Learning Civ Pro

Question 1

What are the two kinds of jurisdiction?

Answer 1

A. Two kinds of jurisdiction: Before a court can decide a case, it must have jurisdiction over the parties as well as over the subject matter. [7]

1. Subject matter jurisdiction: Subject matter jurisdiction refers to the court’s power to decide the kind of case before it. (Examples of subject matter jurisdiction issues: (1) Does the federal court for the District of New Jersey have the power to decide cases in which the two parties are citizens of different states? (2) Does the Binghamton Municipal Court have the power to decide cases involving more than $1,000?)
2. Jurisdiction over the parties: Jurisdiction over the parties refers to whether the court has jurisdiction to decide a case between the particular parties, or concerning the property, before it. (Examples of issues concerning jurisdiction over the parties: (1) Does Court X have jurisdiction over D, who is a citizen of State X, but who is temporarily out of the state? (2) Does Court Y have jurisdiction over property in State Y where the action is one by P to register title to the land in his name?)

Question 2

What are the 2 distinct requires needed before a court can have jurisdiction over *parties*?

Answer 2

B. Jurisdiction over the parties: There are two distinct requirements which must be met before a court has jurisdiction over the parties: [8]

1. Substantive due process: The court must have power to act, either upon given property, or on a given person so as to subject her to personal liability. The Constitution’s Fourteenth Amendment Due Process Clause imposes this requirement of power to act, as a matter of “substantive due process.”
2. Procedural due process: Also, the court must have given the defendant adequate notice of the action against him, and an opportunity to be heard. These, taken together, are requirements of procedural due process, also imposed by the Fourteenth Amendment’s Due Process Clause.

Question 3

What are the 3 kinds of jurisdiction over the parties?

Answer 3

1. In personam: In personam jurisdiction, or jurisdiction over the defendant’s “person,” gives the court power to issue a judgment against her personally. Thus all of the person’s assets may be seized to satisfy the judgment, and the judgment can be sued upon in other states as well. [8]
2. In rem: In rem jurisdiction, or jurisdiction over a thing, gives the court power to adjudicate a claim made about a piece of property or about a status. (Examples: An action to quiet title to real estate, or an action to pronounce a marriage dissolved.) [8]
3. Quasi in rem jurisdiction: In quasi in rem jurisdiction, the action is begun by seizing property owned by (attachment), or a debt owed to (garnishment) the defendant, within the forum state. The thing seized is a pretext for the court to decide the case without having jurisdiction over the defendant’s person. Any judgment affects only the property seized, and the judgment cannot be sued upon in any other court. [8]

—((((Minimum contacts requirement: If jurisdiction in the case is in personam or quasi in rem, the court may not exercise that jurisdiction unless D has “minimum contacts” with the state in which the court sits. In brief, the requirement of minimum contacts means that D has to have taken actions that were purposefully directed towards the forum state. (Examples of the required action: D sold goods in the state, or incorporated in the state, or visited the state, or bought property in the state, etc.) Without such minimum contacts, exercise of jurisdiction would violate D’s Fourteenth Amendment federal constitutional right to due process. [8]

a. Unreasonable exercise: Even if D has the requisite “minimum contacts” with the forum state, the court will not exercise jurisdiction if considerations of “fair play and substantial justice” would require making D defend in the forum state so unreasonable as to constitute a due process violation. But in most cases, if D has the required minimum contacts with the forum state, it will not be unreasonable for the case to be tried there. ))

Question 4

Explain Long-arm statute:

Answer 4

D. Long-arm statute: Most states have “long-arm statutes.” A long-arm statute is a statute which permits the court of a state to obtain jurisdiction over persons not physically present within the state at the time of service. (Example: A long-arm might allow jurisdiction over an out-of-stater who has committed a tort in the state.) [9]

1. Substitute service: Long-arms typically provide for “substitute” means of service, since in-state personal service is not possible. (Example: A long-arm statute might allow the plaintiff to cause the defendant to be served out of state by registered mail.)

Question 5

What are the ways that enable a court to have personal (in personum) jurisdiction over an individual?

Answer 5

A. Different categories: In most states, there are a number of different criteria which will enable the court to take personal jurisdiction over an individual. Some of the most common (each of which will be considered in detail below) are: [9]

1. Presence (service) within the forum state;
2. Domicile or residence within the forum state;
3. Consent to be sued within the forum state;
4. Driving a car within the forum state;
5. Committing a tortious act within the state (or, perhaps, committing an out-of-state act with in-state tortious consequences);
6. Ownership of property in the forum state;
7. Conducting business in the forum state;
8. Being married in, or living while married in, the forum state.

Note: Regardless of the criteria used by the state and its long-arm for establishing personal jurisdiction over the individual, due process requires that the individual have minimum contacts with the forum state before personal jurisdiction may be exercised over her. The meaning of “minimum contacts” is discussed further below in the treatment of jurisdiction over corporations.

B. Presence: Jurisdiction may be exercised over an individual by virtue of his presence within the forum state. That is, even if the individual is an out-of-state resident who comes into the forum state only briefly, personal jurisdiction over him may be gotten as long as service was made on him while he was in the forum state. [10]
Example: D and his wife, P, separate while residing in New Jersey. P moves to California with their children. D visits California on business, and stops briefly to visit the children. While D is visiting, P serves him with process in a California suit for divorce. D never visits the state again.
Held, California can constitutionally assert personal jurisdiction over D based on his presence in the state at the time of service, even though that presence was brief, and even though D had virtually no other contacts with the state. [Burnham v. Superior Court].

C. Domicile: Jurisdiction may be exercised over a person who is domiciled within the forum state, even if the person is temporarily absent from the state. A person is considered to be domiciled in the place where he has his current dwelling place, if he also has the intention to remain in that place for an indefinite period. [11 - 13]

D. Residence: Some states allow jurisdiction to be exercised on the basis of D’s residence in the forum state, even though he is absent from the state. A person may have several residences simultaneously. (The Supreme Court has not yet passed on the due process validity of jurisdiction based solely on residence, so this remains presumptively a valid method of gaining jurisdiction.) [13]

E. Consent: Jurisdiction over a party can be exercised by virtue of her consent, even if she has no contacts whatsoever with the forum state. [14]
Example: P, who does not reside in Ohio or have any other contacts with Ohio, brings suit against D in Ohio. By filing the suit in Ohio, P will be deemed to have consented to Ohio’s jurisdiction. D may then counterclaim against P. Even if P dismisses his own suit, his consent to the action will be binding, and the Ohio courts will have personal jurisdiction over him on the counterclaim.

F. Non-resident motorist: Most states have statutes allowing the courts to exercise jurisdiction over non-resident motorists who have been involved in accidents in the state. [15]

Example: P is a resident of the forum state. D, not a resident of the forum state, is driving his car in the forum state, and has a collision with P’s car. Even if D has no other contacts with the state, a non-resident motorist statute will probably be in force in the state, and will probably give the forum state’s courts jurisdiction over a tort suit by P against D.

1. Service on state official: Most of the non-resident motorist statutes provide for in-state service of process on a designated state official (e.g., the Director of Motor Vehicles) and for registered mail service on the out-of-state defendant himself. [16]

G. In-state tortiousness: Many states have statutes allowing their courts jurisdiction over persons committing tortious acts within the state. [16]
Example: D, an out-of-stater, gets into a fight with P at a bar in P’s home state. P wants to bring a civil battery claim against D in the state. If, as is likely, the state has a long-arm provision governing tortious acts within the state, P will be able to get personal jurisdiction over D in the battery action.

1. Out-of-state acts with in-state consequences: Some “in-state tortious acts” long-arm clauses have been interpreted to include acts done outside the state which produce tortious consequences within the state. In a products liability situation, a vendor who sells products that he knows will be used in the state may constitutionally be required to defend in the state, if the product causes injury in the state. [Gray v. American Radiator Corp.] [16]

H. Owners of in-state property: Many states exercise jurisdiction over owners of in-state property in causes of action arising from that property. [18]

I. Conducting business: States often exercise jurisdiction over non-residents who conduct businesses within the state. Since states may regulate an individual’s business conduct in the state, they may constitutionally exercise jurisdiction relating to that doing of business. [19]

J. Domestic relations cases: Courts sometimes try to take personal jurisdiction over a non-resident party to a domestic relations case. However, the requirement of “minimum contacts” applies here (as in every personal jurisdiction situation), and that requirement may bar the state from taking jurisdiction. [26]

Example: A father resides in New York, and permits his minor daughter to go to California to live there with her mother. Held, the father does not have sufficient minimum contacts with California to allow the mother to bring an in personam suit in California against him for increased child support. [Kulko v. Superior Court]

Question 6

Explain jurisdictions over foreign vs domesticcorporatins:

Answer 6

A. Domestic corporations: Any action may be brought against a domestic corporation, i.e., one which is incorporated in the forum state. [21]

B. Foreign corporations generally: A state is much more limited in its ability to exercise jurisdiction over a foreign corporation (i.e., a corporation not incorporated in the forum state). [22 - 27]

1. Minimum contacts: The forum state may exercise personal jurisdiction over the corporation only if the corporation has “minimum contacts” with the forum state “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” [International Shoe Co. v. Washington] [22 - 23]
2. Dealings with residents of forum state: Usually, a corporation will be found to have the requisite “minimum contacts” with the forum state only if the corporation has somehow voluntarily sought to do business in, or with the residents of, the forum state. [23 - 27]

Example 1 (minimum contacts found): D has no activities in Washington except for the activities of its salesmen, who live in the state and work from their homes. All orders are sent by the salesmen to the home office, and approved at the home office. The salesmen earn a total of $31,000 per year in commissions. 
Held, the company has minimum contacts with Washington. [International Shoe Co.] 

Example 2 (minimum contacts found): D is a Texas insurance company. It does not solicit business in California. However, it takes over, from a previous insurance company, a policy written on the life of X, a California resident. D sends X a new policy; X sends premiums from his California home to D’s out-of-state office. X dies; P (the beneficiary under the policy) is a California resident. P sues D in California for payment under the policy. 
Held, D has minimum contacts with California, and can thus be sued in personam there in a suit by P for payment on the policy. [McGee v. International Life Ins. Co.] 

Example 3 (minimum contacts not found): D is a Delaware bank, which acts as trustee of a certain trust. S, the settlor of the trust, is a Pennsylvania resident at the time she sets up the trust. Years later, she moves to Florida. Later, her two children, also Florida residents, want to sue D in Florida for a judgment that they are entitled to the remaining trust assets. D has no other contacts with Florida. 
Held, D does not have minimum contacts with Florida, and therefore, cannot be sued in personam there. [Hanson v. Denckla] 
Note: The key idea is that D will be found to have minimum contacts with the state only if D has purposely availed itself of the chance to do business in the forum state. Thus in McGee (Example 2 above), the insurance company offered a policy to someone who it knew was a resident of the forum state. In Hanson (Example 3 above), by contrast, the trustee never voluntarily initiated business transactions with a resident of the forum state or otherwise voluntarily did business in the state – it was only S’s unilateral decision to move to the forum state that established any kind of connection with that state, so minimum contacts did not exist.

Question 7

Explain use fo agents for foreign companies and jurisdiction

Answer 7

C. Use of agents: Sometimes an out-of-state company does not itself conduct activities within the forum state, but uses another company as its agent in the state. Even though all business within the state is done by the agent, the principal (the foreign corporation) can be sued there, if the agent does a significant amount of business on the foreign company’s behalf. [27]

Question 8

Explain jurisdiction of internet sites Hosted outside of forum state, but used by forum state users:

Answer 8

D. Operation of an Internet Website that reaches in-staters: A hot question today is whether the operation of an Internet Website that’s hosted outside the forum state, but that’s accessed by some in-staters, constitutes minimum contacts with the state. The main issue is, did the Website operator intended to “target” residents of the forum state? If yes, there are probably minimum contacts; if no, there probably aren’t. [27 - 29]

1. Passive site that just posts information: So if an out-of-state local business just passively posts info on the Web, and doesn’t especially want to reach in-staters or conduct transactions with them, this probably doesn’t amount to minimum contacts, even if some in-staters happen to access the site.

Example: D operates a local jazz cafe in a small town in Kansas. He puts up a Website with a schedule of upcoming events, and uses a trademark belonging to P on the site. P, based in New York, sues D in N.Y. federal court for trademark infringement. Even though a few New Yorkers may have accessed D’s site, this won’t be enough to constitute minimum contacts with N.Y., because D wasn’t trying to attract business from N.Y. [Cf. Cybersell, Inc. v. Cybersell, Inc.]

2. Conducting transactions with in-staters: But if D runs an “e-commerce” site that actively tries to get in-staters to buy stuff from the site, and some do, that probably will be enough to constitute minimum contacts with the state, at least where the suit relates to the in-staters’ transactions. (And if the Web-based transactions with in-staters are “systematic and continuous,” as discussed in the next paragraph, then these contacts will even be enough for jurisdiction in the state on claims not relating to the in-state activities.) [32]

Question 9

Explain what happens when a corporation claim does NOT arise from an in state activity?

Answer 9

E. Claims unrelated to in-state activities: The above discusses generally assumes that the claim relates to D’s in-state activities. Where the cause of action does not arise from the company’s in-state activities, greater contacts between D and the forum state are required. The in-state activities in this situation must be “systematic and continuous.” [29 - 31]

Example: D is a South American corporation that supplies helicopter transportation in South America for oil companies. D has no contacts with Texas except: (1) one negotiation there with a client, (2) the purchase by D of 80% of its helicopter fleet from a Texas supplier, (3) the sending of pilots and maintenance people to Texas for training, and (4) the receipt out-of-state of two checks written in Texas by the client. D is sued in Texas by the Ps (Texas residents) when they are killed in South America while being transported by D.

Held, the Ps cannot sue D in Texas. Because the Ps’ claims did not arise out of D’s in-Texas activities, those Texas contacts had to be “systematic and continuous” in order to be sufficient for jurisdiction. The contacts here were too sparse for that. [Helicopteros Nacionales de Colombia v. Hall]

Question 10

Explain jurisdiction with “Products liability”: The requirement of “minimum contacts” with the forum state has special bite in products liability cases- explain;

(meaning, explain what kind of minimum contacts come from selling a product to a state/stream of commerce)

Answer 10

F. Products liability: The requirement of “minimum contacts” with the forum state has special bite in products liability cases. [32 - 37]

1. Effort to market in forum state: The mere fact that a product manufactured or sold by D outside of the forum state finds its way into the forum state and causes injury there is not enough to subject D to personal jurisdiction there. Instead, D can be sued in the forum state only if it made some effort to market in the forum state, either directly or indirectly. [33]

Example: The Ps are injured in Oklahoma in an accident involving an allegedly defective car. They had purchased the car in New York while they were New York residents. The Ps sue in Oklahoma. D1 is the distributor of the car, who distributed only on the East Coast. D2 is the dealer, whose showroom was in New York. Neither D1 nor D2 sold cars in Oklahoma or did any business there.
Held, neither D may be sued in Oklahoma. Neither D had made efforts to “serve directly or indirectly” the Oklahoma market. Any connection between the Ds’ product and Oklahoma was merely an isolated occurrence, completely due to the unilateral activity of the Ps. [World-Wide Volkswagen v. Woodson]

2. Knowledge of in-state sales enough: But if the out-of-state manufacturer makes or sells a product that it knows will be eventually sold in the forum state, this fact by itself is probably enough to establish minimum contacts. However, if this is the only contact that exists, it may nonetheless be “unreasonable” to make D defend there, and thus violate due process. [34 - 37]
   Example: P is injured while riding a motorcycle in California. He brings a products liability suit in California against, inter alia, D, the Taiwanese manufacturer who made the cycle’s rear innertube. D “impleads” X, the Japanese manufacturer of the tube’s valve assembly, claiming that X must pay D any amount that D has to pay to P. X has no contacts with California, except that X knew that: (1) tires made by D from X’s components were sold in the U.S., and (2) 20% of the U.S. sales were in California. The P-D suit has been settled but the D-X case is to be tried.

Held, X had minimum contacts with California, because it put its goods into a stream of commerce that it knew would lead many of them to California. But despite these minimum contacts, it would be “unreasonable and unfair” – and thus a violation of due process – for California to hear the case, because of the burden to X of having to defend in California, the slenderness of California’s interest in having the case heard there, and the foreign relations problems that would be created by hearing an indemnity suit between two foreign corporations. [Asahi Metal Industry Co. v. Superior Court]

Question 11

Explain “unreasonableness” even when minimum contacts does exist:

Answer 11

G. Unreasonableness: As the case in the above example shows, even where minimum contacts exist, it will be a violation of due process for the court to hear a case against a non-resident defendant where it would be “unreasonable” for the suit to be heard. The more burdensome it is to the defendant to have to litigate the case in the forum state, and the slimmer the contacts (though “minimum”) with the forum state, the more likely this result is to occur. [35]

Question 12

Explain jurisdiction on Suits based on contractual relationship:

Answer 12

H. Suits based on contractual relationship: The requisite “minimum contacts” are more likely to be found where one party to a contract is a resident of the forum state. But the fact that one party to a contract is a resident does not by itself automatically mean that the other party has “minimum contacts” – the existence of a contract is just one factor to look at. [37 - 40]

1. Contractual relationship involving the state: Where the contract itself somehow ties the parties’ business activities into the forum state, this will be an important factor tending to show the existence of minimum contacts. For instance, if one party is to make payments to the other, and the latter will be receiving the payments in the forum state, this stream of payments coming into the state is likely to establish minimum contacts and thus to permit suit against the payor.

Example: D runs a fast food restaurant in Michigan under franchise from P, which has its headquarters in Florida. The contract requires D to make royalty payments to P in Florida.
Held, P may sue D in Florida. The fact that the payment stream comes into Florida is an important factor, though not by itself dispositive, in the court’s conclusion that there were minimum contacts with Florida. [Burger King Corp. v. Rudzewicz]

2. Choice-of-law clause: Where there is a contract between the parties to the suit, the fact that the contract contains a choice of law clause requiring use of the forum state’s law will also be a factor (though not a dispositive one) tending towards a finding of minimum contacts. (Example: On the facts
   of the above example, the franchise contract stated that Florida law would be used. This was a factor helping lead the court to conclude that D had minimum contacts with Florida.) [40]
3. “Reasonable anticipation” of defendant: In suits relating to a contract, as with any other kind of suit, the minimum contacts issue always boils down to this: Could the defendant have reasonably anticipated being required to litigate in the forum state? The fact that the other party was a resident of the forum state, the fact that a stream of payments went into the forum state, and the fact that the forum state’s law was to be used in the contract, are all non-dispositive, but important, factors tending towards the conclusion that the out-of-stater had minimum contacts with the forum state. [40]

I. Class action plaintiffs: An "absent" plaintiff in a class action that takes place in the forum state may be bound by the decision in the case, even if that plaintiff did not have minimum contacts with the forum state. [Phillips Petroleum Co. v. Shutts] [40 - 42] 
J. Libel and slander cases: The First Amendment imposes certain limits on the substantive libel and slander laws of the states (e.g., that no "public figure" may recover without a showing of "actual malice"). But this special first amendment protection does not affect the personal jurisdiction requirements for libel and slander suits – no more extensive contacts between D and the forum state must be shown in defamation suits than in any other type of case. [Calder v. Jones] [42]

Question 13

What are 3 things you need for federal jurisdiction over parties?

Answer 13

IV. FEDERAL JURISDICTION OVER THE PARTIES
A. General principles: To determine whether a federal court has personal jurisdiction over the defendant, you must check three things: [45]
1. Territory for service: Whether service took place within the appropriate territory;
2. Manner of service: Whether the service was carried out in the correct manner; and
3. Amenability: Whether the defendant was “amenable” to the federal suit.

Question 14

For federal jurisdiction over parties, explain the first principle you need “territory for service”:

Answer 14

B. Territory for service: [46 - 49]

1. General rule: As a general rule, in both diversity actions and federal question cases, service of process may be made only: (1) within the territorial limits of the state in which the District Court sits; or (2) anywhere else permitted by the state law of the state where the District Court sits. FRCP 4(k)(1)(A). [45]

Example (within the territorial limits of state): P sues D in a federal action in the Northern District of Ohio. Whether the suit is based on diversity or federal question, service will be territorially valid if D is served with process anywhere within the state of Ohio, since this is the state where the district court sits. This is true even if service is physically made in the Southern District of Ohio.

Example (out-of-state service based on state law): Under the New Jersey long-arm statute, if a non-resident is involved in a motor vehicle accident inside New Jersey with a New Jersey resident, the New Jersey resident may serve the non-resident outside New Jersey, and the New Jersey courts may then exercise personal jurisdiction. P, a New Jersey resident, and D, a California resident, have an accident in New Jersey. P may sue D in diversity in federal District Court for New Jersey; P may serve D with process in California, because the long-arm of the state where the district court sits (New Jersey) would allow such service. FRCP 4(k)(1)(A).

2. 100-mile bulge: A special 100-mile bulge provision (FRCP 4(k)(1)(B)) allows for out-of-state service sometimes, even if local law does not permit it. When the provision applies, it allows service anywhere (even across a state boundary) within a 100-mile radius of the federal courthouse where suit is pending. The bulge provision applies only where out-of-staters will be brought in as additional parties to an already pending action. There are two types of parties against whom it can be used: [47 - 48]
   a. Third-party defendants: Third-party defendants (FRCP 14) may be served within the bulge.

Example: P sues D in a New Jersey federal district court diversity action. D claims that if D is liable to P, X is liable to D as an indemnitor. The suit is pending in Newark, less than 100 miles from New York City. D may serve X in New York City, even if no New Jersey long-arm statute would allow the suit. b. Indispensable parties: So-called “indispensable parties” – that is, persons who are needed in the action for just adjudication, and whose joinder will not involve subject matter jurisdiction problems – may also be served if they are within the bulge.

Example: P sues D for copyright infringement in federal district court for the Eastern District of Kentucky, located in Lexington. D files a counterclaim against P. D wants to join X as a co-defendant to this counterclaim, arguing that P and X conspired to violate D’s copyrights. X resides in Cincinnati, Ohio, located 78 miles from Lexington. If the court agrees that X is required for just adjudication of D’s counterclaim, service on X in Cincinnati is valid, even if the Kentucky long-arm would not allow service there.

3. Nationwide service of process: In several kinds of cases, Congress has provided for nationwide service of process. Suits against federal officials and agencies, and suits based on statutory interpleader, are examples of nationwide service. [47]
4. Foreign defendant not servable in any state: Rule 4(k)(2) allows a federal question suit to be brought against any person or organization who cannot be sued in any state court (almost always because they are a foreigner).

Example: D, a French company, without setting foot in the U.S., solicits business by phone and mail from residents of a large number of states. D does not solicit enough from the residents of any one state to satisfy that state’s long-arm. Therefore, D could not be sued in any state court for a claim concerning its activities. P, a New York investor, brings a suit based upon the federal securities laws against D in the federal district court for the Southern District of New York. Assuming that D can be said to have had minimum contacts with the United States as a whole, the New York federal court will have personal jurisdiction over D for this federal-question claim, because D is not subject to the jurisdiction of the courts of any state. FRCP 4(k)(2).

5. Gaps possible: A defendant who is not located in the state where the district court sits may not be served if he does not fall within one of the four special cases described above (servable pursuant to state long-arm, 100-mile bulge, nationwide service or foreign defendant not servable in any state), even if he has the constitutionally-required minimum contacts with the forum. This is true whether the case is based on diversity or federal question. [49]

Example: P, a Connecticut resident, wants to bring a federal diversity suit in Connecticut against D, a New Yorker. The suit involves an accident that occurred in New York. D owns a second home in Connecticut, as well as lots of other real estate there. Assume that this ownership gives him not only minimum contacts but “systematic and continuous” contacts with Connecticut. However, Connecticut has a very narrow long-arm, which would not allow service on D in New York for a Connecticut state action.
P will not be able to serve D in New York in his federal action, because none of the special cases is satisfied. This is true even though it would not be a violation of due process for either the Connecticut courts or the federal court in Connecticut to exercise personal jurisdiction over D.

Question 15

For federal jurisdiction oer parties, explain the second principle you need “manner of service”:

Answer 15

C. Manner of service: Once you determine that the party to be served lies within the territory described above, you must determine if the service was carried out in the correct manner.

1. Individual: Service on an individual (Rule 4(e)) may be made in any of several ways:
   a. Personal: By serving him personally;
   b. Substitute: By handing the summons and complaint to a person of “suitable age and discretion” residing at D’s residence;
   c. Agent: By serving an agent appointed or designated by law to receive process. (Example: Many states designate the Director of Motor Vehicles as the agent to receive process in suits involving car accidents);
   d. Local state law: By serving D in the manner provided by either: (1) the law of the state where the district court sits, if that state has such a provision, or (2) the law of the state where the person is being served. (Example: P brings an action against D, a resident of California, in New Jersey federal court, and wishes to serve him by certified mail. Service will be possible if either the courts of New Jersey or California allow certified-mail service.)
2. Corporation: Service on a corporation may be made by leaving the papers with an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive process for the corporation. FRCP 4(h)(1).
   a. Local state law: As with individuals, service on a corporation may also be made in the manner provided by the local law of (i) the state where the action is pending or (ii) the state where the service is made. FRCP 4(h)(1), first sentence.
3. Waiver of service: Rule 4(d) allows plaintiff to in effect serve the summons and complaint by mail, provided that the defendant cooperates. P mails to D a “request for waiver of service”; if D agrees, no actual in-person service is needed.
   a. Incentives: D is free to refuse to grant the waiver, in which case P must serve the summons by the in-person methods described above. But, if D refuses the waiver, the court will impose the costs subsequently incurred by P in effecting service on D unless “good cause” is shown for D’s refusal. (FRCP 4(d)(2), last sentence.)

Question 16

For federal jurisdiction over parties, explain the third principle you need “Amenability to suit:”:

Answer 16

D. Amenability to suit: If D was served in an appropriate territory, and in an appropriate manner, you still have to determine whether D is closely-enough linked to the state where the federal district court sits to make him “amenable to suit” in that court. [52 - 54]

1. Federal question: In federal question cases, most courts hold that D is amenable to suit in their court if jurisdiction could constitutionally be exercised over him in the state courts of the state where the federal court is sitting, even if the state court itself would not (because of a limited long-arm) have jurisdiction. [52]

Example: P sues D for copyright infringement. The suit is brought in the Northern District of Ohio. D’s only contact with Ohio is that he sold 100 copies of the allegedly infringing book in Ohio. The state courts of Ohio, although they could constitutionally take personal jurisdiction over D in a similar state-created claim – libel, for instance – would not do so because the Ohio long-arm is very limited and would not cover any action growing out of these facts. However, the federal district court will hear the federal question copyright claim against D, because P has minimum contacts with the state where the federal court sits.

a. Foreign defendants: In general, if the defendant is a foreign corporation or resident, most federal courts will exercise jurisdiction over the defendant only if that defendant has minimum contacts with the state where the federal court sits, not merely minimum contacts with the United States as a whole. (Again, as with an out-of-state but not foreign defendant, the federal court will hear the federal question claim even though the state courts might not exercise jurisdiction over the defendant due to a limited state long-arm.)
i. Narrow exception: If a foreign defendant could not be sued in any state, he may be sued on a federal-question claim in any federal judicial district, assuming that he has minimum contacts with the U.S. as a whole. (FRCP 4(k)(2).) But assuming that the foreign defendant could be sued in at least some state court, the general rule described in the prior paragraph (D must have minimum contacts with the state where the federal court sits, not just with the U.S. as a whole) continues to apply.
2. Diversity: In diversity cases, the federal courts exercise only the jurisdiction that is allowed by the statutory law of the state in which they sit. So if the state statutory law does not go to the limits of due process, the federal court will follow suit. [54]

Question 17

Explain the two types of actions that relate to jurisdiction over “things”:

Answer 17

V. JURISDICTION OVER THINGS
A. Two types of actions: There are two types of actions that relate primarily to “things” rather than to people: (1) in rem actions; and (2) quasi in rem actions. [57 - 68]

1. In rem actions: In rem actions are ones which do not seek to impose personal liability on anyone, but instead seek to affect the interests of persons in a specific thing (or res). (Examples: Probate court actions; admiralty actions concerning title to a ship; actions to quiet title to real estate or to foreclose a lien upon it; actions for divorce.)
   a. No personal liability: In all of these types of in rem actions, no judgment imposing personal liability on anyone results – all that happens is that the status of a thing is adjudicated. (Example: In a quiet title action, a determination is reached that A, rather than B, is the owner of Blackacre).
2. Quasi in rem actions: Quasi in rem actions are actions that would have been in personam if jurisdiction over D’s person had been attainable. Instead, property or intangibles are seized not as the object of the litigation, but merely as a means of satisfying a possible judgment against D.
   B. In rem jurisdiction: [58 - 59]
3. Specific performance of land sale contract: One important type of in rem action is an action for specific performance of a contract to convey land. Even if the defendant is out of state and has no connection with the forum state other than having entered into a contract to convey in-state land, the forum state may hear the action. D does not have to have minimum contacts with the forum state for the action to proceed – it is enough that the contract involved in-state land, and that D has received reasonable notice. [58]
4. Effect of Shaffer: The landmark case of Shaffer v. Heitner, discussed below, has almost no effect on in rem suits. Shaffer holds that there must be minimum contacts before a quasi in rem action may proceed; but no minimum contacts are needed for the court to adjudicate the status of property or some other thing located in the state, even though it affects the rights of an out-of-state defendant. [59]

C. Quasi in rem jurisdiction: [59 - 67]
1. Definition: As noted, a quasi in rem action is one that would have been in personam if jurisdiction over D’s person had been attainable. Instead, property or intangibles are seized not as the object of the litigation, but merely as a means of satisfying a possible judgment against D. [59]
Example: P wants to sue D on a contract claim in California state court. The contract has no connection with California, nor does D himself have sufficient contacts with California to allow that state to exercise personal jurisdiction over him. D does, however, own a bank account in California. Putting aside constitutional due process problems, P could attach that bank account as a basis of jurisdiction, and bring a quasi in rem action on the contract claim. If P wins, he will be able to collect only the value of the bank account, and D will not be personally liable for the remainder if the damages exceed the value of the account.

