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Federal and State Subject Matter and Personal Jurisdiction

What is “Subject-Matter Jurisdiction”?

Subject-matter jurisdiction refers to the types of cases (subject matter of the case) that a court can hear (preside over). For example, a superior court in a state may not be able to hear a family, probate, or taxation matter. Similarly, a federal district court may not hear bankruptcy or immigration cases. Subject-matter jurisdiction is particularly important between federal and state courts. In some instances, a state may not be able to hear certain federal matters, and vice versa. For example, money laundering is a federal crime. A state generally cannot hear a case solely involving federal money-laundering charges, as it is falls outside of its subject-matter jurisdiction. On the other hand, assault is a state law crime that is generally outside of the jurisdiction of the Federal District Court.

General Subject-Matter Jurisdiction - Some state courts have general subject-matter jurisdiction. This means that the state court has the authority to hear any type of case involving state law.

Note: Federal District Courts are trial courts of general jurisdiction.

Example: The state superior court typically has authority to hear cases that are generally heard in lower-level courts. The reverse, however, is not true. Lower level courts (such as a municipal court) cannot hear cases that are outside of its limited, subject-matter jurisdiction.

Limited Subject-Matter Jurisdiction - Often state courts divide jurisdiction based on the following:

⁃ the subject matter of a case,
⁃ the amount in controversy (or possible penalty for a crime), or
⁃ where individuals are located or reside.

Every state in the US has at least one court of general, subject-matter jurisdiction. Likewise, every state has some form of court with limited subject-matter jurisdiction.

Discussion: As stated above, the state superior court typically has general, subject-matter jurisdiction within the state. Do you believe it is important to have state courts of general jurisdiction? Why are courts of limited jurisdiction necessary?

Practice Question: Michelle hires Winston as a general contractor to build her home. Winston does a very sloppy job, which leads to Michelle suing him in state court for breach of contract and damages of $25,000. She sues in an intermediate trial court with a jurisdictional limit of $25,000. The court does not allow for a jury trial. Winston is not happy with the judge serving as trier of fact in the case. What may or should Winston do in this situation?

What is the Federal Court’s Subject-Matter Jurisdiction?

As previously discussed, if a federal court has subject-matter jurisdiction over a case, it means that the court may hear the case. There are generally two methods of establishing federal subject-matter jurisdiction in a case:

Federal Question Jurisdiction

• Federal-question jurisdiction is based upon, or arises out of, a federal law or the US Constitution. For a federal district court to have subject-matter jurisdiction, the parties must demonstrate that the case regards a dispute or charge based in federal law. For example, suing someone for trespass is a state-law tort generally tried in a state court. Suing someone under a federal law, such as discrimination under the Fair Housing Act, would be a federal court action. Special federal courts, such as legislative and administrative courts, have special subject-matter jurisdiction to the extent of the legislative or executive authority applicable to the court’s subject matter. The court cannot hear matters beyond the scope of that jurisdiction. For example, a bankruptcy court cannot adjudicate a securities law dispute.

Federal Jurisdiction when the US is a Party

• Federal courts have exclusive subject-matter jurisdiction in civil or criminal lawsuits against the United States or its representatives. That is, any case in which the US Government is plaintiff or defendant, the matter can only be heard by a federal court. To illustrate, a federal district court would have subject-matter jurisdiction over a case in which a plaintiff sues the Federal Government for passing an allegedly discriminatory law. In such a action, the matter would also fall under federal-question jurisdiction, as the plaintiff is alleging that the action by the Federal Government is unconstitutional.

Suits Between States

• Federal courts have exclusive subject-matter jurisdictions over civil or criminal allegations between state governments. This most often arises when one state sues to enjoin (stop) another state from taking actions that unduly discriminate against another state or its citizens. For example, State A may sue State B in federal court contesting State B’s higher sales tax rates on foreign citizens or businesses.

Diversity Suits between Citizens of Different States (Civil Cases)

• Federal courts have non-exclusive subject-matter jurisdiction in civil lawsuits between citizens of different states, if certain conditions are met. In this situation, allowing for federal subject-matter jurisdiction prevents one party from having an unfair advantage by being subject to another state’s judiciary. It allows citizens of different states to go to trial in federal court, even if the claims are pursuant to state law. The special conditions for this type of jurisdiction are as follows:

Diversity of Citizenship - Parties must be from different states at the time of filing the action. Some federal diversity suits require “complete diversity,” while others require “minimum diversity”. In complete diversity cases, all plaintiffs must be citizens of different states from all defendants. In minimum diversity cases, only one plaintiff must be from a different state from one defendant. Minimum diversity is a common requirement in class actions.

