Jurisdiction

The geographic area over which authority extends; legal authority; the authority to hear and determine causes of action.

Empire Healthchoice v. McVeigh

In Empire Healthchoice Assurance v. McVeigh, No. 05-200, 547 U.S. ____ (2006), the U.S. Supreme Court was asked to decide whether federal question jurisdiction applied to reimbursement claims made by a federal healthcare contractor against proceeds from state-court litigation. Said the Court in the slim majority's opinion, "Federal courts should await a clear signal from Congress before treating such auxiliary claims as 'arising under' the laws of the United States."

Joseph McVeigh, a federal employee working for the Environmental Protection Agency (EPA), was seriously injured as a passenger in a 1997 car accident. Although, following surgery, he was able to return to work, he ultimately died in 2001 of a seizure related to head injuries suffered in the accident.

McVeigh's medical bills totaled somewhere between $100,000 and $157,000. (The disparity represented disagreement between the parties. An attorney for McVeigh's estate claimed the same $15,000 charge for brain surgery showed up three times on a charge summary statement, along with some other unrelated charges. In any event, the total amount owed was not part of the high court's ruling.)

As a federal employee, McVeigh's bills were paid under the Federal Employees Health Benefits Act (FEHBA), 5 USC 8901 et seq. Under FEHBA, the federal government pays for approximately 75 percent of premiums and federal employees pay the remainder. The combined premium payments are deposited in a special Treasury fund, from which carriers (such as Empire Healthchoice) draw to pay for covered benefits. The Act itself contains no provision that addresses carriers' subrogation or reimbursement rights or claims.

The federal Office of Personnel Management (OPM) negotiates and regulates health benefits plans for federal employees. OPM had contracted with the Blue Cross Blue Shield Association (BCBSA) to provide a nationwide fee-for-service health plan (the Plan), to be administered by local companies. Empire Healthchoice Assurance, Inc. (Empire) administered the BCBSA plan to federal employees in New York State. The Plan obligated Empire to make a "reasonable effort" to recover amounts paid for medical care. The "statement of benefits" distributed by Empire to its beneficiaries/enrollees notified them that monetary recoveries received by them must be used to reimburse Empire for benefits paid on their behalf.

After McVeigh's death, his widow, who was the administrator of his estate, filed a wrongful death suit in state court against those allegedly responsible for his death. Empire, as the healthcare benefits provider, had notice of the state-court action, but took no part in it. Prior to trial, a large settlement was reached, and the parties agreed to the settlement. McVeigh's estate set aside $100,000 in escrow for reimbursement of benefits.

However, Empire instead filed suit against McVeigh's estate in federal district court for the Southern District of New York, seeking reimbursement for the $157,000 it allegedly paid for McVeigh's medical care. The district court dismissed Empire's suit for lack of federal jurisdiction, holding that the issue raised was a state, and not federal one.

For its part, Empire maintained that, since it was a federal contractor, its reimbursement claims implicated "uniquely federal interest[s]." (Empire quoted Boyle v. United Technologies Corp., 487 U.S. 500, in which the appeals court held that courts may create federal common law only where state law would "significant[ly] conflict" with "uniquely federal interests.") Empire also argued that FEHBA contained a preemption provision that independently conferred federal jurisdiction.

The Second Circuit Court of Appeals affirmed the district court's dismissal of Empire's suit. It agreed that Boyle was controlling, but concluded that Empire had not met its burden of showing that there was "significant conflict" between federal law and New York state law.

Supreme Court Justice Ruth Bader Ginsburg, writing for the 5-4 slim majority, held that federal courts lacked jurisdiction over suits filed by a federal government contractor for reimbursement of benefits paid pursuant to a provision in a health benefits plan for federal employees. While the majority agreed that distinctly federal elements were involved, other considerations controlled. For example, the express language in the FEHBA's jurisdictional provision, §8912, created federal jurisdiction for civil actions "against the United States." Further, express language in OPM regulations channel disputes over coverage or benefits into federal court by designating OPM as the sole defendant, "and not against the carrier or carrier's subcontractors." 5 CFR 809.107(c). Nowhere in the Act or OPM regulations is there language that opens federal courts to carriers seeking reimbursement. Thus, the preemption provision cited by Empire did not apply to it as a carrier. Ultimately, the majority reasoned that state courts in which personal injury and wrongful death actions were more generally lodged were competent to apply federal law, and best suited to ascertain fair apportionment of tort recovery among co-parties. Accordingly, the majority opinion upheld both district court dismissal and the Second Circuit's affirming opinion.

However, the majority opinion was lengthy. Justice Breyer filed a dissenting opinion in which he was joined by Justices Kennedy, Souter, and Alito.

Lincoln Property Co. v. Roche

Defendants in a civil lawsuit filed in state court may ask a federal district court to remove the matter to federal court in that state if the defendants are not citizens of the state. This right to seek removal is part of federal diversity jurisdiction that is authorized by Congress in 28 U.S.C.A. § 1441. It is predicated on the belief that non-citizens of a state will receive a fairer hearing in federal court rather than state court. Section 1441 states that removal is permissible "only if none of the parties in interest properly joined as defendants is a citizen of the State in which [the] action [was] brought." The Supreme Court, in Lincoln Property Co. v. Roche, ___U.S.___, 126 S.Ct. 606, 163 L.Ed.2d 415 (2005), ruled that named defendants do not have to an obligation to name some other entity that they are affiliated with and show that its joinder would not destroy diversity jurisdiction and send the case back to state court.

Christophe and Juanita Roche rented an apartment in Fairfax County, Virginia. The complex known as Westwood Village was managed by Lincoln Property Company. The Roches discovered toxic mold in the apartment, which can lead to serious health problems. Investigators concluded that the mold spores were airborne in the apartment and had contaminated carpeting and fabric-covered surfaces. The couple moved out of the unit while it was decontaminated, leaving their personal property in the care of Lincoln and the mold removal firm. The Roches later filed separate but similar civil lawsuits in Virginia state court against Lincoln and the State of Wisconsin Investment Board, which allegedly owned the apartment complex. They alleged that the mold had made them sick. They claimed memory loss, headaches, and respiratory problems as well as the alleged loss, theft, or destruction of their personal property during the period they had left the apartment. The couple sought damages for these alleged injuries.

