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Civil Procedure

Chapter One
(Pg. 4) Where can a suit be filed?
Reasons: Convenience, for one party may be inconvenient for the opposing party
Jury may be more sympathetic in a particular venue
Judge avoidance
Court docket concerns (timeliness)

(Pg. 5) Personal Jurisdiction: A court cannot exercise power over a defendant unless
the state in which the court sits has some connection to them or to the incident that
gives rise to the plaintiffs claim. This does not mean a defendant can only be sued in
their home state-but it does mean that a state that has no connection with a
defendant cannot enter a judgment against them. The doctrine of personal
jurisdiction focuses on the defendant, who is being taken to court against their will
The United States district courts are the trial courts of the federal court system. There are 94
federal judicial districts, including at least one district in each state, the District of Columbia
and Puerto Rico. Three territories of the United States -- the Virgin Islands, Guam, and the
Northern Mariana Islands -- have district courts that hear federal cases, including bankruptcy
cases.

How does a case get to Federal Court or have to remain in State Court?
Federal Courts have limited jurisdiction: Congress sets the boundary limits of what types
of cases the federal courts will be allowed to review. These boundaries are set by: Article
III of The US Constitution (See pg. 278 in Rule Book)
Also apply 28 U.S.C. 1331 and 1332 (see page 236 in Rule Book)
CASE Hawkins v. Masters Farms,
Federal R. Civ. P. 12 (b) (1) Defendant Motion to dismiss for
lack of subject matter jurisdiction. See Rule 28 U.S.C 1332
Granted
NATURE OF CASE: Federal R. Civ. P. 12 (b) (1) Defendant Motion to dismiss for
lack of subject matter jurisdiction.
FACTS: The representatives of James Creal (P) brought suit against Masters (D) in the
federal district court for Kansas, alleging the existence of diversity jurisdiction under 28
U.S.C. 1332. Masters (D) moved to dismiss, disputing that there was complete diversity
among the parties.
RULE OF LAW: For purposes of determining diversity jurisdiction, a person is a
citizen of the state in which he or she is domiciled, which for adults is
established by physical presence in a place in connection with the intent to remain
there.
HOLDING AND DECISION: Yes (D) motion to dismiss is granted.

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CASE Bridges v. Diesel Service, Inc.
Motion for sanctions pursuant to Fed. R. Civ. P. 11. Denied
NATURE OF CASE: Motion for sanctions pursuant to Fed. R. Civ. P. 11.
FACTS: Bridges (P) commenced this action against Diesel Service Inc. (D) under the
Americans with Disabilities Act (ADA) alleging that his employer dismissed him from his
job as a result of a disability. By an order dated June 29, 1994, the court dismissed Bridgess
(P) complaint without prejudice for failure to exhaust administrative remedies. In particular,
Bridges (P) did not file a charge with the Equal Employment Opportunity Commission
(EEOC) until after commencement of this action. Diesel Service, Inc. (D) then moved for
sanctions pursuant to Fed. R. Civ. P. 11.
RULE OF LAW Fed: R. Civ. P. 11 imposes an obligation on counsel and client to
stop, think, investigate and research before filing papers either to initiate the suit or
to conduct the litigation.
HOLDING AND DECISION: (Huyett, J.) Yes. Fed. R. Civ. P. 11 imposes an obligation
on counsel and client to stop, think, investigate and research before filing papers either to
initiate the suit or to conduct the litigation. The court is not convinced that Plaintiffs
lawyer displayed a competent level of legal research. A brief review of case law would
have revealed the EEOC filing requirement. Further, an award of sanctions for
failure to exhaust administrative remedies is not unprecedented. However, the court
will not grant sanctions. The prime goal of Rule 11 sanctions is deterrence of improper
conduct. In this case, monetary sanctions are not necessary to deter future misconduct, since
plaintiffs counsel immediately acknowledged his error and attempted to rectify the situation.
Motion is denied.

