SMJ

Question 1

What are the two original bases of SMJ for federal jurisdiction we discussed?

Answer 1

FQ & Diversity

Question 2

Federal Question Statute Section

Answer 2

Section 1331

Question 3

Diversity Statute Section

Answer 3

1332

Question 4

Federal Question Key Phrase

Answer 4

“arising under the Constitution, laws, or treaties of the United States”

• Reminder: Beware of well-pleaded complaint rule

Question 5

Diversity Jurisdiction Requirements

Answer 5

• Complete Diversity
• Amount in controversy exceeding $75K

Question 6

Two Tests for Federal Question

Answer 6

• Creation Test
• Grable Test (Essential Federal Ingredient Test)
• Reminder: Beware of well-pleaded complaint rule

Question 7

Creation Test

Answer 7

We ask whether the cause of action is created by federal law
- If congress created the cause of action, it satisfies the creation test and gets into federal court

Question 8

Grable Test (Essential Federal Ingredient Test)

Answer 8

If a state creates a cause of action, we check to see if there is an essential federal ingredient that allows the claim to proceed to federal court.

4 factors:
- Necessarily Raised
- Actually disputed
- Substantial
- Capable of resolution in federal court w/o disrupting the federal-state balance approved by Congress

Question 9

Grable Test: Necessarily Raised

Answer 9

Does a federal issue need to be addressed or resolved for court to reach a decision/resolve the dispute?

Question 10

Grable Test: Actually Disputed

Answer 10

Do the parties disagree on the federal issue at hand?

Question 11

Grable Test: Substantial

Answer 11

Is the issue one of significant importance to the federal system as a whole? Is the federal issue something the federal system cares a lot about, or not at all?

Question 12

Grable Test: Fed-State Balance

Answer 12

Will granting SMJ here upset the balance between the federal and state courts? Is this the sort of claim that is better resolved in state court?

Question 13

Well-Pleaded Complaint Rule

Answer 13

Defenses do not count under arising under jurisdiction. A defense that hinges on federal law cannot satisfy the essential federal ingredient test.

Policy: (1) We don’t want to upset the federal balance and bring a huge number of state claims into federal court. (2) Courts don’t want to have to draw predictions on possible federal defenses upon examining a complaint. (3) Requiring the federal issue in the Plaintiff’s factual claims makes the jurisdictional inquiry less complicated and more reliable.

Question 14

Federal SMJ Steps (Bare Bones)

Answer 14

(1) Ask if the forum in which the court sits has jurisdiction.
(2) Ask if the case falls under FQ or Diversity.
(3) If FQ, the claim must satisfy either the (1) creation test or the (2) essential federal ingredient test
(4) If diversity, the claim must have (1) complete diversity and (2) the amount in controversy must exceed $75,000.

Question 15

Complete Diversity

Answer 15

No P has the same citizenship as any D

Question 16

Amount in Controversy

Answer 16

$75K+
- determined at the time of filing
- must be alleged in good faith (two requirements: objective and subjective); measured by legal certainty test

Question 17

Legal Certainty Test

Answer 17

Would someone familiar with the law not have reasonably concluded the claim was worth the jurisdictional amount?

At the pleading stage, did the P plead facts such that a court can say she cannot reach the required amount?

Assesses reasonableness of asserted amount by examining similar cases within the jurisdiction

Policy: Very lenient standard. Doesn’t have to be the best outcome, just the best possible outcome

Question 18

When is domicile determined (Diversity Purposes)?

Answer 18

Determined at the time of filing

Question 19

How to determine individual domicile and what factors to weigh

Answer 19

Look at whether the party intended to stay indefinitely
- Standard: party invoking diversity must prove domiciliary by preponderance of evidence
- Bank One Factors: (a) where the party exercises civil and political rights; (b) pays taxes; (c) has real and personal property; (d) has a DL or other license; (e) has bank accounts; (f) has a job or owns a business; (g) attends religious services; (h) has clubs memberships

Question 20

How to determine corporate domicile

Answer 20

Principal place of business (PPB)
State of incorporation

Question 21

Principal Place of Business (PPB)

