SUBJECT MATTER JURISDICTION Flashcards
A graduate student who was born and raised in State A decided to leave home and find an internship in State B. The student intended to return to State A after completing the internship. Upon completing the internship, the student decided to go State C to complete another internship and relocated to a new apartment there. Now the student’s plan is to complete this internship and return to State A to start a business in State A.
During the second internship, the student was in a fight with the patron of a bar located in State C (the patron was from State A). The patron later died from wounds suffered during this fight. The patron’s surviving brother (a lifelong State C resident), was named as the executor of the patron’s estate. The surviving brother, as executor, filed an action against the student on behalf of the patron’s estate in U.S. District Court for the District of State C for $100,000 to cover the patron’s unpaid medical bills from his time in the hospital as a result of the fight.
The student moved to dismiss the action for lack of subject matter jurisdiction. How should the court rule on the motion?
Grant the motion, because the student is a State A citizen and the patron was a State A citizen.
Correct. The student began as a citizen of State A. When the student took on an internship in State B, there was no intention to stay there indefinitely; thus, the State A domicile was retained. Next, when the student moved to State C for a second internship, the student did not form an intent to remain there indefinitely, again meaning that the State A domicile was retained. Mississippi Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989) (“For adults, domicile is established by physical presence in a place in connection with a certain state of mind concerning one’s intent to remain there.”). Thus, this action is a dispute between a State A citizen and the estate of the patron, a State A citizen. Under 28 U.S.C. § 1332(c)(2) the citizenship of the executor is that of the decedent for diversity purposes. This alignment means the requisite diversity of citizenship is lacking.
On April 1, 2020 a runner (who is a Chinese permanent resident alien living in State A), fell in State B when the sole of her running shoe inexplicably separated from the rest of her shoe while she was running a marathon. The runner unfortunately broke several bones in her body as a result. The manufacturer of the shoe was XYZ Shoe Co., a corporation incorporated in Euphoria (a foreign country) with its principal place of business in State B. On May 15, 2020 the runner initiated a federal products liability action in State B federal court against XYZ seeking $76,000 in compensatory damages.
XYZ responded by filing a motion to dismiss the action for lack of subject matter jurisdiction. How should the court rule on the motion?
Grant the motion, because there is not a U.S. citizen on both sides of the action.
Correct. There can be no diversity jurisdiction when there is an alien on both sides of the action unless there is also a citizen of a U.S. State as a party on both sides. 28 U.S.C. § 1332(a)(3). Here the plaintiff is an alien whose adversary is a corporation that is treated as both a citizen of State B and as a citizen of Euphoria. 28 U.S.C. § 1332(c)(1); Bayerische Landesbank v. Aladdin Capital Mgmt. LLC, 692 F.3d 42, 51 (2d Cir. 2012) (stating that a corporation is “treated for diversity purposes as a citizen of both its state of incorporation and its principal place of business, regardless of whether such place is foreign or domestic”); see also JS Barkats PLLC v. Blue Sphere Corp., 2017 WL 2930935, at *3 (S.D.N.Y. July 10, 2017).
A car driver from State A was in a collision with two other vehicles, a truck and a motorcycle. The truck driver and motorcyclist were both from State B. The car driver initiated an action in State A federal court against the truck driver and the motorcyclist, seeking $100,000 in damages from the truck driver and $35,000 from the motorcyclist.
The motorcyclist filed a motion to dismiss the claim against the motorcyclist for lack of subject matter jurisdiction. How should the court rule on this motion?
Grant the motion, because the amount in controversy sought against the motorcyclist is insufficient.
Correct. The amount in controversy against the motorcyclist less than the required greater-than-$75,000 amount in controversy. 28 U.S.C. § 1332(a). This amount may not be aggregated with the amount sought against the truck driver. Snyder v. Harris, 394 U.S. 332, 335 (1969) (“Aggregation has been permitted only (1) in cases in which a single plaintiff seeks to aggregate two or more of his own claims against a single defendant and (2) in cases in which two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest.”). Supplemental jurisdiction is not possible here because although the claim against the motorcyclist arises out of the same set of facts as the claim against the truck driver, the car driver—as a plaintiff—may not get supplemental jurisdiction over the claim because the motorcyclist is a party joined under Rule 20 (i.e., a permissively joined defendant) and the qualifying claim is based on diversity jurisdiction. 28 U.S.C. § 1367(b).
