In the Fall of 2012, I presented on the topic of Subject Matter Jurisdiction (Diversity) for Professor Kirkland's Civil Procedure Class.

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Subject Matter Jurisdiction (Diversity)
University of New Hampshire School of Law
Professor Kirkland's Civil Procedure Class
Kevin M. O'Shea
September 28, 2012

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Goals
 Understand the concept of "complete
diversity," including the ability to determine
domicile.
 Understand the concept of "amount in
controversy," including the ability to
determine whether a claim exceeds $75,000.

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Warning
 If I say anything today that is inconsistent
 with what Professor Kirkland teaches;
 rely on what Professor Kirkland says, not me;
 because Professor Kirkland is grading your exam;
 but your perception that I might have said something
inconsistent with Professor Kirkland might be a good
opportunity to speak with her about your
understanding of SMJ.

4. 4
Courts: Sources of Authority
 What is a court of general jurisdiction?
 What is a court of limited jurisdiction?

5. 5
Courts: Sources of Authority
 What kind of court is a federal district court?
 General or limited subject matter jurisdiction?

6. 6
Courts: Sources of Authority
 What is the source of authority for federal
district court's subject matter jurisdiction?

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Courts: Sources of Authority
 U.S. Const. art. III, § 1
 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…

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Coming attractions
 Don't confuse subject matter jurisdiction with
personal jurisdiction
 Subject matter jurisdiction addresses whether a
court has the authority over a controversy;
 Personal jurisdiction addresses whether a court
has authority over that person.

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Courts: Sources of Authority
 U.S. Const. art. III, § 2
 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;--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.

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Courts: Sources of Authority
 28 USC § 1332
(a) The district courts shall have original jurisdiction of all civil actions
where the matter in controversy exceeds the sum or value of $75,000,
exclusive of interest and costs, and is between—
(1) citizens of different States;
(2) citizens of a State and citizens or subjects of a foreign state, except that
the district courts shall not have original jurisdiction under this
subsection of an action between citizens of a State and citizens or
subjects of a foreign state who are lawfully admitted for permanent
residence in the United States and are domiciled in the same State;
(3) citizens of different States and in which citizens or subjects of a foreign
state are additional parties; and
(4) a foreign state, defined in section 1603 (a) of this title, as plaintiff and
citizens of a State or of different States.

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 Sidebar:
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in law school?

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Complete Diversity
 Strawbridge v. Curtiss, 7 U.S. 267 (1806)
 Plaintiff (Massachusetts) v.
 Defendant 1 (Vermont) and
 Defendant 2 (Massachusetts)
 To allow this suit under diversity, would destroy
"complete" diversity
 Term of art: both sides of (or across) the "v."

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Complete Diversity
What is the policy reason for diversity
jurisdiction in the first place?

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Complete Diversity
"The Court, nonetheless, has adhered to the complete
diversity rule in light of the purpose of the diversity
requirement, which is to provide a federal forum for
important disputes where state courts might favor, or be
perceived as favoring, home-state litigants. The presence of
parties from the same State on both sides of a case dispels
this concern, eliminating a principal reason for conferring
§1332 jurisdiction over any of the claims in the action."
Exxon Mobil Corp. v. Allapattah Svc, Inc., 545 U.S. 546, 553-554 (2005),

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Complete Diversity: Domicile
 Citizenship of a person, for diversity
purposes, is determined by the person's
domicile.

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Complete Diversity: Domicile
 "A person's domicile is the place of 'his true, fixed,
and permanent home and principal establishment,
and to which he has the intention of returning
whenever he is absent therefrom . . . .' "
 A change of domicile may be effected only by a
combination of two elements:
 (a) taking up residence in a different domicile with
 (b) the intention to remain there.
 Mas v. Perry, 489 F. 2d 1396, 1399 (5th
Cir. 1974)

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Domicile: Natural Persons
Ochoa v. PV Holding, Corp., 2007 WL 496612 (E.D. La. 2007)
 Threshold issue:
 When do we take the "domicile" snapshot
 Procedurally, when is this issue raised?
 Substantively, when, in time, do we measure the plaintiff's domicile?
 Does the analysis change if the someone's domicile changes after that time?
 Who has the burden?
 Procedural Posture Sidebar:
 Removal? Remand? 28 USC § 1441
 Mapping out the case facts:
 Facts supporting domicile in Louisiana
 Facts supporting domicile in Texas

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Domicile: Natural Persons
Ochoa v. PV Holding, Corp., 2007 WL 496612 (E.D. La. 2007)
 Louisiana Facts
 Born in New Orleans
 Visiting family at the time of the accident, in Louisiana
 Louisiana drivers license
 Did not have employment in Texas until shortly before deposition
 Texas Facts
 Living in Texas
 But only came to Texas as a result of Hurricane Katrina
 Does have employment in Texas at time of motion

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Domicile: Natural Persons
Ochoa v. PV Holding, Corp., 2007 WL 496612 (E.D. La. 2007)
Here comes the "Benchslap"
See, generally, http://abovethelaw.com/benchslaps/

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Domicile: Natural Persons
Ochoa v. PV Holding, Corp., 2007 WL 496612 (E.D. La. 2007)
 Benchslap
 "The Court notes that the record provides few objective facts
concerning Gulley's domicile in October 2006; indeed, the record
only consists of Gulley's deposition testimony, which is attached
(albeit unauthenticated) to the defendant's opposition to the
plaintiff's motion to remand." (emphasis added).

