Article III, Section I – established the Supreme Court
Article III, Section II – established the right for Congress to make inferior federal courts to the Supreme Court. Also gives Congress the right to dismantle and limit the courts powers.
-Defines 9 subject mater areas in which federal courts jurisdiction “shall extend to”
-Just because a case falls within these 9 categories, does not mean it HAS to be tried in federal court. They simply CAN be tried in federal court.
Subject Matter Jurisdiction
Diversity Jurisdiction – cases between citizens of different states – used to provide a neutral forum for cases involving risk for a local bias.
-About 1/3 of cases
28 U.S.C. 1332 (a) – Congress giving federal courts the ability to hear suits where citizens are from different states to cases over $75,000
(1)Citizens of different states
(2)Citizens of a state and citizens of a foreign county (unless unless foreigner is a permanent resident and domiciled in the same state)
(3)Citizens of different state in which a citizen of a foreign country is an additional party
(4)Foreign state as plaintiff and citizens of a state and different states
People and State Citizenship:
The courts way of determining which state an individual belongs to for the purposes of diversity jurisdiction and other legal matters.
-State of mind when filing the suit.
Domicile Rule: the state where one is physically present, and plans to be for an indefinite period of time, with no intention of leaving – “no formed intent to leave”
-Cannot relinquish old domicile until you establish a new one (Mas)
-Can file in any federal court if you have subject matter jurisdiction
Complete Diversity: must have complete diversity amongst both sides. Meaning no one party from the plaintiff side can share citizenship with any one party from the defendant side.
Corporations and State Citizenship
-Corporations are generally treated like people in the eyes of the law.
28 U.S.C. 1332 (c)(1) –corporations are citizens of states in which they are incorporated and where their principle place of business is. (can only have one principle place of business)
-Courts troubled themselves for 50 years over what “principle place of business” meant.
- Nerve center, daily operations
-Hertz established that the principle place of business was the nerve center
-Hertz v. Friend, SCOTUS (2010)
- F: Hertz did most business in Cali, does business in all states, headquarters in NJ
- I: How should courts determine principal place of business
- R: Principal place of business = where corporate high level officers direct, control, and coordinate corporation’s activities. (nerve center/headquarters)
- Virtue of simplicity – reduced litigation and made it easy for courts to determine the nerve center of a corporation
-Principle place of business can move if the company does in face establish a new nerve center.
-LLC’s and Partnerships are treated like individuals as their individual state citizenships are each taken into consideration.
Amount in Controversy
-Plaintiff’s claim is generally accepted in good faith as long as it seems as if it will reach the $75,000.
-Judge will only throw out a claim if he is absolutely certain it will not reach the $75k – generally give the plaintiff the benefit of the doubt.
-Do not have to know for sure that the plaintiff is going to win, and if the award ends up being for less then $75k, its OK, as long as a reasonable jury could award $75k
-Amount must be met for each defendant, or the defendant must be dropped or the the claim would be sent to state court
-Can add claims together
-If one plaintiff reaches the $75k award, another plaintiff can “tag along” for less money as long as it is for the same set of facts and issue.
-Diefenthal v. C.A.B. (1982) plaintiffs brought action because they were told they couldn’t smoke in first class; judge threw the case out because there was no possible way the AIC would reach $75k.
Gordon v. Steele, (1974)
F: Plaintiff(Gordon) got injured at home in PA. She then moved off to school in ID. The injury caused permanent damage to wrist and arm. Plaintiff had intentions of staying in ID after school due to work or religious reasons. Defendants are doctors in PA. Plaintiff sued in Federal court in PA for medical malpractice. Defendant filed a motion to dismiss because plaintiff was a citizen of PA, not ID, thus ruining diversity and SMJ.
I: Is the plaintiff a citizen of Idaho?
R: If the new state is to be one’s home for an indefinite period of time, he has acquired a new domicile. Since Gordon arrived in ID and had no intentions of leaving, then she is a citizen of ID and the suit is allowed because there is SMJ due to diversity.
Mas v. Perry, (1974)
F: Plaintiffs were students at LSU. Mr. Mas was a French citizen. Mrs. Maswas from MS. They rented an apartment from Perry (defendant, LA) at LSU where there were 2 sided mirrors. They then moved to IL, then back to LSU. They wanted to sue Perry for damages for the 2 sided mirrors. Plaintiffs filed in federal court.
I: Whether the court has SMJ-Diversity over Mr. and Mrs. Mas.
R: Domicile only changes when an individual moves to a new state, and then intends to remain there for an indefinite period of time. Mr. Mas was a French citizen so was therefore a diverse. Mrs. Mas was a MS resident because she never intended to stay in LA or IL. No new domicile due to lack of intention to stay anywhere.
Strawbridge – all parties must be diverse. No one defendant can be from the same state as one of the plaintiffs.
