SMJ Flashcards
A homeowner is suing a paint manufacturer for a violation of state law. The homeowner is a citizen of State A. The paint manufacturer is incorporated in State B, where the manufacturer’s principal place of business is also located. The homeowner is suing the paint manufacturer in state court in State B for $85,000 in damages. The paint manufacturer filed a notice of removal with the appropriate federal court in State B. The homeowner timely filed a motion to remand the case to state court.
Should the court grant this motion?
Yes, because the paint manufacturer is a resident of State B.
Any civil action commenced in a state court that is within the original jurisdiction of a U.S. district court may generally be removed by the defendant to the district court for the district in which the state-court action was commenced. However, if removal is sought solely based on diversity jurisdiction, then removal is improper if any defendant is a citizen of the state in which the action was filed. Here, removal was sought based only upon diversity jurisdiction, and the paint manufacturer is a citizen of State B, the state where the action was filed. Consequently, the court should grant the homeowner’s motion to remand the case to state court.
A plaintiff, a resident of State A, filed a complaint against two defendants in a state court in State B, where a car accident between the parties took place. The claims were based solely on state law. One defendant resides in State B, where the accident occurred, and another resides in State C, a neighboring state. The complaint alleged $100,000 in damages. The defendant who resides in State B was personally served with a complaint and summons while he was walking to work. The defendant who resides in State C was served by a process server in the forum state after attending a business meeting in that state. Shortly thereafter, both defendants filed a notice to remove the case to the federal district court in the district where the case was filed. The plaintiff filed a motion to remand. The federal district court granted the motion.
What is the most likely reason that the motion was granted?
One of the defendants is a citizen of the state in which the action was filed.
A civil action filed in state court may be removed to the district court where the state court action commenced if that federal court has original jurisdiction over the matter. If removal is sought solely based on diversity jurisdiction, however, the claim cannot be removed if any defendant is a citizen of the state where the original action was filed. In this case, one of the defendants was a citizen of State B, where the action was filed, and removal is therefore improper.
A personal representative of a decedent’s estate was sued by the two beneficiaries of the estate in federal district court for fraud under state law in connection with her handling of the estate. The beneficiaries, who uncovered the alleged fraud after the state probate proceedings had been concluded, each sought damages of $50,000. They were both citizens of the same state as the decedent had been before his death.
The personal representative was a citizen of another state.
The personal representative has filed a motion to remand the case to state court. Should the federal court grant this motion?
No, because the case originated in the federal court.
A federal court can only remand a case to the state court from which the claim originated. Because this action was initially filed in federal court, there is no state court to remand the case to; the federal court lacks the power to order a state court to accept this case. The federal court could, of course, dismiss the case if the court determines that it lacks subject-matter jurisdiction.
A plaintiff from State A entered into a three-party contract with a contractor and an electrician, both from State B. The contract covered renovation and reconstruction services that the contractor and electrician were to provide at the plaintiff’s newly purchased home. Upon inspection of the finished work, the plaintiff determined that there were substantial deviations from the contract and significant errors in workmanship. The plaintiff brought a diversity action for breach of contract against the contractor and electrician in federal district court in State B, alleging $125,000 in damages. The contractor then filed a cross-claim against the electrician for breach of that same contract and requested $75,000 in damages.
Can the court exercise supplemental jurisdiction over the contractor’s cross-claim?
Yes, because it arises out of the same transaction or occurrence as the original claim.
A cross-claim may be asserted by a defendant against another defendant or by a plaintiff against another plaintiff if the cross-claim arises out of the same transaction or occurrence as the initial claim, without regard to the amount in controversy or the citizenship of the parties to the cross-claim as long as the court has subject matter jurisdiction over the original complaint. A cross-claim falls under the supplemental jurisdiction of the court. Here, the contractor’s cross-claim against the electrician is for breach of the same contract upon which the plaintiff’s claim is based. Thus, the cross-claim arises out of the same transaction or occurrence as the plaintiff’s claim. As a result, the court can exercise supplemental jurisdiction over the claim, even though the contractor and electrician are both citizens of State B and the amount in controversy does not exceed $75,000.
