Parties cannot consent to SMJ statute of limitations facilitates administration of claims, limits sovereign immunity, promotes judicial efficiency
Determining if case raises Q of SMJ
Clear statement rule
Real-world or courtroom activity?
Does requirement describe an attribute of a party?
Is requirement usually treated as jx?
Is the US a party? sovereign immunity very important
State court SMJ
State court SMJ defined by state law
State courts have general/plenary power (power to hear any case unless removed)
Is the requirement only related to entering judgment on a particular defendant (PJ) or is it related to the court’s power to entertain judgment on a type of case (SMJ)?
Limitation/Fed Regulation –
art VI, sec 1full faith and credit – state has duty to apply transitory COA of other states, but may apply its own procedural law
supremacy - state may not discriminate against FCOA
exclusive jx - Congress may make jx exclusive to fed ct
concurrent jx – state courts may have concurrent jx under art III to hear fed claims
State courts of general jx must hear transitory causes of action that are justiciable under the laws of another state
Does not apply to penal proceedings and in-rem proceedings
Hughes v Fetter – action brought in WI predicated on IL wrongful deaths statute: WI has jx over D, but needed to use IL law b/c law must originate from same state as where tort occurred
state may not carve out jx to refuse to hear cases which it does not want to
balancing test – balance state’s policy for closing itself off from foreign law with full faith and credit (if one state creates a right, others should enforce it)
Howlett v Rose – state court ruled that under state-law sovereign immunity it need not hear a case against a state school board, even though the claim was of fed law and fed law does not prescribe state sovereign immunity
state cannot decline to hear a case that falls under fed law on basis of policy disagreements; article VI supremacy clause
Federal Court SMJ
article III, sec 1 – power vested in one SCOTUS and all inferior courts as established by Congress
sec 2 – scope of Congr power to invest jx in fed ct
2 or more states; state and citizens of another state; citizens of diff states; foreign states/citizens
claim based jx – all cases arising under constitution, laws of US, treaties; all cases of admiralty and maritime jx
Capron v Van Noorden– P claimed that both parties were from NC, so NC cir ct did not have jx
SMJ of fed ct limited by art III, sec 2
Record does not show that either party is from outside NC
A party cannot consent to fed SMJ
Limiting fed jx under federalism court must be cautious to be sure it has jx
Diversity jx – diversity of citizenship and alienage
Diversity jx– state law claim x/ citizens of diff states
Party invoking diversity jx has burden of identifying citizenship of each and every aprty
2 statutory requirements (28 USC § 1332a) – must have diversity jx and must meet amt in controversy (75k)
must be US citizen (Dred Scott v Sanford); art II, sec 2 (non-US citizens cannot sue other non-US citizens in fed ct unless US parties added)
must be citizen of a state
must have complete diversity (Strawbridge)
Mas v Perry – P Mas sued D Perry for invasion of privacy; after judgment, D appealed claiming no SMJ of fed ct as all parties were residents of LA
Residence determined by domicile(§1332(2)) person remains domiciliary of home until he finds a new domicile
Intent to remain – org membership, license, lease, voter registration
One P is citizen of Fr, other is domiciled in MS diversity jx satisfied
1332c – corp is citizen of state/foreign state in which it is incorporated and state/foreign state in which it has principle place of business
Hertz Corp v Friend– P Friend sued D Hertz in CA state ct seeking damages for violations of CA law; D filed for removal to fed ct claiming diversity jx as it PPB was in NJ
Nerve center test – PPB = place of direction/control/coordination of corps activities not offices, but HQ
facts suggest nerve center is in NJ
1332(d)(10) - unincorporated associations
citizen of state where it has PPB, state under which laws it was created; where its members have citizenship
aggregate test - determined by the citizenship of each of its members
insurance cos have citizenship of those they insure (§1332c)
alienage jx - art IV, sec 2 “btw a state/its citizens and foreign states/citizens/subjects”
stateless aliens don’t meet requirements of 1332
1332a3 – citizens of diff states + foreign citizens joined
1332a4 – foreign state party against a citizen of a state or diff states (foreign state must be recognized by executive branch)
1332a – Deeming Provision a PRA shall be deemed citizen of state in which he is domiciled
1332a2 – Jurisdiction Clarification Act – no fed jx over PRA domiciled in same state as US citizen on other side
think about – corps w/ mult citizenship, natl banks citizens where located, dissolved corps
Collusion
Kramer v Caribbean Mills– co assigned its interest for 1$
Assignment was improperly or collusively made
Test – is there a pre-existing relationship? Is business relationship valid in assignment? What are the usual practices of the company?