Lincoln and the board removed the two cases to Virginia federal district court, citing diversity-of-citizenship jurisdiction under § 1441. The notice of removal stated that Lincoln was a Texas corporation with its principal headquarters in Texas. The board stated that it was an independent agency located in Wisconsin. This information had been contained in the Roches' state complaints and the Roches agreed in their federal complaints that the federal courts had jurisdiction to decide these matters. Lincoln answered the Roches' federal complaints, admitting that it managed the apartment complex in question. In addition, it did not try to avoid liability by claiming that some other entity was responsible for managing the complex. Though the Roches told the court that they would investigate to see if additional defendants needed to be joined to the lawsuit, they did not try to join any additional defendants. After discovery, the federal court granted Lincoln's motion to dismiss the case. Six days later the Roches moved the court to remand the case to state court, alleging for the first time that there was no diversity between Lincoln and them. They contended that Lincoln was not a Texas corporation but rather a partnership that had a partner residing in Virginia. The district court denied the motion after Lincoln presented documents that proved it was a Texas corporation.

The Fourth Circuit Court of Appeals reversed the district court and instructed it to remand the case to Virginia state court. The appeals court agreed that Lincoln was a Texas corporation and a proper party in the action but found that Lincoln operated under "many different structures." The court believed Lincoln was a nominal party and suspected that an unidentified Virginia subsidiary was the "real and substantial party in interest." Lincoln had failed to demonstrate the nonexistence of the Virginia entity and therefore had failed to meet is burden of establishing diversity. The Supreme Court agreed to hear Lincoln's appeal because the circuit courts of appeals were divided on whether an entity not named or joined as a defendant can still be considered a real party in interest whose presence would destroy diversity.

The Court, in a unanimous decision, reversed the Fourth Circuit ruling. Justice RUTH BADER GINSBURG, writing for the Court, noted that the Roches could have kept the case in state court if they had named and served as a defendant a party that resided in Virginia. Once removed to federal court, the Federal Rules of Civil Procedure reinforced the conclusion that no additional parties needed to be named for the action to proceed. As to Lincoln's status, Justice Ginsburg pointed out that Lincoln had accepted responsibility for managing the apartment complex. Therefore, a "named defendant who admits involvement in the controversy and would be liable to pay a resulting judgment is not 'nominal' in any sense except that it is named in the complaint." The Fourth Circuit had no authority to "inquire whether some other person might have been joined as an additional or substitute defendant." It was up to the plaintiff to deal with the consequences of selecting the named parties, and not the responsibility of a defendant to name additional defendants. As "masters of their complaint," the Roches had the duty to discover and then seek permission to join other parties that might defeat diversity.

Martin v. Franklin Capital Corporation

Under federal statute 28 U.S.C.A. § 1441 a defendant in a civil lawsuit that has been filed in state court may remove the case to a federal district court if the defendant is a citizen of another state. This diversity-of-citizenship jurisdiction is premised on the assumption that an out-of-state defendant will receive a fairer hearing in the federal court by avoiding local bias. However, diversity jurisdiction cannot be asserted if the plaintiff's claim for damages is less than $75,000. This provision prevents the federal courts from being overwhelmed by relatively minor disputes. Finally, if a defendant improperly removes the case to federal court and that court sends it back to state court, the plaintiff may recover attorney fees from the defendant under 28 U.S.C.A. § 1447(c). As to this last issue, the circuit courts of appeal were divided as to when attorney fees should be awarded under § 1447(c). The Supreme Court, in Martin v. Franklin Capital Corp., __U.S.__, 126 S.Ct. 704, 163 L.Ed.2d 547 (2005), ruled that absent unusual circumstances, attorney's fees should not be awarded when the removing party "has an objectively reasonable basis for removal."

Gerald and Juana Martin filed a class-action lawsuit in New Mexico state court against Franklin Capital Corporation alleging that Franklin had improperly bought car insurance on their behalf to protect Franklin in case the car they had purchased on credit was involved in an accident. Franklin, which is a California corporation, removed the case to federal district court, as was its right under the federal removal statute. The amount in controversy was not clear when Franklin removed the case but it relied on legal precedent suggesting that punitive damages and attorney's fees could be included in a class action to meet the amount-in-controversy requirement. Fifteen months later the Martins filed a motion asking that the federal court send the case back to state court because their claims did not meet the amount-in-controversy requirement. The district denied their motion but the Tenth Circuit Court of Appeals reversed. The Tenth Circuit concluded that punitive damages and attorney's fees could not be aggregated to meet the statutory minimum for federal jurisdiction. The appeals court acknowledged that this ruling was based on decisions that had been made after the district court had rejected the Martin's motion to remand the case to state court.

Based on this ruling the Martins filed a motion in federal district court asking that Franklin pay their attorney's fees for the removal litigation under 28 U.S.C.A. § 1447(c). The district court rejected this motion as well, finding that Franklin had "objectively reasonable grounds" for believing its removal of the case to federal court was proper. The Martins appealed this ruling to the Tenth Circuit, arguing that attorney's fees must be awarded when a removed case is returned to state court. The Tenth Circuit declined to adopt this reasoning, ruling that under circuit precedent the trial judge had "wide discretion" to award fees based on the "propriety of defendant's removal." In this case Franklin had calculated the amount in controversy relying on court precedents; therefore its basis for removal was objectively reasonable. The Supreme Court agreed to hear the Martins' appeal because other circuit courts of appeal had developed different rules for awarding fees under 28 U.S.C.A. § 1447(c).