CASE Bell v. Novick Transfer Co.
Motion to dismiss for failure to state a claim. Fed. R. Civ. P. 8.
Denied
NATURE OF CASE: Motion to dismiss for failure to state a claim.
FACTS: Bell (P) filed a tort complaint in federal court after removal that stated only that
Novick Transfer Co. s (D) agent drove a truck that negligently collided with the car in which
Bell (P) was riding, causing injury to Bell (P).
RULE OF LAW: A complaint that alleges only that a defendant negligently drove a
motor vehicle and thereby injured the plaintiff is sufficient under Fed. R. Civ. P. 8.
HOLDING AND DECISION: (Thompsen, J.) Yes. This tort action was originally filed in
Court of Common Pleas of Baltimore City but was removed to federal court. After such a
removal, the Federal Rules of Civil Procedure apply rather than the laws of the State of
Maryland . Thus, while Maryland law might regard the complaint here as insufficient for
failure to state a cause of action, the inquiry here is to be made in light of the Federal Rules
of Civil Procedure. Rule 8 controls the sufficiency of complaints, and requires only a short
and plain statement of the claim showing the pleader is entitled to relief. The complaint in
this case contains such a statement and sufficiently states a cause of action under Rule 8. A
complaint that alleges only that a defendant negligently drove a motor vehicle and thereby
injured the plaintiff is sufficient under Rule 8. Motion is overruled.
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CASE Larson v. American Family Mutual Ins. Co.
Motion to amend complaint to add party. Fed. R. Civ. P. 20 (A)
Granted
NATURE OF CASE: Motion to amend complaint to add party.
FACTS: The Larsons (P) retained an attorney, Brad Ross -Shannon (D) to sue American Family
Mutual Insurance Company (American Family) (D), which held their homeowners policy, after the
company (D) failed to pay a house-fire claim. Ross-Shannon (D) did not pursue their claim because
he was trying to be hired by American Family (D) in other matters. The Larsons (P) fired Ross-
Shannon (D) and hired another attorney, who initially filed a complaint in April 2006 against only
American Family (D), in state court. American Family (D) removed the case to federal court on the
basis of diversity jurisdiction. After the insurance company (D) provided discovery in January 2007,
the Larsons ( P) learned that Ross-Shannon (D) was in talks with the company (D) while he was
representing the Larsons (P). The Larsons (P) attorney then sought to amend their complaint to add
Ross-Shannon (D) as an additional defendant, based on breach of fiduciary duty, legal malpractice,
and conspiracy, claims that would destroy diversity and force a remand to state court. Ross-Shannon
(D) and American Family (D) objected, arguing that the amendment was not timely filed, since they
knew of the purported claims against Ross-Shannon (D) in February 2006, but waited until February
2007 to filed the amendment, and that joinder of new parties should not be allowed, because the new
claims do not arise out of the same transaction or occurrence as the other claim.
RULE OF LAW: (1) An amendment to a complaint seeking to join a party to a
lawsuit that is filed one month after complainant confirms the partys involvement in
the lawsuit is timely filed under the Federal Rules of Civil Procedure. (2) All persons
may be joined in one action as defendants if claims against them arise out of the
same transaction or occurrence as the other claims.
HOLDING AND DECISION: (Figa, J.) (1) Yes. An amendment to a complaint
seeking to join a party to a lawsuit that is filed one month after complainant confirms
the partys involvement in the lawsuit is timely filed under the Federal Rules of Civil
Procedure. The Larsons (P) may have suspected that Ross-Shannon (D) was negotiating
with American Family (D) before February 2006, but could not confirm that it was so until
American Family (D) provided discovery in January 2007. In addition, they would be
prejudiced if they were denied the opportunity to amend their complaint to add these claims
in this case, because they would then be required to bring the claims in a separate and
somewhat duplicative lawsuit in state court. (2) Yes. All persons may be joined in one
action as defendants if claims against them arise out of the same transaction or
occurrence as the other claims. One theory proposed in the amended complaint is that
the delay by Ross-Shannon (D) in the filing of a lawsuit against American Family (D) and
American Familys (D) denial of payment of the claim was due in part to the fact that the
lawyer (D) and insurer (D) were discussing the possibility of joining forces. The breach of
their respective duties arise out of the same occurrence or transaction, or series of
occurrences or transactions, and it would be inefficient to have one set of claims tried
against American Family (D) in federal court and another set tried against the lawyer (D) in
state court. Joinder is therefore proper. Remanded to state court.

JOINDER RULES

Fed. R. Civ. P. 18 (pg. 50) Joinder of Claims
Fed. R. Civ. P. 19 (pg. 51-4) Required Joinder of Claims
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Fed. R. Civ. P. 20 (pg. 54) Permissive Joinder of Claims
Fed. R. Civ. P. 24 (pg. 65-6) Intervention

CASE Butler v. Rigby
Disclosures and Discovery Fed. R. Civ. P. 26 (pg.67-78)
Affirmed in part, reversed in part.
NATURE OF CASE: Appeal from denial of protective order in personal-injury action.
FACTS: After an automobile accident, the plaintiffs hired attorneys who may have had some
connection to American Medical Group (AMG) and Midtown Health Care (MHC), two
medical care providers. The defendants filed identical notices of depositions on AMG and
MHC and sought past and current patient lists, as well as the total number of patients treated
over a significant period of time. AMG and MHC moved for a protective order on the
grounds that the information was not relevant, was protected by the health care provider-
patient privilege and was overly burdensome. However, the magistrate judge disagreed and
ordered that most of the information was discoverable. AMG and MHC appealed.
RULE OF LAW: Lists of past and current patients are privileged from discovery.
HOLDING AND DECISION: (Vance, J.) Yes. Lists of past and current patients are
privileged from discovery. The Federal Rules provide for liberal discovery and broad
treatment of relevance. The discovery sought need not be admissible at trial if the
information appears reasonably calculated to lead to the discovery of admissible evidence.
However, discovery may be limited by the court if it determines that the discovery sought is
unreasonably cumulative or duplicative or if the burden and expense outweighs its likely
benefit. Privileged information also is not discoverable. In the present case, the number of
total patients treated by AMG and MHC could be relevant in demonstrating that their
connection with the plaintiffs attorneys shows bias. Thus, the magistrate was not clearly
wrong in ordering this information discoverable despite the significant expense and burden
of compiling the information. However, as to the patient lists sought, Louisiana law
construes the health care provider-patient privilege broadly. Thus, the lists are not
discoverable and an order should have been granted to AMG and MHC on that issue.
Affirmed in part, reversed in part.

CASE Houchens v. American Home Assurance Co
Fed. R. Civ. P. 56 Motion for Summary Judgment (pg. 129)
Granted
NATURE OF CASE: Appeal of dismissal of action for damages for breach of
contract.
FACTS: Houchenss (P) husband disappeared in Thailand in August, 1980, and was not heard from
since. Under Virginia law, a person who is missing for seven years is presumed dead. In 1988,
Houchens (P) had her husband declared legally dead. Houchens (P) attempted to collect on two life
insurance policies issued by American (D), under which the proceeds would only be paid upon proof
that the insureds death was accidental. American Home Assurance Co. (American) (D) refused to
pay and Houchens (P) sued in federal court for breach of contract. American (D) moved for
summary judgment, arguing there was no evidence that the insured had died or that he had died
accidentally. The district court granted the motion and dismissed the case, and Houchens (P)
appealed.
RULE OF LAW: Under Fed. R. Civ. P. 56, a federal court must enter summary
judgment if after complete discovery a party fails to show that the evidence, viewed
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in the light most favorable to that party, is sufficient to establish the existence of an
essential element on which that party has the burden of proof.
HOLDING AND DECISION: (Ervin, C.J.) Yes. Under Fed. R. Civ. P . 56, a federal
court must enter summary judgment if a party fails to show that the evidence, viewed
in the light most favorable to that party, is sufficient to establish the existence of an
essential element on which that party has the burden of proof. Under Rule 56( c), a
summary judgment motion must be granted where there is no genuine issue as to
any material fact. Here, Houchens (P) is entitled to the Virginia presumption that her
husband is dead. However, for recovery on the policy it still must be shown that her
husbands death was accidental. The meager circumstances surrounding his disappearance do
not provide sufficient evidence to allow a reasonable jury to conclude that he died
accidentally. Under Virginia law, Houchens (D) had the burden of proof as to accident, a
necessary element of her case. She had insufficient evidence to meet this burden. Thus, as
there was no genuine issue as to a material fact, the summary judgment motion was
properly granted. Affirmed.

