SMJ

Question 1

Can parties consent to SMJ?

Answer 1

No

Court must address sua sponte and dismiss if lacking

Question 2

Exceptions to Diversity Jxd

What Types of Cases Will Fed Court’s Not Exercise Diversity JXD over?

Answer 2

Domestic Relations

& Probate / Estate Proceedings

Domestic Relations

• Actions “involving the issuance of a divorce, alimony or child custody decree.”

Probate Proceedings

• Cases to probate a decedent’s estate
• If claim asserted
  
  • involves actual probate or annulment of a will, or
  • seeks to reach property in the custody of a state probate court

Example:
The federal court had Jxd over a claim for damages for alleged tortious interference with testator’s efforts to create a trust benefiting the P (who was Anna Nicole Smith). [Marshall v. Marshall]

Question 3

“Complete Diversity”

Defined

Answer 3

Every P must be of diverse citizenship from every D

• No diversity if any P is citizen of same state as any D — no same state on either side of the V
• Does not require that all parties be citizens of different states — just no P and no D can be from same state
  
  • Two Ps can be from Utah, as long as no D is from Utah

Determined at Time of Filing

• Diversity need not exist when claim arose
• Diversity is not defeated if, after commencement of the action, a party later becomes a citizen of the same state as one of his opponents

Question 4

When must (Complete) Divsersity exist?

Answer 4

Determined at Time of Filing

• Diversity need not exist when claim arose
• Diversity is not defeated if, after commencement of the action, a party later becomes a citizen of the same state as one of his opponents

Question 5

Exceptions to Complete Diversity Rule

Answer 5

(1) Federal Interpleader

• Federal Interpleader Act — permits SMJ in interpleader actions whenever
  
  • (a) any two or more adverse parties are of diverse citizenship, and
  • (b) the money or property at issue be valued at $500 or more
• Interpleader Under Federal Rules — Complete Diversity
  
  • Interpleader pursuant to FRCP 22, on the other hand, requires the usual diversity between all
    
    • Ps (stakeholders) and
    • Ds (claimants)

(2) Class Actions

• For class actions, diversity is determined on the basis of the citizenship of the named members of the class who are suing.
• Only minimal diversity required

(3) Accidents with 75+ people dead

• The Multiparty, Multiforum Jxd Trial Act – SMJ if minimal diversity between adverse parties

Question 6

Citizenship of

Natural Persons (US Citizens)

Answer 6

Citizen = State Where Domiciled at Time Suit is Filed

Domicile — where a person maintains permanent home

• (1) Physical — actual presence in the state
• (2) Intent — intent to remain / make state permanent home for foreseeable future — no present intent to go elsewhere
  
  • Relevant factors — taking a job, buying a house, joining civic orgs, registering to vote, licensed to drive, qualifying for in-state tuition
• Cannot have more than one domicile / citizenship
• Everyone has a domicile — impossible to lack one
• You retain your last domicile until you gain a new one

US National Living Abroad

• American citizen permanently living abroad has no domicile within the US – and is not a citizen of any state
• Such a person cannot be an original party to a Diversity action in Fed Court

Decedents, Minors, Incompetents, etc.

i.e., people who must sue or be sued through a legal representative

• look to citizenship of decedent, minor, etc.,
  
  • i.e., one being represented
• not citizenship of their legal representative / guardian / executor — their citizenship is irrelevant

Question 7

Citizenship of

US National Living Abroad

Answer 7

American citizen permanently living abroad

• has no domicile within the US – and is not a citizen of any state
• cannot be an original party to a Diversity action in Fed Court

Rules to Remember

• Citizen = State Where Domiciled at Time Suit is Filed
• Domicile — where a person maintains permanent home
• Cannot have more than one domicile / citizenship
• Everyone has a domicile — impossible to lack one
• Retain last domicile until you gain a new one

Decedents, Minors, Incompetents, etc.

i.e., people who must sue or be sued through a legal representative

• look to citizenship of decedent, minor, etc.,
  
  • i.e., one being represented
• not citizenship of their legal representative / guardian / executor — their citizenship is irrelevant

Question 8

Citizenship of

Decedents, Minors, Incompetents, etc.

