Walmart - USC Gould School of Law

Agenda for 15th Class
• Admin
– Handouts
– Name plates
– Lunch this Wednesday (3/12)
• Meet outside Rm. 433 (Faculty Lounge)
– Summer RA work
• Review of joinder & class actions
• Subject matter jurisdiction
– Federal question jurisdiction
– Introduction to diversity jurisdiction
Assignment for Next Class-- Diversity
• 28 USC 1332
– Focus on 1332(a)
– 1367(d) is Class Action Fairness Act (2005)
• 28 USC 1369 (skim)
• Yeazell pp. 207-21
• 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 jurisdiction?
– 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?
• Optional. Glannon Ch 5
28 USC 1332(a) before 2011 Amendment
• The district courts shall have original jurisdiction of all civil actions
where the matter in controversy exceeds the sum or value of
$75,000, exclusive of interest and costs, and is between-– (1) citizens of different States;
– (2) citizens of a State and citizens or subjects of a foreign state;
– (3) citizens of different States and in which citizens or subjects of a
foreign state are additional parties; and
– (4) a foreign state, defined in section 1603(a) of this title, as
plaintiff and citizens of a State or of different States.
• For the purposes of this section, section 1335, and section 1441, an
alien admitted to the United States for permanent residence shall be
deemed a citizen of the State in which such alien is domiciled.
Review of Joinder
– Tradeoff
• Efficiency of processing claims together versus complexity
– In general
• Easier to add claims against persons already part of law suit
• Harder to add new parties
– Joinder always allowed (and mandatory if same transaction or occurrence)
• Joinder of claims. Rule 18
• Counter claims. Rule 13
– Joinder allowed if same transaction or occurrence
• Joinder of parties. Rule 20
• Cross-claim. Rule 13(g)
• Addition of party to counterclaim or crossclaim. Rule 13(h)
• Claim by 3rd party defendant against original plaintiff. Rule 14(a)(2)(D)
• Claim by original plaintiff against 3rd party defendant. Rule 14(a)(3)
– Impleader. Rule 14(a)
• Impleading of 3rd party defendant allowed if 3rd party defendant would be liable
to 3rd party plaintiff for some or all of judgment, if original plaintiff prevailed
against 3rd party plaintiff (original defendant. Rule 14
• Indemnity or contribution
– Judge always has discretion to sever or consolidate. See FRCP 21, 42
Review of Class Actions
– Advantages of class actions
• Lower litigation costs, allows small claims to go forward
– Disadvantages
• Agency problem - lawyer may not litigate in best interest of class
• Pressure to settle non-meritorious claims?
• Certification requirements
• FRCP 23(a). Numerosity, commonality, typicality, adequacy
• FRCP 23(b)(2). Injunctions
• FRCP 23(b)(3). Damages, e.g. mass torts, securities
– Predominance: Common issues must predominate
– Superiority: Class action must be superior to individual actions
• Walmart raises bar for commonality
– 4 justices say majority confused commonality and predominance
– Rhone-Poulenc (Posner J)
• AIDS & Blood transfusion case
• Class not certified, because
– Damages high enough that plaintiffs could bring on own
– Law is different depending on where plaintiff resides and/or received
– Class certification could pressure defendants to settle irrespective of 5
Federal Question Jurisdiction
– Permissible because allowed by US Constitution, Article III
• “The judicial Power shall extent to all Cases …. Arising under this Constitution,
the Laws of the United States, and Treaties….”
– Authorized by 28 USC 1331
• “The district courts shall have original jurisdiction of all civil actions arising
under the Constitution, laws, or treaties….”
– What are cases “arising under” the US Constitution, federal law, or treaties
• Same words used in Article III and 28 USC 1331, but have different meaning
• In Article III: any case in which US constitution, federal statute, or treaty needs
to be interpreted
• In 28 USC 1331: any case in which US constitution, federal statute, or treaty
created the cause of action
– E.g. if complaint would mention or implicitly refer to US Constitution,
federal statute, or treaty
» Well-pleaded complaint rule. Louisville & Nashville Railroad v Mottley
– Not sufficient that federal issue is a defense
» Defense would be raised in answer, not complaint
Federal Question Jurisdiction Questions
• Summarize Louisville.
– Your summary should include the answer to Yeazell. P. 199 Q1
• Under the FRCP as it exists today
– If plaintiff had drafted a “well pleaded complaint,” what would have been the
key allegations of that complaint?
– If plaintiff had drafted a well-pleaded complaint, what paper would defendant
have filed in response? What would have been the key elements of that
– How would plaintiff have raised the unconstitutionality the Act of Congress
which the defendant alleges prohibited giving the passes that the railroad gave
the Mottleys?
– If defendant’s answer had admitted that it had given passes to the Mottleys,
but argued that they were invalid, what motion would the plaintiff have had to
make in order to get the Court to grant the Mottleys the relief they requested
without discovery or trial?
• Yeazell pp. 199ff Qs 3, 4b,
Subject Matter Jurisdiction in State Court
• A 2nd meaning of subject matter jurisdiction is the jurisdiction of a specialized court
– E.g. jurisdiction of bankruptcy court, tax court, probate court, small claims
• 2nd meaning is generally more important in state court
• Unlike federal courts, state courts can generally hear any cause of action
– U.S. Constitution does not limit jurisdiction of state courts
– Although some statutes give federal courts exclusive jurisdiction
• And thus bar state court jurisdiction
– So don’t need to think about diversity jurisdiction or federal question
jurisdiction to determine state court subject matter jurisdiction
– State constitutions or statutes may limit state court jurisdiction
• State are free to set up court systems as they please
– Most have more specialized courts than federal courts
• Probate, small claims court, family court
– Non-specialized state court is usually called “superior court”
• But in NY called “supreme court”
– Highest appellate court in NY called “Court of Appeals”
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
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)
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