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Transcript of Jurisdiction
Notice Subject Matter Jurisdiction Diversity jurisdiction
Federal question jurisdiction
Supplemental jurisdiction Personal Jurisdiction Traditional bases
The minimum contacts test
Federal personal jurisdiction Notice The requirement of notice
Service of process
Opportunity to be heard
Practice under Federal Rules Venue Venue generally
Venue in federal actions
Forum non conveniens
Removal The End
ASCERTAINING APPLICABLE LAW Jurisdiction generally
Jurisdiction means a power of court to adjudicate a particular case.
In the law, jurisdiction sometimes refers to a particular geographic area containing a defined legal authority. For example, the federal government is a jurisdiction unto itself. Its power spans the entire United States. Each state is also a jurisdiction unto itself, with the power to pass its own laws. Smaller geographic areas, such as counties and cities, are separate jurisdictions to the extent that they have powers that are independent of the federal and state governments.
Jurisdiction can also be used to define the proper court in which to bring a particular case. In this context, a court has either original or appellate jurisdiction over a case. When the court has original jurisdiction, it is empowered to conduct a trial in the case. When the court has appellate jurisdiction, it may only review the trial court proceedings for error. Generally, courts of general and special jurisdiction have original jurisdiction over most cases, and appeals courts and the jurisdiction's highest court have appellate jurisdiction, but this is not always the case. For example, under Article III, Section 2, Clause 2, of the U.S. Constitution, the U.S. Supreme Court is a court of appellate jurisdiction. However, under the same clause, that court has original jurisdiction in cases between states. Such cases usually concern disputes over boundaries and waterways.
Finally, jurisdiction refers to the inherent authority of a court to hear a case and to declare a judgment. When a plaintiff seeks to initiate a suit, he or she must determine where to file the complaint. The plaintiff must file suit in a court that has jurisdiction over the case. If the court does not have jurisdiction, the defendant may challenge the suit on that ground, and the suit may be dismissed, or its result may be overturned in a subsequent action by one of the parties in the case.
(2) Jurisdiction in civil litigation
In civil litigation, jurisdiction manes the authority of a court to hear and decide a case. To make a legally valid decision in a case, a court must have both "subject matter jurisdiction" (power to hear the type of case in question, which is granted by the state legislatures and Congress) and "personal jurisdiction" (power to make a decision affecting the parties involved in the lawsuit, which a court gets as a result of the parties' actions).
For example, a state court's subject matter jurisdiction includes the civil laws passed by its own state, but doesn't include patent disputes or immigration violations, which Congress allows to be heard only in federal courts. And no court can hear or decide a case unless the parties agree to be there or live in the state (or federal district) where the court sits, or have enough contacts with the state or district that it's fair to make them answer to that court. (Doing business in a state, owning property there, or driving on its highways will usually be enough to allow the court to hear your case.) Jurisdiction generally (continued)
(3) Concurrent jurisdiction
There are two entirely distinct court systems in the U.S., while each state also has its own system of courts:
(a) Federal judicial system
Federal district courts are courts of original jurisdiction. District courts, like all federal courts, are also courts of limited subject matter jurisdiction, in that statutes authorize them to hear only certain kinds of cases, namely those based on federal questions or diversity of parties.
Circuit Courts are courts of appellate jurisdiction as they are authorized only to review decisions on appeal from district courts, certain specialized federal courts or federal administrative agencies.
United States Supreme Court has original jurisdiction over cases affecting ambassadors and in which states are parties. Its appellate jurisdiction over all other types of cases is largely discretionary.
(b) State judicial system
A variety of courts of limited subject matter jurisdiction, authorized to hear specific types of cases, e.g., traffic, landlord-tenant, small claims or probate.
A court of original and general jurisdiction that hears all claims not exclusively vested in courts of limited jurisdiction, such as state claims and nonexclusive federal question claims that also could have been brought in federal district courts. State courts of general jurisdiction often exist at the county level. Such courts vary in their designations, e.g., Superior Court in the District of Columbia, Circuit Court in Virginia, and Supreme Court in New York.
An intermediate appellate layer, generally available only in more populous states. In some jurisdictions, the decision of the intermediate appellate court is final for the most fact-bound and routine kinds of cases, such as domestic relations and non-capital criminal cases, subject perhaps to discretionary appeal for constitutional questions.
A court of appellate jurisdiction, variously called the Supreme Court, the Court of Appeals, or, in Massachusetts, the Supreme Judicial Court. Where a state provides for an intermediate appellate court, the existence of such allows the highest state court to exercise considerable discretion in selecting cases for further review.
State courts have concurrent jurisdiction in most cases. Federal courts have exclusive jurisdiction in a limited number of cases, such as federal criminal, antitrust, bankruptcy, patent, Copyright, and some admiralty cases, as well as suits against the U.S. government. If a claim can be filed in either state or federal court, and the plaintiff files the claim in state court, the defendant may remove the case to federal court. Federal court proceedings are widely considered to be less susceptible to bias because the jury pool is drawn from the entire state, not just from the local community.
(4) Selecting the court in which to bring suit
The following factors influence the parties’ choice of forum for litigating a given matter:
there must be sufficient contacts between the defendant and the forum state to exercise personal jurisdiction over the defendant;
the court must possess subject matter jurisdiction over the controversy;
concerns of judicial efficiency and convenience of parties and witnesses will influence the appropriate venue within a specific court system in which to try the case;
various tactical factors such as: reputation of judges presiding in specific courts, court calendars, and procedural differences influencing, for example, availability of a jury trial, required level of agreement for verdicts, applicable rules of evidence or availability of appellate review;
where suit can be brought in more than one jurisdiction, differences in substantive law will be evaluated so that the law most favorable to a party’s claim may be applied. Jurisdiction generally (continued)
(5) Ascertaining proper jurisdiction
There are three prerequisites a trial court must satisfy before it can entertain a plaintiff’s claim:
jurisdiction over the subject matter (usually referred to as subject matter jurisdiction);
jurisdiction over the parties or things (usually referred to as personal jurisdiction);
(6) Subject matter jurisdiction
First of all, make a choice between federal court or state court. If the case is a federal case, you must then ask whether the court has subject matter jurisdiction. Essentially, this means that one of the following two things must be true:
Diversity: Either the case is between citizens of different states (with "complete diversity" required, so that no plaintiff is a citizen of the same state as any defendant) and at least $75,000 is at stake; or
Federal question: The case raises a "federal question." Essentially, this means that plaintiff’s right to recover stems from the U.S. Constitution, a federal treaty, or an act of Congress. (There is no minimum amount required to be at stake in federal question cases.)
(7) Personal jurisdiction
Then, make sure that the court has "personal jurisdiction" or "jurisdiction over the parties." You must check to make sure that:
D had minimum contacts with the forum state (whether the court is a state or federal court); and
D received such notice and opportunity to be heard as to satisfy the constitutional requirement of due process.
Last but not least, check whether venue was correct. In federal court suits, the venue requirement describes what judicial district the case may be heard in. Essentially, the case must be heard either:
in any district where the defendant resides (with special rules for multi-defendant cases; or
in any district in which a substantial part of the events giving rise to the claim occurred. Subject matter jurisdiction
Subject matter jurisdiction refers to the question of whether a particular court has the power or competence to decide the kind of controversy that is involved.
Subject matter jurisdiction means the power of a court to hear the type of claim being asserted. In other words, even though a state or federal court has jurisdiction over the parties in an action, it cannot try the case unless it has the power to adjudicate that kind of controversy.
Note that subject matter jurisdiction is not an alternative to personal jurisdiction (the court's authority to enter a judgment binding on the particular defendant involved) but rather is an additional hurdle to be cleared.
(2) General vs. Limited
Each state has its own judicial or court system within which there is a trial court of general jurisdiction. Additionally there is a federal judicial system. However, federal courts are courts of limited jurisdiction.
Unlike state courts of general jurisdiction (such as the Superior Court in California) which have jurisdiction over the subject matter of a wide variety of lawsuits, federal jurisdiction is limited in nature. Federal courts only exercise the limited subject matter jurisdiction bestowed by the Constitution and Congress.
(3) Federal courts
The United States Constitution sets out the permissible scope of the judicial power of federal courts in Article III, § 2. It lists the following types of federal subject matter jurisdiction:
cases “arising under" this Constitution, laws of the United States, and treaties (federal question jurisdiction);
cases affecting ambassadors and other official representatives of foreign sovereigns;
admiralty and maritime cases;
controversies to which the United States is a party;
controversies between states and between a state and citizens of another state;
cases between citizens of different states (diversity jurisdiction);
cases between citizens of the same state claiming lands under grants of different states;
cases between a state or its citizens and foreign states and their citizens or subjects (alienage jurisdiction). Subject matter jurisdiction (continued)
(4) Diversity vs. Federal auestion
In the federal courts, there are two basic kinds of controversies over which the federal judiciary has subject matter jurisdiction: (1) suits between citizens of different states (so-called diversity jurisdiction); and (2) suits involving a "federal question."
Congress has conferred upon federal courts jurisdiction to decide federal questions i.e., cases or controversies arising under the Constitution and laws of the United States (28 U.S.C. § 1331) and cases or controversies between citizens of different states (diversity jurisdiction). (28 U.S.C. § 1332.)
(5) amount in controversy
In federal suits based on diversity, an amount in excess of $75,000 must be in dispute. This is the "amount in controversy" requirement. In federal question cases, there is no amount in controversy requirement.
The party seeking to invoke the jurisdiction of a federal court must make an affirmative showing that the case is within the court’s subject matter jurisdiction.
There is a presumption against federal jurisdiction. The existence of subject matter jurisdiction generally must be demonstrated at the outset by the party seeking to invoke it.
Example: If P wants to invoke diversity jurisdiction, in her pleading she must allege the relevant facts about the citizenship of the parties.
Most courts hold that subject matter jurisdiction, unlike jurisdiction over the parties, may not be conferred by consent of the litigants.
Consent of the parties cannot allow subject matter jurisdiction to a court. Unlike personal jurisdiction, which the court can obtain upon a party’s consent or failure to object, lack of subject matter jurisdiction is never waivable; either the court has it, or it cannot assert it. Agreements between the parties to confer subject matter jurisdiction upon a particular court are invalid.
(8) Dismissal at any time
No matter when a deficiency in the subject matter jurisdiction of a federal court is noticed, the suit must be stopped, and dismissed for lack of jurisdiction. Even at the appellate level, the suit already tried may be dismissed for lack of subject matter jurisdiction.
A party can raise lack of subject matter jurisdiction at any time; there are no time restraints on when such an objection can be raised (again, as opposed to personal jurisdiction, which must be raised at a very early stage in the proceedings). Therefore, a defendant who believes that a court lacks subject matter jurisdiction to hear the case may raise this issue before the trial court or in an appeal from the judgment. If a defect in subject matter jurisdiction is found, the judgment will usually be rendered void, having no legal force or binding effect.
FRCP 12(h)(3) provides: “Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.” This rule has been interpreted to mean that courts can raise lack of subject matter jurisdiction sua sponte, that is, on their own, without any suggestion by a party.
Example: A case brought under federal question jurisdiction goes through trial and through one level of appeals, and is then heard by the Supreme Court. The Supreme Court decides that there was no federal question in the first place. Held, the entire case must be dismissed for lack of federal subject matter jurisdiction. Diversity jurisdiction
The Constitution gives the federal courts jurisdiction over "controversies ... between the citizens of different states...." This is the grant of "diversity jurisdiction."
A phrase used with reference to the jurisdiction of the federal courts which, under the U.S. Constitution, Art. III, § 2, extends to cases between citizens of different states designating the condition existing when the party on one side of a lawsuit is a citizen of one state and the party on the other side is a citizen of another state, or between a citizen of a state and an alien. The requisite jurisdictional amount must, in addition, be met.
When opposing parties in a lawsuit are citizens of different states (including corporations incorporated or doing business in different states) or a citizen of a foreign country, this places the case under federal court jurisdiction, pursuant to Article 3, section 2 of the U. S. Constitution, and the federal Judicial Code, if the amount in controversy exceeds $75,000.
Example: P, a citizen of California, wants to sue D, a citizen of Oregon, for hitting P with D’s car. Assuming that P’s damages exceed $75,000, P can bring her negligence suit against D in federal court, because it is between citizens of different states.
The power of federal courts to try diversity cases comes from the Article 3, Section 2 of the Constitution, which provides that: "the judicial power of the United States may extend to controversies between two or more states, between a state and a citizen of another state, between citizens of different states, or between a state and foreign states citizens or subjects."
This grant is repeated in a statute, 28 U.S.C. 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 –
citizens of different States;
citizens of a State and citizens or subjects of a foreign state;
citizens of different States and in which citizens or subjects of a foreign state are additional parties; and
a foreign state . . . as plaintiff and citizens of a State or of different States.
The right of an individual to take his or her case into a federal court is assured by Article III, § 2 of the U.S. Constitution. This provision extends the federal judicial power to controversies between the citizen of a state and the government of a different state, citizens of a different state, or between a state or its citizens and a foreign government or its citizens. It is put into effect by a statute that limits federal diversity jurisdiction to cases involving a dispute worth more than $75,000. This minimum is intended to keep small cases from clogging the calendars of federal courts. Cases worth less than $75,000 must be brought in a state court even though diversity of the parties' citizenship otherwise would entitle them to be brought in federal court.
The origin and purposes of federal diversity jurisdiction have long been debated. It was created when the Constitution was first adopted, a time when loyalty to one's state was usually stronger than feelings for the United States. It was undoubtedly intended to balance national purposes with the independence of the states.
Some scholars believe that the opportunity to take business and commercial disputes into an impartial federal court helped to encourage investment in the developing South and West. People from the industrialized Northeast felt more secure when their financial transactions in other states were not necessarily at the mercy of local prejudices.
Even if diversity jurisdiction did help the economic growth of the United States, many people question whether it continues to be useful. Because these cases require substantial investments of time and energy by the federal judiciary in cases that arise under state law, proposals to curtail or abolish diversity jurisdiction have been introduced repeatedly in Congress since the 1920s. None of the proposals have been adopted, however. Diversity jurisdiction (continued)
Under the federal diversity jurisdiction statute, 28 U.S.C. § 1332, a federal court has subject matter jurisdiction over a matter where:
there is complete diversity among the parties such that no plaintiff shares citizenship with any defendant; and
the amount in controversy exceeds $75,000.
Deferring to state courts, federal courts have traditionally declined to exercise jurisdiction in the following types of cases, even when the parties satisfy the requirements for diversity jurisdiction:
certain in rem cases.
domestic relations cases.
Additionally, courts are obliged by statute to deny jurisdiction which has been “improperly or collusively made.”
(5) Comparison - Federal question cases
Diversity of citizenship is one of the factors that will allow a federal district court to exercise its authority to hear a lawsuit. This authority is called diversity jurisdiction, which means that a case involving questions that must be answered according to state laws may be heard in federal court if the parties on the two sides of the case are from different states.
No question of federal law is required, and jurisdiction is concurrent with that of the state courts, which means that if the requirements for federal diversity jurisdiction are satisfied, the plaintiff can file the action in either federal or state court.
In diversity case, the amount in controversy must be greater than $75,000, exclusive of interest and costs.
(6) Citizenship - Individuals
Citizenship for diversity purposes requires a party to be a citizen of both the United States and of a state. "Citizenship" is synonymous with "domicile";
Domicile, not residence, is what counts. "Domicile" means physical presence in the state coupled with the intent to reside there indefinitely.
Example: P has his main home in New York, but has an expensive second home in Florida. D has her only home in Florida. P can bring a diversity action against D, because P is deemed a citizen only of New York, not Florida, even though P has a "residence" in Florida.
Citizenship is not determined by residence, but rather by domicile. As the Fifth Circuit has held, “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) a taking up residence in a different domicile with (b) the intention to remain there.” Thus, a person is considered to be domiciled in the place where he has his current dwelling-place, if he also has an intention to remain in that place for an indefinite period.
The courts have equated the state citizenship of natural persons with domicile in a state. Domicile is created by the concurrent establishment of physical residence in a state and an intent to remain there indefinitely. Although a person can have more than one residence at one time, he can have only one domicile at a time.
Being a citizen of a state is something more than simply owning property or being physically present within the state. Citizenship means that the individual has a residence in the state and intends to have that residence as his or her present home. Residence plus this intent makes that place the individual's domicile, and a party can have only one domicile at a time. Citizenship does not mean that the individual must swear that he or she never intends to move, but the residence and the intent to consider it home are essential. Diversity jurisdiction (continued)
(7) Citizenship - Corporations
The diversity statute deems a corporation to be the citizen of “any State by which it has been incorporated and of the state where it has its principal place of business.”
Corporations are citizens of the state in which they are incorporated and also of the state where they maintain their principal place of business. This citizenship in two places has the effect of narrowing the number of cases that qualify for a federal court's diversity jurisdiction because a corporation's citizenship is not diverse from the citizenship of anyone else in either of those two states.
Therefore, one corporation can be a citizen of two different states. For example: ABC Corporation is incorporated in Delaware and has its principal place of business in Michigan. It does not insure anything. ABC Corporation is a citizen of both Delaware and Michigan.
For diversity to exist, no adversary of the corporation may be a citizen of the state in which the corporation is incorporated, or of the state in which it has its principal place of business. For example: XYZ Corp., a corporation which is incorporated in Delaware, has its principal place of business in New York. In order for there to be diversity, no adverse party may be a citizen of either Delaware or New York.
As far as where a corporation’s "principal place of business" is concerned, courts usually consider two factors: where the corporation’s headquarters are located ("nerve center" test) and where the majority of the corporation’s assets are located ("muscle center" test):
Home office: Some courts hold that the corporation’s principal place of business is ordinarily the state in which its corporate headquarters, or "home office," is located. Under this test, "the locus of corporate decision-making authority and overall control constitutes a corporation’s principal place of business for diversity purposes.”
Bulk of activity: Other courts hold that the principal place of business is the place in which the corporation carries on its main production or service activities. Under this test, greater weight is attached to the location of a corporation’s production or service activities in determining the principal place of business under this test.”
Some courts find it more satisfactory to use a hybrid of both tests, called the “total activity” test. This test “considers all the circumstances surrounding a corporation’s business to discern its principal place of business. ‘The “total activity” test provides a realistic, flexible and nonformalistic approach to determining a corporation’s principal place of business through a balancing of all relevant factors.”
(8) Citizenship - Special circumstances
(a) A resident alien (an alien who lives in the United States permanently) is deemed a citizen of the state in which he is domiciled.
A foreigner living in the U.S. is deemed to be a citizen of whatever state in which the alien is domiciled.
(b) Federal jurisdiction exists where there is a suit between a citizen of a state, on one side, and foreign countries, or citizens or subjects thereof, on the other side.
Example: P, a citizen of Mexico, sues D, a citizen of Illinois. Even if there is no federal question issue, there will be federal subject matter jurisdiction of the "alienage" variety, assuming that the amount in controversy requirement is satisfied.
(c) A suit solely between citizens of two foreign countries does not fall within the alienage jurisdiction.
Example: If P, a citizen of Canada, sues D, a citizen of Mexico, there is no alienage jurisdiction.
(d) An American citizen living abroad permanently has no domicile within the United States and is not a citizen of any state.
This means that if an American citizen lives abroad, there will not be diversity between him and an opposing party who is a citizen of a particular American state.
(e) For diversity purpose, unincorporated associations, such as partnerships and labor unions are viewed as citizens of each state in which any member is a citizen.
Unincorporated associations, such as partnerships and labor unions, take the citizenship of each member.
Example: XYZ Partnership is comprised of the following partners: Xavier, who is domiciled in Missouri; Yael, who is domiciled in Minnesota; and Zora, who is domiciled in Montana. XYZ’s domicile is all three states: Missouri, Minnesota and Montana. Diversity jurisdiction (continued)
(9) Complete diversity
The single most important principle to remember in connection with diversity jurisdiction is that "complete diversity" is required. That is, it must be the case that no plaintiff is a citizen of the same state as any defendant.
There must be complete diversity of citizenship between the parties on each side, i.e., all plaintiffs must be citizens of different states than all defendants. The "rule of complete diversity" holds that there is no diversity jurisdiction when any party on one side of the dispute is a citizen of the same state as any party on the other side. If any plaintiff shares a common citizenship with any defendant, then diversity is destroyed and along with it federal jurisdiction.
This does not prevent a pair of plaintiffs, or a pair of defendants, from being co-citizens.
Example 1: Mary, Joe, and Charles, all citizens of Indiana, bring an action in federal court against Todd, Beth, and Larry, all citizens of Iowa. Diversity of citizenship exists.
Example 2: Mary, Joe, and Charles, all citizens of Indiana, bring an action in federal court against Todd, Beth, and Larry. Todd and Beth are citizens of Iowa; Charles is a citizen of Indiana. Diversity of citizenship does not exist.
Example 3: Mary, Joe, and Charles bring an action in federal court against Todd, Beth, and Larry. Mary, Joe, and Charles are citizens of Indiana, Illinois, and Pennsylvania, respectively. Todd, Beth and Larry are citizens of Iowa, Florida and Georgia, respectively. Diversity of citizenship exists.
Example 4: Mary, Joe, and Charles bring an action in federal court against Todd, Beth, and Larry. Mary, Joe, and Charles are citizens of Indiana, Illinois, and Pennsylvania, respectively. Todd, Beth and Larry are citizens of Iowa, Florida and Illinois, respectively. Diversity of citizenship does not exist.
In a suit between citizens of different states, the fact that a foreign citizen (or foreign country) is a party does not destroy diversity. For example: P, a citizen of Ohio, sues D1, a citizen of Michigan, and D2, a citizen of Canada. Diversity jurisdiction exists.
To conceptualize this rule, you can draw a vertical line in the middle of a piece of paper. On the left-hand side, list all of the plaintiffs’ citizenships. On the right-hand side, list all of the defendants’ citizenships. If any jurisdiction appears on both sides of the line, there is no diversity of citizenship and jurisdiction under 28 U.S.C.§ 1332 is unavailable.
(10) Time for determination
The existence of diversity is determined as of the commencement of the action. If diversity existed between the parties on that date, it is not defeated because one of the parties later moved to a state that is the home state of the opponent.
The citizenship of each party must be determined as of the time the lawsuit is commenced. A party's domicile at the time of the events that give rise to the Cause of Action or a change of domicile during the course of proceedings does not affect the court's jurisdiction. This rule, of course, gives a person contemplating a lawsuit the opportunity to change his or her domicile just before serving legal papers that start an action. This tactic has been challenged on a few occasions on the ground that it violates another federal law that prohibits collusion to create federal jurisdiction. Generally, the courts have ruled that a plaintiff's motives in moving to a new state are not determinative, and the only question is whether in fact the plaintiff's domicile is different from that of the defendants at the time the lawsuit begins.
Diversity need only exist at the commencement of the action. The existence of diversity is determined as of the commencement of the action. A change in either party’s citizenship after the filling of the suit does not deprive the court of jurisdiction. If diversity existed between the parties at that date, it is not defeated because one of the parties later became a citizen of the same state as his opponent.
Example: Chris and Matt are involved in a motor vehicle collision in which Chris sustained injuries. At the time of the collision, Chris and Matt were both citizens of Rhode Island. Assume for the purposes of this question that Chris’s cause of action arose at the time of the collision. A few months after the collision, Matt moves to Massachusetts with the intention of residing there permanently. Six months after the collision, Chris brings an action against Matt in federal court. Even though Chris and Matt were citizens of the same state, Rhode Island, at the time the cause of action arose, because Matt changed his domicile and was a citizen of Massachusetts at the time Chris filed suit, diversity of citizenship exists. If, during the course of the lawsuit, Matt changes his domicile back to Rhode Island, diversity is not defeated. Diversity jurisdiction (continued)
(11) Devices to create or destroy diversity
28 U.S.C. § 1332(c)(2) governs the diversity of citizenship rules for decedents, infants (minors) and incompetents. It provides: “[T]he legal representative of the estate of a decedent shall be deemed to be a citizen only of the same State as the decedent, and the legal representative of an infant or incompetent shall be deemed to be a citizen only of the same State as the infant or incompetent.” Therefore, one cannot create diversity by appointing a representative who, in other circumstances, would have a different citizenship than their decedent or infant or incompetent.
Nominal parties ignored - In determining the existence of diversity, nominal or purely formal parties are ignored. For example: Where a guardian of an infant sues, the guardian is deemed to be a citizen only of the same state as the infant.
In addition to 28 U.S.C. § 1332(c)(2), Congress has enacted 28 U.S.C. § 1359, which prohibits a party from creating diversity among the parties simply to impose federal jurisdiction over the case. The statute provides: “A district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court.” Even if the assignment is legal under state law, if it is done only to create diversity of jurisdiction, such a legal assignment will not allow federal jurisdiction.
