CIVIL PROCEDURE CLASS 24

Professor FischerColumbus School of LawThe Catholic University of AmericaNovember 13, 2001

ANNOUNCEMENTS

Academic Dean’s Office Exam Skills Workshop (Alvare, Schooner, Harmon) 5:30 Friday November 16 in the AuditoriumIPLSA (Intellectual Property Law Students Association Meeting at 5:00 p.m. Monday November 19 in Room 204If it makes the difference, there will be refreshments at both events!

WRAP-UP OF LAST CLASS

We finished our study of claim preclusion (also known as res judicata)We studied the requirements for issue preclusion (also known as collateral estoppel)

WHAT WILL WE DO TODAY?

Learn about when collateral estoppel can apply, in federal court, when the parties are not mutualBegin our study of subject matter jurisdiction by learning about 2 bases for federal jurisdiction: diversity and federal question jurisdiction

MUTUALITY AND COLLATERAL ESTOPPEL

Old rule: parties had to be the sameNew rule in federal court: Parklane Hosiery Co. v. Shore (1979)NOTE THAT PARKLANE applies only to federal courts. State courts are not obligated to follow Supreme Court. You will need to check the law carefully to see whether a jurisdiction has abandoned mutuality, and if so, to what extent.

DEFENSIVE NON-MUTUAL COLLATERAL ESTOPPEL

In Blonder-Tongue, the Supreme Court first endorses the use of nonmutual collateral estoppelKey facts of Blonder-TongueWhat is the policy justification for the Supreme Court’s reversal of its long-standing rule requiring mutuality?What is the difference between the use of collateral estoppel in Blonder-Tongue and in Parklane?

DEFENSIVE NONMUTUAL ESTOPPEL

Suit 1: P sues D1 (P loses on Issue A)

Suit 1: P sues D2 (D2 pleads collateral estoppel to bar plaintiff from relitigating Issue A)

PARKLANE HOSIERY V. SHORE

Offensive nonmutual estoppelWhat are the key facts in Parklane?

OFFENSIVE NONMUTUAL COLLATERAL ESTOPPEL

Suit 1: P1 sues D (D loses on Issue A)Suit 2: P2 sues D (new plaintiff invokes collateral estoppel to establish Issue A in her suit against D)What are the risks posed by offensive use of estoppel?

SUPREME COURT IN PARKLANE

Does the Supreme Court categorically endorse or reject offensive nonmutual collateral estoppel?What factors must lower courts consider?

4 PARKLANE FACTORS1. Could nonparty have joined prior litigation?2. Was subsequent litigation foreseeable at time of first suit?3. Is judgment being relied on consistent with prior judgments against this D?4. Are there any procedural opportunities available to D in second action that did not exist in the first that would lead to a different result?

ISSUE PRECLUSION HYPOAl and George, riding on a motorcycle, are thrown off when it hits a pothole. Al, the owner of the cycle, sues the city for $1,000 in damages to the machine. She brings the suit in municipal court which uses an abbreviated system of discovery and has a jurisdictional limit of $5,000. City loses. George then sues the city in federal court for disabling spinal injuries suffered in the same accident; he seeks damages of $1.5 million. George seeks to invoke preclusion on the issue of the city’s negligence.

SUBJECT MATTER JURISDICTION

What is subject matter jurisdiction?REVIEW: Courts of general jurisdiction, other courts e.g. probate courts have specialized jurisdictionFederal Courts are courts of limited jurisdiction under Article III of the U.S. Constitution - a party can only file an action in federal court in limited circumstances!

ARTICLE III Section 1 of the U.S. CONSTITUTION

“The judicial Power of the United States shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish”What does Article III Section 2 provide for subject matter jurisdiction of the federal courts?

Article III Section 2The judicial power shall extend to all cases,

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

ARTICLE III Sect. 2

Sets out the scope of federal judicial powerlist of all areas in which federal courts may subject-matter jurisdictionCongress does not have power to extend the subject matter jurisdiction of the courts beyond the list in Article IIIWhat happens if Congress passes a statute that purports to grant the federal courts power beyond these areas?

