Jurisdiction & Venue

Question 1

What is subject-matter jurisdiction?

Answer 1

SMJ is a court’s authority to hear a case on the merits.

Question 2

Who has the burden of proving SMJ?

Answer 2

The party seeking to invoke a federal court’s SMJ (generally the plaintiff) has the burden to prove by a preponderance of the evidence that the court has either:

• diversity jurisdiction – when the parties are citizens of different states and the amount in controversy exceeds $75,000, or
• federal-question jurisdiction – when the plaintiff asserts a cause of action that arises under the Constitution, a treaty, or a federal law.

Question 3

What is required for FQJx to be invoked?

Answer 3

FQJx exists when the face of the Plt’s well-pleaded complaint asserts a claim arising under the Constitution, a federal law, or a treaty.

A complaint is well-pleaded when its jurisdictional statement shoes that the federal issue is a necessary element of the Plt’s COA.

The federal issue must appear on the face of the plaintiff’s well-pleaded complaint—not the defendant’s answer or counterclaim.

The jurisdictional statement in the complaint must show that the federal issue is a necessary element of the plaintiff’s cause of action.

* Merely mentioning a federal issue that may be asserted in the defendant’s answer is insufficient.

Question 4

What is the home-court-advantage rule?

Answer 4

The home-court-advantage rule prohibits removal from state to federal court when

(1) the federal court’s subject-matter jurisdiction arises from diversity jurisdiction and
(2) a defendant is a citizen of the state where the case was filed.

Question 5

What are the requirements for a defendant to remove a suit from state court to federal court?

Answer 5

A defendant can remove a suit from state court to federal court if the case falls within the federal court’s original subject-matter jurisdiction.

Original jurisdiction arises from either:

• federal-question jurisdiction – when a claim arises under the U.S. Constitution, a treaty, or federal law (not seen here) or
• diversity jurisdiction – when the amount in controversy exceeds $75,000 and the opposing parties are citizens of different states

Question 6

When and how can a party (usually the Plt) seek to return a case to state court?

Answer 6

A party (usually the plaintiff) can seek to return the case to state court by filing a motion to remand.*

One basis for remand is the home-court-advantage rule (ie, forum-defendant rule).

This rule prohibits removal when

• (1) subject-matter jurisdiction arises from diversity jurisdiction and
• (2) a defendant is a citizen of the state where the case was filed.

Question 7

What is personal jurisdiction?

Answer 7

A federal court must have personal jurisdiction over a defendant and be a proper venue to hear a dispute.

Personal jurisdiction can be established through:
(1) general jurisdiction – when the defendant has continuous and systematic contacts with the forum state and is essentially “at home” there or

(2) specific jurisdiction – when the plaintiff’s claim arises from the defendant’s contacts with the forum state.

Question 8

What must a federal court have to hear a dispute?

Answer 8

To hear a dispute, a federal court must have personal jurisdiction over the defendant and be a proper venue in which the case can be heard.

Question 9

When is venue proper?

Answer 9

Venue is proper in any district where:

(1) any defendant resides, if all defendants reside in the same state (ie, residency-based venue)
(2) a substantial part of the events that gave rise to the suit occurred (ie, events-based venue) or
(3) a substantial part of the property is located (ie, property-based venue) or
(4) any defendant is subject to the court’s personal jurisdiction—but only if neither of the above provisions applies (ie, fallback provision).

Question 10

Home-Court-Advantage Rule

Answer 10

A party (usually the plaintiff) can seek to return the case to state court by filing a motion to remand.*

One basis for remand is the home-court-advantage rule (i.e., forum-defendant rule).

This rule prohibits removal when:

(1) subject-matter jurisdiction arises from diversity jurisdiction and
(2) a defendant is a citizen of the state where the case was filed.

Question 11

Personal Jurisdiction

How to establish PJ

Answer 11

Personal jurisdiction over a party (i.e., in personam jurisdiction) can be established through a defendant’s consent or by serving process while the defendant is physically present in the state where the court is located (i.e., the forum state).

