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Flashcards in Jurisdiction of Federal Court Deck (29):

Federal question—arising under federal law

(1) When federal law specifically creates the cause of action or claim, or the cause of action can be implied from the federal law or the constitution, federal question jurisdiction exists.

(2) When state law creates the cause of action or claim, federal question jurisdiction exists, provided a federal issue is an essential element of the claim under state law and must be resolved for the state claim to be determined, unless the federal issue is one for which there is neither an express nor an implied private right of action. The absence of a federal cause of action is not dispositive against federal jurisdiction—the key is whether federal jurisdiction over the embedded issue in a state cause of action will open the floodgates to federal courts for state claims.



The district courts shall have original jurisdiction over all civil actions where the matter in controversy exceeds $75,000, exclusive of interest and costs, and is between citizens of different states. § 1332.

2) Diversity measured when action is commence d : the only citizenship determination that matters is at the time the action is commenced.


Complete Diversity

1) Complete diversity required

a. all parties of opposing sides must be diverse
b. each plaintiff and each defendant must be diverse
c. interpleader exception

i. Interpleader statute: minimal diversity, only
requires diversity between any two claimants
ii. Federal rules require complete diversity.


Determining Diversity

(3) Determining citizenship

a. Individual citizenship is determined by where the party
is domiciled, evidenced by physical presence and an
intention to remain there indefinitely.

b. Corporations

i. Deemed to be citizens of every state of
incorporation and

ii. the state that houses its principal place of

1. muscle test: where a corporation has its executive offices in one state and its physical operation wholly or
predominately in another state, the principal place of business is the state where physical operations are

2. nerve center/home office test: where the corporation performs its operational activities in many state, the principal place of business is the state where the executive offices are located

c. Unincorporated associations, partnerships: Citizenship
is that of each and every one of its members


Determining Diversity: Class Actions

d. Class actions

i. Diversity is determined based on citizenship
of the named representatives.

ii. Post-Exxon Mobile v. Allopattah, absent class
members and additional named plaintiffs
need not independently satisfy the
jurisdictional amount, provided that at least
one named plaintiff satisfies the amount.


Determining Diversity: Legal Representatives, Nonresident US Citizens and Aliens

e. Suits brought by legal representatives: Deemed citizens of the same state as the represented person

f. Nonresident US citizens: There is no diversity
jurisdiction, because the person is not a citizen of any
state and is not an alien.

g. Aliens: may sue and be sued based on diversity, but no two aliens or LPRs can be opposing parties under
diversity jurisdiction.


Collusion and Devices to Create or Defeat Diversity

§ 1359 deprives federal courts of jurisdiction where a
party by assignment or otherwise has been improperly
or collusively made or joined to invoke diversity

A plaintiff can create diversity by changing his domicile
after the cause of action accrues but before the suit is
commenced if the change is genuine.


Subsequent addition of parties: Complete diversity

Complete diversity must be maintained throughout the addition of new parties, unless supplemental jurisdiction is used to hear claims that do not support the diversity requirements.


(6) Jurisdictional amount in controversy

This is determined from the plaintiff’s perspective. Usually all that is required is a good faith allegation that the amount of the damages or injuries in controversy exceeds, exclusive of interest and costs, $75K.

a. What is in controversy?

i. collateral effects of a judgment are not to be
ii. interests and costs are not to be considered
iii. for injunctions, the amount in controversy is the value of the right to be protected or the extent of the injury to be prevented
iv. punitive damages may be used if permitted if applicable under the state substantive law in question


Aggregation of Separate Claims

i. one plaintiff v. one defendant: the plaintiff may aggregate all claims against one defendant

ii. one plaintiff v. several defendants: the plaintiff may aggregate all claims against the defendants only if they are all jointly liable to the plaintiff.

iii. several plaintiffs v one defendant: when complete diversity is present and at least one named plaintiff meets the jurisdictional amount, a federal district court has supplemental jurisdiction over other named plaintiffs or absent class members in a class action who do not meet the jurisdictional amount requirement, so long as they arise from a common nucleus of operative facts.



i. Compulsory counterclaims, arising out of the same transaction or occurrence, need not meet the jurisdictional amount, as ancillary jurisdiction.

ii. Permissive counterclaims must independently meet the jurisdictional amount.

iii. Removal from state courts

1. A plaintiff in state court may not remove if met with a counterclaim of > $75

2. A defendant may be able to remove in contract actions but not in tort


Class Action Fairness Act

a. Subject matter jurisdiction

i. any class member is of diverse citizenship from any defendant
ii. amount in controversy in the aggregate exceeds $5M
iii. >100 class members in the class

b. Removal: any defendant may remove the case without
the approval of any other defendant

c. Actions are excluded from CAFA jurisdiction where the
primary defendants are states or governmental entities
or the claims are based on securities laws or regarding
corporate governance.

d. Local considerations as a bar to jurisdiction

i. Mandatory bar: A federal court must decline
jurisdiction if
1. more than 2/3 of the class members are members of the state in which the action is filed
2. a defendant from whom significant relief is sought is a citizen of that state
3. the principal injuries occurred in the
sate in which the action is filed.

ii. Discretionary: A federal court may decline if more than 1/3 but fewer than 2/3 of the class are citizens of the state in which the action is filed AND the primary defendants are also citizens of that state. Here the court considers whether the state has a significant interest in
retaining the case.


Supplemental Jurisdiction

Generally—§ 1367
The district courts have supplemental jurisdiction over all claims that are so related to claims in the action within original jurisdiction that they form part of the same case or controversy—use the Gibbs “common nucleus of operative facts” test.


