subject matter jurisdiction (diversity), civil procedure, unh law (september 2012)

1

Subject Matter Jurisdiction (Diversity)

University of New Hampshire School of Law

Professor Kirkland's Civil Procedure ClassKevin M. O'Shea

September 28, 2012

2

Goals Understand the concept of "complete

diversity," including the ability to determine domicile.

Understand the concept of "amount in controversy," including the ability to determine whether a claim exceeds $75,000.

3

Warning If I say anything today that is inconsistent

with what Professor Kirkland teaches; rely on what Professor Kirkland says, not me; because Professor Kirkland is grading your exam;

but your perception that I might have said something inconsistent with Professor Kirkland might be a good opportunity to speak with her about your understanding of SMJ.

4

Courts: Sources of Authority What is a court of general jurisdiction? What is a court of limited jurisdiction?

5

Courts: Sources of Authority What kind of court is a federal district court?

General or limited subject matter jurisdiction?

6

Courts: Sources of Authority What is the source of authority for federal

district court's subject matter jurisdiction?

7

Courts: Sources of Authority U.S. Const. art. III, § 1

The judicial power of the United States, shall be vested in one Supreme Court, and in such inferior courts as the Congress may from time to time ordain and establish…

8

Coming attractions Don't confuse subject matter jurisdiction with

personal jurisdiction Subject matter jurisdiction addresses whether a

court has the authority over a controversy; Personal jurisdiction addresses whether a court

has authority over that person.

9

Courts: Sources of Authority U.S. Const. art. III, § 2

The judicial power shall extend to all cases, in law and equity, arising under this Constitution, the laws of the United States, and treaties made, or which shall be made, under their authority;--to all cases affecting ambassadors, other public ministers and consuls;--to all cases of admiralty and maritime jurisdiction;--to controversies to which the United States shall be a party;--to controversies between two or more states;--between a state and citizens of another state;--between citizens of different states;--between citizens of the same state claiming lands under grants of different states, and between a state, or the citizens thereof, and foreign states, citizens or subjects.

10

Courts: Sources of Authority 28 USC § 1332

(a) 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, except that

the district courts shall not have original jurisdiction under this subsection of an action between citizens of a State and citizens or subjects of a foreign state who are lawfully admitted for permanent residence in the United States and are domiciled in the same 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.

11

Academic Advertisement FedCourts

If you want to be a civil litigator who practices in federal courts, think about taking FedCourts.

FedCourts usually explores the contours of federal court jurisdiction.

Helpful for the bar exam, especially if you are taking the bar exam in a jurisdiction that tests federal courts.

Sidebar: What kinds of courses should you consider taking while

in law school?

12

Complete Diversity Strawbridge v. Curtiss, 7 U.S. 267 (1806)

Plaintiff (Massachusetts) v. Defendant 1 (Vermont) and Defendant 2 (Massachusetts)

To allow this suit under diversity, would destroy "complete" diversity

Term of art: both sides of (or across) the "v."

13

Complete DiversityWhat is the policy reason for diversity

jurisdiction in the first place?

14

Complete Diversity

"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."

Exxon Mobil Corp. v. Allapattah Svc, Inc., 545 U.S. 546, 553-554 (2005),

15

Complete Diversity: Domicile Citizenship of a person, for diversity

purposes, is determined by the person's domicile.

16

Complete Diversity: Domicile "A person's domicile is the place of 'his true, fixed,

and permanent home and principal establishment, and to which he has the intention of returning whenever he is absent therefrom . . . .' "

A change of domicile may be effected only by a combination of two elements: (a) taking up residence in a different domicile with (b) the intention to remain there.

Mas v. Perry, 489 F. 2d 1396, 1399 (5th Cir. 1974)

17

Domicile: Natural PersonsOchoa v. PV Holding, Corp., 2007 WL 496612 (E.D. La. 2007)

Threshold issue: When do we take the "domicile" snapshot

Procedurally, when is this issue raised? Substantively, when, in time, do we measure the plaintiff's domicile? Does the analysis change if the someone's domicile changes after that time?

Who has the burden? Procedural Posture Sidebar:

Removal? Remand? 28 USC § 1441 Mapping out the case facts:

Facts supporting domicile in Louisiana Facts supporting domicile in Texas

18


Louisiana Facts Born in New Orleans Visiting family at the time of the accident, in Louisiana Louisiana drivers license Did not have employment in Texas until shortly before deposition

Texas Facts Living in Texas But only came to Texas as a result of Hurricane Katrina Does have employment in Texas at time of motion

19


Here comes the "Benchslap"See, generally, http://abovethelaw.com/benchslaps/

20


Benchslap "The Court notes that the record provides few objective facts

concerning Gulley's domicile in October 2006; indeed, the record only consists of Gulley's deposition testimony, which is attached (albeit unauthenticated) to the defendant's opposition to the plaintiff's motion to remand." (emphasis added).