2. No res judicata value: Quasi in rem judgments have no res judicata value. (Example: If P wins against D in a quasi in rem action in Connecticut, he cannot in a later suit against D in California claim that the matter has been decided for all time. Instead, he must go through another trial on the merits if he wishes to subject D to further liability.) [60]
   a. Possible exception: Some courts hold that if D makes a limited appearance (an appearance that does not confer personal jurisdiction over him) and fully litigates certain issues, he will not be allowed to re-litigate those issues in a subsequent trial. But other courts hold that even here, the first suit will not prevent D from re-litigating the same issues later on.
3. Requirement of minimum contacts (Shaffer): Quasi in rem jurisdiction over D cannot be exercised unless D had such “minimum contacts” with the forum state that in personam jurisdiction could be exercised over him. This is the holding of the landmark case of Shaffer v. Heitner. [63 - 67]
   Example: P brings a shareholder’s derivative suit in Delaware on behalf of XYZ Corp. against 28 of XYZ’s non-resident directors and officers. None of the activities complained of took place in Delaware, nor did any D have any other contact with Delaware. P takes advantage of a Delaware statute providing that any stock in a Delaware corporation is deemed to be present in Delaware, allowing that stock to be attached to provide quasi in rem jurisdiction against its owner. Thus P is able to tie up each D’s XYZ stockholdings even though there is no other connection with Delaware.

Held, this use of quasi in rem jurisdiction violates constitutional due process. No D may be subjected to quasi in rem jurisdiction unless he has minimum contacts with the forum state. Here, neither the Ds’ actions nor the fact that those actions related to a Delaware corporation were sufficient to create minimum contacts, so the exercise of jurisdiction was improper. [Shaffer v. Heitner]

4. Jurisdiction based on debt, insurance or other obligation: Shaffer basically abolishes the utility of quasi in rem jurisdiction – since quasi in rem is only used where there is no personal jurisdiction, and since the same minimum contacts needed for quasi in rem will suffice for personal jurisdiction, quasi in rem will rarely be advantageous. (The one exception is where minimum contacts are present, but the state long-arm for personal jurisdiction is too narrow to reach the defendant, yet a state attachment statute applies.) One big practical effect is that attachment of a third party’s debt to the defendant, or attachment of an insurance company’s obligation to defend and pay a claim, are largely wiped out as bases for jurisdiction. [61 - 62]

Example 1: Harris, of North Carolina, owes $180 to Balk, of North Carolina. Epstein, of Maryland, has a claim against Balk for $300. While Harris is visiting in Maryland, Epstein attaches Harris’ debt to Balk by serving Harris with process in a Maryland suit. Under pre-Shaffer law, this established quasi in rem jurisdiction over the $180 debt, on the theory that the debt goes wherever the debtor goes. If Epstein won, he could require Harris to pay the $180 to him rather than to Balk. [Harris v. Balk] [61]
But after Shaffer, the fact that Balk’s debtor happened to be in North Carolina and available for personal service was irrelevant. Since Balk himself did not minimum contacts with Maryland, and thus could not be sued there personally, Shaffer means that a quasi in rem suit based on Harris’ debt to him may also not be heard in Maryland.

Example 2: Same facts as above, except assume that instead of Harris’ being sued, Insurance Co., which had an obligation to defend Balk and pay judgments issued against Balk, was served in Maryland. Pre-Shaffer, this would have been enough for quasi in rem jurisdiction over Balk. [61]
But because of Shaffer, the fact that Insurer had minimum contacts with Maryland would be irrelevant – an insurance company’s obligation to defend the debtor in the forum state and to pay claims arising out of suits in the forum state is not enough to subject the insured to a quasi in rem suit in the forum state.

D. Limited appearance: [66]
1. Definition: Some states allow a “limited appearance.” Under a limited appearance, D appears in an in rem or quasi in rem suit, contests the case on its merits, but is subjected to liability only to the extent of the property attached or debt garnished by the court.

a. Distinguished from special appearance: Distinguish limited appearances from special appearances – in the latter, a defendant against whom personal jurisdiction is asserted is allowed to argue the invalidity of that jurisdiction without having this argument, or his presence in the court, itself constitute a submission to the court’s jurisdiction.

2. Federal limited appearances: Federal courts usually follow the rule of the state in which they are sitting in determining whether to allow a limited appearance.
   E. Federal quasi in rem jurisdiction: [67 - 68]
3. General rule: Quasi in rem jurisdiction is allowed in a federal court if: (1) the law of the state in which the federal court sits permits such quasi in rem jurisdiction, and (2) P cannot obtain personal jurisdiction over D in the state through reasonable efforts. Rule 4(n). (Examples of conditions satisfying (2): D is a fugitive, or the local long-arm is too weak to reach D even though he has minimum contacts with the state where the district court sits.)
4. Amount in controversy: In a federal quasi in rem case, courts are split as to whether it is the value of the attached property, or the amount claimed, which should control for the $75,000 amount in controversy requirement.

Question 18

Explain: VI. NOTICE AND OPPORTUNITY TO BE HEARD

Answer 18

VI. NOTICE AND OPPORTUNITY TO BE HEARD
A. Notice generally: Even if the court has authority to judge the dispute between the parties or over the property before it (covered in the above sections), the court may not proceed unless D received adequate notice of the case against him. [69 - 78]

1. Reasonableness test: In order for D to have received adequate notice, it is not necessary that he actually have learned of the suit. Rather, the procedures used to alert him must have been reasonably likely to inform him, even if they actually failed to do so. [70]
   Example: P’s process server leaves the summons and complaint at D’s house, with D’s wife. D’s wife throws it in the garbage, and D never learns of it. D has received adequate notice, so the court can exercise jurisdiction over him. Conversely, if P’s process server had left the papers on the sidewalk outside the house, and D had happened to pick them up, this would not be adequate notice to D – the procedures used were not reasonably likely to give D notice, and they are not saved by the fact that D in fact learned of the suit.
2. Substitute service: Personal service – handing the papers to D himself – will always suffice as adequate notice. But all states, and the federal system, also allow “substitute service” in most instances. Substitute service means “some form of service other than directly handing the papers to the defendant.” [71]

a. Leave at dwelling: The most common substitute service provision allows the process papers to be left at D’s dwelling within the state, if D is not at home. These provisions usually require the papers to be left with an adult who is reasonably likely to give them to D. (Example: FRCP 4(e)(2) allows the papers to be left with a person of “suitable age and discretion residing in the dwelling place in question.”)
b. Mail: Some states, and the federal system, allow service to be made by ordinary first class mail. However, usually this method is allowable only if D returns an acknowledgement or waiver form to P’s lawyer. If D does not return the form, some other method of service must then be used. See FRCP 4(e)(1).

3. Service on out-of-staters: Where D is not present in the forum state, he must somehow be served out of state. Remember that in a state court suit, this can only be done if the state has a long-arm statute covering the type of case and defendant in question. Once the long-arm covers the situation, the out-of-state defendant must still be given some sort of notice. [72]
   a. Mail notice: Many states provide for notice by registered or certified mail on the out-of-state defendant.
   b. Public official: Sometimes, service may be made by serving a state official, plus giving notice by mail to D. (Example: Many non-resident motorist statutes allow P to serve the state Director of Motor Vehicles with a matching mailing to the out-of-state defendant.)
   c. Newspaper publication: If D’s identity or residence are unknown, some states allow service by newspaper publication. But this may only be used where D truly cannot be found by reasonable effort.
4. Corporations: Several means are commonly allowed for giving notice of suit to corporations. [73]
   a. Corporate officer: Many states require that a corporation, if it wishes to be incorporated in the state or to do business in the state, must designate a corporate official to receive process for suits against the company. Service on this designated official is, of course, deemed to be adequate notice.
   b. Federal Rule: The Federal Rules, and the rules of many states, are more liberal, in that they allow service on any person associated with the corporation who is of sufficiently high placement. Thus FRCP 4(h)(1) provides that service on a corporation may be made by giving the papers to “an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process.”

B. Constitutional due process: Just as the Fourteenth Amendment’s Due Process Clause prohibits jurisdiction over a defendant who lacks minimum contacts with the forum state (International Shoe), so that clause prohibits the exercise of jurisdiction over a defendant who has not been given “reasonable notice” of the suit. [Mullane v. Central Hanover Bank] [74]

1. Mail notice to all the identifiable parties: For instance, if a party’s name and address are “reasonably ascertainable,” publication notice will not be sufficient, and instead notice by mail (or other means equally likely to ensure actual notice) must be used. [Mennonite Board of Missions v. Adams] [74]
2. Actual receipt doesn’t count: Remember that what matters is the appropriateness of the notice prescribed by statute and employed, not whether D actually got the notice. [74]

C. Opportunity to be heard: D must not only be notified of the suit against him, but must also be given an opportunity to be heard. That is, before his property may be taken, he must be given a chance to defend against the claim. This “opportunity to be heard” must be given to D not only when his property will be taken forever, but even before there is any significant interference with his property rights.

1. Pre-judgment remedy: Opportunity-to-be-heard questions arise most frequently in the context of pre-judgment remedies, which protect plaintiff against the defendant’s hiding or squandering his assets during litigation. Two common forms of pre-judgment remedies are the attachment of D’s bank account and the placing of a lis pendens against her real estate.
2. Three-part test: The court will weigh three factors against each other to determine whether due process was violated when D’s property was interfered with through a pre-judgment remedy: [76 - 78]
   a. First, the degree of harm to D’s interest from the pre-judgment remedy;
   b. Second, the risk that the deprivation of D’s property right will be erroneous (especially if the state could have used additional procedural safeguards against this but did not); and
   c. Third, the strength of the interest of the party (typically P) seeking the prejudgment remedy. [Connecticut v. Doehr] [77]
   Example: A state statute allows P to get a prejudgment attachment of D’s real estate without D’s having a hearing first, so long as P “verifies by oath” that there is probable cause to sustain his claim. Factor 1 above (the strength of D’s interest) works against allowing attachment, since an attachment clouds D’s title and affects his credit rating. Factor 2 (risk of erroneous deprivation) also supports not allowing the attachment, since the judge can’t accurately determine the likely outcome of the litigation based solely on P’s one-sided conclusory statements in the oath. Factor 3 (strength of P’s interest) also works against the attachment, since P is not required to show D is dissipating his assets. Consequently, the grant of a prejudgment attachment of D’s property violates his due process rights. [Connecticut v. Doehr]

Question 19

What are/explain the defenses to claims of jurisdiction:

Answer 19

1. special appearence,
2. collateral attack,
3. Fraud/durress,
4. Immunity

VII. DEFENSES TO CLAIMS OF JURISDICTION

A. Special appearance: In a “special appearance,” D appears in the action with the express purpose of making a jurisdictional objection. By making a special appearance, D has not consented to the exercise of jurisdiction. [80]

1. Appeal: Most courts allow a defendant who has unsuccessfully made a special appearance to then defend on the merits, without losing his right to appeal the jurisdictional issue. [80]
2. Federal substitute for special appearance: The federal courts (and the many state courts with rules patterned after the Federal Rules) have abolished the special appearance. Instead, D makes a motion to dismiss for lack of jurisdiction over the parties; making this motion does not subject D to the jurisdiction that he is protesting. FRCP 12(b)(2). [80]
   a. Waiver: The right to make a motion to dismiss for lack of personal jurisdiction is waived in the federal system if: (1) D makes a motion raising any of the defenses listed in Rule 12, and the personal jurisdiction defense is not included; or (2) D neither makes a Rule 12 motion nor raises the defense in his answer.

B. Collateral attack: [82]
1. General enforcement of judgments: A judgment entered in one jurisdiction may generally be enforced in another. That is, if State 1 enters a judgment against D, D’s property in State 2 (or wages owed him in State 2) may be seized to satisfy the earlier State 1 judgment. [81]

2. Collateral attack on default judgment: If D defaults in an action in State 1, she may collaterally attack the default judgment when it is sued upon in State 2. Most commonly, D collaterally attacks the earlier judgment on the grounds that State 1 did not have personal jurisdiction over her, or did not have valid subject matter jurisdiction. [82 - 83]
   Example: D has no contacts with Iowa. P, an Iowa resident, sues D in Iowa court. D never appears in the action, and a default judgment is entered against him for $100,000. P then brings a suit in D’s home state of New Jersey to enforce the earlier Iowa judgment. D will be permitted to collaterally attack the Iowa judgment, by arguing that Iowa lacked personal jurisdiction over him. The New Jersey court will undoubtedly agree with D that, because D did not have minimum contacts with Iowa, Iowa could not constitutionally take jurisdiction over him. Therefore, the New Jersey court will decline to enforce the Iowa judgment.
3. Waiver by D: A defendant who appeared in the original action without objecting to jurisdiction, or one who unsuccessfully litigated the jurisdictional issue in the first action, may not collaterally attack the judgment. (Instead, a defendant who unsuccessfully litigates jurisdiction in the first action must appeal to the first state’s system, rather than later making a collateral attack.) [82]

C. Defense of fraud or duress: A court may constitutionally exercise jurisdiction over a defendant found within the forum state, even if D’s presence was the result of fraud or duress on the part of the plaintiff. But the court may exercise its discretion not to exercise jurisdiction. (Example: P entices D into the jurisdiction with a false love letter and a false statement that she is leaving the country forever and wants to see D once more. When D arrives at the airport in the forum state, P serves him with papers. Held, the forum state will decline to exercise its jurisdiction because of P’s fraud. [Wyman v. Newhouse]) [83]

D. Immunity: Most jurisdictions give to non-residents of the forum state an immunity from service of process while they are in state to attend a trial. This is true whether the person is a witness, a party, or an attorney. Most states also grant the immunity for related proceedings such as depositions. [84 - 85]

1. Federal suits: Out-of-state parties, witnesses, and attorneys also generally receive immunity from federal court suits (whether diversity or federal question). [85]

Question 20

Explain Venue: (definition, state actions, in federal actions what you need, escape hatch provision, corporations vs people, what rule etc. ?)

Answer 20

VIII. VENUE

A. Definition: “Venue” refers to the place within a sovereign jurisdiction in which a given action is to be brought. It matters only if jurisdiction over the parties has been established. (Example: State X is found to have jurisdiction over the person of B, in a suit against him by A. Venue determines in which county or district of State X the case should be tried.) [86]

B. State action: In state trials, venue is determined by statute. The states are free to set up virtually any venue rules they wish, without worrying about the federal constitution. [87]

1. Basis for: Most commonly, venue is authorized based on the county or city where the defendant resides. Many states also allow venue based on where the cause of action arose, where the defendant does business, etc. [87]
2. Forum non conveniens: Under the doctrine of forum non conveniens, the state may use its discretion not to hear the case in a county where there is statutory venue. Sometimes, this involves shifting the case to a different place within the state. At other times, it involves the state not having the case take place in-state at all. Usually, it is the defendant who moves to have the case dismissed or transferred for forum non conveniens. [88 - 90]
   a. Factors: Three factors that state courts often consider in deciding whether to dismiss for forum non conveniens are: (1) whether the plaintiff is a state resident (if so, he has a stronger claim to be able to have his case heard in his home state); (2) whether the witnesses and sources of proof are more available in a different state or county; and (3) whether the forum’s own state laws will govern the action (transfer is more likely if a different state’s law controls).

C. Venue in federal actions: In federal actions, the venue question is, “Which federal district court shall try the action?” Venue is controlled by 28 U.S.C. §1391. [90 - 97]

1. Still need personal jurisdiction: When you consider a venue problem, remember that venue is not a substitute for personal jurisdiction: the fact that venue lies in a particular judicial district does not automatically mean that suit can be brought there. Suit can be brought only in a district that satisfies both the venue requirements and the personal jurisdiction requirements as to all defendants. [91]
2. Three methods: There are three basic ways by which there might be venue in a particular judicial district: (1) if any defendant resides in that district, and all defendants reside in the state containing that district; (2) if a “substantial part of the events … giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated,” in the district; and (3) if at least one defendant is “reachable” in the district, and no other district qualifies. Each of these is considered below, as sections 3, 4 and 5. [91]
3. “Defendant’s residence” venue: For both diversity and federal question cases, venue lies in any district where any defendant resides, so long as, if there is more than one defendant, all the defendants reside in the state containing that district. [92]

Example: P, from Massachusetts, brings a diversity suit against D1, from the Southern District of New York, and D2, from the Eastern District of New York. Venue will lie in either the Southern District of New York or the Eastern District of New York – each of these is home to at least one defendant, and each of these two districts is in a state that is home to all the defendants. But if D2 had been a resident of the District of Connecticut instead of any New York district, there would not be any “defendant’s residence” venue anywhere.

4. “Place of events or property” venue: For both diversity and federal question cases, venue lies in any district “in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated….” This is “place of events” venue. [92]
   a. Multiple districts: There can be multiple districts qualifying for “place of events” venue, as long as each district was the locus for a “substantial part” of the events relating to the claim. (Example: P, from Massachusetts, sues D, a car dealer from Connecticut. P alleges that D sold P a car in Connecticut, that P drove the car to Massachusetts, and that a defect in the car caused P to be injured in Massachusetts. Probably venue in either the District of Massachusetts or the District of Connecticut would be allowed under the “place of events” provision, since probably both the selling of the defective car and the incurring of the accident were a “substantial part” of the events.)
5. “Escape hatch” provision: Finally, for both diversity and federal question cases, there is an “escape hatch,” by which venue may be founded in a district with which some or all defendants have close ties, if there is no district in which the action may otherwise be brought. This escape hatch is used mainly for cases in which nearly all the events occurred abroad. [93 - 95]
   a. Diversity: In a case founded solely on diversity, the escape hatch gives venue in any judicial district “in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.” §1391(a)(3).

Example: P, from Massachusetts, brings a diversity suit against D1, who resides in the Southern District of New York, and D2, who lives in the District of Connecticut. P’s suit is brought in the Southern District of New York. The suit relates solely to matters which occurred in Mexico.
The escape hatch applies – even though there is no “defendant’s residence” venue or “place of events” venue in S.D.N.Y., the escape hatch works because at least one defendant (D1) is subject to personal jurisdiction in S.D.N.Y. by virtue of his residence there. The escape hatch works only because there’s no other district where the suit could have been brought – there’s no “defendants’ residence” venue since there’s no single state in which all defendants reside, and there’s no “place of events” venue since everything happened in Mexico. (Also, remember that there still has to be personal jurisdiction over each defendant. So D2 will have to have minimum contacts with New York, and be reachable under the New York long-arm.)

b. Federal question cases: In federal question cases, the escape hatch provision gives venue in any judicial district “in which any defendant may be found, if there is no district in which the action may otherwise be brought.” §1391(b)(3). (Probably a defendant is “found” in a district if he can be subject to personal jurisdiction in that district, i.e., he has minimum contacts with that district. So there’s probably no real difference between the escape hatch for federal question cases and the one for diversity cases.)
6. No “plaintiff’s residence” venue: There is no venue (as there used to be) based on plaintiff’s residence. [95]
7. Corporation: The residence of a corporation for venue purposes matters only if the corporation is a defendant. A corporation is deemed to be a resident of any district as to which the corporation would have the “minimum contacts” necessary to support personal jurisdiction if that district were a separate state. Thus a corporation is a resident of at least the district where it has its principal place of business, any district where it has substantial operations, and probably any district in its state of incorporation. But merely because a corporation does business somewhere in the state, this does not make it a resident of all districts of that state. [95]

Example: XYZ Corp. is incorporated in Delaware, and has its only office in San Francisco. XYZ has no contacts with any part of California other than San Francisco. If XYZ is a defendant, it will reside, for venue purposes, in the district of Delaware and in the Northern District of California. XYZ is not a resident of any other districts in California – thus “defendant’s residence” venue would not lie against XYZ, for instance, in a suit brought in the Central District of California, located in Los Angeles.

8. Removal: A case removed from state to federal court passes to “the district court of the U.S. for the district and division embracing the place where such action is pending.” 28 U.S.C. §1441(a). [96]
9. Federal forum non conveniens: In the federal system, when a defendant successfully moves for forum non conveniens, the original court transfers the case to another district, rather than dismissing it. Under 28 U.S.C. §1404(a), “for the convenience of parties and witnesses … a district court may transfer any civil action to any other district or division where it might have been brought.” [96 - 97]
   a. Defendant’s motion: Usually, it is the defendant who moves for forum non conveniens. When this happens, the case may be transferred only to a district where P would have had the right, independent of the wishes of D, to bring the action.

(Example: If suit in a particular district would not have been possible, as an initial matter, because one or more of the Ds could not be personally served there, or because venue would not have been proper there, even the consent by all Ds would not authorize the action to be transferred to that district.)

b. Choice of law: When federal forum non conveniens is granted, the state law of the transferor court is to be applied by the transferee court. (Example: P brings a diversity action against D in Mississippi federal court. That court grants D’s motion to have the case moved to Pennsylvania District Court. If, as is likely, Mississippi federal court would have applied Mississippi state law rather than Pennsylvania state law under Erie principles, the Pennsylvania federal court must also apply Mississippi state law.) This is true whether the forum non conveniens was sought by P or by D. [Ferens v. John Deere Co.] [97]

Question 21

2 types of SMJ:
And general rules of SMJ:

Answer 21

A. Diversity vs. federal question: In the federal courts, there are two basic kinds of controversies over which the federal judiciary has subject matter jurisdiction: (1) suits between citizens of different states (so-called diversity jurisdiction); and (2) suits involving a “federal question.” [100]

1. Other cases: Certain other kinds of cases specified in the constitution also fall under the federal judicial power. These are cases involving ambassadors, cases involving admiralty, and cases in which the United States is a party. But except in these very unusual cases, when you are considering a case that is brought in the federal courts, you must ask: Does it fall within the diversity jurisdiction or federal question jurisdiction? If it does not fall within either of these, probably it cannot be heard by the federal courts.

B. Amount in controversy: In federal suits based on diversity, an amount in excess of $75,000 must be in dispute. This is the “amount in controversy” requirement. In federal question cases, there is no amount in controversy requirement. [101]

C. Burden: The party seeking to invoke the jurisdiction of a federal court must make an affirmative showing that the case is within the court’s subject matter jurisdiction. (Example: If P wants to invoke diversity jurisdiction, in her pleading she must allege the relevant facts about the citizenship of the parties.) [101]

D. Dismissal at any time: No matter when a deficiency in the subject matter jurisdiction of a federal court is noticed, the suit must be stopped, and dismissed for lack of jurisdiction. See FRCP 12(h)(3), requiring the court to dismiss the action at any time if it appears that the court lacks subject matter jurisdiction. [101 - 102]

Example: A case brought under federal question jurisdiction goes through trial and through one level of appeals, and is then heard by the Supreme Court. The Supreme Court decides that there was no federal question in the first place. Held, the entire case must be dismissed for lack of federal subject matter jurisdiction. [Louisville & National RR v. Mottley]

Question 22

Explain all II. DIVERSITY JURISDICTION:

(also explain corporations)

Answer 22

A. Definition: The Constitution gives the federal courts jurisdiction over “controversies … between the citizens of different states….” This is the grant of “diversity jurisdiction.” [103 - 110]

Example: P, a citizen of California, wants to sue D, a citizen of Oregon, for hitting P with D’s car. Assuming that P’s damages exceed $75,000, P can bring her negligence suit against D in federal court, because it is between citizens of different states.

1. Date for determining: The existence of diversity is determined as of the commencement of the action. If diversity existed between the parties on that date, it is not defeated because one of the parties later moved to a state that is the home state of the opponent. [105]
2. Domicile: What controls for citizenship is domicile, not residence. A person’s domicile is where she has her true, fixed and permanent home. (Example: P has his main home in New York, but has an expensive second home in Florida. D has her only home in Florida. P can bring a diversity action against D, because P is deemed a citizen only of New York, not Florida, even though P has a “residence” in Florida.) [105]
   a. Resident alien: A resident alien (an alien who lives in the United States permanently) is deemed a citizen of the state in which he is domiciled.

b. Presence of foreigner: In a suit between citizens of different states, the fact that a foreign citizen (or foreign country) is a party does not destroy diversity. (Example: P, a citizen of Ohio, sues D1, a citizen of Michigan, and D2, a citizen of Canada. Diversity jurisdiction exists.) (In situations where one side consists solely of foreign citizens or foreign countries, “alienage” jurisdiction applies. See below.)
3. Complete diversity: The single most important principle to remember in connection with diversity jurisdiction is that “complete diversity” is required. That is, it must be the case that no plaintiff is a citizen of the same state as any defendant. [103]

Example: P, a citizen of New York, brings a suit against D1, a citizen of New York, and D2, a citizen of New Jersey. We ask, “Is there any plaintiff who is a citizen of the same state as any defendant?” Since the answer is “yes,” the requirement of complete diversity is not satisfied, and there is no diversity jurisdiction.

4. Pleading not dispositive: In order to determine whether diversity exists, the pleadings do not settle the question of who are adverse parties. Instead, the court looks beyond the pleadings, and arranges the parties according to their real interests in the litigation. [104]
   a. Nominal parties ignored: In determining the existence of diversity, nominal or purely formal parties are ignored. (Example: Where a guardian of an infant sues, the guardian is deemed to be a citizen only of the same state as the infant. See 28 U.S.C. §1332(c)(2).) [104 - 105]

B. Alienage jurisdiction: Related to diversity jurisdiction, but analytically distinct, is “alienage” jurisdiction. Alienage jurisdiction exists where there is a suit between citizens of a state, on one side, and foreign states or citizens thereof, on the other. (Example: P, a citizen of Mexico, sues D, a citizen of Illinois. Even if there is no federal question issue, there will be federal subject matter jurisdiction of the “alienage” variety, assuming that the amount in controversy requirement is satisfied.) [106 - 107]

1. Suit between two foreign citizens: But a suit solely between citizens of two foreign countries does not fall within the alienage jurisdiction. (Example: If P, a citizen of Canada, sues D, a citizen of Mexico, there is no alienage jurisdiction.)

C. Diversity involving corporations: For diversity purposes, a corporation is deemed a citizen of any state where it is incorporated and of the state where it has its principal place of business. In other words, for diversity to exist, no adversary of the corporation may be a citizen of the state in which the corporation is incorporated, or of the state in which it has its principal place of business. (Example: XYZ Corp., a corporation which is incorporated in Delaware, has its principal place of business in New York. In order for there to be diversity, no adverse party may be a citizen of either Delaware or New York.) [107]

1. Principal place of business: Courts have taken two different views about where a corporation’s “principal place of business” is.
   a. Home office: Some courts hold that the corporation’s principal place of business is ordinarily the state in which its corporate headquarters, or “home office,” is located. This is sometimes called the “nerve center” test.

b. Bulk of activity: Other courts hold that the principal place of business is the place in which the corporation carries on its main production or service activities. This is sometimes called the “muscle” test. This is the more commonly-used standard.
D. Devices to create or destroy diversity: The federal courts will not take jurisdiction of a suit in which any party has been “improperly or collusively joined” to obtain jurisdiction. 28 U.S.C. §1359. [108 - 110]

1. Assignment: This means that a claimant may not assign her claim in order to create diversity. (Example: Alex and Dennis are both citizens of Florida. Alex wants to bring a diversity action against Dennis. Alex assigns his claim to Barbara, a Massachusetts citizen, with the understanding that Barbara will remit to Alex 80% of any recovery. The court will not take diversity jurisdiction over the Barbara-vs.-Dennis action, because Barbara’s presence in the suit was an improper or collusive joinder. [Kramer v. Caribbean Mills]) [108]
2. Devices to defeat removal: A plaintiff suing in state court may sometimes seek to defeat her adversary’s potential right to remove to federal court. There is no federal statute prohibiting “improper or collusive” joinder for the purpose of defeating jurisdiction. However, as a matter of judge-made law, courts will often disregard obvious removal-defeating tactics (e.g., joinder of a defendant who has nothing to do with the underlying dispute, but who is a citizen of the same state as a plaintiff.) [108 - 110]
   a. Low dollar claim: But the state-court plaintiff is always free to make a claim for less than the amount in controversy ($75,000), in order to defeat removal, even if P has really suffered a loss greater than this amount. (But the less-than-$75,000 amount must be named before D removes.)

Question 23

III. FEDERAL QUESTION JURISDICTION :

Answer 23

III. FEDERAL QUESTION JURISDICTION

A. Generally: The Constitution gives the federal courts authority to hear “federal question” cases. More precisely, under 28 U.S.C. §1331, the federal courts have jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States.” [112 - 113]

1. Federal claim: There is no precise definition of a case “arising under” the Constitution or laws of the United States. But in the vast majority of cases, the reason there is a federal question is that federal law is the source of the plaintiff’s claim. (Examples: A claim of copyright infringement, trademark infringement or patent infringement raises a federal question, because in each of these situations, a federal statute – the federal copyright statute, trademark statute or patent statute – is the source of the right the plaintiff is asserting.) [112]
   a. Interpretation of federal law: It is not enough that P is asserting a state-created claim which requires interpretation of federal law. (Example: P brings a state-court product liability suit against D for injuries sustained by taking a drug made by D. P claims that D violated the federal FDA statute by mislabeling the drug, and that this mislabeling automatically constitutes common-law negligence. D wants to remove to federal court, so it claims that the case is within federal question jurisdiction, because its disposition requires interpretation of a federal statute. Held, no federal question is raised, because P’s claim did not “arise under” federal law. [Merrell Dow Pharmaceuticals, Inc. v. Thompson]) [112]
   b. Claim based on the merits: If P’s claim clearly “arises” under federal law, it qualifies for federal question jurisdiction even if the claim is invalid on the merits. Here, the federal court must dismiss for failure to state a claim upon which relief may be granted (FRCP 12(b)(6)), not for lack of subject matter jurisdiction. [113]
   c. Anticipation of defense: The federal question must be integral to P’s cause of action, as revealed by P’s complaint. It does not suffice for federal question jurisdiction that P anticipates a defense based on a federal statute, or even that D’s answer does in fact raise a federal question. Thus the federal question must be part of a “well pleaded complaint.” [113]

Example: P claims that D Railroad has breached its agreement to give P free railroad passes. A recently-passed federal statute prohibits the giving of such passes. In P’s complaint, he anticipates the railroad’s federal statutory defense, claiming that the statute violates the Fifth Amendment.
Held, since P’s claim was merely a breach of contract claim, and the federal statute was not essential to that claim, there was no federal question – the fact that federal law was an integral part of D’s anticipated defense is irrelevant. [Louisville & Nashville RR v. Mottley]

Question 24

Explain for both types of SMJ, AMOUNT IN CONTROVERSY:

include aggregating

Answer 24

IV. AMOUNT IN CONTROVERSY

A. Diversity only: In diversity cases, but not in federal question cases, plaintiff must satisfy an “amount in controversy” requirement. In all diversity cases, the amount in controversy must exceed $75,000. [114]

1. Interest not included: The $75,000 figure does not include interest or court costs.

B. Standard of proof: The party seeking to invoke federal diversity jurisdiction does not have to prove that the amount in controversy exceeds $75,000. All she has to show is that there is some possibility that that much is in question. [115]

1. “Legal certainty” test: To put it another way, the claim cannot be dismissed for failing to meet the $75,000 requirement unless it appears to a legal certainty that the claim is really for less than the jurisdictional amount. [St. Paul Mercury Indemnity Co. v. Red Cab]
2. Eventual recovery irrelevant: The fact that P eventually recovers far less than the jurisdictional amount does not by itself render the verdict subject to reversal and dismissal on appeal for lack of jurisdiction.
   a. Discretion to deny costs: But the federal court has discretion to deny costs to P, and even to impose costs on him, if he recovers less than $75,000. 28 U.S.C. §1332(b).