Personal jurisdiction can also be established through:

● General jurisdiction – when the defendant has continuous and systematic contacts with the forum state that are so substantial that the defendant is essentially “at home” (i.e., where a defendant is domiciled) or

● Specific jurisdiction – when the plaintiff’s claim arises from the defendant’s minimum contacts with the forum state and the exercise of jurisdiction would comply with notions of fair play and substantial justice.

Question 12

SMJ in Class Actions

Answer 12

1) Federal question
* Class action arises under U.S. Constitution, treaty, or federal law

2) Diversity

• Amount in controversy for any named plaintiff’s claim exceeds $75,000 and
• named opposing parties are citizens of different states

3) Class Action Fairness Act

• Class contains ≥ 100 members
• at least one class member & one defendant are diverse and
• amount in controversy for aggregated claims exceeds $5 million

As in any other lawsuit, a federal court can obtain subject-matter jurisdiction over a class action through either federal-question jurisdiction or diversity jurisdiction.

Question 13

Does a compulsory counterclaim need to meet the AIC under diversity jurisdiction?

Answer 13

NO.

Question 14

Supplemental Jurisdiction

Question 15

SMJ

Abstention

Answer 15

In general, a federal court with SMJ is required to adjudicate the controversy despite the pendency of a similar action in a state court.

A federal court may abstain from hearing a case or stay the matter pending the outcome of the state court action under the following limited circumstances:

i) Resolution of a state law issue by the state court would eliminate the need for the federal court to decide a federal constitutional issue.
ii) Avoidance of federal involvement with a complex state regulatory scheme or matter of great importance to the state,
iii) The state action involves punishment of an individual for criminal activity or for contempt of court, or the imposition of a civil fine, and the federal court is asked to enjoin such activity; and
iv) Parallel proceedings that go beyond mere waste of judicial resources, such as when there is a federal policy of unitary adjudication of the issues.

There are limited circumstances when federal intervention is appropriate. If a plaintiff can demonstrate unusual circumstances calling for federal equitable relief, significant and dire irreparable injury, or prosecutorial bad faith, then a federal court may intercede.

Question 16

Federal Question

If the cause of action is neither expressly nor implicitly created by federal law, then federal jurisdiction over a state law claim will lie if a federal issue is:

Answer 16

If the cause of action is neither expressly nor implicitly created by federal law, then federal jurisdiction over a state law claim will lie if a federal issue is:

(1) necessarily raised,
(2) actually disputed,
(3) substantial, and
(4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.

Question 17

Federal Question

What is considered federal law?

Answer 17

Federal law includes the U.S. Constitution, federal statutes, federal administrative regulations, and U.S. treaties.

State laws incorporating standards of federal law are not considered laws of the United States for the purposes of § 1331.

Question 18

Diversity JX

Answer 18

Article III, Section 2 of the U.S. Constitution permits Congress to extend federal judicial power to controversies “between citizens of di!erent states … and between a state or the citizens thereof, and foreign states, citizens or subjects.”

Under § 1332, Congress gave the U.S. district courts jurisdiction over actions when:

i) The parties to an action are:
a) Citizens of different states;
b) Citizens of a state and citizens or subjects of a foreign state;
c) Citizens of different states and citizens or subjects of a foreign state are additional parties; or
d) A foreign state as plaintiff and citizens of a state or different states; and
ii) The amount in controversy in the action exceeds $75,000.

In general, when these requirements are met, a federal court may exercise jurisdiction over the action, regardless of the legal subject of the controversy.

This is known as “diversity-of-citizenship jurisdiction” or, more commonly, “diversity jurisdiction.”

Question 19

What are the two areas of state law that are excluded from diversity jx?

Answer 19

Two areas of state law are generally excluded from diversity jurisdiction:

1) probate matters (probate of a will or administration of an estate) and
2) domestic relations actions (divorce, alimony, custody disputes).

Note, though, that these exceptions apply only to cases that are primarily probate or marital disputes.

Question 20

Rule of Complete Diversity

Answer 20

Diversity jurisdiction requires complete diversity between opposing parties in a case.