Cases Heard Solely on Diversity

The district court does not have supplemental jurisdiction over claims by plaintiffs against persons made parties under

(1) Rule 14 impleader
(2) Rule 19 joinder of indispensable additional parties
(3) Rule 20 permissive joinder of additional parties
(4) Rule 24 intervention

nor over claims by persons proposed to be joined as plaintiffs under rule 19 or seeking to intervene as plaintiffs under Rule 24 if allowing supplemental jurisdiction over such claims would defeat diversity.


Discretion Over Exercising Supplemental Jurisdiction

Federal courts may decline to exercise supplemental jurisdiction over a claim if

(1) the claim raises a novel or complex issue of state law
(2) the claim substantively predominates over the claim for which the federal court has jurisdiction
(3) the district court has dismissed all claims over which it has original jurisdiction
(4) when exceptional circumstances present other compelling reasons for declining jurisdiction.

If a state claim is dismissed from a federal action for lack of supplemental jurisdiction, the claimant has at least 30 days to file the state action in state court, regardless of whether the state’s statute of limitation has expired.


Supplemental Jurisdiction After Exxon Mobile

Diverse plaintiffs who do not satisfy the jurisdictional amount but are indispensable parties may join their claims to those of any other diverse plaintiff whose claims do satisfy the jurisdictional amount, provided that all claims form a part of the same case or controversy.
This rule is applicable in standard and class actions.


Removal Under Section 1441

Removal—§ 1441
Original jurisdiction necessary
A defendant can only remove an action that could have originally been brought by the plaintiff in federal court.

• Removability is tested as of the date of removal
• A federal defense is an insufficient justification for removal
• The state court need not have had jurisdiction
• Potentially non-diverse defendants are not considered (only indispensable parties under Rule 19).

Only defendants may remove
Other than under 1441(c) (separate and distinct cause of action under federal question jurisdiction) and CAFA, only defendants may remove, and all must agree to and seek removal.


Venue for Removal

Venue lies in the district court embracing the place where the state action is pending.


Home State Defendant Rule

When jurisdiction is based solely on diversity and one of the defendants is a citizen of the state in which the state action is brought, the action is not removable.


Dismissal of Non-Diverse Parties Allows Parties

When all non-diverse parties are dismissed from a ccase, the defendant must move for removal within 30 days after the dismissal and not more than one year after the action commenced.

Removal of class actions
Three exceptions to the general rules for removal apply to class
(1) the one year limitation does not apply to class actions
(2) the consent of all defendants is not required for removal of
class actions
(3) the home state defendant rule is inapplicable to class
Res judicata
Claim preclusion
A valid judgment on a claim precludes a second action on that claim
or any part thereof.


Defendant May Remove Separate and Independent Claims

When there are multiple claims or multiple parties, a defendant may remove the whole case if it contains a separate and independent claim or cause of action within federal question jurisdiction.


Removal Procedure


(1) Notice of removal: a short and plain statement of the grounds for removal signed under Rule 11. A copy should be sent to the parties and to the state court.

(2) Timing: A defendant may file the notice within 30 days
a. from the time of service of the complaint OR
b. from the time that a change in the parties made it

(3) Jurisdictional determination by court: Although subject matter jurisdiction ordinarily should be decided first, where there is a straightforward personal jurisdiction issue presenting no complex question of state law, and the defect in subject matter jurisdiction raises a difficult and novel questions, the court does not abuse its discretion by turning directly to personal jurisdiction.

(4) Procedure after removal: The case proceeds according to the federal rules of procedure. IF the defendant has not answered, he must do so within 20 days or within 5 days after filing the petition for removal, whichever is longer.


Removal: Right to a Jury Trial

(5) Right to jury trial
a. The removing party must file a demand for jury trial
within 10 days after the notice of removal is filed. The
non-removing party must file within 10 days after
service of the notice of removal.

b. Where, prior to removal, one party has already made an express demand for jury trial, the party is not required
to demand again after removal.


Remand Procedure

a. If the remand is sought for a defect in removal
procedures, the motion must be brought within 30

b. If the remand is sought for lack of subject matter
jurisdiction, the remand may be made whenever the
jurisdictional defect is shown.

c. Once all federal claims have been resolved, the court
may exercise discretion in remanding to state court

d. On appellate review, remand is generally barred, except for cases involving civil rights.


Specific Types of Actions that Removal Is Proper

(1) certain actions against federal officers when they were
allegedly acting under color of law

(2) torts by motor vehicle committed in the scope of
employment by federal employees

(3) actions involving international banking

(4) criminal or civil actions where the defendant will be denied a right protected under federal civil rights statutes, but only if denial is inevitable under state law.


Res judicata - Claim Preclusion

A valid judgment on a claim precludes a second action on that claim or any part thereof.


Res Judicata - Issue Preclusion

Where an issue of fact or law was actually litigated and determined by a valid and final judgment, the determination is conclusive in a subsequent action on that claim or a different claim.
ssue in a prior case.


Parties Bound

Those who litigated and those in privity with the litigants are bound by res judicata.


Non Party Use of Prior Determinations

Estoppel can only be used against one who was a party
Defensive collateral estoppel : A defendant in a subsequent action may invoke collateral estoppel against the plaintiff who litigated and lost the same issue in a prior case.

Offensive collateral estoppel : A plaintiff in a subsequent action may invoke collateral estoppel against a defendant who litigated and lost the issue in a prior case.