CASE Norton v. Snapper Power Equipment
Fed. R. Civ. P. 50(A) Motion for a Directed Verdict (pg. 117)
Denied
NATURE OF CASE: Appeal from judgment notwithstanding the verdict denying
damages for personal injuries.
FACTS: Norton (P), a commercial gardener, was injured while riding a lawn mower
manufactured by Snapper Power Equipment (Snapper) (D). Norton (P) sued Snapper (D)
for damages based on strict liability. At the close of Nortons (P) case, and against the close
of all evidence, Snapper (D) moved for a directed verdict. The court left the strict liability
claim for the jury, and the jury returned a verdict for Norton (P), holding Snapper (D) liable
for 80 percent of the injuries. After dismissing the jury, the court indicated that it would
enter a judgment notwithstanding the verdict based on Snappers (D) contention that since a
reconstruction of Nortons (P) accident with the mower was impossible, the jury could not
determine whether a blade-stopping device would have eliminated or lessened Nortons (P)
injury. Norton (P) appealed.
RULE OF LAW: A judgment notwithstanding the verdict should be granted only
where the evidence so strongly points in favor of a moving party that reasonable
people could not arrive at a contrary verdict.
HOLDING AND DECISION: (Clark, J.) Yes. A judgment notwithstanding the verdict
should be granted only where the evidence so strongly points in favor of a moving
party that reasonable people could not arrive at a contrary verdict. The issues here were
whether the failure to install dead man devices rendered the mower defective, and if the
mower was defective, whether the lack of a dead man control caused the injury. Snapper
(D) claims that there was little or no evidence to support the jurys verdict. The jury is,
however, permitted to reconstruct the series of events by drawing an inference upon an
inference. The causation evidence here, although circumstantial, was far more
impressive than Snapper (D) contends, and Snapper (D) was given every opportunity
to point out the weaknesses in Nortons (P) proof, but was unpersuasive to the jury.
Reversed and remanded.


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CHAPTER 2 PAGES 60-64
Jurisdiction and the Constitution
Lawyers would describe the challenge to the Illinois suit against your California
landlord as involving a question of personal jurisdictionthe power of an Illinois
court to render a judgment binding someone who may have never set foot in Illinois.
They would describe the challenge to the federal courts power to decide the
question
At the outset you need only bear in mind that personal and subject matter
jurisdiction are both necessary ingredients of any courts power to render a binding
decision in a case; that is, a court must have both subject matter and personal
jurisdiction to render a valid judgment.

Three parts of the Constitution bear on jurisdiction.
Article III authorizes the establishment of the system of federal courts
Section 2 sets the limits of federal judicial authority. Federal courts cannot
exceed those jurisdictional boundaries, and Congress has the power in many
instances to restrict the scope of federal judicial authority more narrowly
than does the Constitution

Article IV, Section 1 requires that Full Faith and Credit be given in each
State to judicial proceedings of every other State. The Supreme Court has
interpreted this clause to require that one state recognize and enforce
judgments of another state. For example, suppose a court in State A enters a
judgment for $ 100,000 against D, but plaintiff cannot find any assets of D within
State A to satisfy the judgment. Ds only assets turn out to be a large bank account at
a bank located in State B. Under the Full Faith and Credit Clause (and state
legislation implementing it), plaintiff commences a summary proceeding in a court
in State B, records State As judgment, and can then obtain a writ of execution from
the State B court enforcing State As judgment against any assets of D located in
State B.

Section 1 of the Fourteenth Amendment provides that no State [shall] deprive
any person of life, liberty or property without due process of law. This clause,
known as the Due Process Clause, has proved to be one of the cornerstones of
modern constitutional and procedural theory. It derives its relation to
jurisdiction from Pennoyer v. Neff, a case that might be termed the great-
grandparent of personal jurisdiction. Pennoyer made the question of what we
now call personal jurisdiction part of the Constitution.

There are two key ways in which the Constitution dictates choice of law. First,
Article VI provides that the Constitution and federal laws shall be the
supreme Law of the Land; and the Judges in every State shall be bound
thereby, any Thing in the Constitution or Laws of any State to the Contrary
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notwithstanding . This provision is commonly referred to as the Supremacy
Clause.

The clause means that if Congress has validly enacted a statute dealing with a
particular subject, both federal and state courts are required to enforce the
federal statute, regardless of whether there is a contrary state statute or state
common law rule.


CHAPTER 3
Subject Matter Jurisdiction of the Federal Courts

Because of limits on federal power, federal courts can hear only certain kinds of
cases. Consequently litigants, their lawyers, and federal judges need to know
whether a particular kind of case must be filed in federal court. Other cases can only
be filed in state court. And in many others, both state and federal courts are
available. Lawyers describe this sorting of cases between court systems as
subject matter jurisdiction.

Doctrine Personal Jurisdiction

Federal Subject Matter
Jurisdiction
Constitutional Source

Due Process Clause of the
Fourteenth Amendment

Article III

Statutory Source State and federal long-arm
statutes (e.g., Rule 4( k)
(1)( A))

Federal jurisdictional
statutes (e.g., 28 U.S.C.
1331, 1332, etc.)

Effect Limits power of state and
federal courts in any given
state over cases involving
particular defendants
Limits power of federal
courts to certain kinds of
cases


To have the requisite authority, a federal district court must have both
personal jurisdiction over the defendant and subject matter jurisdiction over
the kind of case.

