28 U.S. Code § 1332 and 1367: Subject Matter and Supplemental Jurisdiction

Question 1

What is subject matter jurisdiction? (Q)

Answer 1

Subject-matter jurisdiction is the court’s power to hear the type of case. The main forms of federal subject-matter jurisdiction are:

federal-question jurisdiction, also called arising-under jurisdiction,
diversity jurisdiction, and
supplemental jurisdiction.

Question 2

What is original jurisdiction? (Q)

Answer 2

Original jurisdiction refers to the power of a court to hear a case for the first time, rather than on appeal. A case is within a court’s original jurisdiction if the plaintiff can file the case initially in that court. The two main forms of original jurisdiction in the federal courts are diversity jurisdiction and federal-question jurisdiction, which is also called arising-under jurisdiction.

Question 3

What is concurrent jurisdiction? (Q)

Answer 3

Concurrent jurisdiction exists if two or more court systems have jurisdiction over a case. Most often, this involves a case that could be filed initially either in federal court or in state court.

Question 4

How do the United States Constitution and the United States Code work together to regulate the subject-matter jurisdiction of the federal courts? (Q)

Answer 4

Article III of the U.S. Constitution defines the full extent of federal judicial power, including federal subject-matter jurisdiction. The major statutory provisions governing the specifics of subject-matter jurisdiction are found in Title 28 of the U.S. Code, which is passed by Congress.

Article III leaves to Congress the task of organizing the federal court system, which involves deciding how and to what extent the federal courts will exercise the jurisdiction granted by the Constitution. Although Congress cannot expand jurisdiction beyond its constitutional boundaries, Congress can distribute or limit the exercise of jurisdiction within the federal court system. Congress acts by passing statutes. Thus, Congress’s decisions about organizing the federal courts are contained in the U.S. Code.

Question 5

At what time during a federal case can a party challenge subject-matter jurisdiction? (Q)

Answer 5

A party can challenge subject-matter jurisdiction at any time during a federal case, even for the first time on appeal.

Question 6

If a federal court lacks subject-matter jurisdiction, can the parties consent to allow the court to hear the case? (Q)

Answer 6

No. Lack of subject-matter jurisdiction cannot be waived by the parties. Subject-matter jurisdiction is an expression of federal judicial power. This power derives only from the U.S. Constitution and the federal statutes; the parties cannot create this power themselves. Thus, the parties’ waiver or consent cannot cure a lack of subject-matter jurisdiction.

Question 7

Federal-question jurisdiction extends to cases arising under which three sources of federal authority? (Q)

Answer 7

Federal-question cases are those that arise under the Constitution, laws, or treaties of the United States. The term laws includes statutes, regulations, and executive orders. Federal-question jurisdiction is also called arising-under jurisdiction.

Question 8

Does a case generally arise under federal law if the federal issue is raised by the defendant instead of the plaintiff? (Q)

Answer 8

No. In general, a case arises under federal law only if the federal issue appears on the face of the plaintiff’s well-pleaded complaint. This is called the well-pleaded complaint rule. An alternative statement of this rule says that the plaintiff’s claim must originate in federal law. Thus, if the plaintiff’s claims all arise under state law, but the defendant raises a federal defense, then the case likely does not arise under federal law.

Question 9

Does a case generally arise under federal law if the plaintiff’s complaint raises a nonfederal claim but anticipates a federal defense? (Q)

Answer 9

No. If the plaintiff’s non-federal claim anticipates a federal defense, this is normally not enough to create federal arising-under jurisdiction. In general, a case arises under federal law only if the federal issue appears on the face of the plaintiff’s well-pleaded complaint. Typically, the plaintiff’s claim must originate in federal law.

Question 10

Does a case generally arise under federal law if the plaintiff’s state-law claim requires interpretation of federal law? (Q)

Answer 10

No. If the plaintiff asserts a state-law claim that merely requires interpretation of federal law, this usually does not mean that the case arises under federal law. In general, a case arises under federal law only if the federal issue appears on the face of the plaintiff’s well-pleaded complaint. Typically, the plaintiff’s claim must originate in federal law.

