Select Page

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

FOUR REQUIREMENTS THAT MUST BE SATISFIED BEFORE A COURT MAY HEAR A CASE
1.      SUBJECT MATTER JURISIDCTION
2.      PERSONAL JURISDICTION
3.      PROPER NOTICE (Service of Process)
4.      VENUE

FEDERAL COURT SUBJECT MATTER JURISDICTION

Federal Question Jurisdiction (§1331):Districts courts have original jurisdiction over all cases arising under federal law (§1331).
·         Step 1: Does Claim Contain an Essential Federal Element That Arises Under Federal Law?
o   Yes, apply Step 3 “well-pleaded complaint rule.”
o   No. Substantial Federal Interest Test: if the claim is a state law claim, does the plaintiff’s right to relief depend upon application or interpretation of federal law? If so, is the federal interest implicated “substantial”?
§ Yes. If so, the claim contains an essential federal element. Apply “well-pleaded complaint rule.”
§ No. If not, then claim lacks an essential federal element and federal question jurisdiction does not exist.
·         Step 2: Well-Pleaded Complaint Rule: a claim must contain an essential federal element that appears on the face of the plaintiff’s well-pleaded complaint (Motley). Thus, federal defenses or claims raised by the defendant will be insufficient to serve as the basis for federal question jurisdiction (Motley)
o   Motley: Anticipation of a federal defense doesn’t make the claim arise under the Constitution (Federal Law); even though a federal ingredient exists in the D’s defense, it is insufficient to bring a federal claim because it wasn’t raised by the plaintiff.
Federal Question Jurisdiction U.S. Const., Art, III, §2, cl. 1
·         A case satisfies Article III as long as its resolution turns on a question of federal law, regardless of whether that federal issue is a necessary part of the complaint. Supreme Court’s jurisdiction to review state court decisions comes from §1257, not §1331.
·         §1257 State courts; certiorari: Final judgments or decrees rendered by the highest court of a State in which a decision could be had, may be reviewed by the Supreme Court by writ of certiorari where the validity of a treaty or statute of the U.S. is drawn in question of where the validity of a statute of any state is drawn into question on the ground of its being repugnant to the Constitution, treaties, or laws of the U.S….
Diversity Jurisdiction §1332: in disputes where the amount in controversy exceeds $75,000, federal courts have jurisdiction to hear cases involving suits between (art.1) citizens of different states; (art.2) citizens of a State and citizens or subjects of a different state; and (art.3) citizens of different states where aliens are also parties, and foreign states as plaintiffs and citizens of a state. When plaintiff files a diversity case originally in federal court, all that matters is that the parties are diverse on the date the case was filed.
·         “Citizenship of an Individual”: For individuals, citizenship determined by “domicile”; to establish domicile a person must (1) be physically present in a place and (2) have the intention of remaining there indefinitely (Lunquist); A person always has ONE domicile.
·         In order to change his domicile, a person must both establish residence in a new state and have the intent to remain in that state. The residence and the intent to remain must exist at the same time, even if only for a moment. Focuses on person’s subjective intent.
·         “Citizenship of a Corporation” (§1332(c)(1)): For a corporation, citizenship is based on its (1) state of incorporation and (2) the state where its principle place of business is located, meaning that a corporation can potentially have citizenship in two states for diversity jurisdiction purposes.
o   “Principle Place of Business Test”:
§ (1) Place of Operations Test: The state in which corp. performs a “substantial predominance of corporate operations (Motrose)
·         Relevant Factors: (a) location of employees (b) location of tangible property; (c) location of production activities; (d) location where income is earned; (e) location where purchases are made; (f) location where sales take place.
§ (2) Nerve Center Test: The state in which the executive and administrative functions are performed (i.e. location of decision-making authority, headquarters) (Montrose).
·         “Nerve Center Test” should be used only when no state contains a substantial predominance of the corporation’s business activities (i.e. test employed only if “place of operations test” is insufficient to determine the principal place of business).
·         Citizenship of Legal Representatives (§1331(c)(2)): deemed citizens of the state of the party whom they represent.
