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Civil Procedure I
University of Iowa School of Law
Bauer, Patrick B.

Civil Procedure Spring 2018 Outline; Professor Bauer

Civil Procedure: A Coursebook, 3rd edition by Glannon, Perlman, and Raven-Hansen

A. Introduction

Civil Pro can be fun!

B. Federal Court Subject Matter Jurisdictions

Diversity Jurisdictions


Framers created federal jurisdiction over diversity cases—cases “between citizens of different states”—in order to eliminate bias.
Policy Reasoning: to provide a federal forum for a party that may experience bias at the local level because of their out-of-state status.
Supreme Court has held that Congress may authorize the federal districts to hear some diversity cases, but not others.

28 USC § 1332 requires that the controversy exceeds the sum or value of $75,000, exclusive of interest and costs . . .

State Citizenship of Individuals: The Domicile Test

Gordon v. Steele – A Pennsylvanian plaintiff suffers an injury, which is complicated by Pennsylvanian doctors. Plaintiff moves to Idaho for college. Plaintiff sues under diversity jurisdiction. Court states plaintiff’s citizenship depends on her domicile—determined by her intent to remain “indefinitely.” Plaintiff wins.
“Indefinite Intent” – “intend[s] to make the new state home and that the person has no present intention of going elsewhere [to live]”
Alternative Formulation of the Domicile Test – “to establish a domicile of choice, a person generally must be physically present at the location and intend to make that place his home for the time at least.”
Date for Determining Diversity – must be diverse on the date of the complaint. (administrative purposes, provides efficiency)
Evidence of domicile – the facts such as having gym membership or the like are not the test itself; they are evidence to see if the person was going to stay indefinitely or not indefinitely.
If diversity exists, which federal district court has jurisdiction? All of them will have diversity jurisdiction.
Diversity cases in state court: state courts would also have subject matter jurisdiction.

The Complete Diversity Rule

Mas v. Perry – husband-plaintiff is a French citizen and wife-plaintiff is a Mississippi citizen; both under one party, under diversity jurisdiction, sue defendant, a Louisianan. Defendant claims that because plaintiffs lived in Louisiana for graduate school, no diversity jurisdiction. Court holds that there is diversity jurisdiction because both plaintiffs are not citizens of the defendant’s state.

Diversity statute requires complete diversity between all plaintiffs and all defendants. Minimal diversity is the opposite of complete.
Compare with Gordon: “permanent” vs “indefinite:” Permanence demands too much.

Alienage jurisdiction – Constitution allows federal courts to hear cases that involve foreign citizens suing an American citizen.
State citizens and national citizens – if Mr. Mas (foreigner) were admitted to US for permanent residence and domiciled in Louisiana, §1332(a)(2) would bar him from suing Perry under diversity jurisdiction.
United States citizens who are not state citizens – if a US citizen decides to become a domicile in a foreign country without becoming a citizen of said country, then the citizen cannot raise a claim under diversity jurisdiction. In such a case, suing at a state court level would be a wise option because of its wide subject matter jurisdiction.
The Supreme Court has stated that the diversity statute does not authorize jurisdiction over domestic relations cases unless perhaps tort is involved.

State Citizenship of Corporations and Other Entities

Originally, corporations could not invoke diversity jurisdiction. Bank of United States v. Deveaux. SC reversed in 1844.

Marshall v. Baltimore & Ohio R.R. Co., – corporations were citizens of the states in which they were incorporated. Later revised by statute below.
28 U.S.C. § 1332(c)(1) – corporation will be regarded as a citizen of the state in which they were incorporated and the foreign state where it has its principal place of business.

Corporation can only have one principal place of business even if it does business in numerous places.
The problem that follows the above is how do we choose the principal place of business? (nerve center test v. daily operations test)

Hertz Corp. v. Friend – Plaintiff sues corporation that plaintiff claims is a Californian citizen, but corporation argues that it is a New Jersey citizen because New Jersey is its “principal place of business.” Does corporation have principal place of business in California or New Jersey? The court overturns the Appeals Court decision stating that the “principal place of business” is where a “corporation’s officers direct, control, and coordinate the corporation’s activities.”

Policy Reasoning: to apply the “general business activities” test has led courts to look incorrectly at the State itself, thus measuring whether business there is larger than any other state. If that were to be the case, California would always be the “principal place of business” because of its size. Furthermore, the “general business activities” test is too complex to apply—too many variables, costs time and money, more litigation.
The decision is at odds with the purpose of the diversity jurisdiction: to provide a federal forum for parties likely to suffer prejudice based on the perception that they are “out-of-staters.” (protects “in-state” corporations instead).