The courts have occasionally recognized exceptions to this principle if: (1) the case involves a significant federal interest, such as the interpretation of federal tax law, and (2) exercising federal jurisdiction would not unduly disrupt federal-state relations.

Question 11

A plaintiff sued a pharmacy in federal court, alleging that the pharmacy committed common-law fraud by mislabeling prescriptions. The plaintiff and the pharmacy were citizens of the same state. The pharmacy pled, as a defense, that it had complied with all federal drug-labeling laws.

Does the court have federal-question jurisdiction? (Q)

Answer 11

No. The court does not have federal-question jurisdiction, because the case does not arise under federal law. Federal-question jurisdiction exists if the plaintiff’s claim arose under federal law. However, to satisfy this requirement, the federal issue must appear on the face of the plaintiff’s well-pleaded complaint. A defense rooted in federal law will not create federal-question jurisdiction.

Here, the plaintiff’s common-law fraud claim does not, on its face, raise a question of federal law. The defendant has asserted a defense based on federal law, but a federal defense, standing alone, does not satisfy the well-pleaded complaint rule. The court therefore lacks subject-matter jurisdiction.

Question 12

What are the two principal statutory requirements for federal diversity jurisdiction? (Q)

Answer 12

Federal diversity jurisdiction exists if: (1) there is complete diversity of citizenship between the parties, and (2) the amount in controversy is greater than $75,000, excluding interest and costs.

Question 13

In a suit between a citizen of a U.S. state and a foreign citizen, what is necessary for a court to conclude that the parties lack diversity of citizenship under the federal diversity-jurisdiction statute? (Q)

Answer 13

In a suit between a citizen of a U.S. state and a foreign citizen, the parties are not considered to be diverse if the foreign citizen (1) is admitted for permanent residence in the United States and (2) lives in the same state as the U.S. citizen.

Normally, a suit between a U.S. citizen and a foreign citizen exhibits diversity of citizenship and thus falls within federal diversity jurisdiction if the amount in controversy is satisfied. However, the diversity-jurisdiction statute makes an exception when a lawful resident alien is domiciled, or resides, in the same state as the adverse U.S. citizen. Thus, diversity jurisdiction does not extend to a suit between a citizen of a U.S. state and a lawful resident alien who lives in the same state.

Question 14

What is a domestic corporation’s citizenship for purposes of diversity jurisdiction? (Q)

Answer 14

A domestic corporation is a citizen of both: (1) the state where it is incorporated and (2) the state where it has its principal place of business.

Under the Supreme Court’s nerve-center test, a corporation’s principal place of business is the location of the company’s corporate headquarters or similar place where top management makes major decisions.

Question 15

An individual United States citizen is a citizen of what state for purposes of diversity jurisdiction? (Q)

Answer 15

An individual U.S. citizen is a citizen of the state in which she is domiciled. The state of domicile is the state in which the person has her principal home, with the intent to remain indefinitely.

(1) resided with
(2) the intent to remain indefinitely

Question 16

In a federal diversity case between United States citizens, what is complete diversity of citizenship? (Q)

Answer 16

Complete diversity of citizenship exists if no plaintiff is a citizen of the same state as any defendant. Complete diversity is required in the great majority of federal diversity cases.

Question 17

Does federal diversity jurisdiction extend to suits between citizens of a U.S. state and citizens of a foreign country? (Q)

Answer 17

Yes. The federal diversity statute extends federal diversity jurisdiction to suits between citizens of a U.S. state and citizens of a foreign country. However, there is one exception: diversity jurisdiction does not extend to suits between citizens of a U.S. state and permanent resident aliens who live in the same state.

Question 18

In a federal suit between citizens of different states, does diversity of citizenship exist if foreign citizens are additional parties in the case? (Q)

Answer 18

Yes. The federal diversity statute expressly includes cases between diverse U.S. citizens in which foreign citizens are additional parties. In this type of case, the foreign citizens need not be diverse from one another.

Question 19

If a case involves foreign citizens on both sides, and a U.S. citizen on one side, will most courts find that the case falls within federal diversity jurisdiction? (Q)

Answer 19

No. Although this question is not definitively resolved, most courts will not extend diversity jurisdiction to a case between foreign citizens merely because a U.S. citizen is an additional party.