Parents of a minor filed a product liability action on behalf of their child in federal district court against a manufacturer. The suit seeks damages of $300,000 from the manufacturer. The minor and the manufacturer are citizens of different states. In addition, the parents of the minor, who are citizens of the same state as the minor, seek to join the action as plaintiffs under the rule for permissive joinder, asserting their own claims for damages totaling $50,000 which arose from the same incident. The manufacturer contends that the court lacks subject matter jurisdiction over the parents’ personal claims.
May the court exercise subject matter jurisdiction over the parents’ personal claims?
Yes, because the court can exercise supplemental jurisdiction over the parents’ personal claims.
The parents’ claims do not satisfy the amount-in-controversy requirement of more than $75,000, and therefore the court lacks subject matter jurisdiction over their claims based on diversity jurisdiction. However, the court may exercise supplemental jurisdiction over their claims because they seek to join this action, over which the court has diversity jurisdiction, under the permissive joinder rule (Rule 20) and their claims arise out of a “common nucleus of operative fact.”
The plaintiff, a resident of State A, was involved in an automobile accident with the defendant, who is a resident of State B. The plaintiff filed a negligence claim against the defendant in federal district court seeking to obtain $80,000 in damages. At the time of the accident, a passenger was riding in the plaintiff’s car. The passenger, a resident of State B, also suffered injuries and seeks to join in the plaintiff’s claim alleging $50,000 in damages.
Does the federal district court have jurisdiction over the passenger’s claim?
No, because allowing joinder of the passenger’s claim would destroy complete diversity.
Although a federal district court with jurisdiction over a claim may exercise supplemental jurisdiction over additional claims that arise out of a common nucleus of operative fact, the addition of a party cannot defeat complete diversity. Here, the defendant is a resident of State B. Because the passenger is also a resident of State B, adding the passenger’s claim would defeat complete diversity.
A mother and her son were both injured at a construction site. They brought a negligence action in federal court against the construction company for failure to exercise reasonable care with respect to their presence at the site. The mother alleged in good faith that she suffered $55,000 in damages; her son alleged in good faith $200,000 in damages. Subsequently, they permissively joined as a defendant under Rule 20 an individual whose intentional actions in tampering with warnings posted by the construction company also allegedly caused their injuries. The mother and her son are citizens of the forum state; the two defendants are citizens of other states. The individual defendant has moved to dismiss the mother’s claim against it for lack of subject-matter jurisdiction.
How should the court rule?
Grant the motion, because the mother’s claim was asserted against a defendant who was permissively joined under Rule 20.
The court does not have diversity jurisdiction over the mother’s claim against the individual defendant, even though there is complete diversity between the parties, because her claim does not exceed $75,000. Nor can the court exercise supplemental jurisdiction over her claim against the individual defendant.
The mother’s claim does form part of the same case or controversy as her son’s claim and the court does have diversity jurisdiction over his claim because it meets both the amount-in-controversy and diversity-of-citizenship requirements. Despite that, because the mother’s claim is made by a plaintiff against a party permissively joined under Rule 20, the court cannot exercise supplemental jurisdiction.
An individual who was a U.S. citizen but had permanently moved to a foreign country returned to the United States for an extended visit with relatives who lived in State A. While in State A, the individual suffered serious injuries when an amusement park ride malfunctioned. The individual filed a negligence action in federal district court seeking $95,000 against the corporation that owned the amusement park in which the ride was located. The corporation is incorporated in State B and has its principal headquarters in State A. The corporation has filed a motion to dismiss for lack of subject matter jurisdiction.
Should the court grant the motion to dismiss?
Yes, because the individual’s domicile is in a foreign country.
When the cause of action is based on state common law rather than a federal question as is the case here, subject matter jurisdiction exists on the basis of diversity of citizenship when the plaintiff and the defendant are U.S. citizens as well as citizens of different states. Here, although the individual and the corporation are both U.S. citizens, and the corporation is a citizen of both State A where its principal headquarters is located and State B where it is incorporated, the individual is not a citizen of any U.S. state, but instead, having moved permanently to a foreign country, is domiciled in the foreign country. Therefore, there is no diversity of citizenship because the action is not between citizens of different States. Moreover, alienage jurisdiction is lacking because the individual is not an alien: the facts indicate that the individual has retained his U.S. citizenship. Consequently, subject matter jurisdiction does not exist.