This means that a claimant may not assign her claim in order to create diversity. For example: Alex and Dennis are both citizens of Florida. Alex wants to bring a diversity action against Dennis. Alex assigns his claim to Barbara, a Massachusetts citizen, with the understanding that Barbara will remit to Alex 80% of any recovery. The court will not take diversity jurisdiction over the Barbara-vs.-Dennis action, because Barbara’s presence in the suit was an improper or collusive joinder.
A plaintiff suing in state court may sometimes seek to defeat her adversary’s potential right to remove to federal court. There is no federal statute prohibiting "improper or collusive" joinder for the purpose of defeating jurisdiction. However, as a matter of judge-made law, courts will often disregard obvious removal-defeating tactics (e.g., joinder of a defendant who has nothing to do with the underlying dispute, but who is a citizen of the same state as a plaintiff.)
But the state-court plaintiff is always free to make a claim for less than the amount in controversy ($75,000), in order to defeat removal, even if P has really suffered a loss greater than this amount. (But the less-than-$75,000 amount must be named before D removes.)
In order to determine whether diversity exists, the pleadings do not settle the question of who are adverse parties. Instead, the court looks beyond the pleadings, and arranges the parties according to their real interests in the litigation.
(12) Mas vs. Perry
Facts: Plaintiffs, husband & wife, brought an action against Defendant, their landlord, in a federal court in Louisiana. Ps claim that D had set a two way mirror in their room and had watched them in action. Husband P was a French citizen and wife P was a resident of Mississippi. They were in Louisiana for education purposes and were not sure where they would settle after college. D was a citizen of Louisiana. D claims that Ps were Louisiana domiciliary and the federal court had no subject matter jurisdiction.
Issue: Does the federal court have diversity jurisdiction over this matter?
Analysis: Domicile requires two things: Presence + Intent. Although Ps were present in Louisiana for educational purposes, they had not formed the intent to make Louisiana their permanent residence. Wife’s citizenship never changed despite her various residences because she never had the intention to remain permanently in any of those residences. Because she never effectively changed her domicile, she remained a domiciliary of Mississippi. Therefore, the court had proper jurisdiction over her claim under 28 U.S.C. § 1332(a)(1). Husband retained his status as a French citizen. Therefore, the court had proper jurisdiction over his claim under 28 U.S.C. § 1332(a)(2).
Conclusion: The court affirmed the trial court’s ruling. Diversity jurisdiction (continued)
(13) Amount in controversy
In diversity cases, but not in federal question cases, plaintiff must satisfy an "amount in controversy" requirement. In all diversity cases, the amount in controversy must exceed $75,000.
This monetary limitation is intended to ensure that only substantial cases will be brought in federal court. The amount is computed as of the date of commencement of the action. Subsequent events do not defeat jurisdiction.
The present amount in controversy is $75,000, exclusive of interest and costs. Jurisdictional amount is ordinarily computed from the plaintiff’s viewpoint without regard to possible defenses, and plaintiff’s good faith pleading controls unless the court concludes to “a legal certainty” that he cannot recover the pleaded amount.
(14) Legal certainty test
The party seeking to invoke federal diversity jurisdiction does not have to prove that the amount in controversy exceeds $75,000. All she has to show is that there is some possibility that that much is in question.
The plaintiff need not actually prove the amount in controversy. All that is required is a showing that there is some possibility that the amount in controversy exceeds $75,000. However, clearly frivolous prayers for relief will not be tolerated and will be excluded from the total amount in controversy. It should also be noted that a verdict for the plaintiff for less than $75,000 does not retroactively defeat diversity jurisdiction. As long as the claim was, at the time of the filing, potentially worth more than $75,000, the court has jurisdiction to hear the case.
To put it another way, the claim cannot be dismissed for failing to meet the $75,000 requirement unless it appears to a legal certainty that the claim is really for less than the jurisdictional amount.
Eventual recovery irrelevant - The fact that P eventually recovers far less than the jurisdictional amount does not by itself render the verdict subject to reversal and dismissal on appeal for lack of jurisdiction.
(15) Whose point of view followed
The courts are split as to which party’s point of view is to be considered in calculating the amount at stake. Most courts hold that the controversy must be worth $75,000 to the plaintiff in order to satisfy the jurisdictional amount.
People can differ as to the worth of a claim, and courts are no different. Most courts hold that it is from the plaintiff’s point of view that the amount in controversy is calculated.
The usual standard of proof is that it must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.
The sum claimed by the plaintiff controls if the claim is apparently made in good faith.
(16) Aggregation of claims
Individual claims that do not alone satisfy the jurisdictional amount may be aggregated in the following circumstances:
plaintiff asserts multiple claims against a single defendant, whether or not they are transactionally related.
plaintiff joins several defendants to the same claim pursuant to FRCP 20 if the several defendants have a common undivided interest or title in the claim.
several plaintiffs join in the same claim against one or more defendants pursuant to FRCP 20 when the several plaintiffs have a common undivided interest or title in the claim. Diversity jurisdiction (continued)
(16) Aggregation of claims (continued)
(a) Aggregation by single plaintiff: If a single plaintiff has a claim in excess of $75,000, he may add to it any other claim of his against the same defendant, even though these other claims are for less than the jurisdictional amount. This is done by the doctrine of supplemental jurisdiction.
No claim exceeds $75,000 - Even if a plaintiff does not have any single claim worth more than $75,000, he may add together all of his claims against a single defendant. So long as these claims against a single defendant total more than $75,000, the amount in controversy requirement is satisfied.
Additional defendants - But a plaintiff who has aggregated his claim against a particular defendant, usually may not join claims against other defendants for less than the jurisdictional amount.
Example: P has two claims, each for $40,000, against D1. P will be deemed to meet the amount in controversy requirement as to these claims, because they aggregate more than $75,000. But if P tries to bring D2 into the lawsuit, and has a single claim worth $40,000 against D2, most courts will not allow this claim, because P’s total claims against D2 do not exceed $75,000, and the doctrine of supplemental jurisdiction does not apply.
(b) Aggregation by multiple plaintiffs: It depends on different situations.
At least one plaintiff meets amount - If one plaintiff meets the jurisdictional amount, it’s not completely clear whether the other plaintiffs may join their related claims against that same defendant. The plaintiffs may probably use the doctrine of "supplemental jurisdiction" so as to enable the low-amount plaintiffs to join their claims together with the high-amount plaintiff.
No single claim meets the amount - If no single plaintiff has a claim or claims meeting the jurisdictional amount, aggregation by multiple plaintiffs is not allowed. (Exception: Where two or more plaintiff unite to enforce a single title or right in which they have a common and undivided interest, aggregation is allowed.)
Special restrictions for class actions - In class actions, until recently there has been an especially stringent, and clear, rule: every member of the class had to satisfy the jurisdictional amount. This meant that class actions in diversity cases were rarely possible. Some courts, however, have recently ruled that as long as the named class representatives each have a claim in excess of $75,000, the supplemental jurisdiction doctrine applies, so that the unnamed members need not meet the jurisdictional amount.
(c) Counterclaim: If the plaintiff sues in federal court for less than the jurisdictional amount, and the defendant counter-claims for an amount which, either by itself or added to the plaintiff’s claim, exceeds the jurisdictional amount, aggregation is not permitted.
Suit initially brought in federal court - If P sues in federal court for less than the jurisdictional amount, and D counterclaims for an amount which (either by itself or added to P’s claim) exceeds the jurisdictional amount, probably the amount in controversy requirement is not met.
Removal by defendant - The plaintiff may never remove, even if D counterclaims against him for more than $75,000. (The removal statute simply does not apply to plaintiffs, apart from amount-in-controversy problems.) If the defendant counterclaims for more than $75,000, but plaintiff’s original claim was for less than $75,000, the result depends on the type of counterclaim. If D’s counterclaim was permissive (under state law), all courts agree that D may not remove. If D’s claim was compulsory under state law, courts are split about whether D may remove. Federal question jurisdiction
The Constitution gives the federal courts authority to hear "federal question" cases.
A federal question case contains at least an issue directly involving the U.S. Constitution, federal statutes, or treaties between the United States and a foreign country.
Application of these kinds of law to particular cases or interpretation of the meanings of these laws is a power within the authority of the federal courts. The authority to hear lawsuits that turn on a point of federal law is called federal question jurisdiction.
Unlike federal jurisdiction based upon diversity of citizenship, federal question jurisdiction is not dependent on the parties meeting a prescribed amount in controversy.
The federal question jurisdiction also originates from the U.S. Constitution. The Article 3, section 2 of the Constitution provides that federal judicial power shall extend to cases in law and equity arising under the Constitution, the laws of the United States, and treaties.
However, Congress did not grant original federal question jurisdiction to the lower federal courts until 1875, when it passed the predecessor to 28 U.S.C. 1331, which used language very similar to that in the Con law:
U.S. district courts "shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States."
(3) Exclusive vs. General
Congress has extended the federal trial courts’ jurisdiction to other matters, including cases involving:
admiralty, 28 U.S.C. § 1333;
federal bankruptcy cases, 28 U.S.C. § 1334;
federal commerce and antitrust, 28 U.S.C. § 1337;
federal patents, copyrights and trademarks, 28 U.S.C. § 1338;
where the United States is a plaintiff, 28 U.S.C. § 1345.
Keep in mind that this is not an exhaustive list. It is essential to read the text of each statute and any cases that analyze the statute to determine whether the federal trial courts have jurisdiction over the type of claim. In some cases (such as bankruptcy and maritime cases) the federal courts will have exclusive jurisdiction, which means that only the federal trial courts may hear such claims, not the state courts.
Example: Andy brings a cause of action in admiralty law against Mark in a state trial court in Maine. Mark moves to dismiss the case on the ground that the state court has no subject matter jurisdiction over the case. Because, according to 28 U.S.C. § 1333, federal district courts “have original jurisdiction, exclusive of the courts of the States, of . . . [a]ny civil case of admiralty or maritime jurisdiction,” the case will be dismissed for lack of subject matter jurisdiction.
On the other hand, the general federal question jurisdiction means federal courts shall have jurisdiction over those cases in which a right or immunity created by federal law must be a basic element of the plaintiff’s cause of action, not merely a collateral issue or introduced by way of defense. As a result, the chief problem in invoking this general federal question jurisdiction is in determining how to apply the “arising under” requirement in the statute. Federal question jurisdiction (continued)
(4) Federal law creates claim
There is no precise definition of a case "arising under" the Constitution or laws of the United States. But in the vast majority of cases, the reason there is a federal question is that federal law is the source of the plaintiff’s claim.
There is generally no problem when federal law creates the claim sued upon. As Justice Holmes put it, “a suit arises under the law that creates the cause of action.” Federal question jurisdiction will definitely exists, when federal law is the source of the cause of action. In other words, if the plaintiff’s cause of action derives from federal law, the case necessarily is one falling within the federal question jurisdiction.
Examples: A claim of copyright infringement, trademark infringement or patent infringement raises a federal question, because in each of these situations, a federal statute – the federal copyright statute, trademark statute or patent statute – is the source of the right the plaintiff is asserting.
(5) Nonfederal claim that turns on construction of federal law
This area presents the harder problems of application of the federal question statute. The Supreme Court has confirmed that federal question jurisdiction can be proper “where the vindication of a right under state law necessarily turned on some construction of federal law.
In order to establish federal question jurisdiction, a “right or immunity created by the Constitution or the law of the United States must be an element, and an essential one, of the plaintiff’s cause of action”. Even where a cause of action arises under state law, a federal court may have jurisdiction if it appears that the right to relief rests on the construction or application of a federal law. However, the mere presence of a federal issue in a state-created cause of action does not automatically confer federal question jurisdiction. Its availability depends in part on “an evaluation of the nature of the federal interest at stake”: whether it is sufficiently important to require a federal trial forum.
Example: A shareholder sued to enjoin a corporation in which he held stock from purchasing bonds issued by federal land banks. The shareholder asserted that under state law the corporation was forbidden to invest in bonds that were not legally issued. The only issue in the case was whether the bonds were issued validly under federal law, and the Supreme Court held that there was federal question jurisdiction.
However, If Congress in passing a federal statute decides that there should not be a private right of action for violation of that statute, a state-created cause of action that alleges a violation of the federal statute as an element of the state-law claim will never be construed to arise under federal laws.
It is not enough that P is asserting a state-created claim which requires interpretation of federal law. Where federal law is an element of a state law claim, it suffices to support federal question jurisdiction only when it is important to the outcome of the case.
Example: P brings a state-court product liability suit against D for injuries sustained by taking a drug made by D. P claims that D violated the federal FDA statute by mislabeling the drug, and that this mislabeling automatically constitutes common-law negligence. D wants to remove to federal court, so it claims that the case is within federal question jurisdiction, because its disposition requires interpretation of a federal statute. Held, no federal question is raised, because P’s claim did not "arise under" federal law.
(6) Claim based on the merits
If P’s claim clearly "arises" under federal law, it qualifies for federal question jurisdiction even if the claim is invalid on the merits.
Here, the federal court must dismiss for failure to state a claim upon which relief may be granted (FRCP 12(b)(6)), not for lack of subject matter jurisdiction. Federal question jurisdiction (continued)
(7) Well-pleaded complaint rule
The federal question must be integral to P’s cause of action, as revealed by P’s complaint. It does not suffice for federal question jurisdiction that P anticipates a defense based on a federal statute, or even that D’s answer does in fact raise a federal question. Thus the federal question must be part of a "well pleaded complaint."
It is important to note that subject matter jurisdiction is achieved based on the allegations contained in the complaint. Even if the defendant raises a question of federal law, for example, in its answer, if such a question is not raised in the complaint, the court does not gain subject matter jurisdiction on the basis of the defendant’s answer. It is the plaintiff (or counterclaimant, as the case may be) who has the burden of alleging facts in the complaint that will establish the court’s subject matter jurisdiction.
The rationale of this rule is to permit reliable early determinations of whether the federal court has jurisdiction, so this issue is not left to turn on later developments.
(8) Louisville & Nashville Railroad v. Mottley
Facts: P claims that D Railroad has breached its agreement to give P free railroad passes. A recently-passed federal statute prohibits the giving of such passes. In P’s complaint, he anticipates the railroad’s federal statutory defense, claiming that the statute violates the Fifth Amendment.
Issue: Is a plaintiff’s allegation that a defense to his complaint will raise an issue of federal or constitutional law adequate to give a federal court jurisdiction over the suit?
Analysis: Since P’s claim was merely a breach of contract claim, and the federal statute was not essential to that claim, there was no federal question – the fact that federal law was an integral part of D’s anticipated defense is irrelevant.
Conclusion: The plaintiff’s federal question must appear in the allegations of the complaint, and anticipated defense, involving federal law are inadequate for federal question jurisdiction.
(9) Essential question
A plaintiff cannot invoke the original jurisdiction of the federal courts by importing a federal question into his complaint that is not essential to his case.
A federal claim or question is sufficient to vest the court with jurisdiction unless it clearly appears to be immaterial or made solely for the purpose of obtaining jurisdiction, or where the claim is wholly insubstantial and frivolous.
Where the court’s federal question jurisdiction is properly invoked, there is no minimum amount in controversy requirement. Supplemental jurisdiction
Supplemental jurisdiction is the authority of United States federal courts to hear additional claims substantially related to the original claim even though the court would lack the subject matter jurisdiction to hear the additional claims independently.
This is a way for federal courts to hear claims for which they would not ordinarily have jurisdiction. Supplemental jurisdiction only exists in the situation where a lawsuit consists of more than one claim, and the federal court has valid jurisdiction (either diversity jurisdiction or federal question jurisdiction) over at least one of the claims. In that situation, if the federal claim and the other claims arise out of a "common nucleus of operative fact," then the court may (but does not have to) exercise supplemental jurisdiction to hear the other claims as well.
Supplemental jurisdiction is the means through which one can bring into federal court claims over which a federal court would normally not have subject matter jurisdiction. Essentially, a claim over which the court does not have original subject matter jurisdiction is attached to a claim over which the court has original subject matter jurisdiction.
When a federal court possesses subject matter jurisdiction over a matter, it may exercise supplemental jurisdiction over one or more related claims that would not independently satisfy subject matter jurisdictional requirements.
Modern federal litigation typically involves more than just the basic two parties and more than one claim. These additional claims and parties frequently present subject matter jurisdictional problems. Under the doctrine of supplemental jurisdiction, the new parties and new claims may not have to independently satisfy subject matter jurisdiction – they can in effect be "tacked on" to the "core" controversy.
Supplemental jurisdiction is a way that one can bring state claims into federal court even though there is no diversity or federal question jurisdiction. What must exist, however, as the base upon which to build supplemental jurisdiction: a valid, independent claim over which the court has federal subject matter jurisdiction. This mechanism is called “supplemental jurisdiction,” by which additional claims and parties may be brought into a federal case without independently satisfying subject matter jurisdiction requirements, once there is a basic controversy as to which there is subject matter jurisdiction.
In order to cope with the situation of multi-parties or multi-claims in a federal case, Congress in 1990 enacted the supplemental jurisdiction statute 28 U.S.C. §1367.
By default, courts have supplemental jurisdiction over "all other claims that are so related . . . that they form part of the same case or controversy". The true test being that the new claim "arises from the same set of operative facts." This means a federal court hearing a federal claim can also hear substantially related state law claims, thereby encouraging efficiency by only having one trial at the federal level rather than one trial in federal court and another in state court. However, if the case is brought as a diversity action, there generally is no supplemental jurisdiction if such claims would destroy complete diversity. Courts are also free to decline to exercise supplemental jurisdiction in specified or exceptional circumstances.
This subsection indicates that the grant of supplemental jurisdiction is a broad one the federal district courts are given jurisdiction to add any claim and any party to an additional claim as long as that claim is so close to the original one as to be part of the same case or controversy as that term is used in Article 3 of the Constitution. Supplemental jurisdiction (continued)
(4) Federal practice
Supplemental jurisdiction, a legislative creation since 1990 [28 U.S.C. § 1367], supplants two related judicial doctrines – pendent and ancillary jurisdiction.
(a) Pendent jurisdiction refers to the courts’ extension of jurisdiction from a freestanding (usually federal question) claim to an otherwise jurisdictionally insufficient pendent (usually state law) claim by a plaintiff or plaintiffs.
Pendent jurisdiction is the authority of a United States federal court to hear a closely related state law claim against a party already facing a federal claim, described by the Supreme Court as "jurisdiction over nonfederal claims between parties litigating other matters properly before the court." Such jurisdiction is granted to encourage both "economy in litigation", and fairness by eliminating the need for a separate federal and state trial hearing essentially the same facts yet potentially reaching opposite conclusions.
Pendent jurisdiction allows a plaintiff who has a jurisdictionally sufficient federal question claim to join, in the original complaint, related claims that otherwise are jurisdictionally defective. Generally, it is invoked when a plaintiff brings a federal question claim against a nondiverse defendant and seeks to have a related state law claim against the same defendant adjudicated by the federal court as an incident to the federal claim. Pendent jurisdiction views matters from the plaintiff's perspective, i.e., may he join all his claims with the ones as to which the federal court has subject matter jurisdiction?
Pendent jurisdiction has been essentially codified by Congress along with ancillary jurisdiction in 28 U.S.C. § 1367, its supplemental jurisdiction statute. However, Subsection § 1367 (c)(3) expressly authorizes the district judge to dismiss a supplemental claim when the federal claims have dropped out of the case.
(b) Ancillary jurisdiction extended jurisdiction from the freestanding (often diversity) claim to an otherwise jurisdictionally insufficient claim by the defendant(s) or similarly situated parties such as intervenors as of right. E.g., in a diversity action, ancillary jurisdiction supported a compulsory counterclaim or cross-claim for less than the jurisdictional amount or impleader of a non-diverse party.
Ancillary jurisdiction is a form of supplemental jurisdiction that allows a United States federal court to hear non-federal claims sufficiently logically dependent on a federal "anchor claim" (i.e., a federal claim serving as the basis for supplemental jurisdiction), despite that such courts would otherwise lack jurisdiction over such claims. Ancillary jurisdiction differs from pendent jurisdiction in that pendent jurisdiction requires the federal and non-federal claims to arise from a "common nucleus of operative fact," not to be logically interdependent. Like pendent jurisdiction, a federal court can exercise ancillary jurisdiction if the anchor claim has original federal jurisdiction either through federal-question jurisdiction or diversity jurisdiction.
Ancillary jurisdiction allows a federal court to assert jurisdiction over claims that are sufficiently related or subordinated to an action properly within the court's subject matter jurisdiction. Usually, it is invoked to permit a federal court to adjudicate claims that technically are jurisdictionally defective because they involve non diverse parties or are less than the requisite jurisdictional amount. Ancillary jurisdiction views matters from the defendant's perspective, i.e., may he file a cross-claim against a codefendant? May he bring in a third party against whom he would have a right of indemnity?
Example: Moe, a citizen of California sues Curly, a citizen of New York in Federal District Court for $100,000 in damages arising from an auto accident. Curly wants to file a cross-claim (implead) against Larry, a citizen of California saying that if he (Curly) is liable then Larry is also liable and must indemnify Curly. Although Moe could not have named Larry in his original complaint without destroying diversity, there is ancillary jurisdiction over the claim against Larry and the federal court may hear the entire case.
Areas where ancillary jurisdiction can be asserted include counterclaims (Fed. R. Civ. P. 13), cross-claims (Fed. R. Civ. P. 13), impleader (Fed. R. Civ. P. 14), interpleader (Fed. R. Civ. P. 22) and interventions (Fed. R. Civ. P. 24). Ancillary jurisdiction has been replaced entirely by supplemental jurisdiction, per 28 U.S.C. § 1367(b), part of the U.S. supplemental jurisdiction statute. Supplemental jurisdiction (continued)
(5) New statute - 28 U.S.C. § 1367
Supplemental jurisdiction is governed by 28 U.S.C. § 1367, which was enacted in 1990. Because statutes usually trump earlier judicial decisions, decisions addressing supplemental jurisdiction released before 1990 should only be used cautiously, if used at all.
28 U.S.C. § 1367 provides in relevant part:
“(a) Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve joinder or intervention of additional parties.
(b) In any civil action of which the district courts have original jurisdiction founded solely on section 1332 of this title, the district courts shall not have supplemental jurisdiction under subsection (a) over claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure; or over claims by personal proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332.
(c) The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if
(1) the claim raises a novel or complex issue of State law,
(2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction,
(3) the district court has dismissed all claims over which it has original jurisdiction, or
(4) in exceptional circumstances there are other compelling reasons for declining jurisdiction."
(6) Analysis of § 1367
Under subsection (a), the additional claims to be attached through supplemental jurisdiction must “form part of the same case or controversy” as the count which properly invokes the court’s subject matter jurisdiction. In other words, there must be some sort of relationship between the count(s) over which the court has original subject matter jurisdiction and the count(s) over which the court will need supplemental jurisdiction.
Example: Adam, a citizen of Michigan, files a complaint against Mary, a citizen of Michigan, in federal court. The complaint consists of two counts: violation of Adam's patent and negligence. Adam's patent claim involves his allegation that Mary marketed and sold a product that Adam claims he holds a patent for. This claim is based on federal law and the court will have federal question jurisdiction to entertain that claim. Adam's negligence claim involves the injuries Adam sustained when he slipped on an icy path on Mary’s property. This count is based on state law. Even though the court has subject matter jurisdiction over the patent count (in fact, the court actually has exclusive jurisdiction over that count), the court will not have supplemental jurisdiction over the negligence claim because the two claims are completely unrelated.
Supplemental jurisdiction does not only apply to claims against original parties. Pursuant to 28 U.S.C. § 1367(a), “claims that involve the joinder or intervention of additional parties” are also included.
As provided in 28 U.S.C. § 1367(b), supplemental jurisdiction does not extend (where the original claim is based on diversity jurisdiction) to “claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure; or over claims by persons proposed to be joined as plaintiffs under Rule 19, or seeking to intervene as plaintiffs under Rule 24” when original diversity jurisdiction does not exist. Where the original claim is based in diversity jurisdiction, supplemental jurisdiction applies only to the following claims:
Compulsory counterclaims (counterclaims that must be filed in that particular action) made pursuant to FRCP 13(a)
Crossclaims made pursuant to FRCP 13(g)
Joinder of additional parties to compulsory counterclaims pursuant to FRCP 13(h)
Impleader, pursuant to FRCP 14, of third-party defendants, but only in certain circumstances. Supplemental jurisdiction does not apply to claims by the original plaintiff against a third-party defendant. It does, however, extend to claims by third-party defendants, and claims by and against third-party plaintiffs.
