, notice in writing shall be given by the secretary to the owner of the property
§ Is the federal issue part of the well-pleaded complaint? YES; the only argument they have is the federal statute of terms of service
· Gunn: no fed question jurisdiction because it was not substantial and it disrupted the fed state balance
o Understand why the test was not satisfied in Gunn.
§ Was it raised? YES!
§ Was it disputed? YES!
§ Is it substantial? NO; not a big deal; state court judges adhere closely to SCOTUS decisions; it is fact-bound, not interpretation-bound
§ Disruption of fed state balance? if a lawyer screws up any case dealing with federal issues, then they could go to fed ct., so YES
Removal
o procedure that may be employed by Ds to send cases filed by P in state court, to fed court
o The P is the “master of the complaint”, but D can veto
o Why allow? Puts the P and D on equal footing; each have equal access to a federal forum
o P or D could try to destroy diversity: not “collusively removed”
o Can P prevent removal?
o yes drop fed claims, include non-diverse party
o Keys to understand removal are that:
o Removal under Section 1441 does not expand federal jurisdiction. A defendant can NEVER remove to federal court a case filed in state court over which the federal court would not have had subject matter jurisdiction had the plaintiff chosen to file in federal court in the first instance.
o It is not true that a defendant can ALWAYS remove to federal court a state court case over which the federal court would have had subject matter jurisdiction had the plaintiff chosen to file in federal court in the first instance.
o Removal basics:
o when the P file in state court D may remove the case to fed if the fed ct. would have had juris if the P filed there and
o Avitts:
o originally filed in Texas State Court
o complain referred to some federal law (very vague reference)
o Ds (Amoco) removed to federal court; file with the district court within 30 days of receiving service of complaint
o They also requested P to file a clearer complaint
o IF P amends complaint, can you remove?
o If case does gets removed, but Avitts doesn’t mean that there is fed question, then he should remand; Avitts amends the complaint that gets rid of fed claim (w/o remand)
o P wins preliminary injunction
o Amoco moves for remand saying there is no federal question! Why? because he loves the fed judge that is giving him what he wants
o P opposes remand saying that he pointed out CERCLA and OPA vaguely
§ says maybe that it doesn’t ARISE UNDER, but the result depends on an imbedded fed issue
o Court denies remand
o Amoco appeals preliminary relief: under 1292(a)(1)-Note 5
o Fifth Circuit vacates relief and remands to state court for lack of SJ
o **if court grants remand, then they can make D pay attny. fees