There is no diversity of citizenship if any P in the case is a citizen of the same state as any D in the case or if any P and any D are aliens (i.e., citizens or subjects of a foreign country).

Two Ps in a case may be from the same state without destroying diversity, as long as no P is from the same state as any defendant in the case.

Question 21

3 Exceptions to the complete diversity rule

Answer 21

1. Interpleader

• Under 28 U.S.C. § 1335, the Federal Interpleader Act, the holder of property that is claimed by two or more persons may deposit the property with a court to determine ownership.
• Under the Act, there need be only two adverse claimants of diverse citizenship to establish federal jurisdiction.
  
  • (See federal rule interpleader, which requires complete diversity).
• 2.* Class actions greater than $5,000,000
• For certain class actions in which the amount at issue totals more than $5,000,000, diversity will be met if any member of the P class is diverse with any defendant. § 1332(d)(2)(A).
  3. Multiparty, multiforum trial jurisdiction act of 2002
• Under § 1369(a), for a civil action that “arises from a single accident, where at least 75 natural persons have died in the accident at a discrete location,” only one P need be of diverse citizenship from one D for a federal court to have diversity jurisdiction, if:
  i) A D resides in a state and a substantial part of the accident took place in another state or other location, regardless of whether that D is also a resident of the state where a substantial part of the accident took place;
  ii) Any two Ds reside in different states, regardless of whether such defendants are also residents of the same state or states; or
  iii) Substantial parts of the accident took place in different states.
• Even if those requirements are met, however, under § 1369(b), the district court must abstain from hearing the case if:
  i) The substantial majority of all Ps are citizens of a single state of which the primary Ds are also citizens; and
  ii) The claims asserted will be governed primarily by the laws of that state.
• The Act also provides:
  i) That anyone involved in the accident is permitted to intervene as a P; and
  ii) Nationwide service of process.

Question 22

Complete Diversity

Realignment

Answer 22

In evaluating whether true diversity exists, courts will look beyond the face of the pleadings to determine the “ultimate interests.”

If necessary, they will “arrange the parties according to their sides in the dispute.”

Thus, courts will not allow, for example, a party that is actually aligned with the P to be named as a D in order to present a false diversity.

Question 23

Date of determination of diversity

Answer 23

Diversity is determined at the time the case is filed.

• There is no requirement that diversity exist at the time the cause of action arose.

A change in citizenship after the filing of the case will not affect diversity jurisdiction that was in existence at the time of the filing.

In addition, a change in the parties as a result of substitution or intervention will not affect diversity jurisdiction.

Question 24

Domicile

There is a presumption that a place of domicile continues until it is definitively changed, i.e., when a person:

Answer 24

i) Establishes presence in the new place; and
ii) Manifests intent to remain there for an indefinite period.

Consequently, a compulsory change of residence, such as for incarceration or military purposes, will not result in a change in domicile.

Similarly, an intent to move without actual relocation to another state will not result in a change in domicile.

Question 25

Domicile

When determined & Factors considered

Answer 25

Domicile is determined at the time the action is commenced. Once SMJ has been established, it will not be affected by a party’s change of domicile.

Some factors used in determining domicile include whether:

i) a party exercises civil and political rights (e.g., registration to vote),
ii) pays taxes,
iii) owns real and personal property, and
iv) is employed in the state.

Question 26

Diversity JX

Aliens

Answer 26

Diversity jx based on alienage exists when there are one or more citizens or subjects of a foreign country (i.e., aliens) on one side of the lawsuit and one or more citizens of a state on the other.

There is no diversity jx in an action by one foreign citizen or subject against another,

Nor is there jurisdiction when an action is between a citizen of a state and an alien admitted into the United States for permanent residence who is domiciled in the same state as the citizen. § 1332(a)(2).

Question 27

Diversity JX

Stateless Persons

Answer 27

Diversity jurisdiction does not exist if a party is an alien who is present in the United States and is not a citizen or subject of a foreign country, or if a party is a U.S. citizen whose domicile is a foreign country.

• Such persons are neither citizens of the United States nor citizens or subjects of a foreign country for the purposes of diversity jurisdiction.