Question 20

Does federal diversity jurisdiction extend to a lawsuit solely between two foreign citizens? (Q)

Answer 20

No. Federal diversity jurisdiction does not include suits solely between foreign citizens.

Question 21

For purposes of federal diversity jurisdiction, what is the citizenship of a partnership or other unincorporated association (Unions)? (Q)

Answer 21

For purposes of federal diversity jurisdiction, an unincorporated association, such as a partnership, has the citizenship of each of its members. That is, the association is a citizen of each state of which any of its members is a citizen.

Question 22

For purposes of federal diversity jurisdiction, a party’s citizenship is determined as of what date? (Q)

Answer 22

A party’s citizenship for purposes of diversity jurisdiction is determined as of the date on which the case is filed. It does not matter that a party might have different citizenship before or after this date.

Question 23

A plaintiff sued a defendant in federal court for breach of contract, alleging $500,000 in damages. The plaintiff was a citizen of State A, and the defendant was a citizen of State B. Five days after the plaintiff filed suit, the defendant sold his house in State B and moved permanently to State A.

Does the court have diversity jurisdiction after the defendant moves? (Q)

Answer 23

Yes. The court has diversity jurisdiction. Diversity jurisdiction exists if no plaintiff is a citizen of the same state as any defendant, and the amount in controversy exceeds $75,000. The parties’ citizenship for purposes of diversity jurisdiction is determined as of the date when the complaint is filed. Subsequent changes in citizenship do not affect this jurisdiction.

Here, diversity jurisdiction existed when the plaintiff filed the complaint. At that time, the plaintiff and the defendant were citizens of different states, and the amount in controversy was greater than $75,000. The fact that the defendant later moved to the same state as the plaintiff did not affect diversity jurisdiction. Thus, the court has diversity jurisdiction.

Question 24

Under the federal diversity statute, are the U.S. territories, the District of Columbia, and Puerto Rico considered to be states for purposes of evaluating citizenship? (Q)

Answer 24

Yes. The diversity statute expressly identifies the U.S. territories, the District of Columbia, and Puerto Rico as states for purposes of evaluating citizenship.

Question 25

What amount in controversy is required for federal diversity jurisdiction? (Q)

Answer 25

For federal diversity jurisdiction, the amount in controversy must be greater than $75,000. This must be the amount in controversy not including interest and costs. (Must be at least $75,000.01 excluding interests and costs).

Question 26

Under the federal diversity statute, what forms of relief are excluded from the amount in controversy? (Q)

Answer 26

For federal diversity jurisdiction, the amount in controversy does not include interest and costs.

Question 27

If the plaintiff in a federal diversity case recovers less than the required amount in controversy at trial, does the court still have diversity jurisdiction? (Q)

Answer 27

Yes. Diversity jurisdiction is not affected if the plaintiff actually recovers less than the required amount in controversy at trial. However, in that case, the court may deny costs to the plaintiff and may require the plaintiff to pay the defendant’s costs.

Question 28

The plaintiff sued the defendant in federal court under a state-law tort claim, seeking $200,000 in damages. The parties were citizens of different states, and thus there was complete diversity of citizenship. The case proceeded under diversity jurisdiction. At trial, the jury awarded the defendant $30,000 in damages. Before final judgment, the defendant asked the court to dismiss the case for lack of subject-matter jurisdiction. The defendant argued that the case did not meet the amount-in-controversy requirement for diversity jurisdiction, because the verdict was only $30,000. Should the court grant the motion? (Q)

Answer 28

No. The court should not dismiss the case, because the verdict does not destroy diversity jurisdiction. Diversity jurisdiction requires complete diversity of citizenship and an amount in controversy greater than $75,000. Generally, as long as the plaintiff’s complaint seeks a sufficient amount, jurisdiction is unaffected if the plaintiff recovers less than the jurisdictional amount at trial.

Here, the plaintiff alleged damages of $200,000, and the parties had the requisite diversity of citizenship. Thus, diversity jurisdiction existed when the case was filed. That jurisdiction did not disappear when the plaintiff later recovered only $30,000 at trial. Thus, the court should not grant the defendant’s motion to dismiss for lack of subject-matter jurisdiction.

