I leave the further explanation of these issues to your criminal law and criminal procedure professors.

For now, you simply need to know that there are several basic important distinctions between civil and criminal law and procedure please do not confuse them or apply Criminal procedures in this course on Civil Procedure. V. FEDERAL COURT CASES A. Jurisdiction In order to hear and rule on a case, a federal (as well as a state) court must have the legal authority to do so - it must have jurisdiction. Jurisdiction includes legal authority over both: (1) the type of case at issue; and (2) the particular parties involved in the dispute. Thus, jurisdiction simply refers to whether the court has the power to render a judgment over the parties in the case (referred to as personal jurisdiction) and whether the court is authorized by the Constitution and by statutory law to hear and rule on the specific type of case involved (referred to as subject matter jurisdiction). We will spend much of the first part of the semester on these two types of jurisdiction. 1. Personal Jurisdiction: A court must have authority over the plaintiff (the party suing) and the defendant (the party being sued) in order to enforce any eventual ruling it may make regarding the parties. This is called the court's personal jurisdiction over the parties. Generally, in both federal and state court, the geographic limits of a courts jurisdiction are determined by the borders of the state in which it is located. For example, if you are in state court in California, the power of the court is over persons with sufficient connection to California. If it is in federal court (in California), the power of the federal court over the parties is also defined by the parties connections to California. Similarly, a state or federal court located in Florida, for example, would have power over parties if they are sufficiently connected to Florida. Historically, there were 3 traditional types of personal jurisdiction: (1) in personam (power over the defendant himself, such that all of the person's assets may be seized to satisfy any judgment against him); (2) in rem (power over a thing, such as a piece of property located in the forum state which is owned by the defendant, where the property is what is at stake in the suit); and (3) quasi-in rem (where a thing again, a bank account or a piece of property, etc. is owned by the defendant and located in the forum state and is seized and used to satisfy any judgment against him. The lawsuit is not a dispute over possession of the property; but the property is merely the excuse to get jurisdiction over the defendant-owner. The amount at stake cannot exceed the amount of the property). Of the three traditional types, in personam is the one that has the most relevance for us today and is the most important (because the recovery amount is not limited to the fate of a certain thing [a piece of property], or the value thereof, to pay any judgment since the court has authority over the person and all of their assets). In rem and quasi in rem are more of historical significance, but you should still be familiar with the terms. Many states still have remnants of these concepts in certain types of cases, such as condemnation, title registration, distribution of estate assets, grant of divorce, etc. We will see them in a very old case on personal jurisdiction Pennoyer v. Neff. When we refer to personal jurisdiction today, however, we are really talking about in personam jurisdiction, that is, the courts power over the person, not just their property (in rem or quasi-in rem). To have in personam jurisdiction, two prerequisites must be met: (1) a jurisdictional statute (a long-arm statute, if an out-of-state defendant is sought to be brought into the forum state); and (2) the U.S. Constitution (the Due Process Clauses of the 5th Amendment for federal actions or 14th Amendment for state actions), which requires that the exercise of personal jurisdiction by the court over someone be
16

fair. What determines fairness has come to be defined as whether or not the person has minimum contacts with the state in which the court is located that would make it fair for the court in that state to exercise personal jurisdiction. These personal jurisdiction requirements ((1) jurisdictional statutes/longarm statutes and (2) minimum contacts) are required in both federal and state court. Accordingly, the personal jurisdiction analysis above is the same in both federal and state court actions. The federal court simply applies the state jurisdictional statute/long-arm statute of the state in which the federal court sits and the Constitution's (5th Amendment Due Process Clause, which is the same as the 14th Amendment) Due Process Clause minimum contacts requirement (explained infra). i. Jurisdictional Statutes/Long Arm Statutes Jurisdictional/long arm statutes are passed by state legislatures. They authorize the courts in a state to exercise jurisdiction over defendants located both inside and outside the state borders. Jurisdiction over out-of-state defendants is based on specific types of contacts that the defendants may have with the foreign state. Enumerated in the jurisdictional long-arm statute are the specific activities or conduct which will confer upon the forum state in personam jurisdiction over in-state, and out-of-state defendants, such as living in state, committing a tortuous act within the state, or transacting business within the state. These are called long-arm statutes because they authorize a court to exercise jurisdiction over an out-of-state defendant simply based upon the defendant's contacts with the forum state (i.e., the court can reach out and grab an out-of-state defendant; hence the term long-arm). Generally in federal court, the state jurisdictional-long-arm statute of the state in which the federal court sits is applied (see Rule 4(k)(1)(A)).1 ii. The Due Process Clause (Constitutional)/Minimum Contacts The Due Process Clauses of the Constitution (5th Amendment for federal actions, 14th Amendment for state actions) require that any law, including any long-arm statute, be a fair law. In terms of personal jurisdiction, due process means that if a state requires a defendant to come in and defend a lawsuit in a certain court located in a state or district, that court must comply with general notions of fair play and substantial justice (in addition to satisfying the jurisdictional/long arm statute). This pronouncement has been interpreted as requiring the defendant to have basic minimum contacts with the forum state (in state court, it is the state, and in federal court, it is the state in which the federal court is located) for there to be personal jurisdiction over her. If a defendant does have a certain amount of contacts with the state, then it will be fair for the courts (state courts or federal courts located in that state) to exercise personal jurisdiction over her. a. Case-by-case analysis of minimum contacts - Other than the three traditional minimum contacts situations set forth below (see infra traditional tests for minimum contacts), there really is no formula for determining when a defendant has sufficient minimum contacts with the forum state so as to allow a court in the forum state to exercise jurisdiction over him without violating the Due Process Clause. It is simply a question of determining the fairness of exercising personal jurisdiction in each particular case given the unique set of circumstances relating to that defendant in each case. The reasoning here is admittedly a bit circular. It must be fair to exercise personal jurisdiction over the defendant but how does one go about determining that? By asking whether the defendant has sufficient minimum contacts with the forum state. But how does one

Californias long-arm statute is very broad. It gives California state courts power over any person or property over which the state can constitutionally exercise personal jurisdiction. In effect, the California long-arm statute simply becomes the constitutional test would it be fair to exercise personal jurisdiction over the defendant in these particular circumstances. Other states long-arm statutes list particular kinds of situations, such as doing business or causing injury in the state. 17

determine whether a defendants contacts are enough to reach the minimum requirement level? By determining whatever amount it would take in order to be fair (and then we start all over). A minimum contacts analysis identifies both the quantity and the quality of the defendant's contacts. The courts essentially apply a matrix guide (see Figure 11) using (1) the relatedness between defendant's contacts and the subject of the lawsuit (sometimes referred to as specific personal jurisdiction) and (2) the frequency of defendant's contacts with the forum (sometimes referred to as general personal jurisdiction). Relatedness is categorized simply as how related or unrelated the defendants contacts with the forum state are to the subject of the lawsuit. Frequency, on the other hand, is cast in terms of how systematic and continuous (or substantial and pervasive) the defendants contacts are with the forum state, in general. If the contacts with a forum state are substantial and pervasive, then they need not be related to the conduct which forms the basis of the suit. From the matrix below (see Figure 11), note that the upper-left box is the only certain classification of minimum contacts using this analysis. The upper-right and the lower-left are the gray areas of the matrix and lend themselves to legal persuasion as to whether or not there would be jurisdiction (this is where an attorney's skills are needed). And obviously, if the contacts are both isolated and unrelated, as is the case in the lower-right box, there would be no basis for personal jurisdiction. (See Figure 11). Dont confuse specific and general personal jurisdiction with general subject-matter jurisdiction (infra), as these terms, we shall see, imply very different things legally.

(Figure 11)
MINIMUM CONTACTS
Focusing on the RELATEDNESS between defendant's contacts and the subject of the lawsuit.

(Specific)
RELATED contacts SYSTEMATIC & CONTINUOUS OR SUBSTANTIAL & PERVASIVE contacts ISOLATED contacts DEFINITELY minimum contacts OFTEN minimum contacts (BUT need high degree of relatedness). UNRELATED contacts OFTEN Minimum contacts (BUT need high degree of frequency) NO minimum contacts (neither related nor substantial)

Focusing on the FREQUENCY & PERVASIVENESS of defendant's contacts with the forum.

(General)

We will study the seminal case for minimum contacts, International Shoe Co. v. Washington, and its progeny (later cases developing the concept further: McGee, Hanson v. Denckla, Shaffer, World Wide Volkswagen, Asahi, Burger King, Helicopteros, and Burnham) to discover the Supreme Court's ruling and reasoning on personal jurisdiction. For now, study the diagram above (Figure 11), which is a hypothetical spectrum of contacts a defendant may have with a forum state and probable jurisdiction. Generally, if the defendant has either substantial and pervasive contacts with the state, or even if the defendants contacts are not substantial and pervasive but they are highly related to what the lawsuit is about, then there will be personal jurisdiction over the defendant.
18

Figure 12 below gives you five examples of certain situations regarding the amount of contacts a defendant might need to have with a forum state in order for a court to decide that the defendant has minimum contacts. The top line is the amount of contacts, the second line is how the case is likely to be categorized, and the last line is how a court will likely rule.