§1359 – no jx over any party/assignment that has been improperly/collusively made when done so to created jx
Rose v Giamatti– can’t frivolously add Ds w/o interest in suit in order to defeat fed jx; court may sever parties w/o interest
Rule 21 – court may at any time add/drop/sever claims against a party under; may not dismiss action
Fraudulent joinder – no basis for claim
Improper joinder – parties joined through incorrect procedure
Rule 17 – action must be against real party in interest
Two parties’ citizenship ignored when determining diversity as they had no real stake in dispute
Amount in Controversy
Aggregation – parties must be joined under R20, claims R18
R18 – single P can join and aggregate all claims against single D
multiple P’s cannot aggregate claims that are separate and distinct, but may aggregate claims that are common, single and indivisible look to substantive law (common/indivisible is not “arising out of same transaction)
!!! supplemental jx may cure fed defect when one claim does not meet amt in controversy and cannot be aggregated under R18
Claims must be made in good faith; must be legal certainty that claim is really for more than amt needed for jx Red Cab Rule
Sum by P controls if alleged in good faith and if it cannot be shown to legal certainty that amt falls short
Post-filing findings only admitted if they infer bad faith
If damages do not meet AIC, ct retains jx
Valuing an injunction – P’s value of claim v D’s cost of compliance is this original jx or removal?
Exceptions
Divorces/alimony/child custody (domestic relations), will contests fed ct may dismiss case of may abstain (declines to exercise diversity jx in favor of state ct)
Neither constitution nor state explicitly excludes these
Ankenbrandt v Richards– physical/sexual abuse charges may be heard in fed ct
Marshall v Marshall– no policy behind probate exception in case of tortious interference as state courts have no special proficiency in dealing with tortious interference with estates
Federal Court Jurisdiction: Federal Question
Need 2 things: fed issue on face of complaint, which is sufficiently substantial
Art II, sec 2 “arising under”; also §1331 (but 1331 read more narrowly than art II, sec 2)
Osborn v BUS– fed ct enjoined state auditor (P) from collecting state tax from BUS, P appealed that fed ct did not have SMJ (state law claim)
BUS responded w/ constitutional issue, but constitutional defense does not confer fed jx
Congress authorized fed jx on all cases involving BUS, Congress has this power under art II, sec 2
Once jx is attached, the presence of a nonfederal issue does not defeat jx
Federal ingredient test: once case contains a fed ingredient, fed ct potentially has authority to resolve all issues of the case broad application
Q – does arising under power support jx over cases in which fed statute gives jx but state law provides ROD? under constitution yes; under statutory test, no
BUS v Planters’ Bank of GA – any case involving BUS falls under fjx regardless of nature of claim (state/fed)
Statutory Test (§1331)
Louisville & Nashville v Mottley– P (Mottley) brought breach of contract action in KY cir ct, D claimed breach was in compliance with Congressional act, P claims act violates 5th Am
Anticipation of defense based on constitution may not be used to confer fjx; original cause of action must arise under fed law or constitution
must be well-pleaded complaint federal Q must be on the face of the complaint (not a defense)
States may include federal elements in statutes if they want fjx, and leave elements out if they don’t want fjx