The Court, in a unanimous decision, affirmed the Tenth Circuit ruling. Chief Justice John Roberts, writing for the Court, found no merit in the Martins' claim that attorney's fees should be awarded automatically when a removed case is sent back to state court. The statute stated that the court "may" award attorney's fees, not "shall" or "should." The use of the word "may" clearly connoted discretion and the Court could not change the meaning of the text to make the awarding of feeds mandatory. Roberts pointed out that 28 U.S.C.A. § 1447(c) contained the word "shall" in enough places to indicate Congress knew what it was doing when it used the word "may" in dealing with attorney's fees. The Martins claimed that at minimum that there should be a strong presumption in favor of awarding attorney's fees. Roberts agree that the Martins were on "somewhat stronger ground" because the Court had created such a presumption involving a civil rights statute that permitted the discretionary award of attorney's fees. However, in the civil rights case the plaintiff had served as a "private attorney general" in trying to vindicate civil rights laws. Moreover, the defendant in that case had violated federal law. The Martins were not serving as private attorneys general when they convinced the court to remand the case to state court and Franklin had not violated federal law. Roberts emphasized that Franklin had the right to remove the case under the statute and its error in doing so was "not comparable to violating a substantive federal law."

The U.S. government had filed a brief in the case, urging the Court to limit attorney's fees to cases where the defendant's removal action was "frivolous, unreasonable, or without foundation." Chief Justice Roberts found no merit in this approach; Congress did not "tilt the exercise of discretion" either in favor or against fee awards. Judges had discretion to grant or deny awards, but they did not have unfettered discretion. They should balance Congress' desire to provide defendants with a right to remove as a general rule against the attempts by some defendants to use removal "for prolonging litigation and imposing costs on the opposing party." Judges may only award attorney's fees where "the removing party lacked an objectively reasonable basis for seeking removal." In this case the lower courts properly denied the request for fees because Franklin had an objectively reasonable grounds for removal, based on circuit precedent.

Wachovia Bank v. Schmidt

U.S. national banks are a special type of corporation, chartered to do business by the Comptroller of the Currency of the U.S. Treasury rather than by state governments. Congress has overseen the regulation of national banks since the Nineteenth Century and it has periodically passed legislation that deals with how courts of law will handle matters involving these banks. In Wachovia Bank v. Schmidt, __U.S.__, 126 S.Ct. 941, 163 L.Ed.2d 797 (2006), the U.S. Supreme Court had to decide whether a fair reading of these statutes precluded a national bank from asserting diversity jurisdiction and removing a state court lawsuit to federal court. The lower courts had found that because the national bank had a branch "located" in a state, that branch was a citizen of that state and must litigate the dispute in state court. The Supreme Court rejected this ruling, concluding that the text and legislative history of the statute allowed the national bank to claim citizenship in the place designated in its articles of association as the location of its main office.

Daniel Schmidt and other citizens of South Carolina filed suit in state court against Wachovia Bank, alleging that Wachovia had used fraud to induce them to buy tax shelters that were ruled illegal by the Internal Revenue Ser-vice. Wachovia is a national bank with its designated main office in Charlotte, North Carolina. Wachovia filed a motion in the federal district court located in South Carolina, asking the court to compel arbitration to resolve the dispute. It based federal court jurisdiction for the matter on diversity-South Carolina plaintiffs and a North Carolina defendant. The district court denied Wachovia's motion and the bank appealed to the Fourth Circuit Court of Appeals. However, the Fourth Circuit declined to rule on the merits of the arbitration issue, finding that the district court lacked diversity jurisdiction over the matter. It directed that the lower court to dismiss the case.

Judge Michael Luttig of the Fourth Circuit, writing for the majority, noted that under 28 U.S.C.A. § 1348 national banks like Wachovia are, for diversity purposes, "deemed citizens of the States in which they are respectively located." Wachovia was "located" in every state in which it had a branch office and therefore it must be a "citizen" of these states as well. The Wachovia branch in South Carolina was a citizen of the state, thereby defeating federal diversity jurisdiction. The Supreme Court agreed to hear Wachovia's appeal, as the circuit courts of appeals had divided over the meaning of § 1348. Some agreed with the Fourth Circuit, while others believed national banks are citizens of their designate main offices.

The Supreme Court, in an 8-0 decision (Justice Clarence Thomas did not participate in the consideration of the case), reversed the Fourth Circuit ruling. Justice Ruth Bader Ginsburg, writing for the Court, reviewed the legislative history of national banks, which were first specifically authorized by Congress in 1863. This law granted federal courts jurisdiction to hear proceedings for and against national banks, without regard to diversity, the amount in controversy, or the existence of a federal question. This stood in contrast to state-chartered banks, which like any state-incorporated business organization could pursue a federal lawsuit only on the basis of diversity or the federal question jurisdiction. However, in 1882 Congress reversed course and removed national banks' automatic federal jurisdiction. This amendment placed national banks on the same footing as the banks of the state where they were located. In 1887 Congress returned to the issue, replacing the 1882 provision and using the "located" language now found in § 1348. Congress still sought to place national and state banks on the same jurisdictional plane. Almost 25 years passed before Congress recodified the national bank jurisdiction language in 1911. The phrase "citizens of the States in which they are respectively located" was retained and in 1948 Congress enacted § 1348 in its present form. The law states that federal districts have original jurisdiction to hear national bank cases "established in the district for which the court is held," as well as the "located" provision.

