Subject Matter Jurisdiction

Question 1

Basic Idea

Answer 1

SMJ is about the court’s power over the case, and not the parties.

Federal courts have limited SMJ, so they can only hear certain kinds of cases.

As a general rule, state courts can hear any kind of case. They have general subject matter jx.

Question 2

Cases that State Courts Cannot hear

Answer 2

Patent Infringement
Bankruptcy
Some Federal Securities
Antitrust Claims

Question 3

Federal Courts have Limited SMJ

Answer 3

The two main types of cases that can be heard in fed court are:

1. Federal Question Jx, and
2. Diversity of Citizenship jx (which includes the so-called alienage jx)

A lack of SMJ cannot be waived (unlike PJ). If a case does not invoke federal SMJ, the fed court cannot hear the case. If it does, the judgment is void.

Question 4

Diversity of Citizenship (and alienage) Cases

Answer 4

the case is either (a) between citizens of different U.S. states (diversity); or (b) between a citizen of a US state and a citizen of a foreign country (alienage); and the amount in controversy exceeds $75,000.

Question 5

Complete Diversity Rule

Answer 5

Diversity of citizenship does not exist if any plaintiff is a citizen of the same state as any defendant.

Question 6

When is Diversity determined?

Answer 6

When the case is filed

Question 7

Citizenship of a natural person

Answer 7

A person can only have one domicile. That domicile is retained until it is changed.

Question 8

How do you establish new domicile?

Answer 8

1. Physical Presence in new place, and
2. Intent to remain for the indefinite future.

Courts will look at all relevant factors to determine intent.

Question 9

Citizenship of a corporation

Answer 9

A corporation is a citizen of any state or country in which it is incorporated and of the one state or country in which it has its PPB.

Question 10

Where is a corporation’s PPB?

Answer 10

It is the state from which the corporation’s managers direct, coordinate, and control business activities.

This is also called the nerve center.

PPB = Nerve Center

Question 10

Citizenship of an Unincorporated Association (Partnership, LLC, etc.)

Answer 10

Takes on the citizenships of all of its members.

Question 11

Class Actions - Citizenship

Answer 11

the citizenship of the named representative(s) of the class is used.

Question 12

Citizenship of Decedents, Minors and Incompetents

Answer 12

You use the citizenship of the decedent, minor, or incompetent

Question 13

Amount in Controversy

Answer 13

Must exceed $75,000.

Question 14

Calculating the amount in controversy

Answer 14

only the claim itself is considered.

So the claim itself must exceed $75k. Whatever the P claims in good faith is OK unless it is clear to a legal certainty that she cannot recover more than $75k.

Question 15

Aggregation of Claims

Answer 15

Adding two or more claims to meet requirement.

any single plaintiff may aggregate all of her claims against a single defendant.

Question 16

Joint Claims

Answer 16

You use the total value of the claim. With joint claims, the number of parties is irrelevant.

Question 17

Equitable Relief - How do we satisfy the amount in controversy?

Answer 17

Equitable relief includes the issuance of an injunction, specific performance, rescission of a k, etc.

Amount in controversy is satisfied if either test is met:

1. Plaintiff’s viewpoint - does the relief requested have a value of more than $75k to the P if granted?

OR

2. Defendant’s Viewpoint - will the relief requested by the P cost the D more than $75k?

Question 18

Exclusions from Diversity Jx

Answer 18

Even if the requirements for diversity or alienage jx are met, federal courts decline to hear actions for

divorce
alimony
child custody
actions to probate an estate

Question 19

Collusive Creations of Diversity

Answer 19

If a party attempts to create diversity by a sham transaction, such as assigning a claim for collection purposes merely to create diversity SMJ, the courts ignore the transaction and declare that diversity does nto exist.

Question 20

Voluntary Changes of Citizenship

Answer 20

A P can also create diversity by changing her state citizenship after the cause of action accrued but before suit is commenced.

If it is a genuine change of citizenship, diversity is OK.

Question 21

Federal Question Cases

Answer 21

For there to be FQ jx, the P’s claim must “arise under” federal law.

For example, the claim must arise under the federal constitution or federal legislation.

Question 22

FQ - Well Pleaded Complaint Rule

Answer 22

For FQ cases the pleader must follow the well pleaded complaint rule. It is not enough that some federal issue is raised by the complaint, the P’s claim itself must “arise under” federal law.

Question 23

FQ - is the P enforcing a federal right?

Answer 23

if yes - case can go to fed court under FQ jx

if no - the case cannot go to federal court under FQ jx.

Question 24

Removal

Answer 24

The D might be able to remove the case to federal court. Removal transfers the case from a state trial court to a federal trial court. If removal was improper, the federal court can remand the case to state court.

Question 25

Removal - Federal SMJ Necessary

Answer 25

Generally, an action originally filed in a state court may be removed by a D to federal court when the case could have been filed in a federal court - that is FQ or Diversity jx exists.

Question 26

Removal - State Court need not have jx

Answer 26

Even when the state court has no jx because the action is exclusively federal, the federal court may hear and decide the case under its removal jx.

Question 27

How a Case is Removed

Answer 27

The D files "notice of removal" in federal court, stating grounds for removal, which means SMJ (FQ or Diversity). Permission of the state or federal court is not required. The D attaches all documents that were served on her in the state action. The D then promptly serves a copy of the notice of removal on adverse parties and files a copy of the notice of removal in state court.

Question 28

Timing of Removal

Answer 28

The D must remove no later than 30 days after service (not filing) of the first paper that shows the case is removable. usually that means no later than 30 days after service of process.

Question 29

Who must join the removal?

Answer 29

All D's who have been served with process must join in removal. If D's are served at different times, and a later D initiates timely removal, the earlier served D may join in the removal even though their 30-day period for initiating removal may have expired.

Question 30

Who can remove?

Answer 30

Plaintiff's cannot remove, only Defendants. Plaintiffs can never never ever, remove.

Question 31

What cases may be removed?

Answer 31

The D can remove a case that meets the requirements for diversity of citizenship (including alienage) or FQ jurisdiction. Two limitations based on diversity of citizenship: 1. the case should not be removed if any D is a citizen of the forum state (in-state defendant rule); and 2. The case should not be removed more than one year after the case was filed in state court.

Question 32

One-year Limitation

Answer 32

A case with an instate D can later become removable. The case becomes removable when the claim against the in-state D (or the non-diverse defendant) is voluntarily dismissed from the case.

Question 33

Removal Venue

Answer 33

The D removes to the federal district court "embracing" the state court where teh case was filed. it does not matter if this venue would have been proper under the venue statutes.

Question 34

Remand to State Court

Answer 34

if the P thinks the case should not have been removed, she moves to remand to state court. If the motion to remand is based on a reason other than lack of SMJ (I.e., one-year limitation on the removal of a diversity case), she must remand no later than 30 days after the filing of hte notice of removal. If the P fails to do so, she waives the right to have the case remanded to state court and the case will stay in federal court. On the other hand, if removal was improper because the fed court lacked SMJ, there is no time limit on ordering remand. Remember, an objection to SMJ is never waived, and a court without SMJ is powerless to act on the case.