Answer 21

Nerve center: where the corporations officers direct, control, and coordinate the corp’s activities
- normally where the HQ is
- Only 1 PPB

Question 22

Supplemental Jurisdiction Statute Section and Subsections

Answer 22

1367 (main)
1367(a): GRANT
1367(b): TAKE AWAY/REMOVE
1367(c): DISCRETION

Question 23

Supplemental Jurisdiction Purpose

Answer 23

Allows federal courts to sometimes decide a state claim that does not fall within the court’s federal question or diversity jurisdiction

• ALL CLAIMS NEED SMJ
• If the claim does not have an independent basis for SMJ (FQ or diversity), then it can only get into federal court if it can have supplemental jurisdiction

Question 24

Supplemental Jurisdiction Key Phrase For Including the Tagalong Claim

Answer 24

The tagalong state claim must be a part of the same case or controversy as the standalone claim.

Question 25

Supplemental Jurisdiction: 1367(a)

Answer 25

Grant supp jur if the claim is from the same case or controversy as the standalone claim

Question 26

Supplemental Jurisdiction: 1367(b)

Answer 26

In cases based solely on diversity, 1367(b) bars supp jur in certain circumstances

Question 27

Supplemental Jurisdiction: 1367(c)

Answer 27

A court can decline supp jur based on the factors listed in C
Factors: (a) novel or complex state law issue; (b) tagalong predominates over the standalone claim; (c) court has already dismissed standalone claim; (d) other compelling reasons to dismiss (e.g. would confuse the jury, undermine judicial economy, etc.)

Question 28

Erie: When to Apply

Answer 28

The source of law will determine what analysis you use to decide whether to apply a federal procedural law. There are three tracks: (1) federal statute v. state law; (2) FRCP v. state law; and (3) federal judge-made law v. state law

Tidbit 1: Erie is about the choice of vertical law (federal v. state law), NOT horizontal law (so not about comparing whether NM v. TX law applies).

Tidbit 2: Erie also attempts to determine which state decisional law would apply. In deciding which law to apply, federal courts have to predict what the top state court would use and try to predict it by looking at state trial/appellate courts.

Be careful: If state supreme court recently weighed in on the issue, the federal court is bound by that decision. If not, the federal court will try to predict what they’d do. See Tidbit 2.

Note: When dealing with federal courts in diversity jurisdiction, we apply state substantive law.

Question 29

Erie: Procedural v. Substantive

Answer 29

Procedural: manner and means of enforcing a right or managing a claim or remedy
Substantive: laws that influence underlying conduct and impact the rights of either party involved

Question 30

Steps of Track 1: Federal Statute

Answer 30

(1) Is the federal statute broad enough to control the issue? If yes, proceed to step 2.
(2) Is the federal statute a valid exercise of congressional power?
(2(a)) Is there a conflict between the federal statute and state law? If no, apply both.
(2(b)) If so, is the federal law rationally classifiable as procedural? If yes, apply the federal statutory law.

Question 31

Steps of Track 2: FRCP

Answer 31

(1) Is there a conflict? If no, apply both.
(2) If so, apply the Rules Enabling Act analysis.
(2(a)) Is the FRCP rule a general rule of practice or procedure under 2072(a)? Is it rationally classifiable as procedural law?
(2(b)) If yes, does it modify, abridge, or enlarge a substantive right under 2072(b)? If so, FRCP wins. If yes, state law wins.

Question 32

Steps of Track 3: Fed Judge-Made Law

Answer 32

Apply Hanna/Byrd Combo

Assume the constitutional grant of judge-made procedural rule.

(1) Will applying judge-made law lead to (a) inequitable administration of law or (b) forum shopping? If not, apply federal law. If yes, apply state law.
(2) HOWEVER, check to see if there are (a) countervailing federal interests overcome state interests AND (b) those interests account for the forum shopping/inequitable administration

Question 33

When can you aggregate claims to reach the jurisdictional amount in controversy minimum?

Answer 33

Separate plaintiffs can’t aggregate claims against single defendants to reach the jurisdictional minimum UNLESS there is a common undivided interest (e.g. class action)