21


"Missing" Facts The places where the litigant exercises civil and political rights Pays taxes Owns real and personal property Has his drivers and other licenses Maintains bank accounts Belongs to clubs and churches Has places of business or employment Maintains a home for his family

22


Court concludes: "Gulley's recent employment in Texas and his subjective statement that he

does not presently intend to live in New Orleans fall short of establishing that his domicile several months ago --at the time the complaint was filed -- was Texas and not Louisiana. There is little objective evidence to corroborate his subjective present statement of intent. The defendants bear the burden of showing diverse citizenship because they are attempting to invoke this Court's subject matter jurisdiction. They have failed to carry that burden to show that Gulley was a citizen of Texas at the time the complaint was filed; thus, the Court lacks removal jurisdiction based on diversity of citizenship."

"Accordingly, the plaintiff's motion to remand is GRANTED. The case is hereby remanded to the Civil District Court for the Parish of Orleans."

23

Domicile: CorporationsWhen undertaking a diversity analysis, how do you determine the citizenship of

a US corporation?

24

Domicile: Corporations 28 USC §1332 (c)(1)

"a corporation shall be deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business, except [direct actions against insurers]"

Sidebar: Why would a corporation be incorporated in a state other

than the one where it has its principal place of business?

25

Domicile: CorporationsHertz Corp. v. Friend, 130 S. Ct. 1181, 1194 (2010)

Determination of the "principal place of business" under 28 USC §1332 (c)(1) is now

governed by the "nerve center" test.

26

Domicile: CorporationsHertz Corp. v. Friend, 130 S. Ct. 1181, 1194 (2010)

"We recognize as well that, under the "nerve center" test we adopt today, there will be hard cases. For example, in this era of telecommuting, some corporations may

divide their command and coordinating functions among officers who work at several different locations, perhaps communicating over the Internet."

"That said, our test nonetheless points courts in a single direction, towards the center of overall direction, control, and coordination. Courts do not have to try to weigh corporate functions, assets, or

revenues different in kind, one from the other. Our approach provides a sensible test that is relatively easier to apply, not a test that will, in all instances, automatically generate a result."

27

Domicile: Unincorporated Organizations For unincorporated organizations such as limited liability

companies, partnerships, etc., The citizenship of such an entity would include each state of each

member or partner. Hypo:

Plaintiff is a Delaware corporation with whose employees all handle sales calls from their homes in New Hampshire and Rhode Island and whose products are shipped from a warehouse which is located in the backyard of the home of the president of the corporation in South Berwick, Maine

Defendant is a partnership whose partners come from New Hampshire, Vermont, and Maine.

Is there complete diversity for a suit in D. N.H.?

28

Domicile: Foreign Citizens Rarely happens in real life. Consult the rules, like practicing lawyers do. Don't forget the meaning of the capital "S" in

States.

29

Real World Stories: Collusive Joinder "A district court shall not have jurisdiction of

civil action in which any party, by assignment or otherwise, has improperly or collusively made or joined to invoke the jurisdiction of this court." 28 U.S.C. §1359

30

Real World Stories: Collusive Joinder In Gentle v. Lamb-Weston, a series of Maine

plaintiffs sued an Oregon corporation in state court. 302 F. Supp. 161, 162 (D. Me. 1969). The plaintiffs assigned 1/100 of the claim to an

Oregon resident. The conceded purpose of the assignment was to

defeat an anticipated removal to the federal court by the defendant under 1441(a).

31

Real World Stories: Collusive Joinder The courts willingness to invoke §1359 was

undoubtedly based on the factors including: the Oregon plaintiff had no previous interest in the

litigation and Oregon plaintiff agreed to take the assignment at the

request of and as an accommodation to his law school classmate;

the conceded purpose of the assignment was to defeat the anticipated removal to federal court and

because "plaintiff's counsel have been unembarrassedly frank about their objective at every step."