Question 28

Diversity JX

Minors, incompetents, decedents, and trusts

Answer 28

The legal representative of a minor, an incompetent, or an estate of a decedent will be deemed a citizen of the same state as that minor, incompetent, or decedent. § 1332(c)(2).

As to trusts, the old rule was that they were deemed to be a citizen of the same state as the trustee.

However, this rule has been placed in doubt by Carden, which held that the citizenship of unincorporated associations is determined by the citizenship of all of its members.

At least one lower federal court has recently applied the Carden holding to trusts, holding that Carden requires that diversity be destroyed if, in a suit against a trust, any beneficiary of the trust is a citizen of the same state as a P.

An unemancipated minor is generally deemed a citizen of the state in which his parents are domiciled.

• If a minor’s parents are not citizens of the same state, then the child will generally be deemed a citizen of the state of the parent who has custody.

Question 29

Diversity JX

Class Actions

Answer 29

Diversity in a class action brought pursuant to Rule 23 will generally be determined by the citizenship of the named members of the class bringing the lawsuit.

For certain class actions, however, when the amount at issue totals more than $5,000,000, diversity will be met if any member of the P class is diverse with any D. § 1332(d)(2)(A).

Question 30

Diversity JX

Business Entities - Corporations

Answer 30

A corporation may be a party to a diversity action. The corporation’s citizenship at the time the action is commenced determines jurisdiction.

Under § 1332(c), for the purposes of diversity jx, “a corporation shall be deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business.”

Thus, corporations, unlike individuals, may be citizens of more than one state for diversity purposes, and diversity jx will be destroyed if any opposing party is a citizen of any of the states in which the corporation has citizenship.

_***A pleader does not have the option of alleging that a corporation’s citizenship is either its state of incorporation or the state where the principal place of business is located; both states must be listed in the pleading.***_

Question 31

Diversity JX

• Business Entities - Corporations*
• Incorporation & Principal place of business*

Answer 31

1) Incorporation

A corporation’s state of incorporation is the state in which the corporate entity is legally established.

• Every corporation has at least one state of incorporation, and some have multiple states of incorporation.
• If a corporation is incorporated in more than one state or foreign country, then it is considered a citizen of each state and foreign country in which it is incorporated.
  2) Principal place of business

Determining where a corporation maintains its principal place of business is a question of fact more complicated than determining where a corporation is incorporated.

The Supreme Court has held that “principal place of business” refers to the “nerve center” of the corporation.

The nerve center is generally the location from which the high-level officers direct, control, and coordinate the activities of the corporation. Typically, the nerve center is the corporate headquarters.

****Unlike with incorporation, which may involve multiple states, a corporation’s principal place of business is in only one state or foreign country.****

Question 32

Diversity JX

Business Entities - Foreign Corporations

Answer 32

A foreign corporation will be deemed a citizen of the country in which it is incorporated.

In addition, if the foreign corporation also has its principal place of business in the United States, then it will have citizenship in the state where the principal place of business is located.

Question 33

Diversity JX

Business Entites - Partnerships and other unincorporated associations

Answer 33

Generally, an unincorporated association, such as a partnership, is considered a citizen of each state in which each of its members is domiciled.

Thus, it is possible that a partnership could be a citizen of all 50 states, if it had partners domiciled in every state.

This rule holds for both general and limited partnerships; a limited partnership will therefore be a citizen of every state in which its general and limited partners are domiciled.

EXCEPTION:

An unincorporated association may be treated as a class when “it appears that the representative parties will fairly and adequately protect the interests of the association and its members.”

In that case, the citizenship of the representative parties controls for purposes of diversity jurisdiction.

This exception may not be used merely to create diversity jurisdiction, nor may it be used if the association has the capacity under state law to sue or be sued as an entity. Rule 23.2.

Question 34

Diversity JX

Amount in Controversy

Answer 34

The amount in controversy (AIC) must exceed the sum or value of $75,000, exclusive of interest, costs, and collateral effects of a judgment.

Attorney’s fees may be made part of the amount in controversy if the fees are recoverable by contract or statute.