Jurisdictional Amount - Diversity suits must involve a controversy between the plaintiff and defendant valued at $75,000 or more. In cases with multiple plaintiffs, all plaintiffs’ claims combined must amount to $75,000 or more. For example, the court may aggregate 3 plaintiffs with $25,000 claims to establish the $75,000 amount in controversy requirement. If the dispute is for less than this amount, the federal court cannot hear the suit.

Discussion: Do you think there is a valid justification for allowing individuals from different states to bring an action or remove an action to federal court? Does the federal court forum really mitigate any of the bias concerns with the jury? Do you think the amount in controversy of $75,000 is justified? Should plaintiffs be able to aggregate their claims to reach the $75,000 threshold? Does this create an issue if one of many plaintiffs happens to be located in the same state as the defendant?

Practice Question: Milton enters into a contract to Cara to purchase a private jet. The jet is valued at $7 million dollars in the contract. The terms of the contract state that Cara warrants that the aircraft meets all federal aviation standards. Two months after the sale of the aircraft, Milton learns that the inspections records and mechanical function tests prescribed by the Federal Aviation Administration have been falsified. Milton is exploring his options for suing Cara in state and federal court. Cara is from Florida and Milton is from Mississippi. What subject-matter jurisdiction considerations exist for bringing an action against Cara in state or federal court?

What is the State Court’s Subject-matter Jurisdiction?

General subject-matter jurisdiction means the state court may hear any type of case under state law. A state court of general jurisdiction has subject-matter jurisdiction in either of the following situations:

• an act violates a state criminal law and was committed within the state;

• a civil dispute involves a state law, or

• a citizen of the state is a party to a civil action.

Example: Tom is from Texas and Kay is from Kansas. Tom sues Kay in a Kansas court for a breach of contract that took place in Texas. Even though the breach of contract did not happen in Kansas, the court has subject-matter jurisdiction in the case based upon its personal jurisdiction over Kay as a citizen.

A state court with limited jurisdiction can only hear cases expressly allowed by the law creating the special court. In most states the state legislature will authorize special courts of limited jurisdiction. These courts are commonly limited by the type of case that it can hear or based upon the dollar amount in controversy.

Example: Magistrate court in Georgia, for example, cannot hear a lawsuit alleging more than $15,000 in damages because the amount exceeds the limits of its jurisdiction. South Carolina has a special circuit for family law cases.

Discussion: Do you think it is important for a state to always have a court of general jurisdiction? Why do you think that states create courts of limited jurisdiction? Do these limited courts imply a lack of seriousness or professionalism in those courts? Does a court of general jurisdiction (particularly the judge) have the expertise to preside over all cases without a court of special jurisdiction?

Practice Question: Lilly is from Texas. While in Arizona, she gets into a physical altercation with Mitchel. She is the aggressor and injures Mitchel very badly. Lilly leaves Arizona and returns to Texas. Mitchel presses criminal charges against Lilly in Arizona. Further, he seeks to sue her in civil court to recover damages for the injuries he suffered. What are the grounds for the Arizona court exercising subject-matter jurisdiction over the criminal and civil law actions?

Can federal courts hear matters of state law? And vice versa?

Trial Courts

It depends. A state trial court may hear a case involving a federal question under certain circumstances. There are, however, certain types of cases that a state court cannot hear. Those cases involve a legal situation in which the applicable federal law preempts the entire area of law, such as immigration or bankruptcy. Likewise, a federal trial court may hear a state-law case under certain circumstances. For a federal court to hear a state matter and vice versa, courts must have subject-matter jurisdiction over some legal issue in the case. This generally occurs in two circumstances: 1) the case may involve a mixture of state and federal law, or 2) the the case is a “diversity action”. If a case involving federal law also involves issues of state law, the federal court may adjudicate the state law issues arising in that case. Likewise, a state court hearing issues of state law case may apply federal law to adjudicate a federal law issue. Lastly, a federal court has subject-matter jurisdiction over diversity cases that involve only state law. The federal court will apply the substantive law of the state in which the court is located. The court will apply federal procedural law unless the federal procedural law would likely change the outcome of the case or is “outcome determinative”. In such event, the state procedural law will apply. These rules are known collectively as the “Erie Doctrine”.

Discussion: Why do you think it is important to limit the ability of state courts to hear federal law issues and vice versa? Is there a good argument to allow greater ability of state and federal courts to hear issues solely involving the other’s law?