Pursuant to 28 U.S.C. § 1367(c), the district court has discretion to “decline to exercise supplemental jurisdiction over a claim under subsection (a) under some circumstances. Supplemental jurisdiction (continued)
(7) Federal question cases
Where the original claim comes within the court’s federal question jurisdiction, §1367 basically allows the court to hear any closely related state-law claims. Where the original claim comes within the court’s federal question jurisdiction, the Supreme Court articulated a three-part test to determine whether a federal court has the power to entertain pendent claims:
the federal claim must be sufficiently substantial to support federal question jurisdiction;
the federal and nonfederal claims must derive form a common nucleus of operative fact;
the federal and nonfederal claims must be such that the plaintiff would ordinary be expected to try them in one judicial proceeding.
(a) Pendent state claims with no new parties
Supplemental jurisdiction clearly applies when a related state claim involves the same parties as the federal question claim.
Example: P and D are both citizens of New York. Both sell orange juice nationally. P sues D in federal court for violation of the federal trademark statute, arguing that D’s brand name infringes a mark registered to P. P also asserts that D’s conduct violates a New York State "unfair competition" statute. There is clearly no independent federal subject matter jurisdiction for P’s state law unfair competition claim against D – there is no diversity, and there is no federal question. But by the doctrine of supplemental jurisdiction, since the federal claim satisfies subject-matter jurisdictional requirements, P can add the state law claim that is closely related to it.
(b) Additional parties to state-law claim
Section 1367 also allows additional parties to the state-law claim to be brought into the case.
Example: P’s husband and children are killed when their small plane hits power lines near an airfield. P sues D1 (the U.S.) in federal court, under the Federal Tort Claims Act, for failing to provide adequate runway lights. Then, P amends her complaint to include state-law tort claims against D2 and D3 (a city and a private company) who maintain the power lines. There is no diversity of citizenship between P and D2 and D3, and no federal-question claim against them. But because P’s state-law claim against D2 and D3 arises from the same chain of events as P’s federal claim against D1, P may bring D2 and D3 into the suit under the supplemental jurisdiction concept, and the last sentence of §1367(a).
Subsection 1367(a) overrules Finley by expressly providing that “supplemental jurisdiction shall include claims that involve joinder or intervention of parties,” thereby authorizing jurisdiction over what were formerly called pendent party claims. Most courts have found that claims which satisfy the same transaction or occurrence standard for joinder under FRCP 13(a) (compulsory counterclaim), 13(g) (crossclaim), or 20 (joinder of parties) also qualify for supplemental jurisdiction.
(8) Diversity cases
There is also supplemental jurisdiction in many cases where the "core" claim – the claim as to which there is independent federal subject matter jurisdiction – is based solely on diversity. But there are some important exclusions to the parties’ right to add additional claims and parties to a diversity claim.
Where the core claim the claim as to which there is independent federal subject matter jurisdiction is based solely on diversity, 1367’s grant of supplemental jurisdiction is a bit less generous. 1367 generally allows claims that would have been ancillary to fall within the court’s supplemental jurisdiction in diversity-only cases, and thus eliminates the requirement of diversity and amount-in-controversy as to the supplemental claim. But 1367(b) sets forth some explicit and important limits on supplemental jurisdiction.
Subsection 1367(b) provides that in diversity-only cases the courts do not have supplemental jurisdiction over claims by plaintiffs against persons made parties by FRCP 14 (impleader), 19 (compulsory joinder of parties), 20 (permissive joinder of parties) or 24 (intervention), when exercising such jurisdiction would be inconsistent with the jurisdictional requirements of the diversity statute. Thus, a plaintiff may not assert claims against parties in a diversity action if supplemental jurisdiction would negate complete diversity. Supplemental jurisdiction (continued)
(8) Diversity cases (continued)
If you look at the situations where supplemental jurisdiction is allowed in diversity-only cases, and those where it is not allowed, you will see that basically, additional claims asserted by defendants fall within the court’s supplemental jurisdiction, but additional claims (or the addition of new parties) by plaintiffs are generally not included. So expect supplemental jurisdiction only in cases where the claimant who is trying to benefit from it is in a "defensive posture."
Here are the principal diversity-only situations in which supplemental jurisdiction applies:
(a) Rule 13(a) compulsory counterclaims.
(b) Rule 13(h) joinder of additional parties to compulsory counterclaims.
Example: P, from New York, brings a diversity suit against D, from New Jersey. The claim is for $80,000. D counterclaims that in the same episode, D was injured not only by P but also by Y; D’s injuries total $1,000. Y is from New Jersey. D may bring Y in as a Rule 13(h) additional defendant to D’s compulsory counterclaim against P, even though D and Y are both from New Jersey, and even though D’s claim does not total $75,000 – supplemental jurisdiction applies, and obviates the need for D-Y diversity or for D to meet the amount in controversy requirement.
(c) Rule 13(g) cross-claims, i.e., claims by one defendant against another.
Example: P, from Ohio, brings a diversity suit against D1 and D2, both from Kentucky. D1 brings a Rule 13(g) cross-claim against D2 – since it is a cross-claim, it necessarily relates to the same subject matter as P’s claim. Even though there is no diversity as between D1 and D2, the cross-claim may be heard by the federal court.
(d) Rule 14 impleader of third-party defendants, for claims by and against third-party plaintiffs, and claims by third-party defendants, but not claims by the original plaintiff against third-party defendants.
Example: P, from California, sues D, a retailer from Arizona, claiming that a product D sold P was defective and injured P. The suit is based solely on diversity. D brings a Rule 14 impleader claim against X, the manufacturer of the item, claiming that if D owes P, X must indemnify D. X is a citizen of Arizona. Because D’s suit against X falls within the court’s supplemental jurisdiction, the lack of diversity as between D and X makes no difference. Supplemental jurisdiction would also cover any claim by X against P. But any claim by P against X would not be within the court’s supplemental jurisdiction, so P and X must be diverse and the claim must meet the amount in controversy requirement.
Where the core claim is based on diversity, some important types of claims do not get the benefit of supplemental jurisdiction:
(a) Claims against third-party defendants: Claims made by a plaintiff against a third-party defendant, pursuant to Rule 14(a), are excluded.
Example: P sues D, and D brings a third-party claim against X, asserting that if D is liable to P, X is liable to D. P and X are citizens of the same state. P does not get supplemental jurisdiction for her claim against X, so the P-vs.-X claim must be dismissed.
(b) Compulsory joinder: When a person is joined under Rule 19(a) as a person to be "joined if feasible" ("compulsory joinder"), neither a claim against such a person, nor a claim by that person, comes within the supplemental jurisdiction in a diversity-only case.
(c) Rule 20 joinder: When a plaintiff sues multiple defendants in the same action on common law and facts (Rule 20 "permissive joinder"), supplemental jurisdiction does not apply.
Example: P is hit by D1’s car, then negligently ministered to by D2. P is from New York, D1 is from Connecticut, and D2 is from New Jersey. P’s claim against D2 is for $20,000. The federal court cannot hear the P-D2 claim, because it does not meet the amount in controversy and does not fall within supplemental jurisdiction.
(d) Intervention: Claims by prospective plaintiffs who try to intervene under Rule 24 do not get the benefit of supplemental jurisdiction. This is true whether the intervention is permissive or of right.
Example: P1 sues D in diversity. P2, on her own motion, moves for permission to intervene under Rule 24(b), because her claim against D has a question of law or fact in common with P1’s claim. P1 is a citizen of Indiana, P2 of Illinois, and D of Illinois. Because there is no supplemental jurisdiction over intervention, the fact that P2 and D are citizens of the same state means that the court may not hear P2’s claim. The same result would occur even if P2’s claim was so closely related to the main action that P2 would otherwise be entitled to "intervention of right" under Rule 24(a). Supplemental jurisdiction (continued)
(9) 28 U.S.C. § 1367(c)
Merely because a claim is within the court’s supplemental jurisdiction, this does not mean that the court must hear that claim. Subsection 1367(c) gives courts discretion to refuse jurisdiction when it believes, in the interests of judicial economy, convenience, fairness, and comity, that the supplemental claims would more appropriately be decided by state courts.
Section 1367(c) gives four reasons for which a court may decline to exercise supplemental jurisdiction that exists. Most importantly, the court may abstain if it has already dismissed all claims over which it has original jurisdiction. This discretion is especially likely to be used where the case is in its early stages.
unless the court expressly finds that the supplemental claims falls into one of the four classes mentioned in 1367(c), probably it must keep the claim, even though it thinks that judicial economy would be better served by dismissing it. In other words, a court can decline to assert supplemental jurisdiction over a pendent or ancillary claim only if one of the four categories specifically enumerated in section 1367(c) applies.
Example: P sues D1 (the U.S.) under a federal statute, then adds state-law claims against D2 and D3, as to which there is neither diversity nor federal question jurisdiction. Soon after the pleadings are filed, the court dismisses P’s claim against D1 under FRCP 12(b)(6). Probably the court will then exercise its discretion to decline to hear the supplemental claims against D2 and D3.
(10) 100-mile Bulge Rule
When supplemental jurisdiction is asserted over third-party defendants and indispensable parties, service may be effectuated by the 100-mile bulge rule, if such parties cannot be served within the state in which the federal court sits. The rule allows service on such added parties anywhere within 100 miles of the federal courthouse in which the action is pending. [FRCP 4(K)(1)(B)]
(11) Personal jurisdiction & venue
The application of the supplemental jurisdiction doctrine does not eliminate the requirement of jurisdiction over the parties, nor does it eliminate the requirement of service of process. It speaks solely to the question of subject matter jurisdiction.
But often in the supplemental jurisdiction situation, service in the 100-mile bulge area will be available.
Where supplemental jurisdiction applies, probably venue requirements do not have to be satisfied with respect to the new party. But usually, venue will not be a problem anyway in these kinds of situations.
(12) Statute of limitations
It is important to note that under 28 U.S.C. § 1367(d), if a claim is dismissed for lack of supplemental jurisdiction, the statute of limitations is tolled for 30 days, leaving the claimant the option to re-file in state court. The claimant also has the option to voluntarily dismiss other claims and re-file them in state court.
(13) Jin v. Ministry of State Security
Facts: Plaintiffs, a group of 51 visiting Chinese Nationals, U.S. residents, and U.S. citizens, alleged violations of their rights under the United States Constitution and Federal and State law by persons associated with the People’s Republic of China. The Plaintiffs practice Falun Gong, a self-improvement discipline. Plaintiffs allege that in an effort to eradicate Falun Gong, the government of the People’s Republic of China published a series of negative articles about the practice in state-run newspapers. Over the next few years, the government issued a ban on Falun Gong literature, and began a media campaign describing it as a cult whose members advocated criminal activity. Ultimately, Plaintiffs filed a defamation suit against the Defendant Ministry of State Security of China, following a news event put on by the Chinese government in which Falun Gong members lit themselves on fire. Plaintiffs alleged supplemental jurisdiction over the Ministry as the defamation suit arose under state law. Defendants moved to dismiss the defamation claim under Federal Rule of Civil Procedure 12b (1) and (6).
Issue: When is supplemental jurisdiction appropriate?
Analysis: The Supreme Court of the United States held that although the exercise of supplemental jurisdiction was warranted, the claim was dismissed because it was time barred by the statute of limitations. When a Federal court has an independent basis for exercising Federal jurisdiction, it may in certain circumstances, also exercise supplemental jurisdiction over related claims under state law. To determine when assertion of supplemental jurisdiction is appropriate, district court must determine whether state and Federal claims derive from common nucleus of operative fact and, if so, whether judicial economy, convenience and fairness to litigants weigh in favor of doing so Ultimately the Supreme Court held that the exercise of supplemental jurisdiction over the Falun Gong members’ state law defamation claims against the Chinese television corporation was warranted even though the practitioners were domiciled in different states, because the defamation claims formed a key part of the alleged overarching campaign to abridge and nullify the practitioners’ rights and liberties.
Conclusion: To determine when assertion of supplemental jurisdiction is appropriate, District Court must determine whether state and Federal claims derive from common nucleus of operative fact and, if so, whether judicial economy, convenience and fairness to litigants weigh in favor of doing so. Personal jurisdiction
Personal jurisdiction is the power of a court over the parties in the case, refering to whether the court has jurisdiction to decide a case between the particular parties, or concerning the property, before it.
Personal jurisdiction is jurisdiction over the persons or entities involved in the lawsuit. One way to think about personal jurisdiction is to ask the following question: “What right does a court have to determine the rights of the parties involved in the action?” In other words, the question of whether a court has personal jurisdiction over a person involves the question as to whether it would be fair for the court to issue a judgment against that person.
Personal jurisdiction is defined as the power of a court to hear and determine a lawsuit involving a defendant by virtue of the defendant's having some contact with the place where the court is located, which gives a court the authority to make decisions binding on the persons involved in a civil case. Every state has personal jurisdiction over persons within its territory. Conversely, no state can exercise personal jurisdiction and authority over persons outside its territory unless the persons have manifested some contact with the state.
The concept of personal jurisdiction has its origin in the idea that the power of the King vests in his Sceptre. The King could not exercise power over persons or property located outside of his kingdom. Slowly this was incorporated into law, but problems arose in cases where property owners could not be sued because they had left the kingdom or had died and therefore were not present within the kingdom at the time they were being sued. To solve this problem, the courts created another type of jurisdiction, called quasi in rem, that is, jurisdiction over the land itself, even if the person who owned the land was not in the country. However, this jurisdiction was limited to the settlement of debts owed by the owner of the land. In the United States, the exercise of personal jurisdiction by a court must both comply with Constitutional limitations, and be authorized by a State statute.
Nowadays, personal jurisdiction relates to the question of whether someone from another state, Alaska, New York, or Nevada can be forced to come to the state where the lawsuit was filed (the "forum state") e.g. California, to defend against the lawsuit. The existence of personal jurisdiction depends upon a sufficient connection between the defendant and the forum state to make it fair to require defense of the action in the forum.
(2) Interaction with subject matter jurisdiction
Before a court can decide a case, it must have jurisdiction over the parties as well as over the subject matter.
In order for a court to have jurisdiction, it must have both subject matter jurisdiction and personal jurisdiction. In other words, it must have jurisdiction not only to decide the kind of case before it, but also jurisdiction to decide a case between the particular parties, or concerning the property, before it. If the court does not have jurisdiction over the parties or things, the court must dismiss the case.
Personal jurisdiction is the court’s authority to require someone to come into its authority. Subject matter jurisdiction is the court’s authority to hear a specific kind of claim. Regardless of what type of claim it is, whether it is a claim brought by a plaintiff, a counterclaim brought by a defendant, or a cross claim brought by a co-defendant, the court must have jurisdiction over both the parties or things and over the subject matter of the claim in order to properly exercise its authority over the case.
Personal jurisdiction refers to a court's jurisdiction over the parties to a law suit, as opposed to subject matter jurisdiction, which is jurisdiction over the law and facts involved in the suit. If a court does not have personal jurisdiction over a party, its rulings or decrees cannot be enforced upon that party, except by comity, that is, to the extent the sovereign that does have jurisdiction over the party allows the court to enforce them upon that party.
The restrictions on personal jurisdiction originate from the Constitution, which means the exercise of jurisdiction by a state or federal court must meet the requirement of the due process clause of the 14th Amendment, as the clause is interpreted by the U.S. Supreme Court from time to time. Generally speaking, the 14th Amendment provides two requirements on the application of personal jurisdiction:
(a) The court must have power to act, either upon given property, or on a given person so as to subject him to personal liability. This is the requirement of substantive due process.
Substantive due process can be explained as a limitation on the power of the court to act and exercise power over property or a person or entity. The "substantive due process" inquiry involves an examination of the contacts between the state in which the court has jurisdiction and the defendant or property.
The essence of substantive due process is that it must not be fundamentally unfair for the court to exercise personal jurisdiction over the defendant. It must be fair that the defendant be hailed into the jurisdiction in which the court sits and will determine the defendant’s rights and responsibilities.
Example: Bob lives in Washington state. He has never crossed the state borders, has never done any business outside of Washington state, has never conversed about business on the telephone with anyone outside of Washington state, and he has never purchased anything manufactured outside of Washington state. Bob is involved in a motor vehicle collision on a local road in Washington state. The other person in the collision has filed a summons and complaint against Bob with a trial court in Vermont. Bob has never had any contact with Vermont, has never been in Vermont, and certainly does not want to have to travel three thousand miles to defend himself in a Vermont court. This is an extreme example of a situation in which the Vermont court would not have personal jurisdiction over Bob. It would be fundamentally unfair for Bob’s rights and liabilities to be determined by a court in a jurisdiction in which he has had no contact and to which he does not consent to jurisdiction.
(b) The court must have given the defendant adequate notice of the action against him, and an opportunity to be heard. This is a requirement of procedural due process.
Procedural due process requires that the defendant receive adequate notice of the pending action and an opportunity to be heard.
Both substantive due process and procedural due process are imposed by the Due Process Clause of the Fourteenth Amendment to the United States Constitution. This dual requirement indicates us that when ascertaining whether or not to have right personal jurisdiction over a particular case, a court (state or federal) must check each of two aspects.
First of all, the court must make sure that it has the requisite power to issue a binding decision which can force the defendant to do or not do something or take away some of his property;
Second, the court must try its best to assure the defendant is given the full opportunity to defend himself during the process of trial. Personal jurisdiction (continued)
(4) Territorial jurisdiction
Originally, jurisdiction over parties in the United States was determined by strict interpretation of the geographic boundaries of each state's sovereign power. The authority of the court to issue orders to persons present within the territory comes from the sovereign power of the government. The court's authority allows it to reach all residents of a state, including those who are outside the state for a short period and out-of-state residents who enter the state even briefly. Three types of jurisdiction developed, collectively termed territorial jurisdiction because of their reliance upon territorial control: in personam jurisdiction, in rem jurisdiction, and quasi in rem jurisdiction. Some sources refer to all three types of territorial jurisdiction as personal jurisdiction, since most actions against property (in rem jurisdiction) bear, in the end, upon the rights and obligations of persons. Others continue to recognize the traditional distinction between personal jurisdiction and jurisdiction over property.
There are three different kinds of jurisdiction which a court may exercise over the parties – one of these three must be present for the case to go forward:
(a) In personam jurisdiction, or jurisdiction over the defendant’s "person," gives the court power to issue a judgment against her personally. Thus all of the person’s assets may be seized to satisfy the judgment, and the judgment can be sued upon in other states as well.
In personam jurisdiction referred to jurisdiction over a particular person (or entity, such as a company). In personam jurisdiction, if held by a state court, permitted that court to rule upon any case over which it otherwise held jurisdiction. Under territorial jurisdiction, pure in personam jurisdiction could only be established by serving notice upon the individual while that individual was within the territory of the state.
(b) In rem jurisdiction, or jurisdiction over a thing, gives the court power to adjudicate a claim made about a piece of property or about a status.
In rem jurisdiction referred to jurisdiction over a particular piece of property, most commonly real estate or land. Certain cases, notably government suits for unpaid property taxes, proceed not against an individual but against their property directly. Under territorial jurisdiction, in rem jurisdiction could be exercised by the courts of a state by seizing the property in question. Since an actual tract of land could not literally be brought into a courtroom as a person could, this was effected by giving notice upon the real property itself. In rem jurisdiction was thus supported by the assumption that the owner of that property, having a concrete economic interest in the property, had a duty to look after the affairs of their property, and would be notified of the pending case by such seizure. In rem jurisdiction was limited to deciding issues regarding the specific property in question.
Examples: An action to quiet title to real estate, or an action to pronounce a marriage dissolved.
(c) In quasi in rem jurisdiction, the action is begun by seizing property owned by (attachment), or a debt owed to (garnishment) the defendant, within the forum state. The thing seized is a pretext for the court to decide the case without having jurisdiction over the defendant’s person. Any judgment affects only the property seized, and the judgment cannot be sued upon in any other court.
Quasi in rem jurisdiction involved the seizure of property held by the individual against whom the suit was brought, and attachment of that property to the case in question. This form of territorial jurisdiction developed from the rationale of in rem jurisdiction, namely that seizure of the property was reasonably calculated to inform an individual of the proceedings against them.
Once a valid judgment was obtained against an individual, however, the plaintiff could pursue recovery against the assets of the defendant regardless of their location, as other states were obligated by the Full Faith and Credit Clause of the Constitution to recognize such a judgment (i.e. had ceded their power to refuse comity to fellow states of the Union). Violations by a rogue state could be checked via collateral attack: when a plaintiff sought recovery against a defendant's assets in another state, that state could refuse judgment on the grounds that the original judgment was invalid. Personal jurisdiction (continued)
(5) Constitutional requirement
Before a court can exercise power over a party, the constitution requires that the party have certain minimum contacts with the forum in which the court sits.
Regardless of which type of jurisdiction over the parties is involved, a court may not exercise it unless the defendant has some kinds of requisite connections with the state in which the court sits.
When the proposed defendant resides in and is present in the state in which the court is sitting, the question has posed few problems. The power is assumed to exist because each state has sovereign control over all things and persons within its borders. In those cases the question becomes whether jurisdiction has been obtained in compliance with proper procedural requirements and with adequate notification. But there is no doubt that a state has power to govern any person or corporation present and any property located in its territory.
But, the real difficult problem is how a court can extend its personal jurisdiction over persons out of the state in which it sits. Although the federal Constitution contains a Full Faith & Credit Clause, which means a state must treat the decision made by another state’s court as it made by its own court, a decision without proper personal jurisdiction will definitely be challenged by the losing party and not be recognized by other states. Put it more straightforward, even if a court can try a case and render a judgment over an out of state defendant upon whom no required personal jurisdiction exists, the judgment can not take into force anywhere else outside the territory of the state in which the court sits, because all other states’ courts will regard it as a violation of Constitution and deny to enforce it.
As a result, a court must check whether it has right personal jurisdiction over defendant before deciding to accept a case or not. But, what requirements must a court meet to obtain the proper right to govern an out of state defendant? The 14th Amendment is a restriction instead of authorization clause, which only tells us not to exercise personal jurisdiction in improper way and does not tell us when or how we can exercise personal jurisdiction properly. So, we must rely on the federal Supreme Court’s interpretation on the 14th Amendment from time to time.
(6) In personam jurisdiction - Traditional bases: Pennoyer v. Neff
Facts: Mitchell brought suit against Neff to recover unpaid legal fees. Mitchell published notice of the lawsuit in an Oregon newspaper but did not serve Neff personally. Neff failed to appear and a default judgment was entered against him. To satisfy the judgment Mitchell seized land owned by Neff so that it could be sold at a Sheriff’s auction. When the auction was held Mitchell purchased it and later assigned it to Pennoyer. Neff sued Pennoyer in federal district court in Oregon to recover possession of the property, claiming that the original judgment against him was invalid for lack of personal jurisdiction over both him and the land. The court found that the judgment in the lawsuit between Mitchell and Pennoyer was invalid and that Neff still owned the land. Pennoyer lost on appeal and the Supreme Court granted certiorari.
Issue: Can a state court exercise personal jurisdiction over a non-resident who has not been personally served while within the state and whose property within the state was not attached before the onset of litigation?
Analysis: Here the Supreme Court of the United States is distinguishing between suits in personam, and in rem. An in personam suit is a suit against a person, whose purpose is to determine the personal rights and obligations of the defendant. An in rem action, meanwhile, is an action where jurisdiction pertains to property. Thus the court reasoned that constructive service is sufficient to inform parties of action taken against any properties owned by them within the forum state, because property is always in possession of the owner, and seizure of the property will inform the owner of legal action taken against him. As a result, a court may enter a judgment against a non-resident only if the party 1) is personally served with process while within the state, or 2) has property within the state, and that property is attached before litigation begins. In the instant case, the Oregon court did not have personal jurisdiction over Neff because he was not served in Oregon. The court’s judgment would have been valid if Mitchell had attached Neff’s land at the beginning of the suit. Mitchell could not have done this because Neff did not own the land at the time Mitchell initiated the suit. The default judgment was declared invalid. Therefore, the sheriff had no power to auction the real estate and title never passed to Mitchell. Neff was the legal owner.
Rule: No state can exercise direct jurisdiction and authority over persons or property outside its territory. Every state possesses exclusive jurisdiction and sovereignty over persons and property within its territory; therefore, the courts of that state may enter a binding judgment against a non-resident only if he is personally served with process while within the state, or, if he has property within the state, if that property is attached before litigation begins.
Two exceptions: The first exception is status, which means even absent service within the state, a state court could determine the status of one of its citizens toward a non-resident. This exception bore principally on divorce cases. The second exception is consent, which means non-residents who had no property in the sate were nevertheless subject to its jurisdiction if they had consented to its exercise. Personal jurisdiction (continued)
(7) In personam jurisdiction - Presence within the jurisdiction
Presence, i.e., being served with a copy of the summons and complaint while physically present in the forum jurisdiction, can definitely establish personal jurisdiction. The physical presence of a defendant in the forum is a sufficient basis for acquiring jurisdiction over him, no matter how brief his stay might be.
A court gains personal jurisdiction over a person who is served with process within the court’s jurisdiction, regardless of whether the person lives within the jurisdiction or is just visiting.
