Jurisdiction, Personal, Subject Matter

CIVIL PROCEDURES OUTLINE- FALL 2001

 Three requirements for any lawsuit

• Authority to exercise personal jurisdiction
• Subject Matter jurisdiction over the matter
• Proper venue under the applicable statute

Personal Jurisdiction- turns on the relationship between the defendant and the state where the suit is brought

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  • Constitutional Limits
    • Article III- power enumerated in the Constitution
    • Article IV- Full Faith and Credit Clause
      • Privileges and Immunities  clause- requires states to give citizens of sister states access to its courts on the same terms  as the state’s own citizens have access
    • Article VI- Supremacy Clause
    • Article XIV- limits method of summons for non-State-residents
      • Limits the transactions over which a state may exercise jurisdiction, esp. property in another state
      • Status of persons resident of another state
      • Requirements regarding notice
      • Equal protection clause

State personal jurisdiction

• State court has authority to enter a judgment against a person who is in the state
• Served with process, against property located in the state and involved in a transaction in the state, and against one who consent to jurisdiction  (Pennoyer v. Neff)
• Scope of state court jurisdiction controlled by federal constitutional law
  • Ex. In Pennoyer v. Neff, if state court entered judgment in which personal jurisdiction requirements were lacking, it both denied the defendant due process in that court, and was not entitled to full faith and credit in another state’s courts.
    • Pennoyer recognized jurisdiction based on the presence of property in the state
    • The status of the citizen
    • Personal service in the state
    •  Consent
• A state has jurisdiction over persons and property within its territorial limits

Three types of in rem jurisdiction

• In rem- disputed claims to a particular property
• Quasi-in-rem- against specific persons
  • Shaffer v. Heitner– by accepting positions as officers and directors of a Delaware corporation, appellant purposefully availed itself of the rights and privileges of Delaware (Hanson v. Denckla)
    • Court ruled that assertion of in rem and quasi in rem jurisdiction are subject the same standard as the long arm jurisdiction:  Defendant’s contacts with the state. 
    • All assertions of state-court jurisdiction mush be evaluated according to the standards in International Shoe
    • Must still have contacts, ties or relations to forum.          *******((This is where the City must prove that I (Paul Hansen) am subject to an administrative court, and have no right to a common law trial by jury.))       [** see end of this post- judge not a judicial officer.]
    • Delaware’s assertion of jurisdiction over appellants in this case is inconsistent with that constitutional limitation on state power
    • Generally, owning property within a state might be a purposeful contact supporting suit, but in this case, shareholders/stock (no Delaware statute to correlate stock to property)
    • Relation to International Shoe– central issue in jurisdictional cases is not the state’s power over the defendant or property in question but the fairness to the defendant of requiring him or her to defend against a particular claim in a particular forum
• Quasi-in-rem (attachment) claim does not relate to the property, property seized, used as collateral, 1)to give notice of action, 2) to use to pay plaintiff if the claim is sustained

International Shoe Co. v. Washington

• Presence of corporations- since corp. an entity difficult to determine  presence
  • Presence- idea of transactions (minimum contacts)
    • “Presence” used to define activities that are sufficient to satisfy demands of due process.
    • Due process depends on quality and nature of activity in relation to the fair and orderly administration of the law
    • Relation to Neff:  Historically, power to render judgment against the person grounded on the de facto power over the defendant’s person, thus his presence within the territory jurisdiction required for a judgment to be binding upon him
• • Enlarged to include “some connections with the state”
    • Domicile (could be regarded as present even though they were physically absent)- Khashoggi
    • Also transactions that resulted in legal dispute
      • Hess v. Pawlowski– Ultimately, the State retains the right to regulate highways both to residents and nonresidents.  Implied consent to jurisdiction by virtue of driving, it is limited to accidents and collisions.
      • To have jurisdiction, sop must be done in the state in which the claim is brought, thus the Massachusetts Law that service of process upon a registered agent constitutes service of process upon the individual
• Minimum Contacts
  • Not to offend  notions of fair play and substantial justice
  • Minimum contacts alternative to presence to claim jurisdiction
  • Specific Jurisdiction- limited to a particular claim arising out of defendants contacts with the state
  • General Jurisdiction- any claim against the defendant
• Notice
  • New method, rather than SOP  within the state’s borders, Int’l Shoe, expanded to include notice reasonably calculated to let the defendant know of the suit, by registered mail to the defendant’s headquarters  and by service within the state on one of the shoe salesman (Had to be constitutionally adequate
• Compare to McGee– court allowed California insured to sue Texan insurance company  because of state’s interest in protecting its citizens from the disadvantages of suing the insurer in its home state (Use of long arm jurisdiction
  • As a result of International Shoe– states developed long arm statutes
  • Long Arm Statutes- used to call a nonresident back into the forum state to defend a claim
    • Authorize jurisdiction over defendant’s specific types of conduct (minimum contacts, can then serve person anywhere
    • Specific statutes that resulted from International Shoe to determine what activities within the state constitute sufficient contacts

