|Civil Procedure Outline
Jurisdiction: A court’s power to decide a case or enter a decree. Types of Jurisdiction:
Subject Matter Jurisdiction: Jurisdiction over the nature of the case and the type of relief sought.
Personal jurisdiction: Literally, authority over a person. The power of a court to require a defendant from outside the state to defend a lawsuit in that state. A court’s power to bring a person into its adjudicative process; jurisdiction over a defendant’s personal rights. Defendants may be subject to jurisdiction on the basis of domicile in a state, in-state service of process (tag), consent to jurisdiction, continuous or substantial in-state contacts, or as a result of “minimum contacts” with the forum state that gives rise to a particular cause of action.
Horizontal choice of law: which state’s law applies?
Vertical Choice of Law
Removal: When a case is removed from state to federal court on the basis of subject matter jurisdiction.
SUBJECT MATTER JURISDICTION
All states have conferred broad subject matter jurisdiction on their courts and thus state courts can hear most types of cases. Conversely, federal courts have very limited subject matter jurisdiction.
Sources of subject matter jurisdiction: In order for a court to have subject matter jurisdiction, they must have authority from the Constitution (Article 3, Section 2) or a statute (typically § 1331 or 1332). “Arising under” and diversity (parties from different states)
“§1331- Federal Question: The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” Cause of action compelling the court is a federal question. Essentially, the federal judiciary has the authority to interpret and apply federal law. For federal question jurisdiction to exist, there must be authority from a) the Constitution and b) a statute. Three purposes of the statute: 1) promote uniformity of federal law; 2) encourage judicial expertise in interpreting federal law; 3) protect against possible state-court hostility to claims arising under federal law.
Mottley (1908): Plaintiffs injured on defendant’s railroad due to the defendant’s negligence, plaintiffs and defendant entered into an agreement that the plaintiffs would ride free for life. Some years later the defendants refused to renew their passes claiming their right to do so under an act of Congress. Plaintiffs brought their claim in federal court and it was eventually appealed up to the Supreme Court, who declined to decide it, ruling that the lower court did not have jurisdiction to hear the case. The court determined that “arising under” jurisdiction can be shown only when the plaintiff’s statement of the case is based upon federal law/Constitution. An anticipated defense based on a federal statute does not create a federal question, because the original cause of action was state. From Mottley, we understand that the issue of subject matter jurisdiction can be raised at any time, from either party or the court.
Well-pleaded complaint rule: In order for a case to arise under federal law, the cause of action asserted by the plaintiff in the complaint must be federal. The plaintiff cannot rely on an anticipated federal defense. Thus, defenses, even those that raise a legitimate constitutional or federal question, are irrelevant when determining jurisdiction. (First articulated by Justice Marshall in Osborn, 1824.) The scope of federal jurisdiction is under the control of Congress. Congress has construed their power very narrowly under the Constitution, and the courts have read the corresponding statutes-1331 and 1332-even more broadly.
To determine the cause of action underlying the complaint, look to: the source of law that created the cause of action and the theory the plaintiff is suing under.
Exceptions to the well-pleaded complaint rule. All matters of state law are not automatically precluded by §1331. In Smith, a shareholder sued to enjoin a company from investing in certain bonds on the ground that the Act of Congress authorizing their issuance was unconstitutional. The cause of action was filed under Missouri law, but the court determined that: when the right to relief depends upon the construction or application of the Constitution or federal laws, and such a federal claim is not merely collateral, and rest upon reasonable foundation, the District Court has jurisdiction. Grable was an action for quiet title (wanted the state to put the title back in his land) so the plaintiff was seeking a declaratory judgment. A declaratory judgment, in accordance with §2201 is a judgment that declares the relationship between the parties. It allows a plaintiff who might otherwise be a defendant to sue. To determine a declaratory judgment, the court employs the “imaginary case” rule, in which it considers whether the court would have subject matter jurisdiction without the declaratory judgment-thus it imagine the claim that might be made by the plaintiff. (Could the plaintiff have filed the complaint in federal court without the judgment?) A declaratory judgment cannot create a federal cause of action. Here, Grable wanted the court to definitively determine who owned the land. New standard: does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities? Smith-Grable exception: Although the cause of action is state law, if the cause itself turns on an interpretation of federal law, then a federal court has jurisdiction to hear it. There must be a significant federal issue and it must not disturb the balance of federal/state judicial responsibility in terms of the number and importance of cases that come before each court. Empire sets out an additional factor to be considered by the court: is the federal issue an issue of law (decidable by law) or an issue of fact (one that considers the interaction between the facts and the law?). In order for there to be subject matter-jurisdiction under the Smith-Grable exception, the federal issue must be one of law.