C. Whose point of view followed: The courts are split as to which party’s point of view is to be considered in calculating the amount at stake. Most courts hold that the controversy must be worth $75,000 to the plaintiff in order to satisfy the jurisdictional amount. [115]

D. Aggregation of claims: In multi-plaintiff or multi-claim litigation, you must understand the rules governing when aggregation of claims is permissible for meeting the jurisdictional amount: [116 - 118]

1. Aggregation by single plaintiff: If a single plaintiff has a claim in excess of $75,000, he may add to it any other claim of his against the same defendant, even though these other claims are for less than the jurisdictional amount. This is done by the doctrine of supplemental jurisdiction. [116]
   a. No claim exceeds $75,000: Even if a plaintiff does not have any single claim worth more than $75,000, he may add together all of his claims against a single defendant. So long as these claims against a single defendant total more than $75,000, the amount in controversy requirement is satisfied.

b. Additional defendants: But a plaintiff who has aggregated his claim against a particular defendant, usually may not join claims against other defendants for less than the jurisdictional amount.
Example: P has two claims, each for $40,000, against D1. P will be deemed to meet the amount in controversy requirement as to these claims, because they aggregate more than $75,000. But if P tries to bring D2 into the lawsuit, and has a single claim worth $40,000 against D2, most courts will not allow this claim, because P’s total claims against D2 do not exceed $75,000, and the doctrine of supplemental jurisdiction does not apply.

2. Aggregation by multiple plaintiffs: [116 - 118]

a. At least one plaintiff meets amount: If one plaintiff meets the jurisdictional amount, it’s not completely clear whether the other plaintiffs may join their related claims against that same defendant. The plaintiffs may probably use the doctrine of “supplemental jurisdiction” so as to enable the low-amount plaintiffs to join their claims together with the high-amount plaintiff.
b. No single claim meets the amount: If no single plaintiff has a claim or claims meeting the jurisdictional amount, aggregation by multiple plaintiffs is not allowed. (Exception: Where two or more plaintiff unite to enforce a single title or right in which they have a common and undivided interest, aggregation is allowed.)

c. Special restrictions for class actions: In class actions, until recently there has been an especially stringent, and clear, rule: every member of the class had to satisfy the jurisdictional amount. This meant that class actions in diversity cases were rarely possible. [Zahn v. International Paper Co.] [117] Some courts, however, have recently ruled that as long as the named class representatives each have a claim in excess of $75,000, the supplemental jurisdiction doctrine applies, so that the unnamed members need not meet the jurisdictional amount. [Free v. Abbott Labs.] [117] 
E. Counterclaims: [118] 

1. Suit initially brought in federal court: If P sues in federal court for less than the jurisdictional amount, and D counterclaims for an amount which (either by itself or added to P’s claim) exceeds the jurisdictional amount, probably the amount in controversy requirement is not met.
2. Removal by defendant: If P originally sues in state court for less than $75,000, and D tries to remove to federal court, amount in controversy problems work out as follows:
   a. Plaintiff removal: The plaintiff may never remove, even if D counterclaims against him for more than $75,000. (The removal statute simply does not apply to plaintiffs, apart from amount-in-controversy problems.)
   b. Defendant removal: If the defendant counterclaims for more than $75,000, but plaintiff’s original claim was for less than $75,000, the result depends on the type of counterclaim. If D’s counterclaim was permissive (under state law), all courts agree that D may not remove. If D’s claim was compulsory under state law, courts are split about whether D may remove.

Question 25

V. SUPPLEMENTAL JURISDICTION

Answer 25

A. “Supplemental” jurisdiction: Suppose new parties or new claims are sought to be added to a basic controversy that by itself satisfies federal subject-matter jurisdictional requirements. Under the doctrine of “supplemental” jurisdiction, the new parties and new claims may not have to independently satisfy subject-matter jurisdiction – they can in effect be “tacked on” to the “core” controversy. See 28 U.S.C. §1367. [120 - 134]

1. Pendent and ancillary doctrines replaced: Supplemental jurisdiction replaces two older judge-made doctrines, “pendent” jurisdiction and “ancillary” jurisdiction.
2. Provision generally: Section 1367(a) says that “in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties.” [124]
3. Federal question cases: Where the original claim comes within the court’s federal question jurisdiction, §1367 basically allows the court to hear any closely related state-law claims. [124]

a. Pendent state claims with no new parties: Supplemental jurisdiction clearly applies when a related state claim involves the same parties as the federal question claim.
Example: P and D are both citizens of New York. Both sell orange juice nationally. P sues D in federal court for violation of the federal trademark statute, arguing that D’s brand name infringes a mark registered to P. P also asserts that D’s conduct violates a New York State “unfair competition” statute. There is clearly no independent federal subject matter jurisdiction for P’s state law unfair competition claim against D – there is no diversity, and there is no federal question. But by the doctrine of supplemental jurisdiction, since the federal claim satisfies subject-matter jurisdictional requirements, P can add the state law claim that is closely related to it.

b. Additional parties to state-law claim: Section 1367 also allows additional parties to the state-law claim to be brought into the case. [125]

Example: P’s husband and children are killed when their small plane hits power lines near an airfield. P sues D1 (the U.S.) in federal court, under the Federal Tort Claims Act, for failing to provide adequate runway lights. Then, P amends her complaint to include state-law tort claims against D2 and D3 (a city and a private company) who maintain the power lines. There is no diversity of citizenship between P and D2 and D3, and no federal-question claim against them. But because P’s state-law claim against D2 and D3 arises from the same chain of events as P’s federal claim against D1, P may bring D2 and D3 into the suit under the supplemental jurisdiction concept, and the last sentence of §1367(a). [This overrules Finley v. U.S.] [125]

4. Diversity cases: There is also supplemental jurisdiction in many cases where the “core” claim – the claim as to which there is independent federal subject matter jurisdiction – is based solely on diversity. But there are some important exclusions to the parties’ right to add additional claims and parties to a diversity claim.
   a. Claims covered: Here are the principal diversity-only situations in which supplemental jurisdiction applies: [129 - 130]
   i. Rule 13(a) compulsory counterclaims.
   ii. Rule 13(h) joinder of additional parties to compulsory counterclaims. (Example: P, from New York, brings a diversity suit against D, from New Jersey. The claim is for $80,000. D counterclaims that in the same episode, D was injured not only by P but also by Y; D’s injuries total $1,000. Y is from New Jersey. D may bring Y in as a Rule 13(h) additional defendant to D’s compulsory counterclaim against P, even though D and Y are both from New Jersey, and even though D’s claim does not total $75,000 – supplemental jurisdiction applies, and obviates the need for D-Y diversity or for D to meet the amount in controversy requirement.)
   iii. Rule 13(g) cross-claims, i.e., claims by one defendant against another. (Example: P, from Ohio, brings a diversity suit against D1 and D2, both from Kentucky. D1 brings a Rule 13(g) cross-claim against D2 – since it is a cross-claim, it necessarily relates to the same subject matter as P’s claim. Even though there is no diversity as between D1 and D2, the cross-claim may be heard by the federal court.)
   iv. Rule 14 impleader of third-party defendants, for claims by and against third-party plaintiffs, and claims by third-party defendants, but not claims by the original plaintiff against third-party defendants.

(Example: P, from California, sues D, a retailer from Arizona, claiming that a product D sold P was defective and injured P. The suit is based solely on diversity. D brings a Rule 14 impleader claim against X, the manufacturer of the item, claiming that if D owes P, X must indemnify D. X is a citizen of Arizona. Because D’s suit against X falls within the court’s supplemental jurisdiction, the lack of diversity as between D and X makes no difference. Supplemental jurisdiction would also cover any claim by X against P. But any claim by P against X would not be within the court’s supplemental jurisdiction, so P and X must be diverse and the claim must meet the amount in controversy requirement.)

b. Claims not covered: Where the core claim is based on diversity, some important types of claims do not get the benefit of supplemental jurisdiction: [126 - 128]
i. Claims against third-party defendants: Claims made by a plaintiff against a third-party defendant, pursuant to Rule 14(a), are excluded. (Example: P sues D, and D brings a third-party claim against X, asserting that if D is liable to P, X is liable to D. P and X are citizens of the same state. P does not get supplemental jurisdiction for her claim against X, so the P-vs.-X claim must be dismissed. [Owen Equipment v. Kroger, codified in §1367(b).] )
ii. Compulsory joinder: When a person is joined under Rule 19(a) as a person to be “joined if feasible” (“compulsory joinder”), neither a claim against such a person, nor a claim by that person, comes within the supplemental jurisdiction in a diversity-only case.
iii. Rule 20 joinder: When a plaintiff sues multiple defendants in the same action on common law and facts (Rule 20 “permissive joinder”), supplemental jurisdiction does not apply. (Example: P is hit by D1’s car, then negligently ministered to by D2. P is from New York, D1 is from Connecticut, and D2 is from New Jersey. P’s claim against D2 is for $20,000. The federal court cannot hear the P-D2 claim, because it does not meet the amount in controversy and does not fall within supplemental jurisdiction.)

iv. Intervention: Claims by prospective plaintiffs who try to intervene under Rule 24 do not get the benefit of supplemental jurisdiction. This is true whether the intervention is permissive or of right. (Example: P1 sues D in diversity. P2, on her own motion, moves for permission to intervene under Rule 24(b), because her claim against D has a question of law or fact in common with P1’s claim. P1 is a citizen of Indiana, P2 of Illinois, and D of Illinois. Because there is no supplemental jurisdiction over intervention, the fact that P2 and D are citizens of the same state means that the court may not hear P2’s claim. The same result would occur even if P2’s claim was so closely related to the main action that P2 would otherwise be entitled to “intervention of right” under Rule 24(a).)
c. Defensive posture required: If you look at the situations where supplemental jurisdiction is allowed in diversity-only cases, and those where it is not allowed, you will see that basically, additional claims asserted by defendants fall within the court’s supplemental jurisdiction, but additional claims (or the addition of new parties) by plaintiffs are generally not included. So expect supplemental jurisdiction only in cases where the claimant who is trying to benefit from it is in a “defensive posture.” [125]

5. Discretion to reject exercise: Merely because a claim is within the court’s supplemental jurisdiction, this does not mean that the court must hear that claim. Section 1367(c) gives four reasons for which a court may decline to exercise supplemental jurisdiction that exists. Most importantly, the court may abstain if it has already dismissed all claims over which it has original jurisdiction. This discretion is especially likely to be used where the case is in its early stages. (Example: P sues D1 (the U.S.) under a federal statute, then adds state-law claims against D2 and D3, as to which there is neither diversity nor federal question jurisdiction. Soon after the pleadings are filed, the court dismisses P’s claim against D1 under FRCP 12(b)(6). Probably the court will then exercise its discretion to decline to hear the supplemental claims against D2 and D3.) [130]
6. No effect on personal jurisdiction: The application of the supplemental jurisdiction doctrine does not eliminate the requirement of jurisdiction over the parties, nor does it eliminate the requirement of service of process. It speaks solely to the question of subject matter jurisdiction. (But often in the supplemental jurisdiction situation, service in the 100-mile bulge area will be available.) [134]
   a. Venue: Where supplemental jurisdiction applies, probably venue requirements do not have to be satisfied with respect to the new party. But usually, venue will not be a problem anyway in these kinds of situations.

Question 26

Pleading
Stating a Claim

Rule 3, Rule 7, Rule 8
Include which cases go with these rules

Answer 26

Pleading
Stating a Claim

FRCP 3: A civil action is begun by filing a complaint.

FRCP 7(a): Only 3 pleadings: complaint, answer and reply- a motion is not a pleading

FRCP 8: General Rules of Pleading
Claim must contain:
Statement explaining court’s jurisdiction
* A short and plain statement that says why the claimant deserves relief.
Claimant not required to set out detailed facts in claim. That is done in discovery.

* A claim should not be dismissed for failure to state a claim unless it appears beyond doubt that the P can prove no set of facts in support of his claim. (The negro examples)
“notice pleading”- must claim just enough to give defendant notice of what he is being charged with. There has to be sufficient notice

* A claim should be dismissed only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.
Under rule 12(e) the D can move for a more definite statement it the complaint is not clear and does not provide sufficient notice.

Demand for relief sought
Bell v. Novick Transfer Co.(The complaint)(baby in a truck): Baby bell was in a car that got hit by truck owned by Novick. Baby Bell sued. Novick said the complaint was too vague- it didn’t say how their driver was negligent, etc. Court held that FRCP 8 only requires a short and plain statement showing plaintiff is entitled to relief. Details of how the defendant was negligent will come out during discover and interrogatory under rule 33. The P alleged that there was no contributory negligence (Rule 8(c))

**Federal courts don’t have to uphold state standards.

Bell Atlantic Corp. v. Twombly(Verizon Conspiracy)(2007):
P thought the phone companies were violating anti-trust laws by agreeing not to compete with each other and by excluding other potential competitors. She said this was a conspiracy. Court said this complaint didn’t meet standards of FRCP 8 and dismissed P’s claims because it didn’t include any factual evidence that would suggest that there was a conspiracy, rather than parallel conduct. Claims have to state facts, not just conclusory statements. D didn’t know what exactly they were being accused of. Court says your allegations have to be specific and plausible.

A P’s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions and a formulaic recitation of the elements of a cause of action will not do. Allowing such case would result in massive inefficiency in the discovery stage

Enough facts to state a claim to relief that is plausible on its face.

Dissent says let the D answer and see if they deny allegations or not. Maybe they don’t.
P has to plead facts and it’s the courts job to draw legal conclusions. A P can’t just make conclusory statements.

Ashcroft v. Iqbal(Sep 11)(Iqbal is the rule later)(2009): Iqbal sued Ashcroft and Muller because he said they violated his constitutional rights when they intentionally discriminated against him because of his race, national origin and religion. He said they came up with the policies to do what allegedly happened to him while he was detained. Court said these allegations were conclusory. A government official hasn’t done anything unconstitutional when he drafts a law that ends up disproportionately harming a certain group of people.

Ashcroft didn’t enact this policy BECAUSE he knew it would target a certain group of people (the fact that the P claims Ashcroft did this because he wanted to target a specific race is conclusory). The allegations are conceptually consistent with discrimination, but also consistent with someone who is just following leads and trying to catch terrorists. It’s more plausible that it’s the latter.

Souter wrote dissenting opinion saying Twombly wasn’t meant to be read like this- says court must hold allegations in claim as true even if they’re hard to prove. In Twombly even if allegations were true, they wouldn’t necessarily be in line with a conspiracy. The difference between twombly and this case is that there is a factual case here.

Conclusory test- Ashcroft enacted policy to target the race
1) They were the architect and instrumental executives

2) They knew of it and condoned it …

Plausibility test- Detained thousands or arabs as high interest group. Could be based on discrimination or could be only because they were doing their job. Not enough facts to pass the plausibility test. In cases like twombly you have to be more specific to be plausible but the dissent in Iqbal says this is not such case, the facts are good enough.

The court will ignore conclusory legal allegations
If the allegations that are left in your pleading are not plausible then you have nothing.
Dissent: A court should not decide whether the facts are wrong or not, at the pleading stage the facts are assumed to be true. (Ashcroft said we were not involved, our ranks were high)

Question 27

Specificity
FRCP 9: Pleading Special Matters

Answer 27

Specificity
FRCP 9: Pleading Special Matters
In alleging fraud or mistake, party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.(Rule 9(b))

An allegation of time or place is material when testing the sufficiency of a pleading.

Stradford v. Zurich Insurance Co.(Doctor): P is a dentist who has insured his practice with D. He makes an insurance claim, saying that water damage from frozen pipes cost him $151,000 and that he lost $1.2 million while his business was shut down. D refused to pay claim b/c they said he filed claim 10 days after his insurance was reinstated and that’s fraud. Insurance co. files a counterclaim and accuses P of willfully committing fraud. This claim satisfies FRCP 8 b/c it puts defendant on notice of what he’s being accused of (insurance fraud). Court says counterclaim lacked particularity on what type of fraud he committed (Was there actually no flood? Did he lie about it occurring while he was insured? Is he trying to get more money than he lost?). Rule 9(b) requires for allegations of fraud to be made in a more precise manner. Court held that the counter claim could be more precise and state the “time, place, and nature of the alleged misrepresentation.” Court held that defendants could amend their claim to make it more specific.


Question 28

FRCP 9: Pleading Special Matters

Answer 28

The Jones v. Clinton Complaint
Specific enough to fulfill Rule 8- not all details are there, but enough are there to give notice to C of what he’s being accused of.

Parts of J’s complaint that were critical:

C was a state actor (allowed them to make this a constitutional issue)
J was intimidated by C
C’s “distinguishing” marks
J told her friends after it happened

Count 1: Deprivation of Constitutional Rights
Statute of limitations for a sexual harassment claim had already run out.

C was a public official, so constitutional issue could be brought up
14th Amendment: Every citizen is entitled to equal protection of the laws
Statute §1983: Anyone who deprives someone else of their rights under color of state law is liable.

Count 2: Conspiracy to Deprive Persons of Equal Protection of the Laws
C conspired with his security detail to get her to go to his hotel room.

J was injured as result of conspiracy.

Count 3: Intentional Infliction of Emotional Distress
C’s actions were outrageous and were done intentionally and recklessly. Caused J emotional distress.

Count 4: Defamation
C and his agents made statements about J that they knew were false. Damaged her reputation.

Court threw this out against C b/c he wasn’t involved in anything to defame her. Not specific enough.

Relief:
J demands $75,000 on each claim- didn’t want it to seem like she was out for the money, but justice.
Demands punitive damages b/c she says this is the type of thing many men (and C) do, and the court should stop them from doing this to women.

Question 29

Ethical Limitations
FRCP 11:

Answer 29

Ethical Limitations
FRCP 11:

By signing pleading, an attorney certifies that to the best of his knowledge, formed after an inquiry reasonable under the circumstances:

It is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase cost of litigation
Claims aren’t frivolous and are backed up by existing law
Factual allegations have or will have evidentiary support
Denials of factual allegations have evidentiary support

Sanctions

If after a reasonable amount of time to respond, the court determines that 11(b) has been violated, court may impose sanctions.

Sanction shouldn’t be filed if attorney withdraws or corrects the claim within 21 days of receiving notice.

Court may ask attorney to show why their actions haven’t violated 11(b)

Sanction must be imposed in order to deter repetition of conduct by others in that same position.

Court can’t set monetary sanctions:

Against a represented party for violating 11(b)

On its own without showing order required in 11(c)(3)

If a party has evidence with respect to a contention that would suffice to defeat a motion for summary judgment based thereon, it would have sufficient evidentiary support for purposes of rule 11.

The test of whether the argument to change the law is nonfrivolous is an objective test. (whether the attorney has done enough research or not)
Sanctions should not be more severe than reasonably necessary to deter.

If a judge sanctions you then you don’t have an opportunity to withdraw the case. (Research done, time wasted). However, if the other party tries to sanction you then you have 21 days after they let you know but before they file the sanction

If Jones had made this up she coulnt be sanctioned under 11b2 but she would be sanctioned under 11b3
Dismiss is different than sanction.

Walker v. Norwest Corp.(Massey diversity J):

In a dispute over a minor’s trust fund, lawyer (Massey) filed a complaint alleging breach of fiduciary duty against Norwest and numerous individual officers and employees. Complaint said jurisdiction was based on diversity since “the plaintiff and some of the defendants are citizens of different states.” Attorney for Norwest wrote M telling him that there was no diversity jurisdiction. Warned that if he didn’t dismiss complaint, Norwest would seek sanctions, including attorney’s fees. M didn’t respond. Norwest moved to sanction M. District Court awarded sanctions against M. District court ruled against M and said it was his burden to plead the citizenship of the parties in attempting to invoke diversity jurisdiction. The appellate court affirmed the district court’s entry of Rule 11(b)(2) sanctions against M. Messy didn’t plead citizenship in trying to hide the fact that there was not complete diversity. 11b2

Christian v. Mattell, Inc.(Barbie):

Christian, an undergrad at USC, created and marketed a collegiate cheerleader doll (“Claudine”). She then alleged that Mattell had stolen her design by creating the Cool Blue Barbie. Mattell moved for summary judgment b/c it had copyrighted Mattell years before Claudine was invented. Mattell’s counsel tried to convince Christian’s attorney (Hicks) that his complaint was frivolous. Hicks didn’t listen and hurled Barbies at Mattell’s counsel at a meeting. Mattell gave him 21 days to withdraw his complaint (Rule 11(c)(2)) but he didn’t. Court said Hicks’ failure to investigate fell below the requisite standard established in Rule 11(b)(2) and 11(b)(3). But they said they couldn’t sanction him for his conduct in the meetings because an attorney can only be sanctioned for conduct relating to “pleadings, written motions, and other papers” submitted to the court.The rule 11 sanctions are limited to “papers signed in violation of the rule.” To impose sanctions under its inherent authority, the district court must “ make an explicit finding (which it did not do here) that counsel’s conduct constituted or was tantamount to bad faith”


Jones v. Clinton: 
Could Clinton have filed for Rule 11 sanctions against Jones?

Rule 11(b)(1): Improper Purpose 
Jones is charging him with this just to harass him and hurt his public image. 

But courts are reluctant to charge plaintiffs with sanctions unless there is something obvious that can be brought against it.

Rule 11(b)(2): Claims are frivolous and not backed up by existing law 
Frivolous means that there's no straight-faced argument to be made in favor of this legal position. 

This isn't the case here. 
Rule 11(b)(3): Factual allegations must have evidentiary support 
C says she doesn't have any evidence for what she's claiming. 

But that’s why J included in her claim that she had told her friends and family after it happened.

Rule 11(c)(5): Courts can't sanction a represented party 
She can be sanctioned if she's responsible for factual violations, not legal violations (because she's a represented party) 

Jones specifically said that she had told people right after it happened to deter Clinton from filing for Rule 11 sanctions.
There isn’t enough to get a Rule 11 motion granted.
Motion is a written request for the court to do something.
Motion, Answer or Default Judgment

FRCP 7: Forms of Motions
Motions and other papers
Request for a court order must be made by motion. Motion must:

Be in writing unless during hearing or trial
State with particularity the grounds for seeking the order
State the relief sought

Question 30

FRCP 12: Defenses and Objections:
Time to Serve a Responsive Pleading?

Answer 30

FRCP 12: Defenses and Objections
A. Time to Serve a Responsive Pleading
when do you have to file this? 12a4.

B. Before your answer is due.
C. Before you file your answer.
D. when you file MTD your time for the answer is suspended
e. But before you take a stand on the factual allegations you want to have more time to do that
f. Plaintiff wants the money sooner. Plaintiff is suing for bills.
g. The longer they wait there Is more pressure on them to settle.
h. But it is unethical if the MTD is only to delay.
i. But if you have viable claims then its ok to file for both reasons. Since this delay can end up being so harmful why do we let the D to file this before even letting them answer.

1. This may be to deter frivolous claims. It is more importantly an efficiency argument. Because you have to do a lot of research to show there is a problem with the claim legally then why do we put that time and expenses in our legal system. So we are between a plaintiff who wants to be done with this ASAP and a defendant who wants to file a motion because they don’t want to put so much energy to showing the claim is wrong.

Question 31

FRCP 12: Defenses and Objections

Defenses:?

Answer 31

Defenses: First 3 will lead to immediate dismissal

Lack of subject matter jurisdiction

This is not the type of case that belongs in this court.

Lack of personal jurisdiction

This particular defendant cannot be called into this particular court on this particular legal claim

Improper venue

Even if this case should be in this court, it would be better if it was heard in a different court, one that’s more conveniently located for everyone.

Insufficient process

The summons that was used to get the defendant into the court was insufficient.

Insufficient service of process

Summons was served in an improper way

Failure to state a claim upon which relief can be granted
P usually allowed to amend complaint before it gets dismissed

The complaint doesn’t allege enough facts or detail to put the defendant on notice as to what has been done (Rule 8)- move to have a motion to dismiss under Rule 12(b)(6)

“Everything you’re saying is true, but so what?”

Twombly or fraud cases not detailed enough.

The rule 12b6 is not a test to see if the facts are true.

Motion for Judgment on the Pleadings: After pleadings are closed, but early enough to not delay trial, party may move for judgment on pleadings.

Result of Presenting Matters Outside Pleadings: If on a motion, matters outside the pleading are presented to the court, can move for summary judgment. All the parties must be given chance to present all pertinent material to the motion.

Motion for a More Definite Response: Party may move for a more definite statement of a pleading if it’s so ambiguous that they can’t reasonably prepare a response.

Motion to Strike: Court may strike insufficient defenses, or any redundant, immaterial, impertinent or scandalous matters. Court may act:

On its own

On motion made by a party either before responding to pleading or 20 days after being served with pleading.

Joining MotionsRight to join

A motion under this rule can be joined with any other motion allowed by this rule.

Limitation on further motions

A party that makes a motion under this rule can’t make another motion under this rule making defenses that were available to it but it chose to omit from its earlier motion.

Waiving and Preserving Certain Defenses

When Some are Waived

A party waives any defense listed in 12(b)(2)-(5) by:

Omitting it from a motion described in 12(g)(2)

Failing to:

Make it by motion under this rule

Include it in a responsive pleading or amendment

When to Raise Others: failure to state a claim upon which relief can be granted or to state a legal defense to a claim may be raised:

In any pleading allowed or ordered under Rule 7(a)

By a motion under Rule 12(c)

At trial

Lack of Subject-Matter Jurisdiction: If no subject matter jurisdiction, action must be dismissed.

Hearing Before Trial: Any motion must be heard before trial unless deferred until trial by court.

In a pre-answer motion the D must respond to the substantive allegations of the complaint. She can of course add PJ and SMJ in there but she must respond to substantive.

Jones v. Clinton

C files a 12(b)(6) motion, saying that what happened doesn’t lead to any legal facts.

Count 1: Sexual Harassment1st argument:

J failed to prove that C was acting in his official capacity at the time.

J says he used his position of authority and his security detail to bring about the meeting and commit the acts.

Judge says there’s enough showing an inference that he used his position of authority.

2nd argument:

There is no evidence showing that the discrimination took place because of Jones’ sex.

Judge says maybe it was in part about her personal characteristics, but in general, it’s likely that this happened b/c she’s a woman.

If she wasn’t a woman this wouldn’t have happened to her, this is enough

3rd argument:

C didn’t offer to give her any benefits at work if she did what he wanted or fire her if she didn’t.

J says she was transferred to a job with less responsibilities after this happened. The threats were implicit.

Judge says J must show 1) she was member of protected class; 2) she was subjected to unwelcome sexual harassment; 3) harassment was based on sex; 4) her submission was an express or implied condition for receiving job benefits or her refusal to submit resulted in a tangible job detriment.

Judge says J has sufficiently alleged that there was a threat that she would lose her job or be demoted.

4th argument:

J claims hostile work environment action.

C says this was an isolated incident and even if all the things J is claiming happened, it doesn’t lead to an intimidating, abusive and hostile work environment.

Judge says totality of the actions can be said to have altered J’s work environment.

Judge threw out defamation and due process claim (14th Amendment claim).

Motions to Recuse a Judge28 USC § 144: Bias or Prejudice of Judge

If a party files an affidavit that the judge before whom the matter is pending has a personal bias or prejudice against him or in favor of any adverse party, another judge will be assigned to the case. The affidavit has to include the facts and reasons for the belief that the bias exists.

28 USC §455: Disqualification of Justice or Judge

A judge can disqualify himself when he thinks his impartiality would be questioned

He should disqualify himself when:

Personal bias

He served as a lawyer in private practice in the matter of controversy

Participated during his governmental employment as counsel, adviser or material witness

He or someone in his family (minors) has a financial interest in the subject matter in controversy

He or someone in his family/friends:

Is a party to the proceeding

Is a lawyer in the proceeding

Is known by the judge to have an interest in the outcome

Is going to be a material witness

Jones v. ClintonC’s Argument:

History of interpersonal conflict between Judge Wright and C- C lost her exam and she campaigned for his opponent.

J’s Argument:

Federal Judges are supposed to be unbiased, mild personal matter that was resolved years ago. Every judge was appointed by C or his opponents.

C didn’t file motion b/c if you file and lose, in trouble! It was strategic.

Question 32

Responding to the Complaint: Answers (Affirmative Defenses)?

Answer 32

Responding to the Complaint: Answers (Affirmative Defenses)

FRCP 7: The pleadings stop at the answer unless in the answer there’s a counterclaim or the court orders a reply from the plaintiff.

