International Shoe & Federal Jurisdiction: Contacts & Fair Play/Justice, Exams of Civil procedure

Download International Shoe & Federal Jurisdiction: Contacts & Fair Play/Justice and more Exams Civil procedure in PDF only on Docsity! ID: Name: Exam Name: CivPro_LS1_Kibel_Fall2009 Instructor: Kibel Grade: ____________ 1) I(A). Pennoyer laid out the traditional grounds for in personam personal jurisdiction (IP pjx) as presence, consent, and residency. In other words, per Pennoyer, for the court to exercise IP pjx over a defendant (D) requires that D be present in the forum, consent to the exercise if pjx over him in the forum, and have residency in that forum. The continuing availability of these traditional grounds as a proper basis for IP pjx was distinguished and refined by the subsequent US Supreme Court decisions International Shoe and Burnham. International Shoe distinguished Pennoyer by introducing a new 2-part test to determine whether the court could exercise IP pjx over a non-resident defendant, which focused not on presence, consent, or residency, but rather on (1) minimum contacts with the forum state and (2) whether the maintenance of suit against the defendant would offend traditional notions of fair play and substantial justice. This made it so that presence, residency, and consent were no longer the sole basis for IP pjx, but rather, that the defendant's contacts with the forum were determinative for jurisdictional purposes. Burnham refined Pennoyer by reasserting one of the traditional bases of IP pjx in Pennoyer, presence. In Burnham, the US Supreme Court held that mere presence in the forum state was sufficient to exert IP pjx over D, even though he was not a resident there, and was only there for the limited purpose of visiting his children. The notion of consent was not discussed in the majority opinion of Burnham, but was brought up by Brennan in his opinion, who questioned whether IP pjx could be asserted over D if he was there involuntarily. The overall effect of International Shoe has been to introduce the 2-prong test of minimum contacts and fair play/substantial justice, while Burnham has reaffirmed presence as a basis for IP pjx, post Pennoyer. I(B). International Shoe developed a two-prong test to determine whether IP pjx could be asserted over a non-resident D comprised of (1) minimum contacts (systematic and continuous, rather than isolated, limited, or casual), and (2) that the maintenance of the suit in question would not offend notions of fair play and substantial justice. In World-Wide Volkswagen (WWV), the Supreme Court determined that this two-prong test was sequential in nature, meaning that the court must determine if D has minimum contacts with the forum state (the first prong) before they can move on to considering the second prong. In other words, if D does not have the requisite minimum contacts, then the court does not need to consider the second prong, and can conclude that they do not have IP pjx over D. In addition, the Court further refined the second prong of the International Shoe test in WWV by putting forth "five fairness factors" that should be considered when assessing whether asserting jx over D would comport with notions of fair play and substantial justice. These include the following: (1) the burden on D; (2) the interstate judicial system's interests; (3) the forum state's interests; (4) plaintiff's interest in convenient and effective relief, and (5) the goal of furthering fundamental substantive social policy. Although the court in WWV Sacramento is if the FDC can assert jurisdiction over the case based on subject matter jurisdiction (sm jx). Per 28 USC 1331 and 1332, there are two different forms of federal sm jx: diversity jx and federal question jx. Diversity jurisdiction, covered in s. 1332, requires diversity of citizenship (based on one's domicile) and an amount in controversy above $75,000. Domicile for corporations is determined by (1) place of incorporation, and (2) primary place of business, which is judged by one of three tests, the nerve center test (headquarters, where executives report to), the business activities test (where the "muscle" is, where the bulk of employees are, or one of the main location, and/or the total activities test (takes all factors into account). In this matter, both BF and GU are domiciled in California because they are both incorporated and established under the laws of California and only have locations in California. Therefore, they do not have the requisite diversity of citizenship required by minimal diversity (at least one plaintiff and one defendant must be from different states). The amount in controversy is irrelevant since they do not have diversity of citizenship. Since there is no federal subject matter jx based on diversity, the next step is to consider where there is sm jx under federal question jx. Federal question jx, covered in s. 1331, is determined based on the subject matter of the case, namely whether the case "arises under" federal law. Article III, Section 2 of the US Constitution gives Congress the power to exercise jurisdiction over claims arising under the Constitution, federal statutes, and treatises. Prior to the Civil War, the states had exclusive original jx over cases related to federal laws. However, in Osborn, the US Supreme Court determined a broad definition of "arising under." Following this, the 1875 Judiciary Act was passed, which stated that the FDCs had original jurisdiction over claims arising under federal law. This was codified in 28 USC 1331, which incorporated the 1875 JA language almost verbatim. To determine what consistitues "arising under" federal law, the US Supreme Court in Harms distinguished between two tests: the construction test (the majority's preferred test) and the creation test (Holmes & the minority's preferred test). Under the construction test, a claim arises under federal law if it requires the FDC to construe or interpret federal law. Under the creation test, if federal law is involved at all in the case, then the claim arises under federal law, and the FDC has federal question jx. Using the (majority) construction test in this matter, GU's first claim will require the court to construe and interpret the Federal Levee Act, a federal law. Therefore, it arguably passing the construction test. In Mottley, the Court determined that whether a claim required the court to construe federal law should be determined by the "well-pleaded complaint" rule, basically meaning that the FDCs will only look to a plaintiff's complaint to determine whether or not the case involves a federal question, and therefore whether the FDC has jx. In this case, the FDC will have to look carefully at GU's complaint to determine whether or not there is a federal question involved. This will likely be affirmative, as GU's first count alleges that BF violated the Federal Levee Act, a federal law. However, if GU does not effectively write a "well-pleaded complaint" (that is, they do not properly