1. P (a citizen of New York) files a suit against the D Corp. for fraud under New York law in Wyoming state court. P is asking for $80,000. The suit concerns misrepresentations the president of the D Corp. allegedly made to P in New York City about the productivity of oil fields that the D Corp. holds in Wyoming. These misrepresentations induced P to buy a significant amount of D Corp. stock in New York. The D Corp. is an oil company incorporated in Delaware. It has extensive oil fields of roughly equal size and value in Wyoming, Western Texas and Southern California. The president of the D Corp. works in Houston, Texas, and the board of directors meets there. Most financial decisions are also made in Houston. The D Corp. removes the Wyoming action to the Federal District Court for the District of Wyoming on the basis of diversity, arguing that the parties are diverse and that P has admitted that the amount in controversy is satisfied by asking for more than $75,000 in his complaint. Which of the following statements is most accurate?
A. After removal, the D Corp. would be able to successfully move to dismiss for lack of personal jurisdiction. There is no personal jurisdiction because the misrepresentation at issue took place in New York. The fact that the misrepresentation was about something in Wyoming is insufficient to establish personal jurisdiction.
Wrong. There would obviously be personal jurisdiction over the D Corp. in Wyoming state court and thus in a federal court under R. 4(k), since the D Corp. has extensive oil fields in Wyoming. This would be sufficient for general personal jurisdiction, even if the cause of action is unrelated to these oil fields. 6 of you chose this answer anyway.
B. The district court will remand the case back to state court. The D Corp. may not successfully remove because it resides within the state of Wyoming. A diversity case may not be removed if a defendant is an in-state resident.
Wrong. A diversity case may not be removed if the defendant is an in-state citizen, not resident. The D Corp. is almost certainly not an in-state citizen, since its principal place of business is surely Texas, not Wyoming. Its other state of citizenship is Delaware, where it was incorporated. 29 of you chose this answer anyway.
C. The district court may not remand the case back to state court. The plaintiff and the defendant are diverse. Furthermore, the court may not find that the amount in controversy is below the jurisdictional minimum, because the plaintiff has admitted that the amount in controversy is more than $75,000 by asking for $80,000 in his complaint.
Wrong. A court may find that the amount in controversy is less than a plaintiff states in his complaint. The court has a duty to determine on its own whether subject matter jurisdiction exists. SMJ cannot be created simply through the agreement or admissions of the parties. 35 of you chose this answer anyway.
D. Assume that in Wyoming state court P had joined to his claim against the D Corp. an unrelated breach of contract action against both the D Corp. and X (a citizen of New York). In the contract action, P sued the D Corp. and X for damages for violating a contract, signed by all three in Wyoming, under which the D Corp. and X were each to provide P with coal for his factory in Wyoming. (Assume that the Wyoming state court has joinder rules identical to the federal rules.) If so, after removal, the district court would remand both the fraud and the breach of contract suits back to state court.
Correct. It is possible to defeat removal of a diversity case by joining an unrelated claim to which one joins a diversity-destroying party. (Joining unrelated non-removable claims to a federal question case cannot defeat diversity, however, under 1441(c) – this may have confused you.) I never gave you this exact example in class, but it follows from what we have learned about joinder to defeat diversity. Only 19 of you chose this.
E. The district court will remand the case back to state court, because the case lacks venue. It is not true that a “substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated,” in Wyoming. The fact that the misrepresentation was about Wyoming is insufficient to establish venue.
Wrong. First of all, if the action lacked venue if would be dismissed, not remanded. Second, there is venue for this removed action because the District of Wyoming embraces the state court from which the action was removed. See 28 U.S.C. 1441(a) and Glannon 88. Finally, even if 28 U.S.C. 1391 were used to determine venue (which it shouldn’t), there would still be venue under 1391(a)(1) and 1391(c). 14 of you chose this anyway.
2. P, a citizen of New York, sues D, also a citizen of New York, for federal copyright infringement in the Federal District Court for the Southern District of New York. D defaults and P receives a judgment of $35,000 in damages. Subsequently P has the Federal District Court for the District of New Jersey attach $30,000 worth of D’s stock in a New Jersey corporation and then brings an action on the earlier judgment before the District of New Jersey. The stock is considered to be in New Jersey by virtue of a New Jersey statute that holds that the situs of the shares of any company incorporated in New Jersey shall be New Jersey. Which of the following is most accurate?
A. The action in New Jersey must be dismissed for lack of federal subject matter jurisdiction. It would have had supplemental federal subject matter jurisdiction if it had been brought as supplementary proceedings to the earlier federal question suit. But brought as a separate suit, it cannot be entertained by a federal court.
Correct. The action does not have its own source of subject matter jurisdiction, because it is a state law action between non-diverse parties. Furthermore, there is no supplemental jurisdiction for the action because it is not brought as a continuation of the earlier proceedings in federal court (for example, though R. 69). I mentioned this point orally at least two times in class. [NOTE: There is a certification method under 28 U.S.C. section 1963, by means of which the enforcement of a federal judgment is possible in a district other than that in which the judgment was issued. But that was not discussed in class and furthermore, no reference to certification was made in the question. If there is certification, the enforcement of the federal judgment, although a state-law cause of action, has federal jurisdiction because it is considered ancillary to the earlier federal proceedings that resulted in the judgment.] 29 of you chose this answer.
B. The action in New Jersey must be dismissed for lack of personal jurisdiction. In the light of Shaffer v. Heitner, such a quasi-in-rem action is no longer allowed.
Wrong. The action in New Jersey is not a quasi in rem action. A quasi in rem action would be an action in New Jersey for copyright infringement where the source of personal jurisdiction was D’s New Jersey stock. This action is an action to obtain the stock in satisfaction of a debt. The action is an in rem action because the very property to which the plaintiff is claiming entitlement is located in New Jersey. Shaffer is irrelevant, since the cause of action concerns that property. 30 of you chose this answer anyway.