FRCP 8: Denials/AnswersDefenses: Admissions and Denials
D has to deny only those allegations that he actually disputesGeneral: In responding to pleading, party must:

State in short and plain terms its defenses to each claim

Admit or deny allegations asserted against it

Denials: must fairly respond to substance of allegation

General and Specific Denials:
General Denial: Want to deny all allegations, including jurisdiction. Denying the merits of the case.
Specific Denial: Must either deny some allegations or generally deny all except for those specifically admitted

Zielinski v. Philadelphia Piers, Inc.(Fork lift): Z’s forklift was hit by Johnson’s forklift that was being operated by PPI. But PPI had leased out their forklifts to Carload Contractors. Z and J didn’t know this, so in ONE paragraph in complaint, Z claimed that J was driving negligently and that forklift was owed by PPI. PPI denied that whole paragraph. Court said specific denial of parts of this paragraph and specific admissions of other parts would have warned Z that he sued wrong defendant. Court made PPI admit that they owned the forklift even though it didn’t b/c PPI and Carload had same insurance company. Should break down key facts in complaint so D has to deny/admit each one separately.

Denying Part of an Allegation: Must admit part that’s true and deny the rest

Lacking Knowledge or Information: A party that lacks enough info to form a belief about an allegation must say so- same effect as a denial.

Effect of Failing to Deny: If a responsive pleading is required and the allegation is not denied, it is considered admitted. If responsive pleading not required, allegation is considered denied or avoided.

You have to raise affirmative defenses in your answer or else you waive them. So you’re not denying what they are claiming, but you’re adding more info that will show cause of action is invalid (see list of answers in FRCP book). Affirmative defenses change the burden of proof from P to D.

An affirmative defense relies on facts outside the complaint that render the cause of action invalid even if everything alleged in the complaint is true and even if allegation in the complaint would otherwise be sufficient to state a claim.

If it’s an element of the claim the P has the burden of pleading it and proving it.

An affirmative defense is one which provides a defense without negating an essential element of the crime charge.

(Ex: P alleges D trespassed. D says he was on her land, but he had a right to do so)

Jones v. Block(prisoner injured): J was a prisoner who was injured when he was in custody. Said prison staff refused to reassign him to work he could do despite his injuries. Injuries got worse. Court said J hadn’t exhausted prison grievance remedies before initiating suit. Up to defendant to raise lack of exhaustion as an affirmative defense. FRCP 8(c) gives non-exhaustive list of affirmative defenses that must be pleaded in response.

Jones v. Clinton:

C files general denial, denying merits of the case. Denies some paragraphs, admits some. Rule 8(b)(5): says he doesn’t have enough knowledge of the truth of many allegations (info about J’s family life, etc.).

C’s Affirmative Defenses:

Failure to state a claim upon which relief can be granted. This technically Rule 12 (b)(6) but was pled with affirmative defenses. Can do this.

SOL has run out

This can’t be defamation b/c it’s gossip. Burden of proof on P b/c he’s public figure. Usually it’s on D.

J’s injuries caused by third parties and herself. But also says there were no injuries. Rule 8(d)(2): can contradict yourself in your claim.

Question 33

Amending the Complaint?

Answer 33

Amending the Complaint

FRCP 15: Amended and Supplemental PleadingsAmendments Before TrialParty may amend pleading:

Before being served with responsive pleading

Within 20 days after serving the pleading if responsive pleading not allowed

In all other cases, party can amend pleading with opposing party’s written consent or court’s leave (court should allow when justice requires)

Party must respond to amended pleading 10 days after service.

You cannot add facts to the first pleading, that amendment is not allowed because pleading is all about notice and in case of the beach house painting example the D doesn’t have notice on that.

An amendment relates back to the original filing when the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out – or attempted to be set out in the original pleading.

Beeck v. Aquaslide ‘N’ Dive Corp.(Water Slide): P was injured while using waterslide. Alleged D had made the slide, so he sued them. D originally admitted that they made slide, but after SOL had expired, D’s president realized that the slide wasn’t made by them. D moved to amend its answer and deny manufacturing the slide. Rule 15(a)(2) says court should allow amendment if other party consents or to preserve justice. Court here says it’s in interest of justice to allow for amendment. P has other remedies available to him and the prejudice arguments here against the amendment is not sufficient.

A- the would be amender should have a good reason for not getting the pleading right the first time.

B- allowing amendment would not hurt the other party too much (prejudice)

Jones v. Clinton: J tries to add 4 new claims:

Cut out defamation count to make it just about C (not Ferguson)

What C did was against J’s First Amendment rights- she tried to clarify constitutional claim

New sexual harassment theory: women who give into C’s advances get promotions

J wants Judge to say that she was the victim of sexual harassment by C

C argues and says these amendments were made in bad faith, shouldn’t be allowed.

Rule 15(a): Judge allows motion to amend b/c it wouldn’t be unjust to do so.

Question 34

Amending Complaint– Out of Time?

Answer 34

Amending Out of Time

FRCP 15(c) Relation Back: You can amend the complaint after the SOL has run out if the new claim rises out of the same conduct. One who has been given notice concerning certain conduct has already been afforded SOL protections.
\*\*The more general your complaint, more likely that you'll be allowed to amend later.

Moore v. Baker (Doctor consent): P had blocked artery and D suggested surgery. P injured during surgery. P files suit and claims that D didn’t inform her of the alternatives to surgery. After SOL runs out, P moves to amend complaint, saying D acted negligently during surgery. Court says must determine if new claim arose out of same conduct. TEST: Was there fair notice? Here, court said new claim couldn’t be added b/c D had no idea his performance during surgery would be brought up in trial.

In this case moore would have to prove completely different facts to prevail on neg.

Bonerb v. Richard J. Caron Foundation (Rehab): P was patient in D’s rehab facility, participating in mandatory exercise program. Got injured. Originally said they had negligently maintained basketball court. Moved to amend complaint to add malpractice. Court allowed amendment. Said allegations gave D sufficient notice and alerted him of possibility of claim based on negligent performance of professional duties. They were put on notice that P was questioning the quality of care. Also one important distinction with the Moore case was that in Bonerb the request for amendment came before all the discovery, depositions, expert witness info etc.

Amending a factual element? (2005 practice midterm)

Rule 15 (a) (2) says even if the deadline to amend has passed you can still amend your answer only with your opponent’s consent OR the court should freely give leave when justice so requires.

Therefore, Just like the aquaslike case where they found that the slide was no made by them, this guy has found out that he had admitted that he cashed the check by mistake.

Bad faith (did he rely on good evidence and did adequate research into this?)

Undue delay

Prejudice? (the burden is on the other side to show prejudice)

Too much burden or too much expenses on the other side

Notice problem

Statute of limitation? If it has passed:Relation back of amendment:

If the legal theory is changing and the D was notified on the facts of the dispute in the original complaint and the facts are not changing then good (Bonerb v. Richard)

If, however, facts are being changed (Moore v. Baker) then the whole goal of the pleading process is notice and fairness

Are we passed the discovery stage, depositions, witnesses?

Question 35

Purposeful Availment?

Answer 35

Purposeful Availment?

Availing yourself to the laws and benefits of that state.

Unilateral contacts of the plaintiff or others will not do.(taking the car to Ohio)

Action purposefully directed toward the forum state

Intent or purpose to serve the market in that state

Designing the product for that market

Advertising in that state

Establishing channels for providing regular advice to customers

Marketing the product through a distributor who acts like sales agent.

Stream of commerce argument? (Make sure you bring up Brennan’s argument in Asahi and make sure to point out that WV said that foreseeability was not enough but Asahi came after it.)

Websites:

(1) Passive website just makes some information available on the website
(2) Interactive website where a user can exchange info with the host computer
(3) Entering into contracts with residents of a foreign J that involve knowing and repeated transmission of computer files over the internet.

If something is shipped by mail that means they knew where the customer is located

If they receive correspondence, letters, inputs etc helps the case for PJ.

To determine PJ in this case the courts examine the level of interactivity and commercial nature of the exchange of information that occurs on the website. So the issue is that maybe in the internet world the purposeful availment argument doesn’t work. Maybe international shoe does not go far enough to solve the issue of the internet. Maybe they should come up with other rules. (READ the zippo case)

Jurisdiction would equal selling products and shipping by mail.

Question 36

Origins of PJ? Aka Cases?

Answer 36

Origins

Mitchell v. Neff: N hires M, a lawyer, to help him acquire land in Oregon, which he does. N doesn’t pay M. M sues for legal fees. M notifies N by publication in Oregon newspaper. So N never finds out he’s being sued and doesn’t come defend himself. M wins. Oregon Sheriff takes N’s land and sells it to Pennoyer. N comes to Oregon and finds Pennoyer living there.

Pennoyer v. Neff: (61) N produces his title to house, P produces title from Sheriff. N says P’s title not valid b/c Oregon didn’t have jurisdiction over his land. SC says N was denied due process of law b/c Oregon didn’t have jurisdiction over him.
Types of Personal Jurisdiction:In Personam

Jurisdiction over person of defendant

Resident of state? General

Appear in state court to litigate suit? Specific

Served in state? Specific

In Rem

Jurisdiction over property, whether D is in state or not.

CLAIM ONLY HAS TO DO WITH THE PROPERTY

Quasi in Rem

Jurisdiction over a person who owns property in a state, up to value of property.

International Shoe v. Washington: (75)

W creates unemployment fund and Shoe doesn’t contribute. W sues Shoe for failing to pay taxes owed. W informs Shoe that they’re being sued by sending registered mail to their office in St. Louis and personally serving one of their salesmen there.In Personam:

Appear in Court: Special appearance

Resident of State: Reside where headquarters are or where incorporated. Headquarters in St. Louis, incorporated in Delaware.

Personally Served in State: Employee that was served was not official rep of corporation.

In Rem: Not about property, about taxes

Quasi in Rem: They don’t have property in state, only small number of shoe samples.

SC says if you have sufficient contacts with state, you’re subject to personal jurisdiction there.

Shoe has sufficient contacts with W b/c they had conducted business there regularly and had enjoyed the benefits of W’s laws.

Absorbing In Rem Jurisdiction- Extension of Int’l Shoe over the years…

New Test: Purposeful Availment??

Burden on D

Burden on third parties

Forum state’s interest

Purposeful Availment

Foreseeable?

Minimum Contacts?

McGee v. International Life Insurance Co.: (83)Franklin was CA resident, bought life insurance from company who ended up selling policy to Texas co. Texas co. asks F if he still wants to be insured with them. He says yes. Dies later. Texas co. refuses to pay. Gets sued in CA and says no jurisdiction. Court says there is jurisdiction in CA b/c Texas co. purposefully availed themselves to CA laws. It was also foreseeable that they’d end up in CA courts if they did business there.

Hanson v. Denckla (Florida): (83) Mrs. Donner lives in PA, creates trust in Delaware, then moves to Fl and dies. Daughters get into fight about money in trust. Bring suit in Fl against Delaware trust. SC says no jurisdiction in Fl b/c no purposeful availment. Trustee never said he wanted to do business in Fl. Unilateral acts of third parties not enough to give jurisdiction in state (Donner chose to go to Fl, D didn’t do anything to subject itself to Fl’s laws).

Absorbing In Rem Jurisdiction

Shaffer v. Heitner (Derivative Suit): (86) H is suing the directors of Greyhound in a shareholder’s derivative suit. Says directors broke their fiduciary duty b/c they engaged in anti-competitive behavior and the company ended up having to pay a huge fine. Wrongful acts took place in Oregon but H sued in Delaware, where company was incorporated. H trying to get quasi in rem jurisdiction (can’t get general jurisdiction even though Greyhound is incorporated in Delaware b/c he’s not suing the corporation, he’s suing the individual board members). Property at stake is shareholders’ stocks in Greyhound. SC says minimum contacts test also applies to in rem and quasi in rem jurisdiction. Quasi in rem jurisdiction no longer possible b/c minimum contacts create in personam anyways. If you don’t have minimal contacts and you just own property, you can’t be sued for things that don’t have to do with that property. Board of directors here didn’t have any contacts with Delaware. Lawsuit doesn’t arise out of the stock owned by the board of directors. Brennan’s Dissent: Should be jurisdiction b/c Delaware has interest in protecting actions of directors of one of its corporations. They purposefully availed themselves to Delaware laws.

World Wide Volkswagen v. Woodson (96)

Robinson, a NY resident, bought car in NY. Drove it through OK and got into accident. Sued dealer in OK b/c thought something was wrong with the car. SC says no jurisdiction in OK b/c not foreseeable that they’d be haled into court in OK. No due process- D should be able to take measures against protecting themselves against liability. No purposeful availment. *Purposeful availment PREREQUISITE for jurisdiction. Here, dealer didn’t do anything to avail himself to OK laws. No minimum contacts. Making sure states don’t overreach their power.
Brennan’s Dissent: They knew their car might end up in OK. Ought to be purposeful availment. Too much focus on convenience to D- should be more focused on efficiency, where accident took place, where witnesses are, etc. Putting things into stream of commerce counts as purposeful availment.

Asahi Metal (105)

O’Connor: Zurcher was in motorcycle crash in CA that injured him and killed his wife. Suing Cheng Shin. Chen Shin brings Asahi into suit b/c say they built valve assembly that Cheng Shin put into motorcycle tire. Cheng Shin and Z settle. But Chen Shin still wants Asahi to pay them back. SC says no jurisdiction in CA b/c it’s not enough that Asahi knew that they were selling products that would probably end up in CA. This doesn’t constitute purposeful availment, there has to be a substantial connection. Asahi didn’t advertise in CA, didn’t sell to CA company (sold to Cheng Shin, Taiwanese co. instead), didn’t create product for CA consumers. Also, no American interest in this case anymore- suit between 2 foreign companies. 4-4-1.

There has to be purposeful availment. No purposeful availment here.

Brennan: Putting your product in stream of commerce is purposeful availment. Brennan was dissent in WW VW too. Difference: In WW, dealer didn’t know car would end up in OK. Here, Asahi knew 20% of product would end up in CA. Did it anyways. “knowing intent”= purposeful availment. But jurisdiction not ok despite this b/c balancing test didn’t factor jurisdiction (two foreign companies- no reason for them to be litigating in CA).

Burger King (111)

Ruzewicz, a Michigan resident, wants to be a BK franchisee. BK headquartered in Fl. R fails to pay rent, BK sues him in Fl. SC says there is jurisdiction in Fl. This is what Brennan has been gunning for broader jurisdiction this entire time.

2 factors for personal jurisdiction: Purposeful Availment

R reached out to Fl Corporation to get franchise (long term relationship)

In contract, BK said suits would be held in Fl.

Balancing Test

Foreseeability that he’d be brought to Fl. But Foreseeability isn’t enough, still need purposeful availment.

Convenience of witnesses, defendant, evidence, etc.

R didn’t show most witnesses would be in Michigan

Steven’s Dissent: R didn’t have any contacts with Fl- he dealt with Michigan office. Court relied on boiler plate language in contract to subject R to Fl laws. Suing R in Fl keeps him from bringing witnesses from Michigan into court to defend him.

The Internet

Internet liability on a sliding scale
Passive website = no jurisdiction
Lots of contact targeted towards forum state = jurisdiction

Pavlovich v. Superior Court: (117) P, a Texas resident, created a site that sought to defeat CSS technology and enable people to watch and copy DVDs without codes. Sued by CCA, CA company that owned rights to CSS technology. CCA sued in CA. Court says no jurisdiction in CA.

Test- Jurisdiction over nonresident if:

Purposeful Availment

P didn’t know company that owned the technology was in CA.

Wasn’t intentionally harming CA victims (cites Jones v. Calder case where actress living in CA sued gossip magazine b/c they knew they’d be hurting CA resident. Court found jurisdiction)

CCA says P should have known his actions would harm movie industry that’s based out of CA. Court says D’s knowledge that his conduct may harm someone in forum state not enough for jurisdiction.

Controversy arises out of contacts with CA

P had passive site that gave info. Not grounds for jurisdiction.

Jurisdiction consistent with ideas of fair play and justice

In the case of the actress in CA:

Knew his conduct would have potentially devastating impact upon the P.

Knew that the burnt of that injury would be felt by jones in CA.

The magazine’s is distributed throughout the CA.

Question 37

General Jurisdiction (there has to be systematic and continuous contacts)

Answer 37

General Jurisdiction (there has to be systematic and continuous contacts)

General Jurisdiction: Contacts so significant that it’s fair to subject them to jurisdiction on any claim in that state.

Corporations: General jurisdiction in state where they were incorporated and where they’re headquartered. General jurisdiction can be extended out to a forum state if you have substantial contacts there.

Individuals: General jurisdiction in state of domicile.

Specific Jurisdiction: Contacts sufficient enough to give jurisdiction over claims rising out of those particular contacts.
Standards:Minimum Contacts

If you do business in state, it’s sufficient (Int’l Shoe)

Substantial contacts

Was D reaching out to that state?

WW VW:

Burnam: Went to SF on his own, benefitted from CA laws

Purposeful Availment

Claim has to arise out of contacts with forum state

Foreseeable?

Perkins v. Benguet Consolidated Mining Co.: (123) P filed 2 lawsuits in Ohio against B (owns and operates mines in Philippines) b/c B didn’t issue stock certificates to her. B’s operations were stopped during Japanese occupation. President of company moved back to Ohio and carried out limited business from there. Court determined these substantial contacts (continuous and systematic contacts) allow for Ohio to have general jurisdiction.(out of necessity)

Helicopteros Nacionales de Colombia, S.A. v. Hall: (124) P’s families in helicopter crash in Peru. Sued H (Colombian company) for wrongful death in Texas. H bought some helicopters from Texas, negotiated contract in Texas, trained managers/pilots there, made transactions with bank in Texas… court says no general jurisdiction b/c H doesn’t have continuous and systematic business contacts with Texas. Could have brought claim against H in Texas if claim had risen out of H’s contacts with Texas. But this isn’t case here.

Burnam v. Superior Court: (126) Burnams were married in VA, wanted divorce. Mrs. B and kids moved to CA. Mr. B goes to CA for business, goes to SF to visit kids. Mrs. B serves him with divorce petition there. SC says minimum contacts don’t matter here b/c he was served in state, so there’s jurisdiction. This is in line with traditional notions of fair play and justice. B enjoyed benefits of CA laws while he was visiting, availed himself to CA laws when he came there. Scalia: Jurisdiction. Says there’s historical pedigree- jurisdiction when you’re served in state. Brennan: Jurisdiction. When you set foot in a state, you’re purposefully availing yourself. Colby: There shouldn’t have been jurisdiction. This is essentially going back to Pennoyer.

Jurisdiction by Consent

You can consent to jurisdiction, even if court wouldn’t have jurisdiction in the absence of your consent

If you sign ex ante contract (including forum selection clause), you’re consenting to jurisdiction in that state.

You can waive jurisdiction by litigating it wherever they brought it, raise it in motion to dismiss or in the answer (12)(g) and (h). If you don’t do this, you waive it. Can file a 12(b)(2) motion, saying you don’t think you have jurisdiction.

Carnival Cruise Lines, Inc. v. Shute: (135) S bought tickets for cruise through Washington agent. In fine print of tickets, provision saying that all suits arising out of this cruise will be brought in Fl. S slips and injures herself while on cruise, sues in Washington. SC says no jurisdiction in Washington b/c S waived right to jurisdiction in Washington or CA (where cruise left from). Personal jurisdiction overridden by forum selection clause of contract. Jurisdiction created by consent here.
* Court said it isn’t a fundamentally unfair clause b/c it wasn’t in there to trick or force them into a forum that wasn’t favorable to them. Wouldn’t be enforceable if that was the case. But S knew of the clause before they went on the cruise. Weren’t tricked.( even though no bargaining power and it was after they had paid)

In this case the forum section clause is good because

Contractual clauses are good as long as:

Exercise of jurisdiction would not be fundamentally unfair

The forum clause in the contract is contractually enforceable under the state’s contract law.

A cruise line has a special interest in limiting the for a in which it potentially could be subject to suit. Lot of passenger, any one from around the world could sue them otherwise.

The specification of the forum is more efficient because it prevents the parties from getting involved in long procedures to determine where the right forum is

Reduced benefits, if they could be sued anywhere then the cost would be passed to the customers.

Any bad faith idea is belied by two facts:

The cruises place of business is in florida and most of its cruises come out or go to florida

There is no evidence that there was fraud or alike in getting the customers signiture in this case. They had the option of rejecting the contract.

Long Arm Statutes

Has the state legislature authorized the court to exercise personal jurisdiction over this defendant on this claim?

Long Arm Statutes: The state is reaching its long arms to people out of their state, and into its courts.

Broad: Reaches people who are beyond the court’s jurisdiction under the Constitution.

State has jurisdiction over any defendant who harms a resident of that state.

Minimum contacts and purposeful availment missing

Statute can be broader than state’s constitutional claim over jurisdiction. But it can be enforced to the limits that the constitution will allow.

Narrow: The statute doesn’t cover the whole universe of possible cases that the Constitution would allow for jurisdiction. (NY, Fl)

If there is no statutory jurisdiction, doesn’t matter that there’s no constitutional jurisdiction. BUT IN EXAM, COVER CONSTITUTIONAL QUESTION ANYWAYS.

Consistent with Constitution

CA: There is jurisdiction if it is allowed by Constitution.

The D may have sufficient contacts with a state to support minimum contacts J there even though she did not act within the state.( if you commit an act that you know will have harmful effects within the state then you subject yourself to jurisdiction)

Gibbons v. Brown: (155) G and Mr. and Mrs. B driving in Montreal. G gave B bad directions, tells him to turn wrong way driving down one-way street. G sues B in Fl (B's home state), saying he was driving negligently. 2 years later B sues G in Fl, saying G subjected herself to Fl jurisdiction by bringing suit there 2 years ago. Court say Fl statute doesn't allow for jurisdiction over what happened in Canada, so asks constitutional question. Fl's Long Arm Statute narrower than Constitution. Fl says activity must be substantial, not isolated. Isolated ok in Constitution. Court says G suing in Fl 2 years ago not enough to constitute "substantial" activity in that state. Also Mrs Brown was not a party in the first suit. Even so, Mr. B was defendant, not Mrs. B in suit 2 years ago. Court says G doesn't have contacts with Fl anymore, so no jurisdiction. Florida is asking for general J and Gibbons definitely doesn’t have substantial contacts.
\*\* Could this have been filed in FL federal court? First, must look at state statute, then constitution.
FRCP 4(k)(2): there will be federal if there would have been state

Question 38

Notice

The Constitutional Requirement of Notice

Answer 38

Notice

The Constitutional Requirement of Notice

Mullane v. Central Hanover Bank & Trust Co.: (141) Bank going to surrogate court for accounting proceedings of trust fund. Important for beneficiaries to be present at proceeding to voice objections about how money being managed. Bank placed small publication in local newspaper to give notice to beneficiaries. M assigned to be attorney for beneficiaries b/c none of them showed up (didn’t have notice!). M says notice given to beneficiaries not fulfilling Due Process Clause of Constitution. Supreme Court confronted with 2 questions:Is there personal jurisdiction over out of state beneficiaries?

Yes b/c fund is managed in NY.

Has to be that courts can adjudicate proceedings about fund in their state.

Doesn’t matter if there’s PJ or not.

If there is PJ, was it constitutional to adjudicate case when they didn’t have actual notice? Was sufficient notice given to them?

Due Process Clause: Must have notice!!

Court says important that Bank at least attempted to give notice to some of them (ones it had addresses for).

Must balance 2 things:

State’s interests in adjudicating case in efficient manner

Defendant’s interests in being present at proceedings

STANDARD: There must be notice reasonably calculated under all the circumstances to give notice.

What’s reasonable? Look at facts of case.

Mere gestures not enough.

Newspaper publication not enough!

Service by mail is enough.

Must mail notice to those beneficiaries whose addresses are known.

If they show up, will protect interests of the other beneficiaries too.

By waiving service the D does not waive its right to object to the venue of PJ but it does waive its right to object to the sufficiency of the summons of the method by which it was served (Rule 12(b)(4) and (5))

Question 39

The Mechanics of Giving Notice (rule?)

Answer 39

The Mechanics of Giving Notice

FRCP 4Service

In General. Summons must be served with copy of complaint.

By Whom. Any person who is at least 18 and not a party may serve a summons and complaint.

By a Marshal or Someone Specially Appointed.

Waiving ServiceRequesting a Waiver. D has duty to avoid unnecessary expenses of serving the summons. P may notify each D that action has been commenced and request that D waive service of summons. Service must be:In Writing and be addresses:

To the individual defendant

For a defendant subject to service under Rule 4(h), to an officer, a managing or general agent, or anyone else who is authorized by law to receive service of process.

Name the court where complaint was filed

Be accompanied by copy of complaint, 2 copies of waiver form, pre-paid way of returning form.

Inform D of consequences of waiving and not waiving service

State date when request was sent

Give D at least 30 days after request was sent to return waiver

Send it by first class mail

Failure to Waive. If D in US fails without good cause to return waiver, court must impose:

Expenses incurred in making service

Reasonable expenses, including attorney’s fees, of any motion required to collect those service expenses.

Time to Answer After a Waiver. A defendant who before being served with process, returns waiver in a timely manner, need not serve an answer until 60 days after request was sent.

Results of Filing a Waiver. When P files waiver, proof of service not required.

Waiving service of a summons does not waive any objection to personal jurisdiction or to venue.

Serving an Individual within a Judicial District of the USCan give notice by doing any of the following

Delivering a copy of the summons and of the complaint to the individual personally

Leaving a copy of each at the individual’s dwelling or usual place of abode with someone of suitable age and discretion WHO RESIDES THERE; or

Delivering a copy of each to an agent authorized by appointment or by law to receive service of process.

Question 40

Venue

What are the rules? And everything else

Answer 40

Venue (1391 – 1392 – 1404 – 1406 – 1631)

Venue

You have to have venue in addition to personal jurisdiction before you can sue in a particular state.

28 USC 1391 (district courts generally)A civil action that is founded ONLY on diversity of citizenship may be brought in:

A judicial district where any defendant resides, if all defendants reside in the same state

A judicial district in which a substantial part of the events occurred

A judicial district in which any defendant is subject to PERSONAL JURISDICTION at the time the action is commenced, if there is no district in which the action may otherwise be brought.

A civil action where jurisdiction is NOT founded SOLELY on diversity of citizenship may be brought in:

A judicial district where any defendant resides, if all defendants reside in the same state

A judicial district in which a substantial part of the events giving rise to the claim occurred

A judicial district where any defendant may be found, if there is no district in which the action may otherwise be brought.

A corporation is said to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.

For states that have more than one federal judicial district, you have to figure out which district they’re considered “residents” of, or if they have contacts with the whole state, pick the district where they have the most contacts.

An alien may be sued in any district.

This even includes resident aliens who live here- A resident alien can be sued in any district where there would be personal jurisdiction.

Dee-K Enterprises, Inc. v. Heveafil Sdn. Bhd.: (160) Dee-K (VA) and Asheboro (NC) bought rubber-thread from D to make bungee cords. They sued corporations in Malaysia, Indonesia and Thailand, stating that there was a conspiracy to fix prices and restrain competition. D claimed that venue in Eastern District of VA is improper. 28 USC §1391(d) says an alien may be sued in any district. For American defendants, §1391(b) says venue ok anywhere 1) where D resides, if all D reside in the same place, 2) where substantial part of events occurred, 3) where any D may be found if no other district available. When both domestic and foreign defendants, §1391(b) must be satisfied as to domestic defendants.

28 USC 1392 Defendants or property in different districts in the same state:

Any civil action, of a local nature, involving property located in different districts in the same state, may be brought in any of such districts,

Notes:

Where action is brought in a state court, federal venue rules don’t apply (apply only when the case was initially filed in federal court)

(Venue) - Declining Jurisdiction (§1404)

Both state and federal courts may decline to exercise jurisdiction even though they possess it.

Transfer

A defendant can transfer the case to another division in the same district, or to another district altogether.

TRANFER ONLY APPLIES TO FEDERAL COURTS

28 USC §1404 (both available to Ps and Ds)For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division (a subdivision of a district court) where it might have been brought.

This means there has to be personal jurisdiction in the court D is seeking to transfer to and venue also has to be proper in the transferee court.

If there is no personal jurisdiction or venue in the transferee court, D can’t transfer there.

If nobody else wants to transfer the case other than the judge, the judge can do it “in the interest of justice”- sua sponte.

ONLY APPLIES TO FEDERAL COURTS, state court may use forum non conveniens (which is not a statute, it is judge made common law) to dismiss cases, but they can’t transfer cases from state court to state court.

You can’t transfer to a court unless the case could have initially been brought in that court which means that there had to be PJ and venue at that court and that court was one of the options.

Upon motion, consent or stipulation of all parties, any suit or proceeding may be transferred, at the discretion of the court, from the division in which pending to any other division in the same district. Transfer of proceedings in rem brought by or on behalf of the US may be transferred under this section without the consent of the US where all other parties request transfer.

28 USC §1406: If you sue in the wrong venue, a district court can transfer the case to the right venue, or b/c of injustice, but it doesn’t have to if D doesn’t object to the wrong venue. If D fails to challenge the venue, the right to challenge is waived under 12.

28 USC §1631: (venue proper but PJ lacking) if in the interest of justice, a judge can transfer the case to a court that has personal jurisdiction in the case when the case was filed in a court where there is no personal jurisdiction.

Piper Aircraft v. Reyno: A small commercial plane crashed in Scotland. The pilot and 5 passengers were killed. The decedents were all Scottish. The plane was manufactured in PA, the propeller was manufactured in OH and it was owned and maintained by a Scottish company. Reyno (CA company, administrator of the passenger’s estates) brought a wrongful death action against Piper in CA b/c US torts laws are more favorable to the plaintiffs. D moved the case to federal court in CA b/c of diversity jurisdiction. Piper then transferred the case from district court on CA to the middle district of PA under 1404(a) and Hatzell made the same request under 1631 for lack of PJ. Then both Ds made a motion to dismiss the case b/c of forum non conveniens. TC revered. Court of Appeals reversed the dismissal of the case because the laws in Scottish courts would be less favorable to P. SC said substantive law shouldn’t be taken into account UNLESS P’s remedy was very inadequate or P wouldn’t be able to get a fair remedy in the transferee court. Here, P can get fair remedy in Scottish courts. Court also said that P’s choice of forum is not given as much weight if P chooses a forum that’s not his home forum (P is foreign) (when the P is foreign choice of a specific forum is not given a great weight b/c it shouldn’t matter to a foreign P). Court also said that the events occurred in Scotland and the evidence is there, so more convenient for trial to be in Scotland. Court also said that if case was held in PA, Scottish laws would have to be applied- better for Scottish courts to decide case using Scottish laws.