Answer 8

i.e., people who must sue or be sued through a legal representative

• look to citizenship of decedent, minor, etc.,
  
  • i.e., one being represented
• not citizenship of their legal representative / guardian / executor — their citizenship is irrelevant

But - Class Action

• citizenship of a class in a (non-CAFA) class action lawsuit is determined by citizenship of the Reps

Question 9

Citizenship of

Business Trusts

Answer 9

• The Trustees of a business trust are the real parties in interest — their citizenship determines whether there is diversity
  
  • not that of the individual SHs

Question 10

Citizenship of

Corporations

Answer 10

• (1) Incorporated
  
  • Every US State or Country where incorporated
    
    • Can be multiple — but rare (MBE will tell you)
• (2) PPB
  
  • Only one
  • Where managers direct, coordinate, and control corporate activities
    
    • usually corp HQ

__________________________________

Special Issues:

Alienage — Incorporation or PPB in Foreign Country

Bcas of potential of multiple citizenships for a Corp:

• Can simultaneously be an Alien & Citizen of a US state
• If Corp is an Alien — will defeat Jxd in a suit against another Alien — even though Corp may also have US state citizenship

SH Derivative Suits

• Court will realign Corp as a D to determine diversity

Question 11

Citizenship of

Unincorporated Association

(i.e., Non-Corp Business) — Partnership, LLP, LLC

Answer 11

Citizen of ALL states

in which ANY Partner / Member is a citizen

• If LLP, etc. — we count limited & general partners
• Don’t look to PPB

Question 12

Diversity of Citizenship

Realignment According to Interest & Collusion

Answer 12

• In determining whether diversity exists, court will look beyond the nominal designation of the parties in pleadings and realign them according to their true interests in the dispute. Thus, realignment may create diversity or destroy it.

SH Derivative Actions

• Court will realign Corp as a D to determine diversity

Assignment of Claims

• Where the assignment of a claim to another party is for collection only, the assignment will be ignored in determining whether diversity exists. But, assignee’s citizenship will be used if there is an absolute assignment of the claim made and the assignor retains no interest in the assigned claim.

Question 13

Diversity of Citizenship

Assignment of Claims

Answer 13

Realignment According to Interest & Collusion

• Where the assignment of a claim to another party is for collection only, the assignment will be ignored in determining whether diversity exists.
  
  • But, assignee’s citizenship will be used if there is an absolute assignment of the claim made and the assignor retains no interest in assigned claim

Question 14

Diversity of Citizenship

Suing Insurers

Answer 14

When P sues an insurer on a policy or contract of liability insurance, and does not also join the insured, the insurer (whether Corp or not) is treated as a citizen of all of the following — the state or foreign country in which

• (1) Insurer is a citizen
  
  • (a) is incorporated (if it is)
  • (b) has its PPB, and
• (3) the insured is a citizen

Question 15

Alienage Jxd

US National Living Abroad

Answer 15

No Alienage for US Nationals

— i.e., US citizen permanently living abroad

American citizen permanently living abroad

• has no domicile within the US – and is not a citizen of any state
• cannot be an original party to a Diversity action in Fed Court

Rules to Remember

• Citizen = State Where Domiciled at Time Suit is Filed
• Domicile — where a person maintains permanent home
• Cannot have more than one domicile / citizenship
• Everyone has a domicile — impossible to lack one
• Retain last domicile until you gain a new one

Decedents, Minors, Incompetents, etc.

i.e., people who must sue or be sued through a legal representative

• look to citizenship of decedent, minor, etc.,
  
  • i.e., one being represented
• not citizenship of their legal representative / guardian / executor — their citizenship is irrelevant

Question 16

Alienage Jxd

Answer 16

Alien Defined

• citizen / subject of a foreign country
• not a “citizen” of a US State

Alienage / Diversity Exists When

(I) Case is Btwn:

• (1) Citizen of a US State
• (2) Citizen of a Foreign Country

(II) Aliens are Additional Parties

• Case is btwn US citizens of different states (i.e., completely diverse) — Aliens are Additional Parties
• Example
  
  • P1 — citizen & resident of NY
  • P2 — citizen & resident of France
  • D — citizen & resident of CA

NO Alienage / Diversity Where:
(I) Case Btwn

• (1) Citizen of US State VS
• (2) Alien Resident domiciled in Same State

(II) Alien vs Alien

• Can’t have Aliens on both sides of V
• Example
  
  • P1 — citizen & resident of NY
  • P2 — citizen & resident of France
  • D — citizen & resident of Germany

Aliens are not permitted to be on both sides of the “v” unless they each have U.S. state citizen coparties on both sides.