Question 29

In a federal diversity case, how is the amount in controversy typically established? (Q)

Answer 29

In a federal diversity case, the amount in controversy is typically established by the relief demanded in the plaintiff’s complaint. Courts will generally accept this as the true amount in controversy, unless the defendant raises a challenge to the stated amount.

Question 30

In a federal diversity case, if the plaintiff has alleged an amount in controversy that satisfies the diversity-jurisdiction statute, can the defendant contest subject-matter jurisdiction by challenging the alleged amount in controversy? (Q)

Answer 30

Yes. In a federal diversity case, a defendant can contest diversity jurisdiction by attempting to show that the true amount in controversy is less than the amount stated in the plaintiff’s complaint.

Question 31

If the plaintiff in a federal diversity case has alleged a sufficient amount in controversy, and the defendant challenges that amount, what legal standard will the court apply in deciding whether the allegation is sufficient?

Answer 31

If a diversity plaintiff has alleged a sufficient amount in controversy, a court will uphold a challenge to the stated amount only if it appears to a legal certainty that the plaintiff cannot recover the jurisdictional amount.

Question 32

In considering the amount in controversy in a federal diversity case, how do the courts determine the value of nonmonetary relief?

Answer 32

In a diversity case, courts determine the value of nonmonetary relief by looking at either the value of the relief to the plaintiff or the cost that the relief will impose on the defendant. Under the federal diversity statute, the amount in controversy must exceed $75,000, exclusive of fees and costs. If a plaintiff seeks nonmonetary relief, such as an injunction or a declaratory judgment, the value of this relief will count toward the jurisdictional amount.

Question 33

In a federal diversity case, can a single plaintiff add multiple, unrelated claims against a single defendant to reach the statutory amount in controversy? (Q)

Answer 33

Yes. The concept of aggregation allows a single plaintiff to add, or aggregate, as many claims as the plaintiff has against a single defendant to reach the amount in controversy needed to satisfy diversity jurisdiction.

Question 34

In a federal diversity case, under what circumstances can a single plaintiff add claims against multiple defendants to reach the statutory amount in controversy? (Q)

Answer 34

In a federal diversity case, a single plaintiff can add, or aggregate, claims against multiple defendants only if the defendants are jointly liable to the plaintiff.

Question 35

In a federal diversity case, under what circumstances can multiple plaintiffs add their claims to reach the statutory amount in controversy? (Q)

Answer 35

In a federal diversity case, multiple plaintiffs can add, or aggregate, their claims only if: (1) they have a joint and common interest in the relief (such as when the plaintiffs co-own the property that is the subject of the litigation), or (2) they are plaintiffs in certain class-action suits that involve more than $5 million in controversy.

Question 36

Two plaintiffs together sued a defendant in federal court. The parties had the needed diversity of citizenship. The plaintiffs alleged that the defendant violated state consumer-protection laws when selling each of them a used car. One plaintiff individually sought $40,000 in damages. The other plaintiff individually sought $50,000 in damages.

Does the court have diversity jurisdiction? (Q)

Answer 36

No. The court lacks diversity jurisdiction, because the amount in controversy was not satisfied. Under the diversity-jurisdiction statute, the amount in controversy must exceed $75,000, excluding interest and costs. Multiple plaintiffs may not aggregate, or add, their claims to meet this amount, unless the plaintiffs have a joint-and-common interest in the relief. A joint-and-common interest exists if the plaintiffs seek to recover for a single, indivisible harm.

Here, the plaintiffs do not have a joint-and-common interest in the relief, because each of them seeks individual damages arising from a separate transaction. Thus, the plaintiffs may not aggregate their claims. Neither plaintiff’s individual claim exceeds $75,000; therefore, the court lacks diversity jurisdiction.

Question 37

What is a counterclaim? (Q)

Answer 37

A counterclaim is a claim made by a defending party against the party asserting the initial claim. Counterclaims are most often made by defendants against plaintiffs.