Baby Genius is a brand of organic baby formula created for parents who want their infants to consume the most high-quality nutrients. Baby Genius is produced by a corporation that is incorporated in Minnesota. The corporation has its headquarters in Wisconsin. All of the ingredients used to formulate Baby Genius are sourced from Iowa. The corporation’s sole manufacturing and distribution plant is located in Illinois. Most of the sales of Baby Genius are to residents of California. A mother who lives in Arizona has been feeding Baby Genius to her infant and has filed a federal diversity claim against the corporation because, in a span of 16 months, she has not seen any significant improvement in her infant’s cognitive abilities.
In addition to Minnesota, the corporation is likely a citizen of which other state for the purposes of this cause of action?
Wisconsin.
For the purposes of diversity jurisdiction, a corporation is deemed to be a citizen of every state in which it is incorporated and of the state where it has its principal place of business. A principal place of business refers to the “nerve center” of the corporation. The nerve center is generally the location from which the high-level officers direct, control, and coordinate the activities of the corporation. Typically, the nerve center is the corporate headquarters. Here, because the corporation’s headquarters are located in Wisconsin, that state is likely the location of its principal place of business.
The distracted driver of a powerboat struck and seriously injured two water skiers who, at time of the accident, were performing a stunt in which one was on the shoulders of the other. The unrelated skiers, who each suffered damages in excess of $100,000, filed a joint complaint based on negligence in a federal court located in the district in which the accident occurred. One of the skiers was a citizen of the forum state. The driver-defendant and the other skier were citizens of a neighboring state. The forum state has a long-arm statute that permits the exercise of jurisdiction to the extent permissible under the Due Process Clause of the Fourteenth Amendment.
Upon which of the following grounds can the driver most likely successfully move for dismissal of the claim asserted by the skier who is not a citizen of the forum state?
Lack of subject matter jurisdiction
The federal district court has neither diversity nor supplemental jurisdiction over the claim of the non-forum skier. This claim satisfies the amount-in-controversy requirement since it exceeds $75,000, but it does not satisfy the diversity-of-citizenship requirement because the non-forum skier and the defendant are both citizens of the same state. Consequently, the court lacks diversity jurisdiction over this claim. In addition, the failure to satisfy the diversity-of-citizenship requirement prevents the court from exercising supplemental jurisdiction over this claim, even though it arises from the same nucleus of operative facts as the forum-skier’s claim.
A shareholder in a closely held corporation brought an action against the corporation to compel it to make a $100,000 distribution that had been authorized by the board of directors. The shareholder filed the action in a federal district court for the state in which the corporation was incorporated and had its principal place of business. The shareholder was born and grew up in a neighboring state, but recently moved to a foreign country with the intent to live there permanently, but with no intent to surrender her United States citizenship or acquire foreign citizenship.
Does the court have subject-matter jurisdiction over this action?
No, because diversity jurisdiction does not exist.
In order for diversity jurisdiction to exist with respect to an individual who is a party to an action, the party must either be a citizen of a state or a citizen (or subject) of a foreign country. State citizenship of a party turns on whether the party is domiciled in the state. Here, the shareholder is no longer domiciled in the neighboring state, but instead is domiciled in the foreign country where she currently lives and has the intent to remain permanently. Unlike state citizenship, citizenship in a foreign country generally does not depend on domicile but on whether the individual has taken the necessary steps to become a citizen.
Here, since the shareholder does not plan to renounce her United States citizenship or acquire foreign citizenship, she continues to be a United States citizen. As a consequence, she is neither a citizen of a state nor a citizen (or subject) of a foreign country and cannot be a party to an action brought in federal court on the basis of diversity.
Two parked vehicles, a luxury car and a pickup truck, were seriously damaged when a light pole fell on them. The owners of the vehicles jointly sued the installer of the pole in federal district court, alleging that the damage to their vehicles was caused by the defendant’s negligent installation of the pole. The owner of the car claimed $75,000 in damages and the owner of the truck claimed $15,000 in damages. The defendant was a citizen of the forum state. Each plaintiff was a citizen of the same neighboring state. Contending a lack of subject-matter jurisdiction, the defendant timely filed a motion to dismiss the action. The court granted the motion.