The authority of every tribunal is necessarily restricted by the territorial limits of the State in which it is established. Process from the tribunals of one State cannot run into another State, and summon parties there domiciled to leave its territory and respond to proceedings against them. Thus, presence within the state was originally the chief, if not sole, basis for personal jurisdiction.
Jurisdiction may be exercised over an individual by virtue of his presence within the forum state. That is, even if the individual is an out-of-state resident who comes into the forum state only briefly, personal jurisdiction over him may be gotten as long as service was made on him while he was in the forum state.
Example: John and Cathy were married in Delaware and moved to New York a year later. Eleven years after being married, John and Cathy decided to separate. Cathy moved to Alabama and then filed for divorce in Alabama state court. A few weeks later, John visited Alabama on business. When he arrived at his wife’s house after spending some time with his children, John was served with an Alabama court summons and a copy of the divorce petition. John then returned home to New York. Despite his objections, the Alabama court obtained jurisdiction over John simply because he was served with process while in Alabama.
Transient jurisdiction is based on service within the forum of a nonresident defendant passing through the state, and has been upheld by the Supreme Court in Burnham v. Superior Court, 495 U.S. 604 (1990).
Today, presence continues to be a constitutionally valid method of getting jurisdiction, even where the individual is an out-of-state resident who comes into the forum state only briefly as long as service is made on the person while he is in the forum state, the entire case probably may be tried in the forum state, even though the defendant then leaves the forum state and has no other contacts with it.
The rule is that as long as the defendant voluntarily travels to the forum state, and is served while present there, that state will have personal jurisdiction over him in virtually all instances, even though the defendant may have no other contacts with the state at all apart from the visit on which he was served. An extreme example is even service on an airplane flying over the forum state has been held valid, on the theory that persons in the plane were present in that state.
But, please take care that if the defendant was involuntarily in the forum state at the time of service, for example because he was forcibly brought there, this rationale would presumably not apply, so jurisdiction would probably be a violation of due process.
(8) In personam jurisdiction - Domicile & Residence
A defendant is subject to the personal jurisdiction of his/her/its home state. “Home state” may be defined:
For individuals by residence, citizenship and domicile. In Milliken v. Meyer, 311 U.S 457 (1940), the Supreme Court upheld the validity of personal jurisdiction based on domicile even though the defendant was absent from the state at the time.
For corporations by the state of incorporation or where the corporation conducts its principal operations.
Jurisdiction may be exercised over a person who is domiciled within the forum state, even if the person is temporarily absent from the state. A person is considered to be domiciled in the place where he has his current dwelling place, if he also has the intention to remain in that place for an indefinite period.
Domicile alone is a basis for exercising jurisdiction over an absent domiciliary. I.e., a person may always be sued for all claims, regardless of where they arise, in their state of permanent residence or in the case of a corporation, the state in which it is incorporated.
The rational for allowing jurisdiction based on domicile is quite clear: “A state which accords privileges and affords protection to a person and his property by virtue of his domicile may also exact reciprocal duties.”
However, the Supreme Court granted a restriction on the personal jurisdiction based on domicile. The Court noted the defendant still had to be served out of state in a way reasonably calculated to give him actual notice of the proceedings and an opportunity to be heard. As a result, most courts have held that they have jurisdiction based on domicile only if they have been given this by a statute.
Some states allow jurisdiction to be exercised on the basis of D’s residence in the forum state, even though he is absent from the state. A person may have several residences simultaneously.
Since a person may have several residences, but only one domicile, this is a looser ground for jurisdiction than domicile. The rational of the residence basis is also plausible. The argument that the forum state grants certain privileges and protection to the property owner and is thus entitled to exert jurisdiction in return, would apply almost as strongly to the resident as to the domiciliary.
The Supreme Court has not yet passed on the due process validity of jurisdiction based solely on residence, so this remains presumptively a valid method of gaining jurisdiction. Personal jurisdiction (continued)
(9) In personam jurisdiction - Consent to personal jurisdiction
A defendant who has not been personally served in the jurisdiction can nevertheless voluntarily appear and submit himself to jurisdiction. In such cases defendant is said to have "consented" to jurisdiction.
The United States legal system is an adversarial system. Civil suits cannot be initiated by third parties, but must be filed by the aggrieved party who seeks redress. Generally, the action is initiated in the jurisdiction where the event occurred, where the defendant can be served or where the parties have agreed to have the case located. The filing of a complaint or prayer for relief is a voluntary action by the person aggrieved, and as a necessity of this request, the person seeking relief consents to be bound by the judgment of the court. The doctrine of consent is also extended to defendants who attend and litigate actions without challenging the court's personal jurisdiction. Consent may also derive from a pre-litigation agreement by the parties, such as a forum selection clause in a contract.
Example 1: P, who does not reside in Ohio or have any other contacts with Ohio, brings suit against D in Ohio. By filing the suit in Ohio, P will be deemed to have consented to Ohio’s jurisdiction. D may then counterclaim against P. Even if P dismisses his own suit, his consent to the action will be binding, and the Ohio courts will have personal jurisdiction over him on the counterclaim.
Example 2: The plaintiff corporation has its principal place of business in Florida. The defendants are residents of Iowa. The plaintiff has brought a cause of action against the defendants in a Florida federal court, claiming that the defendants defaulted under a construction equipment lease. Contained in the signed lease was a paragraph that stated, “The Lessee designates Joe Smith of 12 Main Street, Jupiter, Florida, as agent for the purpose of accepting service of any process within Florida.” The defendant did not know Joe Smith. The plaintiff commenced the action by filing in the federal court in Florida a summons and complaint in which the plaintiff claimed the defendants failed to make three consecutive payments on the lease. Two copies of the summons and complaint were delivered to Joe Smith, who on the same day mailed one of the copies to the defendants with a letter stating that he had been served as the defendants’ agent for service of process in Florida. The plaintiff also informed the defendants by certified mail of the service upon Joe Smith. Even though the defendants did not personally know Joe Smith, the appointment of Joe Smith as the defendants’ agent for service of process within Florida is permissible. Parties to a contract may agree in advance to the jurisdiction of a given court, to permit notice to be served by the opposing party, or even to waive notice altogether.
This consent may be express, implied, or due to the making of a general appearance. Even if a party consents to jurisdiction through contract or agreement, such consent may not be valid. The United States Court of Appeals for the 6th Circuit has ruled that consent clauses will be presumed valid only in the absence of fraud, overreaching, grave inconvenience, or violation of the forum’s public policy. Unequal bargaining power between parties is a factor that may render the consent ineffective.
Express consent can be made either before or after suit is filed, and suffices to support jurisdiction without reference to other contacts with the forum. This is often done as part of a commercial contract between the parties. Some contracts go further than just an agreement to submit to the jurisdiction of a particular court. They obligated each party to litigate in one particular court. Such forum selection clauses will be enforced, provided that they are fundamentally fair. But, there is an important exception. In cases involving title to land, courts will proceed only if the land is located in the jurisdiction. In such cases, consent of the parties is insufficient.
Certain state statutes recognize the doctrine of implied consent, by which a defendant is said to have impliedly consented to the jurisdiction of a state over him by virtue of acts which he had committed within the state. A good case in point is the on-resident motorist statute, by which a state can legislate that a nonresident motorist using its highways be deemed to have appointed a local official as his agent to receive service of process in any action growing out of the use of the vehicle within the state. However, the state must provide actual notice to the nonresident defendant. For example: P is a resident of the forum state. D, not a resident of the forum state, is driving his car in the forum state, and has a collision with P’s car. Even if D has no other contacts with the state, a non-resident motorist statute will probably be in force in the state, and will probably give the forum state’s courts jurisdiction over a tort suit by P against D.
Sometimes, a party’s voluntary appearance in an action is sufficient by itself to support jurisdiction. If a suit is brought seeking personal liability over a defendant, his appearance in the court to contest the case on the merits constitutes consent to the court’s jurisdiction, even if jurisdiction would not otherwise have been valid. Such an appearance on the merits is called a general appearance. Personal jurisdiction (continued)
(12) Modern Constitutional doctrine - International Shoe Co. v. Washington
Facts: International Shoe Company was incorporated in Delaware and had its principal place of business in Missouri. The company employed Washington residents to solicit orders there, who reported directly to the company’s main office in Missouri. The state of Washington sued International Shoe to collect unemployment compensation tax upon salaries defendant had paid to its Washington employees, and International Shoe challenged personal jurisdiction in Washington.
Issue: Is a corporation not chartered within a state subject to that state’s jurisdiction if it has certain minimum contacts with the state?
Analysis: Minimum contacts with the forum state can enable a court in that state to exert personal jurisdiction over a party consistent with the Due Process clause. A casual presence of a corporation or its agent in a state in single or isolated incidents is not enough to establish jurisdiction. Acts of agents of the corporation, because of the nature, quality, and circumstances of their commission, may be deemed sufficient. Consent may be implied from the corporation’s presence and activities in the state through the acts of authorized agents. International Shoe had conducted “systematic and continuous” business operations in Washington. A large volume of interstate business for the defendant was created through it’s agents within the state and the corporation received the benefits and protection of Washington’s laws. International Shoe had established agents in the state permanently. Since the activities carried on by defendant corporation in Washington were systematic and continuous rather than irregular or casual, the defendant received the benefits and protection of the laws of the state and is subject to jurisdiction there.
Rationale: While the Court upheld in personam jurisdiction over a nonresident defendant based on systematic and continuous contacts with the state, it said “Due process requires only that in order to subject a defendant to a judgment in personam, if she be not present within the territory of the forum, she have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” The rational of the Supreme Court is that a defendant should understand that her activities within the state will have an impact there, that those activities may lead to controversies and lawsuits there, and that the state has a right to enforce the orderly conduct of affairs within its borders by adjudicating disputes that arise from such in-state activities. The defendant who deliberately chooses to take advantage of the benefits and protections of the laws of a state will not be considered unexpected when that state holds her to account in its courts for her in-state acts.
Rule: In International Shoe Co. v. Washington, 326 U.S. 310 (1945), the Supreme Court articulated a new test of determining whether personal jurisdiction exists over a nonresident defendant who cannot be found and served within the forum state: whether the defendant has certain minimum contacts with the forum state, such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’
Impact: In the modern era, the reach of personal jurisdiction has been expanded by judicial re-interpretation and legislative enactments. Under the new and current doctrine, a state court may only exert personal jurisdiction over an individual or entity with "sufficient minimal contacts" with the forum state such that the particular suit "does not offend 'traditional notions of fair play and justice." The "minimum contacts" must be purposefully directed towards the state by the defendant. This jurisdiction was initially limited to the particulars of the International Shoe Co. v. Washington holding, that is to jurisdictional inquiries regarding companies, but was soon extended to apply to all questions of personal jurisdiction. When an individual, or entity, has no "minimum contacts" with a forum State, the Due Process Clause of the Fourteenth Amendment prohibits that State from acting against that individual, or entity. The lack of "minimum contacts" with the owner of property also constitutionally prohibits action against that property even when the property is located within the forum state.
Test: The International Shoe’s approach has generated a two-stage analysis for determining whether the exercise of jurisdiction over a nonresident defendant is proper. The first stage looks to the purposeful availment requirement. If that is satisfied, the analysis turns to questions of reasonableness.
Step one: The toughest problem in applying the minimum contacts test has been defining the quality an nature that makes a contact sufficient to support jurisdiction, many cases have relied on the requirement that the defendant must have purposely availed itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its law. This requirement emphasizes that the defendant must have made a deliberate choice to relate to the state in some meaningful way before she can be made to bear the burden of defending there.
If jurisdiction in the case is in personam, the court may not exercise that jurisdiction unless D has "minimum contacts" with the state in which the court sits. In brief, the requirement of minimum contacts means that D has to have taken actions that were purposefully directed towards the forum state. For examples: D sold goods in the state, or incorporated in the state, or visited the state, or bought property in the state, etc. Without such minimum contacts, exercise of jurisdiction would violate D’s Fourteenth Amendment federal constitutional right to due process.
Step two: Besides focusing on the defendant’s contacts with the forum, the jurisdictional inquiry takes account of a number of other factors that bear together on whether the exercise of jurisdiction in the state is reasonable. Under this heading, a variety of actors can be considered: (a) The interest of the state in providing a forum to the plaintiff; (b) The interest of the state in regulating the activity involved; (c) The burden of defense in the forum on the defendant; (d) The relative burden of prosecution elsewhere on the plaintiff; (e) Whether the defendant’s activity in the forum is systematic and continuous; (f) The extent to which the claim is related to the defendant’s local activities; (g) Avoidance of multiplicity of suits and conflicting adjudications.
Even if D has the requisite "minimum contacts" with the forum state, the court will not exercise jurisdiction if considerations of "fair play and substantial justice" would require making D defend in the forum state so unreasonable as to constitute a due process violation. But in most cases, if D has the required minimum contacts with the forum state, it will not be unreasonable for the case to be tried there. Personal jurisdiction (continued)
(10) In personam jurisdiction - Wavier
Personal jurisdiction is generally waiveable, so if a party appears in a court without objecting to the court's lack of jurisdiction over it, that objection is forfeited.
When a nonresident defendant objects to a state’s personal jurisdiction over her on due process grounds, she must preserve such objection or risk waiving it. Waiver need not be express. It is enough that a party act in a way which is incompatible with the party’s argument that the forum lacks a basis for asserting personal jurisdiction over her.
Defendant will waive her challenge to personal jurisdiction if she either fails to include it in a motion to dismiss made on other grounds, or fails to otherwise raise the matter by motion or pleading. Today, most states, as well as the federal system, no longer require a defendant to make a special appearance for the purpose of contesting jurisdiction, separate and apart from any other grounds on the merits of the case. Defendant does not prejudice her motion to dismiss by joining with it other grounds for dismissal.
A very common way for a party to consent to jurisdiction is by waiving objection on the basis of lack of personal jurisdiction or by failing to object on that ground in a timely fashion. Most jurisdictions have rules setting forth time periods by which a party must object to personal jurisdiction and in what form the party must object. Under FRCP Rule 12, a defendant normally has 20 days after being served with the summons and complaint to file an answer or to object to jurisdiction. Rule 12(b)(2) allows the defendant to object to jurisdiction over the person by motion. Rules 12(g) and 12(h)(1) provide that an objection not raised is waived.
Example: Plaintiff brought action against defendants in federal court and served defendants with a summons and complaint. Defendants included objection to personal jurisdiction in their original answer. Plaintiff then filed an amended complaint containing a new count. Defendants did not object to jurisdiction regarding the new count. Because the defendants failed to object, the defendants waived lack of jurisdiction as a defense, even as to the additional count.
(11) Difficulties in applying Pennoyer territorial jurisdiction
Following Pennoyer, extreme applications of territorial jurisdiction revealed imperfections in the doctrine, and societal changes began to present new problems as the United States' national economy became more integrated by increasingly efficient multi-state transportation technology and business practices.
We should understand its historical background. Actually, this opinion did not invent anything new; it represents rather the first time that the U.S. Supreme Court had enunciated a coherent, national standard for the exercise of jurisdiction by state over non-residents. The idea that a sovereign state had exclusive and complete power over everything and everyone within its borders, but not outside them, wasn’t new, and was similar to how the international law worked at the time.
Therefore, the Supreme Court reached an important conclusion: process from the tribunals of one State can not run into another state. As a result, in order to obtain the justification of governing foreign-state residents, service of process within the state was sufficient for jurisdiction. This requirement becomes the basis for what has come to be known as “transient jurisdiction” (obtaining jurisdiction by serving a defendant when he was temporarily physically present in the state). This seems a little ridiculous, but it should be deemed as a struggle to overcome the defects of the power-based personal jurisdiction principle, which is followed by all state and federal courts of the U.S. for almost one century.
As a matter of fact, the various states of the U.S. were not independent and fully sovereign nation-states. The states were bound by the Constitution to give full faith and credit to the judgments of the courts of its sister states, which put some limitations on state power. These limitations were increased by the passage of the 14th Amendment after the Civil War, which allowed the direct challenge of judgments that had been rendered without proper jurisdiction. More mobility of people could be expected between that states than between countries, which increased the chances that one state’s citizen would come under the jurisdiction of another state. So, a more loose standard was needed that would allow states some power over non-residents without offending the power of other states. Obviously, the opinion has become obsolete soon after it was announced. Personal jurisdiction (continued)
(13) In personam jurisdiction - The minimum contacts test
Courts of a state may exercise personal jurisdiction over a defendant if she has such minimum contacts with the state that it would be fair to require her to return and defend a lawsuit in that state.
Another way for a court to obtain personal jurisdiction over a "foreign"(out of state) defendant is if the defendant has the requisite minimum contacts with the state. Even if the defendant is served outside the confines of the jurisdiction, the court may have personal jurisdiction if the defendant has sufficient contact with the state. The rationale for this is that if the defendant has sufficient contact with the state, the defendant can reasonably anticipate the possibility of being hailed into court in that state. It is not clear what the level of these "contacts" must be for personal jurisdiction over a foreign defendant to apply. The Supreme Court has stated merely that obtaining personal jurisdiction over a defendant based on its contacts with the state must not “offend traditional notions of fair play and substantial justice.” Contacts do not, however, have to be physical.
Example: The Tastee Corporation (“Tastee”) is a Delaware corporation. Its principal offices are in Dover, Delaware. Tastee is a franchise-based corporation that allows franchisees to run standardized Tastee restaurants. All contracts entered into between Tastee and franchisees provide that the franchise relationship is established in Dover, that the contract is governed by Delaware law and that all monthly fees and all correspondence be sent to Tastee’s principal offices in Dover. District offices monitor the franchisees and report to the principal offices. John and Brian entered into a franchise agreement with Tastee to operate a Tastee restaurant in Connecticut. John and Brian are both Connecticut residents. Eventually, John and Brian become delinquent in making their monthly payments to Tastee. Tastee initiates a cause of action against John and Brian in federal court in Delaware. John and Brian move to dismiss the complaint on the basis that the federal court in Delaware lacks personal jurisdiction over them because they are Connecticut residents and because Tastee’s claim did not arise within Delaware. John and Brian’s motion to dismiss will be denied because they have intentionally created substantial connections with Delaware. “Jurisdiction is proper . . . where the contacts proximately result from actions by the defendant himself that create a ‘substantial connection’ with the forum State. . . . Thus where the defendant ‘deliberately’ has engaged in significant activities within a State . . . or has created ‘continuing obligations’ between himself and residents of the forum . . . he manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded by ‘the benefits and protections’ of the forum’s laws it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well.”
Just because a defendant has contacts with a state does not necessarily mean that the interests of due process are satisfied. “Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process to insure.” Factors the court may consider are:
(a) Whether the contacts are substantial: The more contacts a defendant has with a forum state, the more likely that due process concerns are satisfied. How much business a corporation does in a state and how much money is generated is an example of how to determine whether contacts are substantial.
(b) Whether the contacts are purposeful: If a defendant has purposely established contacts with the forum state, the court likely has personal jurisdiction over the defendant. The United States Supreme Court has said that “the constitutional touchstone remains whether the defendant purposefully established ‘minimum contacts’ in the forum State.”
“Once it has been decided that a defendant purposefully established minimum contacts within the forum State, these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with ‘fair play and substantial justice.’ . . . Thus courts in ‘appropriate case[s]’ may evaluate ‘the burden on the defendant,’ ‘the forum State’s interest in adjudicating the dispute,’ ‘the plaintiff’s interest in obtaining convenient and effective relief,’ ‘the interstate judicial system’s interest in obtaining the most efficient resolution of controversies,’ and the ‘shared interest of the several States in furthering fundamental substantive social policies.’ . . . These considerations sometimes serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required.”
Even if the defendant has not intentionally or deliberately established contacts with the state, if the nature of the defendant’s business is such that it’s reasonably foreseeable that contacts with the forum state will be made, personal jurisdiction over the defendant by the forum state may be established. What can be considered “reasonably foreseeable,” however, still must be decided on a case by case basis. The foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being hailed into court there. . . . The Due Process Clause, by ensuring the "orderly administration of the laws," . . . gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.
Example: Bo and Luke purchased a new car from General Lee, Inc., in New York. Bo and Luke resided in New York. Because Uncle Jessie needed the boys back home, Bo and Luke decided to move back to Alabama. While on their way, driving through Virginia, another car collided with Bo and Luke’s car, causing a fire from which Bo and Luke sustained serious injuries. Bo and Luke brought a product liability action against General Lee, Inc., in state court in Virginia, and also joined the car’s manufacturer, importer and distributor, National General Lee & Co. National General Lee & Co. is incorporated and has its business offices in New York, and it distributes automobiles to retailers like General Lee. General Lee is also incorporated and has its business offices in New York. The National General Lee & Co. and General Lee, Inc., have moved to dismiss the complaint on the basis of lack of personal jurisdiction. Bo and Luke can produce no evidence that either National General Lee & Co. or General Lee, Inc., conduct any business in Virginia, sell any automobiles or ship any automobiles to Virginia, or advertises in Virginia. There is also no evidence that any automobile sold by either defendant has ever entered Virginia, except for Bo and Luke’s car. Even though it is reasonably foreseeable that an automobile sold by the defendants may find its way into Virginia, such remote foreseeability is not enough to establish personal jurisdiction.
(c) Whether the contacts are “systematic and continuous”: The more a defendant’s contacts with a forum state are systematic and continuous, the more likely the court can maintain personal jurisdiction over him. All contacts, however, do not need to be systematic and continuous – this is just one of the factors the court will explore. A single contact, depending on its size and consequences, may be all the court needs to find a basis for personal jurisdiction.
(d) Whether the contacts and the underlying cause of action are related: The less of a relationship that exists between the defendant’s contacts with the forum state and the underlying cause of action, the less likely it is that a court will sustain personal jurisdiction over the defendant. In other words, if there is a lack of a relationship between the contacts and the underlying cause of action, the plaintiff has a greater burden to prove that the court has the requisite personal jurisdiction.
(e) Whether witnesses and evidence are readily or at least somewhat conveniently available: If access to witnesses and evidence is inconvenient, the court is less likely to sustain personal jurisdiction over the defendant.
(f) Whether the forum is interested in the action: The more interested a forum is in the action, the more likely it is to sustain personal jurisdiction over the defendant. For example, states have strong interests in adjudicating matters that involve real estate within their own borders, but not as great an interest in adjudicating matters that involve only personal property. Personal jurisdiction (continued)
(13) In personam jurisdiction - The minimum contacts test (continued)
Having sufficient dealings or affiliations with the forum jurisdiction which make it reasonable to require the defendant to defend a lawsuit brought in the forum state.
Hence, a defendant who has never set foot in California may nevertheless be subject to valid personal jurisdiction so as to be compelled to defend a lawsuit in California provided that he has minimum contacts with the forum state such that compelling him to appear and defend in the forum does not offend traditional notions of fair play and substantial justice.
There are four principles of the minimum contacts test:
Jurisdiction is permissible when the defendant's activity in the forum is continuous and systematic and the cause of action is related to that activity.
Sporadic or casual activity of the defendant in the forum does not justify assertion of jurisdiction on a cause of action unrelated to that forum activity.
A court may assert jurisdiction over a defendant whose continuous activities in the forum are unrelated to the cause of action sued upon when the defendant's contacts are sufficiently substantial and of such a nature as to make the state's assertion of jurisdiction reasonable. ("general jurisdiction")
Even a defendant whose activity in the forum is sporadic, or consists only of a single act, may be subject to the jurisdiction of the forum's courts when the cause of action arises out of that activity or act. ("specific jurisdiction")
What constitutes sufficient "minimum contacts" has been delineated in numerous cases which followed the International Shoe decision.
(14) In personam jurisdiction - The minimum contacts test: Specific jurisdiction
First, let us examine conducts related to the controversy:
(a) Single or isolated activities: In International Shoe, the Supreme Court noted that a corporation’s “single or isolated items of activities in a state . . . are not enough to subject it to suit on causes of action unconnected with the activities there”; in McGee v. International Life Ins. Co., 355 U.S. 220 (1957), the Court addressed the issue of whether a “single or isolated activities” related to the controversy could support personal jurisdiction. The Court answered in the affirmative.
McGee, as the beneficiary of her deceased son’s life insurance policy, sued defendant International Life in California. Defendant was served by mail in Texas, its corporate home. International Life declined to appear in the case and plaintiff obtained a default judgment in California, which she attempted to enforce in Texas. International Life collaterally attacked the judgment, arguing that California did not have personal jurisdiction.
Despite the fact that the defendant conducted virtually no business in California, with the only California policy in force being the decedent’s, the Court nonetheless held that California had validly exercised jurisdiction over the defendant. The Court emphasized the fact that the contract sued upon had a substantial connection to the forum state, as well as California’s strong interest in protecting its citizens.