• alien —v— alien
• alien —v— alien + state citizen
• state citizen + alien —v— alien
• state citizen —v— permanent resident alien from same state
• state citizen —v— US citizen domiciled abroad

Question 17

Diversity JXD

Amount in Controversy Req

Answer 17

P’s complaint must make a good faith allegation that amount of damages / injury exceeds $75,000

at least 1 cent higher than 75k

_______________________________________

Not Including — Interest on Award Amount & Costs

• But following are included:
  
  • Attorneys’ Fees recoverable by K or statute
  • Interest that constitutes a part of the claim itself, as distinguished from interest payable by virtue of a delay in payment

Legal Certainty Test

• To dismiss for insufficient amount — there must be no legal possibility that recovery will exceed $75k
• Must be legal certainty it will be less — matter of law

Time Calculated — Date of Filing

• Subsequent events do not defeat Jxd
• Irrelevant:
  
  • Part payment by D
  • Amount P actually awarded

Equitable Relief Claims

• court looks at value of harm caused — can look from either P or D perspective
  
  • P — cost of harm if not granted
  • D — cost of complying w/ injunction

_______________________________________
AGGREGATING CLAIMS

(Combining 2+ Claims to Meet 75k)

(A) 1 P vs 1 D

• Single P can aggregate all claims against Single D
• Claims don’t need to be factually related

(B) Other i.e., Not — 1 P vs 1 D

• (a) Single P vs Multiple Ds
  
  • Joint Tortfeasors / Joint Liability Claim
    
    • This is ok
    • If P has joint liability claims against multiple Ds — use total value of the claim
  • Not ok if — claims based on separate liabilities
• (b) Multiple Ps vs Single D
  
  • Multiple Ps seek to enforce a single title or right in which they have a common, undivided interest (rare)
    
    • EX — several Ps jointly own real estate and sue D to quiet title — undivided interest, so aggregation OK
  • Examples where not ok
    
    • Multiple victims of the same accident suing for personal injuries — their claims are separate and distinct from one another.
    • In Class Actions — claims of class members cannot be aggregated if their rights are “separate” rather than “joint” / “common.” One class Rep’s claim must exceed $75k, and then court will have Supp Jxd over the claims that don’t

Question 18

Diversity JXD

Amount in Controversy Req

AGGREGATING CLAIMS

Combining 2+ Claims to Meet 75k

Answer 18

(A) 1 P vs 1 D

• Single P can aggregate all claims against Single D
• Claims don’t need to be factually related

_________________________________________

(B) Other i.e., Not — 1 P vs 1 D

• (a) Single P vs Multiple Ds
  
  • Joint Tortfeasors / Joint Liability Claim
    
    • This is ok
    • If P has joint liability claims against multiple Ds — use total value of the claim
  • Not ok if — claims based on separate liabilities
• (b) Multiple Ps vs Single D
  
  • Multiple Ps seek to enforce a single title or right in which they have a common, undivided interest (rare)
    
    • EX — several Ps jointly own real estate and sue D to quiet title — undivided interest, so aggregation OK
  • Examples where not ok
    
    • Multiple victims of the same accident suing for personal injuries — their claims are separate and distinct from one another.
    • In Class Actions — claims of class members cannot be aggregated if their rights are “separate” rather than “joint” / “common.” One class Rep’s claim must exceed $75k, and then court will have Supp Jxd over the claims that don’t

Question 19

Federal Question JXD

Answer 19

Fed Courts have Jxd over

• (1) properly-pleaded claims
• (2) that arise under Fed Law
  
  • statute, regulation, Const., etc.

Claim Arising Under?

• Claim must show a right / interest founded substantially on Federal Law
  
  • requires interpretation / right created by

Well Pleaded Complaint

• FQ must appear on the face of complaint
  
  • Ask if P is enforcing a Fed right
• Following are Insufficient
  
  • Potential Defenses by D???
  • Extraneous Allegations
    
    • Complaint raises a federal law or issue, but P is not enforcing a federal right
      
      • e.g., dispute over who owns a copyright that raises only state law K questions doesn’t require
        interpretation of Copyright Act

Question 20

Exclusive FQ Jxd

Answer 20

Fed Courts have exclusive Jxd over certain types of claims, which must be heard by them, including

• (1) Bankruptcy
• (2) Patent & Copyright
• (3) Federal Antitrust Claims
• (4) Postal Matters

Question 21

Supplemental JXD

Diversity Cases

Answer 21

• Each additional claim must share CNOF (factual connection) with an existing claim that invoked SMJ — (FQJ or Diversity Jxd)
  
  • Same T/O
    
    • CNOF Req always satisfied if Supp claims arise from Same T/O as underlying claim
      
      • CNOF is broader than Same T/O

Diversity Case — Limitation, etc.

