Limited Jurisdiction of Federal Courts

Constitutional Limits

U.S. Constitution, Article 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.

Statutory Implementation

The Constitution defines the outer limits of federal court jurisdiction. It is up to Congress to decide how much of that jurisdiction the federal courts may actually exercise. Statutory grants of jurisdiction may by narrower than what the Constitution permits.

Diversity Jurisdiction

Constitutional & Statutory Basis

Article III, § 2

28 USC § 1332

Citizenship

Citizenship is determined at the time of filing.

Complete diversity

Determining state of citizenship

Individuals
Corporations
Unincorporated associations

Mas v. Perry, 489 F.2d 1396 (5th Cir. 1974)

Facts
Holding & Analysis

Friedrich v. Davis, 989 F. Supp. 2d 440 (E.D. Pa. 2013)

Facts
Issue
Holding
Analysis

Special Issues

Dual citizens
Business incorporated in US but with principal place of business outside US
Involuntary change in domicile
Assignment of interest

Amount in Controversy

Greater than $75k

Aggregation

Single P v. Single D
Multiple Ps v. Single D

No aggregation of separate plaintiffs’ claims:

Common Interest:

Single P v. Multiple Ds

No aggregation of claims against multiple defendants.

Separate Liability: Each D is liable only for their individual obligations to P

Alternative Liability: P alleges that either D1 or D2 is liable.

Joint/Joint & Several Liability: Each defendant is liable for the same obligation and P may collect the full amount from any one of them.

Harshey v. Advanced Bionics Corp. (S.D. Ind. 2009)

Carroll v. Stryker Corp., 658 F.3d 675 (7th Cir. 2011)

Federal Question Jurisdiction

Constitutional Basis

Article III, § 2

… all Cases … arising under this Constitution, the Laws of the United States, and Treaties made … under their Authority

Osborn v. Bank of the United States (US 1824)

Facts & Procedural History:
Issue
Analysis & Holding

Federal Question Statute

28 USC § 1331

The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.

Louisville & Nashville RR v. Mottley (US 1908)

Issue
Facts & Procedural History
Analysis and Holding
Postscript

Following the Supreme Court’s decision, the Mottleys filed a new suit in Kentucky state court, which ruled in favor of the Mottleys and ordered the Railroad to continue honoring the free passes. The Kentucky Court of Appeals (at that time the state’s highest court), concluding that the 1906 federal statute did not nullify the existing contract between the Mottleys and the Railroad, affirmed the judgment. Louisville & Nashville R. Co. v. Mottley, 133 Ky. 652 (1909).

The Railroad again appealed to the U.S. Supreme Court. The issue on appeal was whether the Kentucky court erred in holding that the 1906 federal statute did not apply to the contract. Louisville & Nashville R. Co. v. Mottley, 219 US 467 (1911). The case thus fell within the Court’s appellate jurisdiction over cases involving the interpretation or validity of federal law. Unlike the original jurisdiction of the U.S. District Court’s under § 1331, the Supreme Court’s appellate jurisdiction over cases involving a federal question does not depend on whether that issue arose as part of the plaintiff’s claim or as part of a defense.

This time, the Court held that the 1906 statute did apply to the Mottleys’ free passes. Because the Kentucky court’s judgment—which ordered specific performance of the contractual promise of free transportation—conflicted with federal law,1 the Court reversed. The Court raised the possibility that on remand the Mottleys might still obtain some remedy from the state court:

Whether, without enforcing the contract in suit, the defendants in error may, by some form of proceeding against the railroad company, recover or restore the rights they had when the railroad collision occurred is a question not before us, and we express no opinion on it.

219 U.S. at 272. It is not clear what, if anything, happened next.

Effect of Mottley
Additional Background

Federal Pre-emption and Exclusive Jurisdiction

Pre-emption

Exclusive federal jurisdiction

Counterclaims

Essential Federal Element in a State-Law Claim

Smith v. Kansas City Title & Trust Co. (US 1921)

Facts
Holding
Dissent (Frankfurter)

Merrell Dow Pharm., Inc. v. Thompson (US 1986)

Facts
Holding

Grable & Sons v. Darue Engineering (US 2005)

Facts
Holding

Empire Healthchoice Assurance v. McVeigh (US 2006)

Facts
Holding

Gunn v. Minton (US 2013)

Facts & Procedural History:
Issue
Holding & Analysis

Supplemental Jurisdiction

28 USC § 1367

(a) Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties.

(b) In any civil action of which the district courts have original jurisdiction founded solely on section 1332 of this title, the district courts shall not have supplemental jurisdiction under subsection (a) over claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure, or over claims by persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332.

(c) The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if—

(1) the claim raises a novel or complex issue of State law,

(2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction,

(3) the district court has dismissed all claims over which it has original jurisdiction, or

(4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction

Premise

Requirements: § 1367(a)

Limitations: § 1367(b)

Application of § 1367(b)

Supplemental Jurisdiction Over Counterclaims, Crossclaims, & Third-Party Claims

  1. Supplemental jurisdiction is always allowed over compulsory counterclaims and over crossclaims between co-defendants.
  1. Crossclaims between co-plaintiffs (“claims by plaintiffs against persons made parties under Rule … 20”) are subject to the limitation under § 1367(b). So, where diversity is the sole basis for SMJ over the original claim, supplemental jurisdiction will be allowed only if the co-plaintiffs are citizens of different states.

  2. There is some disagreement among the federal courts as to whether supplemental jurisdiction is ever allowed over permissive counterclaims.

The question really comes down to how close of a factual connection is required for claims to arise from the same T/O for joinder purposes.

  1. Supplemental jurisdiction is always permitted over a defendant’s claim against a third-party defendant under Rule 14(a)(1)

A claim for indemnification or contribution, by definition, arises from the same T/O as the underlying claim against the defendant, which also satisfies the same case or controversy requirement under § 1367(a). Even if diversity is the sole basis for SMJ over the underlying claim against the defendant, the limitation on supplemental jurisdiction under § 1367(b) does not apply to claims by a defendant.

For the same reason, supplemental jurisdiction is also always permitted over these claims involving third-party defendants:

  1. Supplemental jurisdiction is not always allowed over claims by a plaintiff against a third-party defendant under Rule 14(a)(3)

These claims must arise from the same T/O as the plaintiff’s underlying claim against the original defendant (a.k.a. third-party plaintiff). But the limitation on supplemental jurisdiction under § 1367(b) applies to “claims by plaintiffs against persons made parties under Rule 14”. If diversity is the sole underlying basis for SMJ, supplemental jurisdiction is not allowed if the plaintiff and third-party defendant are citizens of the same state.

Note the lack of symmetry here:

Guaranteed Systems, Inc. v. American Nat. Can Co. (MDNC 1994)

Procedural History
Issue
Holding & Analysis
Questions

Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (2005)

Procedural History
Issue
Holding & Analysis
Question

What about claims by a plaintiff against co-defendants joined under Rule 20?

Removal Jurisdiction

Overview

Requirements for Removal

28 U.S.C. § 1441(a)

Limit on Removal

28 U.S.C. §  1441(b)

“Forum defendant rule”

Procedure for Removal & Remand

28 U.S.C. §  1446

Notice of Removal
Timing of Notice
Effect of Notice

28 U.S.C. §  1447(c)

Remand
  1. Under the Supremacy Clause, U.S. Constit., Art. IV, federal law takes precedence over state law where they conflict.