In order for the Smith-Grable exception to apply, the following must exist:
The state law cause of action must have a fundamentally federal foundation (must depend on the construction/application of federal law.
Must involve a significant question of federal law(significant to the administration of law in the country/must have a strong federal interest)
The question must be one of law not fact.
Court has to be able to maintain the state/fed balance
Abstention is the relinquishment of jurisdiction when necessary to avoid needless conflict with a state’s administration of its affairs. (Sometimes the federal court will decline to hear a case, even when it can). In Colorado River, the court determined that abstention from the exercise of federal jurisdiction should always be the exception and not the rule. It is appropriate in the following cases: in cases presenting a federal constitutional issue which might be mooted or presented in a different posture by a state court determination of pertinent state law; where difficult issues of state law bearing on policy problems of substantial public import, are raised (federal review would be disruptive); and where, absent bad faith, federal jurisdiction has been invoked for the purpose of restraining state criminal proceedings. The court should, if possible, seek to avoid duplicative litigation. Other factors to be considered: the inconvenience of the federal forum, the desirability of avoiding piecemeal litigation, and the order in which jurisdiction was obtained by the concurrent forums.
The standard for diversity jurisdiction is set forth by the Constitution and §1332. Diversity simply asks whether the parties in the case are from different states. If so, even though the claim of a lawsuit arose solely under state law, the federal court can hear the case. The purpose of diversity jurisdiction is to avoid discrimination against out of state residents. In Strawbridge, Chief Justice Marshall set forth the rule of complete diversity which states that there is no diversity jurisdiction if any plaintiff is a citizen of the same state as any defendant, no matter how many parties are involved in the litigation. Diversity considers the citizenship of the parties who sue, not the state where the proceedings arise. (Strawbridge facts: A California plaintiff attempted to sue both a California defendant and a South Carolina defendant in one case). As diversity has been interpreted so far, the Constitution grants broad power while the statute is narrow power.
The amount in controversy is another requirement of diversity. There must be a minimum $75,000 in a diversity dispute for it to come before the judge.
Domicile is a primary consideration in determining diversity. Domicile is established by birth and later by the place in which you live (if there is no fixed date for your departure from that state). Where are corporations domiciled? (See §1332 (c)).
What rules apply when the plaintiff attaches a claim containing a federal issue to one that does not contain such a claim? Or, when a plaintiff or defendant, inserts a claim lacking an independent basis for federal jurisdiction by way of a counterclaim, cross-claim, or third-party complaint? Supplemental jurisdiction allows a federal court to hear a case that has a federal claim, for which they would have original jurisdiction, and a state claim, over which there is no independent basis for federal jurisdiction but that derives from the same common nucleus of operative fact (Gibbs).
Cross-claim: When parties on the same side sue each other. If a defendant files a new lawsuit in the same litigation, the sued party is the third party defendant while the suing party is the third party plaintiff. §1367 controls supplemental jurisdiction.