Section 2 of Article III
Article III limits federal courts jurisdiction to the list set forth in 2.
By implication a case not listed in Article III may not be heard in a federal court.
Such a case could be heard only in a state court. Within the boundaries of Article III,
however, Congress remains free to bestow all or some of the constitutionally
permissible jurisdiction on the lower federal courts.
Because the federal courts are courts of limited jurisdiction, two questions lurk at
the threshold of every case brought in a federal court:
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Does the case fall within one of the enumerated categories of Article III, 2;
and has Congress further authorized the lower federal courts to assume that
jurisdiction?
Rule 8( a) reflects these concerns by requiring every federal complaint to
begin with a short and plain statement of the grounds for the courts
jurisdiction.
In judging those jurisdictional statements, the courts look to three
bodies of law
o The Constitution,
o The statutes conferring jurisdiction
o The case law interpreting both.

Federal courts share much of their jurisdiction with state courts.

28 U.S.C. 1331. Grants federal courts jurisdiction over cases that arise under
federal law.
The federal courts have such jurisdiction does not seem surprising, but it may be
surprising to learn that they do not have exclusive jurisdiction over such cases. So
far as Congress and the Constitution are concerned, cases arising under this statute
can be brought in state as well as federal courts. Lawyers describe such shared
jurisdiction as concurrent.

In some instances Congress has made federal jurisdiction exclusive.
(28 U.S.C. 1333 (admiralty),
1334 (bankruptcy),
1346 (b) (tort suits based on negligence of a federal employee),
1337 (antitrust).)
See 28 U.S.C. 1338

FEDERAL QUESTION JURISDICTION

Case Merrell Dow Pharmaceuticals, Inc. v. Thompson
No federal question is raised because the Petitioners claim did
not arise under federal law. The Supreme Court of the United
States affirmed the court of appeals decision.
Brief Fact Summary. Action filed by multiple Respondents against Merrell Dow
Pharmaceuticals, Inc. (Petitioner), a corporation, that manufactures and distributes the drug
Bendectin. Complaints filed in the Court of Common Pleas in Hamilton County, Ohio
alleged that a child was born with multiple deformities as a result of a mothers ingestion of
Bendectin during pregnancy. In the complaints, five of the six counts alleged common-
law theories of negligence, breach of warranty, strict liability, fraud and gross
negligence. However, in count four, Respondents alleged that the drug Bendectin
was misbranded in violation of the Federal Food, Drug and Cosmetic Act (Act)
because its labeling did not provide adequate warning that its use was potentially
dangerous. The Petitioner sought removal to federal district court, in part, upon the
ground that the claims arose under the federal laws of the United States. After
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removal, the cases were consolidated. The district court found a cause of action arising
under the federal laws, but the United States Court of Appeals for the Sixth Circuit reversed,
noting that the Act does not create or imply a private right of action for individuals injured
as a result of violations of the act.
Rule of Law. A complaint alleging a violation of a federal statute as an element of a
state cause of action, when Congress has determined that there should be no private,
federal cause of action for the violation, does not state a claim arising under the
Constitution, laws or treaties of the United States.

CASE Louisville & Nashville Railroad v. Mottley
Federal Rule 12( h)( 3) Lack of Subject-Matter
Jurisdiction. If the court determines at any time that it lacks
subject-matter jurisdiction, the court must dismiss the action.
NATURE OF CASE: Appeal of a decision overruling a demurrer in an action for
specific performance of a contract.
FACTS: In 1871 , Mottley (P) and his wife were injured while riding on the Louisville
& Nashville Railroad (D). The Mottleys (P) released their claims for damages against
the Louisville & Nashville Railroad (D) upon receiving a contract granting free
transportation during the remainder of their lives. In 1907, the Louisville &
Nashville Railroad (D) refused to renew the Mottleys (P) passes, relying upon an act
of Congress that forbade the giving of free passes or free transportation. The
Mottleys (P) filed an action in a Circuit Court of the United States for the Western
District of Kentucky. The Mottleys (P) and the Louisville & Nashville Railroad (D)
were both citizens of Kentucky. Therefore, the Mottleys (P) attempted to establish
federal jurisdiction by claiming that the Louisville & Nashville Railroad (D) would
raise a constitutional defense in their answer, thus raising a federal question. The
Louisville & Nashville Railroad (D) filed a demurrer to the complaint for failing to
state a cause of action. The demurrer was denied. On appeal, the Supreme Court did
not look at the issue raised by the litigants, but on their own motion raised the issue
of whether the federal courts had jurisdiction to hear the case.
RULE OF LAW: Alleging an anticipated constitutional defense in the complaint
does not give a federal court jurisdiction if there is no diversity of citizenship
between the litigants.
HOLDING AND DECISION: (Moody, J.) No. The Supreme Court reversed the
lower courts ruling and remitted the case to that court with instructions to
dismiss the suit for want of jurisdiction. Neither party to the litigation alleged
that the federal court had jurisdiction in this case, and neither party
challenged the jurisdiction of the federal court to hear the case. Because the
jurisdiction of the circuit court is defined and limited by statute, the Supreme
Court stated that it is their duty to see that such jurisdiction is not exceeded.
Both parties to the litigation were citizens of Kentucky and so there was no
diversity of citizenship. The only way that the federal court could have
jurisdiction in this case would be if there was a federal question involved.
Mottley (P) did allege in his complaint that the Louisville & Nashville Railroad
(D) based their refusal to renew the free pass on a federal statute. Mottley (P)
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then attempted to allege information that would defeat the defense of the
Louisville & Nashville Railroad (D). This is not sufficient. The plaintiffs
complaint must be based upon the federal laws of the Constitution to confer
jurisdiction on the federal courts. Mottleys (P) cause of action was not based
on any federal laws or constitutional privileges; it was based on a contract.
Even though it is evident that a federal question will be brought up at the
trial, plaintiffs cause of action must be based on a federal statute or the
constitution in order to have a federal question that would grant jurisdiction
to the federal courts. Reversed and remanded.
Motleys Well-pleaded complaint ruling
A rule of procedure that federal question jurisdiction cannot be
acquired over a case unless an issue of federal law appears on
the face of a properly pleaded complaint
The well-pleaded complaint rule is not satisfied by a defense
based on federal law, including a defense of federal preemption,
or by anticipation of such a defense in the complaint

When a defendant challenges federal question jurisdiction in district court, one of
three questions commonly arises:
a. Is there a federal issue at all? If the plaintiffs claim is based on some federal
statute or regulation, the problem consists in interpreting legislation. If the
plaintiff claims the right to relief under federal common law, the question is
whether such federal common law exists.
b. Assuming there is a federal issue, does it give rise to plaintiffs claim?
That is the question in Mottley.
c. If there is a federal issue that is not the basis for plaintiffs claim, is it
sufficiently important to federalize the case?