Federal Question Jurisdiction
28 U.S.C. 1331: Federal courts have original jurisdiction over all civil matters arising under questions of the Constitution, treatises, or other laws of the US.
-State courts could misinterpret or damage the credibility of the federal laws if they had to interpret it all the time.
-Federal Courts have jurisdiction over all matters that involve labor, environmental, federal tax, patent, securities.
Constitutional Scope of Federal Question
-Art. 3 § 2 says that as long as there is a federal ingredient, then Article 3 § 2 grants federal question jurisdiction.
-Statutory scope of 28 U.S.C. 1331 is much more narrow.
Louisville & Nashville RR Co. v. Mottley, (1908)
F: Mottley’s were passengers on a train and got injured. They promised not to sue in consideration for free train passes for life. Federal government passes a statute outlawing the free passes. RR company stopped the passes due to the statute, the Mottley’s sued for breach of contract.
I: Whether the federal courts have jurisdiction over this matter due lack of the claim arising out of a federal question.
R: No, the Mottley’s claim was based on a breach of contract claim. RR’s defense for denying the passes was a federal statute, but the claim must arise out of the conflict. No mention of federal question in the Mottley’s complaint.
Well-Pleaded Complaint: Well-pleaded complaint - The complaint by the defendant must claim that the defendant directly violated some provision of the Constitution, federal laws, or federal treaties.
Holmes Test: For a suit to arise under federal law, it must be a federal law that creates the cause of action in the plaintiff’s original motion.
-May not be based on counterclaim, even if exclusive federal jurisdictional matter such as patent infringement come up in the counterclaim.
Removal
28 U.S.C. 1441 – (A) allows that the defendant should have equal access to the federal courts as the plaintiff would have. As long as the original complaint could have been filed in federal court, then the defendant can remove to federal court.
(B)(2) – if the case could only be removed due to diversity, and one of the defendants is from the state in which the court claim is occurring, then the case is non-removable (home-state rule)
28 U.S.C. 1446 - (b)(1) Notice of removal must be filed 30 days after defendant gets initial complaint or after service of summons
(B)(2)(A) – All parties must consent to the removal
28 U.S.C. 1447 – (c) Motion to remand for anything other than subject matter jurisdiction must be done within 30 days after filing. Defense is waived if it is not raised within the 30 days. Subject matter jurisdiction defense can be raised at anytime throughout the trial.
(e) if a case is in federal court and a plaintiff moves to add defendants that would destroy diversity, the court may deny the joinder or dismiss the case.
-If Plaintiff drops Federal question claims, after original filing, the federal court may still determine they have SMJ as SMJ is determined at the time of filing.
-However, if plaintiff adds a federal question claim and thus the suit arises out of federal questions, then the defendant may remove to federal court at that time. – 30 days to remove.
Avitts v. Amoco Production Co., (1995)
F: Suit in which P alleged that D damaged a nearby oil production. Complaint vaguely stated that D “violated federal laws”, however never explicitly stated any specific law. D removed to federal court, and then got a heavy injunction placed upon them. They then moved to dismiss for lack of subject matter jurisdiction.
I: Did D ever have a right to remove the case to federal court? Can D move to dismiss due to lack of SMJ even though they removed the case to federal court?
R: Removal was never proper because the suit didn’t arise out of any specific breach of a federal law, district court never should have heard the case. D can look to remand back to state court because if there is no SMJ, then the case does not belong in the federal court. Doesn’t matter how it got there, if it doesn’t belong there it shouldn’t be there.
Personal Jurisdiction
14th Amendment: Due Process limits states, not the federal government – “no state shall deprive any person of life liberty or property without due process of the law.”
Article IV § 1: Full Fath and Credit Clause – the honoring of judgments of other states
-The authority to require the defendant to appear in court and defend the action in a state.
-Personal jurisdiction is what the defendant’s pay for deliberate efforts to derive benefits from or conduct activity in a state
-Federal and state courts generally have the same personal jurisdiction standards
-In personam jurisdiction: judgment against a person, generally enforceable in other states
-In rem jurisdiction: judgment against a specific piece of property, limited in terms of what property actually resides within the state
Pennoyer v. Neff, (1878)
P: Neff sued Pennoyer to recover his land that was sold at auction. Neff cited lack of personal jurisdiction in the original lawsuit where his land was taken.
F: Mitchell was Neff’s Lawyer who did some work for Neff. Neff skipped town without paying Mitchell. Mitchell sued Neff, but didn’t serve him personally, as he went back to his home state of CA. Mitchell put the notice in the newspaper. Court entered default judgment against Neff where Mitchell was able to auction off Neff’s land and sold it to Pennoyer.
I: Whether a state court exercise PJ over a non-resident who has not been personally served while within the forum state?
R: No, Supreme Court rule was that a non-resident must be served with process while within the forum state to get PJ. Must “tag” the defendant in the forum state through transient presence.
