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Civil Procedure II

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Civil Procedure II

Course Info

Professor: Unknown Semester: Spring 2016 Source: Civpro_II_SP16.txt

Topics Covered

  • Subject matter jurisdiction: federal question (§1331), diversity (§1332)
  • Well-pleaded complaint rule (Mottley); adequate federal element
  • Supplemental jurisdiction (§1367): pendent and ancillary history; codification
  • Jurisdictional amount; aggregation rules; Exxon Mobil
  • Removal (§1441); removal tactics; fraudulent joinder
  • Territorial jurisdiction: in personam, in rem, quasi in rem (types 1 and 2)
  • Personal jurisdiction over individuals: presence, domicile, consent, fictitious consent statutes, long-arm statutes
  • Personal jurisdiction over corporations: domicile, presence (International Shoe minimum contacts), general jurisdiction (Goodyear, Daimler), specific jurisdiction (McGee)
  • Notice and process (Mullane)
  • Hypothetical jurisdiction (Ruhrgas)

Detailed Outline

I. Subject Matter Jurisdiction (SMJ)

Constitutional and Statutory Framework:

  • Art. III §2: outer limits of federal judicial power (all cases arising under Constitution, laws, treaties)
  • 28 U.S.C. §1331: inner limits — district courts have original jurisdiction of all civil actions “arising under” the Constitution, laws, or treaties of the United States
  • Special statutes can make jurisdiction exclusive (§1338 — patents) or add restrictions

Structural Principles:

  • Vertical federalism: parallel state and federal court systems
  • Art. I Inferior Tribunals; Separation of Powers (Art. I, II, III)
  • 10th Amendment: federal powers limited/enumerated; Art. VI Supremacy Clause: federal law supreme within enumerated powers

Federal Question Jurisdiction §1331

Well-Pleaded Complaint Rule (Mottley):

  • Federal question must appear on the face of the plaintiff’s complaint
  • Anticipated federal defenses or counterclaims are insufficient

Adequate Federal Element:

  • Claim founded directly upon federal law meets §1331 (J. Holmes: “suit arises under the law that creates the cause of action”)
  • State-law claims that turn on substantial federal issues: pragmatic doctrine
    • Merrell Dow v. Thompson: State-law negligence based on violation of federal drug-branding law — inadequate federal element
    • Grable & Sons: State-law quiet title action turning on IRS failure to follow federal notice statute — adequate federal element (narrow)

Bell v. Hood: Testing federal question on 12(b)(1) motion — substantiality test:

  • Claim is not factually or legally frivolous, AND
  • P’s intent was not merely to create supplemental jurisdiction

Supplemental Jurisdiction §1367

Historical Development:

  • Pendent jurisdiction: Gibbs (1966) — federal and state claims based on “common nucleus of operative fact” (single case)
  • Ancillary jurisdiction: allows logically connected claims (compulsory counterclaims, impleader, intervention) without independent jurisdiction
    • Exception: P cannot assert claim against non-diverse third-party impleaded by D (Owen — would circumvent complete diversity)
    • But: P can assert claim against non-diverse third-party if main claim basis is §1346 (Ortiz)

Codification — 28 U.S.C. §1367:

  • §1367(a): Court may hear all related claims forming part of the same case or controversy — defined as same transaction or occurrence — including claims involving joinder or intervention of additional parties (overrules Finley)

    • “Except as provided in (b), (c)…”

  • §1367(b): Owen limit — applies ONLY in §1332 diversity cases. No supplemental jurisdiction over:

    • Claims by P against persons made parties under FRCP 14, 19, 20, or 24
    • Claims by persons joined as new Ps under 19 or 24
    • Forgotten proviso: when exercising supplemental jurisdiction would be inconsistent with §1332 requirements

  • §1367(c): Gibbs discretion — court may decline if:

    1. Claim raises novel or complex issue of state law
    2. State claim predominates over federal claim
    3. All federal claims have been dismissed
    4. Exceptional circumstances with other compelling reasons

  • §1367(d): SoL tolling — 30-day extension to file in state court after dismissal from federal court

Exxon Mobil (§1367(b) and Amount in Controversy):

  • Rule: Ps suing one D can combine related claims for jurisdictional amount (one P meets threshold; supplemental jurisdiction cures amount defect for co-Ps)
  • But: Cannot use §1367(b) to cure diversity defect (non-diverse party contaminating judgment)
  • P2’s claim falls under §1367(a) and not within §1367(b) exclusions if P2 is not party joined by 14, 19, 20, or 24

Diversity Jurisdiction §1332

General Rule: Complete diversity — no plaintiff shares state citizenship with any defendant.