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Domicile: Natural Persons
Ochoa v. PV Holding, Corp., 2007 WL 496612 (E.D. La. 2007)
 "Missing" Facts
 The places where the litigant exercises civil and political rights
 Pays taxes
 Owns real and personal property
 Has his drivers and other licenses
 Maintains bank accounts
 Belongs to clubs and churches
 Has places of business or employment
 Maintains a home for his family

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Domicile: Natural Persons
Ochoa v. PV Holding, Corp., 2007 WL 496612 (E.D. La. 2007)
 Court concludes:
 "Gulley's recent employment in Texas and his subjective statement that he
does not presently intend to live in New Orleans fall short of establishing
that his domicile several months ago --at the time the complaint was filed
-- was Texas and not Louisiana. There is little objective evidence to
corroborate his subjective present statement of intent. The defendants bear
the burden of showing diverse citizenship because they are attempting to
invoke this Court's subject matter jurisdiction. They have failed to carry
that burden to show that Gulley was a citizen of Texas at the time the
complaint was filed; thus, the Court lacks removal jurisdiction based on
diversity of citizenship."
 "Accordingly, the plaintiff's motion to remand is GRANTED. The case is
hereby remanded to the Civil District Court for the Parish of Orleans."

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Domicile: Corporations
When undertaking a diversity analysis,
how do you determine the citizenship of
a US corporation?

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Domicile: Corporations
 28 USC §1332 (c)(1)
 "a corporation shall be deemed to be a citizen of every
State and foreign state by which it has been incorporated
and of the State or foreign state where it has its principal
place of business, except [direct actions against
insurers]"
 Sidebar:
 Why would a corporation be incorporated in a state other
than the one where it has its principal place of business?

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Domicile: Corporations
Hertz Corp. v. Friend, 130 S. Ct. 1181, 1194 (2010)
Determination of the "principal place of
business" under 28 USC §1332 (c)(1) is now
governed by the "nerve center" test.

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Domicile: Corporations
Hertz Corp. v. Friend, 130 S. Ct. 1181, 1194 (2010)
 "We recognize as well that, under the "nerve center" test we
adopt today, there will be hard cases.
 For example, in this era of telecommuting, some corporations may
divide their command and coordinating functions among officers who
work at several different locations, perhaps communicating over the
Internet."
 "That said, our test nonetheless points courts in a single
direction, towards the center of overall direction, control, and
coordination.
 Courts do not have to try to weigh corporate functions, assets, or
revenues different in kind, one from the other. Our approach provides
a sensible test that is relatively easier to apply, not a test that will, in
all instances, automatically generate a result."

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Domicile: Unincorporated Organizations
 For unincorporated organizations such as limited liability
companies, partnerships, etc.,
 The citizenship of such an entity would include each state of each
member or partner.
 Hypo:
 Plaintiff is a Delaware corporation with whose employees all handle
sales calls from their homes in New Hampshire and Rhode Island
and whose products are shipped from a warehouse which is located
in the backyard of the home of the president of the corporation in
South Berwick, Maine
 Defendant is a partnership whose partners come from New
Hampshire, Vermont, and Maine.
 Is there complete diversity for a suit in D. N.H.?

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Domicile: Foreign Citizens
 Rarely happens in real life.
 Consult the rules, like practicing lawyers do.
 Don't forget the meaning of the capital "S" in
States.

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Real World Stories: Collusive Joinder
 "A district court shall not have jurisdiction of
civil action in which any party, by assignment
or otherwise, has improperly or collusively
made or joined to invoke the jurisdiction of
this court."
 28 U.S.C. §1359

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Real World Stories: Collusive Joinder
 In Gentle v. Lamb-Weston, a series of Maine
plaintiffs sued an Oregon corporation in state
court. 302 F. Supp. 161, 162 (D. Me. 1969).
 The plaintiffs assigned 1/100 of the claim to an
Oregon resident.
 The conceded purpose of the assignment was to
defeat an anticipated removal to the federal court
by the defendant under 1441(a).

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Real World Stories: Collusive Joinder
 The courts willingness to invoke §1359 was
undoubtedly based on the factors including:
 the Oregon plaintiff had no previous interest in the
litigation and
 Oregon plaintiff agreed to take the assignment at the
request of and as an accommodation to his law school
classmate;
 the conceded purpose of the assignment was to defeat the
anticipated removal to federal court and
 because "plaintiff's counsel have been unembarrassedly
frank about their objective at every step."