In Gibbs, the union put a “freeze out” on Gibbs saying that they would not work with him and as a result Gibbs was fired. (Controversy included use of armed mob to prevent opening of the mine.) Gibbs the international branch of the union under a federal law claim (violation of Labor Relations Act) and a state law claim (tortious interference with contractual employment/conspiracy). In order for a federal court to hear a claim under such a circumstance, the relationship between the state and law claims must be substantial, the federal claim must have substance sufficient to confer subject matter jurisdiction, and the state and federal claims must derive from a common nucleus of operative fact (from same transaction or occurrence). If the claims, when considered without their state or federal character, are such that the plaintiff would be expected to try them all in one judicial proceeding, then there is power of the federal court to hear it. (This ruling rejects the Hurn court, who ruled that the federal and state cause of action had to protect the same right.) The court can use discretion when determining which claim is predominant, how far the case has gone, and the likelihood of jury confusion. If the federal case is dismissed, the state case should be dismissed as well. Thus, courts have both power and discretion when dealing with supplemental law claims. The justification for this type of jurisdiction lies in considerations of economy, convenience, and fairness to litigants. The discretion is such that a district court may decline to exercise supplemental jurisdiction if: “the claim raises a complex issue of state law, the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, the district court has dismissed all claims over which it has original jurisdiction, or there are other compelling reasons for declining jurisdiction.” §1367. In other words, Gibbs give courts the power to hear supplemental claims but has the discretion to refuse to hear it.
The “anchoring claim” is the claim that would originally confer subject matter jurisdiction. A supplemental or pendent claim is an additional claim for which the court would not ordinarily have jurisdiction, were it not attached to the anchoring claim. Pendent party jurisdiction is jurisdiction in which a plaintiff attempts to bring in another defendant under a state law claim. In Aldinger, the court declined to extend supplemental jurisdiction over a third party plaintiff (because federal courts have limited jurisdiction). Owen considered a case in which one of the asserted claims was within the district court’s diversity jurisdiction and the other was not. P1 D1 under a state claim, but filed in federal court under diversity. D1 Third Party Defendant (TPD) under a federal claim. P1 then sues TPD under a state claim, but remains in federal court on her belief that there is diversity, however it is later discovered that there is not (TPD turns out to be incorporated in the same state as the plaintiff). Additionally, D1 was granted summary judgment, leaving TPD as the sole defendant. The court determined that in such a case, when a party attempts to add a non-diverse third party when the reason for coming into federal court originally was diversity, it will be dismissed to avoid circumventing Strawbridge (complete diversity requirement). In Finley, Original claim is one in which the federal court has exclusive jurisdiction. The other claim was a state law claim against a non-diverse (new) defendant. With the addition of a new party, as opposed to an addition of claims, the court refuses to assume that they have constitutional power, congressionally authorized, to have jurisdiction over that new (pendent) party. Scalia dissented on the grounds that Aldinger articulated a distinction when the anchoring claim was one of exclusive federal jurisdiction. This issue led Congress to intervene to create §1367, which states that supplemental jurisdiction is provided if the non-anchoring claim arises from the same action except when this would contradict or make inconsistent §1332 (diversity). Thus, Owen remains good law and Finley is not.
Does the Court have supplemental jurisdiction? (Arising Under v. Diversity is reason for coming to court)
Arising Under Diversity
§1367 (c) requires the court to determine if the consideration of the Gibbs values (economy, convenience, fairness, and comity) provide compelling reasons for remand, but also articulates that circumstances warranting declining jurisdiction are exceptional. In Executive Systems, the court read this provision to mean that unless a court can invoke a 1367 c category in exercising its discretion to decline to entertain pendent claims, supplemental jurisdiction must be asserted.
In Guaranteed Systems, a third party defendant moved to dismiss the third party action (making him a party to the suit) for lack of supplemental jurisdiction pursuant to 1367 (b). Facts: General contractor (NC) Subcontractor (DE) in state court. Defendant removed to federal court under diversity and then filed a counterclaim against GC alleging negligence. GC then filed a third party action against subcontractor 2 (NC) under state law. Issue: Does the court have jurisdiction over the third party claim? No, there is no supplemental jurisdiction because of the lack of diversity/arising under. This case is distinct from Owen because the defendant removed.
Removal jurisdiction can essentially be thought of as remand jurisdiction. When a defendant wants to remove to federal court, it automatically can (unless the case is filed in the defendant’s home state). A case cannot be remanded to state court if it did not begin there. Relevant statutes: §1441, 1446, 1447. Shamrock says that a counterclaim is irrelevant to removal (plaintiff cannot remove to federal court on the basis of a defendant’s counterclaim-logical considering that a defendant’s claim is not a sufficient basis for federal jurisdiction). A plaintiff’s motion for remand following a removal will be granted when: a) the removal petition was not filed within 30 days of the case becoming removable; b) the defendant has filed a pleading effectively waiving removal; c) not all the defendants signed the removal petition and d) the sole basis of federal jurisdiction is diversity, and the case is in the state in which the defendant is a domiciliary. Supplemental jurisdiction applies to removed cases in full.