  • Domestic relations exception: Divorce, alimony, child custody cases excluded
  • Probate exception: Administration of estate, probate of will excluded
  • §1332(c)(2): Legal representatives take on citizenship of wards, decedents, incompetents
  • §1359: Ignore citizenship of party “improperly or collusively” named to create jurisdiction
  • Corporations: Citizen of state of incorporation AND principal place of business (nerve center — Hertz v. Friend)

Fraudulent Joinder Doctrine: Courts try to prevent defeating diversity by joining sham non-diverse defendants:

  • Test: No reasonable possibility of recovery against non-diverse defendant (frivolous under Bell v. Hood)

Jurisdictional Amount — §1332 (> $75,000):

  • Saint Paul Mercury Indemnity: Legal certainty test — plaintiff can lose by motion only if claim is clearly insufficient as a matter of law
  • Legal certainty → Substantial possibility (reform proposal): factfinder could award >$75K without being clearly wrong (Nelson)

Removal §1441

  • §1441(a): Case must be in original jurisdiction; all defendants must agree; venue = local federal court
  • §1441(b)(2): If removable solely on diversity, D cannot remove if any D is citizen of the state where action is brought (no home-state removal)
  • §1441(c): If federal claim + non-removable state claim, court may sever and remand state claim
  • Only defendants can remove (Shamrock — §1441 “by the defendant or defendants”)

Jurisdictional Tactics:

  • If P wants state court, D wants federal: P sues first → D must remove promptly
  • If P wants federal court, D wants state: P waits to be sued, then removes on CC
  • Fraudulent Joinder Act of 2015: deny remand if complaint does not state plausible claim against non-diverse D

Hypothetical Jurisdiction (Ruhrgas):

  • Court may resolve personal jurisdiction (12(b)(2)) before subject matter jurisdiction (12(b)(1)) when SMJ is difficult and PJ is straightforward, without issuing binding SMJ ruling

II. Territorial Jurisdiction

Pennoyer v. Neff (1878) — Framework:

Three types of jurisdiction over parties/things:

  1. In personam: Judgment imposing personal liability on D; subjects all D’s nonexempt assets to execution; requires D’s presence in forum (or domicile/consent)

  2. In rem: Judgment affecting interests of all persons in a designated thing (land title registration, forfeiture, admiralty lien, probate)

  3. Quasi in rem (QIR):

    • Type 1 (QIR#1): P seeks to establish pre-existing interest in a thing against D’s interest (partition, mortgage foreclosure, lien enforcement)
    • Type 2 (QIR#2) — Attachment jurisdiction: P applies D’s property to satisfaction of a claim unrelated to the property (grab D’s NY bank account to satisfy tort claim from accident in Japan)

Pennoyer Principle: Sovereign has exclusive authority over persons and things within its territorial boundary.

Later Development: Courts use 14th Amendment Due Process (not just full faith and credit) to test validity of judgments.

QIR#2 in Successive Actions: Judgment applies only to the attached thing (no deficiency judgment, no res judicata on personal claim); P can sue again in another QIR#2 action on remaining claim.

III. Personal Jurisdiction — Individuals

Bases for Personal Jurisdiction:

1. Presence

  • Service within state territory creates PJ (Grace v. MacArthur — service while flying over Arkansas)
  • Limits: Fraud (P uses deception to lure D into jurisdiction — vitiates consent); Force; Immunity (witness/party present for litigation immune from unrelated service)

2. Domicile

  • Sovereign has power over persons domiciled within state even when not physically present (Milliken v. Meyer)
  • Service can be extraterritorial if D is domiciliary
  • Actual: contractual forum selection clause; general appearance
  • Fictitious consent statutes (post-Hess v. Pawloski):
    • States have power to exclude non-residents; can condition entry on consent to be sued for activities within state
    • MA statute: driving on highways = implied consent to suit for related accidents (Hess)
    • Applies to tortious acts in-state; not to general in-state business (Flexner — individuals have P&I Clause protection against exclusion; companies do not)
  • Adam v. Saenger: P voluntarily filing suit in forum submits to PJ on counterclaims

4. In-State Acts (Long-Arm Statutes)

Two types of long-arm statutes:

  • Specific enumeration type (Illinois original): lists specific acts (transacting business, tortious acts in-state, owning real estate in-state, insurance contracts)
  • Constitutional outer limits type (California): goes to limits of Due Process

Standards of Proof in Jurisdictional Facts:

  • Facts more related to jurisdiction → higher showing
  • Facts more related to merits → lower showing (plausibility)

IV. Personal Jurisdiction — Corporations

Bases:

  1. Domicile: Place of incorporation + principal place of business (“nerve center” — Hertz)
  2. Consent: Actual registration to do business in state
  3. In-state acts: International Shoe framework

International Shoe Framework (International Shoe Co. v. Washington, 1945)

CJ Stone replaces Pennoyer’s in personam branch with a two-dimensional analysis:

Two dimensions:

  • Nature of contacts: from “casual or isolated” to “continuous and systematic” activity
  • Relatedness: from “directly related to cause of action” to “unrelated”

Combined with:

  • Power: Does the sovereign have enough of a nexus over D?
  • Reasonableness (“fair play and substantial justice”): Would it be fundamentally unfair to make D defend there?

International Shoe facts: 8 salesmen with showrooms in WA, making commissions; cause of action = WA unemployment fund obligations directly related to those commissions → specific jurisdiction upheld.