Punitive damages, as well, may be permitted to be made part of the amount in controversy.

The AIC is determined at the time the action is commenced in federal court, or, if the action has been removed to federal court, at the time of the removal. The party seeking to invoke federal court jurisdiction must allege that the action satisfies the amount-in-controversy requirement.

In the case of injunctive relief, when it is diffcult to assess a dollar amount, the court determines both:

i) the value of the P’s harm if an injunction is not imposed and
ii) the D’s cost of complying with an injunction.

If the amount of either exceeds $75,000, then the amount-in-controversy requirement is satisfied. § 1332(a).

***Remember that the amount in controversy must exceed $75,000; a claim for exactly $75,000 fails.***

Question 35

Diversity JX

• Amount in Controversy*
• Standard of Proof & Reduction of a claim after filing*

Answer 35

1) Standard of Proof

In general, a P’s good-faith assertion in the complaint that the action satisfies the AIC requirement is suffcient, unless it appears to be a legal certainty that the P cannot recover the amount alleged.

If an alleged AIC is challenged, then the burden is on the party asserting jx merely to show that it is not a legal certainty that the claim involves less than the statutory amount.

2) Reduction of a claim after filing

If events after the action has been filed reduce the AIC below the statutory minimum, then jx will not be lost, as long as the original claim was made in good faith.

Additionally, if the P eventually recovers an amount that is less than the statutory jurisdictional amount, then that fact will not render the verdict subject to challenge on appeal for lack of jurisdiction.

Question 36

Diversity JX

• Aggregation of Claims*
• 1) By a single P against a single D*
• 2) By multiple Ps*

Answer 36

1) By a single P against a single D
* If the diversity action involves only one P and one D, then the total value of all of the P’s claims is calculated to determine the AIC
2) By multiple Ps

If the action involves multiple Ps, then the value of their claims may be aggregated only if the multiple Ps are enforcing a single title or right in which they have a common or undivided interest.

• If multiple Ps, each having separate and distinct claims, unite for convenience or economy in a single suit, then each P’s aggregate claims are judged separately in determining whether the AIC requirement has been met.

If the aggregate claims of at least one P separately meet the AIC equirement, then the court has diversity jx over that P’s claims, provided the diversity-of- citizenship requirement is met.

• The court may also have supplemental jx over the claims of any other P, even though that P’s claims do not meet the AIC requirement.

Question 37

Diversity JX

• Aggregation of Claims*
• 1) By a single P against multiple Ds*
• 2) Class Actions*

Answer 37

1) By a single P against multiple Ds

• The value of a single P’s claims against each D may not be aggregated if the claims are separate and distinct.
• If the Ds are jointly liable to the P, then aggregation to meet the AIC requirement is permissible.

2) Class Actions

In general, if any member of the putative class does not have a claim that meets the statutory jurisdictional amount, then the AIC requirement will not be met.

• Note, though, that the Class Action Fairness Act of 2005 amended § 1332(d) to permit aggregation of claims in certain class actions.

Additionally, when at least one representative P in a putative class action has a claim that meets the statutory jurisdictional amount, other persons with claims that do not meet the jurisdictional amount can be made part of the class under the doctrine of supplemental jurisdiction.

Question 38

Diversity JX

Counterclaims

Answer 38

A counterclaim by a D against a P is not counted for the purposes of determining whether the P has met the statutory jurisdictional amount.

Under some circumstances, though, the counterclaim itself will need to meet the statutory jurisdictional amount in order to be considered by the court.

Question 39

Diversity JX

Counterclaims - Compulsory Counterclaims

Answer 39

A compulsory counterclaim, which is generally a claim arising out of the same transaction or occurrence as the P’s claim, does not have to meet the statutory jurisdictional amount requirement to be considered by the court.

The court will have supplemental jurisdiction over the compulsory counterclaim.

To determine whether counterclaims or cross-claims arise out of the same “transaction or occurrence,” courts consider whether:

(i) the issues of fact and law in the claims are essentially the same;
(ii) the same evidence would support or refute the claims;
(iii) there is a logical relationship between the claims; and
(iv) res judicata would bar a subsequent suit on either claim.

