Civil Procedure I Final Exam Model Answer. Judge Garcia Fall 2002

1) Did the Federal District Court properly deny Pat's motion to remand the case to the Superior court from which it was removed?

The court could properly have remanded the case if removal was improper. If Pat could have commenced the action in federal court, removal would be proper, so long as all of the defendants joined in the request for removal. The defendants both joined so the removal was procedurally proper. We must analyze whether the Federal District Court has original subject matter jurisdiction over the case.

Federal courts exercise original subject matter jurisdiction either on the basis of diversity or federal question. Regarding diversity, District Courts have original jurisdiction of all civil actions where the amount in controversy exceeds $75,000 and is between citizens of different states. As to the amount in controversy, none is stated. But given that it is alleged that Pat's injuries are serious, it would appear that he could maintain in good faith that his personal damages exceed $75,000.00. (Moreover he could aggregate to his personal injuries the damages to his car, though it appears that his suit is solely to recover for his personal injuries.) Unless there is a legal certainty that a party cannot recover the minimum amount, the courts will accept that the amount in controversy requirement is satisfied. Even though Pat might prefer the matter remanded, it would not serve Pat's interest to undervalue the nature of his injuries.

There must also exist complete diversity. All of the plaintiffs must be citizens of states different than the states of citizenship of the defendants. Pat is a citizen of California. Deadly Auto, Inc. (DAI) is a New York citizen. Corporations are citizens where they are incorporated and where they have their principal place of business. DAI is evidently incorporated in New York. Moreover, New York is also its principal place of business either under the nerve center test (a headquarters test) or the corporate activities test since its headquarters are in New York as are its production plants (corporate activities). But Dan Carol (Dan or DC) is a citizen of California. To be a citizen of a state a US citizen, like Dan, must be a domiciliary of a state. A domicile is a person's true, fixed, and permanent home to which the person has the intent to return if absent. Dan was a lifelong California resident who was merely contemplating a permanent move to New York. Which move he did not make because he was not offered a permanent job in New York. One does not lose one's citizenship in a state until one has established a new domicile by moving to a new resident with the intent to remain there. Dan did not have that intent when he moved to New York temporarily. Dan did not establish a new domicile in New York, by the time of the filing of the action. He retained his citizenship in California. Since Dan and Pat are California citizens there is no diversity jurisdiction.

However, it does appear that the federal courts have original federal question jurisdiction over Count 1, the FASA claim. District courts have original jurisdiction of all civil actions arising under the laws of the United States. Under the Holmes creation test, if it is apparent from the face of a well-pleaded complaint that federal law has created the cause of action the plaintiff has pleaded a federal question. This is clearly the case of count I.

FASA provides for (has created) a private right of action, and moreover confers jurisdiction exclusively on the federal district courts. In other words it was improper for Pat to have filed that count in Superior Court. The Superior Court lacked subject matter jurisdiction over the FASA count, because it was excluded from its jurisdiction by the congressional act that created the cause of action. Under former law, the matter would not have been removable to the federal courts, because it would be deemed that there was no action in Superior Court to be removed. Congress has amended § 1441 (e) to permit the removal of a matter within the exclusive jurisdiction of the federal courts.

That leaves us with Count 2, a negligence claim. Under the Holmes creation test, this count was created under California's (perhaps New York's) common law, there being no federal law that provides persons with the right to sue based on negligence. Nonetheless, Count 2 is removable if supplements the claim stated in Count I. If District courts have original jurisdiction in a civil action, they have supplemental jurisdiction over all other claims that are so related that they form part of the same case or controversy under Article III. Claims are related if the arise out of the common nucleus of operative facts. The Supreme Court in United Mineworkers v. Gibbs justified supplemental jurisdiction when claims arise out of a common nucleus of operative facts because considerations of judicial economy compel that there be one lawsuit. Under count 1, it appears that Pat is seeking to recover for the personal injuries caused to him by the production of the unsafe car, meaning he must be claiming that the accident was caused by the unsafe condition of the car. Under count 2, Pat seeks to recover for personal injuries caused by the negligence of Dan Carol. If Pat has a valid FASA claim against DAI, meaning that the defect in the car caused the accident, Dan's primary negligence lies in Dan's "neglect" to have the car repaired. The two claims, clearly, arise from the same nucleus of operative facts. They both relate to the unsafe condition of the car. Certainly much of the evidence regarding the condition of the car will overlap in the proof of each of the claims. Judicial economy demands that the claims be prosecuted in a single suit. [Given that the claims are related, the case does not appear to be one that would be removable pursuant to § 1367(c). That section would permit the removal of the entire case if federal question jurisdiction existed over a separate and independent claim joined with an unremovable claim. The section would permit the federal court to hear the entire case or to remand the claims over which State law predominated. Were the claims separate and independent, a constitutional issue might arise over the court's retention of the state law claims since the court would lack original jurisdiction over them, and they would not be authorized by United Mine Worker v. Gibbs. Since there is no constitutional provision for supplemental jurisdiction, that authority is derivable from the doctrines of Gibbs which require a related claim for such exercise.]*

Finally regarding supplemental jurisdiction, though Dan and Pat share California citizenship, this does not involve a situation where Dan's joinder would destroy diversity. Original jurisdiction is not based solely on diversity; therefore that the parties are not diverse is no problem. Moreover this does not appear to be a situation where the state law based claim should be remanded because it raises novel or complex issues of State law. A negligence claim is commonplace, perhaps even pedestrian, but certainly not novel or complex. Also the state law claim does not predominate over the federal claim, indeed its proof may depend on the proof of the federal claim as we have analyzed above. The federal claim has not been dismissed and there appear to be no other compelling reasons for the court to decline jurisdiction. In fact the reasons are compelling for it to retain jurisdiction.

