SUBJECT MATTER JURISDICTION
1. Subject Matter Jurisdiction can be raised at ANY TIME(can be raised on appeal or even by judge)
a. Most favored defense under Rule 12: must include sentence on why court has subject matter jurisdiction in complaint; can be raised by court as well as by a party (Mottley)
b. 3 ways to get into federal court: diversity, federal question, or removal
2. Diversity Jurisdiction: §1332
a. CHOICE – not mandatory – gives Π the option
i. Π gets first option; if Π chooses fed=it stays; if Π chooses state, Δ can petition for fed if complete diversity exists
ii. If you sue at least one Δ in their home state, case is not removable to fed ct. based on diversity jurisdiction
b. Complete Diversity between the Π’s and the Δ’s
i. Citizens of different states
ii. Between citizen and alien
1. Aliens are Aliens – alien from France treated the same as an alien from Germany
2. However, permanent residents who are aliens have domicile of the state where they are permanent residents, not domicile as an alien (§1332(a))
iii. Foreign state and Π and citizen of a state
iv. NEED AT LEAST 1 CITIZEN OF A STATE
c. Amount in Controversy > $75,000
i. Can add up multiple claims by individual Π to meet the requirement; but cannot add claims by different Πs to meet the requirement
ii. Amount in controversy based on good faith pleading, not on what is awarded
1. Can object only if you can show as matter of legal certainty amount can’t be recovered (statute or contract)
iii. §1332(b) provides that court has discretion to deny court costs (Does not include attorney’s fees) for Π who wins for less than amount in controversy requirement, and court has discretion to award costs to losing Δ
d. Diversity based on Domicile
i. Domicile = permanent home, not residence; Born with domicile of the state where born;
ii. Moving to another state isn’t sufficient to change domicile; To change your domicile, you need: (no exact moment where you can say it happened)
1. intent to make this your permanent home AND
2. actually taking residence there (not enough to declare residency alone)
iii. Subject Matter jurisdiction established when complaint is filed, so moving afterwards is not controlling (But can be used as evidence of intent)
e. Corporate Citizenship:
i. 2 ways for Corporation to have a domicile (Can have 2)
1. Place of incorporation gives it citizenship and domicile in that state
2. Principal Place of Business (Headquarters) gives it a domicile there;
ii. Under diversity jurisdiction, must be diverse w/ respect to BOTH domiciles
iii. Can’t sue a subsidiary; have to sue the parent corporation
iv. Joint ventures and partnerships:
1. Citizenship/domicile established by owners or partners domicile
2. Where owned by two corporations, look at both corporation’ s citizenship (but owners of the corporations and boards of directors are irrelevant)
v. Unincorporated association/union:
1. Citizenship established by members
f. Mas v Perry:
i. Δ watched newly weds through two-way mirror
ii. SC has interpreted §1332 to require complete diversity; same language in Constitution (Art III § 2) has been interpreted by Congress to require minimum diversity
3. Federal Question
a. Same words have totally dif meaning in the Constitutional and statutory context: if there is a federal ingredient in the case, qualifies under Constitutional definition for “arising under”
b. Ingredient Test:
i. “Arising Under” test: §1331 – “well pleaded complaint”(not well pleaded answer or well pleaded response) – defenses irrelevant
1. Motley- for a Π to sue in federal court under the statutory test for arising-under jurisdiction, she(Π) must assert a claim that arises under federal law – Motleys sued for breach of contract (state law claim)
1) Ct. asks whether the Π would have to raise the federal issue in a complaint which includes the elements she needs to prove to establish her claim, and only those elements
ii. Supreme Court has discretionary appellate power over state court decisions w/ controlling issue of federal law under §1257
c. Private Right of Action
i. A citizen has the right to sue for a violation of the statute
1. Express = legislature explicitly granted right to sue
2. Implied = not explicitly granted or denied; must meet 4 part test:
1) Π’s are part of the class of people intended to be protected
2) Legislative intent to grant private right of action (can look at placement in Code)
3) Would further the purpose of the statute
4) Not traditionally a state law claim
d. Two tests of whether a cause of action “arises under” (Fed Q)
i. Cause of action arising under Fed Law (implied or express priv rght of action)
ii. Substantial (can’t win case w/o deciding the fed Q) federal question in state law cause of action, as evidenced in the well pleaded complaint
1. If no private cause of action(exp or imp) = not a substantial fed Q (Merrell Dow)
2. Thus, after Merrell Dow, 2nd test only applies where either:
1) can use fed law for private right of action and chooses not to;
2) personally cannot use private right of action, e.g., b/c fed SOL expired but state SOL didn’t