HORIZONTAL CHOICE OF LAW
When a transaction crosses state lines, which state’s law should apply? The question you must immediately ask in making determinations regarding horizontal choice of law is: is this an instance/problem of substance or procedure? If it’s a procedural issue, the forum follows its own rules. If it is a substantive issue, the forum may follow the rules of another forum.
In Alabama Railroad, the plaintiff, an employee of the defendant, sued in Alabama District Court for an injury suffered in Mississippi. The court had to determine whether to use Alabama or Mississippi law. Lex loci deictus: the law of the place of the wrong doing (“where’s the blood?”)- the place of the last location where the injury occurred. The vested rights doctrine states that you have the right to recover under the law of the state in which the injury occurred. The court decided to use Alabama law, barring recovery. In Babcock (car accident case where driver and passengers were from different states), the court determined that New York had a more compelling interest in determining collusive liability in regards to its residents. The court articulated this rule: when an issue involves a standard of conduct, it is more likely that it is the law of the place of the tort which will be controlling, but the disposition of other issues must turn on the law of the jurisdiction which has the strongest interest in the resolution of a particular issue presented. (Which state has the stronger interest?) Neumeier: Lex loci delictus can only be rejected when it is evident that the site of the accident is the least of the several factors or influences to which the accident may be attributed.
Note: lex loci delicti is the first restatement standard. For the Second Restatement, the standard is: if it is a matter of procedure, follow the forum law. If it is a matter of substance, follow the state law. Lex Loci Delicti continues to govern if: a) the injury occurs in injurer’s state and there is no liability or b) the injury occurs in the injured’s state and there is no liability. If action/injury occurs in one state, but all participants are from another state, apply the latter’s law (State’s interests high).
Where geographically is the lawsuit going to take place? In Pennoyer v. Neff, the court distinguishes between “in rem” and “quasi in rem” jurisdiction. There are three ways in which a court can exercise power over the person/thing in a lawsuit: 1) In rem: the court exercises its power to determine the status of property located within its territory and the determination of the court is binding with respect to all possible interest holders in that property, a declaration of the ownership of property that cannot be contravened following the case, determines ownership as against the world. 2) Quasi in rem: the court renders a judgment for or against a person but recovery is limited to the value of property that is within the jurisdiction and thus subject to the court’s authority. The property may be used to satisfy any judgment assessed in the action; asks a court to temporarily hold property until injured party proves entitlement to relief. 3) in personam: the court exercises its power to render a judgment for or against a person by virtue of his presence within the state’s territory or his citizenship there.
A subsequent court does not have to enforce a judgment made by the first court when the first court lacked personal jurisdiction over the defendant.
For personal jurisdiction, if in the first lawsuit the plaintiff wins on the merits in a forum of his choosing, and in the second lawsuit the plaintiff attempts to make good on the first by going to the place where the defendant has property to collect, the defendant has one chance to litigate whether the rendering court has personal jurisdiction. If he loses, he cannot bring another case on the merits regarding personal jurisdiction). If the defendant does not show up in the first trial, the plaintiff wins by default. When the plaintiff then attempts to enforce this judgment in the defendant’s state, the defendant can rise the issue in their home court but only on jurisdictional issues, not on the merits.
Pennoyer dictates that a defendant nonresident must be tagged/served in the state where the lawsuit is occurring to prevent the defendant from not knowing he was sued and also to prevent fraud or oppression. Additionally, the only source of federal law that limits a state court’s exercise of personal jurisdiction is due process law. (Based on the idea that state sovereignty is limited by the borders of that state).