Question 38

What is the difference between a compulsory counterclaim and a permissive counterclaim? (Q)

Answer 38

A defendant who fails to raise a compulsory counterclaim risks losing the ability to raise the same issue in a later case. Permissive counterclaims do not carry this risk.

Broadly defined, a compulsory counterclaim is one that arises from the same facts, also called the same transaction or occurrence, as the plaintiff’s claim. A permissive counterclaim is one that arises from facts or events unrelated to the plaintiff’s claim.

Question 39

In a federal diversity case, may a plaintiff generally add the plaintiff’s claim and the defendant’s counterclaim to reach the statutory amount in controversy?

Answer 39

No. In a federal diversity case, the amount in controversy normally must be determined by the plaintiff’s claims alone, without reference to any counterclaims.

However, some courts recognize an exception if: (1) the plaintiff fails to allege a sufficient amount in controversy, but (2) the defendant, without objecting to jurisdiction, asserts a compulsory counterclaim that meets the required amount in controversy.

Question 40

In a federal diversity case, which type of counterclaim must independently satisfy the statutory amount in controversy? (Q)

Answer 40

A permissive counterclaim must independently satisfy the statutory amount in controversy. A compulsory counterclaim need not satisfy the statutory amount in controversy.

Question 41

Must a federal court accept jurisdiction of a claim that qualifies for supplemental jurisdiction? (Q)

Answer 41

No. The court has the power to decline supplemental jurisdiction. The court may decline to exercise supplemental jurisdiction if:

the supplemental claim raises a novel or complex issue of state law,
the supplemental claim predominates over the claims within the court’s original jurisdiction,
the court has dismissed the claims over which it has original jurisdiction, or
other exceptional circumstances provide a compelling reason to decline to exercise supplemental jurisdiction.

Question 42

What is federal supplemental jurisdiction? (Q)

Answer 42

Supplemental jurisdiction is the power of a court to hear claims that do not independently fall within the court’s original jurisdiction, if those claims are sufficiently related to claims that do fall within the court’s original jurisdiction.

Question 43

Which claims are specifically excluded from supplemental jurisdiction when made by plaintiffs in federal diversity cases? (Q)

Answer 43

The supplemental-jurisdiction statute excludes claims by plaintiffs against parties brought into the case as third-party defendants or required parties or by permissive joinder or intervention, if those claims would violate the requirements for diversity jurisdiction. In other words, the statute excludes certain claims made by plaintiffs in diversity cases against some parties who are brought into the case after the litigation begins. This rule prevents a plaintiff from evading the diversity requirements by omitting a potential claim from the plaintiff’s complaint, waiting for a non-diverse party to join the case, and then asserting that claim against the non-diverse party.

Question 44

In federal diversity cases, which claims are specifically excluded from supplemental jurisdiction when made by parties seeking to join a case as plaintiffs? (Q)

Answer 44

In a federal diversity case, the court lacks supplemental jurisdiction over claims by parties seeking to join as plaintiffs as required parties or through intervention, if allowing the claims would destroy complete diversity. These exclusions bar a party from joining a case in progress as a way to bring a claim that the party could not assert as an original diversity claim.

Question 45

When does a person decide to remain indefinitely in a state? (GG)

Answer 45

If she is residing in the state on an open-ended basis, without the intent to leave at a definite time or on the occurrence of a definite event.

Question 46

If Acari, from HI, leaves for a one-year job acting in a play in CA, and plans to go to NY after, where is he domiciled? (GG)

Answer 46

Hawaii. He isn’t domiciled in CA because he doesn’t plan to stay there indefinitely and he hasn’t acquired one in NY because he hasn’t moved there yet.

Question 47

If a person is an American citizen but is not domiciled in the U.S. can there be a case for diversity? (GG)

Answer 47

No. To be a citizen of a state one must be a U.S. citizen and be domiciled in a state.

Question 48

If a foreign citizen is domiciled in the same U.S. state as the plaintiff who brought the action against them, is there a case for diversity? (GG)

Answer 48

Yes. To be a citizen of a state one must be a U.S. citizen and be domiciled in a state.

