Subject Matter Jurisdiction (Civil Procedure)

Subject Matter Jurisdiction

Authority/ power to adjudicate the case.

Two Main Court Systems

State and Federal

State Court Jurisdiction

State courts are courts of VERY BROAD jurisdictiom

Federal Court Jurisdiction 

Federal courts are courts of LIMITED jurisdiction

Exclusive Jurisdiction

Only one court system can hear a particular type of claim

• Ex: ONLY FEDERAL has jurisdiction over:

  • patent infringement, copyright, maritime claims, immigration claims, plant variety protections.

• Ex: ONLY STATE has jurisdiction over:

  • Adoption, divorce, will and trust disputes, real property, guardianship

Concurrent Jurisdiction 

• BOTH federal and state courts have jurisdiction over the claim

• If there is concurrent jurisdiction, ∆s can remove it from state court and put it to federal court

• State courts can hear claims arising under US Constitution and federal statutes

When can a challenge to SMJ be raised?

At any point of the litigation

Can SMJ be waived?

No!

For Federal court to have SMJ…

they must have both Constitutional and Statutory authority 

Where in the Constitution do federal courts have the power of SMJ

Article III, Section 2

Four ways federal courts can obtain SMJ

1. Diversity Jurisdiction

2. Federal Question Jurisdiction

3. Supplemental Jurisdiction

4. Removal Jurisdiction

Constitutional Diversity Jurisdiction

grants MINIMAL diversity of citizenship

• “between Citizens of different States”

Statutory Diversity Jurisdiction

28 USC § 1332(a)

COMPLETE diversity of citizenship

Maximum diversity (28 USC § 1332(a)) Two Requirements

1. Amount in controversy

2. Citizens of different states (no single π can be a citizen of the same state as any single ∆ (Stawbridge v. Curtis)

Define “citizen”

Citizenship is defined as a person's domicile

Gordon v. Steele (domicile)

Last place where person resided with the intent to remain there indefinitely

Mas v. Perry (domicile)

physical residence in a state with the intent to stay permanently

Sadat v. Mertes (domicile)

someone intends to make a home for the time being at least

Acquiring a new domicile (Gordon v. Steele)

• Until you abandon your previous domicile

• A party does not lose old domicile until a new one is acquired

• Be a physical resident of a new state with the intent to remain there indefinitely

Acquiring a New Domicile Test (Gordon v. Steele)

List is not exhaustive

• Has the person made any declaration about their location intent? Injective decision of intent

• Exercise of political rights

• Paying of taxes

• Owning property

• Apartment or house

• Place of business

Is minimal diversity complete diversity?

NO!

28 USC 1332(a) Complete Citizen Diversity 

No single π can be of the same state as any single ∆ (Strawbridge v. Curtis)

28 USC 1332(a) Alienage 

• Domicile is NOT needed as long as they are a citizen of a foreign country

• I.e. ∆ who is a citizen of France against π of Ohio = complete diversity

• HOWEVER, if foreign citizen gets a green card, they are no longer covered over alienage and would be treated as a US citizen, meaning they require a domicile

28 USC 1332(a) Non-US-Citizens Admitted for Permanent Residence

• A foreign national admitted in the US for permanent residence is deemed to be a citizen of the state in which the foreign national is domiciled

• A lawful permanent resident is treated the same as a US citizen

• If they are not, they are a citizen of their own country

28 USC 1332(a) A US citizen domiciled abroad

is not a citizen of any state and also is not an alien

• Therefore a "stateless" citizen cannot invoke federal court diversity jurisdiction

• OR CANNOT INVOKE ALIENAGE

Judicially recognized exceptions to diversity jurisdiction

• Domestic relations

• Probate matters

• Real property

Perfecting diversity

• In a case lacking complete diversity, the court can order dismissal of non-diverse defendant/s, thereby "perfecting diversity" and allowing the case to proceed

• Dropping parties or claims

• Collusion or devices to create or destroy diversity

When is the domicile determined?

at the time the complaint was filed

Statute for a corporation’s domicile 

28 USC § 1332 (c)(1)

28 USC § 1332 (c)(1) Corporation’s Citizenship

Its place or places of incorporation AND

Its (one) principal place of business

28 USC § 1332 (c)(1) Corporation’s Citizenship Statutory Language

A corporation shall be deemed a citizen of "every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business.”

Where do we find the tests to find corporations domicile

Hertz

3 tests in Hertz for Corporations domicile

1. Nerve Center Test

2. Corporate muscle / Place of Activity Test

3. Total Activity Test

Which is the primary test in Hertz

Nerve Center Test (adopted by Supreme Court)

Nerve Center Test

• Corporate headquarters deemed principal place of business

• Location from which the business "radiates out to its constituent parts and from which the business's officers direct, control, and coordinate all activities without regard to locale in furtherance of the corporate objective"

Corporate muscle / Place of Activity Test

Where the business conducts the bulk of its activities

Total Activity Test

Synthesis of the two previous tests

Depends on the circumstance which test was used

Foreign Corporations citizenship

• A corporation incorporated in a foreign country is deemed a citizen of the foreign country where it is incorporated and is therefore an alien for purposes of diversity

• However, when a foreign corporation has its principal place of business in this country, it is also a citizen of the state in which the PPB is located

• If headquarters in another country, but PPB in US, it has dual citizenship

• (Picture of hypo = answer in Canada (POI) and Texas (PPB)

Entity Citizenship

• Non-corporate entities, such as unions or partnerships, are treated differently from corporations

• They are considered to be citizens of every state in which their members or partners are domiciled (See notes 5-7 after Hertz)