Practice Question: Zora hires Isabelle as a contractor to design and manufacture a new baby product. Zora files and successfully prosecutes a utility patent on the product. In the contract with Isabelle, she agrees not to copy, trade, or otherwise employ the patented work. Isabelle later takes Zora’s design and begins producing a knock-off version of the product. Zora brings a legal action against Isabelle for patent infringement. Patent law is exclusively federal and preempts all state law. Zora also sues Isabelle breach of contract under New York Law. What are the subject-matter jurisdiction issues if Zora sues Isabelle in federal district court? What are the issues if Zora sues in state court?

Can federal courts hear matters of state law? And vice versa?

Appellate Courts

Federal trial court decisions are appealed to the Federal Circuit Court of Appeals or via special writ to the US Supreme Court. Federal District Courts and Courts of Appeal cannot review decisions from state court cases. Also, state trial or appellate courts can never undertake appellate review of decisions from federal court cases. State trial court decisions are appealed to the state intermediate court of appeals or the state’s supreme court. There is, however, one exception to this rule. The US Supreme court may review decisions of state supreme courts. If the court’s decision appears to conflict with federal law, (such as a statute, treaty, or the US Constitution). US Supreme Court review of state supreme court decisions is most common when the state court upholds a state law that could potentially violate the appellant’s constitutional rights. In such a case, the US Supreme Court may issue a writ of certiorari or accept a request for appeal of the state Supreme Court’s decision by the losing party.

Discussion: Why is it important that state appellate courts not hear appeals from federal trial courts? Why is it important to limit the ability of federal appellate courts from hearing appeals from state trial courts? Why is it important the US Supreme Court be able to hear appeals from state supreme courts? Is there an argument for expending the review authority of any of these courts?

Practice Question: Nancy brings an action against the Georgia State Department of Revenue by suing the Commissioner Andrea. Andrea wins the civil lawsuit based upon an award of summary judgment. Nancy, unhappy with the result, believes that she lost the case because the court showed favor to Andrea as a state official. She does not believe that appealing the decision would do any good, so she files a request for appeal to the Federal Circuit court seeking to overturn the state court’s decision. Is this appeal procedure possible? Why or why not?

What is “Personal Jurisdiction”?

A court must have both subject-matter jurisdiction and personal jurisdiction in every case. While subject-matter jurisdiction regards the court’s authority to hear a certain type of case, personal jurisdiction regards the authority for a court to exercise jurisdiction over an individual. That is, the court must have the legal authority to adjudicate the matter involving the specific individual. Determining whether a court has personal jurisdiction over an individual is different for criminal and civil cases.

Criminal Case - In a criminal case, a court has personal jurisdiction over the defendant if the defendant committed the alleged criminal conduct within the court’s geographic jurisdiction. A federal court will have personal jurisdiction over a defendant committing any criminal activity within the United States. A state court will have personal jurisdiction over a defendant committing any criminal activity within that state’s borders.

Civil Case - Establishing personal jurisdiction in civil cases requires that the court serve the defendant with a summons (or otherwise provide sufficient legal notice of the proceeding), also known as “service of process”. A summons, along with the complaint, gives a defendant legal notice of the allegations against her and directs her to appear before the court on a given date. The legal requirements for serving a summons on someone differ between state and federal courts and are discussed below.

In a criminal case, personal jurisdiction is generally not an issue. An individual would assert a defense to the alleged crime rather than assert a lack of personal jurisdiction. In a civil case, however, personal jurisdiction is a hotly debated topic. This is particularly true for businesses that place products into the market for sale. There is a great deal of uncertainty as to what amount of sales activity in a state will subject the business to personal jurisdiction in that state’s courts.

Discussion: Why are the requirements for personal jurisdiction different for criminal cases versus civil cases? Is there an argument for extending a state’s personal jurisdiction over alleged criminal activity carried on outside of the state’s jurisdiction? Would it be fair to subject

Practice Question: Clarence lives in California. While he was visiting South Carolina, he was driving while intoxicated and crashed his vehicle. The wreck injured a bystander, Devon. Clarence, afraid that he would be arrested, quickly fled the scene of the accident. The next day he returned to California. What are the personal jurisdiction issues if the prosecutor’s office in South Carolina seeks to bring criminal charges against Clarence for driving under the influence and leaving the scene of an accident? What are the personal jurisdiction issues if Devon wishes to sue Clarence?

How does a federal court get personal jurisdiction over someone in a civil case?

Rule 4 of the Federal Rules of Civil Procedure lays out the process for a federal court establishing personal jurisdiction over a defendant. In summary, the federal court must employ the state law governing personal jurisdiction that is applicable in the state in which the federal court is located. The federal court adopting the state’s procedural law must subject the defendant to the same procedures as if the case were in state court. That is, the federal court will use the state’s procedural rules for serving process on individuals within the state’s borders and may also use the state’s long-arm statute to reach defendants outside of the state’s geographic boundary. As discussed further below, the long-arm statute is a special statute allowing the state to serve a summons on a defendant who is not physically located in the state.