·         Citizenship of Insurance Companies (§1332(c)(1):suit against insurer, whether incorporated or unincorporated, to which the action the insured is not joined as a party, the insurer is deemed a citizen of the State of which the insured is a citizen, as well as of any State by which the insurer has been incorporated and of the State where it has its principle place of business.
·         Not Permissible: (a) alien v. alien (b) state citizen + alien v. alien (c) alien + alien v. state citizen (d) state citizen v. permanent resident alien from same state.
·         Complete Diversity:  All of the parties on one side of the action must be completely diverse from all of the parties on the other side of the actionà complete diversity as is required exists (Strawbridge).
o   If no complete diversity, there can be no diversity jurisdiction over the claim.
·         Collusive Joinder (§1359): If a party has been improperly or collusively named simply for the purpose of creating a basis for diversity jurisdiction, the citizenship of the collusively or improperly named party may be ignored for diversity purposes.
·         Determining Amount in Controversy: the claim must be more than $75,000;
o   (1) Compensatory and Punitive damages can be added in to reach the jurisdictional amount;
o   (2) Costs and Interest are EXCLUDED from amount in controversy.
o   (3) Aggregation: The plaintiff’s separate claims can be aggregated to satisfy the amount in controversy only if one of the following exists:
§ (a) there are multiple claims by one plaintiff against one D;
§ (b) there are multiple plaintiffs asserting an undivided interest’; the court will consider the amount in controversy to be the value of the property (75k>) and not the value of each individual claim
§ (c) there are multiple Ds with joint and several liability.
§  
o   Multiple plaintiffs: two or more plaintiffs ordinarily cannot aggregate their claims. Two exceptions: (1) plaintiff with claim >75K can join plaintiff with claim >75K (assuming claims are factually related) by virtue of the supplemental jurisdiction statute; (2) if two or more plaintiffs hold a joint and undivided interest in a property valued over 75K, and their claims involve the property, the court will consider the amount in controversy to be the value of the property (75k>) and not the value of each individual claim.
o   Counter-claims: A court usually considers only the complaint in determining whether the amount in controversy requirement is satisfied. However, several courts have indicated that the requirement may also be met if D asserts a compulsory counter-claim that, when added to the prayer in the complaint, totals more than $75,000. Other courts disagree, holding that only the complaint counts for determining the amount in controversy.
·         Exceptions to Diversity Jurisdiction: Generally, federal courts sitting in diversity may hear any claim regardless of the nature of the dispute. However there are two exceptions:
o   (1) Domestic relations and probate cases. Federal courts will not exercise diversity jurisdiction over the probate will. In Ankenbrandt v. Richards, the Supreme Court reaffirmed that federal courts may not exercise diversity jurisdiction over cases involving core issues of family law (only applies to divorce, alimony, and child custody).
o   (2) Situations where federal courts must abstain from exercising jurisdiction. In rare cases, a federal court sitting in diversity may be required to abstain from a case in situations where the underlying state law is unclear and where there are important state interests at stake.
Supplemental Jurisdiction (§1367): outlines the circumstances under which claims that independently cannot qualify for federal jurisdiction can nonetheless be heard in federal court. Specifically, a state claim lacking any independent basis for federal jurisdiction may be heard in federal court on the basis of supplemental jurisdiction where it is part of the same controversy as a claim in the case that does have its own basis for federal jurisdiction. Supplemental jurisdiction will never be the sole basis for jurisdiction in the case; instead, it always works in conjunction with one of the other forms.
Three Part Test:
·         STEP 1: §1367(A): Whether the claim in question (the claim that could not be heard by a federal court on its own), and another claim in the case that the federal court can hear, “form part of the same case or controversy under Article III of the Constitution.”
o   Freestanding Claim:There must be a claim over which the court has original jurisdiction (Federal question or diversity); must have federal “colorable” claim.
o   Common Nucleus of Operative Fact:

l ordinarily satisfy §1367(a). The only exception, set out in Exxon Mobil, is a case involving multiple plaintiffs and/or defendants, where jurisdiction is based solely on diversity but complete diversity is lacking. Aside from that exception, §1367(a) will be satisfied for all of the following claims:
o   (1) joinder of plaintiffs or defendants under Rule 20, when jurisdiction is based on a federal question or there is complete diversity
o   (2) compulsory counter-claims (Rule 13(a)): to qualify as a compulsory counter-claim the claim must arise out of the same transaction or occurrence, so obviously it would satisfy the requirement of §1367(a).
o   (3) any cross-claims that arise from the same transaction or occurrence as plaintiff’s claim
o   (4) claims by third-party defendant against plaintiff, and plaintiff against third-party defendant, under Rule 14(a).
o   (5) parties joined to counterclaims or cross-claims under Rule 13(h).
Three Crucial Caveats
·         (1) Do not assume that all courts equate “same transaction and occurrence” with the §1367 “common nucleus” test.
·         (2) Do not assume that supplemental jurisdiction is the only way for a court to obtain jurisdiction over a joined claim. Supplemental jurisdiction is a last resort; to be used only if diversity and federal question jurisdiction do not work for al claims.
o   Necessary to first analyze each claim separately, to see whether diversity or federal question applies. Turn to supplemental jurisdiction only if you find claims that do not qualify for federal question or diversity jurisdiction.
o   §1367(c) makes jurisdiction over the supplemental claims discretionary.
·         (3) In determining whether a claim satisfies §1367(a), it is necessary to determine whether the claims falls under any of the exceptions in (b) and (c).
Examples
Counterclaims Rule 13(a)
·         Plaintiff (IA)à ($100K)à Defendant (NE)
·         Plaintiff (IA)ß($50K)ßDefendant (NE): compulsory counterclaim.
·         §1367(b) doesn’t apply to Rule 13 (compulsory counterclaim); §1367(b) only knocks out claims made by plaintiffs.
Crossclaims Rule 13(g)
·         Plaintiff (IA)à($250K)à Defendant 1 (NE)
·         Defendant 1 (NE)à ($250K)à Defendant 2 (NE)
·         Crossclaim Rule 13(g): §1367 doesn’t apply since cross-claim is by D1 against §D2; doesn’t apply since Rule 13(g) is not included in the exceptions.
Impleader Rule 14 (By D)
·         Plaintiffà($250K)àD1à(cross-claim)àD2à(implead)àinsurance company
·         Although Rule 14 Impleader is invoked, §1367(b) doesn’t bar the supplemental jurisdiction because a D impleaded and is suing another party, the plaintiff isn’t suing the insurance company. However, if the plaintiff were to sue the insurance company, then supplemental jurisdiction would be barred since the plaintiff would be bringing an action against an entity made party under Rule 14 (i.e. Insurance company was made a party to the lawsuit pursuant to Rule 14, and so plaintiff cannot sue).
Rule 13(h) Joining Additional Parties
·         Rules 19 and 20 govern the addition of a person as a party to a counterclaim or Crossclaim.
·         Because invoking Rule 13(h) leads you to Rules 19 and 20, §1367(b) bars supplemental jurisdiction when the plaintiff tries to sue a person or entity made party under 19 and 20 (through 13h).
o   (1) Pà D Claim
o   (2) Dà P Counterclaim, Rule 13(a)
o   (3) Dà O Crossclaim, Rule 13(g)
o   (4) PàO Crossclaim, Rule 13(h)
·         (a) D joined O under Rule 13(h), which is governed by Rule 20 (and 19); through transitive property D joined O under Rule 20; (b) P suing O (cross-claim), a party joined under Rule 20; (c) §1367 doesn’t allow lawsuits by plaintiffs against persons joined under Rule 20.