One point of severe nastiness that I want to indicate. The facts of the subject matter jurisdiction question are very similar to J. McIntyre Machinery, Ltd. v. Nicastro, which was decided a month before the bar exam. If you believed the bar review companies who tell you that examiners do not test you on recently decided issues you were misled. Alternately, the court was divided and both sides have strong arguments, so if you went either way with it you are probably fine.
The strategy point here is how to handle your time. This question probably took 35-45 minutes to write. I would recommend finishing early and moving on. If you read ahead, you probably noticed that question three is the fastball and you are going to need to make up time somewhere for it.
From the California State Bar:
Pam and Patrick are residents of State A. While visiting State B, they were hit by a truck owned and operated by Corporation, a freight business.
Corporation is incorporated under the laws of Canada and has its headquarters there, where its President and Secretary are located. State B is the only state in which Corporation conducts its business. Corporation’s drivers and other employees work out of its warehouse in State B.
Pam and Patrick jointly filed a lawsuit against Corporation in federal district court in State A. In their complaint, Pam demanded damages for personal injury in the amount of $70,000 and for property damage in the amount of $10,000; Patrick demanded damages in the amount of $6,000.
Corporation filed a motion to dismiss the complaint for lack of personal jurisdiction. The federal district court denied the motion. After trial, it entered judgment for Pam in the amount of $60,000 and for Patrick in the amount of $4,000.
Corporation has appealed on the grounds of lack of subject matter jurisdiction and lack of personal jurisdiction.
How should the court of appeals rule on each ground? Discuss.I would start with appellate standards of review and then take each issue individually.
I'll discuss after the jump.
I. The Court of Appeals reviews issues of law, such a personal and subject matter jurisdiction de novo.
The issue is the standards of review of the Court of Appeals (COA). The COA reviews the issues of law decided by a lower court de novo. Since personal jurisdiction (PJ) and subject matter jurisdiction (SMJ) are issues of law they will be reviewed de novo.
As a rule of prudence, COA will only review issues raised at the trial court, except for SMJ, which must be present at all stages of litigation. Corporation (C) raised PJ and SMJ in its motion to dismiss at the district court and therefore can raise these issues on appeal.
Therefore, COA will review personal and subject matter jurisdiction de novo.
II. SMJ exists because diversity jurisdiction exists because the plaintiffs and defendant are from different states and the amount in controversy exceeds $75,000.
Federal courts have jurisdiction over cases and controversies arising under the laws and treaties of the United States and actions where the parties meet the requirements of diversity jurisdiction. Federal courts have diversity jurisdiction when 1) all of the plaintiffs and all of the defendants are citizens of different states and 2) the amount in controversy exceeds $75,000.
A corporation is a citizen of two states: where it is incorporated and where its principal place of business is located. Here, C is a citizen of Canada because it "is incorporated under the laws of Canada and has its headquarters there, where its President and Secretary are located." Individuals can be citizens where they are domiciled. Here, "Pam and Patrick [collectively 'P'] are residents of State A." Therefore, P are citizens of State A. Therefore, since C is a citizen of a different state than P, the diversity of citizenship requirement is satisfied.
The amount in controversy claimed by the plaintiff will control if made in food faith, unless it appears to a legal certainty that the claim is really less than the jurisdictional amount. The claims of two plaintiffs can be aggregated to reach the jurisdictional amount unless the claims are "separate and distinct." The inability of the plaintiff to recover an adequate amount to give the court jurisdiction does not show bad faith or oust the court's jurisdiction. Here, Pam claimed $70,000 in personal injury and $10,000 property damage while Patrick claimed unspecified damages of $6,000. For a tort claim, these numbers appear to be made in good faith and are relatively close to the actual numbers discerned by the court's judgment. If C tries to argue that the court lost jurisdiction for entering a low judgment, that argument will fail because the aggregated amount has "legal certainty" in that it is within the realm of the court's authority to grant and the claims are not "separate and distinct" because they arose from the same automobile accident. C's argument that different people suffered different injuries lacks legal merit because of the proximity of the injuries in time, place manner and source.
Therefore, SMJ exists because diversity jurisdiction exists because the plaintiffs and defendant are from different states and the amount in controversy exceeds $75,000.
III. Personal jurisdiction does not exist because C does not have sufficient minimum contacts with B and lacks a sufficiently pervasive presence for general personal jurisdiction.
The issue is whether the A District Court has personal jurisdiction to hear the case. There are two manners of obtaining personal jurisdiction: general personal jurisdiction and specific personal jurisdiction.
Starting with general personal jurisdiction (GPJ), GPJ exists where a foreign corporation has substantial ties to the forum state such that it is "at home" in the forum state. As noted above, C has it's entire business operation and therefore its "home" in Canada. Therefore, GPJ does not exist.
Specific personal jurisdiction (SPJ) is present when a defendant purposely avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws. P can argue that C has put products in the stream of commerce in State B which could reasonably travel to State A and therefore is subject to the privilege of conducting activities within State A. C can respond that the Due Process Clause of the Fourteenth Amendment requires that activities be conducted directly, and not remotely at the forum state. Therefore, since the marketing activity is conducted at state B, state A is not targeted and is therefore lacks sovereign authority to hear the case.
C has the better argument. Due Process applies to all defendants in civil actions in the United States. Therefore, COA should find that the A District Court erred in its interpretation of the law, that C timely objected with its motion to dismiss and should dismiss the case for lack of SMJ.