Note: If the subject-matter of the case is exclusively federal, the Federal Rules of Civil Procedure allow the federal court to exercise personal jurisdiction over the defendant regardless of where she is located. That is, the federal court is not limited by the state’s service of process rules. Federal procedure allows for service of process anywhere in the United States and its territories.

Discussion: Why do you think that federal district courts use the procedural rules for service of process of the state in which the court is located? Is there an argument that federal courts should have their own uniform rules for service of process?

Practice Question: Lindsay, a Florida resident, entered into a services contract with Rachel, a Georgia resident. Rachel later failed to perform and breached the agreement. As a result of Rachel’s breach, Lindsay claims to have suffered damages in the amount of $100,000. Lindsay plans to bring a civil action against Rachel in the Federal District court located in Georgia. At the time, Florida allowed process servers to deliver service of process, but Georgia required service of process to be carried out by the local Sheriff’s office. Lindsay hired a Florida process server to deliver service of process to Rachel. What is the personal jurisdiction issue in this case?

How does a state court get personal jurisdiction over someone in a civil case?

Service of process means providing an individual with a summons (or other authorized method of notification), which gives notice to the individual that she is being called before the court. Personal jurisdiction in state court is governed by the individual state’s law concerning service of process. Service of process must generally take place (the summons must be delivered) while the defendant is physically present within that state. The exception to this rule is that every state has a law, known as a “long-arm statute”, allowing service of process on defendants outside of the state.

Note: There are limited circumstances where a state will allow a court to exercise jurisdiction over an individual without delivering a summons. For example, a court may exercise jurisdiction over an individual in a family matter (such a divorce), if that individual is a resident of the state and cannot be found after diligent search. Another situation is that a court may exercise jurisdiction over an individual’s real estate that is located in the state without delivering a summons to that individual if all attempts to locate the individual fail and notice is posted on the property.

Discussion: Why do you think that states place such importance on delivering notice to establish personal jurisdiction? Do you feel like serving an individual with a summons while she is within the state justifies the court in exercising jurisdiction over that person? Do you think it is justifiable in any circumstance to exercise jurisdiction over someone without delivering a summons?

Practice Question: Quinton decides to sue Maria for failing scratching his new car in the parking lot of the grocery store. Quinton files a court action and pays a process server to deliver the summons and complaint to Maria. The process server tries for weeks to locate Maria but is unsuccessful. Will Quinton be able to sue Maria if he cannot deliver the summons and complaint?

What is a state “Long-arm Statute”?

A state’s long-arm statute allows service of process on defendants who are physically located outside of the state. A state’s long-arm statute must, however, comply with the 14th Amendment’s Due Process protections. This means that, to pass constitutional muster, a state’s long-arm statute will only allow for service of process on individual outside of the state’s borders if the defendant has sufficient contact with the state to make it reasonable to call her into court there. More precisely, the defendant must have “minimum contacts with the state” sufficient to not offend notions of “fair play and substantial justice”. Examples of situations where a defendant has minimum contacts with the state to allow the state to serve process on a defendant via its long-arm statute include when: she is a resident of the state; she owns property in the state that is the subject of the controversy; or she committed the controversial activity in the state. A business entity is subject to jurisdiction if it carries on business regularly in the state or is organized in or registered to do business in the state. All of these situations involve a sufficient level of contact with the state so that service of process outside of the state’s geographic borders does not offend notions of fair play and substantial justice.

Note: Recall, federal courts use the law of the state in which it is located for serving process on a defendant. This includes using the state’s long-arm statute when a defendant is not physically located within the state.

Discussion: How much contact with a state do you feel is sufficient for a court to exercise jurisdiction over the person without offending the due process requirements of the US Constitution? Is there any situation where you believe a slight amount of contact with the state still justifies exercising jurisdiction? How do you feel about exercising jurisdiction over a business that regularly ships products to customers in a state but does not have a physical presence in the state and is not registered to do business?

Practice Question: Elena lives in Vermont and has a small business that manufactures a product for pets and sells it to retail establishments throughout the United States. She takes orders on her website and ships her product through a third-party logistics company. Gary, one of her retailers in Montana, is not happy with the quality of her product and demands a refund. When Elena refuses to refund Gary’s money, he sues her in Montana court. The Montana long-arm statute allows for service of process on a civil defendant in any state if the defendant is a business entity and ships any products into the state of Montana. What constitutional argument could Elena make to defend against being served with process and called into court in Montana?

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