Civ Pro Midterm 2 Outline.docx

1. Subject Matter Jurisdiction A. Federal Question (pg 205 - 220) 1. U.S. Const. Art. III, §2 a. The Judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority. . . . Narrowed down by Congress into:

2. 28 U.S.C. § 1331 a. The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States. 3. Exclusive Federal Jurisdiction: Admiralty, Federal Antitrust, Civil Rights, Patent/Copyright/Trademark, Title 11 Bankruptcy, Postal Matters, Internal Revenue 4. Louisville & Nashville Railroad v. Mottley (U.S. 1908) a. The Mottley’s claim was for breach of contract [free railroad passes for life], a state law cause of action, and did not arise under federal law because the federal issue is not stated in the complaint. b. Distinguishes “arising under” in 1331 vs. Article 3. c. Well-Pleaded Complaint Rule: The court must determine at the outset whether it has jurisdiction, based on claims the plaintiff has asserted, without anticipating the defendant’s answer. 5. American Wellworks v. Layne (U.S. 1916) a. Justice Holmes* Broadest interpretation of 1331: A suit arises under the law that creates the cause of action. (ex: federal statute allowing for private right of action) Smith and Grable go beyond Holmes; but they are still faithful to the well-pleaded complaint rule in that the court looks at what the plaintiff must establish as part of the case. 6. Smith v. Kansas City (U.S. 1920) a. When a state claim does not pass the WellWorks test but is sufficiently “federalized” b. Federal courts upheld arising-under jurisdiction where federal law does not create the right to sue, but the plaintiff, in order to establish her state law claim, must prove a proposition of federal law. c. The plaintiffs could not prove their state law claim without establishing a proposition of federal law; that the federal statute under which the bonds were issued was unconstitutional. d. The decision depends upon the determination of an issue of federal law - “the right to relief depends upon the construction or application of federal law” 7. Grable & Sons Metal Products Inc. v. Darue (U.S. 2005)

a. Court held FQ jurisdiction proper because the claim was regarding the IRS system of notice. “Whether Grable was given notice within the meaning of the federal statute is thus an essential element of its quiet title claim, and the meaning of the federal statute is actually in dispute” b. Established a 3 part test for “federalized claims” i. Does a state law claim raise a federal issue? ii. Is the embedded federal issue actually disputed and substantial? iii. Can a federal forum entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities?  Concerns of opening the federal courts to an excessive number of claims. c. References to Merrell Dow; undertook the type of individualized judgment about the substantiality of the embedded issue called for by Smith i. Non-compliance with federal regulations constituting negligence would attract a horde of cases in federal court (opening up the floodgates) ii. Congress’ refusal to create a federal cause of action for violations of the FDCA statute suggested that such claims were not sufficiently substantial to support arising-under jurisdiction iii. Allowing certain state law claims in federal court because of the importance of the federal issues involved. B. Diversity Jurisdiction (pg 220-234) 1. U.S. Const. Art. III, §2 a. [T]o controversies to which the United States shall be a party, to controversies between 2 or more states, between a state and citizens of another state, between citizens of different states, between citizens of the same state claiming lands under grants of different states, and between a state/citizen and foreign states. (minimal diversity const’l - see Class Action Fairness Act and Federal Interpleader Act)

2. 28 U.S.C. § 1332 a. The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds $75k and is between: i. Citizens of different states ii. Citizens of a State and citizens or subjects of a Foreign state [except subjects of a foreign state who are lawfully admitted for permanent residence and are domiciled in the same state] iii. Citizens of different States in which citizens of a foreign state are additional parties iv. A foreign state as plaintiff and citizens of a State or of different states b. *Note - US citizens domiciled abroad fall into a hole - they cannot be sued under diversity jurisdiction.

3. The purpose of the diversity statute is to guard against local prejudice that might be manifested in state courts against out of state parties. 4. Strawbridge v. Curtiss (U.S. 1806) a. A case is not within 1332(a) grant of diversity unless there is COMPLETE DIVERSITY between the parties, that is, all plaintiffs are from different states than all defendants at the time the suit is brought (COMMENCEMENT OF THE ACTION)