Justice Ginsburg rejected the three major reasons advanced by the Fourth Circuit. First, the word "located" did not have a fixed, plain meaning as claimed by the appeals court. In some provisions the word "unquestionably refers to a single place: the site of the banking association's designated main office." In other provisions the word seemed to refer to or include branch offices. Second, Congress may have intended the words "located" and established" as synonymous or alternative terms. When Congress addressed this issue (1863, 1882, 1887, 1911 and 1948), national banks "were almost always 'located' in the State in which they were 'established.'" With few exceptions a national bank was not permitted to operate branches outside its home state. It was not until 1994 that Congress gave national banks the authority to establish branches in other states. Justice Ginsburg surmised that "Congress' use of the two terms may be best explained as a coincidence of statutory codification." Third, a 1977 Court ruling relied on by the Fourth Circuit was not applicable. The Court had interpreted the word "located" in a now-repealed venue statute for national banks to include any county in which a bank maintained a branch office. Justice Ginsburg held that venue and subject-matter jurisdiction were "not concepts of the same order." Venue is "largely a matter of litigational convenience" (where is the best place to hear a case for the convenience of the parties), while subject-matter jurisdiction "concerns a court's competence to adjudicate a particular category of cases" (what can a court hear). Therefore, the Court did not need to honor this case precedent. The Fourth Circuit decision would have meant that national banks would rarely, if ever, be able to claim diversity jurisdiction. The best course was to locate a national bank in the state designated by its articles of association as its main office.

JURISDICTION

The geographic area over which authority extends; legal authority; the authority to hear and determine causes of action.

Jurisdiction generally describes any authority over a certain area or certain persons. In the law, jurisdiction sometimes refers to a particular geographic area containing a defined legal authority. For example, the federal government is a jurisdiction unto itself. Its power spans the entire United States. Each state is also a jurisdiction unto itself, with the power to pass its own laws. Smaller geographic areas, such as counties and cities, are separate jurisdictions to the extent that they have powers that are independent of the federal and state governments.

Jurisdiction also may refer to the origin of a court's authority. A court may be designated either as a court of general jurisdiction or as a court of special jurisdiction. A court of general jurisdiction is a trial court that is empowered to hear all cases that are not specifically reserved for courts of special jurisdiction. A court of special jurisdiction is empowered to hear only certain kinds of cases.

Courts of general jurisdiction are often called district courts or superior courts. In New York State, however, the court of general jurisdiction is called the Supreme Court of New York. In most jurisdictions, other trial courts of special jurisdiction exist apart from the courts of general jurisdiction; some examples are probate, tax, traffic, juvenile, and, in some cities, drug courts. At the federal level, the district courts are courts of general jurisdiction. Federal courts of special jurisdiction include the u.s. tax court and the bankruptcy courts.

Jurisdiction can also be used to define the proper court in which to bring a particular case. In this context, a court has either original or appellate jurisdiction over a case. When the court has original jurisdiction, it is empowered to conduct a trial in the case. When the court has appellate jurisdiction, it may only review the trial court proceedings for error.

Generally, courts of general and special jurisdiction have original jurisdiction over most cases, and appeals courts and the jurisdiction's highest court have appellate jurisdiction, but this is not always the case. For example, under Article III, Section 2, Clause 2, of the U.S. Constitution, the U.S. Supreme Court is a court of appellate jurisdiction. However, under the same clause, that court has original jurisdiction in cases between states. Such cases usually concern disputes over boundaries and waterways.

Finally, jurisdiction refers to the inherent authority of a court to hear a case and to declare a judgment. When a plaintiff seeks to initiate a suit, he or she must determine where to file the complaint. The plaintiff must file suit in a court that has jurisdiction over the case. If the court does not have jurisdiction, the defendant may challenge the suit on that ground, and the suit may be dismissed, or its result may be overturned in a subsequent action by one of the parties in the case.

A plaintiff may file suit in federal court; however, state courts generally have concurrent jurisdiction. Concurrent jurisdiction means that both the state and federal court have jurisdiction over the matter.

If a claim can be filed in either state or federal court, and the plaintiff files the claim in state court, the defendant may remove the case to federal court (28 U.S.C.A. §§ 1441 et seq.). This is a tactical decision. Federal court proceedings are widely considered to be less susceptible to bias because the jury pool is drawn from the entire state, not just from the local community.

State courts have concurrent jurisdiction in most cases. Federal courts have exclusive jurisdiction in a limited number of cases, such as federal criminal, antitrust, bankruptcy, patent, copyright, and some admiralty cases, as well as suits against the U.S. government.

Under federal and state laws and court rules, a court may exercise its inherent authority only if it has two types of jurisdiction: personal and subject matter. personal jurisdiction is the authority that a court has over the parties in the case. subject matter jurisdiction is a court's authority over the particular claim or controversy.

State Civil Court Jurisdiction

Personal Jurisdiction Personal jurisdiction is based on territorial concepts. That is, a court can gain personal jurisdiction over a party only if the party has a connection to the geographic area in which the court sits. Traditionally, this connection was satisfied only by the presence of the defendant in the state where the court sat. Since the late nineteenth century, notions of personal jurisdiction have expanded beyond territorial concepts, and courts may gain personal jurisdiction over defendants on a number of grounds. However, the territorial basis remains a reliable route to establishing personal jurisdiction.

A person who has a civil claim may file suit in a court that is located in his or her home state. If the defendant lives in the same state, the court will have no trouble gaining personal jurisdiction. The plaintiff must simply serve the defendant with a summons and a copy of the complaint that was filed with the court. Once this is accomplished, the court has personal jurisdiction over both the plaintiff and the defendant. If the defendant lives outside the state, the plaintiff may serve the defendant with the process papers when the defendant appears in the state.

If the defendant lives outside the state and does not plan to re-enter the state, the court may gain personal jurisdiction in other ways. Most states have a long-arm statute. This type of statute allows a state court to gain personal jurisdiction over an out-of-state defendant who (1) transacts business within the state, (2) commits a tort within the state, (3) commits a tort outside the state that causes an injury within the state, or (4) owns, uses, or possesses real property within the state.

The emergence of the internet as a way to communicate ideas and sell products has led to disputes over whether state long-arm statutes can be used to acquire personal jurisdiction over an out-of-state defendant. In Zippo Manufacturing v. Zippo Dot Com, 952 F. Supp.1119 (W.D.Pa.1997), a U.S. District Court proposed that a long-arm statute could be used only when the defendant has either actively marketed a product or the web site has a degree of interactivity that suggests the website seeks to do business. Conversely, a passive web site, where information is merely posted, would not subject a person to the reach of a long-arm statute.

