Federal Courts Outline
I. Federal Court Jurisdiction
A. Intro – Authority of Fed Ct.’s
1. Art. III is source of power.
a. Dist. Ct. created via clause giving Congress power to create “such inferior ct’s as it should desire”
2. Fed Ct’s are ct’s of limited juris
a. Thus, only 4 ways to get into fed dist. ct.:
1.) Fed Question (i.e. front door)
2.) Diversity (i.e. visitors door)
3.) Removal (i.e. back door)
4.) Supplemental juris (i.e. side door)
b. Thus, 1st question (base threshold inquiry) is whether fed ct has juris?
1.) Never presume juris.
B. Federal Question Juris
1. Created by 28 USC § 1331
a. No amount in controversy requirement (as opposed to diversity)
2. Threshold Inquiry: Does case arise under federal law?
3. Face of Complaint Rule (or well pleaded complaint rule)
a. Comes out of Mottley.
1.) Mottley also tells cannot base fed juris based on an anticipated fed defense.
b. Use rule to determine if Fed Q Juris
c. Rule = look w/in complaint & determine if C/A is created by fed law or state law.
1.) Really getting at whether case arises under fed law.
a.) Specifically, § 1331language requires.
4. Use of a Dec. Action (i.e. Fed Dec. Judgment Act) to create fed juris
a. Argument trying to make is that Dec Judgment Act is the fed law which claim, i.e. Dec action, is arising under.
b. Franchise Tax Board (ERISA & CA case) addressed this issue.
1.) Fed Dec Judgment Act does not create fed juris by itself, must already have fed juris via underlying claim seeking declaratory judgment on.
2.) That is, styling a suit in this manner does not create fed juris.
C. Diversity Juris
1. Diversity juris has its origins in the 1789 Judiciary Act.
a. Thus, Cong. has power to tax away or expand it as Cong so wishes.
2. Idea of Diversity – § 1332
a. Citizens of different states
b. $75,000+ in controversy
1.) Pleadings requirement only
a.) Do not have to recover $75,000+, but can result in not recovering costs.
i. Requirement still not much a deterrent; ct. will rely in good faith on pleadings.
3. Determining Citizenship of each party
1.) Must be a citizen of U.S. & domiciled in a state
2.) Determining Domicile (domicile determines citizenship)
a.) Domicile = that place where he has his true fixed & permanent home & principal establishment, and which he has the intention of returning to whenever he is absent abroad.
i. Thus, key = where do you intend to have your home.
b.) Factors ct. will look at (i.e. hypo on snowbirds in FL.)
i. How long resided there
ii. Where are assets kept
iii. Where are registered to vote
iv. Where state taxes are paid
v. Employment location.
1.) Corporations are citizens of state incorporated in & of state where principal place of business is.
a.) Exist numerous ways to determine principal place of business. However, are 3 major ways.
i. Nerve Center Test = where are the executives locate
ties in interest.
a.) Owen Equipment demonstrates this concept.
i. Once fond no diversity & P had directly proceeded against 3PD, case is out.
ii. Even the case when ct. has already rendered a decision.
5.) Party trying to get into fed ct. has the obligation to prove juris requirements.
a.) Party invoking diversity has the burden to prove such.
i. Thus, can be P or D (i.e. removal)
5. Cannot try to create diversity
a. Caribbean Mills demonstrates
1.) Cannot assign/sell a C/A to create diversity.
b. Collusive efforts to create diversity will not work either.
6. When making diversity determination, will examine all parties to suit whether or not properly served & joined.
a. Note, this differs from removal.
D. Supplemental Juris
1. § 1367 – gives fed juris to something that is “in addition” to the fed claim.
a. Rule for supplemental juris = so related to fed claims form part of the same transaction or occurrence (or same case or controversy).
b. § 1367 basics
1.) § 1367(a) creates supplemental juris.
2.) § 1367(b) can take it away
3.) § 1367(c) introduces the concept that is a discretionary decision for the judge.
§ 1367(c) – Discretionary Ruling