b. Note: The complete diversity rule is statutory, and not a constitutional requirement. 5. Redner v. Sanders (S.D.N.Y. 2000) a. In order to be a citizen of a state for diversity purposes, a human must be 1) a citizen of the United States, and 2) domiciled in that state. b. Domicile = Physical presence with the intent to reside indefinitely. c. Residence is not synonymous with domicile. 6. Hertz Corp. v. Friend (U.S. 2010) a. 1332(c)(1): A corporation is a citizen of every state where it is incorporated and where it has its principal place of business. b. Supreme Court adopted the Nerve Center Approach: i. PPB = corporate headquarters, where the high level officers “direct, control, and coordinate the corporations activities.” ii. Cannot be where the corporation holds its board meetings that the officers travel to. 7. Non-Incorporated Businesses (ex: LLC, LLP): Take on the citizenship of each of their members. 8. Hawkins v. Master Farms a. For diversity purpose, the representative of a child, an incompetent, or a deceased person (estate administrator) HAS THE SAME CITIZENSHIP as individual represented. b. Mr. Creal’s conduct of business affairs in Missouri (car registration, insurance, life insurance, and paycheck) was not sufficient to overcome the evidence of his actions of establishing a home with his wife in Kansas. He had moved most of his possessions there and purchased a new bedroom set. 9. Amount in Controversy a. Must EXCEED $75k b. “It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.” c. Aggregation of Claims to Meet the AIC Requirement i. A single plaintiff with 2+ unrelated claims against a single defendant may aggregate. ii. A single plaintiff cannot aggregate amounts sought from different defendants. He must meet the amount requirement against each individually.

iii. iv.

If >2 plaintiffs, at least 1 has to meet the AIC. If 1 plaintiff has claim >75k but 2nd plaintiff does not and the defendant is the same, they can both sue in federal court so long as the 2nd plaintiff’s claim arises out of the “same case or controversy” v. If 2 plaintiffs each have claims against a single defendant, cannot be aggregated if claims are “separate and distinct” vi. If state law allows punitive damages, then it’s okay to tack on. d. Aggregation Notes i. Personal injury claims are distinct and separate, not joint, even when they arise from the same transaction or occurrence. 2. Removal Jurisdiction (pg 242-254 + assessment questions) A. 28 U.S.C. §§ 1441 1. a) Generally: Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division where the action is pending. 2. B) Removal based on diversity of citizenship: a. 1) Fictitious names disregarded b. 2) A civil action otherwise removable solely on 1332 basis may not be moved if ANY of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought (makes sense, bc there would be no prejudice)

B. 1445: Nonremovable Actions 1. A civil action in any State court against a railroad, its receivers or trustees… 2. A civil action in any State court against a carrier or its receivers or trusters… 3. A civil action in any State court arising under the workmen’s compensation laws of such State 4. A civil action in any State court arising under section 30302 of the Violence Against Women Act of 1994 C. 1446: Procedure for Removal 1. a) Need a short and plain statement of the grounds for removal + a copy of all process, pleadings, and orders served upon defendant 2. b) Notice of removal needs to be filed within 30 days after the receipt of service 3. b2a) all defendants who have been properly joined and served must join in or consent to the removal of the action 4. b2b) if defendants are served at different times, and a later served defendant files a NOR, any earlier served defendant may consent to the removal even though that earlier served defendant did not previously initiate or consent to removal. 5. C) A case removed under 1332 may not be removed more than 1 year after commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action (ex bad faith: plaintiff deliberately misstated the AIC) D. 1447: Procedure After Removal

1. A motion to remand the case on the basis of any defect (other than lack of SMJ) must be made within 30 days after filing of the NOR 2. An order remanding a case back to state court is NOT REVIEWABLE unless removed pursuant to 1442 or 1443 (armed forces, civil rights) E. Caterpillar, Inc. v. Lewis (U.S. 1996) 3. State Law in Federal Courts: Erie and Beyond A. RULES OF DECISION ACT (28 U.S.C. §§ 1652): The laws of the Several states…shall be regarded as rules of decision in all civil actions in the courts of the united states, in cases where they apply. B. Pre-Erie: Swift v. Tyson - interpreting “state law” in the Rules of Decision act - held that NY precedent cases were not “laws” and federal courts sitting in diversity were free to ignore them. C. Erie Railroad v. Tompkins (U.S. 1938) - Earth Shattering. 1. Overruled Swift - state law includes both statutory + judge made law 2. Fed courts sitting in diversity need to act as state court would 3. A general common law is an unconstitutional assumption of powers by federal courts (alluding to violating the 10th Amendment) and renders impossible equal protection of the law 4. Twin Aims of Erie: a. Discourage/prevent forum shopping (Black Yellow Taxi Cab case company reincorporated in a state to benefit from that law) b. Avoid inequitable administration of the law - having a general common law and state law does not prove uniformity 5. Justice Reed’s concurrence hinted at hazy line between substantive and procedural law. D. Guaranty Trust Co v. York (U.S. 1945) 1. Outcome-Determinative Test a. When determining whether to apply state or federal law, courts should consider the outcome of the litigation - it should be “substantially the same” as it would be if tried in state court. b. Federal courts need not follow state law that concerned merely the “manner and means” by a which a right to recover is enforced 2. Court held that NY statute of limitations should apply in federal court. E. Byrd v. Blue Ridge Rural Elec. Coop. (U.S. 1958) Justice Brennan 1. Direct conflict between federal PRACTICE [of jury system] and state law [what qualifies as a statutory employee decided by judge] 2. The court opens the door to the possibility that “other considerations” might override outcome determination and permit a federal court to refuse to follow state law. 3. Analysis: a. Is the outcome going to be substantially different? i. Judge vs jury is not clearly outcome determined. ii. Don’t apply mechanically; consider Twin Aims of Erie.