 

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    • Two questions to ask regarding Long Arm Statutes
• • Does the transaction constituting the contact come within the terms of the statute
  • If so, is applying the statute valid under the cons. contacts rule
    • Juxtaposition in Gray v. American Radiator and Standard Sanitary Corp.-vending of a defective valve could through the “stream of commerce,” find its way into Illinois, did not violate judicial jurisdiction of Ill.
• Three principles for assessing the Constitutional adequacy of long arm jurisdiction
  • Purposeful availment– some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state
    • Burger King v. Rudzewicz– Defendant “purposefully directed” his activities at residents in the forum. Defendant’s sought out BK, reached into Florida for a long term contract to enjoy the benefits that would come from affiliation
      • Franchise dispute grew directly out of a contract which had a substantial connection with that state
      • Quality and nature of contacts substantial (World Wide VW v. Woodson)
      • Nor did defendant point to other factors to establish the unconstitutionality of Florida’s assertion of jurisdiction
      • Florida has legitimate interest in providing effective redress for its citizens
    • Asahi Metal Industry Co. v. Superior Court –
      • Considering the international context, the heavy burden on the alien defendant, and the slight interest of the plaintiff and the forum State, the exercise of personal jurisdiction by a California court over Asahi in this instance would be unreasonable and unfair
      • Plaintiff did not establish minimum contacts
• Minimum Contacts- specific jurisdiction
• Fairness- even when a claim arises from the out of state defendant’s purposeful contacts with the forum state, the Constitution forbids the state courts to hear the case if the defendant can show that doing so would be fundamentally unfair
  • Factors to consider-
    • Burden on the defendant
    • Forum state’s interest
    • Plaintiff’s interest in obtaining relief
    • Judicial system’s interest in efficiency
    • Defendant bear a substantial burden of proving that the forum is inconvenient
  • World Wide VW– court has sustained state assertions of jurisdiction over interstate business involved in local transaction but has reversed states’ attempts to assert jurisdiction over nonresident persons

An objection to personal jurisdiction may be made only by a defendant and must be made immediately, or the objection will be waived 

RECALL- Federal court has personal jurisdiction over an out of state defendant only if the state in which that federal court sits would have personal jurisdiction

Statutory Limits

• Personal Jurisdiction authority must be enumerated in state statutes
• Must be constitutional under due process

Notice-                        5^th and 14^th amendment (Reasonable notice and opportunity to be heard)

            Constitutional Requirement

• Mullane v. Central Hanover Bank (newspaper publication of notice to pool money for common trust)
• Due process requires that interest parties be given notice to afford them an opportunity to present their calculations
• Must provide:
  • Reasonable, accurate information with reasonable time to respond
  • Have to actually try to contact the party (actual notice)

Can use property to provide notice (quasi-in-rem jurisdiction, type 1- against the property for the purpose of getting to the defendant.