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Amount in Controversy
 "…matter in controversy exceeds the sum or
value of $75,000, exclusive of interest and
costs…"
 28 USC § 1332 (a)

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Amount in Controversy
 "It is well settled that the amount in
controversy is determined by the amount
claimed by the plaintiff in good faith.
 Tremblay v. Philip Morris, Inc., 2002 DNH 201
(D.N.H. 2002) (citations and quotations omitted)

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Amount in Controversy
 Valuing equitable relief can be difficult, but a
common sense approach is usually effective.
 Example:
 "A number of courts have ruled that, in a case seeking
equitable relief against a foreclosure sale, the fair
market value of the property is an acceptable measure
of the amount in controversy for purposes of diversity
jurisdiction."
 Bedard v. Mortgage Elec. Registration Sys.,
2011 DNH 77 (D.N.H. 2011)

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Amount in Controversy
 "Normally, attorney's fees are excluded from
the amount-in-controversy determination . . . .
 There are two exceptions to this rule:
 when the fees are provided for by contract, and
 when a statute mandates or allows payment of the
fees."
 Tremblay v. Philip Morris, Inc., 2002 DNH 201
(D.N.H. 2002)

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Amount in Controversy
 "It must appear legal certainty that the claim
is really for less than the jurisdictional amount
to justify dismissal."
 St. Paul Mercury Indemnity Co. Red Cab Co.,
303 U.S. 283 (1938)

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Amount in Controversy
 Federal jurisdiction is not lost because a
judgment of less than the jurisdictional
amount is awarded.
 Mas v. Perry, 489 F.2d 1396, 1400 (5th Cir 1974)
 ("That Mr. Mas recovered only $5,000 is, therefore,
not compelling")

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Amount in Controversy
 The "amount in controversy" issue is usually
decided "on the papers."
 Tremblay v. Philip Morris, Inc.,
2002 DNH 201 (D.N.H. 2002)
 ("Further, because Philip Morris has not sought an
evidentiary hearing, I resolve this issue based upon
the parties' submissions.") (citations and quotations
omitted)
 Cf. the "well pleaded complaint" rule of 28 USC §
1331

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Amount in Controversy: "Aggregation Doctrine"
 A single plaintiff may join unrelated claims
against a single defendant in order to reach
the $75,000 threshold.
 4-18 Moore's Federal Practice - Civil § 18.20
 Citing, inter alia, Nationwide Mut. Ins. Co. v. Dewar,
1990 U.S. Dist. LEXIS 12550, at *2
(E.D. Pa. Sept. 21, 1990)
 ("The claims of a single prospective plaintiff against a single
prospective defendant, although unrelated, may be
aggregated for jurisdictional purposes").

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Amount in Controversy: "Aggregation Doctrine"
 However (with two exceptions not discussed
in this class) "courts do not permit
aggregation if there are multiple plaintiffs or
multiple defendants."
 4-18 Moore's Federal Practice - Civil § 18.20
 Citing, inter alia, Zahn v. International Paper Co., 414 U.S.
291, 294-295 (1973)

(multiple plaintiffs with separate and distinct claims,
including plaintiffs bringing class action suit, must each
satisfy jurisdictional amount requirement).

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Amount in Controversy: "Aggregation Doctrine"
 "Aggregation Doctrine"
 Nevertheless, using the supplemental jurisdiction
provisions of 28 USC § 1367
 One claim where a plaintiff has satisfied both the complete
diversity and the amount in controversy requirements of 1331,
 Can be joined to another claim where a second plaintiff cannot
satisfy the amount in controversy requirement against the same
defendant,
 As long as joining the second plaintiff will not create a
jurisdictional defect.
 Exxon Mobil Corp. v. Allapattah Svc, Inc., 545 U.S. 546, 553-554 (2005)

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Amount in Controversy: "Aggregation Doctrine"
 "When the well-pleaded complaint contains at least one claim that
satisfies the amount-in-controversy requirement, and there are no other
relevant jurisdictional defects, the district court, beyond all question, has
original jurisdiction over that claim.
 The presence of other claims in the complaint, over which the district
court may lack original jurisdiction, is of no moment.
 If the court has original jurisdiction over a single claim in the complaint,
it has original jurisdiction over a "civil action" within the meaning of
§1367(a), even if the civil action over which it has jurisdiction comprises
fewer claims than were included in the complaint.
 Once the court determines it has original jurisdiction over the civil action,
it can turn to the question of whether it has a constitutional and statutory
basis for exercising supplemental jurisdiction over the other claims in the
action."
 Exxon Mobil Corp. v. Allapattah Svc, Inc., 545 U.S. 546, 553-554 (2005),

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Amount in Controversy: "Aggregation Doctrine"
 Hypos
 Can a plaintiff join a $50,000 tort claim and a (related
or unrelated) $40,000 contract claim against a diverse
defendant?
 Can a plaintiff join a $50,000 claim with another
plaintiff's $40,000 claim against the same diverse
defendant?
 Can a plaintiff join his $100,000 tort claim and with
another plaintiff's $30,000 related claim against the
same diverse defendant?

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Questions? Comments?
Kevin M. O'Shea
Sulloway & Hollis, PLLC
koshea@sulloway.com
603-228-2829