(b) Sufficient related contacts found: Burger King Corp. v. Rudzewicz [471 U.S. 462 (1985)] demonstrated that not all of the defendant’s contacts related to the controversy must be within the forum. Through negotiation with Burger King’s regional office in Michigan, Rudzewicz and another Michigan defendant obtained a franchise in that state. Defendants failed to make payments, and Burger King brought a federal diversity suit on the franchise agreement in Florida, its headquarters and place of incorporation.
The Supreme Court concluded that personal jurisdiction over Rudzewicz was constitutional, finding that there were enough Florida contacts related to the controversy to satisfy the test. Defendants at times dealt directly with Burger King’s Miami headquarters; they contracted with Burger King to have Florida law govern the franchise agreement; and they promised to send their franchise payments to Burger King’s Florida address. Under the circumstances, the Court refused to attach importance to the fact that Rudzewicz had not been in the forum state.
(c) Insufficient related contacts found: In World-Wide Volkswagen v. Woodson, 444 U.S. 286, 297 (1980), the Court further refined the minimum contacts test, stating that “critical to due process analysis . . . is that the defendant’s conduct and connection with the forum State as such that he should reasonably anticipate being haled into court there.”
In this case, the plaintiffs purchased an Audi from defendant retailer Seaway Volkswagen in New York. Thereafter, while traveling across country in the automobile, they were involved in a collision in Oklahoma, and the gas tank ignited, seriously injuring the plaintiffs. Plaintiffs brought suit in an Oklahoma state court against manufacturer Audi, importer Volkswagen of America, World-Wide Volkswagen and Seaway.
Noting that the only connection of the defendants with Oklahoma was that an automobile sold in New York to New York residents became involved in an accident in Oklahoma, the Court held that Oklahoma courts were without minimum contacts necessary to assert personal jurisdiction. Defendants did not sell cars, advertise, or carry on any other activity in the state. Thus, the Court reasoned that the conduct of the retailer and wholesaler was not such as to cause them to anticipate being sued in Oklahoma. Personal jurisdiction (continued)
(15) In personam jurisdiction - The minimum contacts test: General jurisdiction
Second, let us examine contacts unrelated to the controversy that are of such a nature as to justify suit against defendant in the current controversy.
Recently, courts have begun to distinguish between specific and general jurisdiction. If general jurisdiction is justified, the defendant is subject to suit on any claim in the forum. Specific jurisdiction, on the other hand, gives rise to jurisdiction only for claims related to the jurisdictional contact with the state. In order to assert general jurisdiction there must be substantial forum related activity on the part of the defendant. The threshold for satisfying minimum contacts is higher than in specific jurisdiction cases. For a natural person, general jurisdiction is available in the state of his domicile. For a corporation, it may be subject to general jurisdiction in its state of incorporation or in which its headquarters are located, or in which they conduct substantial activity.
When a non-resident defendant cannot be found and served within the forum, and when the cause of action arises outside of the forum, exercise of personal jurisdiction over the defendant requires contacts with the forum state that are “systematic and continuous.” [Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952)]. Such standard was met in Perkins, an action arising out of out-of-state activities, where the defendant maintained an office and conducted business in the forum state. However, in Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408 (1984), the mere fact that the nonresident defendant made regular purchases in the forum state was not held sufficient to justify personal jurisdiction in a case not related to such purchases.
Keeton v. Hustler Magazine, 465 U.S. 770 (1984), presented the situation where a nonresident defendant has contacts with the forum state that are both related and unrelated to the controversy. Keeton sued Hustler Magazine in federal court in New Hampshire for libel. Hustler Magazine had circulated in New Hampshire copies of the magazine alleged to have libeled plaintiff (related contacts), and it had circulated other issues there in a continuous and systematic fashion (unrelated contacts). While there is some question whether either defendant’s related or unrelated contacts would have alone been sufficient to support personal jurisdiction, the Court found that the aggregate of defendant’s contacts with the forum were proved sufficient.
(16) In personam jurisdiction - The minimum contacts test: Notions of fair play and substantial justice
In Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987), the Court interpreted the standard from International Shoe that “maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ”
The plaintiff sued in California over a serious accident there, allegedly caused by failure of the rear tire of plaintiff’s motorcycle. The plaintiff sued the Taiwanese tire manufacturer, which to bring Asahi, a Japanese concern and manufacturer of the tire’s valve assembly, into the case on a theory of indemnification. The Court held that California’s attempt to assert personal jurisdiction over the foreign defendant was unreasonable on balance. The Court found the interests of the plaintiff and the forum state to be “slight,” and Asahi’s burden from defending in California “severe.”
(17) In personam jurisdiction - Tortuous acts within the state
Most states have passed legislation that allow courts to exercise personal jurisdiction over a defendant who has committed a tortuous act within the state.
The Minnesota long-arm statute, for instance, permits Minnesota courts to exercise jurisdiction over any person in a cause of action arising from “the commission of a tortious act within this state” by that person or his agent. There are two kinds of situations.
D, an out-of-stater, gets into a fight with P at a bar in P’s home state. P wants to bring a civil battery claim against D in the state. If, as is likely, the state has a long-arm provision governing tortious acts within the state, P will be able to get personal jurisdiction over D in the battery action.
(a) In-state acts with in-state consequences
Long-arm statutes based on in-state tortious acts allow jurisdiction if the plaintiff shows at the outset merely that it is reasonably likely that the defendant has committed a tortious act within the state.
(b) Out-of-state acts with in-state consequences
Some "in-state tortious acts" long-arm clauses have been interpreted to include acts done outside the state which produce tortious consequences within the state. In a products liability situation, a vendor who sells products that he knows will be used in the state may constitutionally be required to defend in the state, if the product causes injury in the state. Personal jurisdiction (continued)
(18) Long-arm statutes
All states have "long-arm statutes." A long-arm statute is a statute which permits the court of a state to obtain jurisdiction over persons not physically present within the state at the time of service.
Long -arm statutes (a reference to the authorization to "reach out" beyond the borders of a state) predicate jurisdiction over nonresidents upon a variety of contacts with the forum, including the transaction of business in the state, the commission of certain acts within the state, e.g., the commission of a tort, ownership of property, entering into a contract.
Please keep in mind that it is not enough that an exercise of jurisdiction is constitutionally authorized; there must also be a statute authorizing jurisdiction. It means even if it is constitutionally permissible for a court to exercise personal jurisdiction in a case, that court may still lack the power to call the defendant before it. Why? That’s because the due process clause does not actually confer any jurisdiction on state courts; it only defines the outer bounds of permissible jurisdictional power. In other words, constitutionally permissible extraterritorial jurisdiction is not self-executing; a court needs authority granted by some statute or rule to exercise it. In state court, such authority is usually in the form of a long arm statute, which operates as enabling legislation.
Every state has statutes, called “long-arm” statutes, which extend the state’s jurisdiction over foreign (that is, out of state) defendants who do not consent to jurisdiction. Satisfying the issues of due process discussed above is not enough to establish personal jurisdiction. The requirements of due process and the long-arm statutes must be satisfied before personal jurisdiction may be exercised. The long-arm statutes may not violate due process as established by the Constitution.
While the Pennoyer and later Shoe doctrines limit the maximum power of a sovereign state, courts must also have authorization to exercise the state's power; an individual state may choose to not grant its courts the full power that the state is Constitutionally permitted to exercise. Similarly, the jurisdiction of Federal courts (other than the Supreme Court) are statutorily-defined. Thus, a particular exercise of personal jurisdiction must not only be permitted by Constitutional doctrine, but be statutorily authorized as well. Subsequent to the development of the Shoe Doctrine, states have enacted so-called long-arm statutes, by which courts in a state can serve process and thus exercise jurisdiction over a party located outside the state. The doctrine of International shoe applies only in cases where there is no presence in the forum state.
Some long arm statutes authorize jurisdiction whenever it would not violate the Constitution, which means the legislature has granted the courts the full scope of personal jurisdiction permissible under the due process clause. In such states, the only question that need be considered is the constitutionality of jurisdiction. If the court has the constitutional power to assert jurisdiction, it automatically has the statutory power to do so as well.
Example: California’s statute authorizes its courts to exercise jurisdiction “on any basis not inconsistent with the Constitution of this state or of the United States.”
Most states, however, have not given their courts blanket authority to exercise personal jurisdiction to the limits of due process. Instead, these states designate specific acts as warranting the exercise of jurisdiction in their long arm statutes. With such a statute, one must consider: (a) whether the defendant’s activities fall within the terms of the statute and (b) if so, whether the exercise of jurisdiction in this case is constitutional.
Example: “Every foreign corporation shall be subject to suit in this state, by a resident of this state or by a person having a usual place of business in this state, whether or not such foreign corporation is transacting or has transacted business in this state and whether or not it is engaged exclusively in interstate or foreign commerce, on any cause of action arising as follows: (1) Out of any contract made in this state or to be performed in this state; (2) out of any business solicited in this state by mail or otherwise if the corporation has repeatedly so solicited business, whether the orders or offers relating thereto were accepted within or without the state; (3) out of the production, manufacture or distribution of goods by such corporation with the reasonable expectation that such goods are to be used or consumed in this state and are so used or consumed, regardless of how or where the goods were produced, manufactured, marketed or sold or whether or not through the medium of independent contractors or dealers; or (4) out of tortuous conduct in this state, whether arising out of repeated activity or single acts, and whether arising out of misfeasance or nonfeasance.” Connecticut General Statutes § 33-929(f). Personal jurisdiction (continued)
(19) In personam jurisdiction - Individuals vs. Corporations
Deciding whether an individual is within the personal jurisdiction of a court has not been difficult to determine. Difficulty has arisen when courts have had to decide whether corporations were subject to personal jurisdiction. Corporations have a legal existence and a legal identity but not a tangible existence. They are subject to lawsuits involving tort and contract. As corporations became national economic entities, the courts of a state had difficulty finding personal jurisdiction if the corporation was not located within that state.
Courts established that a corporation is always subject to the jurisdiction of the courts in the state where it was incorporated. States also require corporations to file written consents to personal jurisdiction before they can conduct business within the state. Other states require that either the corporation designate an agent to accept legal process (the legal documents initiating a lawsuit) in the state or that the state attorney general be authorized to accept process for all out-of-state corporations doing business within the state.
(a) Domestic corporations
Any action may be brought against a domestic corporation, one which is incorporated in the forum state. In other words, a corporation is subject to general jurisdiction in its state of incorporation. In addition, a corporation is also subject to general jurisdiction in the state in which its headquarters are located, if different from its state of incorporation.
(b) Foreign corporations
A state is much more limited in its ability to exercise jurisdiction over a foreign corporation (i.e., a corporation not incorporated in the forum state).
The forum state may exercise personal jurisdiction over the corporation only if the corporation has "minimum contacts" with the forum state "such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’" Because of the ease of modern communication and transportation, it is usually not unfair to require a corporation to defend itself in a state in which it conducts business activity. The threshold of minimum contacts varies. Where the action arises out of or is related to the defendant's contacts with the state, the quantity of contacts necessary to establish personal jurisdiction may be truly minimal. In such cases the nature and quality of the contact are the determining factors.
Usually, a corporation will be found to have the requisite "minimum contacts" with the forum state only if the corporation has somehow voluntarily sought to do business in, or with the residents of, the forum state.
Example 1 (minimum contacts found): D has no activities in Washington except for the activities of its salesmen, who live in the state and work from their homes. All orders are sent by the salesmen to the home office, and approved at the home office. The salesmen earn a total of $31,000 per year in commissions. Held, the company has minimum contacts with Washington.
Example 2 (minimum contacts found): D is a Texas insurance company. It does not solicit business in California. However, it takes over, from a previous insurance company, a policy written on the life of X, a California resident. D sends X a new policy; X sends premiums from his California home to D’s out-of-state office. X dies; P (the beneficiary under the policy) is a California resident. P sues D in California for payment under the policy. Held, D has minimum contacts with California, and can thus be sued in personam there in a suit by P for payment on the policy.
Example 3 (minimum contacts not found): D is a Delaware bank, which acts as trustee of a certain trust. S, the settlor of the trust, is a Pennsylvania resident at the time she sets up the trust. Years later, she moves to Florida. Later, her two children, also Florida residents, want to sue D in Florida for a judgment that they are entitled to the remaining trust assets. D has no other contacts with Florida. Held, D does not have minimum contacts with Florida, and therefore, cannot be sued in personam there.
The key idea is that D will be found to have minimum contacts with the state only if D has purposely availed itself of the chance to do business in the forum state. Thus in Example 2 above, the insurance company offered a policy to someone who it knew was a resident of the forum state. In Example 3 above, by contrast, the trustee never voluntarily initiated business transactions with a resident of the forum state or otherwise voluntarily did business in the state – it was only S’s unilateral decision to move to the forum state that established any kind of connection with that state, so minimum contacts did not exist.
(c) Use of agents
Sometimes an out-of-state company does not itself conduct activities within the forum state, but uses another company as its agent in the state. Even though all business within the state is done by the agent, the principal (the foreign corporation) can be sued there, if the agent does a significant amount of business on the foreign company’s behalf. Personal jurisdiction (continued)
(19) In personam jurisdiction - Individuals vs. Corporations (continued)
(d) Operation of an Internet Website that reaches in-staters
A hot question today is whether the operation of an Internet Website that’s hosted outside the forum state, but that’s accessed by some in-staters, constitutes minimum contacts with the state. The main issue is, did the Website operator intended to "target" residents of the forum state? If yes, there are probably minimum contacts; if no, there probably aren’t.
Passive site that just posts information: So if an out-of-state local business just passively posts info on the Web, and doesn’t especially want to reach in-staters or conduct transactions with them, this probably doesn’t amount to minimum contacts, even if some in-staters happen to access the site. For example: D operates a local jazz cafe in a small town in Kansas. He puts up a Website with a schedule of upcoming events, and uses a trademark belonging to P on the site. P, based in New York, sues D in N.Y. federal court for trademark infringement. Even though a few New Yorkers may have accessed D’s site, this won’t be enough to constitute minimum contacts with N.Y., because D wasn’t trying to attract business from N.Y.
Conducting transactions with in-staters: But if D runs an "e-commerce" site that actively tries to get in-staters to buy stuff from the site, and some do, that probably will be enough to constitute minimum contacts with the state, at least where the suit relates to the in-staters’ transactions. (And if the Web-based transactions with in-staters are "systematic and continuous," as discussed in the next paragraph, then these contacts will even be enough for jurisdiction in the state on claims not relating to the in-state activities.)
(e) Claims unrelated to in-state activities
The above discusses generally assumes that the claim relates to D’s in-state activities. Where the cause of action does not arise from the company’s in-state activities, greater contacts between D and the forum state are required. The in-state activities in this situation must be "systematic and continuous."
Example: D is a South American corporation that supplies helicopter transportation in South America for oil companies. D has no contacts with Texas except: (1) one negotiation there with a client, (2) the purchase by D of 80% of its helicopter fleet from a Texas supplier, (3) the sending of pilots and maintenance people to Texas for training, and (4) the receipt out-of-state of two checks written in Texas by the client. D is sued in Texas by the Ps (Texas residents) when they are killed in South America while being transported by D.
Held, the Ps cannot sue D in Texas. Because the Ps’ claims did not arise out of D’s in-Texas activities, those Texas contacts had to be "systematic and continuous" in order to be sufficient for jurisdiction. The contacts here were too sparse for that.
(f) Products liability
The requirement of "minimum contacts" with the forum state has special bite in products liability cases. The mere fact that a product manufactured or sold by D outside of the forum state finds its way into the forum state and causes injury there is not enough to subject D to personal jurisdiction there. Instead, D can be sued in the forum state only if it made some effort to market in the forum state, either directly or indirectly.
Example: The Ps are injured in Oklahoma in an accident involving an allegedly defective car. They had purchased the car in New York while they were New York residents. The Ps sue in Oklahoma. D1 is the distributor of the car, who distributed only on the East Coast. D2 is the dealer, whose showroom was in New York. Neither D1 nor D2 sold cars in Oklahoma or did any business there.
Held, neither D may be sued in Oklahoma. Neither D had made efforts to "serve directly or indirectly" the Oklahoma market. Any connection between the Ds’ product and Oklahoma was merely an isolated occurrence, completely due to the unilateral activity of the Ps.
But if the out-of-state manufacturer makes or sells a product that it knows will be eventually sold in the forum state, this fact by itself is probably enough to establish minimum contacts. However, if this is the only contact that exists, it may nonetheless be "unreasonable" to make D defend there, and thus violate due process.
Example: P is injured while riding a motorcycle in California. He brings a products liability suit in California against, inter alia, D, the Taiwanese manufacturer who made the cycle’s rear innertube. D "impleads" X, the Japanese manufacturer of the tube’s valve assembly, claiming that X must pay D any amount that D has to pay to P. X has no contacts with California, except that X knew that: (1) tires made by D from X’s components were sold in the U.S., and (2) 20% of the U.S. sales were in California. The P-D suit has been settled but the D-X case is to be tried.
Held, X had minimum contacts with California, because it put its goods into a stream of commerce that it knew would lead many of them to California. But despite these minimum contacts, it would be "unreasonable and unfair" – and thus a violation of due process – for California to hear the case, because of the burden to X of having to defend in California, the slenderness of California’s interest in having the case heard there, and the foreign relations problems that would be created by hearing an indemnity suit between two foreign corporations.
As the case in the above example shows, even where minimum contacts exist, it will be a violation of due process for the court to hear a case against a non-resident defendant where it would be "unreasonable" for the suit to be heard. The more burdensome it is to the defendant to have to litigate the case in the forum state, and the slimmer the contacts (though "minimum") with the forum state, the more likely this result is to occur. Personal jurisdiction (continued)
(19) In personam jurisdiction - Individuals vs. Corporations (continued)
(g) Suits based on contractual relationship
The requisite "minimum contacts" are more likely to be found where one party to a contract is a resident of the forum state. But the fact that one party to a contract is a resident does not by itself automatically mean that the other party has "minimum contacts" – the existence of a contract is just one factor to look at.
Where the contract itself somehow ties the parties’ business activities into the forum state, this will be an important factor tending to show the existence of minimum contacts. For instance, if one party is to make payments to the other, and the latter will be receiving the payments in the forum state, this stream of payments coming into the state is likely to establish minimum contacts and thus to permit suit against the payor. For example: D runs a fast food restaurant in Michigan under franchise from P, which has its headquarters in Florida. The contract requires D to make royalty payments to P in Florida. Held, P may sue D in Florida. The fact that the payment stream comes into Florida is an important factor, though not by itself dispositive, in the court’s conclusion that there were minimum contacts with Florida.
Where there is a contract between the parties to the suit, the fact that the contract contains a choice of law clause requiring use of the forum state’s law will also be a factor (though not a dispositive one) tending towards a finding of minimum contacts. (On the facts of the above example, the franchise contract stated that Florida law would be used. This was a factor helping lead the court to conclude that D had minimum contacts with Florida.)
In suits relating to a contract, as with any other kind of suit, the minimum contacts issue always boils down to this: Could the defendant have reasonably anticipated being required to litigate in the forum state? The fact that the other party was a resident of the forum state, the fact that a stream of payments went into the forum state, and the fact that the forum state’s law was to be used in the contract, are all non-dispositive, but important, factors tending towards the conclusion that the out-of-stater had minimum contacts with the forum state.
(20) Class actions & the First Amendment case
An "absent" plaintiff in a class action that takes place in the forum state may be bound by the decision in the case, even if that plaintiff did not have minimum contacts with the forum state.
The First Amendment imposes certain limits on the substantive libel and slander laws of the states (e.g., that no "public figure" may recover without a showing of "actual malice"). But this special first amendment protection does not affect the personal jurisdiction requirements for libel and slander suits – no more extensive contacts between D and the forum state must be shown in defamation suits than in any other type of case.
(21) In rem jurisdiction
In rem actions are ones which do not seek to impose personal liability on anyone, but instead seek to affect the interests of persons in a specific thing (or res).
In rem jurisdiction is the power of a court to deal with a thing (e.g. a parcel of land, an automobile, a ship) and to determine its status in relation to the legal rights of all persons known and unknown. I.e., in a proceeding in rem the court exercises its power to determine the status of property and the determination of the court is binding with respect to all possible interest holders in that property.
Examples: Probate court actions; admiralty actions concerning title to a ship; actions to quiet title to real estate or to foreclose a lien upon it; actions for divorce. In all of these types of in rem actions, no judgment imposing personal liability on anyone results – all that happens is that the status of a thing is adjudicated. For example: In a quiet title action, a determination is reached that A, rather than B, is the owner of Blackacre.
Specific performance of land sale contract: One important type of in rem action is an action for specific performance of a contract to convey land. Even if the defendant is out of state and has no connection with the forum state other than having entered into a contract to convey in-state land, the forum state may hear the action. D does not have to have minimum contacts with the forum state for the action to proceed – it is enough that the contract involved in-state land, and that D has received reasonable notice. Personal jurisdiction (continued)
(22) Quasi in rem actions
Quasi in rem actions are actions that would have been in personam if jurisdiction over D’s person had been attainable. Instead, property or intangibles are seized not as the object of the litigation, but merely as a means of satisfying a possible judgment against D.
Quasi in rem jurisdiction is another method for exercising jurisdiction over a defendant, albeit in a limited manner, based on the defendant’s property located within the forum. Quasi in rem jurisdiction can be used to adjudicate personal obligations, not merely rights in the res. However, it binds the defendant only with respect to his interest in the res upon which jurisdiction is based, and thus, the value of a quasi in rem judgment cannot exceed the value of the res.
Quasi-in-rem jurisdiction is similar to in rem. In a proceeding quasi-in-rem, the court renders a judgment for or against a person but recovery is limited to the value of property that is within the jurisdiction and thus subject to the court's authority. The dispute that gives rise to an action quasi-in-rem may be related to the property or unrelated to it. In an action quasi-in-rem, the property may be used to satisfy any judgment in the action.
Example: P wants to sue D on a contract claim in California state court. The contract has no connection with California, nor does D himself have sufficient contacts with California to allow that state to exercise personal jurisdiction over him. D does, however, own a bank account in California. Putting aside constitutional due process problems, P could attach that bank account as a basis of jurisdiction, and bring a quasi in rem action on the contract claim. If P wins, he will be able to collect only the value of the bank account, and D will not be personally liable for the remainder if the damages exceed the value of the account.
Quasi in rem judgments have no res judicata value.
Example: If P wins against D in a quasi in rem action in Connecticut, he cannot in a later suit against D in California claim that the matter has been decided for all time. Instead, he must go through another trial on the merits if he wishes to subject D to further liability.
Possible exception: Some courts hold that if D makes a limited appearance (an appearance that does not confer personal jurisdiction over him) and fully litigates certain issues, he will not be allowed to re-litigate those issues in a subsequent trial. But other courts hold that even here, the first suit will not prevent D from re-litigating the same issues later on.
Quasi in rem jurisdiction over D cannot be exercised unless D had such "minimum contacts" with the forum state that in personam jurisdiction could be exercised over him. This is the holding of the landmark case of Shaffer v. Heitner.
Example: P brings a shareholder’s derivative suit in Delaware on behalf of XYZ Corp. against 28 of XYZ’s non-resident directors and officers. None of the activities complained of took place in Delaware, nor did any D have any other contact with Delaware. P takes advantage of a Delaware statute providing that any stock in a Delaware corporation is deemed to be present in Delaware, allowing that stock to be attached to provide quasi in rem jurisdiction against its owner. Thus P is able to tie up each D’s XYZ stockholdings even though there is no other connection with Delaware.
Held, this use of quasi in rem jurisdiction violates constitutional due process. No D may be subjected to quasi in rem jurisdiction unless he has minimum contacts with the forum state. Here, neither the Ds’ actions nor the fact that those actions related to a Delaware corporation were sufficient to create minimum contacts, so the exercise of jurisdiction was improper. [Shaffer v. Heitner]
Impact: Quasi in rem jurisdiction has essentially become obsolete as a result of the Supreme Court’s decision in Shaffer v. Heitner, in which it extended the minimum contacts test to quasi in rem cases. The Court stated that all assertions of state court jurisdiction must be based on “minimum contacts.” The test was not satisfied here where the defendant’s in-state property was “completely unrelated to the plaintiff’s cause of action. Significantly, the Court held that “the presence of the property alone would not support the State’s jurisdiction.”
Shaffer basically abolishes the utility of quasi in rem jurisdiction – since quasi in rem is only used where there is no personal jurisdiction, and since the same minimum contacts needed for quasi in rem will suffice for personal jurisdiction, quasi in rem will rarely be advantageous. One big practical effect is that attachment of a third party’s debt to the defendant, or attachment of an insurance company’s obligation to defend and pay a claim, are largely wiped out as bases for jurisdiction.