In Pavlovich v. Superior Court, 59 Cal.4th 262, 58 P.3d 2, 127 Cal.Rptr.2d 329 (Cal. 2002), the California Supreme Court ruled that an out-of-state web site operator who had posted software that allowed users to decrypt and copy digital versatile discs (DVDs) containing motion pictures could not be sued in California state court. The operator, who lived in Texas, did not solicit business or have any commercial contact with anyone in California. The court relied on the Zippo sliding scale and concluded that Pavlovich fell into the passive category. The web site "merely posts information and has no interactive features. There is no evidence in the record suggesting that the site targeted California. Indeed, there is no evidence that any California resident ever visited, much less downloaded" the software. Even if he had known that the software would encourage piracy, this substantive issue did not effect the threshold question of jurisdiction. Therefore, the lawsuit had to be dismissed for lack of personal jurisdiction.

The Minnesota Supreme Court took up the question of Internet jurisdiction in the context of a defamation lawsuit in Griffis v. Luban, 646 N.W.2d 527 (Minn. 2002). Katherine Griffis, a resident of Alabama, filed a defamation lawsuit against Marianne Luban, a Minnesota resident, in Alabama state court. Griffis won a default judgment of $25,000 for statements that Luban had made on the Internet. Luban elected not to appear in the Alabama proceeding, and Griffis then filed her judgment in the Minnesota county where Luban resided. Luban then filed a lawsuit challenging the judgment for want of personal jurisdiction. The Minnesota Supreme Court concluded that the key jurisdiction question was whether Luban had targeted the state of Alabama when she made her defamatory statements. The Court found that while Luban knew that Griffis lived in Alabama, she had not "expressly aimed" her statements at the state of Alabama. Instead, she had published these statements to a specialized Internet newsgroup, one that only had Griffis as a member from Alabama. The court stated: "The fact that messages posted to the newsgroup could have been read in Alabama, just as they could have been read anywhere in the world, cannot suffice to establish Alabama as the focal point of the defendant's conduct." Therefore, Griffis had not established personal jurisdiction over Luban in Alabama, and the Minnesota state courts were not obliged to enforce the Alabama judgment.

If an out-of-state defendant caused an injury while driving inside the state, the court may gain personal jurisdiction over the defendant on the theory that the defendant consented to such jurisdiction by driving on the state's roads. Many states have statutes that create such implied consent to personal jurisdiction.

When the defendant is a corporation, it is always subject to personal jurisdiction in the courts of the state in which it is incorporated. If the corporation has sufficient contacts in other states, courts in those states may hold that the out-of-state corporation has consented to personal jurisdiction through its contacts with the state. For example, a corporation that solicits business in other states or maintains offices in other states may be subject to suit in those states, even if the corporation is not headquartered or incorporated in those states. A corporation's transaction of business in a foreign state is a sufficient contact to establish personal jurisdiction.

In actions concerning real property located within the state, state courts may use additional means to gain personal jurisdiction over out-of-state defendants. A state court may gain personal jurisdiction over all parties, regardless of their physical location, in a dispute over the title to real property. This type of personal jurisdiction is called in rem, or "against the thing." Personal jurisdiction over all parties interested in the real property is gained not through the parties but through the presence of the land in the court's jurisdiction.

If a court cannot gain personal jurisdiction over an out-of-state defendant, the plaintiff may be forced to sue the defendant in the state in which the defendant resides or in the state where the injury occurred. For example, a plaintiff who was injured outside his or her home state may have to file suit in the defendant's home state or in the state where the injury occurred if the defendant has no plans to enter the plaintiff's home state.

Subject Matter Jurisdiction Courts of general jurisdiction have subject matter jurisdiction over the majority of civil claims, including actions involving torts, contracts, unpaid debt, and civil rights violations. Courts of general jurisdiction do not have subject matter jurisdiction over claims or controversies that are reserved for courts of special jurisdiction. For example, in a state that has a probate court, all claims involving wills and estates must be brought in the probate court, not in a court of general jurisdiction.

In some cases, a claim must first be heard by a special administrative board before it can be heard by a court. For example, a workers' compensation claim in most states must be heard by a workers' compensation board before it can be heard in a court of general jurisdiction.

Another consideration in establishing subject matter jurisdiction is the amount in controversy. This is the total of all claims, counterclaims, and cross-claims in the suit. (A counterclaim is a claim by a defendant against a plaintiff; a cross-claim is a claim by a plaintiff against another plaintiff, or by a defendant against another defendant.) In most jurisdictions, if the amount in controversy does not exceed a certain limit, the case must be heard by a court other than a court of general jurisdiction. This court is usually called a small claims court. The rules in such a court limit the procedures that are available to the parties so that the court can obtain a simple and speedy resolution to the dispute.

Federal Civil Court Jurisdiction

Personal Jurisdiction To obtain personal jurisdiction over the parties, a federal court follows the procedural rules of the state in which it sits. For example, a federal court in Michigan follows the Michigan state court rules governing personal jurisdiction. The court examines the usual factors in establishing personal jurisdiction, such as the physical location of the parties, the reach of the state's long-arm statute, any consent to personal jurisdiction by the defendant, or the location of real property in a dispute over real property.

Subject Matter Jurisdiction In some cases a plaintiff may file suit in federal court. These cases are limited to (1) claims arising from the U.S. Constitution or federal statutes (federal question jurisdiction), (2) claims brought by or against the federal government, and (3) claims in which all opposing parties live in different states and the amount in controversy exceeds $75,000 (diversity jurisdiction). A federal court obtains subject matter jurisdiction over a case if the case meets one or more of these three requirements.