Did the court err in granting the motion?
No, because the amount-in-controversy requirement was not met.
In order for subject-matter jurisdiction based on diversity to exist, the amount in controversy must exceed $75,000 and no plaintiff may be a citizen of the same state as any defendant. Although the diversity-of-citizenship requirement is met because the plaintiffs and the defendant reside in different states, the amount-in-controversy requirement is not met by either plaintiff. The damages sought by each, although arising from the same occurrence, cannot be aggregated to meet this requirement. Since neither plaintiff sought damages in excess of $75,000, the federal district court did not err in dismissing the case for lack of subject-matter jurisdiction.
A plaintiff sued a defendant in federal district court. The plaintiff was domiciled in the forum state; the defendant was domiciled in another state. The plaintiff asserted two unrelated causes of action against the defendant. One was based on a breach of contract, for which the plaintiff sought $60,000 in damages. The other was a personal injury claim for which $25,000 in damages was sought. The defendant, who was served with process while in the forum state, filed a timely motion to dismiss based on the lack of subject-matter jurisdiction.
How should the court rule?
Deny the motion, because diversity jurisdiction exists.
In order for subject-matter jurisdiction based on diversity to exist, the amount in controversy must exceed $75,000 and the plaintiff and defendant must be citizens of different states. When there is only one plaintiff and one defendant, all of the plaintiff’s claims against the defendant, including unrelated claims, are aggregated for purposes of determining whether the amount-in-controversy requirement has been satisfied. Here, the aggregated amount of the plaintiff’s unrelated claims, $85,000 ($60,000 + $25,000) exceeds the amount-in-controversy threshold. In addition, the diversity-of-citizenship requirement is met; each party is a citizen of a different state since citizenship for an individual is determined on the basis of domicile.
The plaintiff, a State D citizen, is a shareholder of a corporation incorporated and having its principal place of business in State D. She brought an action in the U.S. District Court in State D requesting an injunction against the corporation, which allegedly was violating a State D law that required corporations to invest only in lawful commercial paper and that gave shareholders a right to sue over alleged violations of this law. The plaintiff claims that the defendant corporation had been purchasing commercial paper that had been issued by the federal government in violation of the U.S. Constitution. The corporation denies this claim and moves to dismiss on the ground that the U.S. District Court lacks jurisdiction.
What would the court be most likely to do?
Exercise general federal-question jurisdiction because the plaintiff has a real and substantial issue of federal law and her right to relief depends upon the resolution of this issue.
When state law creates a cause of action, a federal court can nonetheless exercise general federal-question jurisdiction if the complaint raises a real and substantial issue of federal law, and the outcome necessarily depends on resolving this federal issue. Here the plaintiff’s complaint raises a genuine and substantial federal law issue (the constitutionality of the federal commercial paper), which must be resolved to decide her request for an injunction.
A plaintiff properly filed a complaint in state court seeking $50,000 in damages. The complaint alleged that defendant was violating a state law that protected trade secrets. The defendant timely filed an answer asserting a defense based on federal patent law. The next day the defendant, who was not a citizen of the forum state, timely filed a notice of removal with the federal district court located in the forum state. In response, the plaintiff filed a motion to remand the case to state court, arguing that the federal court lacked federal-question jurisdiction.
Should the federal district court grant the plaintiff’s motion?
Yes, because the complaint was based on state law and sought only $50,000 in damages.
For subject matter jurisdiction based on diversity, the amount-in-controversy must exceed $75,000. Here, the plaintiff sought only $50,000 in damages, so the complaint could not be brought in federal court under diversity jurisdiction. Federal-question jurisdiction exists only when an issue of federal law is presented in the plaintiff’s complaint (the “well-pleaded complaint” rule). Under this rule, the determination of jurisdiction must be made by considering only the necessary elements of the plaintiff’s cause of action, and not potential defenses. In this case, the plaintiff’s complaint did not contain an issue of federal law, and thus there was no basis for federal-question jurisdiction.