Mottley argued as being over-inclusive (lets in too many cases); others argue its too narrow (doesn’t allow fed jx over fed claims brought as D)
Explicit/implied COA in statutes
Shoshone Mining v Rutter - federal law defines how miner’s (Rutter) patent claim should be filed under state law
There is a federal COA, but rule is state law, so not fjx
Smith v Kansas City Title & Trust- bank (D) bought US bonds, Smith (P) shareholder brought suit against D claiming that this investment violated MO law; bonds were bought under federal program, constitutionality challenged
Action arises under fed law as state COA turns on constitutional issue relief depends on constitutional interpretation
Fed law claim sufficiently substantial
State COA + const Q = substantial
National fiscal interest
Moore v Chesapeake RR – P (Moore) sues employer (D) under KY law and also alleges D failed to comply with fed safety requirement
Case is largely state court action; fed safety requirement only alters defenses no fjx
State COA + federal Q in defense = insubstantial
Only affects intra-state employment
Merrell Dow v Thompson– state tort action in OH ct by P (Thompson), D filed for removal (one claim was under FDCA)
fed law, but not fed ROA
ROA is under state tort claim
Bright line rule – no fjx w/o independent fed ROA (shows fed interest)
But there are exceptions after Smith and Moore depending on substantiality of fed interest
Smith – state COA invoking fed norms grants fjx
Brennan’s dissent – existence of fed law expresses fed interest
Grable & Sons Metal v Darue– IRS seized P’s property and gave it to D; P claimed notification by IRS of seizure violated fed statute in state ct; D removed to fed ct
Empire Healthchoice v McVeigh – P (Empire) insurers D (McVeigh), a fed employee; P sued D’s estate to recoup medical expenses after estate recovered from 3rd party; fed statue silent on whether insurers can recover from 3rd parties, but P has contract with fed office which requires taking measures for such recoupment
Disputed fed issue = disputed legal, not factual Q (ie – fed ROA or fed act triggering case?)
No disputed fed statute as required by Grable no legal Q, Q was factual
Congress did not create fed ROA
US govt not a party
Fjx would disrupt federalism and create avalanche of lit
Summary of Fed Q Jx
Mottley – well-pleaded complaint
Grable - fed issue must be disputed
Substantiality – existence of ROA within statutory scheme (Merrel Dow), involvement of govt (Grable), or constitutional ROD (Smith)
Must not disrupt federalism
Grable 4-prong test clarified by Empire Healthchoice
Pendent/Ancillary Jurisdiction
Pendent jx – claims/parties joined in P’s complaint
Ancillary jx – claims/parties joined after filing complaint
Hurn – fed ct may exercise pendent jx over state law claims that provides alternative ground for relief for substantial fed COA
United Mine Workers v Gibbs – P Gibbs brought COA against D UMX for violations of fed statute and TN law in fed ct
Applied Hurn
Test for pendent jx: must fall under art III, must be fed ingredient, must be substantial federal claim under §1331
State and fed claims must have common nucleus of operative fact
Rule 14 – impleader; seeking indemnification from 3rd party D
Rule 19 – required/necessary party
Rule 24 – intervention; stranger can join suit
Limiting pendent jx
Aldinger v Howard – P brought suit against officers for fed law violations, fed law did not apply to county, so P joined country under state law fed jx?