Question 49

When does a suit “arise under” federal law? (GG)

Answer 49

For a suit to arise under federal law, giving a federal court jurisdiction to hear the case, a plaintiff must allege a cause of action based upon those laws or that Constitution. (Mottley)

Question 50

Is a suit judged to have arisen under federal law assessed based on the plaintiffs complaint or the defendant’s answer to the complaint? (GG)

Answer 50

A suit judged to have arisen under federal law based on the plaintiff’s complaint. The plaintiff must assert a right to relief under federal law. (Mottley)

Question 51

Are counterclaims assessed in arising under jurisdiction? (GG)

Answer 51

No. A suit is judged to have arisen under federal law based on the plaintiff’s complaint. (Mottley)

Question 52

Can a case be brought to federal court even if there is no diversity between the parties? (GG)

Answer 52

Yes as long as the complaint arises under federal law.

Question 53

What is the well-pleaded complaint rule? (GG)

Answer 53

The court considers not what the plaintiff pleaded, but what she needed to plead to state her cause of action. The federal courts don’t want to be needlessly dragged in to a case so random allegations to prove state law claims don’t fly. (Mottley)

Question 54

When does a suit arise under a particular type of law? (GG) (Q)

Answer 54

A suit arises under the law that creates the cause of action. (American Well Works Co.)

Question 55

When might a federal court have jurisdiction over a state cause of action? (GG)

Answer 55

A federal court may have jurisdiction over a state cause of action, if the action has a ‘substantial’ federal component in actual controversy, and federal jurisdiction would not disrupt the balance of labor between state and federal courts. (Grable)

Question 56

Do plaintiffs have to bring most federal claims to federal courts? (GG)

Answer 56

No. The plaintiff may choose to litigate a federal issue in state court. There are some exceptions (patents).

Question 57

A developer filed a breach of contract action against a general contractor in federal district court. If the contract was breached, the general contractor believes the fault was that of the framing subcontractor. The general contractor thus intends to file a third-party claim against the subcontractor seeking indemnification for any sums the developer recovers from the general contractor. The general contractor also wants to assert a tort claim against the subcontractor for $80,000 worth of equipment belonging to the general contractor that the subcontractor took from a construction site on a different project. The developer is a citizen of State A, while both the general contractor and the subcontractor are citizens of State B.

Which claims can the general contractor properly assert in the pending federal action? (Canvas)

Answer 57

The indemnity claim only, because the federal court lacks subject matter jurisdiction over the tort claim.

Both is incorrect because, since the tort claim is between two citizens of the same state and is a state law claim, the court does not have federal question or diversity jurisdiction over the claim. The claim therefore needs to invoke supplemental jurisdiction. However, because the tort claim is unrelated to the developer’s claims that are properly in federal court, the federal court also will lack supplemental jurisdiction over the tort claim.

Question 58

What rule did United Mine Workers of America v. Gibbs (1966) add? (Q)

Answer 58

A federal court can exercise pendent jurisdiction over state and federal claims if the federal and state claims are the type that would be expected to be heard at a single hearing and are “derive[d] from a common nucleus of operative fact.”

Question 59

What does 1367a mean in layman’s terms? (GG)

Answer 59

It means that where the federal court has “original jurisdiction,” because the case presents a claim that the plaintiff could properly file in federal court, the court can hear not only that claim, but all other claims arising out of the same “case or controversy.”

Question 60

What does 1367b mean in layman’s terms? (GG)

Answer 60

In diversity cases only, the federal courts will not have supplemental jurisdiction over certain claims by plaintiffs or persons sought to be joined by parties.

Question 61

What rule did Owen Equipment and Erection Co. v. Kroger (1978) add? (Q)

Answer 61

In an action in which federal jurisdiction is based on diversity, the court may not exercise jurisdiction over the plaintiff’s claim against a third-party defendant if there is no independent basis for federal jurisdiction over that claim. 1367b

Question 62

What rule did Exxon Mobil Corp. v. Allapattah (2005) add? (Q)

Answer 62

Where other elements of diversity jurisdiction are present and at least one named plaintiff satisfies the amount-in-controversy requirement, the court may exercise jurisdiction over other plaintiffs who might otherwise be properly joined but who do not allege damages which reach the jurisdictional amount.