-Pennoyer has since been overruled. Was good law for a laong time as people rarely crossed state lines. As business and economy boosted, the PJ ruled needed change.
Challenging Personal Jurisdiction
Special Appearance: must raise a PJ argument in a specially arranged first appearance to the court. Cannot discuss any other claims other than PJ.
-If a PJ argument is lost, you can raise the issue on appeal later, as long as it was previously properly raised.
Interlocutory Appeal – a direct appeal of a motion in the middle of the case, only some courts allow it. Does not have to wait for the trial to finish.
Collateral challenge - D must fail to appear in the forum. This results in a default judgment. P then takes judgment to D’s state and asks the court to enforce the judgment under Full faith clause. D then appears in the enforcing court to challenge PJ.
-Courts do not have to honor every judgment, they can ask what happened to see if PJ and everything went procedurally correct.
-Can only challenge PJ once, if you specially appear and lose, you cannot challenge it again in your home state (collateral estoppel)
Specific Personal Jurisdiction
International Shoe v. Washington, (1945)
F: International Shoe sent salesmen to WA to procure shoes orders. All sales were processed through MO where the company was based. No actual paperwork was done through WA, rather the only thing happening was the salesman were present to get shoe orders. State of WA wanted to sue for unpaid unemployment contributions.
I: Whether International Shoe had availed itself to personal jurisdiction in WA by having salesman there.
R: Yes, “Due process requires only that in order to subject a judgment in personam, if he not be present in the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.”
-By coming into the state and engaging in the protections under the law, then you are liable to suits that may arise under your actions within the state
Minimum Contacts Jurisdiction – new precedent for PJ - (specific) – did the suit arise out of the specific contact with the forum state?
Must have:
- Contacts within the forum state
- Suit must arise out of these contacts
-If yes to both, then there is PJ.
- Is it unfair or unreasonable for the court to entertain this case in their court?
International Shoe for the most part overrules Pennoyer except for the transient presence aspect of aspect of Pennoyer. Can still snag a defendant in a forum state.
McGee v. International Life Insurance Co., (1957)
F: Plaintiff’s son (CA) took out a life insurance policy through International Life Insurance in TX. Plaintiff son then died, Plaintiff looked to collect and insurance denied claim. P filed in CA state court. P got a default judgment in CA state court, took it to TX to be enforced. TX said no PJ.
I:Whether a non-resident corporation is subject to PJ in a state in which it never had an agent or office, merely because it sold a product to an individual it knew to be in forum
R: Yes, due process clause does not prevent CA from entering judgment on D as long as they have satisfied the minimum contacts test. Insurance company knew P’s son was from CA and still maintained him as a client. Enforced the CA judgment.
Worldwide Volkswagen v. Woodson, (1980)
F: P purchased a car from dealership in NY. P left NY to move to AZ. While driving through OK, got into an accident. P brought a products liability suit in OK claiming that their injuries resulted from defective design. P sued the dealer, the distributor (D), and VW. No other contacts with OK other than P.
I: Whether an OK court may exercise PJ over a non-resident retailer when the D’s only connection with forum is that it sold a car in NY to NY residents who became involved in an accident in OK?
H/R: No. SCOTUS says D did not have any conduct with OK and no connection to the forum. PJ here would violate due process. It was the P who had contacts with Ok, not D.
-PJ not permissible unless D has had deliberate, voluntary contacts with the forum state. Reasonableness/forseability of being sued there does not suffice
-D does not have contact with a state simply because a consumer unilaterally transports D’s goods into the forum
Stream of Commerce
-Manufacturer makes a component part in state 1 and sells in to another company is state 2. Company then incorporates the component into a larger product and sells it into state 3. Does manufacturer have minimal contacts with state 3?
Asahi Metal v. Superior Ct. of CA, (1987)
PP: P sued D (component manufacturer) for a tire defect. CA courts said that since D did business on an international scale, it isn’t unreasonable that they defend claims on a defect on an international sale. Court reasoned that D knew its component parts were being sold in CA and D indirectly benefitted from sales in forum. SCOTUS grants cert
F: P driving a motorcycle and crashed. P sued claiming that tube in tire was defective. D manufactured the motorcycle’s wheel tubes. Asahi made valve in Japan and sold them to Cheng Shin in Taiwan, but knew their components were eventually being sold in CA.
I: Whether the mere awareness that some of their components eventually arrived in the forum state in the stream of commerce constitutes “minimum contracts” with the forum state which do not offend traditional notions of fair play and substantial justice?
H/R: (Sandra Day Oconnor) No. Due process requires more than the D’s awareness of its product’s entry into the forum through stream of commerce for minimum contacts. Making D defend in the forum was an unreasonable burden. D’s actions must be purposefully directed toward the forum state. A product arriving solely from the stream of commerce into the forum not enough for minimum contacts. Test: (1) Was there contact? (2) Did it arise from contact? (3) Is it reasonable to make D defend in forum?