Read the diagram down each column then over to the next column (Figure 12)
HYPOTHETICAL MINIMUM CONTACTS ANALYSIS <----------------------- Less Contacts------------------------------------||---------------------------------- More Contacts----------> 1) Florida defendant, who has never been to, never conducted business in, nor owns any property in Iowa, is sued in Iowa by an Iowa plaintiff who was hurt by defendant while plaintiff was driving in Florida. 1) Defendants contacts to Iowa are: NONE 2) Florida defendant, who has no contacts with Iowa, except for paying for his aunt to live in an Iowa nursing home, is sued by an Iowa plaintiff in Iowa, based on a Florida land deal. 2) Defendants contacts to Iowa are: Casual, Isolated, Insignificant, Irrelevant 3) Florida defendant, who was on vacation in Iowa, gets into a hit and run accident in Iowa. The Iowa plaintiff accident victim hires a detective, finds the defendant in Florida, and then sues him in Iowa for damages to her car caused by defendant in the Iowa accident. 4) Florida defendant, who is a co-owner of a summer-only hamburger stand in Iowa, gets sued by an Iowa plaintiff in Iowa for breach of an auto insurance contract made in Florida but to be applicable in Iowa. (The automobile is used in Iowa, sometimes, to pick up hamburger). 5) Florida defendant corporation, which has two of its three manufacturing plants in Iowa, gets sued by a plaintiff for making slanderous remarks about the plaintiff professional basketball player's lack of athletic ability.

3) Defendants contacts are: A Significant Single Act (the accident in Iowa), directly related to the plaintiffs lawsuit (this is an example of specific jurisdiction)

4) Defendants contacts are: Fairly continuous and systematic contacts that are somewhat related to the lawsuit; auto used in business accident is subject of suit; sells and has a hamburger stand in Iowa. 4) Jurisdiction is probable (although there probably still needs to be contacts that are somewhat more related to the lawsuit). An unrelated civil rights violation that took place in Florida, for example, might be too unrelated to the contacts in order to confer jurisdiction in an Iowa court (although perhaps not, it's a close call). These contacts may or may not be Substantial/Pervasive

5) Defendants contacts are: Substantial and pervasive, systematic and continuous contacts, even though they are not related to the lawsuit (this is an example of general jurisdiction) 5) Jurisdiction is very likely because the contacts in Iowa are so Substantial and Pervasive (Systematic & Continuous) that they do not need to be related to the lawsuit. NOTE: The more Substantial and Pervasive the contacts are to the forum, the less those contacts have to be related to the suit, to be considered minimum contacts.

1) Jurisdiction? No way, no constitutional basis for jurisdiction in Iowa whatsoever. No contacts at all with the State of Iowa to justify jurisdiction in Iowa.

2) Jurisdiction? No way, no constitutional basis for jurisdiction in Iowa just because defendant purchases something in Iowa, (although it is often different if he were to sell something in Iowa).

3) Jurisdiction in Iowa is now very likely despite only one visit to Iowa by defendant because the contacts (the accident) are highly related to the lawsuit. However, an unrelated breach of a Florida contract claim, for example, would be too unrelated to the hitand-run contacts to confer jurisdiction. Also, the contacts are not substantial & pervasive. 19

Remember, the more connection a defendant has to a state and/or the more related those contacts are with the subject of the lawsuit, the more likely it is that a court in that state would find that it is fair for that court to exercise personal jurisdiction over the defendant. However, this jurisdiction/minimum contacts test is not complete. The defendant also needs to have purposefully availed himself of the benefits and protections of the state to be subject to personal jurisdiction there. This is where the quality of the contacts come into play. So it is important to note that in addition to assessing the relatedness and pervasiveness of the defendants contacts, we must also determine whether the defendant has purposefully availed himself of the privilege of conducting activities within the forum state (i.e., if you knowingly and voluntarily take advantage of the benefits associated with having some kind of relationship with our state, then notions of fair play and substantial justice will not be offended by forcing you to litigate a dispute in our state. In other words, it's going to be fair for you to get sued in our state given what you knowingly did to connect with our state). For there to be purposeful availment, the defendant's activities within the forum state must have been (1) voluntarily entered into by the defendant, and (2) a lawsuit in that state must be foreseeable by the defendant. Thus, a defendant cannot be kidnapped and brought into the state and be said to have minimum contacts with the state because there would be no purposeful availment of the privilege of conducting activities in the state. Two cases that explain this concept are Hansen v. Denkla, and Worldwide Volkswagen. But that is still not the end of the inquiry. Additional considerations that can affect the quality of the minimum contacts analysis include the convenience of the parties and witnesses in attending trial in the state and, to a lesser degree, the state's interest in providing a forum for the plaintiff to sue. Also, after all is said and done, exercising jurisdiction over the defendants must be REASONABLE. See Asahi. So in addition to the quantity of contacts, one must mix these additional quality considerations together in order to make a fair play and substantial justice determination. As demonstrated above, there are really no bright line distinctions in determining whether minimum contacts exist in order to confer personal jurisdiction. As a result, there is only a spectrum of contacts, and each unique case must be decided on a case-by-case basis. That is where your persuasive lawyering skills come into play because your out-of-state client will want you to argue that notions of fair play and substantial justice will be offended if the forum state is allowed to arbitrarily subject her to their court system based upon very limited contacts. b. The Traditional Tests for Determining Minimum Contacts Despite the fact that there are no clear formulas, the following categories of contacts have been held generally, by definition, to constitute a defendant's minimum contacts with the forum state. In other words, they are fair enough by definition to be sufficient to automatically confer personal jurisdiction (you may want to look for these first, before doing a case-by-case analysis): (1) Physical Presence of a defendant within the forum state borders when receiving a copy of the summons and complaint is often enough. So if defendant receives a copy of the summons and complaint while in the state, that is, gets served in the state, then he is deemed to be present in the state's territory [he does not have to live there] and therefore is subject to the courts jurisdiction in that state. See Burnham (and conflicting concurring opinions). However, one cannot force or trick a defendant to come to the state and then serve them there for this to work (remember the requirement of purposeful availment requiring a defendant to voluntarily connect with a state such that it was foreseeable that he might get sued there based on that contact).
20

(2)

Defendants Domicile within the forum state is enough. If the defendant's permanent fixed home is located in the state and he has a subjective intent to stay there for the indefinite future [no immediate plans to move], then he is deemed to be domiciled in the state (more than mere residence) and subject to the jurisdiction of the courts located in that state (note that a person may only have one domicile while a corporation may have more than one: (1) the state of incorporation and (2) the state of principle place of business)); or Defendants Consent to be sued within the forum state is enough. The defendant may want to get the issue resolved by the state court, and therefore simply voluntarily submit to the court's jurisdiction; however, the defendant is not required to consent because then it would not truly be consent. Minimum contacts are unimportant here because defendants consent alone, irrespective of his contacts, makes exercising jurisdiction over him fair. Defendant can consent beforehand in a contract, as we shall see in Carnival Cruise Lines, or by waiver (waiver is a failure to argue that there is a lack of personal jurisdiction).

(3)

So check to see if one or more of these traditional forms (by definition) of personal jurisdiction is available: (1) (2) (3) Did defendant get served while physically present in the state? Is defendant domiciled in the state? Has defendant consented to jurisdiction in the state?

Many cases involve situations where minimum contacts can be satisfied by one or more of these three preceding situations. We are not limited, however, to these traditional forms. If one or more of them is not present, then we have to engage in a case-by-case analysis of the contacts in each unique situation (as described above). Also, note that the concern for personal jurisdiction is a concern often relating only to the defendant. This is true because a plaintiff, by filing suit in the forum state and asking the court located in the forum state for relief, has implicitly consented to the court's jurisdiction. Such a plaintiff is purposefully availing himself of the states benefits the state is providing for plaintiff a forum in which to sue so it would be fair to exercise jurisdiction over that plaintiff. So be aware that there is ALWAYS personal jurisdiction over the plaintiff because a plaintiff obviously consents to the courts jurisdiction by bringing the lawsuit within the state in the first place. Finally, note that personal jurisdiction is important not only as a mechanical requirement and application of procedural law, but perhaps even more importantly, there can be enormous strategic advantages or disadvantages to requiring that defendant be sued in one state and not the other, such as travel and inconvenience costs as well as familiarity or lack thereof with certain courts in different cities or parts of the country. In many cases, the place of the lawsuit can significantly affect the parties relative bargaining positions in settlement negotiations. See the following table for a summary checklist of personal jurisdiction (Figure 13) - note that you must satisfy BOTH tests: (1) Jurisdictional statute and (2) the Constitutional (Minimum Contacts) test.

21

(Figure 13)
PERSONAL JURISDICTION CHECKLIST REQUIREMENT 1) Jurisdictional Statute: (for both instate and out-ofstate defendants) but called the Long-Arm Statute if the defendant is out-ofstate- this is the statutory test. 2) Minimum Contacts (Due Process: fair play and substantial justice) the constitutional test. LEGAL APPLICATION The jurisdictional/long-arm statute will set forth the types of actions (i.e. tortuous act, driving a car in state, transacting business in state, property in state, contract performed in state, etc.) that the legislature has authorized the courts to hear. It is a statute simply containing a list of types of contacts. Just read the statute, then decide if your type of defendant is on the list. If it is, then you have satisfied the test. If not, then there is no jurisdiction LEGAL SOURCE State statutes for state court actions, Federal Rule 4 for federal actions (note that in federal court Rule 4(k)(1)(A) incorporates the state jurisdictional/long-arm statute for the state in which federal court sits) (see also other federal statutes, i.e., the Federal Interpleader Act). Due Process Clause of the Fifth (for federal) and Fourteenth (for state) Amendments (and case law: International Shoe and its progeny interpreting the due process clause and establishing minimum contacts, purposeful availment, reasonableness, etc.).