The most frequently considered factor is whether there is a logical relationship between the claims, but any one of them can support a conclusion that the claims arise from the same “transaction or occurrence.”

Question 40

Diversity JX

• 1) Counterclaims - Permissive Counterclaims*
• 2) Removal by defendant - permissive counterclaim*
• 3) Removal by defendant - compulsory counterclaim*

Answer 40

1) A permissive counterclaim, which is a claim arising out of a transaction that is unrelated to the P’s claim, has to meet the statutory jurisdictional amount requirement.
2) When a diverse defendant makes a permissive counterclaim under state law for more than the federal statutory jurisdictional amount, and the P’s claim is for less than the federal statutory jurisdictional amount, the defendant is not permitted to remove the case to federal court.
3) When a diverse defendant makes a compulsory counterclaim under state law for more than the federal statutory jurisdictional amount, and the P’s claim is for less than the federal statutory jurisdictional amount, courts are split on allowing removal by the defendant. Most courts, though, do not allow the defendant to remove the case to federal court.

Question 41

Diversity JX

Voluntary change of state citizenship

Answer 41

A party may voluntarily change state citizenship after the accrual of a cause of action, but before the commencement of a lawsuit, and therefore establish or defeat diversity jurisdiction.

A party’s motive for changing citizenship is irrelevant, but the change of state citizenship must be genuine to be recognized.

In determining whether a party’s change of state citizenship is genuine, a court may consider whether:

i) the party changed her domicile specifically to create or destroy diversity, but as long as the party intends to stay in the new state indefinitely, this motive will not invalidate the change in domicile.

Question 42

Supplemental JX

In General

Answer 42

A district court with jurisdiction over a claim may exercise “supplemental jurisdiction” over additional claims over which the court would not independently have SMJ (usually state law claims against a nondiverse defendant) but that are so related to the original claim that the additional claims form part of the same case or controversy under Article III of the U.S. Constitution. § 1367(a).

In judging whether the claims are related, the test is whether they arise out of a “common nucleus of operative fact” such that all claims should be tried together in a single judicial proceeding.

Question 43

Supplemental JX

Federal Question JX Cases

Answer 43

When the district court’s SMJ for a claim is based on the existence of a federal question, additional claims against the same party can be heard by the court through the exercise of supplemental jurisdiction if the common-nucleus-of-operative-fact test is met.

Example: P sues D, her corporate employer, in federal court under Title VII for sex discrimination and retaliation, matters over which the court has federal question jurisdiction. P then seeks to sue D for assault and battery under state law, a claim that arises under the same operative facts that applied to her Title VII claim. The federal court has discretion to exercise supplemental jurisdiction over the assault and battery claim.

Similarly, a district court may have supplemental jx over claims that involve the joinder or intervention of additional parties over which the court would not otherwise have jurisdiction if the claims involving the additional parties satisfy the common-nucleus-of-operative-fact test.

• Such jurisdiction is also referred to as “pendent-party jurisdiction.”

Example: P sues D1 1, her corporate employer, in federal court under Title VII for sex discrimination and retaliation, matters over which the court has federal question jurisdiction. P then seeks to sue D2, her direct supervisor, for assault and battery, a claim that arises under the same operative facts that applied to her Title VII claim against the corporate employer. The federal court could exercise supplemental jurisdiction over the assault and battery claim against the supervisor.

_***Dismissal of a federal claim on the merits does not preclude a federal court from exercising pendent-party jurisdiction over the state claim.***_

Question 44

Supplemental JX

• Diversity JX Cases*
• Permissive Joinder*

Answer 44

When a district court has diversity jx over a claim, the common-nucleus-of-operative-facts rule also applies to determine whether the court can exercise supplemental jurisdiction over an additional claim.

Permissive joinder

Although the additional claim is not required to satisfy the AIC requirement for purposes of supplemental jx, when the additional claim is asserted by a P seeking to join the action under Rule 20 (permissive joinder), the addition of that party cannot result in a violation of the requirement for complete diversity of citizenship.

