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Name: Exam Name: CivPro_LS1_Kibel_Fall Instructor: Kibel Grade: ____________
I(A). Pennoyer laid out the traditional grounds for in personam personal jurisdiction (IP pjx) as presence, consent, and residency. In other words, per Pennoyer, for the court to exercise IP pjx over a defendant (D) requires that D be present in the forum, consent to the exercise if pjx over him in the forum, and have residency in that forum. The continuing availability of these traditional grounds as a proper basis for IP pjx was distinguished and refined by the subsequent US Supreme Court decisions International Shoe and Burnham. International Shoe distinguished Pennoyer by introducing a new 2-part test to determine whether the court could exercise IP pjx over a non-resident defendant, which focused not on presence, consent, or residency, but rather on (1) minimum contacts with the forum state and (2) whether the maintenance of suit against the defendant would offend traditional notions of fair play and substantial justice. This made it so that presence, residency, and consent were no longer the sole basis for IP pjx, but rather, that the defendant's contacts with the forum were determinative for jurisdictional purposes. Burnham refined Pennoyer by reasserting one of the traditional bases of IP pjx in Pennoyer, presence. In Burnham, the US Supreme Court held that mere presence in the forum state was sufficient to exert IP pjx over D, even though he was not a resident there, and was only there for the limited purpose of visiting his children. The notion of
consent was not discussed in the majority opinion of Burnham, but was brought up by Brennan in his opinion, who questioned whether IP pjx could be asserted over D if he was there involuntarily. The overall effect of International Shoe has been to introduce the 2-prong test of minimum contacts and fair play/substantial justice, while Burnham has reaffirmed presence as a basis for IP pjx, post Pennoyer.
I(B). International Shoe developed a two-prong test to determine whether IP pjx could be asserted over a non-resident D comprised of (1) minimum contacts (systematic and continuous, rather than isolated, limited, or casual), and (2) that the maintenance of the suit in question would not offend notions of fair play and substantial justice. In World-Wide Volkswagen (WWV), the Supreme Court determined that this two-prong test was sequential in nature, meaning that the court must determine if D has minimum contacts with the forum state (the first prong) before they can move on to considering the second prong. In other words, if D does not have the requisite minimum contacts, then the court does not need to consider the second prong, and can conclude that they do not have IP pjx over D. In addition, the Court further refined the second prong of the International Shoe test in WWV by putting forth "five fairness factors" that should be considered when assessing whether asserting jx over D would comport with notions of fair play and substantial justice. These include the following: (1) the burden on D; (2) the interstate judicial system's interests; (3) the forum state's interests; (4) plaintiff's interest in convenient and effective relief, and (5) the goal of furthering fundamental substantive social policy. Although the court in WWV
should be determined using that state law, while for those cases where the issues were not bound up with state law should use the outcome-determinative test (keeping in mind that state law should be applied unless there was a federal systemic reason not to do so). Finally, for those cases in which the relevant state law was merely procedural (and not substantive), federal law should be applied. Hanna distinguished this test by first referencing the "twin aims" of the Erie test and the outcome-determinative test, which were (1) to discourage forum- shopping, and (2) to prevent the unfair administration of justice, and then stating that a "Hanna prong" should be added to the court's analysis when determining vertical choice of law. The court stated that when there was no valid federal directive applicable to a case, then the federal district court should apply the Erie test and outcome-determinative test. However, if there was a valid federal directive, then the court should apply the Hanna prong, and determine whether there was a state law in direct conflict with this federal directive. If no, then the federal directive and state law could co-exist as equally important. However, if they were in direct conflict, the federal directive would take precedence over the state law.
Part II:
(A) The first consideration in determining if Big Farm (BF) can remove Geese Unlimited's (GU) first count alleging that BF violated the Federal Levee Act (FLA) from Sacramento County Superior Court to Federal District Court (FDC) in
Sacramento is if the FDC can assert jurisdiction over the case based on subject matter jurisdiction (sm jx). Per 28 USC 1331 and 1332, there are two different forms of federal sm jx: diversity jx and federal question jx. Diversity jurisdiction, covered in s. 1332, requires diversity of citizenship (based on one's domicile) and an amount in controversy above $75,000. Domicile for corporations is determined by (1) place of incorporation, and (2) primary place of business, which is judged by one of three tests, the nerve center test (headquarters, where executives report to), the business activities test (where the "muscle" is, where the bulk of employees are, or one of the main location, and/or the total activities test (takes all factors into account). In this matter, both BF and GU are domiciled in California because they are both incorporated and established under the laws of California and only have locations in California. Therefore, they do not have the requisite diversity of citizenship required by minimal diversity (at least one plaintiff and one defendant must be from different states). The amount in controversy is irrelevant since they do not have diversity of citizenship.
Since there is no federal subject matter jx based on diversity, the next step is to consider where there is sm jx under federal question jx. Federal question jx, covered in s. 1331, is determined based on the subject matter of the case, namely whether the case "arises under" federal law. Article III, Section 2 of the US Constitution gives Congress the power to exercise jurisdiction over claims arising under the Constitution, federal statutes, and treatises. Prior to the Civil War, the states had exclusive original jx over cases related to federal laws. However, in Osborn, the US Supreme Court determined a broad definition of
pleaded complaint rule, removal of this claim to the FDC in Sacramento would be proper.