1. Consider one of the traditional tests: (1) Presence; (2) Domicile; or, (3) Consent. 2. Evaluate for general and/or specific personal jurisdiction. (Frequency of contacts and relatedness of the contacts to the suit) 3. Check purposeful availment: (a) foreseeability; and, (b) voluntariness. 4. Consider other balancing factors (i.e., interests of forum state, convenience of parties, and reasonableness).

Remember, as a general matter, personal jurisdiction analysis is generally identical in both state and federal court given Federal Rule 4(k)(1)(A) that says to apply the state longarm statue of the state in which the federal court sits. 2. Subject Matter Jurisdiction: Federal Court Subject matter jurisdiction is where the court has the power to hear a certain type or kind of claim, as opposed to having power over a party, which is personal jurisdiction. State court subject matter jurisdiction is very broad. Basically, state courts can hear almost any claim that is not exclusively federal (see the partial list of exclusive jurisdiction on page 25). This is called general subject matter jurisdiction. It is not a difficult concept for state courts because state courts have the power to hear virtually any kind of case. Federal court subject matter jurisdiction, on the other hand, is limited to the kinds of cases explicitly listed in the Constitution (Article III, Section 2) and set out in federal statutes ( 1331, 1332). In Federal Court, there are generally two types of subject matter jurisdiction (or two types of cases a federal court is authorized to hear that we are going to study): (1) Federal Question Jurisdiction ( 1331); and (2) Diversity Jurisdiction ( 1332). We will also consider Supplemental Jurisdiction ( 1367) and Removal ( 1441), all discussed below. Note that you CANNOT consent to subject matter jurisdiction like you can with personal jurisdiction. We will not focus on the many other types of subject matter jurisdiction in federal court such as cases in which the United States itself is a party ( 1346, 1361), or other special kinds of federal cases, such as incidents at sea (Maritime Law) ( 1333), patents ( 1338), bankruptcy cases ( 1334), etc., but you should note their existence.

22

i. Federal Question Jurisdiction (28 U.S.C. 1331) See Louisville and N. R.R. v. Mottley A federal court can hear cases involving the U.S. Constitution, laws passed by Congress, or cases arising under a federal treaty. If there is a federal issue in the case (a federal question), then the federal court can exercise federal question jurisdiction under 28 U.S.C. 1331. Generally, a federal court cannot hear state law claims unless there is 1332 diversity jurisdiction (see below). Note that it is possible to hear a federal question case in state court, because state court subject matter jurisdiction is so broad. So you can bring either a state or federal claim in state court. But you cannot bring state law claims in federal court, except in diversity or supplemental jurisdiction cases. Again, note that you can bring state law claims, and federal question claims, in state court. So in 1331 federal question cases in federal court, the court's subject matter jurisdiction is called federal question jurisdiction because the plaintiff has alleged in her complaint that a federal right or responsibility has been violated or ignored by defendant and that defendant has harmed plaintiff as a result. The determination of whether there is an actual federal question for subject matter jurisdiction purposes is based solely upon the allegations contained in plaintiff's complaint. Thus, if the defendant raises a federal right or responsibility issue in his answer to the complaint (by way of counterclaim or affirmative defense, explained below), this would not confer federal question subject matter jurisdiction because it would not arise in the plaintiffs complaint the federal right or responsibility created by federal law must be what defendant has violated and gives plaintiff the right to recover, not a defense the defendant can use against plaintiffs state law claims. Remember that the court will look to a plaintiff's well pleaded complaint to determine whether there is federal question subject matter jurisdiction. For example, if plaintiff brings a defamation suit (state law issue) and the defendant claims he was exercising free speech (a federal issue 1st Amendment), this would NOT qualify as a federal question claim because plaintiffs complaint (the state law defamation claim) is not based on any federal question (the 1st Amendment freedom of speech defense). Rather, only defendants affirmative defense (that he was protected by federal law) is a federal issue, so there would be no federal question jurisdiction because plaintiffs action is based solely on state law. It does not matter that defendants defense is based on federal law. ii. Diversity Jurisdiction (28 U.S.C. 1332) In addition to federal question subject matter jurisdiction, federal courts also can have subject matter jurisdiction over cases that are based on state laws or that involve state law issues, provided: (1) they involve parties who are from different states (or if one party is from a foreign country); and (2) those parties from different states/countries have more than $75,000 at stake in their dispute (it must be at least $75,000.01). In such cases, the court's subject matter jurisdiction is called 1332 diversity jurisdiction. If either of these two conditions (diverse citizenship and amount in controversy) is not met, then there will be no diversity subject matter jurisdiction in the federal court. But remember, all this would mean is that the parties must go to state court to litigate the case; it does not mean they lose the case. It just means they cannot have it heard in federal court. a. Citizenship In determining a party's citizenship status for diversity purposes, the following must be kept in mind. First, all plaintiffs must be diverse from all defendants (complete diversity). Multiple defendants, however, do not need to be diverse among each other and multiple plaintiffs also do not have to be diverse from each other. As you will see later, an exception to the complete diversity requirement may occur in class action lawsuits.
23

Second, the date for determining citizenship is when the complaint is filed; however, you dont lose diversity if you move during the suit. Third, citizenship is based on a party's domicile which is simply the party's residence that is also their fixed, permanent, home state in which the party has the intent to stay for the indefinite future. An individual can have only one domicile at a time, and it remains that persons domicile until he actively does something to change it. Corporations, unlike individuals, can have more than one domicile for diversity of citizenship purposes. For example, a corporation is domiciled in: (1) any state in which the corporation is incorporated (assuming state law allows corporations to be incorporated in more than one state); and (2) the state of the corporation's principal place of business (i.e., its headquarters, manufacturing base, operations base, or its nerve center) this can only be one particular state. Also note that a foreigner (not domiciled in the U.S.) is considered to be diverse from a U.S. citizen from any state. See Saudeh v. Farouki. b. Amount in Controversy Remember, even though the parties are diverse (from different states/countries), they still must meet the amount in controversy requirement. In determining the amount in controversy requirement for diversity purposes, the plaintiff simply needs to make a good faith allegation in the complaint that the dispute is worth more than $75,000 (exclusive of interest and costs); $75,000 is not enough. It must be at least $75,000.01. If a plaintiff recovers less than $75,000, they may have to pay for defendants costs; but the ultimate recovery has no effect on jurisdiction, e.g., if a plaintiff ultimately recovers only $60,000 (or even nothing), the court does not lose jurisdiction, as long as there was a good faith allegation in the first place when the complaint was filed that more than $75,000 was at stake. It will meet this test as long as it is not a legal certainty that the claim is definitely not worth more than $75,000 when made. Note also that for injunctions getting someone to quit doing something such as polluting a river, the amount in controversy is determined by alleging how much the injunction is worth. Note that in a 1331 Federal Question case, unlike a 1332 diversity case, neither the parties' citizenship status being different or the same, nor the amount in controversy being over or under $75,000, have any impact whatsoever on federal question subject matter jurisdiction, because it is based solely on whether there is a federal question present in plaintiffs complaint, not on the citizenship status of parties nor amount in controversy. Thus, if a federal right or responsibility is predominately at issue in a case and appears on the face of plaintiffs well-plead complaint, it can be brought in federal court as a federal question case even when a plaintiff and defendant are both from the same state (no diversity) and/or only $150 is at stake (less than $75,000). Note, however, that there is an exception to diversity jurisdiction for family law (divorces, child custody, child support, adoption, etc.) type cases: they still take place only in state courts, even if they would otherwise qualify for diversity jurisdiction. In state court, there are no diversity citizenship requirements. But note that even if diversity does exist (diverse citizenship, over $75,000 at stake) a plaintiff may still elect to file that lawsuit in a state court because there is no requirement that a diversity case must go to federal court; it simply can go to federal court, in addition to state court, just as a federal question case can either be brought in state or federal court (see Concurrent Jurisdiction, below).

24

3. Concurrent Subject Matter Jurisdiction: Ability to Sue in Federal OR State Court Because of a state court's broad general subject matter jurisdiction, the cases that can be brought in federal court (Diversity/Federal Question) can also be brought in state court. Whenever a claim can be brought in either federal or state court, it is called concurrent jurisdiction, because either a federal court or a state court would have subject matter jurisdiction over that particular type of case (federal and state subject matter jurisdiction run together, hence, the term concurrent jurisdiction).2 Figure 14 on the next page is a diagram of various types of subject matter jurisdiction for federal and state courts which demonstrates that there is concurrent jurisdiction in many instances. This is significant for two reasons: (1) it gives plaintiffs a strategic option do they want to sue in federal court OR state court, if they could elect to sue in either court; and (2) it is important when invoking 1441 Removal explained below. 4. Exclusive Federal Jurisdiction Congress has granted the federal courts exclusive jurisdiction (no concurrent state court jurisdiction here) in the following actions: 1) Bankruptcy proceedings (28 U.S.C. 1334). 2) Patent and copyright cases (28 U.S.C. 1338). 3) Actions against foreign consuls and vice consuls (28 U.S.C. 1351). 4) Admiralty and maritime cases. However, federal jurisdiction is exclusive only in limitation of liability proceedings and in maritime actions in rem. (28 U.S.C. 1333). 5) Antitrust cases (15 U.S.C. 15, 26). In this instance, exclusive jurisdiction is not expressly granted by statute; rather, the antitrust statutes have been judicially interpreted to require exclusive jurisdiction in federal court. 6) Cases under the Securities Exchange Act of 1934 (15 U.S.C. 78aa) 7) Actions where the United States is involved as a party 28 U.S.C. 1346, 1361). This includes cases involving fines, penalties, or forfeitures under the laws of the United States, crimes and tort suits against the United States, and customs decisions review. With respect to #7, when the U.S. is sued, the doctrine of sovereign immunity prevents the United States from being sued without its consent. However, in the Federal Tort Claims Act, for example, the United States has consented to suits based on negligence of government employees, if a private person would be liable under the same circumstances. Likewise, suits for tax refunds may be brought in federal court. So even though state subject matter jurisdiction is very broad, much broader than federal subject matter jurisdiction, in these types of cases, there is no state subject matter jurisdiction. That means that these types of cases can only be brought in federal court.