Claims arising from the U.S. Constitution or federal statutes Federal question jurisdiction is covered in 28 U.S.C.A. § 1331. This statute provides that federal district courts have "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." Some claims are expressly identified as federal in the Constitution. These claims include those involving ambassadors and consuls or public ministers, admiralty and maritime claims, and claims made by or against the federal government. Claims that are based on federal law also may be filed in federal court. An action against the federal government based on the negligence of a federal employee, for example, is authorized by the federal tort claims act of 1946 (60 Stat. 842 [28 U.S.C.A. § 1346(b), 2674]).

The U.S. Supreme Court, in Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., 535 U.S. 826, 122 S. Ct. 1889, 153 L. Ed. 2d 13 (2002), issued a landmark decision on "arising under" jurisdiction of the federal courts. The case involved patent law litigation between two competitors, with the plaintiff filing a declaratory judgment action in federal district court asking the court to declare that the plaintiff had not infringed the defendant's trade dress. This action was not based on a federal law but the defendant's counterclaim, in which it invoked federal patent law to allege patent infringement by the plaintiff, seemed to give the court "arising under" jurisdiction. The Court thought otherwise, ruling that the counterclaim did not confer federal jurisdiction and that the case must be dismissed. This decision limits the "arising under" jurisdiction of the federal courts and gives state courts the opportunity to hear copyright and patent actions (through a defendant's counterclaim) that have always been heard in the federal courts.

Some cases may combine federal and state issues. In such cases, no clear test exists to determine whether a party may file suit in or remove a suit to federal court. Generally, federal courts will decline jurisdiction if a claim is based predominantly on state law. For example, assume that a plaintiff is embroiled in a property dispute with a neighbor. The plaintiff files suit against the neighbor, alleging state-law claims of nuisance, trespass, breach ofcontract, and assault. A state official advises the plaintiff that the property belongs to the neighbor (the defendant). If the plaintiff sues the state official in the same suit, alleging a constitutional violation such as the uncompensated taking of property, a federal court may refuse jurisdiction because the case involves predominantly state law.

Federal courts may decline jurisdiction on other grounds if a state court has concurrent jurisdiction. When they do so, they are said to abstain, because they are refraining from exercising their jurisdiction. Federal courts tend to abstain from cases that require the interpretation of state law, if state courts can decide those cases. Federal courts abstain in order to avoid answering unnecessary constitutional questions, to avoid conflict with state courts, and to avoid making errors in determining the meaning of state laws.

Claims brought by or against the federal government Generally, the United States may sue in federal court if its claim is based on federal law. For example, if the federal government seeks to seize the property of a defendant in a drug case, it must base the action on the federal forfeiture statute, not on the forfeiture statute of the state in which the property lies.

Generally, state and federal governments have sovereign immunity, which means that they may not be sued. However, state and federal governments may consent to suit. At the federal level, Congress has removed the government's immunity for injuries resulting from the negligent and, in some cases, intentional conduct of federal agencies, federal officers, and other federal employees (60 Stat. 842 [28 U.S.C.A. § 1346(b), 2674, 2680]). Generally, the federal government is liable only for injuries resulting from the performance of official government duties.

If Congress has not waived federal immunity to certain suits, a person nevertheless may file suit against the agents, officers, or employees personally. For example, the U.S. Supreme Court has held that federal agents, officers, and employees who violate constitutional rights may be sued for damages in federal court (Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 91 S. Ct. 1999, 29 L. Ed. 2d 619 [1971]).

Claims in which all opposing parties live in different states and the amount in controversy exceeds $75,000 Diversity cases provide federal courts with subject matter jurisdiction under 28 U.S.C.A. § 1332. A civil case qualifies as a federal diversity case if all opposing parties live in separate states and the amount in controversy exceeds $75,000. If the opposing parties live in the same state, the case may still qualify for federal subject matter jurisdiction if there is some remaining citizenship diversity between parties. For example, assume that a person is acting as a stakeholder by holding property for a third party. If ownership of the property is in dispute, the stakeholder may join the defendants in the suit to avoid liability to any of the parties. Such a case may be filed in federal court if a defendant lives in a different state, even if one of the defendants lives in the same state as the stakeholder or in the same state as the other defendants.

State and Federal Criminal Court Jurisdiction

Personal Jurisdiction Personal jurisdiction in a criminal case is established when the defendant is accused of committing a crime in the geographic area in which the court sits. If a crime results in federal charges, the federal court that sits in the state where the offense was committed has personal jurisdiction over the defendant. In a conspiracy case, the defendants may face prosecution in any jurisdiction in which a conspiratorial act took place. This can include a number of states if at least one conspirator crossed state lines or if the conspiracy involved criminal acts in more than one state. kidnapping is another crime that can establish personal jurisdiction in courts in more than one state, if it involves crossing state lines.

Subject Matter Jurisdiction In criminal cases, the question of jurisdiction is relatively simple. Subject matter jurisdiction is easily decided because criminal courts or the courts of general jurisdiction have automatic subject matter jurisdiction over criminal cases. In most states, minor crimes may be tried in one court, and more serious crimes in another. In Idaho, for example, criminal cases are tried in the district courts. However, misdemeanor cases may be assigned by the district court to a magistrate (Idaho Code § 1-2208 [1996]). (A magistrate is a judge who is authorized to hear minor civil cases and to decide criminal matters without a jury.)

The major question in criminal subject matter jurisdiction is whether the charges are pursuant to federal or state law. If the charges allege a violation of federal criminal law, the defendant will be tried in a federal court that is located in the state in which the offense was committed. If the charges allege a violation of state law, the defendant will face prosecution in a trial court that has jurisdiction over the area in which the offense was committed. If a crime violates both federal and state law, the defendant may be tried twice: once in state court, and once in federal court.

Venue

Venue is similar to, but separate from, jurisdiction. The venue of a case is the physical location of the courthouse in which the case is tried. If more than one court has both subject matter and personal jurisdiction over a case, the court that first receives the case can send the case, upon request of one of the parties, to a court in another jurisdiction. Unlike jurisdiction, venue does not involve a determination of a court's inherent authority to hear a case.

further readings

Meslar, Roger W., ed. 1990. Legalines Civil Procedure. 3d ed. Chicago, Ill.: Harcourt Brace Jovanovich Legal and Professional Publications.