Private interests:

Fewer evidentiary problems would be posed if in Scotland.

Inability to implead potential third party Ds in the US

Public interests:

Two sets of laws would be confusing to the jury (Scottish law and PA law would be confusing for the judges and the jury)

American interest in this case not sufficient

Forum non conveninens only available to Ds

Question 41

Subject Matter Jurisdiction:

Federal Question Jurisdiction?

Answer 41

Subject Matter Jurisdiction

Federal Question Jurisdiction

What is the reach of federal subject matter jurisdiction?Constitution, Article III (Page 284 of Supplement)§1: There shall be a Supreme Court. Lower courts must be established by Congress. There doesn’t have to be a federal judiciary at all.

The first Congress created a federal judiciary. But Congress could abolish the federal judiciary if they wanted to.

§2: List of cases that the Constitution will allow federal courts to hear. If a case doesn’t fall into these categories, it cannot be brought in federal court.

Any claims arising under the Constitution or the laws of the US

Cases where the US is a party

Controversies between 2 states

Controversies involving a state and the citizen of another state

Controversies between citizens of different states (Diversity Jurisdiction)

Controversies between a state and a foreign state or citizen

Congress can’t add to this list.

The only way you can add to this list is by amending the Constitution.

2 ways a case goes to federal court:

Federal Question Jurisdiction: Giving federal courts the ability to hear cases in law and equity arising out of the Constitution under Article III §2.

Diversity Jurisdiction: Giving federal courts the ability to hear cases from citizens of different states.

Concurrent: what can be brought in federal court, can also be brought in state courts.

The supreme court has a broader arising under than district courts.

28 USC §1331: Federal DISTRICT COURTS can hear cases that arise under federal law.

WELL PLEADED COMPLAINT RULE

Your cause of action/original claim has to contain a federal law question.

You can anticipate all the defenses you want in your complaint if you want, but that DOES NOT create federal subject matter jurisdiction.

So even if a federal issue ends up arising out of the defense (when there is no federal question in the original complaint), there is NO federal jurisdiction, even if the entire case is going to be surrounded around the federal issue.

Louisville & Nashville Railroad v. Mottley: Mottleys injured in railway accident. RR gave them lifetime pass for free lifetime transportation. Later, Congress said lifetime passes were not allowed. RR stopped honoring Mottley’s pass. SC said that the federal district court didn’t have jurisdiction to hear this case- there was no diversity of citizenship, so no jurisdiction. Neither party argued that there was no subject matter jurisdiction- the SC did this sua sponte (“on the court’s own motion”). It’s not enough for P to anticipate a Constitutional defense and file suit in a federal court. In order to file in federal court, P’s original claim has to arise under the Constitution. Case dismissed.

According to 8a you could have not asserted the federal defense in there.

12b1 or 12b6 to dismiss it.

In Osborn, Marshal interpreted the constitutional scope of the arising under J to be met if the federal law was an ingredient of the case.

Justice Homles suggested that a suit arise under the law that creates the cause of action. BUT Smith and Grable hold that the federal court ought to be able to hear claims recognized under state law that nonetheless turn on substantial questions of federal law.

Question 42

SMJ: Diversity Jurisdiction

Answer 42

Diversity Jurisdiction

28 USC §1332The district courts have jurisdiction over all civil actions where the matter in controversy EXCEEDS $75,000 AND is between:

Citizens of different states (Californian suing NY)

Citizens of a state and citizens of foreign states (CA v. France)

Citizens of different states and in which citizens or subjects of a foreign state are additional parties (Ca and Mexico v. NY and French)

A foreign state, as plaintiff and citizens of a state or of different states. (Mexican suing Californian)

** An alien admitted to the US for permanent residence is deemed a citizen of the state in which the alien is domiciled.

The amount in question must exceed $75,000

For the purposes of this section:

A corporation is a citizen of a state where it is incorporated and where it has its principal place of business.

****REQUIREMENTS FOR DIVERSITY JURISDICTION****

Complete diversity is ESSENTIAL

Individual Citizenship = Domicile = Presence and intent to remain there indefinitely (residence is not equivalent to domicile –so long as he does not have any definite intent to move)

Mas v. Perry: Ps sued landlord, D, for spying on them via 2-way mirrors he had installed in their apartment. P won in district court. D appealed for lack of subject matter jurisdiction. 2 ways to get federal jurisdiction: 1) the legal claim is one that arises out of the Constitution and 2) diversity. Here, P from LA and Mr. Mas from France. Mrs. Mas grew up in Mississippi, moved to LA. Court of appeals said Mrs. Mas citizen of Mississippi, even though she no longer lives there and has no intention of going back there. But court said she never gave up her Mississippi citizenship. If you want to change your citizenship, have to move to a new place and have the intent to remain there indefinitely. So Mrs. Mas didn’t have the intention of going back to Mississippi, but she had never moved anywhere else with the intention of indefinitely staying there, so she remains a citizen of Mississippi.

Redner v. Sanders: P is a US citizen living in France and D are all citizens of NY. P tries to invoke DJ by saying he’s a resident of France. Court says §1332(a)(2)(saying DJ = suit between citizen of a US state and a foreign citizen) says citizen, not resident. P responds by saying he’s a citizen of CA, so there’s diversity under §1332(a)(1) (saying DJ = citizens of different states). Court says a person is a citizen of a state if he is a US citizen AND he is domiciled within the state in question. Here, P isn’t domiciled in CA, so not a CA citizen.

Corporation’s Citizenship = Where it’s incorporated and its principal place of business

Courts divided on where a corporation’s principal place of business is

Some courts use “nerve center test”- where the CEO and administration reside(USE THIS)

Unincorporated Association’s Citizenship = A state where ANY member is a citizen (citizen of the domicile of all members, hard to sue them for DJ b/c they probably have at least one employee from each state)

Citizenship is determined at the START of the suit (when the action is filed)

Saadeh v. Farouki: Defendant, a Jordanian resident residing in Maryland with “permanent resident” immigration status in the U.S. borrowed funds from Plaintiff, a Greek citizen, and defaulted on the loan. Plaintiff brought suit invoking diversity jurisdiction. While litigation was under way, D became US citizen. The District Court rendered a judgment for Plaintiff, and Defendant appealed on the merits. The Court of Appeals asked that the parties brief on the matter of jurisdiction. At the time the suit was filed there was no DJ between Farouki, a permanent resident and a Greek citizen so the court of appeals dismissed the case and so farouki let go of the challenge he was having over SMJ with appellate court b/c he knew he had become a citizen so he could now re-file with true diversity citizenship. Court said the purpose of the provision in §1332(a) was to limit diversity jurisdiction, not expand it. Here, court saying 2 readings of the statute- can either follow intent of Congress or follow the plain language of the statute. Congress can’t just declare that you’re a citizen of MD if you’re not. But court dodges this Constitutional question and reads the statute in a more limited way.

Amount in controversy MUST EXCEED $75,000AGGREGATING CLAIMSA single P with 2 unrelated claims for (separate losses) against the SAME D CAN aggregate!

If the legal theories of the separate claims are different then the P cannot aggregate

If P sues D1 for 50k and D2 for 50k the P cannot aggregate the claims.

If P sues D1 for 80K and D2 for 50K, he cannot aggregate.

There needs to be complete diversity and if there is, if 2 Ps sue a single D. Only if one of the P has over 75k then they cannot aggregate but they can do it under supplemental J if it arises out of the same transaction(this is if the original claim is based on diversity, and Exxon says this doesn’t fail under 1367B b/c 1367B (p against parties made parties under the joinder rules))

2 P who even have claims arising out of the same transaction against same D, both below 75k, CAN NOT aggregate unless they represent interests that is indivisible. So 2 P cannot aggregate if their claims are considered separate and distinct. But if indivisible yes.

If P has one claim for less than 75k and another claim for punitive damages, cant aggregate.

The court must find the amount in controversy requirement met unless it is quite clear that there is no way the recovery will reach 75k.

Question 43

Supplemental Jurisdiction

Answer 43

Supplemental Jurisdiction

SUPPLEMENTAL JURISDICTION ALLOWS FEDERAL COURTS TO HEAR CLAIMS THAT ARE RELATED TO PROPER FEDERAL CLAIMS, BUT ARE NOT JURISDICTIONALLY PROPER IN THEMSELVES.

28 USC §1367Except as provided in subsections (b) and (c) or as expressly provided otherwise by federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties.

If a plaintiff brings a proper federal claim or diversity claim, so that the federal court has “original jurisdiction,” the court may hear all the claims that are part of the same “case or controversy under Article III…”

IT’S NOT GOOD ENOUGH THAT ARTICLE III HAS GIVEN JURISDICTION (Article III authorizes constitutional J b/c of the word CASE and not CLAIM)- IT’S ALSO NECESSARY TO HAVE STATUTORY JURISDICTION!!!! 1367 is the statutory J.

If the court has original J, the court is authorized to hear all claims that arise out of the same nucleus of operative fact as the proper federal claim. This includes additional claims asserted by P, and those asserted by other parties as well, including counter claims and cross-claims.

In any civil action of which the district courts have original jurisdiction founded solely on §1332 (diversity J actions), the district courts shall not have supplemental jurisdiction under subsection (a) over claims by plaintiffs against persons made parties under Rule 14, 19, 20 or 24, or over claims by persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of §1332. (this subsection only bars claims against plaintiffs in diversity cases not defendants)

The district courts may decline to exercise supplemental jurisdiction over a claim under (a) if:

The claim raises a novel or complex issue of state law

The claim substantially predominates over the claim or claims over which the district court has original jurisdiction

The district court has dismissed all claims over which it has original jurisdiction

In the exceptional circumstances, there are compelling reasons for declining jurisdiction.

The period of limitations for any claim asserted under (a) and for any other claim in the same action that is voluntarily dismissed at the same time as or after the dismissal of the claim under (a), shall be tolled while the claim is pending and for a period of 30 days after it is dismissed unless state law provides for a longer tolling period.

(1367 (c)) Szendrey Ramos v. First Bancorp: P sued D in federal court based on a federal law and also stated a number of violations of state law. The court held that there would be no supplemental J here because the state law claims substantially predominated the federal State claims are far greater in number and, to prove them, case goes way outside the scope of what is needed to prove the federal claim. Also, Puerto Rican state law on some of the central matters is substantially different than American law (with regard to lawyer conduct). If state law claims raise novel issues of state law or substantially predominate over the federal claim, the state claims cannot come up under supplemental jurisdiction – see 1367 (c)

(1367 (a)) In re Ameriquest Mortgage: The resolution of her state claim cannot be decided without affecting her federal claim - 1367 (a). If a state claim is part of the same “case or controversy” as a federal claim, it can go up under 1367 (supplemental jurisdiction). In order to qualify, there must be a common nucleus of operative fact meaning you would ordinarily try it in one case. Here, the state claims are integrally connected. You couldn’t make a decision on one issue, without affecting the decision on the other issue.

If the counter claim, even if it’s not related to the first claim, involves a federal question on itself then it is of course allowed.

When the third party plaintiff impleads a third party D, the third party action must be viewed as a separate claim for purposes of determining SMJ. If the court would not have had SMJ over this separate suit then it would lack independent SMJ when it is brought as a third party action too.

If the third party P impleads a third party who doesn’t meet the requirement of an independent SMJ and if that third party D sues the P, assuming the case arises out of the same nucleus of operative facts, the P now becomes a D. Now up until this point there is supplemental J, but Now if the P counterclaims on the third party D, the requirement of 1367 (b) is not met anymore because now it is a claim against a third party D brought in the suit by rule 14.

If a P joins the first P and has a claim related to the first claim but does not meet the SMJ requirement, there is supplemental J over him if he is not joined by rules 14, 19, 20 or 24

If P sues D based on a federal question, P can sue D2 on a state law question related to the same acts.

P from NY sues D from CA for injury in an accident for 100k. P2 from CA joins P1 and sues for 100k. Supplemental J under 1367 (a) same transaction, supplemental under 1367 (b) b/c there is no reference to whether P2 joined under 20, BUT a federal court does not have diversity J over any claim in the action unless there is complete diversity between all Ps and the Ds. You cannot use supplemental J to add other Ps, have to meet SMJ requirements.

When there is DJ we don’t have to worry about supplemental J at all.

Question 44

A. PERSONAL JURISDICTION

Answer 44

Personal jurisdiction refers to the ability of a court to exercise power over a particular defendant or item of property. It may be categorized as in personam, in rem, or quasi in rem. The primary limitations on a court’s power to exercise personal jurisdiction are found in the United States Constitution and state statutes

Question 45

B. SUBJECT MATTER JURISDICTION

Answer 45

B. SUBJECT MATTER JURISDICTION

The subject matter jurisdiction of the federal courts is limited to that authorized by the Constitution as implemented by federal statute and decisional law. In general, it may be categorized as follows:

1. Diversity of Citizenship Jurisdiction Diversity of citizenship jurisdiction under 28 U.S.C. section 1332 is grounded historically in the desire to protect out-of-state parties from local prejudice. Its main requirement is that there be complete diversity between opposing parties. Each plaintiff must be of diverse citizenship from each defendant. Also, the amount in controversy must exceed $75,000.
2. Federal Question Jurisdiction Federal question jurisdiction under section 1331 presents fewer specific difficulties. The principal problem in this area is to determine when an action “arises under” federal law. A secondary problem is to know what types of actions are within the exclusive jurisdiction of the federal courts under other specific statutes.
3. Removal Jurisdiction Removal jurisdiction allows defendants to remove an action brought in a state court to a federal court if the federal court would have had original jurisdiction over the action.
4. Supplemental Jurisdiction The doctrine of supplemental jurisdiction is codified under section 1367 and includes, under a single name, the concepts of “ancillary” and “pendent” jurisdiction. In any form, supplemental jurisdiction allows a federal court to entertain certain claims over which it would have no independent basis of subject matter jurisdiction, that is, claims that do not satisfy diversity or federal question jurisdiction

It is important to note that supplemental jurisdiction operates only after a claim has invoked federal subject matter jurisdiction, after the case is properly in federal court. Supplemental jurisdiction operates to bring additional claims into that case that arise from the same transaction or occurrence as the original claim, but it cannot be used to get the case into federal court in the first instance.

Question 46

C. VENUE

Answer 46

Venue is the designation of the proper geographic district in which to bring an action. Venue will depend on where the cause of action arose and on the nature of the parties (whether corporate or natural persons).

Question 47

1. Limitations on Personal Jurisdiction

Answer 47

1. Limitations on Personal Jurisdiction The exercise of personal jurisdiction generally must be authorized by statute and constitutional.
   a. Statutory Limitations States have the power to decide over whom their courts may exercise jurisdiction. Therefore, the first place to look to determine whether the court has properly exercised personal jurisdiction usually is state law. If no state statute grants the court the power over the parties before the court, the court lacks personal jurisdiction.
   b. Constitutional Limitations The Due Process Clause of the Constitution places two restrictions on the exercise of personal jurisdiction. First, the defendant must have such contacts with the forum state that the exercise of jurisdiction would be fair and reasonable. Second, the defendant must be given appropriate notice of the action and an opportunity to be heard. Exercise of personal jurisdiction over a defendant in violation of these constitutional requirements is not valid, even if a statute purports to grant the court jurisdiction.
   c. Personal Jurisdiction in Federal Courts The main jurisdictional problem in state courts arises when the defendant over whom power is sought lives in another state. Since the federal borders encompass all states, one might expect that federal courts would encounter problems of personal jurisdiction only when the defendants were foreign nationals. However, Rule 4 of the Federal Rules provides that, absent some special federal statute, each federal court must analyze personal jurisdiction as if it were a court of the state in which it is located. Thus, in most cases, the assessment of whether the court has personal jurisdiction over the defendant will be exactly the same in federal court as it is in state court. Rule 4 also authorizes jurisdiction without regard to state long arm statutes over third-party defendants and parties required to be joined under the compulsory joinder rules, provided the party is served within 100 miles from the place where the summons was issued.

Question 48

2. Three Types of Personal Jurisdiction

Answer 48

a. In Personam Jurisdiction In personam jurisdiction exists when the forum has power over the person of a particular defendant. (Jurisdiction over a plaintiff is generally not an issue because the plaintiff accedes to the court’s jurisdiction by bringing suit in that court.) In these cases, the court may render a money judgment against the defendant or may order the defendant to perform acts or refrain from acting. Such a judgment creates a personal obligation on the defendant and is entitled to full faith and credit in all other states; in other words, if a defendant is ordered to pay a sum of money to a plaintiff, the plaintiff may enforce the judgment against the defendant’s property in any other state where that property is located.
b. In Rem Jurisdiction In rem jurisdiction exists when the court has power to adjudicate the rights of all persons in the world with respect to a particular item of property. This jurisdiction is limited to situations where the property is located within the physical borders of the state and where it is necessary for the state to be able to bind all persons regarding the property’s ownership and use. This occurs with respect to actions for condemnation (eminent domain cases), forfeiture of property to the state (for example, when the property is used for the unlawful transportation of narcotics), and settlement of decedents’ estates.
c. Quasi In Rem Jurisdiction One type of quasi in rem jurisdiction exists when the court has power to determine whether particular individuals own specific property within the court’s control. Unlike in rem jurisdiction, however, it does not permit the court to determine the rights of all persons in the world with respect to the property. A second type of quasi in rem jurisdiction permits the court to adjudicate disputes other than ownership based on the presence of the defendant’s property in the forum (see E.2.a.2), infra, regarding applicable constitutional limitations).
1) Defendant Is Not Bound Personally The basis of a court’s power to exercise quasi in rem jurisdiction is the property within the state. (See E., infra.) The judgment does not bind the defendant personally and cannot be enforced against any other property belonging to the defendant.

Question 49

B. STATUTORY LIMITATIONS ON IN PERSONAM JURISDICTION

Answer 49

B. STATUTORY LIMITATIONS ON IN PERSONAM JURISDICTION

Each state is free to prescribe its own statutory bases for personal jurisdiction. Of course, the exercise of jurisdiction in a given case must also satisfy the constitutional requirements. (See C., infra.) Most states have statutes granting their courts in personam jurisdiction in the following four situations:

(i) Where the defendant is present in the forum state and is personally served with process;
(ii) Where the defendant is domiciled in the forum state;
(iii) Where the defendant consents to jurisdiction; and
(iv) Where the defendant has committed acts bringing him within the forum state’s long arm statutes. Each of these bases of in personam jurisdiction will be discussed in detail below.
1. Physical Presence at Time of Personal Service

Most states grant their courts in personam jurisdiction over any defendant who can be served with process within the borders of the state, no matter how long he was present, even if merely passing through. The Supreme Court has upheld this type of jurisdiction, allowing a transient defendant to be served with process for a cause of action unrelated to his brief presence in the state. [Burnham v. Superior Court, 495 U.S. 604 (1990)]

2. State Law Exceptions to Traditional Rule

Even though jurisdiction through presence at the time of service has been upheld under the Constitution, state statutes and court decisions have limited the power of their courts in certain situations. a. Service by Fraud or Force Invalid If a plaintiff brings a defendant into a state by fraud or force to serve process, most courts will find the service invalid for exercising personal jurisdiction over the defendant. [See, e.g., Copas v. Anglo-American Provision Co., 73 Mich. 541 (1889)]

EXAMPLE While in Tennessee, a driver from Ohio was in a car accident with a mechanic from Tennessee. The accident was clearly the mechanic’s fault, so the driver suggested that the mechanic repair his car and return it to him in Ohio as a means of avoiding a lawsuit. The driver immediately went back to Ohio and filed suit. When the mechanic returned the car to the driver in Ohio, the driver delayed the mechanic long enough to have the process server serve the mechanic with the summons and complaint. The fact that the mechanic was served in Ohio cannot be used as a basis for personal jurisdiction over the mechanic in Ohio.

b. Immunity of Parties and Witnesses Most states likewise grant immunity from personal jurisdiction to nonresidents who are present in the state solely to take part in a judicial proceeding, or who are passing through the state on their way to a judicial proceeding elsewhere.
3. Domicile

Most states grant their courts in personam jurisdiction over persons who are domiciliaries of the state, even when the defendant is not physically within the state when served with process.

a. Defined Domicile refers to the place where a person maintains her permanent home. If a person has legal capacity, her domicile is the place she has chosen through presence (even for a moment), coupled with the intention to make that place her home. If a person lacks capacity, domicile is determined by law (for example, an infant is a domiciliary of the custodial parent’s home state).
b. Citizenship A United States citizen, even though domiciled abroad, is subject to personal jurisdiction in the United States. The scope of this basis for jurisdiction is unclear, because states have never attempted to enact laws or rules enabling their courts to obtain jurisdiction solely on the basis of citizenship
4. Consent

Virtually every state provides for in personam jurisdiction through the defendant’s consent. Such consent may be express or implied or through the making of a general appearance.

a. Express Consent A party’s express consent to the jurisdiction of local courts, whether given before or after suit is commenced, serves as a sufficient basis for in personam jurisdiction.
1) By Contract A person can, by contract, give advance consent to jurisdiction in the event a suit is brought against him.
2) By Appointment of Agent to Accept Service of Process A person can, by contract, appoint an agent in a particular state to receive service in that state in an action against him. The terms of the contract determine the extent of the agent’s power and, thus, the scope of the jurisdiction conferred.
a) Appointment Required by State When the state heavily regulates a type of business (for example, the sale of securities) to protect its citizens, it can require a nonresident engaged in that business to appoint an agent for service of process in the state. Note: The state cannot require every nonresident businessperson to appoint such an agent, because the state lacks power to exclude individuals from the state. However, a state can require nonresident corporations to make such an appointment before doing business in the state.
b. Implied Consent When the state has substantial reason to regulate the in-state activity of a nonresident of the state, it may provide that by engaging in such activity, the nonresident thereby appoints a designated state official as his agent for service of process. Thus, for example, the Supreme Court has upheld statutes that use such implied consent to subject a nonresident motorist to jurisdiction in any state in which he has an accident. [Hess v. Pawloski, 274 U.S. 352 (1927)]
c. Voluntary Appearance A defendant may consent to jurisdiction by a voluntary appearance, such as by contesting the case without challenging personal jurisdiction. Generally, any sort of appearance provides a sufficient basis for jurisdiction, but many states allow “special appearances” through which a defendant can object to the court’s exercise of jurisdiction. The defendant usually must make this special appearance—by stating grounds for his objection to jurisdiction—in his initial pleading to the court; otherwise, the defendant will be deemed to have consented to jurisdiction.
5. Long Arm Statutes

Virtually all states grant their courts in personam jurisdiction over nonresidents who perform or cause to be performed certain acts within the state or who cause results within the state by acts performed out of the state. In personam jurisdiction is granted regardless of whether the defendant is served within or outside the forum, but is limited to causes of action arising from the acts performed or results caused within the state.

a. Unlimited Long Arm Statutes A few states, such as California, have long arm statutes that give their courts power over any person or property over which the state can constitutionally exercise jurisdiction. (See C., infra.) These are known as unlimited long arm statutes.
b. Limited (or Specific) Long Arm Statutes Most states, however, have long arm statutes that specify in detail the situations in which their courts can exercise jurisdiction.
1) Limitations in Tort Cases Some statutes permit jurisdiction when a “tort” occurs within the state, while others require a “tortious act.” The latter language has caused problems where an out-of-state manufacturer puts his products into the stream of commerce knowing that some items will end up in the forum state. When the gravamen of the complaint is negligent manufacture, some courts have read “tortious act” narrowly and confined jurisdiction to the place of manufacture; others have read it to mean “the place the tort occurred,” interpreting that to be the place of injury.
2) Limitations in Contract Cases Many statutes permit jurisdiction if the cause of action arises out of the “transaction of business” in the state. Some states require the defendant or his agent to have been physically present in the state at the time the transaction took place, but others have taken a broader view—for example, New York has upheld jurisdiction over a California resident who made telephone bids from California on paintings being sold in New York.
3) Limitations in Property Actions Many state statutes permit jurisdiction over a nonresident defendant when the cause of action arises from ownership of property within the state—as in the case of a tort action based on negligent maintenance of realty or a contract action regarding the sale of the property. Some statutes include chattels, while others are confined to realty.
4) Limitations in Marital Dissolution Cases All states provide that when a married couple last lived together in the state and one spouse then abandons the other, the remaining spouse may obtain personal jurisdiction over the absent spouse for divorce or legal separation proceedings. States vary on whether the plaintiff spouse must be living in the state at the time of abandonment (or other cause for dissolution) or whether jurisdiction may be acquired whenever the plaintiff has acquired domicile in the state.

Question 51

C. CONSTITUTIONAL LIMITATIONS ON IN PERSONAM JURISDICTION

Answer 51

C. CONSTITUTIONAL LIMITATIONS ON IN PERSONAM JURISDICTION

Once it is determined that a state has a statute that allows the court to exercise in personam jurisdiction over the parties before it, the constitutionality of the exercise must next be determined. There are two components of the constitutional aspect: contacts with the forum and notice.

1. Sufficient Contacts with the Forum
   a. Traditional Rule: Physical Power Traditionally, jurisdiction over a person (or res) was a consequence of the state’s physical power to carry out its judgment; i.e., it was based on the power to arrest the person to force compliance with a judgment. Accordingly, the Supreme Court upheld exercises of jurisdiction whenever the defendant was served with process within the forum state. [See Pennoyer v. Neff, 95 U.S. 714 (1878)] The Court later expanded the states’ physical power to extend not only to those defendants who were served within the state, but also to those defendants who consented to the state’s power or who were domiciled in the state, regardless of where they were served.
   b. Modern Due Process Standard: Contact, Relatedness, and Fairness The concept of power by which a state could enforce its judgments was greatly expanded by the Supreme Court in International Shoe Co. v. Washington, 326 U.S. 310 (1945). No longer was power controlled solely by whether one of the traditional bases of presence, residence, or consent was present. Instead, the focus became whether sufficient minimum contacts exist between the defendant and the forum so that maintenance of the suit against the defendant does not offend “traditional notions of fair play and substantial justice.” The Supreme Court has listed a series of factors by which to assess the constitutionality of personal jurisdiction. In general, the factors fall under three headings: contact, relatedness, and fairness.
   1) Contact International Shoe requires that the defendant have “such minimum contacts” with the forum that the exercise of jurisdiction would be fair and reasonable. In considering whether there are such contacts, a court will look to two factors: purposeful availment and foreseeability
   a) Purposeful Availment Defendant’s contact with the forum cannot be accidental. Rather, the contact must result from her purposeful availment with that forum. The defendant must reach out to the forum in some way, such as to make money there or to use the roads there. The court must find that through these contacts the defendant purposefully availed herself “of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.” [Hanson v. Denckla, 357 U.S. 235 (1958)]

EXAMPLES 1) A plaintiff is injured in a car accident in Montana and brings a products liability action against Ford, the manufacturer, in Montana. The car was designed in Michigan and manufactured in Kentucky. Furthermore, the car was not sold in Montana but in another state. The Court held that Ford was subject to personal jurisdiction in Montana. By advertising in a state, shipping original replacement parts to the state, and maintaining a network of dealers that sell and repair used cars in the state, Ford created a market for its cars within Montana. Ford thus has purposeful contacts with the state, and the cause of action relates to those activities, as those contacts encourage people in the state to buy and drive Ford products. [Ford Motor Company v. Montana Eighth Judicial District Court, 141 S. Ct. 1017 (2021)]

2) Defendants, Michigan residents, entered into a franchise contract with a Florida corporation. The agreement required, among other things, that fees be sent to the franchisor’s home office in Florida, and provided that Florida law would govern any dispute. The Court held that the defendants could be sued in Florida; their contact with Florida resulted from their purposeful availment of that state. [Burger King v. Rudzewicz, 471 U.S. 462 (1985)]

COMPARE 1) Father, in New York, agreed to give up custody of Daughter to Mother in California. Mother sued Father in California for additional support. Father’s only contact with California was letting Daughter go there. The Court held that California could not obtain in personam jurisdiction over Father because, in acting in the interest of family harmony, Father could not be said to have purposefully availed himself of the benefits and protections of California laws. [Kulko v. Superior Court, 436 U.S. 84 (1978)]

2) Defendant, a New York car dealer, was sued in Oklahoma based on an injury that Plaintiff received from an accident in Oklahoma. The only basis for jurisdiction over Defendant was the sale of the allegedly de-fective car in New York by Defendant, who knew no more than that any vehicle sold might be driven elsewhere. The Court found that there was no purposeful availment of the privileges or protections of Oklahoma. Note that this case is unlike Ford Motor Company, above, because the dealer, not the car manufacturer, was contesting personal jurisdiction. The New York dealer had insufficient contacts with Oklahoma. [WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980)]
(1) “Stream of Commerce” Cases There is great difficulty in assessing purposeful availment in “stream of commerce” cases. Stream of commerce cases typically arise when Defendant manufactures its product in State A (or even Country A) and sells them to a second party in State B, thereby placing the product in the stream of commerce. The product eventually winds up in another state (State C) and causes an injury therein. The question is whether Defendant purposefully availed itself of State C. The Supreme Court has failed to reach a consensus as to when placing an item in the stream of commerce subjects the defendant to personal jurisdiction in the state where the product winds up. [Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987); J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873 (2011)] For bar exam purposes, the important points to remember are:
(a) Merely placing an item in the stream of commerce, by itself, is not a sufficient basis for personal jurisdiction.
(b) It is unresolved whether placing an item in the stream of commerce with the knowledge or hope that it will wind up in a particular state would be a sufficient basis for personal jurisdiction (but probably unlikely). If you encounter such a question on the exam, you should scour the question for facts showing an intentional targeting (purposeful availment) of the forum. (See (c), below.)
(c) Placing an item in the stream of commerce coupled with some other acts that show the intent to serve a particular state, for example, by modifying its product to comply with state law, by maintaining sales offices within the state, by maintaining repair capabilities in the state, etc., is a sufficient basis for personal jurisdiction.
(2) Internet Cases The Supreme Court has not set out a specific test or standard for assessing purposeful availment based on the defendant’s Internet activity. Many courts will look at whether the defendant has a passive website that allows people to view only content, an active website that allows people to order and download products, or something in between. The maintenance of a website for only informational purposes, without more activity in the forum, is insufficient to exercise jurisdiction over the defendant for all causes of action (that is, general jurisdiction), but it may be sufficient for a claim arising from the maintenance of the website itself and brought under the state’s long arm statute (thus using specific jurisdiction) if the defendant is specifically targeting readers in the forum. On the other hand, maintenance of an active website alone would be sufficient for the exercise of general jurisdiction (that is, a claim unrelated to the website activities) if the “at home” test is satisfied. Specific jurisdiction hinges on whether the defendant was purposefully directing his activities to the forum. [Snowney v. Harrah’s Entertainment, Inc., 35 Cal. 4th 1054 (2005)—Nevada hotel subject to personal jurisdiction in California when it specifically targeted California consumers by providing rate information to and accepting reservations on its website, by touting its proximity to California, and by providing driving directions from California]
b) Foreseeability It must be foreseeable that the defendant’s activities make her amenable to suit in the forum. In other words, the defendant must have known or reasonably anticipated that her activities in the forum would render it foreseeable that she may be “haled into court” there.