Statutory Requirement (Rule 4 (d)

• National Development Co. v. Triad Holding Corp. (Khashoggi) – SOP sustained under Rule 4 (d)(1), apt. dwelling house or usual place of abode for service. Actual notice (but actual notice not enough is service doesn’t comply with the rule) Goal is to make the party aware
  • Summons must be served together with a copy of the complaint to anyone 18 years or older
  • Waiver of service of process- defendant must sign and return waiver of service sent by plaintiff, unless good cause

Opportunity to Be Heard – Sufficient advance warning to allow time to prepare an adequate defense

• Connecticut v. Doehr (attachment of property w/o having to demonstrably show evidence of plaintiff getting rid of collateral)
  • No pre-attachment hearing
  • Also not required to show exigent circumstances
  • Violation of Due process
  • Prejudgment remedy provision violates the requirement of due process by authorizing pre-judgment attachment w/o prior notice or hearing

Subject Matter Jurisdiction– (12 (b)(1) concerns the court’s authority to hear generic types of cases

• Non waivable right
• Court may also bring up at any time (sua sponte)
• Rule 12 (b)(1)-must plead at the outset
  • Concurrent jurisdiction- two available forums- can be brought in Federal of State court
    • Federal- Limited Subject Matter Jurisdiction
      • Can hear only certain kinds of cases
      • Those prescribed by Art. 3 of the Constitution and federal statutes
    • State courts- General Subject Matter Jurisdiction-can hear cases in almost all circumstances
    • Exception to General Subject Matter Jurisdiction of state courts is where Congress has granted federal courts exclusive jurisdiction
      • i.e. admiralty 1333, bankruptcy 1334

IF CASES ARE BOTH, PLAINTIFF DECIDES WHERE TO FILE

•   Plaintiff bears the burden of establishing Federal SMJ- Lack of SMJ- defense that is never waived

DISTRICT COURT JURISDICTION- Foreign state, federal questions, diversity of cit.

Federal Questions- any federal district court will have smj over a matter, although not all will have personal jurisdiction

• Limits of SMJ-Those under diversity cases and those that arise under federal law
  • Article III, sec.2- those not implied belong to the States (arising under)
    • Limited to: Diversity suits (two citizens of different states, citizens and aliens, admiralty), alienage, and federal question
    • Plaintiff bears the burden of establishing SMJ

28 USC 1331- arising under language, claim must be based on federal claim

• Louisville & Nashville R.R. v. MOTTLEY – (K claim, passes revoked in accordance with statute)
  • plaintiff’s original cause of action must arise under the Constitution or Federal Statute to have federal subject jurisdiction (Well pleaded complaint rule)
  • not enough for federal law to be used as possible defense
  • fails to fulfill requirements of 28 USC §1331 – narrower interpretation than given to Article 3 of constitution
  • under Art. 3 – any case w/federal ingredient may be tried in federal court-Broad interp. leaves door open for Congress to adapt to future      
  • 1331- claim must be based on federal claim-Narrow interp: simplicity and doesn’t overburden fed court

 

• Has to “arise under” and be a sufficient or central part of the dispute 

Well Pleaded Complaint Rule- a federal defense to a state law claim

• Court is able to determine at the beginning whether it has jurisdiction, based on the claims the plaintiff has asserted, without waiting for the defendant’s answer.

Implied Complaint-

• Federal right created by statute, yet no express authorization to sue for damages as a result of violation of that right

Merrell Dow– (drug misbranded in violation of the Federal Drug and Cosmetic Act)

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  • implied right of action- given from federal government
  • Right to relief depended necessarily on a substantial question of federal law
  • In this case, federal claim, one of many
  • Court came up with four questions to find implied right
    • Whether or not plaintiffs are a part of the class for whose benefit the statute was passed
    • Legislative intent or congressional purpose to provide a private right of action
    • Federal cause of action would not further the underlying purposes of the legislative scheme
    • Respondent’s cause of action traditionally left to  state law

Holding: Congress did not intend a private right of action for violation of the statute it enacted

Suit must arise under the law that creates the cause of action

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  • In a state based cause of action, that turns on the construction of federal law- also considered within federal question boundaries