• Example: an accounting firm with partners in 20 states is considered to be a citizen of all 20 states for purposes of diversity jurisdiction

Partner citizenship

The citizenship for a general partnership is that of each and every general partner, and the citizenship of a limited partnership is that of each and every partner, both limited and general. See notes 5-7 after Hertz

Suits brought by a legal representative

A legal representative of an infant (i.e. minor), or a legally incompetent person, or the estate of a decedent is deemed to be a citizen of the same state as the infant, incompetent or decedent

Minors without separate legal representation

The citizenship of a minor without separate legal representation is that of her parents

Class Actions

• If a suit is brought by several named persons on behalf of a class under Rule 23, diversity is determined on the basis of the named members of the class who are suing

• The citizenship of absent class members need to be diverse

• Separate statute for class action that allows minimum diversity

Collusion or Devices to Create or Destroy Diversity

Federal courts will not have jurisdiction if a party, by assignment or otherwise, has been improperly or collusively made or joined to invoke jurisdiction

28 USC 1332(a) Amount in Controversy

EXCEEDS $75k

How to determine whether the plaintiff has satisfied the amount in controversy requirement?

• Diefenthal, citing St. Paul Mercury

• Determined by good-faith amount alleged at the time the complaint is filed, not by how much is ultimately recovered (mas)

How they determine price for amount in controversy

The amount has been set "not so high as to convert the Federal courts into courts of big business or so low as to fritter away their time in the trial of petty controversies.

Goal of Amount-in-Controversy Requirement

keep federal courts from frittering away their resources on petty cases.

What can the π do when the amount in controversy is in doubt?

the π might amend her complaint to allege damages more fully or submit affidavits detailing the injuries or damage she had suffered, with supporting documentation such as medical bills. The court could even take live testimony at a hearing on the issue if necessary.

St. Paul Mercury test

• gives the π the benefit of the doubt.

• It's a might test! Slightest possibility that threshold is met, then it is given

• If she will probably recover more than $75k, but might not, the amount requirement is met

• If she probably will not recover that much but conceivably could, the amount is met

• Only where the judge, looking at the facts and supporting evidence, is convinced that the claim is certainly not worth more than $75k will she dismiss for failure to meet the amount requirement

Diefenthal

Good faith damages are accepted by the court unless it is clear to a legal certainty that the plaintiff cannot recover the amount in controversy.

Aggregating Claims to Meet the Amount Requirement
Single P vs Single D

• Typically allowed

• May aggregate claims even if unrelated in order to meet the amount in controversy requirement

Aggregating Claims to Meet the Amount Requirement

Multiple Parties

• typically NOT allowed

• Several plaintiffs. None of them exceed $75k by themselves, but they exceed $75k together

• Several defendants. The plaintiffs does not have a claim that exceeds $75k against any individual defendant, but the claims exceed $75k in total

• Multiple plaintiffs and defendants

• In most of these cases, aggregation in NOT allowed even when the claims are all related.

• Multiple plaintiffs cannot combine to meet amount in controversy

  • IF ONE of the plaintiffs meet the claim, then yes you can combine others since the amount in controversy is already met!

Goal of diversity jurisdiction

out of state ∆s are not in a biased court

FQJ: Two Authority Requirements

1. Constitutional

2. Statutory

FQJ: Constitutional Authority 

Article III, Section 2

• "arising under the Constitution, the Law of the US, and Treaties made…"

FQJ: Statutory Authority

28 USC §1331

• The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the US

• interprets Article III Section 2 "cases arising under" federal law as more narrowly than the constitutional grant.

FQJ: Constitutional Interpretation (2)

• Osborn: a federal ingredient in the case is enough

• Mottley: well-pleaded complaint rule

  • More narrow than Osborn.

Well-pleaded complaint rule (Mottley test)

• The "well-pleaded complaint rule" requires the federal issue to be part of the plaintiff's initial complaint, not a defense anticipated from the defendant.

• Under 28 USC § 1331 a claim "arises under" federal law only "when the π's statement of his own cause of action shows that it is based upon" federal law

• Π's complaint must plead a federal cause of action

• analysis must focus on the allegations in the π's complaint, not potential defenses the ∆ might assert in her answer

Two alternate tests under the well-pleaded complaint rule

1. The Holmes Test (Creation Test)

2. The Grable/Gunn Test (Embedded federal question test)

The Holmes Test (Creation Test)

• A case "arises under" federal law if the law that creates the cause of action is a federal law.

  • Asks us to look at the complaint and to determine whether it is a federal or state sovereign that has created the cause of action

• Mottley tells us where to look; Holmes tells us what to look for

  • Where do we look? = COMPLAINT

  • What do we look for? = Well-pleaded allegations

Exception to Mottley

Vornado Rule

Vornado Rule

A federal counter claim will not remove the case to federal court UNLESS VORNADO RULE:

• Patent, plant variety, and copyright cases

Declaratory Judgement

• A party obtains a court ruling before it takes an action that may violate the other party's right

  • Wanting to know in advance what legal obligation / rights are

• THIS IS NOT A FEDERAL QUESTION because the natural plaintiffs were not bringing the federal question

• Must determine the natural plaintiff

• The well-pleaded compliant rule applies to the plaintiff complaint, and in a DJ applies to the pleaded injury

Does the Mottley rule define the jurisdiction of the Supreme Court? 

NO!

The Mottley rule does NOT define the jurisdiction of the Supreme Court - it interprets the jurisdiction of the federal district courts under 28 USC 1331.

Goal of FQJ

national judiciary to decide national question. Do not want state courts to undermine principles of federalism.