Person A initiated an action in federal court against Person B for defamation, seeking $45,000 in damages. In the same action B asserted a counterclaim against A for an unrelated breach of contract, seeking $80,000 in damages. A is a citizen of State A. B is a citizen of State B.
B has moved to dismiss the action for lack of subject matter jurisdiction. How should the court rule on the motion?
Grant the motion, because although both litigants are from two different states, the amount A seeks to recover is below the required jurisdictional amount.
Correct. Different litigants may not aggregate their claims to reach the jurisdictional amount. Snyder v. Harris, 394 U.S. 332, 335 (1969) (“Aggregation has been permitted only (1) in cases in which a single plaintiff seeks to aggregate two or more of his own claims against a single defendant and (2) in cases in which two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest.”). Thus, A is asserting a claim of only $45,000, which is less than the required $75,000-plus. 28 U.S.C. § 1332(a). NOTE: Had B’s claim been a compulsory counterclaim, a minority of courts (two circuits) appear to permit compulsory counterclaims to be aggregated with the plaintiff’s claim to satisfy the amount in controversy requirement, although not for purposes of removal. See Spectacor Management Group v. Brown, 131 F.3d 120 (3rd Cir. 1997) (compulsory counterclaim filed by defendant will satisfy jurisdictional amount if defendant elects not to file a motion to dismiss); Geoffrey E. Macpherson, Ltd. v. Brinecell, Inc., 98 F.3d 1241, 1245 n.2 (10th Cir. 1996) (defendant’s compulsory counterclaim included in jurisdictional amount).
A car driver from State A was hit by a truck and severely injured. The car driver initiated an action in State A federal court against the truck driver, a State B citizen, for negligence arising from the car accident. The car driver sought $50,000 in damages. A passenger in the same car, also from State A, joined in this action as a co-plaintiff to assert a claim against the truck driver for $30,000 in damages arising from the same car accident. Thus, the car driver and the passenger are plaintiffs permissively joined together in this action under Rule 20.
May the court exercise subject matter jurisdiction over the passenger’s claim in this case?
B No, because the amount of damages sought by the passenger is insufficient and those damages may not be aggregated with the damages sought by the car driver to satisfy the required amount.
Correct. Multiple plaintiffs may not aggregate their individual claims, related or unrelated, against a defendant. Snyder v. Harris, 394 U.S. 332, 335 (1969) (“Aggregation has been permitted only (1) in cases in which a single plaintiff seeks to aggregate two or more of his own claims against a single defendant and (2) in cases in which two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest.”); Troy Bank of Troy, Ind. v. G.A. Whitehead & Co., 222 U.S. 39, 40 (1911) (“When two or more plaintiffs, having separate and distinct demands, unite for convenience and economy in a single suit, it is essential that the demand of each be of the requisite jurisdictional amount.”). As a result, that means that both of the claims of each plaintiff are too low to satisfy the required $75,000-plus threshold. Thus, there can be no diversity jurisdiction over either of them. 28 U.S.C. § 1332(a). Supplemental jurisdiction fails because of the lack of any claim over which the court has an original basis for jurisdiction. 28 U.S.C. § 1367(a).
A car driver from State A was hit by a truck and severely injured. The car driver initiated an action in State A federal court against the truck driver, a State B citizen, for negligence arising from the car accident. The car driver sought $80,000 in damages. A passenger in the same car, also from State A, joined in this action as a co-plaintiff to assert a claim against the truck driver for $30,000 in damages arising from the same car accident. Thus, the car driver and the passenger are plaintiffs joined in this action under Rule 20.
May the court exercise subject matter jurisdiction over the passenger’s claim in this case?
Yes, because the passenger is a co-plaintiff asserting a claim that shares a common nucleus of operative fact with the car driver’s claim.