CASE Grable & Sons Metal Prod. Inc. v. Darue
Land was sold to satisfy an Internal Revenue Service lien for unpaid taxes.
To assure that it had clean title, the purchaser of the land brought a quiet title action in state
court, at which point the original owner of the land challenged title, alleging that the notice
of the sale was inadequate.
Defendant sought to remove to federal court, arguing that the underlying issue was the
adequacy of the IRS system of notice in their tax sales.
Federal question jurisdiction was proper, said the Court. In a unanimous opinion

Grable set out a three-part test for such federalized claims
Does a state-law claim
[1] necessarily raise a federal issue,
[2] actually disputed and substantial,
[3] which a federal forum may entertain without disturbing any congressionally approved
balance of federal and state judicial responsibilities
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Lower courts interpreting this test have overwhelmingly remanded such cases to
state courts, usually claiming, without much analysis, that the case fails the third of
the Grable criteria.

A case can start out as a federal case, but then lose its federal status after a judgment
or settlement.
Plaintiffs sue defendants on a claim arising under federal law. The parties then settle the case
by signing an agreement.
The case is dismissed by agreement of the parties in an order that makes no
reference to the settlement agreement.
Plaintiff then sues defendant for violation of the agreement.
Is there federal question jurisdiction? No:
The settlement agreement is an ordinary contract, whose breach does not arise under
federal law.
But if the parties had embodied their agreement in a consent decree (which would
have been part of the courts judgment), its breach would arise under federal law,
because federal courts have jurisdiction to enforce their own judgments. Kokkonen v.
Guardian Life Ins. Co., 511 U.S. 375 (1994).

Sally borrowed money from Frank, giving him a mortgage as security. She then
declared bankruptcy, and, in a federal bankruptcy proceeding, Franks interest was
transferred to Joe. (Recall that there is exclusive federal jurisdiction over
bankruptcy.) Through an error, however, the transfer to Joe was never properly
recorded. Frank now sues Joe, alleging that he still holds a mortgage on the property.
Joe seeks to remove the case to federal district court, arguing that Franks lawsuit
calls into question the validity of the federal bankruptcy judgment and thus arises
under federal law. Held: No, in Rivet v. Regions Bank, 522 U.S. 470 (1998) (claim
preclusion based on a prior federal judgment is a defense, so the claim does not arise
under federal law, citing Mottley).

Federal Removal Jurisdiction

Challenging Federal Subject Matter Jurisdiction

Difference between a Rule 12(b) (1) dismissal versus a Rule 12 (b) (6)

If a defendant moves for dismissal under 12(b) (1)
The federal court rules case DOES NOT arise under federal law and grants dismissal
Case CAN BE refilled in state court

If a defendant moves for dismissal under 12(b) (6)
The federal court rules case DOES NOT arise under federal law and grants dismissal
Case CANNOT BE refilled in state court

Suppose that the defendant DOES NOT move to dismiss under either Rule 12( b)( 1)
or 12( b)( 6) and the CASE PROCEEDS.
Is the objection to jurisdiction waived?
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NO, AS MOTLEY DEMONSTRATES THE COURT FINDS FEDERAL
JURISDICTION SO CRUCIAL THEY MUST RAISE THE QUESTION
SUA SPONTE (ON THE COURTS OWN MOTION TO DISMISS ON LACK OF
JURISDICTION)

A PARTY THAT MAKES AN APPEARACE IN COURT IN AN ATTEMPT TO
CHALLENGE SUBJECT MATTER JURISDICTION AND LOSES WILL BE
BOUND BY THAT DECISION...
Parties who appear, challenge the subject matter jurisdiction of a federal court, and
lose are bound by that determination; just as with personal jurisdiction, they may not
thereafter challenge the judgment in a second action. Stoll v. Gottlieb, 305 U.S. 165
(1938); Durfee v. Duke (infra page 779).

A PARTY THAT MAKES AN APPEARACE IN COURT BUT DOES NOT
CHALLENGE SUBJECT MATTER JURISDICTION AND LOSES WILL BE
BOUND BY THAT DECISION...
Parties who have appeared but failed to challenge the subject matter jurisdiction of a
district court may generally not thereafter attack its judgment in another court, for
lack of diversity or federal question jurisdiction. Chicot County Drainage District v.
Baxter State Bank, 308 U.S. 371 (1939).

A PARTY NEVER MAKES AN APPEARACE IN COURT AND LOSES BY
DEFAULT CAN THEY NOW MAKE AN ATTEMPT TO CHALLENGE
SUBJECT MATTER JURISDICTION...
Here one cannot be certain. If one extends Chicot County Drainage District, one
concludes that collateral attack is not available that a party wishing to challenge
subject matter jurisdiction must appear in the first suit. Kalb, however, points in the
opposite direction: A party who had appeared (in the foreclosure proceeding) was
nevertheless able to raise a collateral challenge. To be sure, Kalb involved a statute
that, as the Court saw things, permitted collateral challenge. The only entirely safe
statement is that the Court has not clearly resolved the question. As one
commentator put it, using an example from state rather than federal subject matter
jurisdiction: The proverbial case involves a justice of the peace who has undertaken
to grant a divorce [thus clearly overstepping his subject matter jurisdiction]. [W]
ould [one] require the respondent in such a case to appear before the justice under
penalty that otherwise the divorce would be legally valid[?] I cannot believe that any
court would hold that.
Geoffrey C. Hazard, Jr., Revisiting the Second Restatement of Judgments: Issue
Preclusion and Related Problems, 66 Cornell L. Rev. 564, 591 (1981