Wildasin, Mark H., and Richard A. Jones. 2001. "Internet Jurisdiction." Journal of Internet Law (December).

cross-references

Diversity of Citizenship.

JURISDICTION

The U.S. federal, state, and even local governments have adapted the territorial reach of their criminal laws to permit punishment of "new and complex crimes" when elements of extraterritoriality exist. The proactive extension of its extraterritorial jurisdiction has resulted in transformation of the law of jurisdiction and has led to occasional tension with other governments. While this discussion concerns primarily federal law, similar developments have occurred on a subnational level, where states and even municipalities continually expand their jurisdiction to meet criminal threats from an increasingly borderless world, where technology, transportation, and free-trade developments enable criminals to move money, capital, goods, people, and ideas instantaneously.

This discussion outlines the conceptual bases of jurisdiction and then applies it to recent developments in U.S. law, especially with respect to terrorism, narcotics, and alien smuggling. The article also describes the jurisdiction of military courts-martial, the use of proactive investigative and policing techniques abroad, the limits on the enforcement of foreign penal judgments, and basic principles governing jurisdiction between state and federal courts, and conflict-of-laws in the criminal context.

Constitutional limitations

Generally there is no constitutional bar to the extraterritorial application of domestic penal laws. Prosecutors, if challenged, must be able to show that congressional intent of extraterritorial scope is clear and that the application of the statute to the acts in question does not violate the due process clause of the Fifth Amendment.

Jurisdiction is the power of the state to prescribe and punish crimes, the power of the executive to apply and enforce laws, and the power of courts to adjudicate cases. Since a state's criminal law has no force and effect beyond its territorial limits, except for universal crimes, a criminal offense committed in one state cannot be prosecuted in another. The threshold issue of whether a court has jurisdiction to resolve a pending controversy is fundamental. A court cannot act outside its authority or jurisdiction. Each court has jurisdiction to determine whether it has jurisdiction. If a court determines it has no jurisdiction to decide the merits of a case, the appropriate action is to dismiss.

The five traditional bases of jurisdiction over extraterritorial crimes are: territorial, nationality, protective, passive personality, and universal. Under the "territorial theory," jurisdiction applies to conduct or the effect of which occurs within the territorial boundaries of the state. When an element of an offense occurs within a state, that state has jurisdiction based on subjective territoriality. When an effect or result of criminal conduct impacts the state, but the other elements of the offense occur wholly beyond its territorial boundaries, that state has jurisdiction based on objective territoriality. The "nationality theory" bases jurisdiction on the allegiance or nationality of the perpetrator of offenses proscribed by the state of his allegiance, no matter where the offense occurs. The "protective principle" applies whenever the criminal conduct has an impact on or threatens the asserting state's sovereignty, security, or some important governmental function. The "passive personality theory" applies merely on the basis of the victims nationality. The United States and many other nations have rejected this basis of jurisdiction, although they increasingly have started to invoke it, especially with respect to terrorist crimes. The "universality theory" permits any forum to assert jurisdiction over particularly heinous or universally condemned acts (e.g., genocide and crimes against humanity), when no other state has a prior interest in asserting jurisdiction.

Extraterritorial jurisdiction

The expansion of the theoretical bases of jurisdiction to prescribe, which is based on the thwarted extraterritorial narcotics conspiracy aimed at importation of narcotics into the United States, has been criticized. Various U.S. judicial decisions have expanded the objective territoriality theory to include offenses intended to have an effect on the United States, such as thwarted extraterritorial conspiracies. The decisions are the subject of criticism because, being thwarted, the offenses never actually cause such an effect. Because the extraterritorial conspiracy is thwarted, it arguably causes no significant effect on the asserting state's territory and does not give it jurisdiction.

To combat international narcotics trafficking, the U.S. Congress and the courts have expanded extraterritorial jurisdiction In addition to asserting jurisdiction over thwarted extraterritorial conspiracies, they have enacted laws with extraterritorial jurisdiction over new crimes, such as money laundering, even when such crimes have limited connection with the United States.

In the arrest of General Manuel Noriega, the president of Panama, for narcotics offenses, the United States sent troops into Panama, killing innocent civilians to arrest Noriega. The Noriega case is one of the most celebrated modern examples of the expansion of U.S. extraterritorial jurisdiction because of the use of so much force to arrest a head of state for acts that occurred in Panama (Andreas, p. 37).

In August 1986, the United States enacted the Omnibus Diplomatic Security Act of 1986, providing jurisdiction to extradite or prosecute perpetrators of international terrorism. The act provides for the U.S. prosecution of persons who kill U.S. nationals abroad when the offense was "intended to coerce, intimidate, or retaliate against a government or a civilian population." Hence, U.S. jurisdiction is provided even though the actions occur abroad.

The continued expansion of U.S. territorial jurisdiction to combat organized crime was reflected in U.S. Attorney Zachary W. Carter's announcement on 7 October 1997 of stricter interpretation of U.S. jurisdiction over its territorial waters with regard to regulating casino boats. The new interpretation required casino boats that sail from New York City to travel at least twelve miles from shore before passengers could start gambling. New York City Mayor Rudolph W. Giuliani had urged federal officials to invoke the twelve-mile start in order to curb organized crime influences (Fried).

The U.S. has broadly extended its extraterritorial jurisdiction to try to ensure that other governments meet their international law obligations to combat transnational organized crime. Under the Foreign Assistance Act of 1961, as amended (the "FAA"), the U.S. Department of State is required to prepare an annual International Narcotics Control Strategy Report (INCSR). The INCSR provides the factual basis for the presidential narcotics certification determinations for major drug-producing or drug-transit countries. The law requires that if the United States does not certify a country for its actions occurring totally outside the U.S., then it must suspend most foreign assistance and vote against multilateral development bank lending to that country.