Example 1:

P1, a citizen of Pennsylvania, brings a negligence action in federal court for $500,000 against D, a citizen of New York, based on an automobile accident.

P2, also a citizen of Pennsylvania and a passenger in P1’s car at the time of the accident, seeks to join P1’s action by filing a negligence claim against D for $30,000.

While diversity jx does not exist for P2’s claim because it does not satisfy the $75,000 AIC requirement, the court can exercise supplemental jurisdiction over that claim because it meets the common-nucleus-of-operative-facts test.

Example 2:

Assume for this example the same facts as those in Example 1 except that P2 is a citizen of New York.

The federal court cannot exercise supplemental jx over P2’s claim because the presence of P2 would defeat the requirement for complete diversity.

Question 45

Supplemental JX

• Diversity JX Cases*
• 1) Counterclaims*
• 2) Cross-claims*

Answer 45

1) Counterclaims

A counterclaim may be asserted by a D against a P without satisfying the jurisdictional amount when the counterclaim is compulsory.

A permissive counterclaim does not qualify for supplementary jx and therefore must satisfy the jurisdictional amount and the rule of complete diversity.

2) Cross-claims

A cross-claim may be asserted by a D against another D or by a P against another P if the cross-claim arises out of the same transaction or occurrence as the initial claim, without regard to the AIC or the citizenship of the parties to the cross-claim as long as the court has SMJ over the original complaint.

Question 46

Supplemental JX

Precluded claims in diversity cases

Answer 46

Under § 1367(b), in actions in which the original jurisdiction of the federal court is based solely on diversity jx, supplemental jx is precluded for:

i) Claims by existing Ps (but not Ds) against persons made parties under one of the following FRCP:

• Rule 14 (impleader),
• Rule 19 (compulsory joinder),
• Rule 20 (permissive joinder), or
• Rule 24 (intervention);

ii) Claims by persons to be joined as Ps pursuant to Rule 19; and
iii) Claims by persons seeking to intervene as Ps pursuant to Rule 24, when the exercise of supplemental jx over such claims would be inconsistent with the requirements for diversity jx under 28 U.S.C. § 1332.

Example 1: P, a citizen of Iowa, sues D, a Nebraska corporation, in federal court under diversity jx for the wrongful death of P’s husband. D then impleads Contractor, a citizen of Iowa, under Rule 14, alleging that if D is liable to P, then Contractor must indemnify D for any liability to P.

If P then asserts a claim directly against Contractor, because they are both citizens of the same state (Iowa), supplemental jx in federal court will not apply to the claim, as it would be inconsistent with the requirements for diversity jx pursuant to §1367(b).

Note that D’s claim against Contractor would fall within the federal court’s supplemental jx, as it is derived from the same operative facts being considered by the court under the claim over which it has original jx and is not precluded by § 1367(b).

Question 47

Discretionary Rejection of Supplemental Jurisdiction

Answer 47

Under § 1367(c), a district court has discretion to decline to exercise supplemental jx over a claim that would otherwise qualify for supplemental jx in each of the following circumstances:

i) The supplemental claim raises a novel or complex issue of state law;
ii) The supplemental claim substantially predominates over the claims within original federal jurisdiction;
iii) All of the claims within the court’s original jurisdiction have been dismissed; or
iv) In exceptional circumstances, if there are other compelling reasons for declining jurisdiction.

Question 48

FRCP 4(k) - “100 mile bulge rule”

Answer 48

The “100-mile bulge rule”—for federal courts to acquire personal jurisdiction over a party who is:

1) added to the suit through impleader (i.e., third-party practice) or required joinder and
2) served with process within 100 miles of the federal court where the suit is pending—even if the party is served in another state.

Question 49

Special Rules for where venue is proper

Answer 49

1) Removal
* Federal district where state action was pending
2) Foreign resident
* Any judicial district
3) Federal official sued in official capacity

• Where defendant resides
• Where substantial events occurred or property is located
• Where plaintiff resides if no real property is involved in suit

4) Foreign government

• Where substantial events occurred or property is located
• In federal district court of Washington, D.C.