DOUBLING UP ON JURISDICTIONAL CHALLENGES
What if a defendant challenges both subject matter and personal
jurisdiction?
Suppose defendant files a pre-answer motion seeking dismissal based on Rule 12( b)(
1) and 12( b)( 2), as the Rule permits. If either challenge is well founded, the case will
be dismissed. But a dismissal will have different consequences for a refilled suit;
depending on which ground is used for dismissal.
13
If a case is dismissed for want of federal subject matter jurisdiction, a plaintiff
is free to refile the suit in state court because the judgment establishes only
the lack of federal jurisdiction, leaving the state court open.
If the case is dismissed for want of personal jurisdiction, principles of former
adjudication (Chapter 11) preclude plaintiff from refilling in state court in the
same state because the federal courts decision that personal jurisdiction is
lacking will bind the state court.
Under those circumstances, should a federal court faced with motions to
dismiss on both grounds always take subject matter jurisdiction first, because
that will have the narrowest subsequent effect? No, the Supreme Court has
said; the discretion of a trial court to handle its docket allows it to dismiss for
want of personal jurisdiction if that is the most obvious ground, even though
that will preclude subsequent state-court litigation. Ruhrgas AG v. Marathon
Oil Co., 526 U.S. 574 (1999).


IN SUMMARY:
A CASE DISMIISED FOR LACK OF FEDERAL SUBJECT MATTER
JURISDICTION CAN BE REFILED

A CASE DISMISSED FOR LACK OF PERSONAL JURISDICTION
CANNOT BE REFILED DECISION IS ALSO BINDING ON STATE
COURT

WHY DIVERSITY JURISDICTION MATTERS

In order to provide a federal forum for plaintiffs who seek to vindicate federal rights,
Congress has conferred on the district courts original jurisdiction in federal-question cases
civil actions that arise under the Constitution, laws, or treaties of the United States. 28 U.S.C.
1331. In order to provide a neutral forum for what have come to be known as diversity
cases, Congress also has granted district courts original jurisdiction in civil actions between
citizens of different States, between U.S. citizens and foreign citizens, or by foreign states
against U.S. citizens. 1332. Exxon-Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552
(2005).

CASE: Redner v. Sanders
Motion to dismiss for lack of diversity jurisdiction.
FACTS: When plaintiff claimed he was a resident of France, defendants argued that only
plaintiffs citizenship in France would satisfy federal diversity jurisdictional requirements.
Plaintiff filed a complaint in federal court, alleging that he was at all times mentioned a
citizen of the United States residing in France, and that defendants are residents of the State
of New York. Defendants moved to dismiss for lack of subject matter jurisdiction, arguing
that mere residency in a foreign country does not equate with citizenship of a foreign
country as required by 28 U.S.C. 1332( a)( 2).
RULE OF LAW For purposes of diversity jurisdiction under 28 U.S.C. 1332( a)( 2), the
controversy must be between citizens of a state and citizens or subjects of a foreign state,
not merely residents.
14
ISSUE: For purposes of diversity jurisdiction under 28 U.S.C. 1332( a)( 2), must the
controversy be between citizens of a state and citizens or subjects of a foreign state, not
merely residents?
HOLDING AND DECISION: (Griesa, J.) Yes. purposes of diversity jurisdiction under 28
U.S.C. 1332( a)( 2), the controversy must be between citizens of a state and citizens or
subjects of a foreign state, not merely residents. Here, plaintiffs complaint speaks of his
residing in France, whereas the statute speaks of citizenship. The two are not synonymous.
It appears in fact that defendants are citizens of the State of New York. However, for
jurisdiction to exist under (a)( 2), plaintiff would need to be a citizen of a foreign state, not
merely a resident, and the complaint itself actually alleges that plaintiff is a citizen of the
United States. Thus, the case does not involve an action between citizens of the United
States and a citizen of a foreign state. Accordingly, there is no jurisdiction under 1332( a)(
2). Motion granted and suit dismissed.

As with 1331, the federal question statute, the courts read 1332 very carefully. Its
not enough that there are a bunch of people not from the same state. Instead the
courts insist that the diversity required exactly match one of the statutory definitions.

Citizen takes on different meanings, depending on which section of 1332 one is
reading. To be a citizen of France means that one is a French national, having
taken an oath of allegiance to the Republic of France, with all the political rights and
obligations that entails. To be a citizen of California, for diversity purposes, means
simply that one makes ones permanent home there.

The time for measuring citizenship for diversity purposes is as of the date on which
the complaint is filed in federal court. That is true even if the plaintiff has moved to
another state for the sole purpose of establishing diversity:

COMPLETE DIVERSITY IS NEEDED
Strawbridge v. Curtiss TEST The presence of parties from the same
State on both sides of a case dispels this concern, eliminating a principal
reason for conferring 1332 jurisdiction over any of the claims in the
action.
Although 28 U.S.C. 1332 does not by its terms require that each plaintiff be diverse from
each defendant, that interpretation was attached to the predecessor statute by Chief Justice
Marshall in Strawbridge v. Curtiss, 7 U.S. 267 (1806), and has been unquestioned law every
since. Thus even in a case with multiple diverse parties the existence of a single party with
the same state citizenship as that of an opposing party will destroy diversity. As an opinion
written more than 200 years after Strawbridge explained it: The complete diversity
requirement is not mandated by the Constitution, or by the plain text of 1332( a).
The Court, nonetheless, has adhered to the complete diversity rule in light of the
purpose of the diversity requirement, which is to provide a federal forum for
important disputes where state courts might favor, or be perceived as favoring,
home-state litigants. The presence of parties from the same State on both sides of a
case dispels this concern, eliminating a principal reason for conferring 1332
jurisdiction over any of the claims in the action.

15
FOR DIVERSITY TEST WHAT ABOUT PARTNERSHIPS?
For diversity purposes, partnerships are not considered as entities but as collections
of individuals; thus the citizenship of each of the members of a partnership must be
considered

CORPORATIONS?