Specific Jurisdiction

Requires: (1) sufficient contacts with the forum, AND (2) cause of action arising from or related to those contacts, AND (3) reasonableness of exercising jurisdiction.

General Jurisdiction

Cause of action unrelated to contacts → need “continuous and systematic” contacts rendering the corporation “essentially at home.”

  • Perkins (1952): Exceptional case — company moved its operations to OH during wartime; OH had general jurisdiction
  • Helicopteros (1984): Substantial purchasing and training activities in TX insufficient for general jurisdiction over helicopter crash in Peru
  • Goodyear (2011): Contacts must be so continuous and systematic as to render corporation “essentially at home”
  • Daimler AG v. Bauman (2014): Corporation is “at home” only at its place of incorporation and principal place of business; general jurisdiction extremely restricted; agent’s activity in CA only establishes specific jurisdiction for that agent’s contacts

Notice — Mullane v. Central Hanover Bank (1950)

  • 14th Amendment Due Process governs notice requirements regardless of Pennoyer distinctions
  • Known claimants: Personal service of process required if practicable
  • Unknown claimants: Publication sufficient
  • Formless, flexible approach: state has power over trust created under its laws; can bind all beneficiaries with adequate notice

V. Quasi In Rem and Limited Appearances

QIR#2 — Limitations:

  • Criticized as “American barbarism” — allows P to grab D’s property in forum to force D to defend
  • After Shaffer v. Heitner (1977) [not in notes but implicit]: QIR#2 must satisfy minimum contacts test (International Shoe applies)

Limited Appearance:

  • Allows D to defend on merits of QIR#2 without submitting to full in personam jurisdiction
  • If D wins: keeps property; P can sue again (no res judicata on personal claim)
  • If D loses: loses attached property only (no deficiency judgment); P can sue again for remainder
  • Erie governs availability of limited appearance in diversity — federal courts should follow state rule (or arguably apply limited appearance to combat local bias)

FRCP 13(a)(2)(B): D need not assert compulsory counterclaim when sued by QIR#2 attachment — prevents D from inadvertently submitting to in personam jurisdiction.

Federal Statutory Provisions:

  • §1655: Bestows TJ for in rem and QIR#1 actions; specifies notice requirements
  • FRCP 4(n)(2): Bestows TJ for QIR#2 when no PJ over D; seizure under state law

VI. Removal and SMJ — Tactical Considerations

Typical Removal Scenarios:

ScenarioWho Wants WhatTactic
P wants state, D wants federalD has 13(a) CCP sues first → forces state court (“race to courthouse”)
P wants federal, D wants stateP has main claimP must wait to be sued, then remove remaining CC
P wants federal diversity, D is non-diverseP wants to defeat home-state DFraudulent joinder argument

Counterclaims and Removal:

  • Only defendants can remove (Shamrock — counter-defendant cannot remove)
  • Compulsory counterclaim by original D does not give P ability to remove

Key Doctrines

Key Cases

Exam Approach

1. SMJ — Federal Question

  • Does the federal question appear on the face of the complaint? (Mottley)
  • Adequate federal element? (Merrell Dow = no; Grable = yes if substantial)
  • Test federal question claim that seems implausible: Bell v. Hood substantiality test

2. SMJ — Diversity

  • Complete diversity among all parties? (no P shares citizenship with any D)
  • Corp citizenship: state of incorporation + nerve center (Hertz)
  • Amount > $75K? Legal certainty test (Saint Paul Mercury)
  • Domestic relations / probate exception?

3. Supplemental Jurisdiction

  • §1367(a): Same transaction or occurrence → supplemental power exists
  • §1367(b): In diversity cases, block claims by P against parties joined under 14/19/20/24; block claims by persons joined as new Ps
  • §1367(c): Discretionary declination (novel state law, state claim predominates, all federal claims dismissed)
  • Exxon Mobil: supplemental jurisdiction cures amount defect but NOT diversity defect

4. Personal Jurisdiction — Individuals

  • Presence? Domicile? Consent (actual or fictitious)? In-state act under long-arm?
  • Long-arm: check both statutory reach (enumeration vs. constitutional limits) and constitutional limits (DP)

5. Personal Jurisdiction — Corporations

  • General jurisdiction: “essentially at home” = place of incorporation or principal place of business (Daimler)
  • Specific jurisdiction: purposeful availment + relatedness + reasonableness (McGee/Hanson framework)
  • Notice: personal service to known claimants; publication for unknown claimants (Mullane)

6. QIR#2 and Limited Appearances

  • QIR#2 now requires minimum contacts (Shaffer — implicit)
  • Limited appearance available to D to defend on merits without submitting to in personam
  • No deficiency judgment if D loses; P can sue again in personam

7. Removal

  • All Ds must consent; D cannot remove from own home state (§1441(b)(2))
  • 30 days to remove after receipt of complaint
  • No removal of domestic relations/probate cases
  • Fraudulent joinder doctrine: deny remand if no plausible claim against non-diverse D

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