Diversity Jurisdiction

• Since Erie, federal court sitting in a diversity case must apply the same law that the states in which it sits would have been applied
• Goal is to claim federal jurisdiction  within the constitution bounds of Article III (jurisdiction over all diversity cases, regardless of the sum and statute 28 USC 1332 (requires 75,000.00 minimum)
• Strawbridge v. Curtiss– to be within statutory grant must have complete diversity, (art. III allows div. as long as some parties are diverse)
  • Strawbridge interprets statutory rather than constitutional law
• Domicile- residence with intent to reside indefinitely (Khashoggi – National Dev Co. p 166)
• 1332 (c) Corporation diversity- citizen of any state where it is incorporated and principle place of business
  • JA Olson– corporation can only have one place of principle business
  • 1332 (c)(1) principal place of business clause- nerve center test/place of activity
    • Nerve center test- center of hub, place where the corporation has an office from which its business is directed and controlled
    • Place of activity test- method of operation, business by way of activities rather than board meetings 
• • Now Total Activity test- balance of both tests to find where the most substantial activity takes place
    • If operations are far flung, sole nerve center more significant
    • If operation are in one state and executive office in another (place of activity more significant )
    • When activity is passive and the brain is in another state, the brain is given greater significance
• Date for determining diversity is the date of filing suit in federal court

Amount in Controversy

• For federal cases, must be more than 75,000.00.
• Aggregation- May add up any claims against a single defendant to reach the required sum, even if totally unrelated
• Aggregation- May NOT aggregate claims of different plaintiffs to equal minimum amount

Assignment of Claim

• 1359- can’t manufacture diversity by assigning claim over to Uncle Bob in Utah who could then claim diversity jurisdiction

Venue-

• Determines where within a court system a case can be brought

Plaintiff is the master of his claim; venue may be waived by the defendant

• General- 1391(a)(1) if diversity of citizenship, venue, in any district where the defendant resides (if all of the defendants reside in the same state)
• 1391 (a)(2) where a substantial part of the events occurred (or property)
• 1391 (a)(3) IF THERE IS NO DISTRICT WHERE THE ACTION CAN OTHERWISE BE BROUGHT, then a judicial district where any defendant is subject to personal jurisdiction at the time the action is commenced (allows venue where any defendant is subject to personal jurisdiction)

If venue is not based solely on diversity of citizenship then governed by 1391 (b)

• Same three provisions as (a)
• 1391(b)(3) authorizes venue in a district where any defendant may be found
• 1391 (c)-Corporation- residence anywhere subject to personal jurisdiction, significant contacts
• 1391 (d) alien in any district
• 1404- transfer from one district court within the federal system to another in a different state or district  (convenience of parties or witnesses)
  • transferor court is the proper venue, change of courtrooms, not change of law applied
    • Court may transfer the action to some other district if doing so would advance convenient administration of justice and if it could have been brought there initially
    • Requires that considerable weight be given to the plaintiff’s choice of venue
    • Permits transfer to any district where the case might have originally been brought
    • 1406- transferor court is the improper venue- if improper venue, court shall dismiss or transfer, takes on the new law (use law from proper district)

Removal –

• federal removal statutes allow the defendant to remove some cases from state court to federal court

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  • 1441 (a)- authorizes removal of state court actions where the district courts have had original jurisdiction
  • Federal court authority a derivative of state court
  • In diversity- removal limited, defendant may not remove case if he is a resident of the state in which such action is brought
  • 1446-proper removal procedures (all defendants just agree to remove)

DEFENDANT WAIVES HER OBJECTION TO VENUE IF SHE FAILS TO RAISE IT WHEN SHE RESPONDS TO THE P’S COMPLAINT (Rule 12 (b)

Forum Non Conviens- court has discretionary authority to decline to try the action whenever it appears that the cause my be more appropriately tried elsewhere

• Must weight public and private interest in looking to an alternative forum
• Also choice of law issue
  • Piper Aircraft Co. v.  Reyno (Scottish air crash, Scottish passengers, American plane and parts)
    • Just because an alternative forum may provide laws that are less favorable to the Plaintiff than that chosen by the Plaintiff  does not alone bar dismissal
    • 1404 transfers- should not result in a change of applicable law HOWEVER, 1404 transfers different from Forum Non Conviens
    • Ordinarily- Plaintiff’s forum deserves substantial deference BUT … (???)
      • Fnc will not be applied if dismissal will deprive the plaintiff of the only available forum for the case