Cannot join D on state law claim w/o independent basis of fjx
Congress specifically declined to include county as party who may be sued under this fed statute (intent not to try these parties in fed ct)
Owen Equipment v Kroeger – wrongful death suit w/ diversity jx, D impleaded 3rd party discovered to have same PPB where P had residency
§1332a1 requires complete diversity; circumstances of case do not negate express Congressional acts
Aldinger and Owen favor pendent/ancillary jx unless specific grant of jx withholds such power
Finley v US– one claim against fed agency (exclusive fjx), other claim against nondiverse D under state law
Fed statute confers jx over action against US, which court infers as only actions against US no explicit grant of pendent-party jx
Bright line rule disfavoring pendent-party jx
Pendent claim –common nucleus of operative fact
Pendent-party – explicit
Supplemental Jurisdiction
In response to Finley, Congress passed §1367
A – supplemental jx allowed when
1 – fed jx over original claim, and
2 – supp claim is related and of the same controversy as original claim
B – if fjx of original claim rests on diversity, supp jx not allowed for R19 (required), R20(permissive), or R24(intervening) defendants; or for R19/24 plaintiffs
No supplemental jx over parties that will destroy diversity
C – fed ct may decline jx over
Novel/complex state law issues
State law claim predominates (like in Gibbs)
All claims with original fjx dismissed
Exceptional circumstances + compelling reasons
Are these (c) the exclusive grounds for declining SMJ
Exxon Mobil v Allpattah – two cases, both which joined some Ps who did not meet amt in controversy
1367b only excludes claims against Ds joined under R20, does not exclude Ps joined by R20/23 when at least one other party meets AIC
amt in controversy not a constitutional Q like diversity
supplemental jx of other parties not meeting amt in controversy allowed as long as Strawbridge is satisfied
Kokkenen –SCOTUS confirmed existence of ancillary jx when court needs to enforce orders
Removal Jurisdiction
Removal - §1441
1441b2 - Ds properly joined and served may not remove case to fed ct
1446b2A – all Ds properly joined and served must consent to removal petition; “rule of unanimity”
1446b2B – each D in suit has 30 days to seek removal regardless of when served; “last served D” rule
1446b3 – if suit not removable based on initial pleading, D may file notice of removal w/in 30 days of receipt of amended pleading/motion
1446c1 – exception to one-year rule for diversity cases; applies when P acts in bad faith to prevent D from removing
1446c2 – AIC base on P’s complaint unless D asserts
meets statutory req if nonmonetary, monetary but state law does not allow complaint to include specific amt, or state law permits recovery in excess of amt alleged in complaint
1446c3A – Ds who lack adequate info during 30-day window to use discovery to determine AIC
§1441 – removal only allowed to Ds; fed ct must have jx over original complaint
a counterclaim (R13) or affirmative defense cannot be basis for removal
but there will be fjx over counterclaim “so related that it is part of the same case or controversy”
1441b – in-state D cannot remove
1441c – removal allowed when fed claims are joined w/ state law claims (not transactionally related), but the unrelated claim must be severed and remanded to state court, if the fed claim would be removable on its own
1441f (derivative removal) – if court from which suit was removed did not have jx over a claim, fed ct is not precluded from exercising jx over that claim
§1446 – removal motion can be made for up to 1 yr after original filing, but must be made within 30 days of obtaining info that case can be removed
burden of proof is preponderance of the evidence standard to demonstrate legal certainty
SMJ can be challenged at any time during lawsuit (direct attack)
Opportunity for collateral challenge limited
Restatement II of Judgment does not allow collateral challenge of SMJ
Applicable Law
28 USC 1652 – Rules of Decision Act laws of states shall be regarded as rules of decision in civil actions where they apply, except where fed law otherwise provides/requires
28 USC 2072 – Rules Enabling Act allows Congress/Supreme Court to enact rules of procedure for fed cts as long as such rules to not abridge or odify state’s substantive rights
Swift v Tyson – diversity action to enforce bill of exchange; NY law would not allow for enforcement of note did fed ct have to apply NY law under RDA?
Judicial decisions are not “laws” under RDA, they are evidence of the laws but not the laws themselves
In absence of state statute, fed ct has power to announce common law ROD, can base ROD on construction of general common law
b/c NY statute existed, ct applied it
Eerie v Thompkins – P injured by train while walking on path next to D’s RR, PA law placed lower duty on RR than fed law, P took case to NY-based fed ct what law applies?