Example: Harris, of North Carolina, owes $180 to Balk, of North Carolina. Epstein, of Maryland, has a claim against Balk for $300. While Harris is visiting in Maryland, Epstein attaches Harris’ debt to Balk by serving Harris with process in a Maryland suit. Under pre-Shaffer law, this established quasi in rem jurisdiction over the $180 debt, on the theory that the debt goes wherever the debtor goes. If Epstein won, he could require Harris to pay the $180 to him rather than to Balk.
But after Shaffer, the fact that Balk’s debtor happened to be in North Carolina and available for personal service was irrelevant. Since Balk himself did not minimum contacts with Maryland, and thus could not be sued there personally, Shaffer means that a quasi in rem suit based on Harris’ debt to him may also not be heard in Maryland. Personal jurisdiction (continued)
(23) Federal jurisdiciton over parties
Personal jurisdiction in the federal courts is governed by rule 4 of the Federal Rules of Civil Procedure. Rule 4 directs each federal district court to follow the law on personal jurisdiction that is in force in the state courts where the federal court is located. Federal courts may use state long-arm statutes to reach defendants beyond the territory of their normal authority. With cases that can only be brought in federal court, such as lawsuits involving federal securities and antitrust laws, federal courts may exercise personal jurisdiction over a defendant no matter where the defendant is found.
To determine whether a federal court has personal jurisdiction over the defendant, you must check three things:
Territory for service: Whether service took place within the appropriate territory;
Manner of service: Whether the service was carried out in the correct manner; and
Amenability: Whether the defendant was "amenable" to the federal suit.
(a) Territory for service: As a general rule, in both diversity actions and federal question cases, service of process may be made only: (1) within the territorial limits of the state in which the District Court sits; or (2) anywhere else permitted by the state law of the state where the District Court sits. FRCP 4(k)(1)(A).
Example (within the territorial limits of state): P sues D in a federal action in the Northern District of Ohio. Whether the suit is based on diversity or federal question, service will be territorially valid if D is served with process anywhere within the state of Ohio, since this is the state where the district court sits. This is true even if service is physically made in the Southern District of Ohio.
Example (out-of-state service based on state law): Under the New Jersey long-arm statute, if a non-resident is involved in a motor vehicle accident inside New Jersey with a New Jersey resident, the New Jersey resident may serve the non-resident outside New Jersey, and the New Jersey courts may then exercise personal jurisdiction. P, a New Jersey resident, and D, a California resident, have an accident in New Jersey. P may sue D in diversity in federal District Court for New Jersey; P may serve D with process in California, because the long-arm of the state where the district court sits (New Jersey) would allow such service.
A special 100-mile bulge provision (FRCP 4(k)(1)(B)) allows for out-of-state service sometimes, even if local law does not permit it. When the provision applies, it allows service anywhere (even across a state boundary) within a 100-mile radius of the federal courthouse where suit is pending. The bulge provision applies only where out-of-staters will be brought in as additional parties to an already pending action. There are two types of parties against whom it can be used:
Third-party defendants: Third-party defendants (FRCP 14) may be served within the bulge. For example: P sues D in a New Jersey federal district court diversity action. D claims that if D is liable to P, X is liable to D as an indemnitor. The suit is pending in Newark, less than 100 miles from New York City. D may serve X in New York City, even if no New Jersey long-arm statute would allow the suit.
Indispensable parties: So-called "indispensable parties" – that is, persons who are needed in the action for just adjudication, and whose joinder will not involve subject matter jurisdiction problems – may also be served if they are within the bulge. For example: P sues D for copyright infringement in federal district court for the Eastern District of Kentucky, located in Lexington. D files a counterclaim against P. D wants to join X as a co-defendant to this counterclaim, arguing that P and X conspired to violate D’s copyrights. X resides in Cincinnati, Ohio, located 78 miles from Lexington. If the court agrees that X is required for just adjudication of D’s counterclaim, service on X in Cincinnati is valid, even if the Kentucky long-arm would not allow service there.
Nationwide service of process: In several kinds of cases, Congress has provided for nationwide service of process. Suits against federal officials and agencies, and suits based on statutory interpleader, are examples of nationwide service.
Foreign defendant not servable in any state: Rule 4(k)(2) allows a federal question suit to be brought against any person or organization who cannot be sued in any state court (almost always because they are a foreigner).
Example: D, a French company, without setting foot in the U.S., solicits business by phone and mail from residents of a large number of states. D does not solicit enough from the residents of any one state to satisfy that state’s long-arm. Therefore, D could not be sued in any state court for a claim concerning its activities. P, a New York investor, brings a suit based upon the federal securities laws against D in the federal district court for the Southern District of New York.Assuming that D can be said to have had minimum contacts with the United States as a whole, the New York federal court will have personal jurisdiction over D for this federal-question claim, because D is not subject to the jurisdiction of the courts of any state.
A defendant who is not located in the state where the district court sits may not be served if he does not fall within one of the four special cases described above (servable pursuant to state long-arm, 100-mile bulge, nationwide service or foreign defendant not servable in any state), even if he has the constitutionally-required minimum contacts with the forum. This is true whether the case is based on diversity or federal question.
Example: P, a Connecticut resident, wants to bring a federal diversity suit in Connecticut against D, a New Yorker. The suit involves an accident that occurred in New York. D owns a second home in Connecticut, as well as lots of other real estate there. Assume that this ownership gives him not only minimum contacts but "systematic and continuous" contacts with Connecticut. However, Connecticut has a very narrow long-arm, which would not allow service on D in New York for a Connecticut state action. P will not be able to serve D in New York in his federal action, because none of the special cases is satisfied. This is true even though it would not be a violation of due process for either the Connecticut courts or the federal court in Connecticut to exercise personal jurisdiction over D. Personal jurisdiction (continued)
(23) Federal jurisdiciton over parties (continued)
(b) Manner of service: Once you determine that the party to be served lies within the territory described above, you must determine if the service was carried out in the correct manner.
Service on an individual (Rule 4(e)) may be made in any of several ways:
Personal: By serving him personally;
Substitute: By handing the summons and complaint to a person of "suitable age and discretion" residing at D’s residence;
Agent: By serving an agent appointed or designated by law to receive process. (Example: Many states designate the Director of Motor Vehicles as the agent to receive process in suits involving car accidents);
Local state law: By serving D in the manner provided by either: (1) the law of the state where the district court sits, if that state has such a provision, or (2) the law of the state where the person is being served. (Example: P brings an action against D, a resident of California, in New Jersey federal court, and wishes to serve him by certified mail. Service will be possible if either the courts of New Jersey or California allow certified-mail service.)
Service on a corporation may be made by leaving the papers with an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive process for the corporation. FRCP 4(h)(1).
Local state law: As with individuals, service on a corporation may also be made in the manner provided by the local law of (1) the state where the action is pending or (2) the state where the service is made. FRCP 4(h)(1), first sentence.
Rule 4(d) allows plaintiff to in effect serve the summons and complaint by mail, provided that the defendant cooperates. P mails to D a "request for waiver of service"; if D agrees, no actual in-person service is needed.
Incentives: D is free to refuse to grant the waiver, in which case P must serve the summons by the in-person methods described above. But, if D refuses the waiver, the court will impose the costs subsequently incurred by P in effecting service on D unless "good cause" is shown for D’s refusal. (FRCP 4(d)(2), last sentence.)
(c) Amenability to suit: If D was served in an appropriate territory, and in an appropriate manner, you still have to determine whether D is closely-enough linked to the state where the federal district court sits to make him "amenable to suit" in that court.
In federal question cases, most courts hold that D is amenable to suit in their court if jurisdiction could constitutionally be exercised over him in the state courts of the state where the federal court is sitting, even if the state court itself would not (because of a limited long-arm) have jurisdiction.
Example: P sues D for copyright infringement. The suit is brought in the Northern District of Ohio. D’s only contact with Ohio is that he sold 100 copies of the allegedly infringing book in Ohio. The state courts of Ohio, although they could constitutionally take personal jurisdiction over D in a similar state-created claim – libel, for instance – would not do so because the Ohio long-arm is very limited and would not cover any action growing out of these facts. However, the federal district court will hear the federal question copyright claim against D, because P has minimum contacts with the state where the federal court sits.
In general, if the defendant is a foreign corporation or resident, most federal courts will exercise jurisdiction over the defendant only if that defendant has minimum contacts with the state where the federal court sits, not merely minimum contacts with the United States as a whole. (Again, as with an out-of-state but not foreign defendant, the federal court will hear the federal question claim even though the state courts might not exercise jurisdiction over the defendant due to a limited state long-arm.)
Narrow exception: If a foreign defendant could not be sued in any state, he may be sued on a federal-question claim in any federal judicial district, assuming that he has minimum contacts with the U.S. as a whole. (FRCP 4(k)(2).) But assuming that the foreign defendant could be sued in at least some state court, the general rule described in the prior paragraph (D must have minimum contacts with the state where the federal court sits, not just with the U.S. as a whole) continues to apply.
In diversity cases, the federal courts exercise only the jurisdiction that is allowed by the statutory law of the state in which they sit. So if the state statutory law does not go to the limits of due process, the federal court will follow suit. Personal jurisdiction (continued)
(24) Jurisdiction challenges
A defendant may challenge the court’s personal jurisdiction in two ways:
Direct attack: A direct attack involves the defendant’s participation in the lawsuit in order to attempt to prevent the court from reaching the merits of the case. The jurisdictional challenge may be joined with other arguments in support of dismissal. However, direct attack forces the defendant to forfeit part of the protection secured by due process as he experiences the increased burden of defending in a distant and inconvenient forum as soon as he begins participating in the case.
Collateral attack:A defendant who objects to a court’s personal jurisdiction over her and defaults in an action may subsequently bring a collateral attack against the judgment. However, if the defendant participated in the case without objecting to the court’s personal jurisdiction, she cures any defect by waiver. If the defendant did challenge the court’s personal jurisdiction in the first case, she is precluded from relitigating the question in the judgment-enforcement proceeding.
(a) Direct attack
When a person wishes to challenge personal jurisdiction, he or she must take care in appearing before the court in the forum state. If the defendant makes a general appearance, the court will take this to be an unqualified submission to the personal jurisdiction of the court. The defendant waives the right to raise any jurisdictional defects.
To prevent this from happening, a defendant must request a special appearance before the court. A special appearance is made for the limited purpose of challenging the sufficiency of the Service of Process or the personal jurisdiction of the court. If any other issues are raised, the proceeding becomes a general appearance. The court must then determine whether it has jurisdiction over the defendant. If the defendant is found to be within the personal jurisdiction of the court, the issue may be appealed. Some states permit an immediate appeal, whereas others make the defendant raise the issue after the case has been heard on its merits in the trial court.
In a "special appearance," D appears in the action with the express purpose of making a jurisdictional objection. By making a special appearance, D has not consented to the exercise of jurisdiction. The federal courts (and the many state courts with rules patterned after the Federal Rules) have abolished the special appearance. Instead, D makes a motion to dismiss for lack of jurisdiction over the parties; making this motion does not subject D to the jurisdiction that he is protesting. FRCP 12(b)(2). However, the right to make a motion to dismiss for lack of personal jurisdiction is waived in the federal system if: (1) D makes a motion raising any of the defenses listed in Rule 12, and the personal jurisdiction defense is not included; or (2) D neither makes a Rule 12 motion nor raises the defense in his answer.
(b) Collateral attack
If D defaults in an action in State 1, she may collaterally attack the default judgment when it is sued upon in State 2. Most commonly, D collaterally attacks the earlier judgment on the grounds that State 1 did not have personal jurisdiction over her, or did not have valid subject matter jurisdiction.
Example: D has no contacts with Iowa. P, an Iowa resident, sues D in Iowa court. D never appears in the action, and a default judgment is entered against him for $100,000. P then brings a suit in D’s home state of New Jersey to enforce the earlier Iowa judgment. D will be permitted to collaterally attack the Iowa judgment, by arguing that Iowa lacked personal jurisdiction over him. The New Jersey court will undoubtedly agree with D that, because D did not have minimum contacts with Iowa, Iowa could not constitutionally take jurisdiction over him. Therefore, the New Jersey court will decline to enforce the Iowa judgment.
A defendant who appeared in the original action without objecting to jurisdiction, or one who unsuccessfully litigated the jurisdictional issue in the first action, may not collaterally attack the judgment. (Instead, a defendant who unsuccessfully litigates jurisdiction in the first action must appeal to the first state’s system, rather than later making a collateral attack.)
(c) Defense of fraud or duress
A court may constitutionally exercise jurisdiction over a defendant found within the forum state, even if D’s presence was the result of fraud or duress on the part of the plaintiff. But the court may exercise its discretion not to exercise jurisdiction.
Example: P entices D into the jurisdiction with a false love letter and a false statement that she is leaving the country forever and wants to see D once more. When D arrives at the airport in the forum state, P serves him with papers. Held, the forum state will decline to exercise its jurisdiction because of P’s fraud.
Most jurisdictions give to non-residents of the forum state an immunity from service of process while they are in state to attend a trial. This is true whether the person is a witness, a party, or an attorney. Most states also grant the immunity for related proceedings such as depositions.
Federal suits: Out-of-state parties, witnesses, and attorneys also generally receive immunity from federal court suits (whether diversity or federal question). Notice
Even if the court has authority to judge the dispute between the parties or over the property before it, the court may not proceed unless D received adequate notice of the case against him.
The existence of personal jurisdiction depends upon a sufficient connection between the defendant and the forum state to make it fair to require defense of the action in the forum and the giving of reasonable notice to the defendant that an action has been brought. If the defendant has not received proper notice, the court's power to adjudicate is imperfect. Notice is usually given by serving the defendant with the "process" (e.g. a copy of the summons and the complaint) of the court.
Although a case meets both the statutory and constitutional requirements for personal jurisdiction, the suit may be dismissed if insufficient notice is given to the defendant. The defendant can claim that the proceeding violated due process because without proper notice there was no effective opportunity to be heard. What constitutes proper notice so as to satisfy the Constitution involves an inquiry into both the type of notice utilized and the timing of the notice.
The concept of notice is critical to the integrity of legal proceedings. Due process requires that legal action cannot be taken against anyone unless the requirements of notice and an opportunity to be heard are observed.
An individual who is being sued in a civil action must be provided with notice of the nature of the suit. State statutes prescribe the method of providing this type of notice. Courts are usually strict in requiring compliance with these laws, and ordinarily a plaintiff must put this information into a complaint that must be served upon the defendant in some legally adequate manner. The plaintiff may personally serve the complaint to the defendant. When that is not practical, the papers may be served through the mail. In some cases a court may allow, or require, service by posting or attaching the papers to the defendant's last known address or to a public place where the defendant is likely to see them. Typically, however, notice is given by publication of the papers in a local newspaper. When the defendant is not personally served, or is formally served in another state, the method of service is called substituted service.
Notice is a vital principle of fairness and due process in legal procedure, and must be given to both parties, to all those affected by a lawsuit or legal proceeding, to the opposing attorney, and to the court. In short, neither a party nor the court can operate in secret, make private overtures or conceal actions. Notice of a lawsuit or petition for a court order begins with personal service on the defendants (delivery of notice to the person) of the complaint or petition, together with a summons or order to appear (or file an answer) in court. Thereafter, if a party is represented by an attorney, notice can usually be given to the attorney by mail. If there is a so-called ex parte hearing (an emergency session with a judge with only the requesting party or his/her attorney present) the party wanting the hearing must make a diligent attempt to give notice to the other party. A court may allow "constructive" notice by publication in an approved legal newspaper of a summons in a lawsuit.
(3) Due process
The Due Process Clauses (found in the Fifth Amendment and the Fourteenth Amendment) of the United States Constitution deny effect to adjudications unless the parties to be bound were given prior notice and an opportunity to participate. Notice that satisfies due process may be found from proper service of process or other recognized alternatives. Process usually consists of a summons directing defendant to respond or appear in court on penalty of default. Service is the formal means by which process is delivered to a defendant.
The essence of procedural due process, another requirement that must be satisfied for a court to exercise personal jurisdiction over a defendant, is that the defendant must receive adequate notice and an opportunity to be heard. Again, notions of “fairness” are implicated.
To satisfy procedural due process, a court must give the defendant adequate notice of the pending action. Additionally, the defendant must be notified of his opportunity to be heard and, if applicable, assert a defense. This is usually accomplished through service of process. How process may be served, however, is dependant upon the forum’s rules, which often vary from forum to forum. See Federal Rule of Civil Procedure Rule 4. Service of process is discussed more expansively below. Notice (continued)
(4) Types of notice
There are various types of notice, each of which has different results. In general, notice deals with information that a party knows or should have known. In this context notice is an essential element of due process.
The type of notice that must be utilized is decided on the case by case basis. The key in all cases, regardless of the type of jurisdiction involved, is what is practicable, with the emphasis on utilizing the means of notice that is most likely to reach the defendant. When determining what type of notice to require, the court also may consider the difficulties of locating the defendant and the need for the adjudication.
(a) Personal service
In the past, personal in-hand service within the forum state was generally required in in personam cases. Individual service of process clearly is the best means of ensuring actual notice and thus a favored way of obtaining jurisdiction. Until now, personal service is still the best and surest means of satisfying the notice requirement.
(b) Substitute service
Personal service – handing the papers to D himself – will always suffice as adequate notice. But all states, and the federal system, also allow "substitute service" in most instances. Substitute service means "some form of service other than directly handing the papers to the defendant."
Leave at dwelling: The most common substitute service provision allows the process papers to be left at D’s dwelling within the state, if D is not at home. These provisions usually require the papers to be left with an adult who is reasonably likely to give them to D. (Example: FRCP 4(e)(2) allows the papers to be left with a person of "suitable age and discretion residing in the dwelling place in question.")
Mail: Some states, and the federal system, allow service to be made by ordinary first class mail. However, usually this method is allowable only if D returns an acknowledgement or waiver form to P’s lawyer. If D does not return the form, some other method of service must then be used.
(c) Constructive service
Constructive notice is the legal fiction that signifies that a person or entity should have known, as a reasonable person would have, even if they have no actual knowledge of it. For example if it is not possible to serve notice personally then a summons may be posted on a court house bulletin board or legally advertised in an approved newspaper. The person is considered to have received notice even if they were not aware of it.
The notion of constructive service was developed to notify defendants who could not be located within the state. However, if you want to employ constructive notice, you must make sure this has become the only feasible method to notify the defendant, because the usage of constructive notice is limited by courts strictly. The standard that has generally been used for determining whether such constructive service is constitutionally adequate has been whether the procedure used was reasonably likely to give the defendant actual notice.
Service by newspaper publication announcing the suit has been upheld widely in many cases, especially where the defendant’s identity is unknown. So, service by publication will virtually never be constitutionally sufficient if the defendant’s name and address are known. But, if a domiciliary of the forum state hides himself intentionally within the state, service by publication is proper.
Alternative means of notice, such as newspaper publication, may satisfy due process where individual notice is impracticable and the party seeking to bypass individual notice can demonstrate that (1) the suit is in the interest of the absentees, (2) they will be adequately represented by one before the court, and (3) the value of their individual interests is not too great. Where the identities and parties can be reasonably ascertained, however, individual notice is required.
Mullane v. Central Hanover Bank & Trust Co.
Facts: Central Hanover Bank (P) was the trustee of a common trust fund formed by pooling the assets of a number of smaller trusts. Central Hanover Bank petitioned to the New York Surrogate’s Court for a judicial settlement of the trust. The only notice provided to beneficiaries was via publication in a newspaper. Mullane (D) was appointed attorney and special guardian for a number of beneficiaries who either were unknown or did not appear. Mullane objected to the statutory provision for notice by publication, arguing that it was unconstitutional for lack of due process under the Fourteenth Amendment.
Issue: Is notice given to out of state parties by publication in a newspaper, when the parties’ addresses were known, constitutional in light of the Due Process Clause of the Fourteenth Amendment?
Analysis: Notice must be reasonably calculated to inform known parties affected by the proceedings. However, constructive notice by publication was acceptable with regard to missing or unknown parties or for those whose whereabouts could not be ascertained by due diligence or for whom future interests were too conjectural to be known with certainty. In the instant case, notice given to out of state parties by publication in a newspaper, when the parties’ addresses were known, is unconstitutional in light of the Due Process Clause of the Fourteenth Amendment.
Rule: The Court held that the expense of notification by mail, and the availability of names and addresses of beneficiaries, were factors that could be taken into account in determining whether publication was sufficient notice. The standard is becoming on of general reasonableness in view of all the circumstances (importance of proceedings, cost, and availability of other better notification methods) Notice (continued)
(4) Reasonableness test
In order for D to have received adequate notice, it is not necessary that he actually have learned of the suit. Rather, the procedures used to alert him must have been reasonably likely to inform him, even if they actually failed to do so.
As a matter of fact, generally what matters is the appropriateness of the notice prescribed by statute and employed, not whether the defendant actually got the notice. Thus, if a reasonable means of notification is prescribed by statute, and followed in the individual case, it does not matter that the defendant did not in fact receive notice. For instance, if a party’s name and address are "reasonably ascertainable," publication notice will not be sufficient, and instead notice by mail (or other means equally likely to ensure actual notice) must be used.
Conversely, if the prescribed statutory method is either insufficient, or is not followed, the fact that the individual defendant actually received notice does not make the service valid. Why? That’s because the hearing requirement of 14th Amendment provides the defendant must not only be notified of the suit against him, but must also be given an opportunity to be heard. That is, in order for the state to take defendant’s property from him, the defendant must be given a chance to appear in court to tell his side of story. Remember that what matters is the appropriateness of the notice prescribed by statute and employed, not whether D actually got the notice.
Example: P’s process server leaves the summons and complaint at D’s house, with D’s wife. D’s wife throws it in the garbage, and D never learns of it. D has received adequate notice, so the court can exercise jurisdiction over him. Conversely, if P’s process server had left the papers on the sidewalk outside the house, and D had happened to pick them up, this would not be adequate notice to D – the procedures used were not reasonably likely to give D notice, and they are not saved by the fact that D in fact learned of the suit.
(5) Service on out-of-staters
Where D is not present in the forum state, he must somehow be served out of state. Remember that in a state court suit, this can only be done if the state has a long-arm statute covering the type of case and defendant in question. Once the long-arm covers the situation, the out-of-state defendant must still be given some sort of notice.
Mail notice: Many states provide for notice by registered or certified mail on the out-of-state defendant.
Public official: Sometimes, service may be made by serving a state official, plus giving notice by mail to D. (Example: Many non-resident motorist statutes allow P to serve the state Director of Motor Vehicles with a matching mailing to the out-of-state defendant.)
Newspaper publication: If D’s identity or residence are unknown, some states allow service by newspaper publication. But this may only be used where D truly cannot be found by reasonable effort.
Several means are commonly allowed for giving notice of suit to corporations.
Corporate officer: Many states require that a corporation, if it wishes to be incorporated in the state or to do business in the state, must designate a corporate official to receive process for suits against the company. Service on this designated official is, of course, deemed to be adequate notice.
Federal Rule: The Federal Rules, and the rules of many states, are more liberal, in that they allow service on any person associated with the corporation who is of sufficiently high placement. Thus FRCP 4(h)(1) provides that service on a corporation may be made by giving the papers to "an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process." Notice (continued)
(8) Opportunity to be heard
D must not only be notified of the suit against him, but must also be given an opportunity to be heard. That is, before his property may be taken, he must be given a chance to defend against the claim. This "opportunity to be heard" must be given to D not only when his property will be taken forever, but even before there is any significant interference with his property rights.
Opportunity-to-be-heard questions arise most frequently in the context of pre-judgment remedies, which protect plaintiff against the defendant’s hiding or squandering his assets during litigation. Two common forms of pre-judgment remedies are the attachment of D’s bank account and the placing of a lis pendens against her real estate.
The court will weigh three factors against each other to determine whether due process was violated when D’s property was interfered with through a pre-judgment remedy:
First, the degree of harm to D’s interest from the pre-judgment remedy;
Second, the risk that the deprivation of D’s property right will be erroneous (especially if the state could have used additional procedural safeguards against this but did not); and
Third, the strength of the interest of the party (typically P) seeking the prejudgment remedy.
Example: A state statute allows P to get a prejudgment attachment of D’s real estate without D’s having a hearing first, so long as P "verifies by oath" that there is probable cause to sustain his claim. Factor 1 above (the strength of D’s interest) works against allowing attachment, since an attachment clouds D’s title and affects his credit rating. Factor 2 (risk of erroneous deprivation) also supports not allowing the attachment, since the judge can’t accurately determine the likely outcome of the litigation based solely on P’s one-sided conclusory statements in the oath. Factor 3 (strength of P’s interest) also works against the attachment, since P is not required to show D is dissipating his assets. Consequently, the grant of a prejudgment attachment of D’s property violates his due process rights.
(9) Federal practice - Federal Rule 4
Rule 4 of the Federal Rules of Civil Procedure (FRCP 4) sets forth the methods for effectuating service in federal trials. Specific procedures are outlined for various parties: individuals, infants and incompetents, corporations and associations, foreign, federal, state and local governments, as well as individuals in foreign countries.
