Exam - 2 - Answer

I. The first question was obviously about personal jurisdiction. The first point to develop was what contacts or relationships, if any, Donald had with the forum state (Alabama). Some students passed over this point too quickly, which has to be a mistake. For if there are no significant (or minimum) contacts, it is hard to judge the quality and nature of such non-existent contacts. Plausible matters to raise included the fact that Donald was the initiator of the contact with Acme--though it is true that Acme advertised in a national journal, and it is fair to raise that point. Additionally, Donald negotiated with a business entity in Alabama by telephone and received assurances (from Alabama) both orally and in writing. While a matter such as this might not get much weight in a final analysis, the job of the attorney is to either search for such relationships (if representing the plaintiff) or prepare to challenge them (if representing the defendant). It is not entirely satisfactory to pass over such matters without comment. The next possible contact is speculation, but reasonably informed speculation. Is it not likely that any payments Donald may have made were made to Alabama, or were intended to go to that state? Additionally, Donald took title to refrigerators in Alabama, and arranged shipping from Alabama to North Dakota. Altogether these contacts/relationships mayor may not add up to much, but certainly when they are taken together they suggest at least a modestly comprehensive scheme of arrangements.

The second point to develop would have been the quality and nature of such relationships. That the contacts seemed to be intentional seems like a no-brainer. Systematic and continuous requires a little more reflection. The facts play tricks with you here, because you can't be entirely sure how long the relationship worked before it broke down. And you can characterize it as a one-season shot, or look at it like something that may have lasted at least four months. However you decided this point, there were some things to say. The contacts or relationships, such as they were" were obviously related to the cause of action. Almost no students had trouble with that matter. The magnitude of the contacts, of course, was another matter entirely. The value of the contract 'was obviously something to consider, but in what sense? Should we look at the gross value of the contract (undisclosed in the facts)? How about the profit to Acme (also undisclosed)? The one number we have is $100,000, which looks pretty large to me (I am duly impressed by the students who thought a six figure number is little more than small change), but it is only a claim for damages, and may not reflect the real value (higher or lower) of the contract. Witness's and evidence was complex, but students handled it pretty well, on the whole. Clearly there were witnesses in both Alabama, North Dakota, and Minnesota. Clearly there was physical evidence in all states. And some students saw the distinction between the availability of non- party North Dakota witnesses in an Alabama trial, versus the relative ability of Alabama employees of Acme in a North Dakota trial. State interest and availability of other fora were easy points.

II. The second question was more difficulty. Although some students really did well on it, on the whole it was a bigger stumbling block for the class than the first question. It started off easily enough. Assuming a timely and proper petition, removal is automatic and it was easy to establish diversity jurisdiction (and Donald was clearly not sued in his home state). While the facts are a little tricky about exactly where the parties had citizenship, it was hard to find any ground for alleging that their citizenship's overlapped.

The counterclaim, of course, failed the amount-in-controversy test and therefore fell short of the diversity requirements. And aggregation of any plausible kind did not fill in the gap. Thus, under section 1441(c) the counterclaim should not have been removed (the absence of a federal question rendered useless the idea of removing even the non-removable claims). Thus, if by some trick of fate the counterclaim got removed, it should have been remanded to state court quickly. Discussion of section 1367 (supplemental jurisdiction) was inappropriate here. However, students who did enter that discussion here (as opposed to the second part of question II), got some points, depending on the quality of their discussion.

The second part of the question asked if you could figure out a better way to try to handle things. Two ideas that wouldn't work are trying to pretend that the case, somehow, contains a federal question, or that, somehow, the amount in controversy on the counterclaim could be raised. Very weak stuff. Something that might have worked would be to wait before answering. Remove the case first. Then file the answer and counterclaim. In a very similar vein, if you assume the answer and counterclaim were already filed in state court, then file an amended answer (under whatever the state court's counterpart to Rule 15 is) that does not include the counterclaim. Then, after removal, file an amendment under Rule 15, with leave of court, to include the counterclaim. This would require a brief discussion of Rule 15(a), plus of course supplemental jurisdiction (which would fit well here). As to the use of supplemental jurisdiction, there is a difference between trying to use it to remove non-diverse claims when the underlying basis of jurisdiction is diversity --a practice not authorized by the current version of section 1441(c) -- and using supplemental jurisdiction to add a non-diverse counterclaim to a case already removed to federal court. On such distinctions are the fortunes of attorneys built (or not).