Challenges to Personal Jurisdiction, Venue (forum), and Subject Matter Jurisdiction

• Special Appearance may appear although objecting to court’s authority. (Strictly personal jurisdiction) or Rule 12
  • Sole purpose is to challenge the court’s authority of personal jurisdiction
    • If any other issues are raised, then she has subjected herself to the court’s authority
    • Direct Attacks- appear in the original action at the beginning of the suit and object to the court’s exercise of jurisdiction
    • Subject Matter Jurisdiction- move to dismiss using Rule 12 (b) (1)
  • Rule 12 (b) Defenses and Objections- (20 days) Must be presented prior to pleading
  • Defendant may also raise other objections at the same time, without waiving personal jurisdiction objections
  • 12(b)(1) lack of subject matter jurisdiction
  • 12(b)(2) lack of personal jurisdiction
  • 12(b)(3) improper venue
  • 12 (h) waiver, defense of lack of personal jurisdiction, waived if not raised from the outset
  • Collateral Attack- ignore suit, wait for creditor to attempt to enforce judgment
  • Court will enter default judgment
  • Petitioner will then attempt to use the Full Faith and Credit Clause (Article IV, sec.1) to get the defendant’s state to recognize the judgment and enforce the court remedy
  • Defendant’s state can refuse if it finds that original state didn’t have jurisdiction anyway
  • Waived the opportunity to argue the merits of the case

Determining what Rules Apply

• RDA (Rules of Decision Act)- deciding when federal courts should apply state laws
• 1652-The laws of the several states shall be regarded as rules of decision in civil actions in the courts of the US, in cases where they apply
  • Swift v. Tyson– law include only statutory laws, plus court made doctrines on matters of local law
  • Bad because it entitled one set of parties to get one result and another set to get a different.  The first was entitled to their result because their citizenship enabled them to bring the suit in federal court
  • Pre-Erie, the courts assumed, in general law, the power to declare rules of decision which congress was without power to enact as statutes
  • Post- Erie- General Law non-existent, Court limited to those powers enumerated in the Constitutional.  Federal court doesn’t have any power to create common law
  • Only applies when there is no applicable Federal Law on point

Erie

• Holding- equitable administration of laws (same conclusion in state, federal courts), prevent forum shopping

York

• Significance
  • Larger than substance v. procedure, but outcome determination test
  • Substantial state laws must be applied in so much as they determine the outcome of the case
  • Looked at the distribution of judicial power between state and federal courts

 

Byrd- Balancing test

• Identify the policies behind a state law or rule
• Determine whether they are sufficiently strong to prevail over the policies of the federal procedure in question (Gasparini)
• Significance- 3 part test, takes the two previous tests and adds state/federal interest.  Sliding scale to balance
  • Is the state practice “bound up with the definition of the rights and obligation of the parties?” If yes, state law
  • Would its application be outcome determinative?
  • Are there “affirmative countervailing” considerations of federal judicial administration present? (balancing state v. federal interest)

 

Rules Enabling Act (REA)

• Hanna v. Plumer- upheld the Federal Rules provisions on service of process. 
  • A rule authorized by the REA would prevail over any conflicting state law if rule valid and on point

Holding in all of this, case by case basis.  Federal courts may apply federal rules that are “rationally capable of classification” as procedural and that the federal courts must try to apply at least some state law by construing the Federal Rules narrowly

Gasparini- (photographer) even after Hanna, state law with procedural aspects will sometimes prevail in federal courts

• Requires that the balancing test is alive and well
• Requires courts to identify and give some weight to state provisions that implement policies of substantive law

DeWeerth- painting, assumed the risk when she filed in federal court.  Issue is not the timeliness of the filing of the complaint for rule 60 (b)(1) but rather the fact that the case is closed and even if judges mistakenly applied the law, court won’t reopen issue….

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**     “When acting to enforce a statute and its subsequent amendments to the present date, the judge of the municipal court is acting as an administrative officer and not in a judicial capacity; courts in administering or enforcing statutes do not act judicially, but merely ministerially“.    Thompson v. Smith, 154 SE 583.