include that their claim is based on a federal Act), the claim could arguably fail the well-pleaded complaint rule. But this is highly unlikely, as their claim seems to be solely based on the Act. Since the first claim regarding the Federal Levee Act passes both the construction test and the well- pleaded complaint rule, removal of this claim to the FDC in Sacramento would be proper. The purpose behind removal is to provide equal access to the court system for both plaintiff and defendant. Because only a defendant can remove a case, BF is the proper party to do so, as they are the defendant here. The proper procedure for BF to seek such a removal would first require them to file a Notice of Removal with the FDC in Sacramento. They must file this Notice within 30 days of receiving service of GU's Summons and Complaint. GU can then file a Motion for Remand to have the case remanded back to the State court, if they so wish. Unless the Motion for Remand is approved, the court will then remove the case from Superior Court to the FDC in the same state and area where the state claim was filed ("embracing" the place where the controversy took place). (B) As stated, the first claim against BF satisfies the requirements of subject matter jx as codified in 28 USC 1331 because it "arises under" federal law. Based on the rules of supplemental jx, when an FDC exercises jx over a claim that, independent of its relation to a claim that the FDC has original jx over, it would not have jx over, BF can successfully remove the second count (alleging violations of the California Wetlands Act (CWA)) to the FDC in Sacramento. The CWA is most likely a state Act based on the inclusion of "California," and therefore does not "arise under" federal law per 28 USC 1331. The FDC would not have subject matter jx over this claim, based on the fact that this Act would fail the construction test outlined above. However, per 28 USC 1367, a FDC can lack of diversity subject matter jx should be granted. To reach this determination, the court must look at 28 USC 1332, which provides the scope of diversity jx, as well as related federal case law. Diversity jx is one of two types of subject matter jx, the other being federal question jx, which permit a federal district court (FDC) to exercise jx over a case. Diversity jx is comprised of two requirements: (1) that the amount in contoversy exceed $75,000; and (2) that the parties have diversity of citizenship. In Homes v. Bell, the first question is whether or not Homes' can prove that its claim involves an amount in controversy exceeding $75,000. Per Whitchurch, a plaintiff should be reasonably afforded a showing of the validity of assertion that his damages exceed $75,000. Based on the "amount test," a claim can be dismissed based on the amount in controversy being too low based on two factors: (1) plaintiff's claim must not have been made in good faith, or (2) there must be legal certainty that plaintiff's damages do not meet the required amount. The required amount can be comprised of the aggregate of several sources, including punitive damages, injunction damages, and actual damages. The actual damages portion of the plaintiff's claimed amount in controversy cannot include attorneys' fees or interest. Here, Homes has asked for the recovery of its attorneys' fees, which cannot be a consideration when calculating the amount in controversy. Therefore, the court must disregard that portion of the alleged damages, and look to the actual damages, the $3,000 a month rent for the remaning 25 months left on Bell's lease, which totals exactly $75,000. Because 28 USC 1332 requires that the amount in controversy exceed $75,000 (it must be $75,000.01 and above), without including its (precluded) attorneys' fees, Homes' claim does not meet the required amount in controversy. The court could dismiss Homes' complaint based on this factor alone, as long as Bell can prove the legal certainty that Homes' damages do not meet the required amount. He has this legal certainty, as their claimed damages minus attorneys' fees are only $75,000. However, the court must also consider whether the parties have diversity of citizenship in assessing whether or not it has diversity jx. Citizenship is determined per 28 USC 1332. A corporation can be a citizen of up to 2 different states, one being its place of incorporation, and one being its primary place of business. A corporation's primary place of business is determined based on one of three tests, the nerve center test (where the corporation is headquartered; where its executives actually report), the business activities test (where a corporation's "muscle" - its employees - are located), or the total activities test, which takes all of these into account. In this case, Homes is incorporated in Delaware, making it a citizen of that state. Using the nerve center test, Homes is headquartered in San Francisco, CA, making it a citizen of California. Using the business activities test, Homes' sole business activity is owning and renting homes in San Francisco, CA, so it is also a citizen of CA under this test. Finally, using the total activities test, since it is headquartered and does all of its business in California, it is a citizen of that state, making it a Delaware and California citizen. Per 28 1332, a natural person's domicile is understood as that person's: (1) present fixed residence; or (2) the last place where he intended to remain indefinitely (or, the place he intends to return to when absent). In this case, Homes is almost certainly arguing that the parties have diversity of citizenship based on Bell's past residence in New York. In Mas, the court determined that the plaintiff's permanent fixed residence was the place not where she was currently living, but where she intended to return and make her home long-term. Here, it is true that Bell was a resident of New York from birth until 2000, when he left his job at the National Tax Agency (NTA) to begin working at Golden Bay Law School (GBLS) in California. Homes will probably argue that Bell has indicated that NY is his permanent, fixed residence by returning to his old employer, NTA, and seeking to cancel his lease (potentially cutting ties with California). However, Bell has negotiated a 2-year leave of absence with GBLS, which indicates instead that he is taking a mere detour to NY, and intends to return in 2 years (possibly permanently) to his job at GBLS, and to CA. In other words, Bell's intention to return to GBLS and CA after 2 years, rather than quitting that position permanently, shows that his domicile per 1332 is CA, or "the place he intends to return to when absent." Therefore, Bell is a citizen of CA, and since Homes is also a citizen of CA, the diversity of citizenship requirement is not met. Bell's Motion to Dismiss on the grounds of lack of diversity subject matter jx should be granted. Homes can then re-file its case in SF Superior Court, if it intends to purse its alleged damages against Bell. END OF EXAM