b. Is the state law [having a judge decide a question of fact] bound up with state created rights and obligations or mere manner and mode of enforcement? i. The state did not have a good reason why the jury was displaced. c. Is there a countervailing federal interest (that trumps mechanically applying the outcome-determinative test in York)? i. Here, jury as fact finder is grounded in the 7th Amendment. ii. The federal interest outweighed the state’s and the federal court was justified in ignoring state law. F. RULES ENABLING ACT (28 U.S.C. §§ 2072) 1. The Supreme Court shall have the power to prescribe general rules of practice and procedure and rules of evidence for cases in the United States district courts and courts of appeals. 2. Such rules shall not abridge, enlarge, or modify any substantive right. All laws in conflict with such rules shall be of no further force or effect after such rules have taken effect. 3. Made possible the promulgating of the FRCP. Congress delegated to the Supreme Court the congressional authority to promulgate rules of “practice and procedure” for the federal courts. 4. Once a court determines that a federal directive, such as the FRCP, applies to the facts of the case and is valid, the Supremacy Clause of the constitution requires that it be applied. The Supremacy Clause says that federal law is the supreme law of the land. 5. Before applying the “typical, relatively unguided” Erie inquiry, a court must ask whether there is a federal directive on point. G. Hanna v. Plumer (1965) Earth-Shattering***** 1. Direct conflict between Federal Rule of Civil Procedure [service under Rule 4] vs. State standard for service of process 2. Analysis: a. Is there a FRCP or federal statute that answers the question in dispute? b. Does that FRCP or statute “directly collide” with state rule/law? i. Direct Collision Factors:  Are purposes of both rules co-extensive or FRCP is “sufficiently broad”? 1. If not, then court will likely find no direct collision. 2. If they are co-extensive or FRCP is broader, FRCP/statute will likely apply. (Hannah and Shady Grove)  Is the state rule mandatory, but FRCP is discretionary? 1. If FRCP discretionary, it will likely apply.  Does the FRCP keep the case alive, while the state rule closes the courthouse door? 1. Want to keep the case alive. c. Does the adoption of the FRCP transgress constitutional bounds aka Was Congress authorized to do it?

i. Always going to be yes. d. Does it exceed the Congressional mandate embodied in the REA? i. Is it a rule of practice and procedure? ii. Does it abridge, enlarge, or modify any state substantive right?  Look to legislative history to give you the purpose of the statute. H. Semtek v. Lockheed (2001) 1. Dismissal on SOL grounds does not have claim preclusive effect in other jurisdictions I. Shady Grove Orthopedic Assoc., P.A. v. Allstate Ins. Co. (U.S. 2010) (excerpt on TWEN) 4. Pleadings A. Review Rules 8, 10, 12(b)(6) B. Haddle v. Garrison (U.S. 1998) C. Bell v. Novick Transfer Co. (1955) 1. Court held that plaintiff’s complaint did not need to allege more than the car he was riding in was struck by a car owned by defendants and that it was operated in a careless, reckless, and negligent manner so that plaintiff was injured. D. Conley v. Gibson (U.S. 1957) 1. All that is required is a “short and plain statement” that will give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests AKA “Notice Pleading” 2. The accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. E. Bell Atlantic Corp v. Twombly (U.S. 2007) F. Ashcroft v. Iqbal (U.S. 2009) G. Special Pleadings 1. Rule 9 2. Stradford v. Zurich Ins. Co. (SDNY 2002) 3. Jones v. Bock (U.S. 2007) H. Ethical Responsibilities 1. Rule 11 2. Bridges v. Diesel Service (E.D. PA. 1994) 3. Walker v. Norwest Corp. (8th Cir. 1996) 4. Christian v. Mattel (9th Cir. 2003)