Service of process is governed by FRCP 4. The three methods of serving process are personal service, substituted service, and constructive service. Due process does not require that the defendant be served personally however, notice "reasonably certain" to reach the defendant is required. I.e., Notice must be reasonably calculated under all the circumstances to apprise the defendant of the pendency of the action.
The rule 4 of FRCP sets forth the correct manner of service carried out in federal courts. The allowable manner of service is somewhat different, depending on whether the defendant is an individual or a corporation. The manner for serving an individual is set out in 4(e). Service on the individual may be made by serving him personally, by leaving the summons and complaint at defendant’s residence with a person of suitable age and discretion residing there, by serving an agent appointed or designated by law to receive process, by serving defendant in the manner provided either by the law of the state where the district court sits or by the law of the state where the person is being served.
On the other hand, service on a corporation may be made by leaving the papers with an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive process for the corporation.
In addition, based on Rule 4(m), service on the defendant must be made within 120 days after the filing of the complaint. If the plaintiff fails to serve the defendant within this time, the court can dismiss the action.
In federal actions, a plaintiff may serve process upon an individual, corporation or association by:
delivering the summons and complaint to the individual personally;
leaving the summons and complaint at the individual's dwelling house or usual place of abode with a person of suitable age and discretion then residing therein;
delivering the summons and complaint to an agent authorized by appointment or by law to receive service of process.
FRCP 4(d)(2) provides incentives for a defendant to agree to waive formal service and instead accept service by mail. Upon notice of the commencement of the action and a request for waiver of service from the plaintiff, a defendant who so agrees is granted an extended time within which to answer – 60 days instead of the 20 days granted when process is formally served.
FRCP 4 also imposes upon the defendant “a duty to avoid unnecessary costs of serving the summons,” and therefore, failure to accept process by mail subjects the defendant to liability for costs of service as well as attorney’s fees incurred in any motion to collect the costs of service.
(10) Attacking Notice
Defective service of process can be challenged by a FRCP 12(b)(5) motion to dismiss or the objection can be made in the answer. Defective service of process goes to lack of notice. Due process requires notice and an opportunity to be heard. Venue
Venue refers to the specific court in which a case is brought. In each city, county, state or country, there may be many courts in which a case may be brought, but one specific court may be more appropriate or proper than another.
Actually, venue is a French legal terminology, which means place of trial. In American civil procedure law, it is regarded as the place within a sovereign jurisdiction in which a given action is to be brought. In civil cases, venue is generally proper in the county or district where important events related to the case took place, such as the signing or performance of a contract or the accident or other incident that led to a personal injury case. Typically, the plaintiff in a civil case may also sue in the district or county where the defendant lives or does business.
Put it simple, venue means a proper place, such as the correct court to hear a case because it has authority over events that have occurred within a certain geographical area. Every court system, state or federal, has venue rules, generally established by statute, indicating the proper or most convenient location for trial of a case. For civil cases, venue is usually the district or county which is the residence of a principal defendant, where a contract was executed or is to be performed, or where an accident took place. However, the parties may agree to a different venue for convenience (such as where most witnesses are located). Sometimes a lawsuit is filed in a district or county which is not the proper venue, and if the defendant immediately objects (asks for a change of venue), the court will order transfer of the case to the proper venue.
Example: John wants to bring an action against Bill for injuries John sustained during a collision between John’s and Bill’s vehicles. Both John and Bill live in White Plains, New York, and the collision occurred in White Plains, New York. White Plains is in Westchester County, which is adjacent to Rockland County. New York State trial courts exist in both Westchester and Rockland. Both courts have jurisdiction over John and the subject matter of the case. However, the proper venue in which to being this case is in Westchester county since that is where both parties reside and that is where the accident occurred. Where a plaintiff may bring a federal action is also an issue. If John’s claim was based on federal law, should he bring his action in United States District Court for the Southern District of New York, or should he bring his action in United States District Court for the Eastern District of New York?
Venue principles are aimed at the selection of the most convenient and logical court within a given court system.
If jurisdiction determines what state a suit can be brought in, venue determines what county or judicial district it may be brought in. The purpose of venue rules is to limit the plaintiff's choice of forum in order to insure that the locality of the lawsuit has some logical relationship to the litigants or the subject matter of the dispute.
Venue is a statutory limitation on the geographic location of litigation designed to prevent the plaintiff from suing where it would be burdensome for the defendant to appear and defend. The most important reason of the existence of the venue rule is to further restrict the places where the plaintiff may choose to bring suit and to assure that suits are tried in a place that bear some sensible relationship to the claims asserted or to the parties to the action. That’s because personal jurisdiction and subject matter jurisdiction will not always limit the plaintiff’s choice of forum so significantly.
Example: State X is found to have jurisdiction over the person of B, in a suit against him by A. Venue determines in which county or district of State X the case should be tried.
(3) Venue under American law
Venue is the legally proper or most convenient place where a particular case should be filed or handled. Every state has rules determining the proper venue for different types of lawsuits.
A basic principle of U.S. law is that a civil action will be decided by a court in the locality where the dispute occurred. This principle is expressed in the concept of venue. In accordance with this principle a civil action must be started where either the plaintiff or the defendant resides, where the cause of action arose, or, if real property is at issue, where the real property is situated.
State and federal venue statutes govern where a case will be tried. State venue statutes list a variety of factors that determine in which county and in which court a lawsuit should be brought, including where the defendant resides, where the defendant does business, where the plaintiff does business, or where the seat of government is located.
A plaintiff may bring his action in any of the places permitted by state law. Most commonly, states allow a lawsuit to be brought in the county where the defendant resides. Choosing the wrong place is not fatal to the plaintiff's action, however. Statutes usually provide that a judgment rendered by a state court is valid even if venue is improper. If a defendant believes the suit is being tried in the wrong venue, she usually must object at the outset of the case, or she will be presumed to have waived the right to object.
Different rules regulate venue in the federal courts. The federal court system is divided into judicial districts, which can cover an entire state or, in the case of populous states, only a portion of the state. The federal venue statute (28 U.S.C.A. § 1391) refers to these districts in the way state venue statutes refer to counties. Except when a special law applies to a particular type of case, proper venue is determined by the factor that allows the case to be brought in federal court.
If the court derives its authority because the plaintiffs and defendants are residents of different states (known as diversity jurisdiction), then the proper venue is the judicial district where all the plaintiffs or all the defendants reside or the district where the claim arose. In lawsuits where the federal court has jurisdiction because a question of federal law is involved (known as federal question jurisdiction), venue lies only in the district where all the defendants reside or where the claim arose. Venue (continued)
(4) Venue vs. Jurisdiction
To understand venue, it is crucial that you remember that all other jurisdictional requirements, such as diversity jurisdiction or federal question jurisdiction, and personal jurisdiction, must be satisfied before venue can even be discussed. In other words, for a court to be a proper venue, it first must have jurisdiction to hear the case.
Jurisdiction is the power to adjudicate, while venue relates to the place where judicial authority may be exercised and is intended for the convenience of the litigants. Thus, venue becomes a consideration only when jurisdiction over parties has been established.
Venue under American law is a concept distinct from jurisdiction, which focuses on the authority of a court to hear a particular case. Venue is concerned with the geographical location of the court where a lawsuit is commenced. However, unlike personal jurisdiction, there is no constitutional requirement for proper venue in order to have a valid judgment.
Venue is either a county (for cases in state court) or a district or division (for cases in federal court). Venue deals with locality of a lawsuit--that is, in which locale a lawsuit may be filed or commenced. It involves a decision of which district (federal court) or county (state court) is appropriate, based typically on where a matter occurred or where the defendant resides. A case can be brought only in a certain venue. For instance, in federal diversity cases, the venue can be only: (a) the district where any defendant resides if all defendants reside in the same state, (b) the district where a substantial part of the events giving rise to the claim occurred, or (c) the district in which any defendant is subject to personal jurisdiction if there is no district in which the claim can otherwise be brought.
Venue and personal jurisdiction are closely related for practical purposes. A lawyer should usually perform joint analysis of personal jurisdiction and venue issues. Personal jurisdiction is largely a constitutional requirement, though also shaped by state long-arm statutes and Rule 4 of the Federal Rules of Civil Procedure, while venue is purely statutory. It is possible for either venue or personal jurisdiction to preclude a court from hearing a case:
Personal jurisdiction is the limiting factor. In World-Wide Volkswagen Corp. v. Woodson, the plaintiffs sued, in an Oklahoma state court, an automobile dealership based in New York for damages from an explosion that occurred on June 11, 1977, as the plaintiffs drove the car through Oklahoma. Had the plaintiffs sued in U.S. federal court sited in Oklahoma, personal jurisdiction against the dealership would have been unavailable, as the dealership did not have minimum contacts with the forum state. Venue, however, would have been proper under 28 U.S.C. § 1391, the general federal venue statute, because Oklahoma was a state in which a substantial part of the events or omissions giving rise to the claim occurred. However, the United States Supreme Court found that the defendants (World-Wide Volkswagen Corp.) did not have the minimum contacts with Oklahoma necessary to create personal jurisdiction there.
Venue is the limiting factor. Suppose Dale resides in California. Peter from Nevada wants to sue Dale for battery which Dale committed against Peter in California. Peter knows Dale is going to a week-long conference in South Carolina. Peter realizes that Dale would settle a suit that would take place in South Carolina, because it would be too expensive to defend. So, during Dale's trip, Peter serves Dale with process for an action filed in South Carolina federal court. The federal court has personal jurisdiction, based on Dale's presence in South Carolina at the time process was served (transient service of process). However, venue is improper under § 1391.
(5) Improper venue
Venue, unlike subject matter jurisdiction, may be waived.
Venue is determined by statute, but parties can stipulate or contract to an otherwise improper venue. Objections to venue are waived unless timely asserted. Improper venue does not subject a judgment to collateral attack.
Defendants can waive venue at the time of trial. Plaintiffs can waive venue at the time of trial. Plaintiffs may also waive their right to sue in certain venues through a contract that contains a valid and reasonable forum selection clause or venue selection clause. Forum selection clauses, establishing venue convenient to the offeror, are near universal in form contracts offered by a party that does business in many places. The proper recourse for challenging venue is a motion to dismiss for improper venue. Fed. R. Civ. P 12(b)(3). This is one of the waivable defenses, meaning that this must be made in the initial response to the complaint or it will be waived.
For various reasons either party to a lawsuit may move for a change of venue, which is up to the discretion of a judge in the court where the case or prosecution was originally filed. Reasons for such a request may include a clause in a contract stating that any action must be brought in a certain other venue, or pretrial publicity may be claimed to have tainted the potential jurors in that venue from rendering an impartial judgment. Other reasons, among others, may include lack of personal or subject matter jurisdiction, and "interests of justice". The interests of justice is subject to varied interpretations and may encompass many issues, such as efficient use of judicial resources and avoidance of unnecessary waste and expense, convenience to parties and witnesses, familiarity of the court with the state law to be applied, level of congestion of the respective courts, and avoidance of inconsistent adjudications.
Venue can be transferred from one federal district to another (28 U.S.C. § 1404). A case can also be removed from a state court to a federal court. Finally, a case may be dismissed because its venue is harshly "unfair" to one or more parties under a doctrine called forum non conveniens, often used in cases where the events took place in a foreign country. Venue (continued)
(6) Venue under state judicial systems
The rules for proper venue vary from state to state, as each state has created its own venue rules. In state actions, proper venue usually depends on where the defendant resides. Where the cause of action arose, where the tort (if applicable) occurred and where the defendant does business are also factors on which proper venue may depend, depending on the type of case or controversy.
In state trials, venue is determined by statute. The states are free to set up virtually any venue rules they wish, without worrying about the federal constitution. Typically venue in state judicial systems may be based on some or all of the following factors:
the locus of the res (property) or event that is the subject of the lawsuit.
where the defendant resides.
where the defendant does business, or retains an agent.
where the plaintiff resides.
where the plaintiff does business.
in suits by or against government parties, where the seat of government is located.
Although specific venue rules vary from state to state, following are some general rules that apply to many jurisdictions:
If all parties to a controversy reside out of a state, the proper venue is usually in the county in which the transaction or event that gave rise to the cause of action occurred.
If the case is to determine the status of real property, or if jurisdiction is based on attached real property (i.e., cases based on quasi-in-rem jurisdiction), the proper venue is usually the county in which that property is located. Many states extend this rule so that all cases involving real property should be tried where the property is located.
Where one or more parties lives in the state that is hosting the case, proper venue is often the home county of either party, although some states favor the home county of the defendant as the ideal venue.
(7) Venue under the federal judicial system - Generally
Because federal law is applied nationally, when an action arises under federal law, one important question is: in which district court should the action be brought? This is not a question to be taken lightly, for a case filed in the wrong venue may be subject to dismissal, even if the court has subject matter jurisdiction and jurisdiction over the parties or things.
It is essential to note that in addition to proper venue, the court must still have jurisdiction over the parties or things and jurisdiction over the subject matter of the case. Venue and personal jurisdiction are entirely different issues – just because a case is filed in the correct venue does not mean that the court necessarily has jurisdiction over the persons or subject matter.
Some states have more than one federal district, whereas some states have only one federal district. In addition, there may be more than one courthouse within each district. Within the Southern District of New York, for example, federal district courts exist in both Manhattan and White Plains. In which specific court the case should be filed depends on the rules of the local court, which should be researched when needed.
As in the realm of personal jurisdiction, a party's residence is usually controlled by his or her domicile, so that a person, for the purposes of venue, can have only one residence. Keep in mind, however, that different jurisdictions may not agree on this point. Also like personal jurisdictions, and unlike subject matter jurisdiction, most jurisdictions hold that one may consent to venue. Again, however, some jurisdictions disagree. Some jurisdictions hold that a defendant who consents to personal jurisdiction also consents to venue. If a defendant does not object to improper venue, the objection is waived.
As stated earlier, a defendant may move to dismiss the case for improper venue pursuant to FRCP 12(b)(3). Even if the court decides that venue is proper, it may choose to transfer the case to another venue for the convenience of parties and witnesses and/or in the interest of justice. The court to which the case will be transferred must have been able to hear the case in the first place, however (the transferee court must have jurisdiction and be a proper venue). When such a transfer occurs, the plaintiff is not penalized for the delay. Because the case is merely transferred, and not dismissed, the statute of limitations will not run during transfer. The court’s discretion to make such a transfer is quite broad. Venue (continued)
(8) Venue under the federal judicial system - 28 U.S.C. §1391
Venue in federal courts is controlled by 28 U.S.C. §1391. The statute provides two grounds for venue and a fallback provision. It provides mainly for venue based on the defendant’s residence, the place where a substantial part of the relevant events occurred, or the place where defendant can be made subject to personal jurisdiction. The main provisions of 1391 are as follows:
(a) A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.
(b) A civil action wherein jurisdiction is not founded solely on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought.
(c) For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. In a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State, and, if there is no such district, the corporation shall be deemed to reside in the district within which it has the most significant contacts.
1391(a): Some federal civil actions are based only on diversity of citizenship. If all defendants reside in the same state, the action may be brought in a district where any of the defendants reside. Another option is to bring the action in the district in which the main events on which the claim is based occurred. In an action where the subject is property, the action may be brought in the district in which a substantial part of the property is located. If all of the defendants are not from the same state, or there is not one state in which the substantial events occurred or in which the main part of the property is located, the action may be brought in a district in which any defendant is subject to personal jurisdiction at the time the action is brought.
Exampe 1: John, a citizen of Montana, wants to file an action in federal court against Mark, a citizen of South Dakota, for injuries John sustained during an automobile collision. John seeks to recover $100,000. The proper venue is federal district court in South Dakota (assuming there is only one federal courthouse in South Dakota; otherwise, local rules apply regarding which division of the particular district court should host the action).
Example2: John, a citizen of New Jersey, wants to file an action in federal court against Mark and Mike, citizens of New York, for injuries John sustained during an automobile collision; John seeks to recover $100,000 from each defendant. Mark lives in Buffalo, New York, which is within the Western District of New York, and Mike lives in Scarsdale, New York, which is in the Southern District of New York. John may file his action in either the United States District Court for the Western District of New York or the United States District Court for the Southern District of New York. If the collision had occurred in Hempstead, New York, John could also have brought his action in federal district court for the Eastern District of New York, because that is where the substantial part of the events giving rise to the claim occurred.
Where all defendants do not reside in the same state, and there is no district in which the substantial events occurred or in which the main property is located, the action may be brought in a district in which any defendant is subject to personal jurisdiction at the time the action is brought. Personal jurisdiction, in this situation, is not determined by the state in which the defendant is a citizen, but rather by the boundaries of the federal judicial district. For example: John, a citizen of New Jersey, wants to file an action in federal court against Mark, a citizen of New York (who resides in the southern district), and Paul, a citizen of Connecticut, for some matters that arose in Canada. 28 U.S.C. § 1391(a)(1) does not apply, nor does 28 U.S.C. § 1391(a)(2). Therefore, 28 U.S.C. § 1391(a)(3) applies, and the action may be brought in either the district court in Connecticut or in the Southern District in New York. Remember, of course, that personal jurisdiction must still be satisfied with regard to each defendant.
1391(b): Many federal civil actions are not based only on diversity of citizenship. Some actions, for example, qualify for diversity of citizenship but also concern a federal question, while some federal actions are allowable in federal court simply in the basis of federal question jurisdiction. In these cases, like actions based only on diversity of citizenship, if all defendants reside in the same state, the action may be brought in a district where any of the defendants reside. Also like actions based only on diversity of citizenship, another option is to bring the action in the district in which the main events on which the claim is based occurred. In an action where the subject is property, the action may be brought in the district in which the substantial part of the property is located. If all of the defendants are not from the same state, or there is not one state in which the substantial events occurred or in which the main property is located, the action may be brought in a district in which any defendant may be found. This last option differs substantially from the venue options for actions based only on diversity of citizenship.
1391(c): Where a defendant is a corporation, the corporation resides in any district in which it is subject to personal jurisdiction at the time the action is brought. This means that a corporation may reside, for venue purposes, in more than one judicial district. If the state has more than one district for the federal district court (e.g., New York), the corporation can reside in any district in the state with which it has minimum contacts, as if that district were a separate state.
Example: John, a citizen of New Jersey, wants to file an action in federal court against ABC Corp., whose business is only conducted in the Southern District of New York, and has absolutely no contact with anyone or anything within any of the other districts in New York. Therefore, John may only file his action in the United States District Court for the Southern District of New York.
If, however, ABC Corp. conducted business throughout the entire state of New York, but not enough to have the requisite minimum contacts needed for personal jurisdiction, the corporation’s residence is the district in which it has the most significant contacts, which is a determination to be made by the court. Recall that jurisdiction for a corporation is based on its citizenship. However, the proper venue for an action against a corporation depends on the corporation’s residence. While citizenship of a corporation is based upon the state where the corporation is incorporated and its principal place of business, the corporation's residence depends on where the corporation does business, which may be numerous districts.
Proper venue for actions against unincorporated associations (e.g., partnerships) is determined in the same manner as with corporations. Venue (continued)
(8) Venue under the federal judicial system - 28 U.S.C. §1391 (continued)
28 U.S.C. § 1391 Summarized: In diversity actions, venue is proper in the district all defendants reside if all the defendants reside in the same state, or in the district in which the claim arose, or, alternatively, where any of the defendants may be found. In federal question cases there is no plaintiff's venue. The action may be brought only in the district where all defendants reside or the district in which the claim arose.
(a) Federal diversity cases - 1391(a) governs venue in diversity cases. Except as otherwise provided by law, venue is only proper in:
A judicial district where any D resides (if all Ds reside in the same state),
A judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is subject of the action is situated, or
(FALLBACK PROVISION) A judicial district in which any D is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.
If Ds reside in different districts but all within the same state, venue is proper in any district in which one D resides in that state. Subsection (3) is a fallback provision that is only available in unusual circumstances when there is no district anywhere in the US where venue would be proper under (1) or (2). "Except as otherwise provided by law" means that 1391 will apply unless there is a special venue statute for the type of claim the P brings. For example, tort claims against the US must be brought in the district where the P resides or where the act or omission complained of occurred. Venue is proper under (2) for any district where a substantial part of the events giving rise to the claim took place, even if substantial events also took place in other districts. We don't have to choose which events are most substantial.
Example 1: P, from Massachusetts, brings a diversity suit against D1, from the Southern District of New York, and D2, from the Eastern District of New York. Venue will lie in either the Southern District of New York or the Eastern District of New York – each of these is home to at least one defendant, and each of these two districts is in a state that is home to all the defendants. But if D2 had been a resident of the District of Connecticut instead of any New York district, there would not be any "defendant’s residence" venue anywhere.
Example 2: P, from Massachusetts, sues D, a car dealer from Connecticut. P alleges that D sold P a car in Connecticut, that P drove the car to Massachusetts, and that a defect in the car caused P to be injured in Massachusetts. Probably venue in either the District of Massachusetts or the District of Connecticut would be allowed under the "place of events" provision, since probably both the selling of the defective car and the incurring of the accident were a "substantial part" of the events.
(b) Federal question cases - 1391(b) governs venue in federal suits not based on diversity jurisdiction. 1391(a) and 1391(b) are the same except for subsection (3), which states that venue is proper where any D "may be found." Again, subsection (3) only applies if (1) and (2) cannot.
(c) Residence analysis for corporations - 1391(c) provides residence guidance for corporations. Since 1391(a) and 1391(b) apply equally with individuals and corporations, the only outstanding issue is residence. 1391(c) provides:
D corporations shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.
In a state with more than one judicial district and in which a corporation is subject to personal jurisdiction the time an action is commenced, the corporation is deemed to reside in any district in that state where its contacts with that district would be sufficient to subject it to personal jurisdiction if it were a separate state. If there is no such district, the corporation is deemed to reside in the district where is has the most significant contacts.
Example: XYZ Corp. is incorporated in Delaware, and has its only office in San Francisco. XYZ has no contacts with any part of California other than San Francisco. If XYZ is a defendant, it will reside, for venue purposes, in the district of Delaware and in the Northern District of California. XYZ is not a resident of any other districts in California – thus "defendant’s residence" venue would not lie against XYZ, for instance, in a suit brought in the Central District of California, located in Los Angeles.
Most courts hold that a corporation is subject to general in personam jurisdiction in both the state of its principal place of business and the state of its incorporation. Corporations can be residents of multiple states. Thus, venue is proper in these locations. However, be careful in multi-district states; personal jurisdiction over a D is state-wide while venue is only district-wide.
To sum up, the statute provides two grounds for venue and a fallback provision:
Defendant’s Residence - In both diversity and federal questions cases, venue may be proper in the district where the defendant resides, or if there are multiple defendants, in any district where any defendant resides provided that all defendants reside in the state in which the federal court sits. Most courts equate residence with domicile for venue purposes. Subsection 1391(c) defines the residence of a defendant corporation to be “any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.” This test has been applied to unincorporated associations as well for purposes of venue.
Locus of Substantial Part of Events or Property at Issue - Venue may be proper in the judicial district “in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is the subject of the action is situated.”
Fallback Venue - If, based on the preceding grounds, there is no district in which the action may otherwise be brought: (1) diversity actions may be brought in “a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced.” [28 U.S.C. § 1391(a)(3)]; (2) federal question cases may be brought in a judicial district “in which any defendant may be found.” [28 U.S.C. § 1391(b)(3)]. The fallback provision set forth in § 1391(a)(3) is largely invoked when there are defendants who do not reside in the same state and either the claim arose outside the United States or all of the defendants are not subject to personal jurisdiction where a substantial part of the claim-related events occurred. Venue (continued)
(9) Venue under the federal judicial system - Specific venue
In certain instances, the proper venue may depend on the type of federal action brought. While general venue rules are codified at 28 U.S.C. § 1391, other sections are more specific. For example, actions concerning copyrights may be brought in any district in which the defendant (or his agent) resides, or any district in which the defendant (or his agent) may be found.
Example: Jake, a resident of California, has created a comic strip called “Dopie” and has copyrighted the Dopie character. A few years later, Doug, a resident of the federal district of Western Nevada, has created his own comic strip called “Mopie”. The Mopie character is exactly the same as the Dopie character. Jake wants to bring an action against Doug in federal court for copyright infringement. Assuming all jurisdictional requirements are met, Jake may bring his action in Western Nevada, as that is where Doug resides.
Like copyright actions, actions for patent infringement may be brought in the district where the defendant resides. Unlike copyright actions, patent infringement actions may also be brought where the defendant committed the acts of infringement and has a regular and established place of business.