Correct. The claims both arise from the same car accident and the supplemental jurisdiction statue does not withhold jurisdiction over supplemental claims asserted by plaintiffs joined under Rule 20, which is the passenger’s status here. Exxon Mobil Corp. v. Allapattah Servs. Inc., 545 U.S. 546, 560 (2005) (“Section 1367(b), which applies only to diversity cases, withholds supplemental jurisdiction over the claims of plaintiffs proposed to be joined as indispensable parties under Federal Rule of Civil Procedure 19, or who seek to intervene pursuant to Rule 24. Nothing in the text of § 1367(b), however, withholds supplemental jurisdiction over the claims of plaintiffs permissively joined under Rule 20.”). Diversity jurisdiction is not available for the passenger’s claim because it seeks less than the required amount in controversy and may not be aggregated with the car driver’s claim. Troy Bank of Troy, Ind. v. G.A. Whitehead & Co., 222 U.S. 39, 40 (1911) (“When two or more plaintiffs, having separate and distinct demands, unite for convenience and economy in a single suit, it is essential that the demand of each be of the requisite jurisdictional amount.”).
An investor from State A initiated a securities fraud action in federal court against XYZ, a corporation incorporated in State B with its headquarters in State A. The claim was based on the Federal Securities Act, a federal statute prohibiting public misrepresentations made for the purpose of manipulating the price of a stock. The investor sought $40,000 in damages on that claim. The investor also asserted a state law fraud claim arising out of the same alleged misrepresentation and sought $50,000 on that claim.
XYZ responded by filing a motion to dismiss the Federal Securities Act claim for lack of subject matter jurisdiction. How should the court rule on the motion?
Deny it, because the investor’s claim is based on a federal statute.
Correct. Because the parties share citizenship in State A there is no diversity of citizenship, which eliminates the possibility of diversity jurisdiction. 28 U.S.C. § 1332(a), (c)(1). However, there is federal question jurisdiction over the Federal Securities Act claim because it arises under federal law. 28 U.S.C. § 1331.
A shopkeeper from State A filed a breach of contract complaint against a State B supplier in State A federal court based on the supplier’s failure to deliver goods to the shopkeeper in a timely fashion. The shopkeeper is seeking $100,000 in damages. After receiving the shopkeeper’s complaint, the supplier filed a third-party complaint under Rule 14 against the delivery company, a business incorporated and having its principal place of business in State B, alleging that the delivery company is partially responsible for the delay and thus should be liable for 50% of any liability the supplier is found to have to the shopkeeper (assume that the supplier and the delivery company have an agreement that obligates the delivery company to indemnify it for 50% of the liability incurred under such circumstances if proven by the evidence).
May the court exercise subject matter jurisdiction over the supplier’s claim against the delivery company?
Yes, because the supplier’s claim against the delivery company is part of the same case or controversy under Article III as the shopkeeper’s claim against the supplier.
Correct. Although there is no diversity jurisdiction over the supplier’s claim against the delivery company because there is a lack of diversity between the supplier and the delivery company and the amount in controversy between them is insufficient, supplemental jurisdiction works here because the claim arises out of the same tardy delivery that is the basis for the shopkeeper’s claim against the supplier. 28 U.S.C. § 1367(a); United Mine Workers of America v. Gibbs, 383 U.S. 715 (1966). Section 1367(b) does not withhold supplemental jurisdiction in this case because even though the claim over which there is an original basis for subject matter jurisdiction—the shopkeeper’s claim against the supplier—is based on diversity jurisdiction, the supplemental claim (i.e. supplier v. delivery company) is being asserted by the defendant, not by one of the prohibited plaintiffs. 28 U.S.C. § 1367(b).
An entrepreneur from State A initiated an action in federal court against a competitor from State B, for tortious interference with prospective business advantage, which is a state law claim, seeking $100,000 in damages. In the same complaint, the entrepreneur also asserted a claim against a business owner for defamation (which is also a state law claim) arising out of the same incident that formed the basis for the entrepreneur’s tortious interference claim against the competitor. The business owner lives and works in State C but also has a summer home in State A, where service of process was delivered. The entrepreneur demanded $40,000 in damages for the defamation claim against the business owner. The rule that permits the competitor and the business owner to be sued together is Rule 20, thus making those two litigants parties joined under Rule 20.
May the court exercise subject matter jurisdiction over the entrepreneur’s defamation claim against the business owner?
No, because the entrepreneur’s claim against the business owner is for less than the jurisdictional amount required for diversity jurisdiction.