Under Californias unified trial court system, all counties have at least one superior court that can exercise general subject matter jurisdiction over civil matters not within the exclusive jurisdiction of another court. There are two important classifications, however: (1) Limited Civil Cases; and, (2) Unlimited Civil Cases. Limited Civil Cases are for cases in which the amount in controversy is LESS than $25,000 dollars, with certain restrictions on equitable and declaratory relief (types of remedies explained infra). Unlimited Civil Cases are for cases in which the amount in controversy is OVER $25,000, with no restrictions on equitable or declaratory relief. A Small Claims division exists for cases in which the amount in controversy is $7,500 or less (and no lawyer for either side is allowed). After a case begins, there is a procedure to reclassify a case from one of these categories into another if the amount in controversy changes or was really different to begin with. 25

5. Limited, General, and Concurrent Jurisdiction

(Figure 14)
SUBJECT MATTER JURISDICTION: LIMITED, GENERAL, AND CONCURRENT

TYPE OF CASE (type of law at issue) 1. U.S. Constitution, statutes, and treaties. 2. Most federal statutes and regulations. 3. Federal statutes and regulations which are exclusively federal (e.g., federal bankruptcy, federal antitrust, patents, etc.). 4. Any type of state law case (except family law) arising between citizens of different states, where the amount in controversy is over $75,000. 5. Any type of state law cases arising between citizens of the same state, but with an amount in controversy over $75,000, or citizens of different states, but where the amount in controversy is $75,000 or below. 6. Family law cases involving divorced parents from different states and more than $75,000 is at stake. 7. Any other type of case not specifically set forth in Art. III of the U.S. Constitution.

FED. COURT ONLY

STATE COURT ONLY

CONCURRENT (either one)

X X X X X

X X

This diagram demonstrates how limited federal court subject matter jurisdiction is, and how broad state court subject matter jurisdiction is. Again, note that in concurrent jurisdiction type cases, the plaintiff has her choice of either bringing her lawsuit in federal OR state court because subject matter jurisdiction would be proper in either. Note that you can bring nearly every federal case in state court, unless the claim is exclusively federal. B. Federal Court Supplemental Jurisdiction and Removal Jurisdiction (Expanding the Federal Court's Subject Matter Jurisdiction) 1. Supplemental Jurisdiction (28 U.S.C. 1367) (formally: ancillary and pendent jurisdiction) see United Mineworkers v. Gibbs Whenever a federal court case involves additional parties or additional claims, there must be an independent basis for subject matter jurisdiction over each additional party or additional claim. For example, if a plaintiff has a federal question case, but then adds a state law claim (and diversity does not exist), then there would be no independent subject matter jurisdiction for that additional state law claim in a federal question case. The plaintiff could not have brought the state law claim by itself in federal court since it is not a federal question and there is no diversity. Similarly, if a plaintiff's case is based on diversity, but later she adds a defendant to the case who is from her own home state, then diversity would be destroyed. As a result, the defendant has no independent basis for subject matter jurisdiction and cannot be added to the case. In certain circumstances, however, independent subject matter jurisdiction is not necessary for such additional claims or parties because the court often can exercise supplemental jurisdiction over the additional claims or parties and thereby satisfy, by definition, the need for independent subject matter jurisdiction (this used to be called ancillary and pendant jurisdiction, but the names were changed in 1991, and both are now simply referred to as supplemental jurisdiction.). Congress has enacted a federal statute, 28 U.S.C. 1367, which sometimes allows for supplemental jurisdiction in various
26

circumstances when there is no independent subject matter jurisdiction over additional claims or parties (See Complex Litigation, infra, for an explanation of those various circumstances). The main requirement is that the additional claim, for which there is no subject matter jurisdiction, may be given supplemental jurisdiction because it is supplemental to the subject matter jurisdiction already present for the main claim, as long as the additional claim arises out of the same case or controversy as the main claim for which there already is subject matter jurisdiction. For example, if you get sued for a violation of federal civil rights by me, from your state, and $30,000 is at stake, there would be subject matter jurisdiction over the claim because although diversity would not exist (we are both from California, and less than $75,000 is at stake), federal question would exist (federal civil rights claim). Now, assume you also get sued by me for breach of contract for $10,000 in the same lawsuit. Problem: there would be no subject matter jurisdiction over that breach of contract claim (contract breach is a state law claim, not federal, so no 1331 Federal Question jurisdiction) and no diversity (parties are from the same states, not diverse, and not over $75,000.00 in dispute). This is where 1367 supplemental jurisdiction may come in to help. If the breach of contract arises out of the same case or controversy as the federal civil rights claim, then there will be supplemental jurisdiction for that breach claim, even though it could not be brought on its own (because there would be no federal question or diversity jurisdiction for the claim by itself). 2. Removal Jurisdiction ( 1441, 1446) Whenever there is concurrent jurisdiction, recall, the plaintiff has a strategic choice whether to bring the case in state court or federal court. Assume in this situation that plaintiff chooses state court. That is not necessarily the end of the story. A defendant who gets sued in state court can remove the case from state to federal court (but only if the lawsuit originally could have been brought in federal court to begin with). If defendant is going to remove to federal court, she must do so 30 days after being served in the state court lawsuit (an exception to this is where the ability to remove the federal subject matter jurisdiction arises later during the lawsuit, in which case the 30 days would start running from the time the federal subject matter jurisdiction arose). If there is more than one defendant, all the defendants must agree to remove (one defendant cannot force all of her co-defendants to remove). When removing, defendant must remove to the federal court in the state where the state court action is pending so if I sue you in California state court, and you can remove to federal court under 1441, you must remove to federal court IN CALIFORNIA. In 1332 diversity cases, because the parties are citizens from different states (hence, the term diversity), the diverse citizens of the different states presumably need a neutral federal forum in which to settle their dispute (historically, there was a concern that a state court would be biased in favor of its own citizens so that parties from different states needed to have their disputes heard in an unbiased federal court; however, there is still a valid question behind the justification that state courts are biased, while federal courts are not. There still might be a home court advantage in federal court because the federal court will still be located within the state of one of the litigants.) This removal process partially eliminates plaintiff's total control of the choice of forum and helps to prevent plaintiff from forum-shopping between federal and state court (where, for example, a plaintiff might choose to bring the lawsuit in federal court because federal procedural law favors the plaintiffs case, or choose a state court for the same reasons). So if defendant would rather be sued in federal court than state court, the defendant can remove the lawsuit from state to federal court, provided that the plaintiff could have originally brought her claim in federal court.

27

The complaint and any other pleadings are just moved over to the federal court as if it had been filed there to begin with. Note that removal is a one-way street from state to federal court. There is no such thing as removing from federal court to state court. Rather, such a federal to state court move would be a forum non conveniens (transferring from one sovereign court system to another, see venue, below). Note also that in diversity cases only, there is a limitation on removal. The defendant cannot remove to federal court if he gets sued in a state court of his home state (defendant would not be prejudiced if he is being sued in his own state by an out-of-state plaintiff) - the whole policy reason behind diversity in the first place. So plaintiff can keep a federal diversity case in a state court if she sues the defendant in his own home state. However, if the suit involves a federal question, recall, citizenship and amount in controversy do not matter, and therefore the defendant in a federal question case can remove the case from his home state court to federal court without a problem. C. Venue Even if the court has the authority to hear the particular case (subject matter jurisdiction) and has the authority to rule over the particular parties (personal jurisdiction), the lawsuit also must be filed in the proper venue for the court to hear the case. Venue can be thought of as the most convenient and proper locality for the parties and the witnesses to hold trial in within the proper jurisdiction. In federal court, venue is the proper U.S. Judicial District. In state court, venue is the proper county court or division in the state. 1. Federal Court Venue (28 U.S.C. 1391) There is a somewhat complicated but mechanical federal statute, 28 U.S.C. 1391, which determines which possible U.S. Judicial District Courts will constitute a proper venue for the case in question (this is not a Rule of Civil Procedure, it is instead a federal statute passed by Congress - recall the difference outlined in Figure 5). Note, however, that there are some statutes for venue in specific types of cases (copyright, 1400; stockholders derivative suit, 1401). Basically, federal venue is proper, for both federal question or diversity cases, in either (1) any judicial district where the defendant resides if all defendants reside in the same state; or (2) any judicial district in which a substantial portion of the events or omissions took place or a substantial portion of the property giving rise to the lawsuit is located. However, if neither (1) or (2) apply to any venue in the U.S., then there is a third possibility, but it differs depending upon whether the case is based on (a) diversity or (b) non-diversity subject matter jurisdiction. In diversity cases, (a)(3) states that venue can be where the defendant is subject to personal jurisdiction, but only if there is no other U.S. Judicial District in which the action may otherwise be brought (i.e., the first two (a)(1) and (a)(2) cannot be met in any other U.S. Judicial District in the U.S.). In non-diversity cases (e.g., federal question cases), (b)(3) states it can be where any defendant may be found, but only if there is no other district in which the action may otherwise be brought (i.e., the first two (b)(1) and (b)(2) cannot be met in any other U.S. Judicial District in the U.S.). Thus, there is probably more latitude in non-diversity cases (when the first two venue determinants (b)(1) and (b)(2) cannot be met) because conceivably it is easier to find a defendant than it is for that defendant to be subject to personal jurisdiction in that U.S. Judicial District.3
3