EXAMPLES 1) A national magazine is subject to in personam jurisdiction for libel cases in every state in which the magazine is marketed. Its publishers may reasonably anticipate causing injury in every state in which the magazine is sold, and thus should reasonably anticipate being haled into court in each state. [Keeton v. Hustler Magazine, 465 U.S. 770 (1984); Calder v. Jones, 465 U.S. 783 (1984)]

2) In Ford Motor Company v. Montana Eighth Judicial District Court, supra, the Court held that, by creating a market for its used cars in the forum state, and by continuously and deliberately exploiting that market, Ford should have reasonably anticipated being haled into a court of the state where its product failed due to an alleged design defect.
2) Relatedness of Claim to Contact

One important factor is whether the claim asserted against the defendant arises out of or relates to the defendant’s contacts with the forum. If it does, the court is more likely to find that jurisdiction is fair and reasonable. This assessment requires the court to determine the nature and quality of the defendant’s contacts with the state. Some authorities consider this factor to be part of the “contact” or the “fairness” assessment; others consider it, as we do here, to be part of the “relatedness” assessment. On an essay, the important point is that you address the issue in your answer, whether under the contact, relatedness, or fairness prong of the analysis. On an MBE question, remember that if the cause of action does not arise from or is unrelated to the defendant’s activities in the forum, there must be general personal jurisdiction over the defendant.

a) Claim Arising from Activity in the State (Specific Jurisdiction)

If the defendant’s in-state activity is based on isolated acts committed within the jurisdiction, personal jurisdiction over the defendant will be proper only for causes of action arising from or relating to that in-state activity; in other words, the court will have “specific jurisdiction.” When there are multiple claims or parties involved, each claim of each plaintiff must arise from or relate to some in-state activity for there to be specific jurisdiction. EXAMPLE Eighty-six plaintiffs from California and 592 plaintiffs from other states sued Bristol-Myers Squibb, a pharmaceutical company incorporated in Delaware and headquartered in New York, in California, alleging that the drug Plavix injured them. None of the non-California plaintiffs alleged any connection to California with regard to their treatment. Because there was no activity in California as to the nonresident plaintiffs, the court lacked personal jurisdiction over Bristol-Myers Squibb as to the claims of the non-California plaintiffs, even though Bristol-Myers Squibb was subject to personal jurisdiction in California with respect to the California plaintiffs. The fact that the place of injury was outside the forum state also distinguishes this case from Ford Motor Company v. Montana Eighth Judicial District Court, supra. The place of injury is thus significant in accessing whether there is personal jurisdiction. [Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017)]

Note: When the injury does not take place in the forum state, there also could be a lack of statutory authorization because no state would authorize personal jurisdiction over a defendant who commits an out-of-state act that produces an out-of-state injury. However, California has an unlimited long arm statute, so the statutory authorization issue essentially rolled into the constitutional issue.

b) “At Home” in the State (General Jurisdiction)

General jurisdiction—in personam jurisdiction for any cause of action against the defendant, regardless of where the cause of action arose— requires that a defendant be “at home” in the jurisdiction. A person is “at home” in the state in which he is domiciled, and a corporation is “at home” in the state in which it was incorporated and the state in which it has its principal place of business. [Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011); Daimler AG v. Bauman, 571 U.S. 117 (2014); BNSF Railway Co. v. Tyrrell, 137 S. Ct. 1549 (2017)] A number of states have statutes that authorize personal jurisdiction over a defendant that conducts systematic and continuous activity (“doing business”) within the state. Such “authorization” statutes must be read with this constitutional requirement in mind.

Note: Remember that the discussion here is about general jurisdiction, not specific jurisdiction. If a plaintiff is injured in State A by a defendant, he may still sue in State A regardless of whether the defendant is “at home” in State A, because there will very likely be specific (long arm) jurisdiction. Should you need to discuss general jurisdiction in an essay answer, make sure to discuss whether the defendant is “at home” in the state, as discussed above.

3) Fairness

In addition to the defendant’s having relevant contacts with the forum, International Shoe requires that the exercise of jurisdiction not offend “traditional notions of fair play and substantial justice.” The Court has listed several factors relevant to assessing whether jurisdiction would be fair. It is possible that an especially strong showing of fairness might make up for a lesser amount of contact (although minimum contacts are always required). Note, however, that fairness is not a factor for the exercise of general jurisdiction.

a) Convenience

A defendant will often complain that the forum is inconvenient. The Supreme Court has emphasized, however, that the Constitution does not require that the forum be the best of several alternatives. The forum is constitutionally acceptable unless it is “so gravely difficult and inconvenient that a party is unfairly put at a severe disadvantage in comparison to his opponent.” [Burger King v. Rudzewicz, supra] This is a very difficult standard to meet, and the defendant usually will not be able to meet it simply by showing that the plaintiff has superior economic resources.

b) Forum State’s Interest

The forum may have a legitimate interest in providing redress for its residents.

EXAMPLES 1) Decedent, a California resident, purchased a life insurance policy by mail from a Texas company. Decedent regularly mailed his premiums from California to the Texas company, which had no other contacts with California. In a suit brought by the beneficiary of the life insurance policy, the Supreme Court held that California had personal jurisdiction over the Texas company. Among other things, the Court noted that California had a strong interest in protecting its citizens from alleged misfeasance by insurance companies. [McGee v. International Insurance Co., 355 U.S. 220 (1957)]

2) Asahi, a Japanese manufacturer of tire valves, shipped valves to a Taiwanese manufacturer of motorcycle tire tubes. The valves were incorporated into tires and sold in California, where a resident was injured by a defective tire. The Taiwanese manufacturer was sued in a California court, where it sought to implead Asahi. The main case was settled, leaving only the indemnity claim by the tire manufacturer against Asahi pending. Held: Even though Asahi placed the defective goods in the stream of commerce knowing that some would be used in California, exercise of jurisdiction by the California court would be unreasonable considering the severe burdens of Asahi in defending in a foreign legal system, the slight interest of the Taiwanese manufacturer and California in the exercise of jurisdiction, and the international interest in not subjecting an alien corporation to United States jurisdiction. [Asahi Metal Industry Co. v. Superior Court, supra]
c) Other Factors The Supreme Court has listed other factors relevant to the assessment of whether the exercise of jurisdiction would be fair and reasonable, but has not discussed these factors in detail:
(1) the plaintiff’s interest in obtaining convenient and effective relief, (2) the interstate judicial system’s interest in obtaining the most efficient resolution of controversies, and (3) the shared interest of the states in furthering fundamental substantive social policies.
2. Notice

In addition to the requirement that the defendant have such minimum contacts with the forum to render the exercise of jurisdiction there fair and reasonable, due process also requires that a reasonable method be used to notify the defendant of a pending lawsuit so that she may have an opportunity to appear and be heard. Due process requires that notice be “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” [Dusenbery v. United States, 534 U.S. 161 (2002)—quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950)]

a. Traditional Methods of Personal Service Satisfy Due Process Notice Requirements

Any of the traditional methods of personal service satisfy due process notice requirements. These include personal delivery to the defendant; leaving papers with a responsible person at the defendant’s residence or place of business; delivery to an agent appointed to accept service; or delivery by registered mail, return receipt requested. (See VIII.B., infra, for discussion of methods of service of process.)

b. Requirement that Agent Notify Defendant

If an agent is appointed by contract, in a case where the plaintiff chose the agent for his own benefit, or the agent is appointed by operation of law (as under a nonresident motor vehicle statute), the failure of the agent to notify the defendant will prohibit jurisdiction—since the defendant will in fact be deprived of an opportunity to be heard. (This is not true when the defendant voluntarily selects his own agent, since any failure of the agent can and will be attributed to the principal.)

c. Requirements for Cases Involving Multiple Parties or Unknown Parties

In Mullane v. Central Hanover Bank & Trust Co., supra, an action was brought against a number of trust beneficiaries scattered throughout the world. The Supreme Court held that the Constitution did not require personal service on each beneficiary since the cost would have been prohibitive. However, every beneficiary had to be notified by the best practical means available. Thus, those whose addresses were known or could reasonably be ascertained had to be notified by ordinary mail, while those whose names or addresses were unknown could be notified by publication. Such methods of notice are valid only if all defendants have substantially identical interests.

d. Knowledge that Notice by Mail Was Not Received

Although Mullane v. Central Hanover Bank & Trust Co., supra, does not require actual notice, if a party knows that the notice by mail was not received, he may not proceed in the face of such knowledge if practicable alternatives to apprise the defendant of the action exist.

EXAMPLE In Jones v. Flowers, 547 U.S. 220 (2006), the state sent a certified letter to a homeowner to inform him that he was delinquent on taxes and that failure to pay would make his property subject to public sale. By statute, the taxpayer was required to keep his address updated. The letter was returned “unclaimed,” after which the state took no further steps (such as using first class mail or posting notice on the property) to notify the taxpayer. The Court held that taking no further steps to provide notice with the knowledge that notice had not been received violated due process.

Question 52

D. IN REM JURISDICTION - . Statutory Limitations

Answer 52

D. IN REM JURISDICTION

As stated in A.2.b., supra, in rem actions adjudicate rights of all persons with respect to property located in the state. An in rem judgment does not bind the parties personally, but is binding as to the disposition of the property in the state.

1. Statutory Limitations Most states have statutes providing for in rem jurisdiction in actions for condemnation, title registration, confiscation of property (such as vehicles used to transport narcotics), forfeiture of a vessel, distribution of the assets of an estate, and a grant of divorce when only the complaining spouse is present and subject to personal jurisdiction. In the last case, the “property” is the marital status of the complainant.

Question 53

D. IN REM JURISDICTION- Constitutional Limitations

Answer 53

2. Constitutional Limitations
   a. Nexus In in rem actions the basis of jurisdiction is the presence of the property in the state. The state has a great interest in adjudicating the rights of all the world regarding this property. Therefore, the presence of the property in the state is constitutionally sufficient for the exercise of jurisdiction over the property.
   1) No Jurisdiction If Property Not Located in State A court has no in rem power over property outside the state; for example, in settling a decedent’s estate, the court has no in rem power over property in other jurisdictions.
   2) No Jurisdiction If Property Brought in by Fraud or Force The exercise of in rem power is prohibited when the property is brought into the state by fraud or force. b. Notice The requirements of Mullane v. Central Hanover Bank & Trust Co., supra, apply to in rem actions. Thus, persons whose interests are affected and whose addresses are known must at least be notified by ordinary mail. [Walker v. City of Hutchinson, 352 U.S. 112 (1956)

Question 54

E. QUASI IN REM JURISDICTION- Statutory Limitations

Question 55

QUASI IN REM JURISDICTION- Constitutional Limitations

Answer 55

2. Constitutional Limitations
   a. Nexus

The minimum contacts standard is applicable to every exercise of personal jurisdiction. The mere presence of property within a state is not, by itself, sufficient to permit a court to exercise personal jurisdiction over a defendant merely because she happens to have property in the state when the action is not related to the property. [Shaffer v. Heitner, 433 U.S. 186 (1977)]

1) Quasi In Rem Type I Thus, when the dispute involves the rights of the parties in the property itself (quasi in rem type I), jurisdiction based upon the presence of the property in the state is proper. The close connection between the litigation and the property provides the necessary minimum contacts.

EXAMPLE A brother, who lives in State A, and a sister, who lives in State B, own antique furniture together. The furniture is located in State B. The sister brings an action in State B against the brother to determine who has rightful possession of the furniture. Because the furniture is located in State B, a court in State B would have personal jurisdiction over the brother in this suit to determine ownership of the furniture.

2) Quasi In Rem Type II When the dispute is unrelated to the ownership of property (quasi in rem type II), jurisdiction cannot be based solely on the presence of property in the forum state; there must be minimum contacts between the defendant and the forum. However, if the defendant has minimum contacts with the forum, it is also likely that a court could exercise in personam jurisdiction over a defendant under the forum’s long arm statute, thus removing the limit on recovery to the defendant’s in-state property. As a result, use of quasi in rem jurisdiction type II will be rare.

EXAMPLE A contractor, a resident of Maine, flies to Ohio and enters into a contract with a homeowner, a resident of Ohio. All performance is to occur in Ohio. The contractor flies home to Maine. The homeowner breaches the contract. The contractor does not want to fly to Ohio to sue the homeowner, but he discovers that the homeowner has a boat docked in Maine. Attaching the boat would not provide the court with personal jurisdiction over the homeowner; the contractor would have to show minimum contacts between the homeowner and Maine.

3) Procedural Requirements To obtain quasi in rem jurisdiction, a plaintiff must “bring the asset before the court” by attachment (or garnishment). This will inhibit the sale or mortgage of the defendant’s interest, since a new owner must take subject to the decision of the court. Serious questions have been raised as to whether such a pretrial interference with a defendant’s property rights is constitutional unless the defendant is afforded a hearing on the necessity of such procedures. Most commentators think the process is valid, but the Supreme Court has thus far avoided the issue.
b. Notice

As in in rem cases, quasi in rem cases require the best practical notice. Therefore, posting of notice or notice by publication will be insufficient where the addresses of persons affected by the action are known or reasonably ascertainable. The federal statute for the enforcement of liens or other claims to real or personal property requires personal service if practicable and service by publication if personal service is not practicable. If the defendant is not personally served, he may appear within one year of final judgment, and the court must set aside the judgment on payment of costs as the court deems just. [28 U.S.C. §1655]

Question 56

. DIVERSITY OF CITIZENSHIP JURISDICTION- Introduction

Answer 56

A. INTRODUCTION The federal courts have been given subject matter jurisdiction over controversies between citizens of different states, even though the controversies do not involve questions of federal substantive law, in order to protect an out-of-state party from possible local bias in state courts.

Question 57

DIVERSITY OF CITIZENSHIP JURISDICTION- . DIVERSITY AMONG THE PARTIES

Answer 57

1. Complete Diversity When Action Is Commenced
   a. Multiple Parties—Complete Diversity Diversity jurisdiction requires “complete diversity,” meaning that no plaintiff may be a citizen of the same state as any defendant. If one defendant and one plaintiff are co-citizens of the same state, complete diversity is lacking and there is no diversity jurisdiction.

EXAMPLE A, B, and C bring an action against X, Y, and Z. A and B are citizens of New York; X and Y are citizens of Florida; and C and Z are citizens of Texas. Since no diversity exists between C and Z, the requirement of complete diversity is not satisfied, and, as structured, the case cannot be brought in federal court under diversity jurisdiction.

1) But Note The rule of complete diversity does not require that every party be of diverse citizenship from every other party. It requires only that no plaintiff be a co-citizen with any defendant. Thus, two plaintiffs who are both citizens of Missouri may invoke diversity of citizenship jurisdiction against three defendants, all three of whom are citizens of Kansas.
b. “Alienage” Jurisdiction Most bar exam questions in this general area involve basic diversity of citizenship jurisdiction, in which the dispute involves “citizens of different states,” as discussed immediately above. However, section 1332(a)(2) grants subject matter jurisdiction over “alienage” cases, in which the dispute is between a citizen of a U.S. state and an “alien”—meaning a citizen or subject of a foreign country. Jurisdiction is denied, however, if the case is between a citizen of a state and a citizen of a foreign country who has been admitted to the United States for permanent residence and domiciled in the same state as the U.S. citizen. Also note that the U.S. Constitution does not provide for federal jurisdiction over cases by an alien against an alien; there must be a citizen of a U.S. state on one side of the suit to qualify for alienage jurisdiction.

EXAMPLES 1) A, a citizen of Venezuela, sues B, a citizen of New York. This dispute would invoke alienage jurisdiction (assuming the amount in controversy requirement was also met), because it is between a citizen of a state and a citizen of a foreign country.

2) A, a citizen of Venezuela, sues B, a citizen of France. This dispute would not invoke alienage jurisdiction, because it is not between a citizen of a state and a citizen of a foreign country. There is no citizen of a state involved here
3) A, a citizen of New York, sues B, a permanent resident alien domiciled in New York. Alienage jurisdiction would be denied because B has the same U.S. domicile as A.
1) Aliens as Additional Parties

28 U.S.C. section 1332(a)(3) grants jurisdiction in a case between citizens of different states in which citizens or subjects of a foreign country are additional parties. The foreign parties are disregarded for jurisdictional purposes. It appears that the restriction in example 3) above does not apply—by the statutory language, it applies only to section 1332(a)(2) actions. Although not entirely clear from case law, there also appears to be no subject matter jurisdiction when there are U.S. citizens on one side of the action and aliens on both sides.

EXAMPLE A plaintiff from State A sues a defendant from State B and a resident alien who is domiciled in State A. By the face of the statute, jurisdiction apparently is not defeated by the fact that the resident alien is domiciled in the same state as the plaintiff.

c. Diversity When Action Is Commenced Diversity of citizenship (or alienage) must exist as of the time the suit is instituted. [Grupo Dataflux v. Atlas Global Group, 541 U.S. 567 (2004)] It need not exist at the time the cause of action arose, and it is not defeated if, after commencement of the action, a party later becomes a citizen of the same state as one of his opponents.

EXAMPLES 1) A buyer from State A breaches an $80,000 contract with a seller from State A. Solely to create diversity, and prior to filing suit, the seller moves to State B. Diversity of citizenship exists because the seller is considered to be a citizen of State B even though it was a citizen of State A when the cause of action arose. Its intent is irrelevant.

2) A buyer from State X breaches an $80,000 contract with a seller from State Z. Solely to defeat diversity, the seller moves to State X prior to filing suit. Diversity of citizenship does not exist because the seller is considered to be a citizen of State X even though it was a citizen of State Z when the cause of action arose. Its intent is again irrelevant.
3) A buyer from State C breaches an $80,000 contract with a seller from State D. After suit was filed, the seller moves to State C. Diversity of citizenship is not defeated by this post-filing move.
2. Questions of Citizenship
a. State Citizenship of an Individual—Domicile The determination of the state of citizenship of a natural person depends on the permanent home to which he intends to return. The concept is the same, except in name, as domicile. A new state citizenship may be established by (1) physical presence in a new place and (2) the intention to remain there, that is, no present intent to go elsewhere. The citizenship of a child is that of her parents. In most cases, the citizenship of a party will be determined by the court, but it may be left to the jury.
b. Citizenship of a Corporation—Possible Multiple Citizenships For diversity purposes, a corporation is deemed to be a citizen of every state and foreign country in which it is incorporated and the one state or foreign country in which it has its principal place of business. [28 U.S.C. §1332] A corporation’s “principal place of business” is the state from which the corporation’s high level officers direct, control, and coordinate the corporation’s activities (that is, its “nerve center,” which will usually be the corporation’s headquarters). [Hertz Corp. v. Friend, 559 U.S. 77 (2010)] Thus, many corporations have two citizenships—their state of incorporation and the state in which their principal place of business is located. Although rare, it also is possible for a corporation to have more than two state citizenships because a corporation may be incorporated in more than one state. It is impossible, however, for a corporation to have more than one principal place of business. If an opposing party is a citizen of any of the corporate party’s states of citizenship, there is no diversity.
1) Special Rule for Direct Actions

The rules of corporate citizenship are subject to a special rule in direct actions against an insurer. When a plaintiff sues an insurer on a policy or contract of liability insurance, and does not also join the insured, the insurer (whether incorporated or not) is treated as a citizen of all of the following: (1) the state or foreign country in which the insurer is incorporated (if it is); (2) the state or foreign country in which the insurer has its principal place of business; and (3) the state or foreign country of which the insured is a citizen.

2) Incorporation or Principal Place of Business in Foreign Country Because a corporation is a citizen of both its place of incorporation and its principal place of business, and either of those places may be in a foreign country, a corporation might simultaneously be an alien and a citizen of a U.S. state. In that case, there would be no alienage jurisdiction between that corporation and nother alien, even though the corporation may also have U.S. state citizenship. (See 1.b., supra.)

EXAMPLE There is no alienage jurisdiction in an action between a Delaware corporation that has its principal place of business in Canada and a citizen of Mexico.

c. Unincorporated Associations
1) Capacity In federal question cases, unincorporated associations (for example, partnerships) are considered entities that may sue or be sued (this is not true under some state laws). In diversity jurisdiction cases, an unincorporated association may sue or be sued in its own name if local state law permits.
2) Citizenship Regardless, the unincorporated association’s citizenship is that of each and every one of its members. (If an unincorporated association cannot be sued in its own name, each member must be sued, so the rule is the same.)
3) Class Action If the association is large, a class action is possible. If a class action is brought, the relevant citizenship is that of the named members who sue or are sued on behalf of the members of the association. (See e., infra.)
4) Partnerships The citizenship of a partnership, general or limited, is that of each and every partner. [Carden v. Arkoma Associates, 494 U.S. 185 (1990)]
5) Limited Liability Companies Although limited liability companies (“LLCs”) are formed in a manner similar to corporations, they are treated as unincorporated associations for citizenship purposes. Thus, an LLC is a citizen of all states of which its members are citizens. [See, e.g., Belleville Catering Co. v. Champaign Market Place LLC, 350 F.3d 691 (7th Cir. 2003)]
d. Legal Representatives A legal representative of an infant, an incompetent, or an estate of a decedent is deemed to be a citizen of the same state as the infant, incompetent, or decedent.

EXAMPLE A commuter from State A is killed in an auto accident with a truck driver from State B. The commuter’s brother, who is from State B, is appointed to administer the estate of the commuter. Complete diversity exists, as the brother effectively takes on the citizenship of the commuter.

e. Class Actions

If suit is brought by several named persons on behalf of a class, diversity is determined on the basis of the citizenship of the named members of the class who are suing. Thus, there is considerable room for maneuvering to create diversity if the class has members who are citizens of several different states.

f. Nonresident United States Citizens A United States citizen domiciled abroad is not a citizen of any state and also is not an alien. (Alien status depends on nationality, not domicile.)

EXAMPLE A retiree has permanently moved from State A to Country B to live out the remainder of her years, but she has not obtained citizenship in Country B. She is no longer a citizen of State A, nor of any state, and she is not a national of Country B. Thus, she is neither a citizen of any U.S. state or a foreign national. (Of course, any claim by or against her can be brought in state court.)

3. Collusion and Devices to Create or Defeat Diversity Diversity jurisdiction cannot be created by improperly or collusively assigning a claim or joining a party merely to create diversity jurisdiction. [28 U.S.C. §1359]
   a. Assignment of Claims

The assignment of a claim to another party for collection only is clearly within this section. [Kramer v. Caribbean Mills, Inc., 394 U.S. 823 (1969)] Thus, the assignment would be ignored in determining whether diversity exists. But note: There is no collusion if an absolute assignment of a claim is made and the assignor retains no interest in the assigned claim.

EXAMPLE A supplier from State A enters into a contract with a manufacturer from State A. Naturally, a contract dispute arises. In order to create diversity jurisdiction, the supplier assigns its interest in the contract to a citizen of State B for $1 plus 5% of any litigation proceeds. The assignment to the citizen of State B will be disregarded, and there will be no subject matter jurisdiction because complete diversity does not exist.

COMPARE A home buyer from State A buys a home in State A and initially finances the purchase through a small State A bank. The total value of the mortgage is $500,000. As a normal course of business, the lender then sells the mortgage for $300,000 to a large bank that is incorporated in State B and has its principal place of business in State C, with the right to collect payment solely in the hands of the larger bank. Here, diversity would exist because the assignment is complete and was not intended to defeat diversity.

b. Class Actions

It is not improper to select the named members of a class action to ensure diversity jurisdiction exists, even if unnamed members of the class are co-citizens of the defendant and naming them would prevent diversity jurisdiction.

c. Voluntary Change of State Citizenship As noted above, a plaintiff can create diversity by changing his state citizenship after the cause of action accrued but before suit is commenced, but the change must be genuine. In other words, a true change of citizenship can create or destroy diversity. The party’s motive for changing citizenship is irrelevant.
4. Realignment According to Interest
a. May Create or Destroy Diversity In determining whether diversity exists, the court will look beyond the nominal designation of the parties in the pleadings and realign them according to their true interests in the dispute. Thus, realignment may create diversity or destroy it.
b. Shareholder Derivative Actions In a shareholder derivative action, a shareholder brings the action on behalf of his corporation because the corporation has failed to enforce a perceived claim against a third party. In such a case, the corporation typically is named as a plaintiff in the case even though it is antagonistic to the shareholder’s claim. Recognizing the realities of the situation, the corporation is treated as a defendant for purposes of determining diversity jurisdiction. [See Smith v. Sperling, 354 U.S. 91 (1957)]

EXAMPLE A shareholder from State A contends that a high level corporate officer, who resides in State B, has converted company assets for his own benefit. The company is from State B. Complete diversity exists as the company is considered to be a defendant.

5. Supplemental Jurisdiction over Additional Claims Occasionally, a claim may be joined that could not, by itself, invoke federal question jurisdiction or diversity jurisdiction (because, for example, it is a state claim between parties who are citizens of the same state or because it does not involve the requisite amount in controversy). (See C., infra.) The federal court may nonetheless entertain such claims under its supplemental jurisdiction. (This type of supplemental jurisdiction used to be known as “ancillary jurisdiction.”) Supplemental jurisdiction requires that the supplemental claim arise from a common nucleus of operative fact as the claim that invoked original (diversity or federal question, usually) federal subject matter jurisdiction. Some courts consider the common nucleus test to mean that the claims must arise from the same transaction or occurrence, but the growing trend is that the common nucleus test is broader than that.
6. Joinder or Subsequent Addition of Parties The Federal Rules permit numerous methods by which multiple claims or parties may be joined or added to the case. A claim by or against such a party, like any claim in federal court, must satisfy some basis of federal subject matter jurisdiction, such as diversity of citizenship or federal question. If the claim does not satisfy either of those, and it arises from a common nucleus of operative fact (see above), the party asserting the claim might invoke supplemental jurisdiction. Joinder of claims or parties is also discussed in VIII.G., infra.
   a. Restriction on the Use of Supplemental Jurisdiction in Diversity Cases

For cases that are in federal court based solely on diversity, supplemental jurisdiction may not be used to support: (i) Claims by plaintiffs against persons made parties under Rules 14 (impleader), 19 (compulsory joinder), 20 (permissive joinder), or 24 (intervention); (ii) Claims by persons proposed to be joined as plaintiffs under Rule 19; and (iii) Claims by persons seeking to intervene as plaintiffs under Rule 24; When the exercise of supplemental jurisdiction would be inconsistent with the requirements for diversity jurisdiction. [28 U.S.C. §1367(b)]

b. Intervention of Right

Intervention of right must be allowed when: (1) the intervenor claims an interest relating to the property or transaction that is the subject of the action; (2) the disposition of the action may adversely affect that interest; and (3) the current parties do not adequately represent the intervenor’s rights. [Fed. R. Civ. P. 24(a)] Under the supplemental jurisdiction statute, there appears to be no supplemental jurisdiction for claims by original plaintiffs against intervening defendants or for claims by intervening plaintiffs. Such claims may proceed only if there were an independent basis of jurisdiction, that is, diversity or federal question jurisdiction.

EXAMPLE A stockholder from State A holds stock in a corporation from State B worth $100,000. The stockholder’s partner, also from State A, claims that the stock was purchased as part of an agreement and thus should have been issued in both the stockholder’s and partner’s name. The partner brings an action in federal court to have the stock reissued in both names. If the stockholder intervenes as a plaintiff, he may not use supplemental jurisdiction to support his claims. Similarly, if he intervenes as a defendant, the partner may not use supplemental jurisdiction to support the partner’s claim against the stockholder. Note, however, that the corporation could use supplemental jurisdiction to assert claims against the stockholder.

c. Permissive Intervention

Permissive intervention may be permitted in the court’s discretion when the intervenor’s action and the main action have a claim or defense involving a common question of law or fact. The claim by a permissive intervenor must invoke either diversity of citizenship or federal question jurisdiction. [Fed. R. Civ. P. 24(b)]

EXAMPLE A pedestrian from State A was injured when she was hit by a work truck driven by a citizen of State B and owned by a corporation from State B. The truck was insured by an insurance company from State C. An issue in the case is whether the truck driver was in the course of his employment at the time of the accident. If the truck driver was not driving the truck in the course of his employment, the insurance company would not be required to pay any claim arising out of the accident. Accordingly, the insurance company sues the truck driver and corporation in federal court for a declaratory judgment that the accident is outside of the policy. The pedestrian should be allowed to intervene, as the common question of whether the truck driver was in the course of employment at the time of the accident is shared between her action and the insurance company’s action. Note that here, presence as either a defendant or a plaintiff would not destroy diversity, and the amount in controversy would be the same in both actions.

d. Substitution of Parties Substitution involves changes in parties to a lawsuit necessitated by death, incompetency, etc., of an original party after an action has been commenced. [Fed. R. Civ. P. 25] The citizenship of the substituting party is disregarded; that of the original party controls. Substitution should be distinguished from an amendment that allows “replacement” of an original party by the party in whom or against whom the action properly lies. A “replacement” party must be diverse to the party or parties on the opposing side.