Correct. A single plaintiff may not aggregate claims against multiple defendants. Snyder v. Harris, 394 U.S. 332, 335 (1969) (“Aggregation has been permitted only (1) in cases in which a single plaintiff seeks to aggregate two or more of his own claims against a single defendant and (2) in cases in which two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest.”). Further, there is no supplemental jurisdiction over the claim of the entreprenuer against the business owner; claims by plaintiffs against parties joined under Rule 20 (which is what the business owner is) may not receive supplemental jurisdiction when the claim qualifying for original jurisdiction (i.e. entrepreneur v. competitor) is based on diversity, as is the case here. 28 U.S.C. § 1367(b) (“In any civil action of which the district courts have original jurisdiction founded solely on section 1332 of this title, 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 . . . .”).
A citizen from State B was taken into custody by a police officer from Capitol City in State A. During the citizen’s confinement, the police officer struck the citizen repeatedly with a nightstick, resulting in serious injuries. The citizen initiated an action in federal court against the police officer under 42 U.S.C. § 1983, claiming a violation of the citizen’s civil rights and seeking $65,000 in damages.
The citizen also named the police department for Capitol City in State A as a defendant in the same action, asserting a claim under State A law for negligence based on its failure to train and supervise the police officer properly. The citizen sought $65,000 on the claim against the police department. (A claim by citizen directly against the police department under federal law was unavailable because the Supreme Court has held that municipal agencies may not be held liable under 42 U.S.C. § 1983 merely because their employees have committed constitutional violations.)
The police department filed a motion to dismiss for lack of subject matter jurisdiction over the claim against it. How should the court rule?
Deny the motion, because the claim against the police department and the police officer derive from a common nucleus of operative fact.
Correct. Because the citizen’s claim against the police officer qualifies for federal question jurisdiction, 28 U.S.C. § 1331, and because both claims arose out of the police officer’s use of the nightstick against the citizen, 28 U.S.C. § 1367(a) confers supplemental jurisdiction over the state law claim against the police department. Section 1367(b) does not apply because the basis for original jurisdiction over the citizen’s claim against the police officer is not diversity jurisdiction; there is no basis for declining jurisdiction under section 1367(c). Diversity jurisdiction is not available over the claim against the police department because the amount sought on that claim is below the required $75,000-plus threshold of the diversity statute, 28 U.S.C. § 1332(a), and it may not be aggregated with the other claim, Snyder v. Harris, 394 U.S. 332, 335 (1969) (“Aggregation has been permitted only (1) in cases in which a single plaintiff seeks to aggregate two or more of his own claims against a single defendant and (2) in cases in which two or more plaintiffs unite to enforce a single title or right in which they have a common and undivided interest.”).
The Association of Motorcycle Riders (AMR) is an unincorporated association organized under the laws of State A with members in every state but State A. Its principal place of business is in State A. AMR retained a plumber, who is a State A citizen, to repair the plumbing in its headquarters building. Several months after the work was completed, there was a major flood in the building that AMR attributed to the plumber’s poor work. As a result, AMR suffered $500,000 in damages.
AMR initiated an action against the plumber in State A federal court, asserting a breach of implied warranty claim under state law. May the court exercise subject matter jurisdiction over AMR’s claim?
Yes, because AMR and the plumber are not citizens of the same state.
Correct. None of AMR’s members are citizens of State A, making it completely diverse from the State A plumber. Carden v. Arkoma Assocs., 494 U.S. 185, 195–96 (1990) (“[W]e reject the contention that to determine, for diversity purposes, the citizenship of an artificial entity, the court may consult the citizenship of less than all of the entity’s members. We adhere to our oft-repeated rule that diversity jurisdiction in a suit by or against the entity depends on the citizenship of ‘all the members.’”) (quoting Chapman v. Barney, 129 U.S. 677, 682 (1889)). See also Americold Realty Trust v. ConAgra Foods, Inc., 136 S. Ct. 1012 (2016). Because none of AMR’s members are citizens of State A, there is complete diversity with the plumber, who is a citizen of State A. Given the amount in controversy of $500,000, diversity jurisdiction over the claim would be appropriate. 28 U.S.C. § 1332(a).