(A) Claims by Ps cannot invoke Supp Jxd

Exceptions

• Multiple Ps, and the claim by one P against (original) D doesn’t meet Amount in Controversy req
  
  • P1 and P2 (both CA) sue D (NY) on state-law claims in Fed Court. P1’s claim is for $100k. P2’s is for $50k. P2’s claim arises from the same T/O as P1’s. P1’s claim gets Supp Jxd.
• Ps joined either under
  
  • Rule 23 (class action) or
  • Rule 20 (permissive party joinder),
  • so long as Complete Diversity is not destroyed.

(B) Claims by Ds (can use)

• Can Use to Overcome Amount in Controversy
  
  • Ds can use to overcome 75k Amount in Controversy Req if CNOF satisfied
• But NOT Complete Diversity Req
  
  • Supp Jxd cannot be used to override the Complete Diversity req

ALSO - Discretionary Factors to Decline Supp
Court may refuse supplemental claim (even if reqs met) if:

• (1) Original Jxd claims are dismissed early in the proceeding
  
  • e.g., by 12(b)(6) Failure to State a Claim
• (2) State Law Grounds — the Supp (state) claims
  
  • (a) raise novel or complex state law issue, or
  • (b) substantially predominate over original Jxd claims

Question 22

Supplemental JXD

Answer 22

• Supp Jxd allows a Fed Court to hear additional claims — which on their own don’t meet Diversity or FQ Jxd reqs
  
  • counterclaims
  • crossclaims
  • impleader
  • intervention
• Cannot use to get a Case into Fed Court
  
  • Case must already be in (from Div or FQ)
  • Just brings in additional claims into a pending case already in Fed Court

Must Share CNOF

Common Nucleus of Operative Fact

• Each additional claim must share CNOF (factual connection) with an existing claim that invoked SMJ — (FQJ or Diversity Jxd)
• Same T/O
  
  • CNOF Req always satisfied if Supp claims arise from Same T/O as underlying claim
    
    • CNOF is broader than Same T/O

Diversity Case — Limitation, etc.
(A) Claims by Ps cannot invoke Supp Jxd

Exceptions

• Multiple Ps, and claim by one of P against (original D) doesn’t meet the Amount in Controversy req
  
  • P1 and P2 (both CA) sue D (NY) on state-law claims in Fed Court. P1’s claim is for $100k. P2’s is for $50k. P2’s claim arises from the same T/O as P1’s. P1’s claim gets Supp Jxd.
• Ps joined either under
  
  • Rule 23 (class action) or
  • Rule 20 (permissive party joinder),
  • so long as Complete Diversity is not destroyed.

(B) Claims by Ds (can use)

• Can Use to Overcome Amount in Controversy
  
  • Ds can use to overcome 75k Amount in Controversy Req if CNOF satisfied
• But NOT Complete Diversity Req
  
  • Supp Jxd cannot be used to override the Complete Diversity req

Discretionary Factors to Decline Supp
Court may refuse supplemental claim (even if reqs met) if:

• (1) Original Jxd claims are dismissed early in the proceeding
  
  • e.g., by 12(b)(6) Failure to State a Claim
• (2) State Law Grounds — the Supp (state) claims
  
  • (a) raise novel or complex state law issue, or
  • (b) substantially predominate over original Jxd claims

Question 23

Discretionary Factors to Decline

Supplemental JXD

(even when orig jxd is FQ)

Answer 23

Court may refuse supplemental claim (even if reqs met) if:

• (1) Original Jxd claims are dismissed early in the proceeding — and only slate claims left
  
  • e.g., by 12(b)(6) Failure to State a Claim
• (2) State Law Grounds — the Supp (state) claims
  
  • (a) raise novel or complex state law issue, or
  • (b) substantially predominate over original Jxd claims

Question 24

Removal JXD

Answer 24

D can remove a case originally filed in state court to Fed Court

__________________________________________

RULES; GENERALLY

(A) Only D Can Remove (if all Ds join)

• All Ds must agree to removal
  
  • Ds who have been properly joined and served must join in the petition for removal

(B) Original Jxd Necessary — Can only remove if case if P could have filed in Fed Court — i.e., there is FQ / Div + Supp

(i) D may remove separate & independent FQ claim

• If a case filed in state court contains a claim that would arise under Fed law, and it is joined with state law claims that do not invoke Div or Supp Jxd, the entire case can be removed to federal court.
  