In California, venue refers to a proper COUNTY in the state in which an action may be tried. Actions involving land must be brought in the county court where the land is located. Other actions may be brought in the county where any defendant resides, or, in contract actions, in the county where the contract was entered or was to be performed, or, in personal injury/wrongful death actions, in the county where the injury occurred. For actions against a corporation, association, or partnership, venue is also available where the contract was made or to be performed, where the obligation or liability arose, where the breach occurred, or where the organization has its principal place of business. Note also that although California often upholds forum selection clauses for personal jurisdiction purposes, it does not uphold venue selection clauses. 28

Note that U.S. Judicial Districts which are venues for purposes of 1391 are usually the same borders as state borders. For example, the U.S. Judicial District for New Mexico has for its borders the same borders as the state of New Mexico. In states such as New Mexico, personal jurisdiction and venue may be determined by using the same exact borders. So for federal cases in the District of New Mexico, venue is usually not a problem if there already is personal jurisdiction in the state of New Mexico because (1) residence or (2) place of events probably will be satisfied for venue purposes. However, for more populous states, like New York, Texas, or California, the U.S. Judicial Districts (the venues) are smaller subsets within the state borders. For example, in California, unlike New Mexico, the state borders and the venue borders are NOT the same: there is the Northern District of California (Redding, San Francisco), the Eastern District of California (Sacramento), the Central District of California (Fresno, L.A.), and the Southern District of California (San Diego). Note that the outer borders of the U.S. Judicial Districts, however, share a portion of common borders with the State of California that is because U.S. Judicial Districts never cross over state borders, even though they can sometimes subdivide a states border and create U.S. Judicial Districts therein. (Figure 3, Page 6 ). A U.S. Judicial District often will further subdivide into Divisions for even further convenience and locality. For example, the U.S. District Court for the Eastern District of Virginia is subdivided into four divisions: the Alexandria Division, the Norfolk Division, the Richmond Division, and the New Port News Division. Remember, Local Rules can supplement the 1391 venue statute, but cannot supersede it. Venue is still for the US Judicial districts, but local rules may further direct the parties to divisions within a proper venue. Only plaintiffs have to satisfy venue requirements since they are bringing the case in the first place, so that if a defendant files a counterclaim, that counterclaim does not have to satisfy venue. Also, just as a party can consent to personal jurisdiction, they also can consent to venue as well. A party can consent to an improper venue simply by failing to raise an objection based on venue. When the defendant is a corporation, the corporation's residence for venue purposes ( 1391(a)(1) or (b)(1)) is simply where the corporation may be subject to personal jurisdiction ( 1391(c)). This is because a corporation, unlike an individual, does not really reside or live anywhere so we have to attach a corporate residence for either (a)(1) or (b)(1) to work for a corporation. Remember, however, that (a)(2) and (b)(2) where a substantial portion of the events or omissions occurred are still applicable even when defendant is a corporation. Venue is also proper in any Judicial District when suing a foreign citizen ( 1391(d)).4

Again, note the slight differences in California venue: in federal court, venue is proper in a judicial district in which any defendant resides, as long as all defendants reside in the same state. In California, it is in any county where any defendant resides, regardless if any other defendant resides in that same county, or any out-of-state defendant, but there still would have to be personal jurisdiction over that out-of-state defendant. For actions against corporations, it is where the corporation has its principal place of business, not like in federal venue, where it is subject to personal jurisdiction for residence purposes. Note also that under the federal venue statute, 1391(a)(2) or (b)(2), venue is where a substantial portion of events or omissions giving rise to the lawsuit are located, or where the land is located, whereas in California, against a corporation, it is spelled out more specifically: the county in which the contract is made or to be performed, or the county in which the obligation or liability arose, or the county in which the breach occurs, or the county in which the corporation has its principal place of business. 29

(Figure 15) FEDERAL VENUE CHECKLIST 1391

Venue Generally Subject Matter Jurisdiction satisfied (see below diversity or non-diversity, e.g. federal question) in one of three (3) ways (to the right)

(1)

OR, (2)

OR, (3)
Cannot apply if either subsections (1) or (2) can be applied; but if (1) and (2) are unavailable anywhere in the U.S., then we can look to (3):

Diversity

(a)

Judicial district where any defendant resides, if all defendants reside in the same state. See 1391(a)(1).

Judicial district in which a substantial portion of the events or omissions giving rise to the claim occurred, or a substantial portion of the property that is the subject of the action is situated. See 1391(a)(2). Same as above. See 1391 (b)(2).

Judicial district in which the defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought. See 1391(a)(3). Judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought. See 1391(b)(3)

Non-diversity Federal Question

Same as above. See 1391(b)(1).

(b)

Corporations Residence for 1391(a)(1) or (b)(1) apply 1391(a) and (b) for either diversity or federal question when applicable. Before applying section (a)(1) or (b)(1) however, note that a corporation is deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. See 1391(c) for a detailed explanation. Alien (foreign citizen): an alien may be sued in any district. See 1391(d).

2. Transfer of Venue ( 1404, 1406, 1631) and Forum Non Conveniens i. Transfer When a plaintiff sues in one U.S. Judicial District, but then either the plaintiff or the defendant (usually the latter) wants the case to be held in another U.S. Judicial District; instead of dismissing and starting all over again in the second U.S. Judicial District, the case can be transferred pursuant to one of the transfer statutes. Transfers are often requested because defendants would rather litigate in a different U.S. District where it would be more convenient to fight the lawsuit. Sec. 1404 is a federal court to federal court transfer where both courts are proper courts. Sec. 1406 is when venue is lacking in the first court, the case can transfer to another federal court where venue is available. Sec. 1631 is when personal jurisdiction is unavailable in the first court but is available in the transfer court.5

In California, pursuant to a motion made by a party requesting a transfer of venue to another county within the state, the court may transfer venue, even if venue is proper in the county where the lawsuit has been filed, in the following circumstances: (1) there is reason to believe that an impartial trial cannot be had in the county where the lawsuit has been filed; (2) the convenience of witnesses and the overall cause of justice will be better served if there is a transfer to the requested county; or (3) there is no judge in the county where the action was originally filed that would be proper and would be qualified to hear the case. 30

ii. Forum Non Conveniens When the defendant asks the first court (any court, federal or state) to transfer the case, in its discretion to another court system altogether, such as a foreign country, or from a federal court to a state court, or from one state court to another state court. This is done for the convenience of the parties, location of evidence, interest of the forum in settling the dispute, etc. (i.e., according to various public and private factors). It is not a transfer because the first court (federal) is NOT moving the lawsuit to another federal court, but instead to another state or foreign court.6 See Figure 16 below. See Reyno v. Piper Aircraft

(Figure 16)
Court to Court TO Federal Court Transfer (from court at
bottom to court at right)

TO State Court

TO a Court in a Foreign Country Forum Non Conveniens

FROM Federal Court:

1404 (proper court to proper court) 1406 (no venue to a proper court) 1631 (lacking personal jurisdiction to a proper court)

Forum Non Conveniens

FROM State Court:

1441, 1446 Removal (if to a Transfer (if to another federal court in the same state as the state county in same state); court) Forum Non

Forum Non Conveniens

Conveniens (if to a
different state court)

3. State Court Venue (Note that 1391 - the Federal Venue Statute - Is Inapplicable in State Court Actions) One must look to the applicable state court statute in order to determine the proper venue in a state court case, not 1391. Usually, proper venue for a state lies in the county where the defendant resides or the county in which the events giving rise to the lawsuit took place. Do not confuse venue territories, as they apply differently to state and federal court actions. For federal court, venue is within the boundaries of a U.S. Judicial District, whereas for state court, venue is within the boundaries of a county or some other division within the state. For venue purposes, a U.S. Judicial District is meaningless in a state court action, as state county or state division is meaningless in a federal court. There are 50 different state venue statutes. D. Personal Jurisdiction, Subject Matter Jurisdiction, and Proper Venue: The Three Ring Circus In order for a case to be in the proper court, the court must have, simultaneously: (1) personal jurisdiction; (2) subject matter jurisdiction; and (3) proper venue. Cases having only one or two of these threshold requirements must be dismissed, or transferred in the federal court system to another federal court (see 1404, 1406, or 1631). The diagram on the next page (Figure 17) demonstrates that all three rings (just a Venn diagram showing the overlapping requirement of the three categories) are necessary to get into federal court. Accordingly, the court can hear only those cases where there is a complete three-way overlap. We shall spend much of the first semester on these and other related jurisdictional and venue issues: especially the need for their simultaneous overlap. For now, review the diagrams on the next pages (Figures 17 and 18) for a quick checklist of the three ring circus.