Example: Jake, a resident of California, has developed a new miracle weight loss drug that he has patented with the appropriate federal agency. A few years later, Doug, a resident of the federal district of Western Nevada who maintains his office in the federal district of Northern Arizona, while working in his office, takes Jake’s formula and begins marketing his own weight loss drug. Assuming all jurisdictional requirements are met, Jake may bring a patent infringement action against Doug in the federal district of either Western Nevada or Northern Arizona.
If a holder of stock in a corporation wishes to bring an action on behalf of his corporation, he may bring the action in any judicial district where the corporation could have sued the same defendants. In other words, if the corporation itself would be able to sue the defendants in the Northern District of New York, so may the corporation’s stockholders.
Some federal civil actions include an officer or employee of the United States or a United States agency as a defendant. Such an action may be brought in any judicial district in which a defendant in the action resides, any district in which a substantial part of the events on which the action is based occurred, or any district in which a substantial part of the property on which the action is based is located. If no real property is involved in the action, the action may also be brought in any judicial district in which the plaintiff resides. Remember, however, that venue for non-government defendants must still satisfy the venue requirements discussed above.
Furthermore, the courts have personal jurisdiction over the federal employee or agency (or the United States) within the boundaries of the United States, even if the employee or agency is not within the actual district over which the court has jurisdiction. To obtain personal jurisdiction over such a defendant, the summons and complaint may be served by certified mail.
(10) Transfer of venue within the same Judicial system
Inter-system transfer has been codified in many jurisdictions. Under the federal transfer statute, 28 U.S.C. § 1404, both plaintiffs and defendants may seek transfer to a district where the case could have originally been brought. Transfer is available upon a lesser showing than required for forum non conveniens dismissal; generally for “the convenience of parties and witnesses, [or] in the interest of justice.” [28 U.S.C § 1404(a)] Any contractual choice of forum between the parties is not dispositive but is a factor to be considered.
Statutory transfer is intended only to change the place of trial, and not the applicable law or the availability of limitations defenses. Upon transfer, the court must apply the law that would have been applied in the transferor court, whether the movant was the plaintiff or the defendant.
(11) Change of venue outside of judicial system
State courts have no power to transfer cases to the courts of other states, and neither state nor federal courts have the power to transfer cases to the courts of foreign countries. In such cases, most judicial systems permit dismissal of suits under the common law doctrine of forum non conveniens, in anticipation that the plaintiff will recommence the suit in the alternative foreign venue. To obtain a forum non conveniens dismissal, the defendant must:
demonstrate that an adequate alternative forum is available.
show that considerations of party and forum convenience override the plaintiff’s choice of forum and justify dismissal. Typical such considerations include: relative ease of access to proof, availability of compulsory process for attendance of witnesses, the cost of obtaining their attendance, the possibility of obtaining a jury view of the scene of the accident or property which is the subject of the action, and the enforceability of any eventual judgment in the original forum. To be continued: Forum non conveniens
Literally, forum non conveniens means “inconvenient forum”. It does not refer to a judicial forum that is improper; rather it refers to a judicial forum that is inconvenient or not as appropriate as another forum may be.
Forum non conveniens (Latin for "forum not agreeing") is a common law legal doctrine whereby courts may refuse to take jurisdiction over matters where there is a more appropriate forum available to the parties. As a doctrine of the conflict of laws, forum non conveniens applies between courts in different countries and between courts in different jurisdictions in the same country.
The defendant may move to dismiss an action on the ground of FNC. Invoking this doctrine usually means that the plaintiff properly invoked the jurisdiction of the court, but it is inconvenient for the court and the defendant to have a trial in the original jurisdiction. The court must balance convenience against the plaintiff’s choice of forum. In other words, if the plaintiff’s choice of forum was reasonable, the defendant must show a compelling reason to change jurisdiction. If a transfer would simply shift the inconvenience from one party to the other, the plaintiff’s choice of forum should not be disturbed.
The doctrine of forum non conveniens can be employed when the venue, albeit proper, is inappropriate, inconvenient, or unacceptable for various reasons. It is for a court to determine, on a case by case basis, whether it is the proper venue in which to hear the action. This is true even though it has jurisdiction over the parties, jurisdiction over the subject matter of the case, and is a proper venue in which the action can be brought.
Under the doctrine of forum non conveniens, the state may use its discretion not to hear the case in a county where there is statutory venue. Sometimes, this involves shifting the case to a different place within the state. At other times, it involves the state not having the case take place in-state at all. Usually, it is the defendant who moves to have the case dismissed or transferred for forum non conveniens. Three factors that state courts often consider in deciding whether to dismiss for forum non conveniens are: (a) whether the plaintiff is a state resident (if so, he has a stronger claim to be able to have his case heard in his home state); (b) whether the witnesses and sources of proof are more available in a different state or county; and (c) whether the forum’s own state laws will govern the action (transfer is more likely if a different state’s law controls).
(3) Federal practice
In the federal system, when a defendant successfully moves for forum non conveniens, the original court transfers the case to another district, rather than dismissing it. Under 28 U.S.C. §1404(a), "for the convenience of parties and witnesses … a district court may transfer any civil action to any other district or division where it might have been brought."
Defendant’s motion: Usually, it is the defendant who moves for forum non conveniens. When this happens, the case may be transferred only to a district where P would have had the right, independent of the wishes of D, to bring the action. For example: If suit in a particular district would not have been possible, as an initial matter, because one or more of the Ds could not be personally served there, or because venue would not have been proper there, even the consent by all Ds would not authorize the action to be transferred to that district. However, it doesn't preclude a federal court from rasing FNC on its own, that is, sua sponte. Thus, the court may invoke the doctrine of forum non conveniens sua sponte, that is, without the issue being raised by a party.
Choice of law: When federal forum non conveniens is granted, the state law of the transferor court is to be applied by the transferee court. For example: P brings a diversity action against D in Mississippi federal court. That court grants D’s motion to have the case moved to Pennsylvania District Court. If, as is likely, Mississippi federal court would have applied Mississippi state law rather than Pennsylvania state law under Erie principles, the Pennsylvania federal court must also apply Mississippi state law. This is true whether the forum non conveniens was sought by P or by D.
(4) Public interests vs. Private interest
There are two types of factors the court will take into account when considering a forum non conveniens motion: public interest and private interest:
(a) Public interest factors include: “(1) having local disputes settled locally; (2) avoiding problems of applying foreign law; and (3) avoiding burdening jurors with cases that have no impact on their community.” Another factor to consider is whether another group of citizens has a greater interest in deciding the case than those of the original forum. Finally, another consideration is whether a judgment by one court will have to be enforced in another jurisdiction, which can create more legal hurdles; it may make more sense to have the other jurisdiction decide the case in the first place.
Example: Andy slips and falls on the sidewalk outside Paul’s boutique in Manhattan in New York City. Both Andy and Paul are residents of Manhattan. Andy files an action against Paul in State Supreme Court in Westchester County, New York. Paul moves to invoke the doctrine of forum non conveniens. A court is likely to grant the motion because the parties are from Manhattan and the events giving rise to the action occurred in Manhattan. In addition, because the court would like to to avoid burdening jurors with cases that have no impact on their community, if possible, the doctrine may be applied and the action may be moved to Manhattan.
(b) Factors concerning private interests include: “(1) ease of access to evidence; (2) the cost for witnesses to attend trial; (3) the availability of compulsory process; and (4) other factors that might shorten trial or make it less expensive.” Forum non conveniens (continued)
(5) Factors to be considered
In deciding whether to grant the motion, the court considers:
The location of potential witnesses - The defendant must make a full and candid showing, naming the potential witnesses for the defense, specifying their location, specifying what their testimony may be and how crucial it is for the defense, and setting forth how exactly they may be inconvenienced by having to testify in the court chosen by plaintiff.
The location of relevant evidence and records - The defendant must identify the records; explain who is in charge of the records; address necessity, language, and translation problems; address the volume of such records; address the law governing these records; and rule out the existence of duplicate records in the jurisdiction chosen by the plaintiff. The mere fact that records need to be translated is not sufficient grounds to invoke FNC.
Possible undue hardship for the defendant - The defendant must explain what the hardship is and how material the costs are. If there are costs involved, they need to be spelled out. If there is a difficulty in getting witnesses out of a foreign court and into the original court, this needs to be revealed to the court. The defendant must explain why the use of letters rogatory or other judicial reciprocity tools are not sufficient and cannot replace actual transfer of the case. The standard that the defendant must meet is “overwhelming hardship” if they are required to litigate in the forum’s State.
Availability of adequate alternative forums for the plaintiff - Merely pointing out that the plaintiff could have sued somewhere else is not sufficient to succeed on an FNC motion.
The expeditious use of judicial resources - In practice, this is just boilerplate language that comes along with the application. However, sometimes the court chosen by the plaintiff may be logistically or administratively unfit or illequipped for the case; for example, a case may involve a large number of torts.
The choice of law applicable to the dispute - If all other factors weigh in favor of keeping the case in the jurisdiction where it was filed, then the court may choose between application of local law (lex fori) or relevant foreign law. Thus, the mere fact that foreign law may apply to the event, circumstances, accident, or occurrence is not a strong reason to dismiss the case on FNC grounds.
Questions of public policy - In analyzing the factors, the subject matter of the complaint may touch on a sensitive issue that is important to the laws of either the original jurisdiction or the alternative forum. Those public policy issues must be pinpointed, analyzed and briefed in a way that makes it clear why this issue overrides the other factors. For example, an employee suing a foreign corporation in a state of employment, may enjoy the public policy to protect local employees from foreign abusers.
Additional factors include:
The location where the cause of action arose - In most states, defendant must usually show that the cause of action arose outside of the jurisdiction.
The identities of the parties - Who is suing whom? Is the plaintiff suing an individual defendant or a small company without financial means as a method to oppress the defendant with financial and legal costs by litigating in a remote court? Is the defendant a conglomerate making the FNC application simply to force the plaintiff to bear expensive costs of travel and retainer of foreign lawyers? A plaintiff who is a resident in the state where action was filed is normally entitled to have his case heard in his home state.
Vexatious motive - Where there is no evidence that the plaintiff had improper intent in bringing the case specifically in a particular forum, courts usually deny the FNC motion.
Jurisprudential development and political conditions at the foreign forum - Is the court going to send the plaintiff to a land where the law is underdeveloped, uncivilized, or where there is no equal protection or due process? Is the court going to send the plaintiff to another court in a country where violence is rampant or in the middle of a war? A suit will not be dismissed if the foreign court does not permit litigation of the subject matter of the complaint, no live testimony of the plaintiff is required by appearance, or if the foreign law is otherwise deficient in its protocols or procedures.
(6) Adequate alternate forum
To exercise the doctrine of forum non conveniens, an adequate alternate forum in which the case may be heard is essential. Such a forum must be willing to hear the case, and the defendant(s) must be able to be served with process within the alternate forum.
To exercise the doctrine, there must be an adequate alternative forum in which the case can be heard. The burden to prove the existence of such an alternate forum is on the party who moves to transfer the case for forum non conveniens, usually the defendant. Without an alternate forum, the case must remain in the original forum, no matter how inconvenient it may be.
To determine whether another forum is an adequate alternative, the court must determine whether the alternate forum will hear the case, and whether the defendants may be served with process in the alternate forum. Usually, the latter depends on the jurisdiction of the alternate forum over the defendants. Because it is usually the defendants who move to transfer the case to the alternative forum, the defendants will often consent to such jurisdiction. If the defendants refused to consent, the case would remain in the original forum, which is exactly what the defendants were attempting to avoid.
In situations where the defendant seeks to employ the doctrine of forum non conveniens and names a court in a foreign country as an alternative forum, the original court will take many factors into consideration, such as: whether the foreign court will apply American substantive law; whether the plaintiff will be prejudiced by transfer to a foreign court; and whether the foreign court will be fair. As for the transfer of a trial to a jurisdiction outside of the U.S., courts will only grant the transfer if a foreign court is “more appropriate”, and there may be a real opportunity to obtain justice there. Forum non conveniens (continued)
It should be noted that the plaintiff’s initial choice of forum is given deference. Even if there are more reasons to grant the motion for forum non conveniens than to deny it, the deference may still control and the court may hold on to the case. The reasons to grant the motion to move the case must be extremely persuasive.
Generally speaking, there is a strong presumption in favor of the plaintiff’s choice of forum. A defendant must show compelling evidence in order to disturb the choice of forum. The burden of proof is on the defendant. The court must also consider the defendant’s vast resources compared with the plaintiff’s limited resources as an aggrieved individual.
Example: In 2006, the 2nd Circuit Federal Court in New York issued a decision in the famous Coca Cola case. Coca Cola took over assets of Jews expelled from Egypt in the 1950s and was sued in New York. In that case, the plaintiffs were Canadians and nonresidents of New York. The court denied Coca Cola’s FNC motion and the U.S. Supreme Court denied certiorari. The 2nd Circuit stated that the fact that the New York court would need to apply “modest application” of Egyptian law was not a problem because “courts of this Circuit are regularly called upon to interpret foreign law without thereby offending the principles of international comity”. Also, the fact that there were witnesses abroad was not a problem either. They could be flown into the U.S. or Letters Rogatory could be issued to the Egyptian courts to collect their testimony. Further, it was held that in an FNC scenario, a court applies the balance of conveniences, but preference (and weight) must be given to the fact that plaintiffs chose this particular forum for “legitimate reasons”. The fact that plaintiffs could sue in Canada was not relevant because Coca Cola was a U.S. company and it was “perfectly reasonable to sue in the US”.
(8) Piper Aircraft Co. v. Reyno
Facts: In July 1976, an airplane was involved in an accident in the Scottish Highlands while on a charter flight from Blackpool to Perth, killing the pilot and five passengers instantly. The aircraft was a Piper Aztec manufactured by Piper Aircraft Co. in the U.S. state of Pennsylvania, and Hartzell Propeller, Inc. manufactured the propellers in the U.S. state of Ohio. A British Department of Trade found no evidence of defective equipment and indicated that pilot error may have caused the accident. A California probate court appointed respondent Gaynell Reyno administratrix of the estates of the five passengers. She did not know nor was she related to any of the decedents, she was merely the legal secretary to the attorney who filed this lawsuit. Reyno admitted the choice of the United States as a venue was more favorable to her case.
Issue: Should a case be dismissed on the grounds of forum non conveniens when all the witnesses and evidence are in another country, the other country’s jurors would be more connected to the problem, it is inconvenient to the parties to try the case in the jurisdiction where it was brought, and the other country’s law will be applied?
Analysis: The possibility of a change in substantive law should ordinarily not be given conclusive or even substantial weight in the forum non conveniens inquiry. If conclusive or substantial weight were given to the possibility of a change in law, the forum non conveniens doctrine would become virtually useless. Jurisdiction and venue requirements are often easily satisfied. As a result, many plaintiffs are able to choose from among several forums. Ordinarily, these plaintiffs will select that forum whose choice-of-law rules are most advantageous. Thus, if the possibility of an unfavorable change in substantive law is given substantial weight in the forum non conveniens inquiry, dismissal would rarely be proper. Additionally, this would lead to other practical problems. At least where the foreign plaintiff named an American manufacturer as defendant, a court could not dismiss the case on grounds of forum non conveniens where dismissal might lead to an unfavorable change in law. The American courts, already very attractive to plaintiffs, would become even more attractive. The flow of litigation into the United States would increase and further congest already crowded courts.
Because the central purpose of any forum non conveniens inquiry is to ensure that the trial is convenient, a foreign plaintiff's choice deserves less deference. The District Court's holding that the case would be better suited in Scotland was not unreasonable. First, because the majority of evidence was there and second, because the decedents were not able to properly implead the defendants. Also, Pennsylvania would not be a good venue because there would need to be two law standards - the Pennsylvania law would apply to Piper and Scottish law would apply to Hartzell. A trial involving two sets of laws would be confusing to the jury. A lack of familiarity with Scottish law would also be confusing. Another powerful reason why Pennsylvania is a bad venue is that Scotland has a very strong interest in this litigation. There is "a local interest in having localized controversies decided at home." The incremental deterrence that would be gained if this trial were held in American court is likely to be insignificant. The American interest in this accident is simply not sufficient to justify the enormous commitment of judicial time and resources that would inevitably be required if the case were to be tried there.
Rule: The doctrine of forum non conveniens allows a court to dismiss a case that was brought in the wrong forum. When all or most of the significant events, witnesses and evidence are centered in one location, then a court must dismiss a case brought in another location under the doctrine of forum non conveniens unless the alternate forum provides the plaintiff with absolutely no remedy. Whether the law of the forum chosen by the plaintiff is more favorable to the plaintiff should not be given weight.
Remember: Choosing a particular forum because the law is more favorable to the plaintiff cannot be given any substantial weight under a forum non conveniens analysis. Although the general rule is that a court should not dismiss a case on grounds of forum non conveniens unless there is an alternate forum in which the plaintiff can pursue a remedy, this rule only requires that the plaintiff be able to file a proper lawsuit in that alternate forum. Removal to the federal courts
Removal refers to the transfer of a civil action from state trial court to federal district court.
The legal terminology removal means any action brought in state court of which the federal courts would have had original jurisdiction may be removed by the defendant to federal district court. So, only cases which could originally have been brought in the federal courts may be removed.
Generally, any action brought in state court that the plaintiff could have brought in federal court may be removed by the defendant to federal district court. However, there are important exceptions to this rule.
Example: P, from New Jersey, sues D, from New York, in New Jersey state court. The suit is a garden-variety automobile negligence case. The amount at issue is $100,000. D may remove the case to federal district court for the District of New Jersey.
In certain cases, the defendant may wish the case to be heard by a federal, rather than state, tribunal. Where a defendant in a state civil action wants to have the case heard by a federal tribunal, the defendant will seek to “remove” the case to federal court.
In order to achieve a balance between plaintiff and defendant, when we give plaintiff the right to choose the federal court system or the state court system to sue, at the same time we also give defendant the right to second-guess that choice by removing some types of cases from the state court to a federal court. Once properly removed the case becomes a federal case, and the state court loses jurisdiction over it. Both pretrial litigation and trial will take place in the federal court.
Sometimes, the federal district courts will have original jurisdiction over a civil action filed in state court. That is not to say that the case has been improperly filed in state court – it is only to say that the federal court is also be able to hear the case because it has original subject matter jurisdiction. In such a case, the defendant or defendants may remove the case to the federal district court for the district and division in which the action is pending. To where does the case get removed? Generally, a case filed in state court will be removed to the federal court that has geographical jurisdiction encompassing the state court’s location.
Example: John brings a cause of action against Mike in New York Supreme Court in Westchester County. Assume that a federal court also has jurisdiction, both personal and subject matter, over the parties and the case. If Mike’s motion to remove the case to federal court is granted, the case will most likely be removed to United States District Court for the Southern District of New York in White Plains, New York.
The original defendant(s) may remove the action to federal court. Whether a defendant to a counterclaim, crossclaim or third party action, etc. (who may be the plaintiff in the original action), may remove the case to federal court is another question. The majority of courts hold that such removal is not allowed. If an original defendant moves for removal, the counterclaims and crossclaims, etc., may end up being removed anyway.
(4) Federal question cases
Where the plaintiff’s state court complaint raises a federal question, the defendant may remove. The well-pleaded complaint rule applies in the removal situation, and the fact that the defendant has raised a federal defense to the plaintiff’s state law claim is not sufficient to support removal. However, plaintiff is master of his claim. If he chooses not to assert a possible federal claim, the defendant may not remove the case by citing the unasserted claim.
The right of removal is generally decided from the face of the pleadings. The jurisdictional allegations of plaintiff’s complaint control. For example, P is badly injured in an automobile accident caused by D’s negligence. P’s medical bills total $80,000, but P sues only for $60,000, for the express purpose of thwarting D’s right to remove. The jurisdictional allegations of P’s complaint control, so that D may not remove even though more than $75,000 is "really" at stake. Removal to the federal courts (continued)
(5) Diversity cases
Where the federal district courts have original jurisdiction over a civil action in state court that is not based on a federal claim (i.e., the court's subject matter jurisdiction is based on diversity of citizenship), the action is removable to federal district court only if none of the defendants is a citizen of the state in which the action was brought. Of course, the defendants must be properly joined and served.
Where the federal district courts have original jurisdiction over a civil action in state court because the action arises under federal law, the case is removable, regardless of the citizenship or residence of the parties involved.
The most important single thing to remember about removal jurisdiction is this: In diversity cases, the action may be removed only if no defendant is a citizen of the state in which the action is pending. Since diversity jurisdiction is designed to protect against local prejudice, there is no reason to invoke it on behalf of a local party.
Example: P, from New Jersey, brings a negligence action against D, from New York, in the New York state court system. D may not remove the case to federal court for New York, because he is a citizen of the state (New York) in which the action is pending. (But if P’s suit was for trademark infringement – a kind of suit that raises a federal question but may be brought in either state or federal court – D would be able to remove, because the "not a citizen of the state where the action is pending" requirement does not apply in suits raising a federal question.)
In removal cases, the usual rules governing existence of a federal question or of diversity, and those governing the jurisdictional amount, apply. So, if there is no federal question, diversity must be "complete."
(6) Removal of multiple claims
Where P asserts against D in state court two claims, one of which could be removed if sued upon alone, and the other of which could not, complications arise.
Very often, plaintiffs will join multiple causes of action in one case filed in state court. In a case where the federal district court has original jurisdiction over some of the claims but not others, the entire case may be removed to federal court. This is similar to supplemental jurisdiction – the non-removable claims can go along with the removable claims. Once removed, the federal district court will either hear the entire case or, if it feels that the state court is the more appropriate forum for certain claims in which state law predominates, it will remand those claims to state court.
(a) If the claim for which there is federal jurisdiction is a diversity claim, the presence of the second claim (for which there is no original federal jurisdiction and diversity is not complete) defeats the defendant’s right of removal entirely – the whole case must stay in state court.
(b) Where the claim for which there is original federal jurisdiction is a federal question claim, and there is another, "separate and independent," claim for which there is no original federal jurisdiction, D may remove the whole case.
Example: P and D1 are both citizens of Kentucky. P brings an action in Kentucky state court alleging federal antitrust violations by D1. P adds to that claim a claim against D1 and D2, also from Kentucky, asserting that the two Ds have violated Kentucky state unfair competition laws. Section 1441(c) will allow D1 and D2 to remove to federal court, if the antitrust claim is "separate and independent" from the state unfair competition claim.
If §1441(c) applies, and the entire case is removed to federal court, the federal judge need not hear the entire matter. The court may instead remand all matters in which state law predominates. In fact, the federal court, after determining that removal is proper, may remand all claims – even the properly-removed federal claim – if state law predominates in the whole controversy.
(7) Compulsory remand
If the federal judge concludes that the removal did not satisfy the statutory requirements, she must remand the case to the state court from which it came.
Example: If in a diversity case it turns out that one or more of the Ds was a citizen of the state in which the state suit was commenced, the federal judge must send the case back to the state court where it began.
(8) Mechanics of removal
D must usually file for removal within 30 days of the time he receives service of the state-court complaint.
The procedures through which a defendant may remove the case to federal court are detailed, but fairly simple. Generally, defendants must file a notice of removal with the appropriate federal court within 30 days of receiving the summons and complaint. In addition to filing the notice, the defendant must include “a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or defendants in such action.” 28 U.S.C. § 1446(a). The filing of the notice creates automatic removal – the case is no longer under the jurisdiction of the state court. At this point, it is up to the appropriate federal court to determine whether the removal is proper, whether all claims are removable, etc. If need be, the court may remand either the entire case or certain claims back to state court. The case will not be dismissed for inappropriate removal; rather, the remedy is to remand it back to the state court.
As stated above, the defendant(s) has 30 days from receipt of the summons and complaint to file the notice of removal. If, however, the case is not removable at this point, but becomes removable later, because, for example, the plaintiff amends the complaint, the defendant will again have 30 days by which to file a notice of removal, beginning on the date that the amendment is filed.
Parties can agree to waive removal. If, in a contract, a clause exists that a particular claim will be litigated in state court, that claim will not be removed to federal court.
Bill and Ted enter into a contract in which Bill agrees to buy 84 widgets from Ted. The last clause of the contract provides: “All claims arising under this contract must be heard by Idaho state court. No claim arising under this contract may be removed to federal court.” Bill files an action in state court against Ted. Ted files a notice of removal in federal district court. The federal district court will remand the case back to state court.
All defendants (except purely nominal ones) must join in the notice of removal. (However, if removal occurs under §1441(c)’s "separate and independent federal claim" provision, then only the defendant(s) to the separate and independent federal claim needs to sign the notice of removal.)
Example: John brings a cause of action against Mike and Mark in state court. Assume that a federal court also has jurisdiction, both personal and subject matter, over the parties and the case. Further assume that Mike and Mark qualify for removal. If Mike seeks to remove the case to federal court but Mark does not agree, the case may not be moved. If Mike qualifies for removal but Mark doesn’t qualify for removal, then Mark’s disagreement does not affect the initial decision about removal; it will be removed.