5) Multiparty, multiforum litigation

• Where defendant resides
• Where substantial part of accident occurred

6) Federal Tort Claims Act

• Where plaintiff resides
• Where act/omission occurred

Question 50

Under the general venue statute, venue is proper in a judicial district where:

Answer 50

1) any defendant resides—but only if all defendants reside in the same state
2) a substantial portion of the events occurred or a substantial part of the property at issue is located or
3) any defendant is subject to the court’s personal jurisdiction—but only if venue cannot be established under the above provisions.

However, special venue rules apply in certain situations, including when a defendant is a nonresident of the U.S. (like the jeweler here).

In this situation, venue is proper in any judicial district—including a district in the state where the buyer resides.

Question 51

Where should a federal district court look when analyzing whether it has personal jurisdiction over a nonresident defendant?

Answer 51

A federal court has the same personal jurisdiction as the courts of the state in which it is located (i.e., the forum state).

The forum state’s long-arm statute specifies when a federal court within the state can exercise specific personal jurisdiction over a nonresident defendant.

Question 52

What law must courts apply when a claim arises under FQ jx?

Answer 52

When a claim arises under federal-question jurisdiction, federal courts must apply federal law, including federal common law, to procedural and substantive issues.

Question 53

How can a defendant consent to a court’s personal jurisdiction?

Answer 53

A defendant can consent in any of the following ways:

1. Express consent – by contractually agreeing to the court’s jurisdiction (e.g., forum-selection clause)
2. Implied consent – by engaging in an activity that the forum state has a substantial interest in regulating (e.g., driving on public roads)
3. Waiver – by failing to assert a personal-jurisdiction objection in a pre-answer motion or answer, whichever occurs first
4. Appearance – by voluntarily appearing in court to litigate the merits of the case without challenging personal jurisdiction (i.e., a “general appearance”)*
   * *A defendant who voluntarily appears in court for the express purpose of challenging personal jurisdiction makes a “special appearance.” Federal courts no longer require a defendant to make a “special appearance” to object to personal jurisdiction, which can be done in a pre-answer motion or answer.

Question 54

Is a federal court with SMJ required to adjudicate a controversy despite a pending similar action in a state court?

Answer 54

YES.

A federal court with subject-matter jurisdiction is required to adjudicate the controversy despite the pendency of a similar action in a state court.

**Note: there are exceptions**

Question 55

Where is venue proper under the Federal Tort Claims Act?

Answer 55

In an action filed under the Federal Tort Claims Act, venue is proper either in:

i) the judicial district where the plaintiff resides OR
ii) in the judicial district where the act or omission occurred.

(Note: The Federal Tort Claims Act waives sovereign immunity and permits a tort action against the United States under limited circumstances.)

Question 56

Where may an action be brought against a federal officer or employee acting in an official capacity or under color or legal authority?

Answer 56

An action against a federal officer or employee acting in an official capacity or under color of legal authority may be brought in the judicial district in which the plaintiff resides.

Question 57

Is the doctrine of forum non conveniens applicable to the transfer of an action from one federal court to another?

Answer 57

NO.

Application of the common law doctrine is largely confined to dismissal of actions that would be more appropriately tried in the court of a foreign country.

It is not applicable to the transfer of an action from one federal court to another.

Question 58

Can a federal court exercise general federal question jurisdiction when a state law creates a cause of action and the complaint raises a real and substantial issue of federal law, and the outcome depends on resolving the federal issue?

Answer 58

YES.

When state law creates a cause of action, a federal court can nonetheless exercise general federal-question jurisdiction if the complaint raises a real and substantial issue of federal law, and the outcome necessarily depends on resolving this federal issue.

Question 59

What may be included in the “amount-in-controversy”?

Answer 59

In a federal diversity claim, the amount in controversy must exceed the sum or value of $75,000, exclusive of interest, costs, and collateral effects of a judgment.

Although interest and costs are excluded from the amount in controversy, attorney’s fees may be made part of the amount in controversy if the fees are recoverable by contract or statute.

Punitive damages, as well, may be permitted to be made part of the amount in controversy.