In California, it is a transfer if it is from one county in California to another county in California. But it is a grant of a forum non conveniens motion if it is from a California state court to another state court or to a federal court. 31

(Figure 17) THE THREE RING CIRCUS OF A PROPER COURT

PERSONAL JURISDICTION SUBJEC T M ATTE R JURISDICTION

VENUE
= Sorry, dismissal or transfer. = Close, but close only counts in horseshoes and hand grenades, dismissal or transfer. = Congratulations, you are not quite ready to be a Supreme Court Justice, but you at least have found the proper court in which to sue.

There must be all three personal jurisdiction, subject-matter jurisdiction, and venue for you to be in the proper court. (Figure 18) REQUIREMENTS TO GET A CASE INTO FEDERAL COURT THE THREE RING CIRCUS

PERSONAL JURISDICTION

SUBJECT MATTER JURISDICTION

VENUE

REQUIREMENTS:* 1) Jurisdictional/Long-Arm Statute AND 2) Due Process: Minimum Contacts Using one of the three Traditional tests (presence, domicile, consent) OR Using Case-By-Case analysis (general or specific jurisdiction) *Both steps ((1) and (2)) need to be met before personal jurisdiction is satisfied.

REQUIREMENTS:** 1) Federal Question 1331 (plaintiffs complaint) OR 2) Diversity 1332 (citizenship and amount in controversy) OR 3) some other specified basis (i.e. 1367, 1441, 1334, etc.) **You only need to meet one of the above requirements to satisfy subject matter jurisdiction. 32

REQUIREMENTS 1391*** 1) Defendants Residence (If all Ds reside in the same state) OR 2) Where substantial portion of events or omissions occurred or property at issue is located OR 3) If no other U.S. Judicial District is available, then personal jurisdiction (diversity) or where defendant may be found (non -diversity) ***You only need to meet one of the above to satisfy venue requirements

Figures 17 and 18 show that all three rings (personal jurisdiction, subject-matter jurisdiction, and venue) must be met before a case can be properly filed in a federal or state court. If any one of these three rings is not met, then the case cannot be heard in federal or state court. In state court, although personal jurisdiction is nearly identical, subject-matter jurisdiction is much easier to meet than in federal court, and venue is a matter of looking at the state venue statute in state court, or the federal venue statute, 1391, if in federal court. After we have determined that the case is properly in a federal or state court (i.e., all three rings have been met Figures 17 and 18) we will then need to do an Erie analysis to determine which laws, state or federal, will apply to the case. E. Which Law Applies?: The Erie Problem and Conflicts of Law After we determine that the court does indeed have personal and subject matter jurisdiction, and the case is in a proper venue (the three rings have been met so we know WHERE the case can be filed), we must determine what law is going to be applied in the particular court: federal law or state law. Just because we are in a federal court, federal law does not necessarily or always apply (and vice-versa). There are rules which determine which law federal or state is going to apply to a lawsuit. We have the Erie Doctrine which stands for the proposition that state law can be applied by a federal court, but only when it is exercising its diversity jurisdiction (the doctrine is named after an important Supreme Court case). Note that the procedural law of the forum always applies: in state court use state procedural law and in federal court use federal procedural law. Sometimes we have conflicts that are between different states or even a foreign country. For example, what if a contract were created/signed in California, but was to be preformed in Mexico what substantive contract law would govern the dispute, that of California or that of Mexico? Each court has its own conflict of law rules to help make that determination such as the situs of the lawsuit, or what state has the most significant relationship to the lawsuit. Conflict of law is discussed below. Conflict of law is similar in a sense, but in the end is quite different from the Erie federal vs. state choice of law issue in a diversity case that we are talking about here. When the choice of law is between a federal law or state law, the Erie Doctrine was developed by the Supreme Court to avoid two distinct problems: 1) forum shopping (choosing a federal or state court to get federal or state law to apply if one would produce better law and thus a better result for your client than another court), and 2) inequitable administration of laws (justice and the applicable law should be applied consistently, justice should not be based simply on which court your smart, tactical lawyer was able to file a lawsuit against your opponent). We want to make sure that a federal court and a state court located in the same state will enter similar judgments (justice should produce consistent results). Justice needs to be based on the truth, not on the mere legal tactic of choosing a particular court system. Not surprisingly, in state cases, state law usually applies (unless the state is ruling on a federal issue [which it can since it has concurrent jurisdiction over federal question cases], in which case federal law obviously would apply). Similarly, in a federal court, federal law usually applies, but much hinges on whether the federal court's subject matter jurisdiction is based on diversity or federal question jurisdiction. In a federal court, in a federal question case, federal law always applies. In diversity based cases, however, federal law and state law apply in different areas. Before explaining how each applies, you need to be aware of a further important distinction: the difference between substantive law and procedural law.

33

1. The Substantive/Procedural Law Distinction: i. Substantive Law has to do with peoples rights and responsibilities, and their legal duties and legal remedies (hence, the essence or substance of law). Your other courses Property, Contracts, and Torts - deal primarily with substantive law. Substantive law deals with questions such as: Can you own air space? When is a contract created? Are mere words a tort? These are substantive law questions. These laws generally govern the duties and actions of citizens in society you can think of them as the rules of society. ii. Procedural Law, on the other hand, has more to do with the operation of the courts, the conduct of the litigation, and the rules of civil procedure (hence, the process of law). This Civil Procedure course, obviously, deals with procedural law in civil cases. Procedural law deals with questions such as: In what court can you sue? How many days does a defendant have to answer a complaint? When can you add parties to the suit? These are procedural law questions. These laws generally govern how lawyers maneuver in legal actions on behalf of their clients in litigation you can think of them as the rules of lawsuits. iii. When to Apply Substantive or Procedural Law? First, remember that the procedural law of the forum always applies. In state court cases, the procedural law and the substantive law of the state apply (or sometimes, of another state when the conflict of law rules point to the law of another state as the applicable governing law to be applied), unless the case involves a substantive federal issue, like a federal question, in which case state procedural law still applies, but the federal substantive law obviously would apply [federal question]. In federal court cases, the procedural law and the substantive law of the federal court both apply only when the subject matter jurisdiction is based upon federal question jurisdiction. But when the subject matter jurisdiction is based upon diversity jurisdiction, or when there is supplemental jurisdiction over a state law claim that is part of the same case or controversy as the federal question claim for which there is federal subject matter jurisdiction, the substantive law of the state in which the federal court sits applies (or sometimes the substantive law of another state), while the procedural law of the federal court still applies. Remember, the procedural law of the forum always applies. The problem is that it is not always clear what is substantive law and what is procedural law. In certain types of cases, sometimes certain procedures apply one can often ask: is that an area of substance since it is tied to a certain type of case, or is it simply procedure? Although lawyers love to categorize, and many laws can easily be categorized as substantive or procedural, not everything can be so easily pigeonholed into nice neat little packages of substantive law or procedural law. This can be very complicated and esoteric. 2. Erie, Non-Erie, and Reverse Erie Applying state substantive law in diversity cases is known as the Erie Doctrine. State law vs. Federal law Erie problems do not arise in federal question cases heard in federal court, because both federal substantive law (the federal question) and federal procedural law (procedural law of the forum always applies) will apply in federal question cases. So there is no opportunity to apply state law in federal question cases. Similarly, Erie problems do not exist in state court cases dealing with substantive state law issues because the state court will simply apply both state substantive law (California law of Contracts) and state procedural law (procedural law of the forum always applies). The following table (Figure 19) summarizes these Erie issues setting forth generally which law applies in which forum:
34

(Figure 19) ERIE, NON-ERIE, AND REVERSE ERIE FEDERAL COURT SUBJECT MATTER JURISDICTION (Limited Jurisdiction)

Diversity of Citizenship 1332 (or 1367 supplemental jurisdiction if the

additional claim is a state law claim) Erie Doctrine (state and federal law) (This is where the Erie Doctrine applies.) The federal court should apply: State substantive law (Contract, Property, Tort claim) Federal procedural law (Federal Rules of Civ Pro)

Federal Question 1331

Non-Erie (all federal law) (The Erie Doctrine is never applicable here.) The federal court should apply: Federal substantive law (Federal Question claim) Federal procedural law (Federal Rules of Civ Pro)

STATE COURT SUBJECT MATTER JURISDICTION (General Jurisdiction)

State court Erie issues will always be non-Erie or reverse Erie

Non-Erie (all state law) (No Erie Doctrine is at issue. We are dealing with state substantive law in state court.) The state court should apply: State substantive law (Contract, Property, Tort) State procedural law (State Rules of Civ Pro)

Reverse-Erie (federal and state law) (This is when we are dealing with a federal question in state court. Remember, we can do this because state courts have concurrent jurisdiction.) The state court should apply: Federal substantive law (Federal Question claim) State procedural law (State Rules of Civ Pro)

This diagram is very basic, so it is important to make some further critical distinctions and observations. Notice that you always apply the procedural law of the forum you are in: in state court, state procedural law always applies; in federal court, federal procedural law always applies. Thus, you can still forum shop at least for procedural law. A court NEVER applies the procedural law of a different court; it always applies only its own procedural law. Also notice that you can apply federal substantive law in state court as well as in federal court because of concurrent jurisdiction (as long as there is no exclusive federal question jurisdiction where the particular case can only be heard in federal court, not in state court, according to statute. (See page 26 for exclusive federal jurisdiction matters)). This is reverse-Erie.

