Civil Procedure Learning Questions - Set 1 Flashcards
For purposes of diversity jurisdiction, a corporation is considered to be a citizen of:
A
Every state in which it is incorporated and the one state in which it has its principal place of business
B
The first state in which it was incorporated and every state in which it does substantial business
C
The first state in which it was incorporated and the one state in which it has its principal place of business
D
Every state in which it is incorporated and every state in which it does substantial business
A
For purposes of diversity jurisdiction, a corporation is deemed to be a citizen of every state in which it is incorporated and the one state in which it has its principal place of business. Thus, it is possible for a corporation to have two or more state citizenships for diversity purposes.
The rule for a corporation is that, in addition to its states of incorporation, a corporation is a citizen of the one state in which it has its principal place of business. It is not a citizen of every state in which it does substantial business. Likewise, in addition to the principal place of business, a corporation is deemed to be the citizen of every state in which it is incorporated, not just the first state in which it was incorporated. Thus, the choices incorporating those standards are incorrect statements of a corporation’s citizenship for diversity purposes.
For purposes of diversity jurisdiction, the state citizenship of an individual is determined by:
A
The state in which the person has his permanent home and to which he intends to return
B
The state in which the person is currently residing, even if temporarily
C
The state in which the person votes
D
The state in which the person has a valid driver’s license or state identification card
A
For diversity purposes, the state citizenship of an individual is the state in which he has his permanent home and to which he intends to return.
The state in which the person is currently residing, even if temporarily, is not the person’s home state for diversity purposes.
Although voting and holding some sort of state identification will be considered as evidence of an individual’s true permanent home, the state in which the person votes and the state in which the person has a valid driver’s license or state identification card are not generally determinative of the person’s state citizenship.
A party’s state citizenship for purposes of diversity jurisdiction is determined:
A When the lawsuit is filed
B When the cause of action accrues
C When the lawsuit is filed, but if a party changes his state citizenship after the lawsuit is filed, the new state citizenship controls
D When the lawsuit is filed (for a claimant) or when process is served (for a defendant)
A
Diversity of citizenship is determined when the lawsuit is filed. Diversity need not exist when the cause of action accrues, and it is not defeated if a party changes his state citizenship after the lawsuit is filed. Hence, those choices are incorrect. State citizenship for diversity purposes is not controlled by service of process. Thus, the choice that includes “when process is served (for a defending party)” is incorrect.
For a claim brought under diversity jurisdiction, __________ is required to be alleged as damages to satisfy the jurisdictional amount
A
The amount of $75,000 or more
B
The amount of $100,000 or more
C
An amount that exceeds $100,000
D
An amount that exceeds $75,000
D
For claims brought under diversity jurisdiction, an amount that exceeds $75,000 is required to be alleged as damages to satisfy the jurisdictional amount, exclusive of interest and costs. Hence, answers with an amount that exceeds $100,000 and the amount of $100,000 or more are incorrect.
It is not enough for the claim to involve exactly $75,000; it must be in excess of that amount. Thus, the answer with the amount of $75,000 or more is incorrect.
Four investors, all of whom are American citizens, own as a partnership a chain of 15 car dealerships in a number of states. Two of the investors live in State A, one lives in State B, and one lives in State C. The investors leave the day-to-day operation of each dealership to a manager that the partnership employs. The investors leave the management of the entire chain of dealerships and the day-to-day operation of the partnership to several key officers that it employs. The officers operate out of the partnership’s largest dealership, which is in State D. A customer of the State D dealership sued the partnership in federal district court in State D, alleging fraud and breach of contract arising from her purchase of a car, and claiming, in good faith, damages exceeding $75,000. The customer is a citizen of State D.
Does the federal district court in State D have subject matter jurisdiction over the customer’s action against the partnership?
A Yes, because the federal district court is located in State D and not another state.
B Yes, because the plaintiff customer is a citizen of State D while the defendant partnership is a citizen of State A, State B, and State C.
C No, because the plaintiff customer is a citizen of State D and the defendant partnership is also a citizen of State D, the state where its principal place of business is located.
D No, because federal courts do not have subject matter jurisdiction over local transactions that take place entirely in one state.
B
The court has subject matter jurisdiction. Diversity of citizenship jurisdiction is available when (i) there is complete diversity of citizenship, meaning that each plaintiff is a citizen of a different state from every defendant; and (ii) the amount in controversy exceeds $75,000. A natural person’s citizenship is the state that is the person’s permanent home. A partnership is a citizen of each state of which one of its partners is a citizen, both limited and general. Here, the plaintiff is a citizen of State D, and the partners are citizens of State A, State B, and State C. Thus, complete diversity exists, and the amount in controversy is stated to exceed $75,000. As a result, diversity of citizenship jurisdiction exists. (A) is incorrect because diversity would be present in any federal court. Subject matter jurisdiction would thus exist in any federal court. (C) is also incorrect. A corporation’s principal place of business is one of its possible citizenships—every state in which the corporation was incorporated being the other possible citizenships. The same rule does not apply to partnerships; a partnership takes on the citizenships of its partners. (D) is an incorrect statement of the law. The fact that the transaction was local does not preclude subject matter jurisdiction founded on diversity of citizenship jurisdiction.