The purpose behind removal is to provide equal access to the court system for both plaintiff and defendant. Because only a defendant can remove a case, BF is the proper party to do so, as they are the defendant here. The proper procedure for BF to seek such a removal would first require them to file a Notice of Removal with the FDC in Sacramento. They must file this Notice within 30 days of receiving service of GU's Summons and Complaint. GU can then file a Motion for Remand to have the case remanded back to the State court, if they so wish. Unless the Motion for Remand is approved, the court will then remove the case from Superior Court to the FDC in the same state and area where the state claim was filed ("embracing" the place where the controversy took place).
(B) As stated, the first claim against BF satisfies the requirements of subject matter jx as codified in 28 USC 1331 because it "arises under" federal law. Based on the rules of supplemental jx, when an FDC exercises jx over a claim that, independent of its relation to a claim that the FDC has original jx over, it would not have jx over, BF can successfully remove the second count (alleging violations of the California Wetlands Act (CWA)) to the FDC in Sacramento. The CWA is most likely a state Act based on the inclusion of "California," and therefore does not "arise under" federal law per 28 USC 1331. The FDC would not have subject matter jx over this claim, based on the fact that this Act would fail the construction test outlined above. However, per 28 USC 1367, a FDC can
exercise supplemental jx over a claim if it is "so related" to a claim over which the court has original jurisdiction that it forms part of the same case and is part of the same controversy. 28 USC 1367 basically codified the decisions of Gibbs and Owen, in which the Supreme Court determined that supplemental jx could be exercised at the court's discretion. GU's claim that BF has violated the CWA is very closely related to its federal claim that BF has violated the Federal Levee Act, as both involve the construction of the levee and its negative influence on the wetlands bird habitats, and both are based on the same set of facts and the same timeline. Therefore, both claims are "so related" that they are part of the same claim and the court would not be remiss in exercising supplemental jx over the state claim. Based on the fact that the second count filed by GU is "so related" to the first count, and because the court can exercise supplemental jx over this claim at their discretion, removal of the second (state law) claim in this instance is proper.
(C) As mentioned above, 28 USC 1367 states that an FDC can exercise supplemental jx at its discretion, meaning that it is not mandatory. The court can decline to exercise supplemental jx over a state law claim if one of the following reasons exists: (1) the claim raises a novel or complex issue of state law; (2) the state law claim substantially predominates over the federal law claim (and the federal law claim is a "mere appendage," per Gibbs); (2) the (federal) claims over which the FDC had original jx have been dismissed, and (4) exceptional circumstances exist that permit the court to decline supplemental jx. GU's
lack of diversity subject matter jx should be granted. To reach this determination, the court must look at 28 USC 1332, which provides the scope of diversity jx, as well as related federal case law. Diversity jx is one of two types of subject matter jx, the other being federal question jx, which permit a federal district court (FDC) to exercise jx over a case. Diversity jx is comprised of two requirements: (1) that the amount in contoversy exceed $75,000; and (2) that the parties have diversity of citizenship. In Homes v. Bell, the first question is whether or not Homes' can prove that its claim involves an amount in controversy exceeding $75,000. Per Whitchurch, a plaintiff should be reasonably afforded a showing of the validity of assertion that his damages exceed $75,000. Based on the "amount test," a claim can be dismissed based on the amount in controversy being too low based on two factors: (1) plaintiff's claim must not have been made in good faith, or (2) there must be legal certainty that plaintiff's damages do not meet the required amount. The required amount can be comprised of the aggregate of several sources, including punitive damages, injunction damages, and actual damages. The actual damages portion of the plaintiff's claimed amount in controversy cannot include attorneys' fees or interest. Here, Homes has asked for the recovery of its attorneys' fees, which cannot be a consideration when calculating the amount in controversy. Therefore, the court must disregard that portion of the alleged damages, and look to the actual damages, the $3,000 a month rent for the remaning 25 months left on Bell's lease, which totals exactly $75,000. Because 28 USC 1332 requires that the amount in controversy exceed $75, (it must be $75,000.01 and above), without including its (precluded) attorneys' fees, Homes' claim does not meet the required amount in controversy. The court
could dismiss Homes' complaint based on this factor alone, as long as Bell can prove the legal certainty that Homes' damages do not meet the required amount. He has this legal certainty, as their claimed damages minus attorneys' fees are only $75,000.
However, the court must also consider whether the parties have diversity of citizenship in assessing whether or not it has diversity jx. Citizenship is determined per 28 USC 1332. A corporation can be a citizen of up to 2 different states, one being its place of incorporation, and one being its primary place of business. A corporation's primary place of business is determined based on one of three tests, the nerve center test (where the corporation is headquartered; where its executives actually report), the business activities test (where a corporation's "muscle" - its employees - are located), or the total activities test, which takes all of these into account. In this case, Homes is incorporated in Delaware, making it a citizen of that state. Using the nerve center test, Homes is headquartered in San Francisco, CA, making it a citizen of California. Using the business activities test, Homes' sole business activity is owning and renting homes in San Francisco, CA, so it is also a citizen of CA under this test. Finally, using the total activities test, since it is headquartered and does all of its business in California, it is a citizen of that state, making it a Delaware and California citizen. Per 28 1332, a natural person's domicile is understood as that person's: (1) present fixed residence; or (2) the last place where he intended to remain indefinitely (or, the place he intends to return to when absent). In this case, Homes is almost certainly arguing that the parties have diversity of citizenship