C. D will prevail in the action in New Jersey. The property at issue should have been attached in the first suit in New York. Without such attachment, the New York judgment is void for want of personal jurisdiction.
Wrong. The source of PJ over D in the first action was the fact that D’s domicile was in New York. No attachment of D’s property was necessary. Indeed a federal court in New York would not have jurisdiction over the New Jersey property to attach it anyway. 2 of you chose this answer anyway.
D. The action in New Jersey will not be dismissed for lack of federal subject matter jurisdiction. The enforcement of a federal judgment is itself a federal cause of action. Therefore P’s New Jersey action will have federal question jurisdiction.
Wrong. This is just false. I said many times in class that an action to enforce a judgment, even a federal judgment, is a state law cause of action. R. 69 makes this clear too. 33 of you chose this anyway.
E. The action in New Jersey must be dismissed for lack of personal jurisdiction. In the light of Shaffer v. Heitner, a state may no longer statutorily determine the situs of shares of companies incorporated in that state.
Wrong. Shaffer does not say this. It is true that Shaffer puts doubt on quasi in rem actions where the situs of the intangible property is determined to be in the state by statute, but this isn’t a quasi in rem action. The action in New Jersey concerns the very property attached. 8 chose this anyway.
3. In 1860, prior to the enactment of the 14th Amendment, P, a citizen of Oregon, sued D, a citizen of California, in Oregon state court. The suit concerned $300 in unpaid fees for lawyer services that P performed in Oregon for D while D was a citizen of Oregon. Service was on D in California. D defaulted. In 1870, after the enactment of the 14th Amendment and after the case of Pennoyer v. Neff, P brought an action on the earlier judgment before another Oregon state court. In the second action, property owned by D that was worth $400 was attached in order to execute the judgment. D appeared. What is the best defense that D could make in the second suit?
A. The judgment in the first suit is void because the exercise of personal jurisdiction over D in the first suit was in violation of the 14th Amendment.
Wrong. How can one appeal to the 14th Amendment when it did not exist at the time that the earlier judgment was rendered? Pennoyer itself makes it clear that that cannot be done. 17 of you chose this anyway.
B. The judgment in the first suit is not entitled to Full Faith and Credit.
Wrong. The full faith and credit clause and 28 U.S.C. 1738 are relevant to one state’s treatment of another state’s judgments. This is a question of how Oregon treats its own judgments. 25 of you chose this anyway.
C. The first suit was removable as a diversity case. As a result the judgment in the first suit is void because the state court lacked subject matter jurisdiction.
Wrong. This is basically gibberish. Just because an action is removable does not mean that if it is not removed the state court does not have subject matter jurisdiction. 3 of you chose this anyway.
D. The judgment in the first suit is void because the exercise of personal jurisdiction in the first suit was in violation of Oregon law.
Correct. If there is no 14th Amendment to appeal to, then the only way that you can convince an Oregon court that an earlier default judgment before another Oregon court is void is by showing that the earlier court’s assertion of personal jurisdiction was in violation of Oregon law. And in fact we know from Pennoyer than such an assertion of personal jurisdiction would have been contrary to Oregon law at the time, since D was not served in Oregon as required under Oregon law for an in personam action. 37 of you chose this.
E. The second suit should be dismissed for lack of personal jurisdiction, because the exercise of jurisdiction over D in the second suit is in violation of the 14th Amendment.
This is not the best answer. The second suit concerns the very property attached by the court. If the property is in Oregon, then the assertion of personal jurisdiction in the second suit is clearly in keeping with the 14th Amendment. I failed to say that the property was in Oregon however. Thus you might have thought that the property was not in Oregon (although the court could never have attached it then). Therefore, I will give the 37 who chose this 2 out of 5 points.
4. The state legislature of Alabama added to a state medical malpractice statute the following provision:
§ 4(a) Exclusive state jurisdiction. Alabama state courts shall have exclusive subject matter jurisdiction for all actions brought under this statute.
Which of the following is most accurate?
A. Section 4(a) is valid. Just as Congress can create exclusive federal subject matter jurisdiction for federal causes of action, so can state legislatures create exclusive state subject matter jurisdiction for state causes of action.
Wrong. This is just false. See answer C. 8 of you chose this answer anyway.
B. Section 4(a) should be applied by a federal court sitting in diversity before whom an action under the Alabama medical malpractice statute is brought, because the requirement of state court subject matter jurisdiction is “bound up with [state] rights and obligations in such a way that its application in . . . federal court is required.” Byrd v. Blue Ridge Rural Electric Corp.
Wrong. Section 4(a) is contrary to the U.S. Constitution and 1332. See answer C. Therefore it does not matter whether 4(a) is bound up with state substantive rights – federal law must be used. 5 of you chose this anyway.
C. Section 4(a) is invalid because it is in violation of Art. III, § 2 of the United States Constitution and 28 U.S.C. § 1332.
Correct. Under Art. III, § 2, the United States has judicial power over diversity cases. Congress has decided to let the federal courts exercise (part of) that power by enacting 1332. A state legislature cannot divest federal courts of their constitutional powers over diversity cases by enacting a statute. It is therefore invalid. 76 of you chose this.
D. Section 4(a) is valid because
1. applying a contrary federal rule would promote forum-shopping and the inequitable administration of the laws
2. there is no countervailing federal interest in uniformity and
3. Alabama is obviously interested in this rule applying in federal court.
Wrong. See answer C. 7 of you chose this anyway.
E. Section 4(a) is invalid because it would “abridge, enlarge or modify a substantive right.”
Wrong. See answer C. 7 of you chose this anyway.