35

Finally, notice that diversity jurisdiction (or supplemental jurisdiction with an additional state law claim) in federal court is really the only area where Erie issues are raised (where in the same case you apply state substantive law and federal procedural law in federal court). To recapitulate, federal question cases brought in federal court apply both federal substantive and procedural law (making it a non-Erie issue), and in state court it is possible to have only state substantive and state procedural law (also a non-Erie issue). In state court, a reverse Erie situation is possible (where federal substantive law [federal question] and state procedural law apply). Make sure you are familiar with Figure 19. Eries applicability to diversity cases (or supplemental jurisdiction with an additional state law claim) in federal court is further demonstrated in Figure 20. If a case resembling the top-left box existed where a state breach of contract claim was being brought in state court, then Erie would not apply because there is no state law or federal law that could possibly conflict. In such a case, both state procedural and substantive law would apply because it is being brought in state court and it is dealing with state substantive law. Another non-Erie situation would be a case resembling the bottom-right box where a federal civil rights claim was being brought in federal court. Since a federal claim is being brought in federal court, no conflict between state law or federal law could exist. The federal court would simply apply its own federal substantive and federal procedural law. Things become a little trickier when a case deals with the substantive law (state or federal) that is dissimilar to the court or forum (state or federal) being used. The bottom-left box is an example of this: a federal question being brought in state court. This situation would come up if a federal civil rights claim were brought in state court, which is possible because of concurrent jurisdiction (state courts can hear substantive federal claims). Although a potential conflict between federal and state law may arise, this is not the Erie situation that we will be dealing with in this class. This is not a diversity case because it is being brought in state court, not federal. Thus, this is what we call reverse-Erie. Again, Erie applies only in diversity cases (or supplemental jurisdiction with an additional state law claim) in federal court. This leaves us with the top-right box where a state breach of contract claim is brought in a federal court. In such a situation, diversity would be the only way to admit a state claim into a federal court (plaintiff and defendant would have to be from different states [or one be from a different country] and have a controversy amounting to more than $75,000). In such a situation, one must be aware that a potential Erie issue (how to deal with the conflict based on the source of the federal law, if it is not clearly substantive or procedural) may arise. See Figure 20.

(Figure 20)
STATE COURT STATE SUBSTANTIVE LAW - STATE PROCEDURAL - STATE SUBSTANTIVE NON-ERIE FEDERAL QUESTION - STATE PROCEDURAL - FEDERAL SUBSTANTIVE
(IF NOT EXCLUSIVE FEDERAL JURISDICTION.)

FEDERAL COURT - FEDERAL PROCEDURAL - STATE SUBSTANTIVE

(DIVERSITY) (SUPPLEMENTAL)

*ERIE* - FEDERAL PROCEDURAL - FEDERAL SUBSTANTIVE NON-ERIE

REVERSE ERIE

36

Figure 21 shows that federal law comes from four different sources. These sources of federal law make a big difference as to how to apply federal law when it conflicts with state law. 3. The Erie Doctrine: When State Law and Federal Law Conflict To further understand these issues, you need to be aware that there is a hierarchy of the sources of federal law, just as there is a hierarchy of courts. At the highest level is (1) the U.S. Constitution, followed by (2) statutory laws (laws created by federal and state legislatures), then (3) the rules of procedure created by the judiciary and passed by the legislature (like the Federal Rules of Civil Procedure), and finally, (4) the common law (the law contained in written judicial opinions), including local rules created by judges in order to run their courtrooms more smoothly and consistent with their local practice needs. In a diversity case, if there is a conflict between federal and state law that cannot be harmonized that is, interpreted in such a way as to avoid the conflict between the laws application, then we must determine the source of the federal law in conflict with the state law in order to analyze the federal/state conflict and see which conflicting law should apply.

(Figure 21)
HIERARCHY OF THE SOURCES OF LAW

CONSTITUTIONAL LAW

STATUTORY LAW (Laws passed by the Legislature)

RULES OF CIVIL PROCEDURE (Written by the Supreme Court; Approved by Congress)

COMMON LAW/JUDGE MADE LOCAL PRACTICE RULES (Each U.S. Judicial District's Local Rules of Practice)
So whether state procedural or state substantive law applies in a diversity case, for example a situation where the Erie doctrine would apply really depends on a four step analysis:

37

(1) (2) (3) (4)

Is there a clear state substantive law and clear procedural law that do not conflict? If so, apply both laws to case; (Figure 19) Is there a conflict between state and federal law (each law says to do something different)?; If so, can the court harmonize the federal and state law, that is, interpret them in such a way so that there is no conflict?; and, If there is a conflict that cannot be harmonized, then determine the source of the federal law that is conflicting with the state law in order to determine which law should ultimately apply (the following analysis focuses on this Step #4).

4. The Source of Federal Law Must Be Determined When a Conflicting Federal and State Law Cannot Be Harmonized The following four (4) guidelines apply (because there are 4 sources of federal law) regarding a conflict where the source of the federal law must be determined in order to find out which law (federal or state) applies. i. Conflict Between Federal Constitutional Provision and State Law: U.S. Constitution Wins. (Notice in Figure 21 that the U.S. Constitution is the highest source of law) For example, the Seventh Amendment to the U.S. Constitution provides for a jury trial in civil cases where damages are the remedy, regardless of the amount in controversy (once subject matter jurisdiction is satisfied). Suppose, however, that a state statute provides that in contract actions (a substantive state law area) there will be no jury unless the amount in controversy is $100,000 (so, looking at Step #2, there is a conflict). We are in federal court in a diversity breach of contract action so state substantive law applies (Step #1, but it is not totally clear whether this particular state law is procedural [right to a jury] or a substantive right regarding contracts in California). There is no feasible way to harmonize the conflict (Step #3). As a result, we check the source of the federal law (Step #4). The source of the federal law that is in conflict with the state law here (the U.S. Constitution) controls over the conflicting state law because the U.S. Constitution is always supreme over state law (under the Constitutions Supremacy Clause). ii. Conflict Between a Federal Statute and State Law Federal statute usually wins. (2nd highest source of federal law) For example, the federal venue statute ( 1391(a)(1)) provides that venue is proper where defendant currently resides (not where he used to reside in the past). However, suppose in California tort actions (state substantive law) a state law allows for venue to be based on a defendant's past, as well as present, residence (Steps #1 & 2 show a conflict where it is not clear what is procedural and what is substantive). First, you try to harmonize the conflicting laws (Step #3) (if current residence is the issue, then there would be no conflict). If you cannot harmonize the laws (because the issue is of past residence), then you go to the source of the federal law (Step #4). Here, since the source is a federal statute, the federal statute wins (Step #4). The only issue at that point would be whether the federal statute is valid or constitutional (very seldom, however, are federal statutes of this type considered unconstitutional). Also, if the issue determined by the federal statute is even arguably procedural (and a venue statute is clearly procedural), then the federal statute wins. Thus, if a federal statute conflicts with a state law, then the federal statute almost always controls because as long as it is even arguably procedural, it is not unconstitutional. iii. Conflict Between Federal Rule of Civil Procedure and State Law The Federal Rule Usually Wins. Hanna v. Plummer (3rd highest source of federal law, but it is already defined as procedural so it applies) A Federal Rule of Civil Procedure will always win over a conflicting state law because a Federal Rule of Civil Procedure is, by definition, procedural, and as we know, in diversity cases, state substantive law applies and federal procedural law applies (Step #1).
38

(These are the Federal Rules of Civil Procedure, after all). The Rules Enabling Act, 28 U.S.C. 2074 (REA), gives the Supreme Court the statutory authority to promulgate the Federal Rules of Civil Procedure. The rules are all clearly valid and have never been held to be unconstitutional (it is highly unlikely the Supreme Court would hold that its own rules are unconstitutional). Under the REA, however, the Federal Rules of Civil Procedure cannot be applied if they would abridge, enlarge, or modify any substantive state rights; i.e., if the Federal Rule would thwart the efficacy of a state law, the Federal Rule must yield. If a federal court were to hold that a procedural rule would abridge, enlarge, or modify a state substantive right (which would be highly unlikely), then the federal rule would not apply. Of course, the court will attempt to harmonize any conflict (Step #3), but if it cannot, it will apply the Federal Rule of Civil Procedure in question (Step #4), provided no state substantive right is abridged, enlarged, or modified, which has never been the case. An important note: with respect to statutes of limitations (the time period allowed in which to bring a lawsuit or forever lose the claim, e.g., if a contract is broken the aggrieved party may only have three years in which to file a complaint or lose it forever): statutes of limitations are deemed substantive (not procedural) law, and, as a result, the state statutes of limitations periods apply in federal diversity cases (even though one might argue they are procedural because they relate to the timing of the lawsuit). For example, the federal rule determining when the lawsuit begins (Rule 3 commencement of lawsuit) would abridge, enlarge, or modify a state substantive right if it were otherwise (it would allow a state case in federal court that would be barred in state court); thus implicating the enlargement of a state substantive law because the federal system would extend the duration of a plaintiffs cause of action beyond the time limit which the state legislature had initially promulgated. Whenever federal courts are adjudicating cases filed pursuant to diversity jurisdiction, 28 U.S.C. 1332 (or supplemental jurisdiction with an additional state law claim), the application of state substantive law has been deemed a constitutional command; therefore, federal courts are operating under a strict constitutional duty to accord state law its legal import. This duty has created great tension in the federal system between proponents of state versus federal power. iv. Conflict Between a Federal Judicial Practice (Federal Procedural Common Law) and State Law No Clear Winner; This One Is Up for Grabs. Erie, York, Byrd line of cases Since federal judges have to run their own courtrooms, they have developed special local rules of practice for their particular judicial districts governing such things as paper size, length of pleadings, special scheduling orders, certain cut-off dates (but NOT statutes of limitations deadlines), etc. very nuts and bolts type of rules that are simply too minor to be included in the U.S. Constitution, the Federal Statutory Code, or the Federal Rules of Civil Procedure, but nevertheless are still necessary for the court on a day-to-day level. Also, they have developed federal common law that sometimes can be deemed procedural; it is unwritten in any code, but exists in the holdings of federal court cases (e.g., perhaps a case holding that a federal judge can ignore briefs that are filed late). If there is a conflict between a state law and this type of procedural local rule of practice or federal common law and that conflict cannot be harmonized (Step #3), then (Step #4) the state rule applies over the federal practice rule/common law, provided the difference between the federal and state law would make a difference in the result of the case, as it would be outcome determinative. That is, if applying the federal practice rule, instead of the state law, would make a difference in the outcome of the case, then it would be outcome determinative, and therefore it would be deemed substantive, by definition, meaning that the state law would apply.