Corporations can manipulate jurisdiction by moving its corporate headquarters to a different state to create diversity.

Carden rule – treats partnerships, limited liability companies, and other new forms of business organization as collections of individuals, and therefore as citizens of the state of each member/shareholder. (Difficult to est. div. test)

Courts will treat an entity the way it is characterized by law rather than by its similarity to a business entity.

Perfecting Diversity – the established rule is that jurisdiction is assessed as of the time of filing; if the court lacks jurisdiction, but the jurisdictional defect is cured before the case went to judgment, then it can still go to court, otherwise there would be additional costs.

The Amount-in-Controversy Requirement

Congress has set a minimum amount-in-controversy requirement to prevent minor diversity cases from going to trial (prevent waste of resources).
St. Paul Mercury Indemnity Co. v. Red Cab Co., – plaintiff’s claim for more than the required amount will generally be accepted, if it appears to be made in good faith, unless it “appear[s] to a legal certainty that the claim is really for less than the jurisdictional amount.”

Under this test, the judge will decide whether the injuries the plaintiff has alleged will convince a jury to award more than $75,000 for those injuries. If not, the case is dismissed.
As long as the plaintiff has the possibility of recovering more than $75,000, then the requirement is met.

Diefenthal v. C.A.B. – Defendants claim that the flight attendant humiliated them to the point of > $10,000 in damages. The district court said the claim was illegitimate. Even if defendants say that they made their claim in good faith, can a court still dismiss for lack of jurisdiction? Yes, if there is a lack of legal certainty that justifies the damage claim, then the court does not have jurisdiction.

there must be legal and a factual basis for a recovery of the required amount.

Ethical limits on insupportable claims: Rule 11(b)(3) states that allegations must have factual support; furthermore, ABA Model Rules of Professional Conduct 3.1 provides “A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis for doing so that is not frivolous.

Frivolous if “the lawyer is unable . . . to make a good faith argument on the merits of the action.”

A plaintiff can bolster his claim if the amount in controversy is in doubt by providing supporting documentation such as medical bills or even providing expert testimony. If plaintiff has not made his case by such support, he should file a claim in state court (likely

that a suit “arises under the law that creates the cause of action.”
A case would “arise under” federal law if, for instance, a federal statute was violated, and the victim would, in the name of that violation, make a claim.
Holmes test and the well-pleaded complaint rule are not alternative tests.
Where a defendant counterclaims, the court will not accept the counterclaim to serve as a basis for “arising under” federal jurisdiction.

If allowed, it would allow a defendant to unfairly remove a case brought in state court just by making a federal defense.
28 U.S.C Section 1454(a), however, allows a counterclaim in state court to remove the case to federal court if the claim relates to patent, plant variety, and copyright cases.

Declaratory judgement – allows a party bring suit itself to determine its rights and liabilities before actually being sued

Supreme Court states that even if a would-be defendant files declaratory judgment that relates to federal law, the would-be plaintiff’s cause of action must be the determinative factor in deciding if the case “arises under” federal law—i.e., If the plaintiff made a “regular” suit, it would have to “arise under” federal law.

Beyond the Holmes Test: State Law Claims Involving Substantial Questions of Federal Law

A case that asserts a state law claim may satisfy §1331 if, in order to decide the state law claim, the court will have to resolve a substantial issue of federal law. Smith v. Kansas City Title & Trust Co.

Grable reaffirmed Smith by stating for a state law claim, “Only when a state law claim necessarily raises a state federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities can it go to a federal court.”

Gunn v. Minton – Minton claims that his legal malpractice claim was based on an alleged error in a patent case, and therefore it “arises under” federal patent law for purposes of 28 U.S.C. §1338(a), and thus the state trial court’s order should be dismissed and moved to a Federal District Court.

Grable – Federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.
Substantiality requires that the issue be important to the federal system as a whole.

Exception to the Holmes test – Shoshone Mining Co. v. Rutter – where federal law authorized the suit, but the suit would involve only state law issues, and therefore did not go to a federal court.
Bell v. Hood – plaintiffs made a claim seeking a nonexistent relief under federal law; the federal court had jurisdiction, but because of the lack of merit, it dismissed the case.
Cases raising both federal and state claims – If a plaintiff asserts several claims in a single action, which comprises of state and federal claims, and if both types of claims are from the same root, and if the federal claim is a substantial claim that provides a basis for federal court jurisdiction, then a federal court may hear both the state law claim along with the federal law claim.