Hertz (2010) - USC Gould School of Law

Agenda for 25th Class
• Admin
– Handouts
– Name plates
– Lunch today
• Meet at 11:45 outside Rm 433 (Faculty Lounge)
• Subject matter jurisdiction
– Review of federal question jurisdiction
– Diversity Jurisdiction
– Intro to Subject Matter Jurisdiction in complex litigation
• Supplemental Jurisdiction
Assignment for Next Class – Supplemental Jurisdiction
• Supplemental Jurisdiction
– Read 28 USC 1367 very carefully
– Test for Supplemental Jurisdiction (handout)
– Supplemental Jurisdiction Questions (handout)
• Optional
– Glannon. Ch. 16, 17
Review of Federal Question Jurisdiction
• 2 meanings
– Federal or state court (focus of class)
– Specialized federal or state court
• Bankruptcy court, probate court. Other specialized courts
• Federal subject matter jurisdiction
– 2 basic headings of federal subject matter jurisdiction
• Federal question, diversity
– Federal question jurisdiction
• “Well pleaded complaint rule”
– Does cause of action arise under federal statute or US constitution?
– Would minimally adequate complaint invoke federal law
» E.g. plead facts that would satisfy elements required by federal law
– Not sufficient that federal issue in answer or reply
– Cannot get around rule by pleading more than necessary
• Federal statute or constitutional provision does not need to be mentioned
in “short and plain statement of claim” FRCP 8(a)(2)
• Federal statute or constitutional provision does need to be jurisdictional
statement. FRCP 8(a)(1)
• Need subject matter jurisdiction AND personal jurisdiction AND Venue
Diversity Jurisdiction I
• Federal subject matter jurisdiction if
– Citizen of State A sues citizen of state B
– AND “amount in controversy exceeds … $75,000”
• Rationale
– Concern about state court bias against non-citizens
– Concern about anti-corporate bias of state courts
– Federal forum for disputes with inter-state/national implications
• US citizen is citizen of US state in which “domiciled”
– Domicile = residence with intent to remain indefinitely
• “indefinitely” means no plans to leave, even if don’t plan to stay
– Individuals do not lose domicile in one state until establish domicile
somewhere else
– Student who grew up in MA and went to school in IL and CA may still be citizen
of MA, even if hasn’t lived there for 10 years, as long as never intended to
remain indefinitely in IL or CA
• Corporations are citizens of two places
– State of incorporation
– State of principal place of business (PPB)
• PPB = “nerve center” or headquarters. Hertz (2010)
– Means LESS likely to get diversity jurisdiction
• If individual citizen of CA sues corporation incorporated in Delaware with
PPB in CA, then no diversity jurisdiction
• Similarly, if individual citizen of Delaware sues….
Diversity Jurisdiction II
• Removal allowed if case could have been brought initially in federal court AND
defendant is NOT from forum state
– CA sues MA in MA court for $80,000, MA defendant cannot remove to federal
court, even though CA plaintiff could have brought case in federal court
• Complete diversity rule
– No plaintiff can be a citizen of the same state as any defendant
• MA v CA & MA, no diversity jurisdiction
• MA & CA v MA, no diversity jurisdiction
• MA & CA v NV, diversity jurisdiction
• AL & AK & CA & DE v AL & FL & KS & MO & NH & NM & OH
– NO diversity jurisdiction
– Rationale
• In-state party protects out-of-state party
– Doesn’t make sense, because co-defendants may have divergent
• Reduce federal caseload
– Not constitutionally required
• Congress could change by statute
• Similar to status of well-pleaded complaint rule
Diversity Jurisdiction III
• Also diversity jurisdiction if
– Suit between citizen of US and foreigner (citizen or subject of foreign state). 28
USC 1332(2)
• CA v. France; MA v Germany, etc.
• Called “alienage jurisdiction”
– Alien admitted to US for permanent residence treated like citizen of the state
in which domiciled
• CA v French permanent resident domiciled in MA. Diversity
• CA v French permanent resident domiciled in CA. No diversity
• If no diversity, can, of course, still get federal jurisdiction through federal question
• Even if diversity of citizenship, must still show personal jurisdiction & venue
Diversity J Questions
• Yeazell Pp. 209 Q1, 3b, 4,
• Suppose P is a citizen of Turkey, and D is a citizen of Egypt admitted to
permanent residence in the US and domiciled in MA. P sues D in
federal district court to collect a $100,000 debt. Is there federal
– First consider this question under the current of 28 USC 1332(a)
(the version in your Rules Pamphlet
– Now consider this question under 28 USC 1332(a) as it existed
before 2011 (See next slide)
• Does the older statute give you a different answer?
• If so, is that answer constitutional under US Constitution,
Article III, Section 2?
• Would a purposivist interpretation of the text give you a
different answer than a textualist interpretation?
• Can you see why 28 USC 1332(a) was amended in 2011?
SMJ in Complex Litigation I
• In general, subject matter jurisdiction determined independently for each claim
– Unless there’s an exception that specifically covers the situation
– Joinder does not give subject matter jurisdiction
• Some relaxation of complete diversity rule
– In class actions, complete diversity is determined by considering ONLY
citizenship of named plaintiff(s)
• Suppose named plaintiff is from CA and defendants are from NV and MA,
there is diversity jurisdiction, even if plaintiff class includes plaintiffs from
NV and/or MA
• Manipulable by plaintiff who wants or does not want federal jurisdiction
– Federal SMJ in any non-securities class action where any member of plaintiff
class is a citizen of a state different from any defendant, IF amount in
controversy exceeds $5,000,000. 28 USC 1332(d).
• With discretion to decline jurisdiction for reasons in (d)(3) and (d)(4)
• Removable only if 100 or more plaintiffs. (d)(11)(A)
• This is relatively new statute. Class Actions Fairness Act (2005)
– Federal SMJ in cases involving death of at least 75 people, if minimal diversity
and “substantial part of accident” took place in state other than defendant’s
residence, or any two defendants reside in different states, or substantial parts
of the accident took place in different states. 28 USC 1369
SMJ in Complex Litigation II
• Aggregation of amount in controversy
– Can meet amount in controversy requirement by adding together amounts in
controversy for several claims?
– Relevant for diversity jurisdiction only
– See Yeazell pp. 219ff
– Single plaintiff may aggregate claims against single defendant
– 2 or more plaintiffs may aggregate claims against 1 or more defendants only if
their claims are part of a common undivided interest
– In class actions, sufficient that one member’s claim meets the amount in
controversy requirement
• But cannot aggregate if no member meets the amount in controversy
– Except under CAFA (5m total; removal only if 100 or more plaintiffs)
– Origin and current status of aggregation rules unclear
• May be displaced by supplemental jurisdiction statute
• Supplemental Jurisdiction -- Friday’s class
• Removal
– All defendants must ordinarily consent to removal. 1446(b)(2)(A)
SMJ in Complex Litigation III
• Supplemental Jurisdiction
– Very complicated. See handout
– Basic idea
• If federal court has subject matter jurisdiction over a claim (e.g. diversity
jurisdiction or federal question jurisdiction), then it also has jurisdiction
over related state law claims
– Even though there would be no federal subject matter jurisdiction over
the state law claims if they were brought independently
• Supplemental jurisdiction should not be used to circumvent the complete
diversity rule
Trademark (federal)
Tort (state)
Unfair competition (state)
contribution (state)
Tort (state)
Supp. J. over unfair competition claim
No Supp. J. over CA v CA tort claim