MAJOR AREAS IN WHICH FEDERAL COURTS EXERCISE SUBJECT-MATTER JURISDICTION

1. FEDERAL QUESTION cases2. DIVERSITY casesOthers include admiralty and maritime cases, suits in which U.S. a party

CONSTITUTIONAL PARAMETERS

Article III sect. 2 extends federal judicial power to, e.g., cases “arising under this Constitution, the Laws of the United States, and Treaties. . .”Then up to Congress to effectuate this grant of judicial power by passing legislation

FEDERAL QUESTION STATUTE

What is the general federal question statute?Note: there are many other statutes that confer federal subject-matter jurisdiction over cases arising under various federal laws, for example certain securities statutes, civil rights statutes, title 11 bankruptcy cases, patents etc. See, e.g. 28 U.S.C. §§ 1333-1338

CONCURRENT JURISDICTION

In most cases, federal court subject-matter jurisdiction is CONCURRENT with that of state courts.What does concurrent jurisdiction mean?In some cases, e.g. copyright infringement actions or patent infringement actions, federal courts have exclusive subject-matter jurisdiction

CHOOSING A COURT

If plaintiff had a choice, why would a plaintiff choose federal court over state court?Why would a plaintiff choose state court over federal court?TO THINK ABOUT: Is this parallel federal-state system sensible or dysfunctional?

28 U.S.C. section 1331

“The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States”What do you think is the basis for including federal question jurisdiction in the Constitution?Is there an amount in controversy requirement for federal question cases?

IS THERE AN AMOUNT IN CONTROVERSY REQUIREMENT FOR FEDERAL QUESTION CASES?

There used to be (originally $10,000)1980 amendment to sect. 1331 changed thisWhy do you think the amount in controversy requirement was abandoned for federal question jurisdiction?

LOUISVILLE & NASHVILLE RR CO. v. MOTTLEY (1908)

Famous U.S. Supreme Court caseThe classic case illustrating the “well pleaded complaint rule”Meaning of “arising under” Ultimately a Constitutional inquiryBut note: Louisville’s reading of “arising under” is not constitutionally required

LOUISVILLE & NASHVILLE V. MOTTLEY

Why did the Mr. And Mrs. Mottley bring this lawsuit in the circuit court of the US for the Western District of Kentucky? What was their cause of action?What remedy did they seek?What was the railroad’s defense?How did the trial court rule?

THE SUPREME COURT

What were the two legal questions that were appealed to the Supreme Court?Did the Supreme Court decide these issues?Why or why not?NOTE THAT NEITHER PARTY QUESTIONED SUBJECT-MATTER JURISDICTION. SEE FRCP 12(h)(3)

SUBJECT-MATTER JURISDICTION

In Louisville & Nashville RR v. Mottley, did the federal court have diversity jurisdiction? Did the federal court have federal question jurisdiction? Why or why not?

THE WORDS OF JUSTICE MOODY

“It is not enough that the plaintiff alleges some anticipated defense to his cause of action, and asserts that the defense is invalidated by some provision of the Constitution of the United Stats.”THUS, THE PLAINTIFF’S STATEMENT OF HER OWN CAUSE OF ACTION MUST BE BASED ON SOME FEDERAL LAW OR THE CONSTITUTION

The Aftermath of Louisville & Nashville v. Mottley

Supreme Court reverses and remands with instructions to circuit court to dismiss for lack of jurisdiction. Action recommenced in a state courtAction eventually ends up in the U.S. Supreme CourtU.S. Supreme Court finally rules on the meritsThe Mottleys lose (see 219 U.S. 467 (1911)).Why did Supreme Court allow this result to happen? Didn’t they foresee the outcome on the merits?

A Sensible Rule?

Does the well-pleaded complaint rule (a bright-line test) make sense? Why or why not?How could Congress amend s. 1331 to change the result in Mottley and expand federal judicial power to its constitutional limits?

COUNTERCLAIMS

Well-pleaded complaint rule appliesThus, a defendant cannot create federal jurisdiction by pleading a counter-claim arising under federal law.