EXAMPLE A v. B. A dies and the administrator of his estate is substituted as plaintiff. Jurisdiction is not destroyed even though B and the administrator are co-citizens. However, if A sues B and subsequently discovers that C—not B—is the proper defendant, an amendment to the complaint by which B is replaced by C must show that diversity exists between A and C.

e. Third-Party Practice—Impleader A third-party claim is the joinder by the defendant in the original action (who is usually called the third-party plaintiff) of another person not originally a party to the action (who is called the third-party defendant). [Fed. R. Civ. P. 14] The impleader claim asserts that the third-party defendant is or may be liable to the defendant for all or part of the plaintiff’s claim against the defendant. In other words, an impleader claim is for indemnity or contribution.

EXAMPLE P sues D for $500,000 for personal injuries allegedly inflicted by joint tortfeasors D and X. Applicable law provides that joint tortfeasors have a right of contribution against each other. D may implead X into the pending case. D is seeking to deflect her liability on P’s claim, in part, to X. (If X owed D indemnity for some reason, then D could implead X to deflect her entire liability on the underlying claim to X.) After the third-party defendant is impleaded, he may assert a claim against the plaintiff in the pending case if the claim arises from the same transaction or occurrence as the underlying suit. In addition, after the third-party defendant is impleaded, the plaintiff may assert a claim against him if it arises from the same transaction or occurrence as the underlying suit.

1) Subject Matter Jurisdiction Required

Of course, every claim asserted in federal court must have a basis of subject matter jurisdiction.

EXAMPLES 1) P, a citizen of Illinois, sues D, a citizen of Wisconsin, asserting a state law claim of more than $75,000. Thus, the case invokes diversity of citizenship jurisdiction and is properly brought in federal court. Now D impleads X, who is also a citizen of Illinois, on an indemnity claim of more than $75,000. That claim invokes diversity of citizenship jurisdiction, because it is asserted by a citizen of Wisconsin (D) against a citizen of Illinois (X) and exceeds $75,000. The fact that P is also a citizen of Illinois is irrelevant; the claim is not by or against her, so her citizenship does not affect the impleader claim. If P wanted to assert a claim against X in this situation, however, there would not be diversity because P and X are co-citizens of Illinois. In addition, the claim would not invoke supplemental jurisdiction, because in diversity of citizenship cases, the supplemental jurisdiction statute cannot be used to override the complete diversity rule. Thus, unless the claim by P against X invoked federal question jurisdiction, it could not be asserted in the pending case; it would have to be asserted in state court.

2) P, a citizen of Alabama, sues D, a citizen of Maine, asserting a state law claim of more than $75,000. Thus, the case invokes diversity of citizenship jurisdiction and is properly brought in federal court. Now D impleads X, who is also a citizen of Maine, on a state law contribution claim. The impleader claim does not invoke diversity of citizenship jurisdiction, because it is asserted by a citizen of Maine (D) against another citizen of Maine (X). It does not invoke federal question jurisdiction because it is based on state law. The claim invokes the ancillary form of supplemental jurisdiction, however, because it arises from a common nucleus of operative fact as the underlying case and is asserted by the defendant, not the plaintiff, thus avoiding the restriction on the use of supplemental jurisdiction in 28 U.S.C. section 1367(b). f. Cross-Claims A party may assert a claim in a pending case against a co-party, but only if the claim arises from the same transaction or occurrence as the underlying dispute. [Fed. R. Civ. P. 13]

EXAMPLE A homeowner sues a carpenter and a plumber in federal court. A claim by the plumber against the carpenter (or by the carpenter against the plumber) that arises from the same transaction or occurrence as the underlying case would be a cross-claim.

1) Subject Matter Jurisdiction Required Cross-claims, like all claims in federal court, must invoke subject matter jurisdiction. Therefore, after determining that a cross-claim would be filed, assess whether that claim could invoke diversity of citizenship or federal question jurisdiction. If so, the claim may be asserted in federal court. However, if a cross-claim does not invoke diversity of citizenship or federal question jurisdiction, the cross-claim could nonetheless be asserted in federal court through supplemental (ancillary) jurisdiction.

EXAMPLE A homeowner from State A validly sues a carpenter and a plumber, both of whom are from State B, in federal court. If the plumber has a cross-claim for $25,000 against the carpenter, it may be asserted in federal court under the court’s supplemental jurisdiction, even though the amount in controversy is not more than $75,000 and the parties are from the same state.

Question 58

C. DJ- JURISDICTIONAL AMOUNT: IN EXCESS OF $75,000

-also talk aggregating

Answer 58

C. DJ- JURISDICTIONAL AMOUNT: IN EXCESS OF $75,000

JURISDICTIONAL AMOUNT: IN EXCESS OF $75,000

Actions brought in a federal court under the diversity statute must meet the jurisdictional amount requirement. The matter in controversy must be in excess of $75,000, exclusive of interest and costs. [28 U.S.C. §1332] The amount is determined from what is claimed in the complaint, disregarding potential defenses or counterclaims. Usually, all that is necessary is a good faith allegation that the amount of the damages or injuries in controversy exceeds, exclusive of interest and costs, the sum of $75,000. Good faith means that there must be a legally tenable possibility that recovery will exceed the jurisdictional amount. The complaint can be dismissed only if it appears there is no legal possibility of a recovery exceeding the jurisdictional amount. Jurisdiction is not retroactively defeated by the fact that the amount actually recovered is less than the jurisdictional amount.

1. What Is “In Controversy”?
   a. Collateral Consequences of the Judgment Does the collateral effect of the judgment sought by the plaintiff bring into controversy the value of other claims that may be governed by the judgment? The Supreme Court has held that the collateral effects of a judgment may not be considered.

EXAMPLE An insured from State A asserts a claim for installments due under a disability policy for the past year totaling $50,000 against an insurance company from State B. The insured is due another $80,000 over the next year. Only the $50,000 amount is considered, even though the judgment may control the insured’s rights to payment of the $80,000.

COMPARE Same facts as above, but if the insurance company sues to cancel the contract for fraud, the value of the entire contract, $130,000, is brought into controversy, and the amount in controversy is satisfied.

b. Interest and Costs

The statute excludes interest and costs in determining the jurisdictional amount. However, attorneys’ fees that are recoverable by contract or by statute are considered part of the matter in controversy rather than as costs. Similarly, interest that constitutes a part of the claim itself, as distinguished from interest payable by virtue of a delay in payment, is part of the jurisdictional amount.

EXAMPLE Plaintiff sues on a three-year note with face value of $70,000 and accrued interest of $10,500. Since the interest on the note is part of the claim, the jurisdictional amount is satisfied. [See, e.g., Brainin v. Melikian, 396 F.2d 153 (3d Cir. 1968)]

COMPARE Plaintiff sues on a one-year note with the face value of $60,000 and accrued interest of $10,000. But the defendant did not pay immediately, and additional interest of $10,000 accrued between maturity and filing. The additional interest after maturity is not part of the claim.

c. Equitable Relief

There may be difficulty calculating an amount in controversy for a claim for equitable relief, given that the claimant does not seek money damages. For example, suppose P sues D for an injunction ordering D to remove part of D’s house that blocks P’s view. What is the value of the injunction and, therefore, the claim? Some courts look at the issue from the plaintiff’s viewpoint, and ask what the value of the harm caused by the blocked view is. Other courts look at the issue from the defendant’s viewpoint, and ask what it would cost the defendant to comply with the injunction if it were ordered. Some courts conclude that the amount in controversy requirement is satisfied if the amount under either test—plaintiff’s viewpoint or defendant’s viewpoint—exceeds $75,000. On an essay, discuss both viewpoints; on the MBE, consider whether jurisdiction would be valid under either viewpoint before answering. d. Punitive Damages If a punitive damage claim is permitted under state substantive law, it may be used in making the dollar amount requirement because there is “no legal certainty” that the amount will not be recovered.

2. Aggregation of Separate Claims
   a. One Plaintiff Against One Defendant

For purposes of meeting the jurisdictional amount, the plaintiff may aggregate all her claims against a single defendant. This aggregation is permitted regardless of whether the claims are legally or factually related to each other. Aggregation has nothing to do with supplemental jurisdiction.

EXAMPLE A plaintiff from State A has a breach of contract claim for $50,000 and a tort claim for $50,000 against a defendant from State B. He may add those two claims together to satisfy the amount in controversy requirement.

b. One Plaintiff Against Several Defendants A plaintiff who has an action against several defendants cannot aggregate claims based on separate liabilities. However, there is no aggregation problem if the plaintiff asserts a joint claim against multiple defendants. With a joint claim, courts look at it as one claim, and look to the total value of the claim to determine whether the amount in controversy is satisfied.

EXAMPLE A homeowner contracts with a roofer to put a new roof on his house in the summertime and a home improvement contractor to remodel his kitchen in the fall. The contracts for each are $50,000. Turns out, the roofer installs the roof poorly, and the contractor never shows up after accepting a $30,000 advance payment. The homeowner may not aggregate the two claims. They are separate claims.

COMPARE A pedestrian is hospitalized when he is injured by two drag racers. The hospital bills run $80,000. The pedestrian sues the drag racers in federal court. Here, the amount in controversy is satisfied because the claim is based on joint liability. Either drag racer may be held liable for the total amount of the claim.

c. Several Plaintiffs Against One Defendant Several plaintiffs can aggregate their claims only where they are seeking “to enforce a single title or right in which they have a common or undivided interest . . . . ” If the claims are separate and distinct, aggregation may not be used.

EXAMPLE Two investors own Blackacre, an empty lot worth $100,000, as an investment as joint tenants. They bring a quiet title action against a neighbor in federal court. The amount in controversy requirement is met, because joint tenancies are undivided interests in the whole land, so we use the total value of the land.

COMPARE A driver is in a collision with a city owned bus. Two passengers were injured. One passenger has a claim of $50,000, the other has a claim worth $30,000. Because their claims are separate and distinct from one another, aggregation is not allowed and the amount in controversy is not satisfied. d. Significance in Class Actions This rule has special importance in class actions, in which the rule is that the claims of the class members cannot be aggregated if their rights are “separate” rather than “joint” or “common.” One class representative’s claim must exceed $75,000, and the court will have supplemental jurisdiction over the claims that do not exceed $75,000. [Snyder v. Harris, 394 U.S. 332 (1969)]

3. Supplemental Jurisdiction over Claims Not Exceeding $75,000 in Diversity Cases A claim by a joined plaintiff (a co-plaintiff) that does not meet the amount in controversy requirement for diversity of citizenship jurisdiction may use supplemental jurisdiction if the claim arises from a common nucleus of operative fact as the claim that invoked diversity of citizenship. However, in such a case, the supplemental jurisdiction cannot be used to override the complete diversity rule as between the co-plaintiff and defendant(s). [Exxon Mobil Corp. v. Allapattah Services, 545 U.S. 546 (2005)]

EXAMPLE A plaintiff from California asserts a state-law claim for $100,000 against a defendant from Arizona. This claim may use diversity of citizenship jurisdiction, as it is between a citizen of California and a citizen from Arizona, and the amount in controversy exceeds $75,000. In the same case, a co-plaintiff, who is also from California, wants to assert a state-law claim against the same defendant for $50,000 that arises from a common nucleus of operative fact as the first claim. The claim by this co-plaintiff cannot use diversity of citizenship jurisdiction because it does not exceed $75,000. Nonetheless, the claim by the co-plaintiff can be heard in federal court under supplemental jurisdiction.

COMPARE A plaintiff, a citizen of California, asserts a claim for $100,000 against a defendant, a citizen of Arizona. That claim invokes diversity of citizenship jurisdiction. In the same case, a co-plaintiff, a citizen of Arizona, wants to assert a claim against the same defendant for $50,000 in the same case. The claims by plaintiff and co-plaintiff again arise from a common nucleus of operative fact. The claim by co-plaintiff cannot invoke diversity of citizenship jurisdiction because it is by a citizen of Arizona against a citizen of Arizona and the amount in controversy is not sufficient. Here, the co-plaintiff cannot use supplemental jurisdiction because it cannot be used to override the complete diversity requirement. Thus, that claim may be asserted only in state court.

4. Counterclaims

A defendant’s counterclaim [see Fed. R. Civ. P. 13] cannot be combined with the plaintiff’s claim to reach the jurisdictional amount; for example, if the plaintiff claims $20,000, the amount in controversy is not satisfied even if the defendant counterclaims for $100,000. Does a counterclaim itself have to meet the requirements of the jurisdictional amount?

a. Compulsory Counterclaim Need Not Meet Jurisdictional Amount

A compulsory counterclaim (arising out of the same transaction or occurrence) does not need to meet the jurisdictional amount requirement. The court has ancillary (supplemental) jurisdiction over such a counterclaim just as it does over a third-party claim under Rule 14 impleader.

EXAMPLE A driver from Colorado is in an accident with a trucker from Illinois. The driver sues the trucker in federal court for $100,000 to cover his medical bills. The trucker’s truck was damaged to the tune of $10,000 in the accident. The coun-terclaim arises out of the same transaction or occurrence, so the trucker must assert this claim in federal court in the same action. He may use supplemental jurisdiction to have his claim heard in federal court, because the claim, by necessity, arises out of a common nucleus of operative fact, and the claim is asserted by a party other than the plaintiff.

b. Permissive Counterclaim Must Meet Jurisdictional Amount

A defendant’s permissive counterclaim (arising out of a completely unrelated transaction) must have an independent jurisdictional basis, and thus must meet the jurisdictional amount requirement because the common nucleus test is not satisfied. A growing body of case law, however, holds that supplemental jurisdiction is available if there is some sort of factual relationship between the two claims.

EXAMPLE A driver from Colorado is in an accident with a trucker from Illinois. The driver sues the trucker in federal court for $100,000 to cover his medical bills. The trucker’s truck was damaged to the tune of $10,000 in the accident. By coincidence, the trucker also has a separate and distinct breach of contract claim against the driver for $50,000. There is no supplemental jurisdiction over the contract claim.

c. No Removal to Federal Court Based on Counterclaim

As will be discussed later, if a plaintiff brings a case in state court that could have been brought in federal court, the defendant typically has a right to remove the case to federal court. However, the same is not true regarding plaintiffs and counterclaims: A plaintiff who claims $75,000 or less in a state court action who is met with a counterclaim for more than $75,000 may not remove the suit to federal court, regardless of whether the counterclaim is compulsory or permissive, because removal is permitted only to defendants. The weight of authority also holds that in a situation where the plaintiff has not met the jurisdictional amount, the defendant who must assert a compulsory counterclaim in the state suit may not remove the action, even though the counterclaim is over $75,000 and there is complete diversity. Thus, a plaintiff with a small claim can require a defendant with a large claim to litigate it in state court simply by being the first to file. But note: Even though this is the traditional rule, there is a trend allowing removal. If you encounter such a question on the exam, use the traditional rule, but, on an essay, note the trend for allowing removal.

EXAMPLE A trucker from Illinois is in an accident with a driver from Colorado. The trucker sues the driver in state court for $10,000. The driver has medical bills totaling $100,000. Under the traditional rule, the driver may not remove the case to federal court.

Question 59

F. EXCEPTIONS TO DIVERSITY OF CITIZENSHIP JURISDICTION

Answer 59

F. EXCEPTIONS TO DIVERSITY OF CITIZENSHIP JURISDICTION

For historical reasons, even though the requirements for diversity of citizenship jurisdiction are satisfied, federal courts will not exercise jurisdiction over domestic relations or probate proceedings.

1. Domestic Relations The federal court will not take jurisdiction over actions “involving the issuance of a divorce, alimony or child custody decree.” [Akenbrandt v. Richards, 504 U.S. 689 (1992)] Note that this exception is quite narrow. Federal courts may maintain actions upon state court decrees, such as those for alimony. They also may hear cases involving intra-family torts. They refuse only cases involving issuance of decrees of divorce, alimony, or child custody.
2. Probate Proceedings Federal courts will not entertain cases to probate a decedent’s estate. To fall within this exception to diversity of citizenship jurisdiction, however, the claim asserted must involve actual probate or annulment of a will or seek to reach property in the custody of a state probate court. [Marshall v. Marshall, 547 U.S. 293 (2006)] EXAMPLE The federal court had jurisdiction over a claim for damages for alleged tortious interference with testator’s efforts to create a trust benefiting the plaintiff (who was Anna Nicole Smith). [Marshall v. Marshall, supra]

Question 60

IV. FEDERAL QUESTION JURISDICTION

-Where it must appear, corporations.

Answer 60

A. INTRODUCTION

It is difficult to formulate a summary of the case holdings as to when an action “arises under” federal law. The best one can do, perhaps, is the following: A case arises under federal law if the plaintiff is alleging a right or interest that is substantially founded on federal law, which consists of federal common law, federal constitutional law, federal statutory law, treaty law, and federal administrative regulations. For exam purposes, there is no amount in controversy requirement for federal question cases.

B. FEDERAL QUESTION MUST APPEAR IN THE COMPLAINT

The federal question must appear as part of the plaintiff’s cause of action as set out in a well-pleaded complaint. It is therefore sometimes necessary to determine whether certain allegations are proper in pleading the cause of action, and whether the federal element is essential to the plaintiff’s case.

1. Defendant’s Answer or Defense Is Irrelevant The content of the defendant’s answer is not relevant; the existence of a defense based on federal law will not give federal question jurisdiction. Likewise, the court may not look to a counterclaim asserted by the defendant to determine whether the plaintiff’s complaint states a federal question claim. [Holmes Group, Inc. v. Vornado Air Circulation System, Inc., 535 U.S. 826 (2002)]
2. Anticipation of a Defense Similarly, a complaint does not create federal question jurisdiction if it alleges federal issues only in anticipation of some defense.

EXAMPLE A sues B for specific performance of a contract and alleges that B’s refusal to perform is based on B’s erroneous belief that federal law prohibits his performance. No federal question jurisdiction exists because the federal question presented by the plaintiff’s complaint is merely in anticipation of B’s defense. [Louisville & Nashville Railroad v. Mottley, 211 U.S. 149 (1908)]

C. IMPLIED FEDERAL RIGHT OF ACTION

It is not essential that the federal statute expressly provide for a civil cause of action for an alleged violation. Thus, federal question jurisdiction was held to exist in an action involving an alleged violation of the Fourth and Fifth Amendments [Bell v. Hood, 327 U.S. 678 (1946)] and an alleged violation of the Securities Exchange Acts of 1934 [J. I. Case v. Borak, 377 U.S. 426 (1964)], although neither the Constitution nor the act involved created a “remedy” for the wrongs complained of. However, not all federal provisions creating duties are held to create an implied private right of action. [Cort v. Ash, 422 U.S. 66 (1975)]

D. FEDERAL CORPORATIONS Federal question jurisdiction does not arise merely from the fact that a corporate party was incorporated by an act of Congress unless the United States owns more than one-half of the corporation’s capital stock, in which case it is treated as a federal agency that can sue or be sued on that basis in federal court. [28 U.S.C. §1349]

Question 61

E. SUPPLEMENTAL (PENDENT) JURISDICTION OVER STATE CLAIMS

Answer 61

E. SUPPLEMENTAL (PENDENT) JURISDICTION OVER STATE CLAIMS

As previously discussed (supra, III.B.5.), claims sometimes can invoke supplemental jurisdiction when the supplemental claim arises from a common nucleus of operative fact as the original claim, whether the case got into federal court by diversity of citizenship or federal question jurisdiction. Supplemental jurisdiction in federal question cases is discussed here.

1. Supplemental (Pendent) Claims

In some cases, the plaintiff will have both federal and state claims against the defendant. Although there may be no diversity, the federal court has discretion to exercise supplemental (pendent) jurisdiction over the claim based on state law if the two claims “derive from a common nucleus of operative fact” and are such that a plaintiff “would ordinarily be expected to try them all in one judicial proceeding.” [United Mine Workers of America v. Gibbs, 383 U.S. 715 (1966)] Essentially, this means that the two claims must arise from the same transaction or occurrence. The supplemental jurisdiction statute [28 U.S.C. §1367(a)] adopts this standard for the grant of supplemental jurisdiction.

EXAMPLE P, a citizen of Arkansas, asserts two claims against D, who is also a citizen of Arkansas, in federal court. Importantly, both claims arise from a common nucleus of operative fact. Claim #1 is for violation of a federal statute, and thus invokes federal question jurisdiction. Claim #2 is based on state law, and thus does not invoke federal question jurisdiction (because it is based on state, not federal, law). Also, Claim #2 does not invoke diversity of citizenship (because P and D are citizens of the same state). Nonetheless, Claim #2 invokes supplemental jurisdiction because it arises from a common nucleus of operative fact as the claim that invoked federal question jurisdiction.

a. Effect of Dismissal of Federal Claim on Supplemental (Pendent) Claim

The court may exercise supplemental (pendent) jurisdiction over the state claim even though the federal claim is dismissed on the merits. However, the state claim should probably also be dismissed (without prejudice) if the federal claim is dismissed before trial. Indeed, the supplemental jurisdiction statute provides that the court may refuse supplemental jurisdiction if the federal claim is dismissed, if the state claims are complex or novel, or if the state claims predominate substantially over federal claims.

2. Pendent Parties Pendent party jurisdiction is relevant in cases in which the plaintiff sues more than one defendant, there is federal jurisdiction over the claim against one defendant, and the claim against the second defendant does not invoke federal question or diversity of citizenship jurisdiction. Under the supplemental jurisdiction statute, the claim against the second defendant might invoke supplemental jurisdiction if it arises from a common nucleus of operative fact as the claim against the first defendant. Pendent party jurisdiction also can arise when multiple plaintiffs assert claims against one defendant.

EXAMPLES 1) A school employee from State A asserts a section 1983 claim against a school district and joins a transactionally related state law (not federal question) claim against the principal. The school employee and the principal are citizens of the same state. The claim against the principal cannot invoke federal question jurisdiction (because it is based upon state law) and cannot invoke diversity of citizenship jurisdiction (because the school employee and the principal are citizens of the same state). The claim against the principal falls within the court’s supplemental jurisdiction, however, because it arises from a common nucleus of operative fact as the claim that invoked federal question jurisdiction and is asserted by the plaintiff in a federal question case.

2) The estate of a husband asserts a section 1983 claim for violation of his constitutional rights against the sheriff arising out of his arrest and death while in custody. In the same case, the wife asserts a state law claim against the sheriff based on loss of consortium. The wife and sheriff are citizens of the same state. The claim by the wife falls under the court’s supplemental jurisdiction because it arises from a common nucleus of operative fact as the federal question claim by the estate against the sheriff.

Question 62

V. VENUE -

Answer 62

V. VENUE A. SUBJECT MATTER JURISDICTION DISTINGUISHED

Subject matter jurisdiction and venue are very often confused. Subject matter jurisdiction is the power of the court to adjudicate the matter before it, whereas venue relates to the proper geographic district in which to bring the action. [28 U.S.C. §1390] Subject matter jurisdiction is a question of power or authority; venue is a question of geography. Subject matter jurisdiction cannot be conferred by agreement; venue can be. A court can have subject matter jurisdiction without being a proper venue.

EXAMPLE Smith, a citizen of Georgia, brings a personal injury suit arising in Florida against Jones, a citizen of New York. Suit is brought in the federal district court in California. The amount in controversy exceeds $75,000. Under section 1332, the district court has diversity jurisdiction, but venue is improper and the case is subject to transfer or dismissal. [28 U.S.C. §1391] Note: Unlike past federal practice and the existing practice in many states, local actions (like those involving real property) and transitory actions (like tort actions) are treated under the same venue provision in federal court.

B. GENERAL RULES

1. General Rules for Most Civil Actions Venue in civil actions in the federal courts is proper in:
   (i) A judicial district in which any defendant resides, if all defendants are residents of the state in which the district is located;
   (ii) A judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or
   (iii) If there is no district anywhere in the United States which satisfies (i) or (ii), a judicial district in which any defendant is subject to the court’s personal jurisdiction with respect to the action.

EXAMPLE A roofing contractor from Nebraska entered into a contract to put a new roof on a homeowner’s home in Kansas. The roofing contractor did a poor job, resulting in substantial damages to the homeowner. Venue in this case would be in either Nebraska (in which the roofing contractor resides) or Kansas (in which the home is located, as it is the place where a substantial part of the events or omissions occurred).

2. Special Venue Provisions

There are many venue provisions applicable only to specified types of actions. One is worth noting: Where the defendant is the United States or an agency thereof, or an officer, employee, etc., of the United States acting in his official capacity, a civil action may be brought where:

(1) a defendant resides;
(2) a substantial part of the events or omissions giving rise to the action occurred, or a substantial part of property that is the subject of the action is situated; or
(3) the plaintiff resides if no real property is involved in the action. [28 U.S.C. §1391(e)]

C. RESIDENCE

1. Natural Persons For venue purposes, a natural person, including an alien lawfully admitted for permanent residence in the United States, is deemed to reside in the judicial district in which that person is domiciled. [28 U.S.C. §1391(c)(1)]
2. Business Entities An entity with the capacity to sue and be sued in its common name under applicable law, whether or not incorporated, is deemed to reside, if a defendant, in any judicial district in which the defendant is subject to the court’s personal jurisdiction with respect to the civil action in question. [28 U.S.C. §1391(c)(2)]
   a. Note for Corporations

In a state having more than one judicial district and in which a corporate defendant is subject to personal jurisdiction at the time the action is commenced, the corporation is deemed to reside in any district in that state within which the corporation’s contacts would be sufficient to subject the corporation to personal jurisdiction if the district were a state. If there is no such district, the corporation is deemed to reside in the district within which it has the most significant contacts. [28 U.S.C. §1391(d)]

3. Nonresident of United States A defendant who is not a resident of the United States—whether a U.S. citizen or analien—may be sued in any judicial district. The joinder of such a defendant, however, is disregarded in determining where the action may be brought with respect to any other defendants. [28 U.S.C. §1391(c)(3)]

EXAMPLE While on a trip in Wyoming, a driver from Kansas has a car accident with a driver from Germany. The Kansan could sue the German in any judicial district within the United States.

COMPARE If a citizen from Montana were also involved in the accident, the driver would be limited to where venue is proper as to the Montana citizen—either Wyoming (the place of the accident) or Montana (the residence of the Montana citizen).

D. IMPROPER VENUE MAY BE WAIVED

Unlike jurisdiction over the subject matter, venue may be waived by the parties. Venue is considered to be waived unless timely objection (in a pre-pleading motion or, where no such motion is made, in the answer) is made to the improper venue.

E. TRANSFER

1. Original Venue Proper Section 1404(a) allows transfer to another district where the action “might have been brought” or “to which all parties have consented,” even though venue has been properly laid in the court before which the motion to transfer is made. The policy behind section 1404 is that while venue may be correct, the parties or the witnesses might be greatly inconvenienced by the trial in the original forum. By balancing the relative convenience offered by the alternative forums, the original court has discretion to transfer the action to a court in which the action “might have been brought” in conformity with the rules governing:
   (1) subject matter jurisdiction, (2) in personam jurisdiction over the defendant, and (3) venue. Another alternative is transfer to a court to which all parties have consented (even if venue ordinarily would not be proper there). If the superior forum is in another judicial system, the court may dismiss or stay the action under the doctrine of forum non conveniens.
2. Original Venue Improper When a case is filed in an improper venue, a court must dismiss, or, in “the interests of justice,” transfer the case to a venue in which it could have been brought (in other words, subject matter jurisdiction, personal jurisdiction, and proper venue must exist). [28 U.S.C. §1406(a)] Transfer is more appropriate than dismissal except in extraordinary circumstances.
3. Effect of Forum Selection Clauses If the transaction involved in the suit included an agreement as to where a suit should be brought in case of litigation (that is, a forum selection clause), the clause will be enforced by means of a motion to transfer “in the interests of justice” unless exceptional public interest factors dictate otherwise. [Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas, 571 U.S. 49 (2013)]
4. Original Court Lacks Personal Jurisdiction The Supreme Court has held that the original court’s lack of personal jurisdiction over the defendant does not affect its power to transfer a case under section 1406(a). [Goldlawr, Inc. v. Heiman, 369 U.S. 463 (1962)] There is also authority to support the conclusion that the same is true in transfers under section 1404(a). [See, e.g., United States v. Berkowitz, 328 F.2d 358 (3d Cir. 1964)]

F. LAW APPLICABLE UPON TRANSFER

1. Original Venue Proper If venue in the transferring court was proper, the transferee court applies the law the transferor court would apply, including its choice of law rules, unless the transfer was ordered to enforce a forum selection clause. [Atlantic Marine Construction Co., supra] This is true even where the plaintiff initiates a transfer for convenience after initially choosing the inconvenient forum. [Ferens v. Deere Co., 494 U.S. 516 (1990)]

EXAMPLE P sued D in a federal district court in Pennsylvania. D moves to transfer to the Federal District Court of Massachusetts. The court must apply the law that would have been applied in Pennsylvania. [Van Dusen v. Barrack, 376 U.S. 612 (1964)]

2. Original Venue Improper A transfer on the ground that the original choice of venue was improper generally results in a change of the law applicable under Erie; that is, the law of the transferee court will apply.

EXAMPLE P sued D in the federal district court in Maryland. D moved to transfer to New York under section 1406(a) because Maryland was an improper venue. The law applied in the transferee court (New York) would be its own law.

Question 63

REMOVAL JURISDICTION

Answer 63

A. ORIGINAL JURISDICTION NECESSARY

A defendant sometimes may remove an action that was brought by the plaintiff in state court when the action could have originally been brought in the federal courts (that is, the case satisfies the requirements for diversity or federal question jurisdiction). [28 U.S.C. §1441]

EXAMPLE While in State A, a law firm partner (also from State A) is driving his $200,000 Lamborghini down the road when he hits a poor, heavily indebted law student from State B. The Lamborghini is totaled. The partner sues the student in a State A state court for the value of his car. The student may remove the case to federal court in State A (see C., infra).

1. When

Whether federal jurisdiction exists allowing a defendant to remove is tested only as of the date of removal.

EXAMPLE A plaintiff from State A sues a defendant from State A in a state court for more than $75,000. The defendant moves to State B, then timely files a notice of removal. Removal would be proper based on diversity of citizenship jurisdiction.