  • But— Fed Court must sever and remand state law claims to state court.
  • Only those Ds against whom a Fed claim is asserted must join in the removal.

(C) Waiver — if D files Permissive Counterclaim

• D who filed permissive counterclaim in state court waives right to remove

(D) Limits in Diversity Jxd Case

(i) Can’t remove if — Any In-State D

• D cannot remove if P filed suit in any D’s home state
  
  • i.e., no removal if any D is a citizen of the forum state

(ii) Max - Within Year of Filing

• No removal more than one year after case filed in state court
• Occurs when
  
  • Dismissal of Non-Diverse D — case becomes removable by D1 if P voluntarily dismisses the claim against non-diverse D (D2)
• Exception to 1 yr rule — Bad Faith
  
  • D1 shows that P acted in bad faith by originally joining D2 to prevent removal

(E) Timing — 30 days of service of first doc showing removable

• D must remove within 30 days of service of the first doc that shows that case is removable
  
  • usually service of process
• 30 day clock resets if a new D is served

(F) Vene — Removal to that District

• Can only remove to federal district embracing state court in which case was originally filed

__________________________________________

PROCEDURE

• (1) D files “Notice of Removal” in Federal court
  
  • Notice must be
    
    • (i) signed
    • (ii) contain grounds for removal – i.e., SMJ (FQ / Diversity)
    • (iii) documents that were served on D in state action must be attached
• (2) D “promptly” serves a copy of the “notice of removal” on all adverse parties
• (3) D files a copy of the “notice of removal” in State court
• Note — Don’t need approval from either state or federal court before removing — i.e., D doesn’t file motion

__________________________________________

IF REMOVAL IMPROPER — FED COURT (CAN) REMAND TO STATE COURT

• (1) Improper Procedure
  
  • P can move to remand within 30 days of D’s filing of the notice of removal — if fails to meet time limit, P waives right to remand
    
    • EX — if there is an in state D
• (2) Lack of SMJ — P can move to remand at any time

Question 25

Removal JXD

Procedure

Answer 25

(1) D files “Notice of Removal” in Fed Court

• Notice must be
  
  • (i) signed
  • (ii) contain grounds for removal – i.e., SMJ (FQ / Diversity)
  • (iii) documents that were served on D in state action must be attached

(2) D “promptly” serves a copy of the “notice of removal” on all adverse parties

(3) D files a copy of the “notice of removal” in State court

Note — Don’t need approval from either state or federal court before removing — i.e., D doesn’t file motion

__________________________________________

IF REMOVAL IMPROPER — FED COURT (CAN) REMAND TO STATE COURT

• (1) Improper Procedure
  
  • P can move to remand within 30 days of D’s filing of the notice of removal — if fails to meet time limit, P waives right to remand
    
    • EX — if there is an in state D
• (2) Lack of SMJ — P can move to remand at any time

Question 26

Removal JXD

Timing

Answer 26

30 days of service of first doc showing removable

• D must remove within 30 days of service of the first doc that shows that case is removable
  
  • usually service of process
• 30 day clock resets if a new D is served

In Diversity Cases: ​Max - Within Year of Filing

• No removal more than one year after case filed in state court
• Occurs when
  
  • Dismissal of Non-Diverse D — case becomes removable by D1 if P voluntarily dismisses the claim against non-diverse D (D2)
• Exception to 1 yr rule — Bad Faith
  
  • D1 shows that P acted in bad faith by originally joining D2 to prevent removal

__________________________________________

PROCEDURE

• (1) D files “Notice of Removal” in Federal court
  
  • Notice must be
    
    • (i) signed
    • (ii) contain grounds for removal – i.e., SMJ (FQ / Diversity)
    • (iii) documents that were served on D in state action must be attached
• (2) D “promptly” serves a copy of the “notice of removal” on all adverse parties
• (3) D files a copy of the “notice of removal” in State court
• Note — Don’t need approval from either state or federal court before removing — i.e., D doesn’t file motion