In conclusion, the fact that Dan is a resident of California does not prevent removal of the case, because the basis for removal is federal question and supplemental jurisdiction and not diversity. The District Court properly denied Pat's motion to remand.

2) Did the federal court properly grant DAI's and DCs motion to transfer motion?

A district court may transfer venue either because the action was filed improperly in a district or because of the convenience of the parties and witnesses and the interests of justice. Under either basis the court may only transfer an action to a district where the action might have been originally brought under federal venue statutes. New York was a proper venue for the filing of the action.

Venue is only proper, under the federal question venue statute, based upon our analysis of question one. Federal question venue lies where any defendant resides, if all of the defendants reside in one state. Alternatively venue is proper in a district where a substantial part of the events giving rise to the claim occurred. If no district is available under the first two rules, then venue lies in a district where any defendant is subject to personal jurisdiction. Under rule 1, the defendant's do not all reside in New York. This assumes that the temporary residence of Dan, if it continues, would not make him a resident of New York for venue purposes. If it does, then all of the defendants reside in one state, and venue would be proper under rule 1. Nevertheless a substantial part, indeed all of the parts, of the events giving rise to the claims occurred in New York. (I assume the district to which the matter would be transferred is the district either where the accident occurred or the car was manufactured.) Therefore venue is proper under rule 2 and we need not, indeed cannot, look to rule 3.

Venue was proper in San Francisco under the removal statute (§ 1441(a), since the matter was filed in San Francisco Superior court and was removed to the San Francisco District Court. This assumes that California would have been a proper place to file the action, meaning that California has jurisdiction over the defendants. It clearly has jurisdiction over Dan Carol, a domiciliary of California, and may have it over DAI based on minimum contacts (or a voluntary appearance if DAI did not challenge the personal jurisdiction of the California Courts before removing the case.) [Were the matter to have been filed originally in District Court, venue might conceivably be proper under rule 1, since DC resides in California and DAI may likewise reside in California, and perhaps in San Francisco, for venue purposes. A corporation is deemed to reside, for venue purposes, in any district where it would be subject to personal jurisdiction, or in a the district where it has the most significant contacts if it would be subject to personal jurisdiction in the state but not in any single district. Rule 2 is inapplicable because none of the events giving rise to the claim occurred in San Francisco. Rule 3 is inapplicable because at least New York was a proper venue under rule 2.]* Given that we do not know DAI's relationship to California and cannot say that venue was improper in California, it must be assessed whether the interests of justice and the convenience of the witnesses compel the transfer to New York. Certainly insofar as DAI and the witnesses are concerned the matter is more convenient in New York. That is whore the accident occurred and where the manufacture of the vehicle occurred. As far as Dan is concerned given that he has moved to transfer to New York, he is evidently conceding that New York is convenient for him. (Indeed he may still reside there temporarily.) Only Pat is inconvenienced by the transfer of the matter to New York, and only to the extent that Pat's medical witnesses are in California. The bulk of the litigation of the case would have to occur in New York in any event, since that is where the evidence and witnesses on liability are all located. Since the question is one of discretion which would not be disturbed unless it were clearly an abuse of discretion, the transfer to New York was properly granted.

3) Did the court correctly deny DAI's motion to dismiss Dan's cross-claim?

As discussed in Question 1, the federal courts may exercise subject matter jurisdiction based on diversity, federal question, or supplemental jurisdiction?

The basis for Dan's bringing his cross-claim against DAI does not appear from the fact situation. As we have discussed in question one the Holmes creation test says that the law that creates the claim determines whether the question is a federal question or not. Dan's claim might be based on state law. But it is conceivable that it is based on the federal statute FASA that creates a private right of action against auto manufacturers for producing unsafe cars. If he has so alleged, the he alleges a federal question, and any appended state law claims would be supplemental to the federal claim as analyzed in question number 1 above. Regardless, complete diversity exists between Dan and DAI. As discussed in question number 1 above, Dan is a citizen of California and DAI is a citizen of New York. Whether Dan's damages exceed $7$,000.00 would depend on the value of the car. If it does not exceed $75,000.00, then diversity jurisdiction would be lacking because of the amount in controversy requirement. [Dan might be able to enhance improve the value of his claim were he entitled to seek indemnity from DAI for the damages that he might be liable to Pat for. Such a claim might be within the parameters of FASA.]* Nevertheless supplemental jurisdiction would exist. Dan's claim against DAI is related to Pat's claim against DAI. They arise out of the common nucleus of operative facts. Indeed both relate to the unsafe condition of the car, the alleged cause of the accident. The fact that Pat seeks to recover for personal injuries and Dan for property damage, does not alter the conclusion that the common nucleus of operative facts is the accident, which is central to the resolution of all claims regardless of the theory supporting the claim. The court properly ruled to deny DAI's motion to dismiss Dan's cross-claim, most clearly because the claim is supplemental to Pat's claim, perhaps also because there exists a federal question and complete diversity.

* All bracketed material is material that is within the range of students' ability to discuss, but was not expected and full credit would have been awarded were it omitted.