39

Outcome determinative is defined as a difference in the result of the case that would lead to forum shopping and/or the inequitable administration of laws. For example, if a state law provides for any page length on pleadings, but a federal practice rule for a particular U.S. Judicial District requires all pleadings to be doubled-spaced and not to exceed two pages (because the federal judges are lazy in that particular judicial district and want to get rid of complex cases); and, as a result, a plaintiff with a complex case feels compelled to sue in state court because his case has many claims and parties such that he simply could not bring it in federal court because of the page limit, such would lead to forum shopping (the plaintiff would sue in state court so he would not lose his additional claims against additional parties). Thus, the state rule would have to be applied so that the state interest in the full and fair resolution of all issues would be served by allowing the plaintiff to file all claims against all parties in a unitary court proceeding. It is also important in assessing the outcome determinative aspects of the case to balance the interests of the state law and the federal common law. If one or the other has a particularly strong interest, such may be enough to be controlling. If you did not understand this section on the Erie Doctrine all that well now, do not worry, it will come to you this is only the introduction and overview. We will have much time to explore all of these particular issues in detail as the course proceeds. Refer to the Attack Sheet below to help determine whether the federal or state law applies. Remember, for exam purposes you would need to explain your thinking each step of the way. Is there a clear State Substantive Law and Clear Procedural Law That Do Not Conflict?

YES Apply the substantive (state) and the procedural (federal) law to the case.

NO

Can you harmonize the federal and state law so there is no conflict?

NO

YES Apply the harmonized federal procedural and state substantive law

What is the source of the federal law that is conflicting with the state law? U.S. Constitution v. State Law Federal Statute v. State Law Federal Rule of Civil Procedure v. State Law

Federal Common Law v. State Law

Constitution Wins!
(Supremacy Clause)

Federal Statute Wins!

(If even arguably procedural Test

Federal Rules of Civil Procedure Wins!

(Unless it abridges, enlarges, modifies any 40 substantive state rights)

No Winner.
(Apply Erie/York/Byrd test)

5. Do Not Confuse Choice of Law and Conflicts of Law i. Choice of Law (Erie: State Law v. Federal Law) When you are in federal court based on diversity suing on a state law claim (or if there is supplemental jurisdiction over a state law claim joined to a federal question claim), the Erie doctrine is invoked such that state substantive law and federal procedural law are applied. Choice of law is determining what exactly is substantive law and what exactly is procedural law in order to know which state and federal laws to apply in the event there is a conflict between state and federal law. For example, if there is a diversity breach of contract action in federal court, and there is no conflict between state and federal law, then state substantive contract law would apply, and the federal procedural law would apply. However, if there is a conflict between state and federal law that cannot be harmonized, then we must look to other tests (depending on the source of the federal law; see below) in order to determine whether the law is procedural or substantive i.e., which law should ultimately apply. So choice of law is trying to choose between federal and state law in a diversity case if it is not clear or obvious if the law in question is substantive or procedural. ii. Conflicts of Law (State Law v. State Law or the Law of a Foreign Country) Conflict of law is a determination between two or more possible applications of substantive law, either between states or between countries. For example, if the formation of the contract occurred in California, but the breach occurred in New York, which substantive contract law should apply, that of New York or that of California? Each state has a set of laws called conflicts of laws principles which determine which substantive law should apply in situations like the one above. Note that conflict of law provisions are not substantive law, but instead, you look to the provision to determine which substantive law to apply. Thus in the contract example, conflict of law would instruct us to look at the state in which the action took place to see which law applies. If the lawsuit is filed in California, then we would turn to California conflict of law principles. Depending on the conflict of law principle adopted by the state/country, different state substantive law will apply. These provisions can sometimes be confusing when it is uncertain whether to go from one states conflict of law provision to another states provision, or whether we go from one states conflict of law provision directly to the other states substantive law. Unlike choice of law (federal vs. state law), we are trying to determine which possible substantive law applies (State A v. State B [or foreign country] substantive law). There are several conflict of law theories that a state/country can adopt: lex fori, multilateralism, unilateralism, or harmonization. Lex fori simply applies the substantive law of the forum, reasoning that if there is personal jurisdiction over a defendant, thus satisfying due process, then it is also fair to apply the substantive law of the forum over the defendant as well. Some advantages of lex fori include the predictability of the law applied (apply the states own law), ease of administration (no dispute over conflict of law provisions), and it is not susceptible to manipulation (attorneys cannot argue for the application of law different from that of the forum). However, because there may be several jurisdictions available even when one applies lex fori, forum shopping may still occur since a plaintiff would simply choose the forum with the most favorable substantive law. States/countries that adopt the multilateralism approach apply the substantive law of the situs of the wrong, i.e., they articulate rules to locate an incident or transaction within a particular jurisdiction, and define it as the place of the wrong to help identify the state whose law should govern the conflict. Multilateralism differs from lex fori in that it does not simply apply its own law but attempts
41

to apply the appropriate law of the place of the wrong. Thus, this theory does not promote substantive law forum shopping because neither the plaintiff nor the defendant has a choice in where the harm occurs, although procedural forum shopping may still occur. One flaw of the multilateral theory is that it makes a major assumption that all states/countries apply the same conflict of law rules regarding the situs of the case. This is an unrealistic assumption because if countries applied the same conflict rule in the same place, then conflict of law would not occur in the first place. Even in cases where conflict of law rules are the same, the rules are still subject to interpretation that may lead to different results. Another problem with multilateralism is whether courts can apply foreign law correctly since courts are usually not as familiar with another states law or the law of a foreign country. Some sub-theories that support multilateralism include comity, which is to pay respect to other courts and their jurisdiction and sovereignty, and vested rights theory, which means that the situs of the action happened in a state/country and therefore any legal remedy for that wrong is tied to the country from where it emanated. Unlike multilateralism, unilateralism does not focus on a rigid framework of rules but favors a process of more discretionary decision-making that can be tailored to the needs of each particular case. Unilateralism theory asks the question of what generally seems fair, and determines the place with the most significant relationship (similar to determining minimum contacts for personal jurisdiction in the United States). However, this flexible (and probably more realistic) approach not only has no predictability or consistency, but is also open to manipulation as to who can hire a better attorney to persuade the particular judge that his desired forum is the place with the most significant relationship. A fourth way to deal with conflicts of law is the harmonization of substantive law. This approach focuses on commonalities rather than on differences. Although at first glance harmonization may seem as unrealistic as expecting everyone to hold hands and be friends, there have been attempts to try to obtain uniformity through rational agreement either legislatively (government ratifying conventions or treaties), or judicially (judges search for best legal results). Thus, uniformity may be obtained through a rational agreement in a contract dispute that the law of the state in which the contract was formed should apply.7 VI. BRINGING A CIVIL CASE IN FEDERAL COURT A. An Actual Dispute For a court to decide a case, there must be an actual case or controversy (U.S. Const. Art. III, Sect. 2). Also, the controversy must be a legal one courts cannot resolve every type of disagreement (like a political disagreement). Although courts can, for example, render a declaratory judgment (Rule 57) in order to clarify a confusing contract so that the parties can continue their legal relationship knowing their legal rights and responsibilities under their contract before an even bigger dispute or possible harm arises, courts cannot give advisory opinions or answer interesting, hypothetical legal questions for those who are simply curious. In short, the case or controversy in the lawsuit cannot simply be staged in order to get a court to consider a fake dispute, but the parties can ask for legal clarifications from the court in order to avoid an inevitable dispute leading to very possible future harm.
7

Californias conflict of law principle use a government interest test it weighs the interest that each state, or foreign country, has in the dispute. It analyzes the comparative impairment to each states (or countrys) interest should the law of the other state (or country) be applied. Also, California will enforce choice of law provisions in contracts (where, for example, parties agree before any dispute ever develops, that if a dispute should develop, a certain body of law will govern the dispute). But it will enforce only if the chosen law has a substantial relationship to the parties or their transaction, or any other reasonable basis exists for the parties choice of law. If the parties choice of law has such a connection, the court will then make sure that the law does not violate California public policy. If it does conflict with California public policy, then the court will weigh parties interests in selection of the law with Californias public policy interest, and then decide which law to apply. 42