CASE: Hertz Corp. v. Friend
MOTION TO REMOVE A CLASS ACTION LAWSUIT TO
FEDERAL COURT BASED ON DIVERSITY JURISDICTION
GRANTED US SUPREME COURT THUS ESTABLISHING
NERVE CENTER TEST FOR PRINCIPAL PLACE OF BUSINESS
FACTS: California-based employees (P) of Hertz Corp. (D) claimed in a class action
that Hertz (D) violated Californias wage and hours laws. Hertz (D) tried to remove
to federal court on the basis of diversity jurisdiction. The federal diversity
jurisdiction statute provides that a corporation shall be deemed to be a citizen of
any state by which it has been incorporated and of the state where it has its
principal place of business. The employees (P) objected, arguing that because Hertz
(D) derived more revenue from California than any other, and because the plurality
of its business activities occurred there, California was its principal place of
business.
RULE OF LAW The phrase principal place of business in the federal diversity
jurisdiction statute refers to the place where the corporations high level
officers direct, control, and coordinate the corporations activities. FACTS:
ISSUE: Does the phrase principal place of business in the federal diversity
jurisdiction statute refer to the place where the corporations high level
officers direct, control, and coordinate the corporations activities?
HOLDING AND DECISION: (Breyer, J.) Yes. The phrase principal place of business
in the federal diversity jurisdiction statute refers to the place where the
corporations high level officers direct, control, and coordinate the corporations
activities. Some courts refer to this test as the nerve center test. Normally, this
would be where the corporation maintains its headquarters, provided headquarters
is not simply an office where the corporation holds its board meetings. This
interpretation is supported by the statutes language. The statute uses the word
place in the singular form of the word, not the plural. It is also supported by its
advancement of administrative simplicity, which demands that courts be provided
straightforward rules under which they can readily assure themselves of their
power to hear a case. And it is supported by the statutes legislative history, which
suggests that the words principal place of business should be interpreted to be no
more complex than the initial test put forth by the Judicial Conference, the half of
gross income test, a test the Conference rejected as too impractical to apply. A
nerve center test offers greater simplicity. There may be no perfect test that
satisfies all administrative and purposive criteria, but some complication must be
accepted in view of the necessity of having a clearer rule.

16
HOW CAN WE TEST THE $75K REQUIREMENT FOR JURISDICTIONAL PURPOSES
It must appear to a legal certainty that the claim is really for less than the
jurisdictional amount to justify dismissal. The inability of plaintiff to recover an
amount adequate to give the court jurisdiction does not show his bad faith or oust
the jurisdiction. Nor does the fact that the complaint discloses the existence of a
valid defense of the claim. But if, from the face of the pleadings, it is apparent, to a
legal certainty, that the plaintiff cannot recover the amount claimed , or if, from the
proofs, the court is satisfied to a like certainty that the plaintiff never was entitled to
recover that amount, and that his claim was therefore colorable for the purpose of
conferring jurisdiction, the suit will be dismissed.

Plaintiff has not provided competent proof to meet his burden of demonstrating
the requisite amount in controversy. Instead, he argues that he satisfies the
jurisdictional requirement because he is entitled to recovery of punitive damages that
could result in a verdict in excess of $ 75,000.
[ Plaintiff] has pled that the Defendants acted intentionally, thus punitive damages
are potentially recoverable under Illinois law if Salmi can prove what he has alleged.
Even assuming [Plaintiff] can recover punitive damages, [however,] he would
have to recover multiple times his actual damages to satisfy the $ 75,000 amount.
Such a recovery certainly would stretch[] the normal ratio, and would face certain
remittitur. Plaintiffs mere hope for an extreme punitive award cannot be the sole
basis for jurisdiction. Salmi v. D.T. Management, Inc., 2002 U.S. Dist. LEXIS
17970 (N.D. Ill. 2002).


May a plaintiff aggregate the amount sought as relief for different claims
to reach the statutory minimum?
SOMETIMES:
Some guidelines from the case law:
A single plaintiff with two or more unrelated claims against a single defendant may
aggregate claims to satisfy the statutory amount.
If two plaintiffs each have claims against a single defendant, they may not aggregate
if their claims are regarded as separate and distinct.
If one plaintiff has a claim in excess of the statutory amount and a second plaintiff
has the same claim for less than the statutory amount, both against the same
defendant, the first plaintiff can sue in federal court. What about the second? Yes, so
long as the second plaintiffs claim arises out of the same case or controversy as
the first there will be supplemental jurisdiction: Exxon Mobil Corp. v. Allapattah
Servs., Inc., 545 U.S. 546 (2005). d. In situations involving multiple plaintiffs or
multiple defendants with a common undivided interest and single title or right, the
value of the total interest will be used to determine the amount in controversy. This
is not the case if the various claims are considered several and distinct, and they may
be so considered even though the claims arose from a single instrument or the
parties have a community of interest.
The preceding rules have complex application to class actions.
o For class actions that meet the criteria of the Class Actions Fairness Act of
2005, codified in part in 1332( d) (discussed more fully in Chapter 12 ), one
17
can aggregate the claims of all class members; if they reach $ 5 million, the
amount in controversy requirement is met.
o For class actions based on diversity that do not meet the requirements of the
Act, one cannot simply add up the claims of all class members. Instead at
least some members must have claims that individually satisfy the
jurisdictional amount. Snyder v. Harris, 394 U.S. 332 (1969). But if one
member meets the amount in controversy requirement, the others can take
advantage of supplemental jurisdiction. Exxon Mobil Corp. v. Allapattah
Servs., Inc., 545 U.S. 546 (2005).
Counterclaims are treated differently, depending on their classification under Rule 13
as either compulsory or permissive. Basically, when a plaintiffs claim exceeds $
75,000 (the statutory amount), a compulsory counterclaim may be heard regardless
of amount. A permissive counterclaim not arising from the same transaction or
occurrence requires an independent jurisdictional basis. The law is unsettled,
however, when plaintiffs claim falls short of $ 75,000 but defendants counterclaim
increases the amount in controversy to more than $ 75,000. See generally Wright,
Federal Courts 216 (reporting virtually no holdings addressing the question).