3) In Merrell Dow, Π’s trying to prove negligence per se using fed law as the applicable standard of care(violation of FDCA advertising rules); Court holds that if there is no private right of action in a federal statute, there is no substantial federal question and thus no federal subject matter jurisdiction (narrows the second test of “arising under”)
i. After this case, it appears that a statute that creates a federal substantive right, but is held not to create a private right to sue to enforce that right, will not support arising-under jurisdiction under § 1331
4. Removal
a. 28 USC §1446(b) requires motion to remove within 30 days from service of summons or service of pleading; and within a maximum of 1 year from commencement of the action (only for Diversity removal)
b. Removal an administrative action, immediately granted and done by the clerk
c. 28 USC §1441(b) limits removal to:
i. Fed Question: no time limitation beyond 30 days
ii. Diversity: only if none of the defendants is a citizen of the state in which the case is brought, with one year maximum and 30 day requirements (§1446(b))
d. All Δ’s must agree to removal petition for both diversity & Fed Q
e. Only need one cause of action to meet the “arising under” test for Fed Q to allow the entire case to be removed to Fed Ct (28 USC §1441(c))
Personal Jurisdiction
5. Personal jurisdiction answers the question of where you can sue; a suit in federal court requires both personal and subject matter jurisdiction
a. Not a privileged defense under FRCP 12 – must raise it in first response or it is waived (Rule 12(h)(1)) – Limited appearance exception
6. FRCP 4: Service of Summons
a. FRCP §4(c)(1) requires summons and complaint to be served together
b. FRCP §4(m) requires service within 120 days of complaint being filed
c. FRCP §4(e)(1) instructs federal judges to follow state law on servic
personal jurisdiction for Epstein’ s suit against Harris in MD (Epstein v Harris, collecting on Balk’s debt to Epstein);
b. Process was Constitutional b/c of the MD statutory safeguard requiring notice to the creditor and the creditor has a year and a day to appeal the judgment; if the creditor lacks notice, the MD judgment is still valid but Harris could not rely on it in the NC suit
c. Stretches Pennoyer rules b/c notice to Balk provided outside of the state; Balk had actual notice and had a remedy in MD to contest the judgment; thus the NC court (Harris v Balk) must give full faith and credit to the MD court
d. Personal debt diff from negotiable instruments, like bonds; such debts remain with the document / papers
e. Personal debt travels with the person; so Balk’s property travels with Harris!
9. Hess v Pawloski: (1927)
a. State statute mandates that nonresident driving in the state requires consent to have state official accept service of process on behalf of Δ; utilizes dicta in Pennoyer that allowed state to mandate conditions for doing business, including appointment of agent for service of process (no personal service was made or no prop attached)
b. IMPLIED CONSENT, with no actual notice to Δ of that consent is okay
c. Δ gets notice of any suit from his agent, the secretary of state; however, to ensure that Δ gets notice of suit, signed return receipt by mail of summons required from Δ, even if in another state
d. Shift in values b/w NOTICE and POWER from Pennoyer; there, power most important and notice secondary. Here, Notice more important.
10. International Shoe v Washington: (1945)
a. Corporate defendant, like intangible property in Harris v Balk, presents problems under the Pennoyer system. Impossible to physically seize a corporation or intangible property. Doctrine of presence within the state determines whether there is personal jurisdiction.
b. State sues corporate for unpaid unemployment compensation for traveling salesmen w/in state; state serves agent and sends service by mail to HQ; Δ, in special appearance, claims no personal jurisdiction b/c incorporated in St. Louis
c. Special appearance different from limited appearance, where Δ appears to defend suit but not accept service for any other lawsuits; Fed Rule requires notification of special appearance in first filing with the court.
d. Under Pennoyer analysis: incorporated in DE and not a citizen of WA, although there is notice no power over Δ by serving salesman, very little property to seize for quasi in rem jurisdiction (a few pairs of shoes)
e. Court creates a MINIMUM CONTACTS test for determining presence in the state for in personam jurisdiction
i. Historically, needed physical presence (POWER)
ii. Shift from POWER (Sheriff arrest ) to NOTICE (service of summons)
iii. Corporation is a person under the 14th Amendment
iv. A corporation’s presence is defined by its activities within the state; Under Due Process Clause, must not “offend notions of fair play”; FAIRNESS & NOTICE
v. Activities that are (1) continuous and systematic; and (2) give rise to liabilities in question, are sufficient to establish presence in the state to establish jurisdiction.