32

Amount in Controversy "…matter in controversy exceeds the sum or

value of $75,000, exclusive of interest and costs…" 28 USC § 1332 (a)

33

Amount in Controversy "It is well settled that the amount in

controversy is determined by the amount claimed by the plaintiff in good faith. Tremblay v. Philip Morris, Inc., 2002 DNH 201

(D.N.H. 2002) (citations and quotations omitted)

34

Amount in Controversy Valuing equitable relief can be difficult, but a

common sense approach is usually effective. Example:

"A number of courts have ruled that, in a case seeking equitable relief against a foreclosure sale, the fair market value of the property is an acceptable measure of the amount in controversy for purposes of diversity jurisdiction." Bedard v. Mortgage Elec. Registration Sys.,

2011 DNH 77 (D.N.H. 2011)

35

Amount in Controversy "Normally, attorney's fees are excluded from

the amount-in-controversy determination . . . . There are two exceptions to this rule:

when the fees are provided for by contract, and when a statute mandates or allows payment of the

fees."

Tremblay v. Philip Morris, Inc., 2002 DNH 201 (D.N.H. 2002)

36

Amount in Controversy "It must appear legal certainty that the claim

is really for less than the jurisdictional amount to justify dismissal."

St. Paul Mercury Indemnity Co. Red Cab Co., 303 U.S. 283 (1938)

37

Amount in Controversy Federal jurisdiction is not lost because a

judgment of less than the jurisdictional amount is awarded. Mas v. Perry, 489 F.2d 1396, 1400 (5th Cir 1974)

("That Mr. Mas recovered only $5,000 is, therefore, not compelling")

38

Amount in Controversy The "amount in controversy" issue is usually

decided "on the papers." Tremblay v. Philip Morris, Inc.,

2002 DNH 201 (D.N.H. 2002) ("Further, because Philip Morris has not sought an

evidentiary hearing, I resolve this issue based upon the parties' submissions.") (citations and quotations omitted)

Cf. the "well pleaded complaint" rule of 28 USC § 1331

39

Amount in Controversy: "Aggregation Doctrine"

A single plaintiff may join unrelated claims against a single defendant in order to reach the $75,000 threshold. 4-18 Moore's Federal Practice - Civil § 18.20

Citing, inter alia, Nationwide Mut. Ins. Co. v. Dewar, 1990 U.S. Dist. LEXIS 12550, at *2 (E.D. Pa. Sept. 21, 1990) ("The claims of a single prospective plaintiff against a single

prospective defendant, although unrelated, may be aggregated for jurisdictional purposes").

40


However (with two exceptions not discussed in this class) "courts do not permit aggregation if there are multiple plaintiffs or multiple defendants."

4-18 Moore's Federal Practice - Civil § 18.20 Citing, inter alia, Zahn v. International Paper Co., 414 U.S.

291, 294-295 (1973) (multiple plaintiffs with separate and distinct claims,

including plaintiffs bringing class action suit, must each satisfy jurisdictional amount requirement).

41


"Aggregation Doctrine" Nevertheless, using the supplemental jurisdiction

provisions of 28 USC § 1367 One claim where a plaintiff has satisfied both the complete

diversity and the amount in controversy requirements of 1331, Can be joined to another claim where a second plaintiff cannot

satisfy the amount in controversy requirement against the same defendant,

As long as joining the second plaintiff will not create a jurisdictional defect. Exxon Mobil Corp. v. Allapattah Svc, Inc., 545 U.S. 546, 553-554 (2005)

koshea, 09/21/2012

42

Amount in Controversy: "Aggregation Doctrine" "When the well-pleaded complaint contains at least one claim that

satisfies the amount-in-controversy requirement, and there are no other relevant jurisdictional defects, the district court, beyond all question, has original jurisdiction over that claim.

The presence of other claims in the complaint, over which the district court may lack original jurisdiction, is of no moment.

If the court has original jurisdiction over a single claim in the complaint, it has original jurisdiction over a "civil action" within the meaning of §1367(a), even if the civil action over which it has jurisdiction comprises fewer claims than were included in the complaint.

Once the court determines it has original jurisdiction over the civil action, it can turn to the question of whether it has a constitutional and statutory basis for exercising supplemental jurisdiction over the other claims in the action." Exxon Mobil Corp. v. Allapattah Svc, Inc., 545 U.S. 546, 553-554 (2005),

43


Hypos Can a plaintiff join a $50,000 tort claim and a (related

or unrelated) $40,000 contract claim against a diverse defendant?

Can a plaintiff join a $50,000 claim with another plaintiff's $40,000 claim against the same diverse defendant?

Can a plaintiff join his $100,000 tort claim and with another plaintiff's $30,000 related claim against the same diverse defendant?

44

Questions? Comments?Kevin M. O'Shea

Sulloway & Hollis, PLLC

[email protected]

603-228-2829

mailto:[email protected]