DIVERSITY JURISDICTION

U.S. Constitution Article III section 2 states: “The judicial Power [of the United States] shall extend to . . . Controversies between Citizens of different States . . . and between a State, or the Citizens thereof and foreign States, Citizens, or Subjects.”

RATIONALE FOR DIVERSITY

Why did the framers include the provision for diversity jurisdiction in the Constitution?Do you think diversity jurisdiction is necessary or desirable, or should it be abolished?

Congressional Implementation

Congress first implemented the Constitutional grant of diversity jurisdiction in the 1789 Judiciary ActPlease cite to the current statutory grant of diversity jurisdictionIs this grant narrower or broader than the grant of diversity jurisdiction in Article III sect. 2 of the U.S. Constitution?

Restrictions on Diversity Jurisdiction

1. AMOUNT IN CONTROVERSY (St. Paul Mercury Indemnity Co. v. Red Cab Co. (1938)2. COMPLETE DIVERSITY (Strawbridge v. Curtis (1806)RULE OF THUMB: If any 2 parties on both sides of the v. are citizens of the same state, that defeats diversity jurisdiction

Requirements for Diversity

1. CITIZENSHIP (see 1332(a)2. AMOUNT IN CONTROVERSY 3. COMPLETE DIVERSITY

Timing For Determining Diversity

To determine diversity, should the court consider the citizenship (1) at the time of filing the complaint ; (2) at the time of serving the complaint; (3) at the time of filing the answer; (4) at the time of serving the answer; or (5) some other time?

CITIZENSHIP REQUIREMENT

BE FAMILIAR WITH 1332(a)How is citizenship of a natural person determined?How can citizenship be changed?A particular problem: determining the citizenship of students attending school in a different state from their parents’ domicile

CITIZENSHIP OF CORPORATIONS

How do you determine the citizenship of a corporation for the purposes of diversity jurisdiction?What statutory provision governs a corporation’s citizenship for this purpose?

CORPORATE CITIZENSHIP

For the purposes of diversity, a corporation may have 2 citizenships unlike a natural person who can only have 11. Place of incorporation2. Principal place of business How is the principal place of business determined?

TESTS USED TO DETERMINE CORPORATE CITIZENSHIP

2 main tests used to determine “principal place of business” (corporation can only have one!)1. NERVE CENTER TEST - where is corporate policy made, where are executive/administrative functions of corporation?2. PLACE OF OPERATIONS TEST -where is corporation’s major production/service activities?

ALIENAGE JURISDICTIONCan a person domiciled in a state and a citizen of the U.S. invoke alienage jurisdiction to sue a resident of that state who is not a citizen of the U.S. without any other basis for subject-matter jurisdiction?See 28 U.S.C. s. 1332 (a) (2)Note technical difference between “alienage” jurisdiction and “diversity” jurisdictionNOTE: Alien corporations are citizens of foreign nation where incorporated.

ALIENAGE HYPONigel is a British subject living in Michigan.Can Roseanne, an American citizen domiciled in Michigan, sue Nigel, a British subject who has lived in Detroit for the past 6 months, in federal court for breach of contract?Does it matter if Nigel has been admitted to permanent residence in the U.S.?

Americans Domiciled Abroad

Pierre is an American citizen domiciled in Paris. Can Jonathan, an American citizen domiciled in New York, invoke alienage or diversity jurisdiction to sue Pierre in federal court?Can Jonathan rely on alienage or diversity jurisdiction to sue Pierre’s friend

Marie-Louise, a French national domiciled in Paris in federal court?

Amount In Controversy Requirement

What is the amount in controversy requirement for diversity?

Amount In Controversy Requirement

Matter in controversy must exceed $75,000Under St Paul Mercury, it must appear to a legal certainty that the P’s claim really is for less than the jurisdictional amount to justify dismissal. It must be patent on the face of the complaint that the P can’t recover the jurisdictional amount. What happens if a judgment is eventually entered for $75,000 or less than $75,000? Is there still diversity? Can the judge penalize the P in any way?We will study rules for aggregation in the next class