SUPPLEMENTAL JURISDICTION

o We turn now to a doctrine that broadens federal jurisdiction, filling in selectively
some of the area between the inner and the outer rings . This doctrine, now known
as supplemental jurisdiction, originated in case law and has now taken statutory
form.
o Supplemental jurisdiction originated in case law that stretched federal jurisdiction to
cover parts of cases that, if brought independently, would not have fit within the
district courts subject matter jurisdiction. Congress then codified some and
modified other case law results. Examine the statute, 28 U.S.C. 1367, and consider
structure and its application to some basic problems.

;
OUTER BOUNDARY OF
ARTICLE III POWER
UNEXPOITED ARTICLE III
POWER
POWER CONFERED
BY THE STATUTES


18
CASE: In re Ameriquest Mortgage Co. Mortgage Lending Practices
Pursuant to Federal Rule of Civil Procedure 12( b)( 1) and 28 U.S.C.
1367( a) and (b), defendant Douglas Trevino now moves to dismiss
Counts II and III of plaintiff Barbara Skanes Amended Complaint.
We deny Trevinos motion.
We find that:
a) there is a sufficient nexus between Skanes state law claims and her
TILA claim to support supplemental jurisdiction; and
b) the discretionary factors set forth in 1367( b)
(c)do not weigh in favor of a decision to decline to exercise supplemental jurisdiction.

CASE: Szendrey-Ramos v. First Bancorp
DECLINE SUPLEMENTAL JURISDICTION
CANNOT HEAR THE CASE BECAUSE:
State-law claims substantially predominate over the federal
claim
Upon careful consideration of the issues presented by this case, and the law governing such
issues, we decline to exercise supplemental jurisdiction over the P.R. law claims. Accordingly,
these claims will be dismissed without prejudice, and Defendants arguments for dismissal
on the merits of such claims are thus moot. As for the Title VII discrimination and
retaliation claims, they survive the motion to dismiss. This case thus goes forward solely
under Title VII. We explain our reasoning below.
The Court finds that two of 1367( c) s subsections are at issue here:
(1) that the state law claims raise complex or novel issues and
(2) that the state-law claims substantially predominate over the federal claim. We start with
the latter and work our way back to the former.

FEDERAL REMOVAL JURISDICTION 28 U.S.C. 1441
Jurisdictional statutes give plaintiffs an initial choice of state or federal court for cases in
which federal and state court jurisdictions overlap. Congress has also given defendants the
power to second-guess plaintiffs who choose a state court in cases that could have been
brought in federal court. The process, known as removal, has as its basic text
28 U.S.C. 1441

CASE: Caterpillar, Inc. v. Lewis Manufacturer
NATURE OF CASE: Appeal of judgment vacating verdict for the defense in personal-
injury case.
FACT SUMMARY: A federal district court denied a motion to remand a case to state
court even though the case lacked complete diversity and later entered judgment
after the nondiverse defendant had settled out of the case.
RULE OF LAW A district courts error in failing to remand a case improperly
removed does not prevent adjudication if the jurisdictional requirements are
satisfied at the time of judgment.
19
FACTS: Lewis (P) filed a personal-injury claim in state court. The case was removed
to federal district court at Caterpillar Inc. s (D) request although there was not
complete diversity of citizenship among the parties. After the removal, Lewis (P)
moved to remand the case to state court for lack of federal jurisdiction. The district
court denied the motion. Subsequently, the nondiverse defendant settled out of the
case. At trial, Caterpillar (D) prevailed. Lewis (P) appealed, claiming that the district
court did not have jurisdiction at the time of removal. The court of appeals agreed
and vacated the judgment. Caterpillar (D) appealed.
ISSUE: Does a district courts error in failing to remand a case
improperly removed prevent adjudication if the jurisdictional
requirements are satisfied at the time of judgment?
HOLDING AND DECISION: (Ginsburg, J.) No. A district courts error in
failing to remand a case improperly removed does not prevent
adjudication if the jurisdictional requirements are satisfied at the
time of judgment. The lack of subject matter jurisdiction at the
time of removal is not fatal to later adjudication of the case. The only
issue is whether the jurisdictional requirements are met at the time the judgment is
entered. In the present case, allowing removal when there was not complete
diversity was a mistake by the district court. However, when judgment was entered,
complete diversity did exist. Thus, there was sufficient subject matter jurisdiction to
adjudicate the case. Reversed and remanded.

HOW CAN A DEFENDANT REMOVE A CASE TO FEDERAL COURT?
28 U.S.C. 1441(a) AND (b)
Sec. 1441. Actions removable generally
(a) Except as otherwise expressly provided by Act of Congress, any civil action
brought in a State court of which the district courts of the United
States have original jurisdiction, may be removed by the defendant
or the defendants, to the district court of the United States for the
district and division embracing the place where such action is pending. . .
(b) Any civil action of which the district courts have original jurisdiction founded
on a claim or right arising under the Constitution, treaties or laws of the
United States shall be removable without regard to the citizenship or
residence of the parties. Any other such action shall be removable only
if none of the parties in interest properly joined and served as
defendants is a citizen of the State in which such action is brought.

28 U.S.C. 1446
Sec. 1446. Procedure for removal
(a) A defendant or defendants desiring to remove. . . shall file in
the district court. . . a notice of removal signed pursuant to Rule 11.
. .containing a short and plain statement of the grounds for
removal. . . .
20
(b) The notice of removal of a civil action or proceeding shall
be filed within thirty days after. . . a copy of the initial pleading. . .
If the case stated by the initial pleading is not removable, a notice
of removal may be filed within thirty days after receipt . . . of a
copy of an amended pleading, motion, order or other paper from
which it may first be ascertained that the case is. . . removable,
except that a case may not be removed on the basis of jurisdiction
conferred by section 1332 of this title more than 1 year after
commencement of the action.

State Law in Federal Courts: Erie and Its Entailments