A resident of State A sued a resident of State B in federal district court in State B for breach of contract. Jurisdiction was based on diversity of citizenship. The plaintiff alleged that the contract was entered into in State C and was to be performed in State D. The plaintiff further alleged that the defendant failed to perform.
While hearing this case, what substantive law should the federal district court apply?
A The law that the State D state court would apply.
B The law that the State C state court would apply.
C The law that the State B state court would apply.
D The law that the federal district court believes most logically applies.
C
The court should apply the law that the State B state court would apply. In a diversity case, the federal court applies the law that would be applied by the courts of the state in which the federal court is located. This includes the state’s choice of law rules. In the instant case, the federal court sitting in State B may well, as an end result, apply the law of State D or State C, but if it does so, it will be because State B’s choice of law rules require such a result. (A) and (B) are incorrect because the answers imply that the federal court will apply State D’s or State C’s choice of law rules, which is incorrect. (D) is incorrect because the federal court cannot ignore the law the state would apply even though it finds that law to be unsatisfactory.
While working on a site in State A, a State B construction worker was standing near a steel crane when the crane’s boom swung near a high tension power line. The worker was electrocuted and severely injured. The worker filed an action in federal district court against the power company that owns the power lines. The action seeks $500,000 and alleges that the power company’s negligent construction, maintenance, and operation of the power lines caused the injury. The power company is a State A corporation and all its operations are in State A. The power company filed a third-party complaint against the owner-operator of the crane, a State B citizen. The third-party claim is based on state law and alleges that the crane’s owner-operator is liable to the power company for any liability the power company has to the injured worker. The worker amended his complaint to add a state law negligence claim for $500,000 against the crane’s owner-operator.
Does the federal court have subject matter jurisdiction over the worker’s claim against the owner-operator of the crane?
A No, because the court does not have supplemental jurisdiction over the worker’s claim against the owner-operator of the crane.
B Yes, because the claim arose from the same transaction or occurrence as the worker’s claim against the power company.
C Yes, because all claims asserted arose from a common nucleus of operative fact.
D Yes, because the State B worker has sufficient contacts with State A.
A
The court does not have subject matter jurisdiction over the worker’s claim against the owner-operator of the crane. Diversity of citizenship jurisdiction is available when (i) there is complete diversity of citizenship, meaning that each plaintiff must be a citizen of a different state from every defendant; and (ii) the amount in controversy exceeds $75,000. The citizenship of an individual is his domicile, and a corporation is a citizen of every state in which it is incorporated and the one state in which it has its principal place of business. Here, the worker is from State B and the power company is a State A corporation with all its operations (and therefore its principal place of business) in State A. The plaintiff’s claim is for $500,000, satisfying the amount in controversy requirement. Accordingly, there is diversity of citizenship jurisdiction over this claim. Once one claim satisfies the requirements for original federal subject matter jurisdiction, the court has discretion to exercise supplemental jurisdiction over related claims that derive from the same common nucleus of fact and are such that a plaintiff would ordinarily be expected to try them in a single judicial proceeding. However, for cases based solely on diversity, supplemental jurisdiction is not available for claims against persons made parties under the impleader rules when use of supplemental jurisdiction would be contrary to the requirements of diversity jurisdiction. In the instant case, the owner-operator shares state citizenship with the worker and was made a party when the power company impleaded him on a claim for indemnity. Because a claim by the worker against the owner-operator would circumvent the complete diversity requirement, supplemental jurisdiction is not available for that claim. Hence, (A) is correct. (B) is incorrect because supplemental jurisdiction cannot be used to override the requirements of diversity jurisdiction, as discussed above. (C) is a too broad of a statement. There are some instances in which supplemental jurisdiction cannot be used, such as to support a claim by a plaintiff against a person made a party under the impleader rules (as is the case in this question). (D) is an incorrect statement of law, and irrelevant. First, subject matter jurisdiction (the power to hear a case) must be distinguished from personal jurisdiction (the power over a particular defendant). A court technically may have subject matter jurisdiction (e.g., diversity jurisdiction is satisfied) without having personal jurisdiction over one of the defendants because the defendant has insufficient contacts with the jurisdiction. Furthermore, a plaintiff consents to the personal jurisdiction of the court by filing suit. Here, that means the State B worker submitted to personal jurisdiction in State A by filing suit.
A citizen of State A asserted a state law claim of $80,000 against a citizen of State B in the federal district court. The State B citizen has a state law claim against another citizen of State B for $90,000 that arose out of the same transaction or occurrence as the original complaint. As a result, the State B citizen brought a third-party action against that person.
Does the court have subject matter jurisdiction over the State B citizen’s claim in the third-party action?
A No, because the amount in controversy is insufficient.
B No, because there is no diversity of citizenship.
C Yes, because the requirements of diversity jurisdiction have been met.
D Yes, because the court has supplemental jurisdiction.
D
The court has subject matter jurisdiction over this claim under its supplemental jurisdiction powers. The prerequisites for diversity of citizenship do not exist, because both are residents of State B. However, the court would have supplemental jurisdiction over a third-party claim that arose from the same transaction or occurrence as the underlying claim. Although (B) is a true statement, it is incorrect because there is supplemental jurisdiction. (A) is factually incorrect. (C) is incorrect because, as stated, diversity of citizenship is lacking.