What about corporations? International Shoe: Establishes a “minimum contacts” rule-“ a court may exercise personal jurisdiction over a nonresident (including a corporation) so long as there exists minimum contact, in accords with the standards of fair play and substantial justice to permit state enforcement. (The extent of the defendant’s due process protection depends on the “quality and nature of the activity [creating the contact] in relation to the fair and orderly administration of the laws.”) If the defendant corporation has minimum contacts with a state then the state has personal jurisdiction over that defendant. The concurrence suggests that that you have to also consider the state’s interest in adjudicating the dispute, not just the defendant’s contacts. General jurisdiction is the term used when a defendant has sufficient contact with the forum to warrant asserting jurisdiction over it for all matters (facts of the lawsuit need not be related to the forum). When a defendant has sufficient contact with the forum to warrant asserting jurisdiction over it for matters related to its activity, but not enough for general jurisdiction, it is called specific jurisdiction (lawsuit arises out of contact with the forum- requires statutory authorization, either through a state “long-arm statute*” when in state court or through a federal rule of civil procedure when in federal court). Hague rule: for a state’s substantive law to be selected in a constitutionally permissible manner, that state must have significant contact or a significant aggregation of contacts, creating state interests, such that the choice to use its law is neither arbitrary or fundamentally unfair. (Idea is to prevent a defendant from having to defend himself in a distant forum unless his contacts with the forum are such that “he should reasonably anticipate being haled” into the forum-Woodson).
McGee expanded state jurisdiction over foreign corporations and other nonresidents based on the idea of the “nationalization of commerce”- mail + state interest deemed sufficient to satisfy the minimum contacts test. Personal availment test: Did the defendant take advantage of/expect protection of state laws? (Foreseeability is not sufficient). Hanson: (rich lady case-she dies, her children arguing about who should get the money, she lived in Florida but her trust was in Delaware-did the trust sufficient contact with Florida?). The court ruled that there are territorial limitations to personal jurisdiction that do more than safeguard against inconvenient or distant litigation. Court declined to find sufficient contacts between the trust and Florida, distinguishing the transactions from the mailings in McGee. “The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum state, as the application of the rule depends on the quality and nature of the defendant’s activity;” the defendant must have “purposefully availed” itself of the privileges of conducting activities within that State, thus invoking the benefits and protections of its laws for personal jurisdiction to apply.
Worldwide Volkswagen: Strict liability allows purchaser to sue any and everyone in the chain of production. The court determined that there was no purposeful availment (financial benefits from a collateral relation to a forum state insufficient to establish minimum contacts). Nicastro: “Stream of commerce”- when a manufacturer makes a product and sells it, it becomes a product of the stream. Rather than applying the minimum contacts analysis, the court determined that the idea of a stream of commerce cannot supersede due process and that only purposeful contacts with the forum are relevant. Because the plaintiff was unable to prove that the defendant had purposefully availed itself of the market, the court did not have personal jurisdiction over him.
*State long-arm statutes seek to push the limits of personal jurisdiction and are used to deal with nonresidents. Types: a) those that go to the limits of the Constitution, b) favors naming transactions and determining whether the actions in question fall under those transactions which are governed by the court. Theory of advanced consent: Agreements that any future adjudication will occur in a particular state. These are typically upheld unless contrasted by state law, and do not have to be economically sensitive. Federal long-arm statutes: 4(k) (1) (c) and 4 (k) (2) deal with foreign defendants.
It is not clear whether the conclusion that a tag (serving the defendant in a state) is a sufficient showing of personal jurisdiction in that state, under International Shoe. In Schaffer, Scalia claimed that a tag allows general jurisdiction. However, the majority determined that, in terms of the relationship between quasi in rem and personal jurisdiction, when the only contact the defendant has with the forum state is the location of property as defined by statute in the forum state, the forum lacks personal jurisdiction unless the minimum contacts test is satisfied. Distinguished by Burnham, which stated that the holding does not compel a conclusion that a state necessarily lacks jurisdiction over an individual unless the litigation arises out of his activities in the state, rather, quasi in rem must satisfy the requirements of International Shoe. Grace determined that air space is considered within the territorial limits of a state. In Calder v. Jones, the court established that lack of contact will not preclude a court from determining a case in which it would ordinarily be able to hear. If a party could reasonably anticipate being brought to court in a state because of their relation to the forum, jurisdiction may be proper (based on the state’s interest). Effects Test: Were the defendant’s actions directed toward the forum state? (Unilateral action away from state is not sufficient to show that it was. Typically applies in tort claims)