2. Federal Defense Insufficient

A defendant cannot remove on the ground that she has a defense grounded in federal law, since the existence of a federal defense is insufficient to confer original federal question jurisdiction under section 1331.

EXAMPLE To settle a claim, a railroad gave a passenger a lifetime pass on its railroad. After a number of years passed, Congress made the provision of such lifetime passes illegal. The passenger sues the railroad for breach of contract. The fact that the passes are now illegal is a federal defense to the breach of contract action, which does not give the federal court jurisdiction based on a federal question.

3. State Court Need Not Have Had Jurisdiction

By statute, the federal court may hear and decide a claim in a removed civil action even where the state court had no jurisdiction because the action is exclusively federal.

B. ONLY DEFENDANT MAY REMOVE; ALL MUST SEEK REMOVAL

Only defendants can exercise the right of removal. Thus, a plaintiff cannot remove on the ground that a counterclaim against him could have been brought independently in a federal court. If there is more than one defendant, all defendants who have been properly joined and served must join in or consent to the removal. (Note: The Class Action Fairness Act relaxes this rule for some class actions. See VIII.G.2.d., infra.)

C. VENUE

Venue for an action removed under section 1441(a) lies in the federal district court “embracing the place where such [state] action is pending.” In removal cases, section 1441(a) determines proper venue, not section 1391(a). Thus, in a properly removed case, venue is proper in the federal court of the state where the case was pending, even if venue would have been improper had the plaintiff originally filed the action in the federal district court of that state.

EXAMPLE Linda, a citizen of State A, sues Jim, a citizen of State B, in the state court in State Z in the amount of $2 million for negligent acts Jim committed in State B. Jim may remove the case to the federal district court of State Z because the court has diversity jurisdiction and Jim is not a citizen of State Z. Although under section 1391(a) venue would have been improper if Linda had filed her case in the State Z federal district court, under section 1441(a) venue is proper in the federal district court of State Z because it “embraces the place” where the state court action was pending.

D. DEFENDANT MAY REMOVE SEPARATE AND INDEPENDENT FEDERAL QUESTION CLAIM

If a case filed in state court contains a claim that would arise under federal law, and it is joined with state law claims that do not come within the court’s diversity or supplemental jurisdiction, the entire case can be removed to federal court. The federal court, however, must then sever and remand the state law claims to state court. Only those defendants against whom a federal claim is asserted are required to join in the removal.

E. DISMISSAL OF NONDIVERSE PARTY ALLOWS REMOVAL

If no federal question is involved and diversity jurisdiction does not exist because a party is a co-citizen of an opposing party, removal will be permitted if the nondiverse parties are thereafter dismissed from the action and there is complete diversity between the remaining parties, subject to the limitations discussed below.

F. LIMITATIONS ON REMOVAL IN DIVERSITY OF CITIZENSHIP CASES

1. Defendant Citizen of Forum State When the jurisdiction of the federal court is based solely on diversity and one of the defendants is a citizen of the state in which the state action was brought, the action is not removable. [28 U.S.C. §1441(a)(2)] Rationale: Diversity jurisdiction was created to ensure that defendants could get a fair hearing in a neutral court, rather than in a state court that might favor its own citizens. When the state court involved is a court in the state in which the defendant lives, no such concern arises.

EXAMPLE Jones, a citizen of State A, sues Brown, a citizen of State B, and Smith, a citizen of State C, in the state court in State B. Although diversity jurisdiction would have existed originally (assuming the jurisdictional amount had been met), Brown and Smith cannot remove. Had Jones brought the action in the state court in State A, Brown and Smith could remove. [28 U.S.C. §1441(b)] When the original jurisdiction of the district court would have been based on a federal question, the defendants can remove without regard to the citizenship of the parties.

2. One-Year Rule

A case may not be removed on the basis of diversity of citizenship jurisdiction more than one year after it was commenced in state court. [28 U.S.C. §1446(b)] Note also that a case must be removed no later than 30 days after the defendant discovers, through service of an amended pleading, order, etc., that the case has become removable (see G.2., infra). Because most cases will be removable, if at all, at commencement of the action, the one year deadline generally will not be difficult to meet. The provision may be important, however, if the case is not removable at the outset, but becomes removable later. But note: The one year rule does not apply to removals based on federal question jurisdiction, nor does it apply if the district court finds that the plaintiff has acted in bad faith (for example, by fraudulently joining a nondiverse party or by intentionally failing to disclose the true amount in controversy) in order to prevent a defendant from removing the action.

EXAMPLES 1) A homeowner from Illinois sues a contractor from Wisconsin in an Illinois state court, seeking damages of $100,000. The case is removable at its commencement because the case meets the requirements of diversity of citizenship jurisdiction and no defendant is a citizen of Illinois. The contractor must remove the case within 30 days of being served with process.

2) A pedestrian from Illinois sues a driver from Illinois and a trucker from Wisconsin based on joint liability arising out of a car accident. The pedestrian seeks damages of $250,000. The case is not removable at its commencement, since the pedestrian and the driver share Illinois state citizenship. However, if the pedestrian later voluntarily dismisses the claim against the driver, the case becomes removable. The trucker must then remove within 30 days. But if more than one year has passed since the state case was commenced, the trucker cannot remove on the basis of diversity of citizenship.

G. PROCEDURE FOR REMOVAL

1. Notice of Removal

A defendant seeking removal must file a notice of removal—containing a short and plain statement of the grounds for removal and signed under Rule 11—in the federal district court in the district and division within which the action is pending. A copy of the notice should be sent to the other parties and to the state court. Once this is done, the state court can no longer deal with the case. If the state court attempts to do so, the federal court can enjoin the state court’s action.

a. Allegation of Amount in Controversy In cases seeking nonmonetary relief, or in cases in which the plaintiff (under state law) is not required to state an amount in controversy or in which recovery may be in excess of the damages stated, the defendant may state that the amount in controversy exceeds $75,000, and the district court may keep the case if it finds, by a preponderance of the evidence, that the amount does exceed $75,000.
2. Thirty-Day Rule Generally, a defendant must file a notice of removal within 30 days “after receipt by or service on that defendant of the initial pleading or summons.” [28 U.S.C. §1446(b)] The statute is intended to address different state approaches to the order of filing a case and serving process. For instance, in some states, the defendant is served with a summons but not a copy of the complaint. For such defendants, the 30-day removal period would start to run upon formal receipt of the complaint. Informal notice does not start the ticking of the 30-day clock.

EXAMPLE A plaintiff files an action against a defendant in state court. The plaintiff e-mails a “courtesy copy” of the complaint to the defendant, but does not have formal process (a summons and complaint) served for two weeks. The defendant removes the case within 30 days after being served with process, but more than 30 days after receiving the e-mailed copy of the complaint. Was removal timely? Yes. The 30 days ran from service of process on the defendant. [Murphy Brothers v. Michetti Pipe Stringing, Inc., 526 U.S. 344 (1999)]

a. Effect of Multiple Defendants on the 30-Day Rule

If defendants are served at different times, and a later served defendant initiates timely removal, the earlier served defendant may join in the removal even though his 30-day period for initiating removal may have expired.

b. Effect of Amendment on 30-Day Rule

A defendant also may file a notice of removal within 30 days of receipt of an amended pleading, motion, order, or other court paper (such as discovery or other state court pleadings) that shows that a nonremovable case (or an apparently nonremovable case) is in fact removable. [28 U.S.C. §1446(b)(3)] This provision is significant in states that either prohibit the plaintiff from alleging or do not require the plaintiff to allege a specific amount of damages and in cases in which a nondiverse defendant has been dismissed. In such cases, the 30-day window to remove may begin much later than after the service of the initial pleading.

3. Procedure After Removal

After removal, the case proceeds according to the federal rules of procedure. Repleading is not necessary unless the court so orders. If the defendant has not answered, she must answer or present the other defenses or objections available to her under the Federal Rules within 21 days after being served, or within seven days after filing the petition for removal, whichever period is longer. Amendments may be made to pleadings filed before removal.

4. Right to Jury Trial
   a. Demand for Jury Trial The right to a jury trial in a case removed to a federal court may be waived unless a timely demand for a jury trial is filed. If, at the time of removal, all necessary pleadings have been served, a trial by jury will be granted to a party so entitled. The removing party must file a demand for jury trial within 14 days after the notice of removal is filed. The nonremoving party generally must file for jury trial within 14 days after service on her of the notice of filing for removal.
   b. Demand Not Required

A party who, prior to removal, has made an express demand for trial by jury in accordance with state law, need not make a demand after removal. In addition, if state law applicable in the court from which the case is removed does not require the parties to make an express demand in order to claim trial by jury, they need not make such demand after removal unless the court directs they do so.

5. Remand a. Based on Procedural Defects

A plaintiff can file a motion to have the case remanded (sent back) to the state court. If the plaintiff bases this motion on a defect other than subject matter jurisdiction (for example, a defect in removal procedures), the motion must be brought within 30 days of removal. b. Based on a Lack of Subject Matter Jurisdiction A motion to remand for lack of federal jurisdiction, on the other hand, may be made at any time. If the court erroneously fails to remand, but the subject matter defect is cured before trial begins, failure to remand does not require that the federal judgment be vacated. [Caterpillar Inc. v. Lewis, 519 U.S. 61 (1996)]

c. When All Federal Claims Have Been Adjudicated

The federal court has discretion to remand a case to state court once all federal claims have been resolved, leaving only state claims over which there would be no diversity jurisdiction. [Carnegie-Mellon University v. Cohill, 484 U.S. 343 (1988)]

d. Appellate Review of Remand Order Appellate review of remand orders is generally barred [28 U.S.C. §1447(d)]; however, appeal is allowed where a case involving civil rights is remanded to state court. Remand orders can also be reviewed by means of a mandamus if the remand represented a refusal to exercise plainly proper jurisdiction. [Thermtron v. Hermansdorfer, 423 U.S. 336 (1976)]

Question 64

VII. CONFLICT OF JURISDICTION BETWEEN STATE AND FEDERAL COURTS

Answer 64

VII. CONFLICT OF JURISDICTION BETWEEN STATE AND FEDERAL COURTS

A. FULL FAITH AND CREDIT EXTENDED TO FEDERAL COURTS

The Constitution’s Full Faith and Credit Clause—which requires a state to recognize the legislative acts and judicial decisions of its sister states—is applicable only where a state court judgment is sought to be enforced in another state. However, an implementing federal statute provides that this Clause is extended to the federal courts. Therefore, recognition of judgments is required between state and federal courts and between federal courts.

B. INJUNCTIONS AGAINST PENDING STATE PROCEEDINGS

Potentially, a case also could be filed in state court by one party and in federal court by the other party. In such a case, federal court is prohibited from enjoining pending state court proceedings unless expressly authorized by statute (that is, the interpleader provision expressly authorizes injunctions against state court proceedings), or “where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” [28 U.S.C. §2283] The case coming to a final decision first will have preclusive effect on the other. (See XI.B., infra.)

C. INJUNCTIONS AGAINST THREATENED STATE CRIMINAL PROSECUTIONS

Threatened state criminal prosecutions, where state court proceedings have not already been instituted, will be enjoined only when necessary to prevent irreparable harm which is clear and imminent and where appellate remedies in the criminal case are clearly inadequate to provide relief. Such injunctions are almost invariably denied, except where a federal right of free speech or assembly or a federally protected civil right is threatened by the state criminal proceeding, and it is shown that the prosecution is in bad faith or is for the purpose of harassment. Relief by declaratory judgment will ordinarily be denied if an injunction would be denied.

D. INJUNCTIONS AGAINST STATE TAX PROCEDURES

A statute [28 U.S.C. section 1341] prohibits injunctions against the assessment, levy, or collection of state taxes “where there is a plain, speedy and efficient remedy . . . in the courts of such State.” [See Rosewell v. LaSalle National Bank, 450 U.S. 503 (1981)]

Question 65

VIII. THE FEDERAL RULES OF CIVIL PROCEDURE A. COMMENCEMENT OF THE ACTION

Which rules

Answer 65

A. COMMENCEMENT OF THE ACTION

An action is commenced by filing a complaint with the court. [Fed. R. Civ. P. 3] Filing a complaint before the statute of limitations has run will satisfy the statute of limitations in federal question cases and in diversity cases where the state rule is similar. However, the Supreme Court has held that a state rule that an action is commenced for purposes of the statute of limitations only upon service of process must be applied in diversity cases. (For example, a state rule might say that filing is effective for commencement purposes only if service of process is perfected within a certain time period, like 90 days. That rule must be followed in diversity cases.) [Walker v. Armco Steel Corp., 446 U.S. 740 (1980)]

Question 66

Rules: B. SERVICE OF PROCESS

Answer 66

B. SERVICE OF PROCESS

[Fed. R. Civ. P. 4]

1. Who May Serve

Any person who is at least 18 years old and not a party to the action may serve the summons and complaint (together known as “process”). A party may request that service be made by a United States marshal.

2. Time Limit for Service of Process

Service within the United States ordinarily must be made within 90 days of the complaint being filed; however, the court must extend this period for good cause shown.

3. How Service Is Made
   a. Individuals An individual may be served by
   (1) personal service, (2) service left at the defendant’s usual place of abode with one of suitable age and discretion residing therein, or (3) service upon an authorized agent of the defendant. A person of suitable age and discretion is generally a person who is older than 14 years.
   b. Minors or Incompetent Persons

A minor or incompetent person must be served only in accordance with the rules of the state in which service is to be made.

c. Corporations, Partnerships, Etc.

A corporation, partnership, or association may be served by serving an officer, a managing or general agent, or an authorized agent of the corporation.

d. Service Under State Rules

In addition to the above methods (and other than on a minor, incompetent person, or a person whose waiver has been filed), service may be made as provided by the rules of the state in which the federal court sits or the state in which service is to be effected, regardless of the basis of subject matter jurisdiction. Hence, federal courts can use state long-arm provisions.

e. Waiver of Service by Mail

The plaintiff may also request the defendant to waive service of process. To request a waiver of service, the plaintiff must mail the defendant certain items, the most important of which are a formal request to waive service (that also informs the defendant of the consequences of failing to waive service), two copies of the waiver form, and a copy of the complaint. The defendant generally has 30 days (60 days if outside the United States) from the date that the request was sent to return the waiver.

1) Effect of Waiver

A defendant who waives formal service of process has 60 days (90 days if outside the United States) from the date the request was sent, instead of the usual 21 days (see F.3.b., infra) to answer the complaint. The waiver of service does not waive the defendant’s right to object to venue and jurisdiction.

2) Effect of Failure to Waive

If the defendant does not waive service of process, the plaintiff must serve him using one of the methods described in 3., supra. However, a defendant who is located in the United States is liable for the cost of such service if he does not have good cause for failing to waive service.

4. Parties Served Outside State

The court will acquire personal jurisdiction over parties served outside the state:

a. Under statute and rules for extraterritorial service of the state in which the federal court sits (domiciliaries, long arm jurisdiction, and in rem jurisdiction);
b. If they are third-party defendants [Fed. R. Civ. P. 14] or required to be joined for just adjudication [Fed. R. Civ. P. 19], if served within 100 miles from the place where the summons was issued (but within the United States);
c. If out-of-state service is permitted by federal statute (such as the interpleader statute);
d. For cases that involve a federal question, when a defendant is served with process (or waiver thereof), provided that the defendant is not subject to general jurisdiction in any state court, that the defendant has sufficient contacts with the United States to warrant the application of federal law, and that the exercise of jurisdiction is not prohibited by statute.
5. Parties Served in Foreign Country

Unless a federal law provides differently, a court will acquire personal jurisdiction over a party served in a foreign country:

a. As provided in an international agreement;
b. In absence of an agreement, as provided by the foreign country’s law or as directed by a foreign official in response to a letter of request (but the method must be reasonably calculated to provide notice);
c. Unless it is prohibited by the foreign country’s law, by personal service or by mail, signed return receipt requested. (However, a corporation may not be served by personal service, and a minor or incompetent person may not be served by either of these methods); or
d. Any method the court orders (so long as the method is not prohibited by international agreement).
6. Immunity from Process

The federal courts recognize the immunity from service of process of parties, witnesses, and attorneys who enter a state to appear in another action. In addition, if a party was induced by the plaintiff’s fraud or deceit to enter a state so that he could be served, the service is invalid and the court does not acquire personal jurisdiction.

EXAMPLE A driver from State A is sued in two different cases in federal court in State B. The driver has not yet been served in case one, and is set to be deposed in State B for case two. If the driver were to be served in State B while being deposed in case two, such service would not be effective.

C. TIME PERIODS

1. Counting Time When a time period is expressed in days, the day of the event that triggers the period is excluded, and the last day of the period is included, when determining on what day an action must be taken. Intermediate Saturdays, Sundays, and legal holidays are included, except that if the last day of the period falls on a Saturday, Sunday, or legal holiday, the due date becomes the next workday. Three days are added to the period when service of the paper is made by mail, by leaving the paper with the clerk, or by other means to which the parties have consented. [Fed. R. Civ. P. 6(a)] Note: It is unlikely that a question would expect you to get an exact date down without providing you a calendar
2. Extensions of Time

The district court may extend the period within which actions under the Federal Rules must be performed (for example, when a paper is delivered late in the day). However, certain time periods may never be extended. The following motions must be filed, with no extensions, within 28 days after entry of judgment: a renewed motion for judgment as a matter of law, a motion to amend judgment, a motion for a new trial, a motion to amend findings of fact in a nonjury case, and a grant of a new trial on the court’s initiative. [Fed. R. Civ. P. 6(b)].

Question 67

F. PLEADINGS, including all rules and components

Answer 67

F. PLEADINGS

Pleadings serve the function of giving notice to the opposing parties.

1. Complaint Each claim for relief should contain:
   (i) A short statement of the grounds for the court’s jurisdiction;
   (ii) A short statement of the claim showing that the pleader is entitled to relief; and
   (iii) A demand for judgment for relief, which may be in the alternative. The federal pleading rules generally require only that a pleader put the other side on notice of the claim being asserted; detailed assertions of facts underlying the claim generally are not required. However, the Supreme Court in recent years has required that the plaintiff state facts supporting a plausible (not just possible) claim. [Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 556 U.S. 662 (2009)]
2. Pre-Answer Motions
   a. Rule 12(b) Prior to filing an answer, the defendant may, if he chooses, file a motion and raise any or all of the following defenses:
   (i) Lack of subject matter jurisdiction;
   (ii) Lack of personal jurisdiction;
   (iii) Improper venue; (iv) Insufficient process;
   (v) Insufficient service of process;
   (vi) Failure to state a claim upon which relief can be granted (that is, even if plaintiff’s allegations are taken as true, relief could not be granted); or
   (vii) Failure to join a party needed for a just adjudication (includes necessary and indispensable parties). The first defense (subject matter jurisdiction) may be raised at any time—even for the first time on appeal. The defendant must raise defenses (ii) through (v) at the time he files a motion or his answer (or an amendment as of right thereto)—whichever is first. If he does not, the defendant waives these defenses. The last two defenses (if limited to failure to join an “indispensable party”) can be made at any time prior to trial or “at trial.” The defendant may choose not to file a motion and instead raise these defenses in his answer. A motion to dismiss for failure to state a claim that raises issues outside of the pleadings will be treated as a motion for summary judgment.

EXAMPLE A plaintiff from Wyoming files a negligence claim against a corporate defendant that is incorporated in Delaware and has its principal place of business in New York. The claim arises out of a breach of contract for the sale of goods in New York. The plaintiff files the case in Wyoming, and the defendant files a motion to dismiss for lack of subject matter jurisdiction without raising the issues of personal jurisdiction or incorrect venue. The defendant has waived both those issues.

b. Motion for More Definite Statement

A party may move for a more definite statement before responding (by filing an answer or reply) to a pleading (a complaint) that is so vague or ambiguous that a responsive pleading cannot reasonably be framed. The opposing party has 14 days after notice of an order to obey unless the court fixes a different time. If not obeyed, the court may strike the pleading or issue any other appropriate order. [Fed. R. Civ. P. 12(e)]

c. Motion to Strike

Before responding to a pleading or, if no responsive pleading is permitted, within 21 days after service of the pleading, a party may move to have stricken any insufficient defense, or any redundant, immaterial, impertinent, or scandalous matter. Such motion may also be made upon the court’s initiative at any time. [Fed. R. Civ. P. 12(f)] And note: An objection of failure to state a legal defense to a claim is not waived merely because a motion to strike is not made. Such a defense can be made by motion for judgment on the pleadings, or at the trial. [Fed. R. Civ. P. 12(f), (h)]

3. Answer
   a. Must Contain Denials or Admissions and Any Affirmative Defenses The answer must contain a specific denial or admission of each averment of the complaint, or a general denial with specific admissions to certain averments. Where the defendant is without knowledge or information sufficient to form a belief, a statement to that effect constitutes a denial. A failure to deny constitutes an admission. The answer must also state any affirmative defenses the defendant may have, such as statute of limitations, Statute of Frauds, res judicata, etc.
   b. Time

If no Rule 12 motion is made, a defendant who was formally served with a summons and complaint must present an answer within 21 days after service; a defendant to whom the complaint was mailed and who waives formal service must answer within 60 days after the request for waiver was mailed to her. If a Rule 12 motion is made and the court does not fix another time, the responsive pleading is to be served within 14 days of the court’s denial or postponement of the motion. The answer is due within 14 days of service of a more definite statement if the court grants a Rule 12(e) motion (see 2.b., supra.) The same timing rules apply to answers to counterclaims and cross-claims.

c. Counterclaims

Claims that the defendant may have against the plaintiff may be pleaded in the answer as counterclaims. If a counterclaim arises out of the same transaction or occurrence as one of the plaintiff’s claims, it is a compulsory counterclaim and must be pleaded or it will be barred. Any other counterclaim is permissive and may be asserted (assuming there is subject matter jurisdiction) even though there is no connection at all between it and the plaintiff’s claim.

d. Effect of Failure to Answer—Default and Default Judgment

A default is simply a notation in the case file by the clerk that there has been no answer filed within the time permitted by the rules. A default judgment is a judgment, with the same effect as any other judgment, that is entered because the defendant did not oppose the case.

1) Default

If a party against whom a judgment for relief is sought has failed to plead or otherwise defend, and that fact is made to appear by affidavit or otherwise, the clerk must enter the default of that party. Once the default has been entered, the party may not proceed with the action until the default has been set aside by the court. [Fed. R. Civ. P. 55]

2) Default Judgment

A defendant against whom a default is entered loses the right to contest liability. However, the amount of damages must still be determined before a default judgment may be entered, and the defaulting party can be heard at the hearing for damages. A default judgment may be entered against a minor or incompetent person only if she has a personal representative who has appeared in the case.

a) Default Judgment Entered by the Clerk On request of the plaintiff, supported by an affidavit as to the amount due, the clerk may sign and enter judgment for that amount and costs against the defendant if:
(1) the plaintiff’s claim against the defaulted defendant is for a sum certain;
(2) the default was entered because the defendant failed to appear;
(3) the defaulted defendant is not an infant or incompetent person; and
(4) the damages amount requested is not greater than the amount requested in the complaint. [Fed. R. Civ. P. 54(c), 55(b)(1)]
3) Notice Required

If the defendant has “appeared,” even though he has not answered, he must be notified of the request for a default judgment by first-class mail at least seven days before the hearing on the application for a default judgment. Appearance includes any actual formal appearance before the court and any other action that clearly indicates that the defendant intends to contest the case on the merits (for example, the defendant’s continued settlement negotiations). [Fed. R. Civ. P. 55(b)(2)]

4) Setting Aside a Default or a Default Judgment An entry of default may be set aside for “good cause shown.” Although not specifically required by the rules, a majority of courts also will require that the defendant have a meritorious defense. A default judgment may be set aside as provided in Rule 60 (relief from judgments) (see IX.A., infra).
4. Inconsistent Claims or Defenses A party may set out as many alternative claims or defenses as he may have regardless of consistency.
5. Special Pleading

The general rule of pleading is for short and plain statements, but there are certain rules for special circumstances. [See Fed. R. Civ. P. 9] Note that in some of these situations (notably concerning fraud, mistake, and special damages), the Federal Rules require a party to state more detail than simply a short and plain statement. These situations requiring greater specificity are narrow, however, and the Supreme Court has emphasized that courts have no power to impose such rigorous pleading requirements outside the areas addressed by Federal Rule or statute. [Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002)—lower court erred by requiring detailed pleading of employment discrimination claim; Leatherman v. Tarrant County, 507 U.S. 163 (1993)—lower court erred by requiring detailed pleading of civil rights case against municipality]

a. Capacity Capacity or authority to sue or be sued need not be alleged. A person wishing to challenge a party’s capacity has the duty to raise the issue by specific negative averment, including such particulars as are within his knowledge.
b. Fraud or Mistake Circumstances that establish fraud or mistake must be stated with particularity. By statute (the Private Securities Litigation Reform Act), plaintiffs in federal securities fraud cases must plead with particularity facts relating to the defendant’s acting with the required scienter.
c. Conditions of the Mind Malice, intent, knowledge, or other conditions of the mind may be averred generally.
d. Conditions Precedent The performance of conditions precedent may be alleged generally. Denial of performance or occurrence must be made specifically and with particularity.
e. Official Document or Act When dealing with an official document or act, it is sufficient to aver that it was issued or the act was done in compliance with the law.
f. Judgment It is not necessary to aver jurisdiction when a domestic or foreign court or a board or officer renders a judgment or decision.
g. Timing Time and place averments are material for the purpose of testing the sufficiency of a pleading.
h. Special Damages Elements of special damages must be specifically stated.
6. Reply

A reply by the plaintiff to the defendant’s answer is required only if the court orders the plaintiff to file one. A plaintiff need not reply to an affirmative defense; he is deemed to deny or avoid the allegation of the defense. [Fed. R. Civ. P. 7, 12]

7. Amendment and Supplemental Pleadings
   a. Amendment As a matter of course, a pleading may be amended once within 21 days of serving it or, if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading or a pre-answer motion. Thereafter, a pleading may be amended only by the written consent of the adverse party or by leave of the court upon motion. Leave of the court is “freely given when justice so requires.” [Fed. R. Civ. P. 15]
   1) Relation Back For statute of limitations purposes, an amendment to a pleading that arises from the same conduct, transaction, or occurrence that was set forth (or was attempted to be set forth) in the original pleading generally is deemed filed on the date that the original pleading was filed. (In other words, the filing of the amendment relates back to the filing date of the original pleading.) Amendments also relate back if relation back is permitted by the law that provides the statute of limitations applicable to the action. [Fed. R. Civ. P. 15(c)] Of course, the original complaint must have been filed within the applicable statute of limitations period.
   2) Changing Party An amendment changing the party or the naming of the party against whom a claim is asserted relates back if the amendment concerns the same conduct, transaction, or occurrence as the original pleading and if, within the period for filing a complaint and serving process, the party to be brought in by amendment:
   (i) Has received such notice of the action that she will not be prejudiced in maintaining her defense on the merits; and
   (ii) Knew or should have known that, but for a mistake concerning the proper party’s identity, the action would have been brought against her. [Fed. R. Civ. P. 15(c)(1)(C)] The Supreme Court has emphasized that it is the knowledge of the party to be brought in by amendment (not of the plaintiff) that is relevant. [Krupski v. Costa Crociere S.p.A., 560 U.S. 538 (2010)] And again, the original complaint must have been filed within the applicable statute of limitations period.
   3) Conform to Evidence

A pleading may be amended during or after trial, or even after judgment, to conform to the evidence, reflect an issue actually tried by the express or implied consent of the parties, or permit the raising of new issues at trial. However, a party may not raise a new claim or defense for which the opposing party had no opportunity to prepare and which would result in prejudice in maintaining his action or defense. [Fed. R. Civ. P. 15(b)]

4) Due Process Limitation

Amendments to pleadings must satisfy due process. For example, in Nelson v. Adams U.S.A. Inc., 529 U.S. 460 (2000), the trial court permitted a post-verdict amendment to add a defendant, and simultaneously entered judgment against that new defendant. The Supreme Court held that this procedure violated the new defendant’s due process rights. The Federal Rules are meant to provide an opportunity for an added defendant to respond to a claim, and do not permit such “swift passage from pleading to judgment in the pleader’s favor.”

b. Supplemental Pleadings Supplemental pleadings relate to matters occurring after the date of the original pleading. The permission of the court, upon motion, is required. Permission may be granted even though the original pleading is defective in its statement of a claim for relief or a defense. [Fed. R. Civ. P. 15(d)]

Question 68

Rule 11

Answer 68

a. Certification upon Presenting Paper to Court In federal civil cases, the attorney (or unrepresented party), by presenting to the court a pleading, written motion, or other paper, certifies that to the best of her knowledge, information, and belief formed after an inquiry reasonable under the circumstances:
(i) The paper is not presented for any improper purpose (harassment, delay, etc.);
(ii) The legal contentions in the pleading are warranted by existing law or a nonfrivolous argument for the modification of existing law or the establishment of a new law;
(iii) The allegations and factual contentions either have, or upon further investigation or discovery are likely to have, evidentiary support; and
(iv) Denials of factual contentions are warranted on the evidence or, where specified, are reasonably based on a lack of information and belief. The certification applies anew each time an attorney or unrepresented party “later advocates” a position contained in a pleading, motion, etc. Thus, a paper that was not sanctionable when first presented may become sanctionable if the attorney or party later advocating a position contained in the paper has since learned or should have learned that the position no longer has merit.
b. Sanctions

For violations of the requirements listed above, the court has discretion to impose sanctions limited to what is sufficient to deter repetition of such conduct by the parties or parties in other cases (that is, general deterrence is a valid consideration). When appropriate, sanctions may be imposed against parties, attorneys, or law firms, and may consist of nonmonetary directives or monetary penalties including payment of expenses and attorneys’ fees incurred because of the improper paper. However, a monetary sanction may not be imposed on a represented party for violation of a.(ii), supra.

1) Court’s Initiative

A court on its own initiative may enter an order describing the matter that appears to violate Rule 11 and direct the proponent to show cause why sanctions should not be imposed.

2) Party’s Motion

A party who believes that his opponent has presented a paper in violation of Rule 11 may serve a motion for sanctions on the party. If the party does not withdraw or correct the matter within 21 days, the moving party may then file the motion for sanctions with the court.