A business owner from State A brought a products liability action in federal court against a State B computer company and a State B software designer, seeking $100,000 from each for injuries arising out of damage their software caused to the business owner’s company (this makes each of these two defendants parties joined under Rule 20). The software designer responded by asserting a crossclaim for indemnification against the computer company (based on their contract), seeking compensation for any liability the court might find against the designer on the business owner’s claim. The software designer asserted an additional claim against the computer company seeking $30,000 for breach of contract (a state law claim) based on the failure of the computer company to pay patent licensing fees to the software designer as had been agreed (the computer company had previously indicated that it ceased paying the fees because it considered the patent invalid).
The computer company responded to the software designer’s breach of contract claim with a motion to dismiss for lack of subject matter jurisdiction. How should the court rule on the motion?
Grant the motion, because the software designer and the computer company are citizens of the same state and the software designer’s breach of contract claim and the business owner’s product liability claims do not derive from a common nucleus of operative fact.
Correct. The common State B citizenship of the software designer and the computer company undermines diversity jurisdiction for the breach of contract claim. 28 U.S.C. § 1332(a). Further, because the breach of contract claim is unrelated to the business owner’s original products liability claims, it cannot qualify for supplemental jurisdiction. 28 U.S.C. § 1367(a).
A consumer from State A—on behalf of one hundred consumers from State B—initiated a class action in State A state court against three telephone companies, asserting products liability claims and each seeking $1,000 in damages. Each of the three telephone companies was incorporated in State B; the principal place of business for each company was located in State C, State D, and State E, respectively.
The telephone companies received notice of the action on June 1, 2020. On June 15, 2020 , the three companies together filed a notice of removal in State A federal district court. On August 15, 2020 that year, the consumer moved to remand the case to State A state court. How should the court rule on the remand motion?
Grant it, because the amount in controversy requirement is not satisfied.
Correct. Diversity jurisdiction is unavailable because each plaintiff’s claim is below the required $75,000-plus threshold, 28 U.S.C. § 1332(a), and the claims of the class members may not be aggregated to reach the amount in controversy. Snyder v. Harris, 394 U.S. 332, 337 (1969). Further, because no plaintiff has a claim of more than $75,000, there is no original jurisdiciton over any single claim, meaning supplemental jurisdiction is not possible. 28 U.S.C. § 1367; Exxon Mobil Corp. v. Allapattah Servs. Inc., 545 U.S. 546 (2005). The final option, jurisdiction under 28 U.S.C. § 1332(d) (the Class Action Fairness Act), is not possible because although there are 100 members of the class and minimal diversity exists among all plaintiffs and the defendants, the claims of the consumers do not aggregate to more than $5 million.
A customer from State A initiated an action in State B state court against a telephone company incorporated in State A and with its principal place of business in State B for a violation of State B consumer protection law. The telephone company responded by filing a notice of removal in State B federal court on March 1, 2020. The telephone company plans to raise a federal statute as a defense to the consumer protection law claim.
On June 1, 2020, the customer sought remand to State B state court. How should the court rule on the motion?
Grant it, because the customer and telephone company are both citizens of State A.
Correct. There is no diversity jurisdiction because the parties share State A citizenship. 28 U.S.C. § 1332(a), (c)(1). There is no federal question jurisdiction because the customer’s claim arises under state law, not federal law, and the claim does not necessarily depend on the resolution of a substantial federal legal issue. Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (2005). The assertion of a federal defense cannot be a basis for removal. Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149 (1908). The lack of subject matter jurisdiction can be raised at any time as a basis for remand. 28 U.S.C. § 1447(c).
An employee from State A initiated an action in State A state court against its employer (a State B corporation headquartered in State B) for breach of contract, seeking $100,000 in unpaid compensation. The employer received service of the complaint on January 15, 2020.
On March 1, 2020 the employee amended the complaint to add a claim for employment discrimination under federal law. The amended complaint was served on the employer the next day, on March 2. On the March 15, 2020 the employer filed a notice of removal in State A federal court.
The employee promptly filed a motion to remand the case on March 18, 2020. How should the court rule on the motion?
Grant it, because the employer’s removal of the case was untimely.
Correct. The employee’s breach of contract claim, which involved a dispute between diverse parties for more than $75,000, was removable initially based on diversity jurisdiction when it was served on January 15. More than 30 days have passed since the employer received notice of that claim. 28 U.S.C. § 1446(b). The employee can assert the defect in the employer’s March 15 removal at this time. 28 U.S.C. § 1447(c).