The statute requires that for each country that received international narcotics assistance in the past two fiscal years, a report must be issued on the extent to which the country has "met the goals and objectives of the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances."

The convention requires that parties take legal measures to prohibit, criminalize, and punish all forms of illicit drug production, trafficking, and drug money laundering, to control chemicals that can be used to process illicit drugs, and to cooperate in international efforts to meet these goals. The convention also requires signatory countries, such as the United States to take extraterritorial criminal action over narcotics offenses committed on the high seas, and to cooperate in allowing an investigating state to search vessels flying its flag, and otherwise cooperate in investigations on the high seas.

In October 1995, President Bill Clinton in President Decision Directive (PDD) 42 imposed sanctions under the International Emergency Economic Powers Act (IEEPA), blocking the assets of the leaders, cohorts, and front companies of identified Colombian narcotics traffickers in the United State and in U.S. banks overseas. IEEPA authorities required the U.S. Secretary of the Treasury to impose sanctions, including freezing assets held in U.S. financial institutions, against nations and entities deemed a threat to the national security, foreign policy, or economy of the United States. The directive provides a series of new initiatives: (a) identifying nations that are most egregious in facilitating money laundering, and considering sanctions if after negotiation they do not take adequate steps; (b) using the authority of the IEEPA to block the U.S. assets of cartel leaders and front companies and to bar trade between them and the United States as outlined in Executive Order 12978; (c) negotiating an international Declaration on Citizens' Security and Combating International Organized Crime; (d) developing a legislative package of new authorities to better enable U.S. agencies to investigate and prosecute all aspects of international organized crime; and (e) seeking additional resources to provide increased U.S. anticrime training and assistance to friendly governments.

On 21 October 1995, President Clinton issued Executive Order 12978, under the authority of IEEPA. It finds that the activities of significant foreign narcotics traffickers centered in Colombia and the unparalleled violence, corruption, and harm constitute a usual and extraordinary threat to the U.S. national security and economy. Additionally, U.S. individuals and companies are forbidden from engaging in financial transactions or trade with the identified individuals or enterprises connected to the Colombian Cali Cartel. The Treasury Department identified 359 businesses and individuals whose assets had been blocked since 1995 under authority of the President's Executive Order. As part of the PDD 42 process, an interagency group is reviewing whether measures can be taken against other international criminal cartels (U.S. Department of State, p. 532).

U.S. extraterritorial jurisdiction has expanded to combat alien smuggling. On 9 November 1995 the report of the Interagency Working Group (IWG), "Deterring Alien Smuggling," determined that alien smuggling must be dealt with at its source as well as in those transit countries through which migrants are moved to the United States. The IWG recommended programs to disrupt global smuggling by increasing the awareness of foreign governments. The IWG has helped prepare a model antismuggling law for adoption in the Western Hemisphere and recommended that additional human resources be devoted to combating alien smuggling by expanding U.S. overseas enforcement capability. In June 1997 the Immigration and Naturalization Service (INS) announced a major expansion of its offices overseas to "go to the source" of the immigrant smuggling problem (Andreas, pp. 40–41).

Congress vested in U.S. district courts jurisdiction over offenses punishable by federal law that have been committed within the special U.S. maritime and territorial jurisdiction. Such jurisdiction extends to the high seas, to any other waters within the U.S. admiralty and maritime jurisdiction that remains outside the jurisdiction of any particular state, and to any U.S. aircraft while in flight over the high seas, or over any other waters within the U.S. admiralty and maritime jurisdiction outside the jurisdiction of any particular state.

Courts-martial jurisdiction

Another means by the which the United States exerts extraterritorial jurisdiction is through courts-martial. The three types of courts-martial are general, special, and summary. General courts-martial adhere to the Uniform Code of Military Justice. They have jurisdiction to try any person who is subject to a trial by a military tribunal for violations of the laws of war. Special courts-martial have jurisdiction to try persons subject to the code for noncapital offenses, and capital offenses under regulations prescribed by the President of the United States, who is also authorized to determine punishment. Summary courts-martial have jurisdiction to try persons subject to the code, except officers, cadets, aviation cadets, and midshipmen, for any noncapital offense. No person may be brought to trial, however, if he objects.

Status-of-forces (SOFAs) agreements were created to aid in the determination of which courts have jurisdiction over visiting forces. These agreements established "concurrent jurisdiction," which allowed courts-martial to adhere to both the jurisdictions of the "sending" and "receiving" states. The "sending" state (e.g., the United States over its troops in Germany) retains its ability to perform its military mission by reserving the right to try persons for offenses against the nation or its property (e.g., theft by a U.S. serviceman against U.S. government property), and for offenses borne out of official duty. The "receiving state" retains its territorial sovereignty and jurisdiction over all other offenses (e.g., violent crimes against German nationals) (Bassiouni, p. 119).

The United States and other states engage in proactive policing extraterritorially, such as the use of surveillance, undercover sting operations, controlled deliveries of contraband (whereby the delivery of the contraband is allowed in order to trace and detect the involvement of upperechelon criminals), and the use of liaison officers whereby federal agencies station officials permanently in foreign countries. States try, as much as possible, to abide by the internal law of the foreign state when conducting investigations.

Traditionally, the United States has not recognized and executed the penal laws of another country. To the extent that authority to recognize foreign penal judgments has existed in the U.S. (e.g., through treaty or statute), such recognition has been restricted. The limited authority to recognize and enforce foreign penal judgments combined with the traditional suspicion with foreign criminal procedure has resulted in decisions that substantially limit the effect accorded criminal judgments abroad. Few statutes specifically refer to convictions in courts of a foreign sovereign. Some statutes expressly exclude such convictions, while most are silent or ambiguous.

As between state and federal courts, a federal court has original jurisdiction over all violations of federal law. In cases where one act constitutes an offense against both a state and the United States, both the federal and state courts have jurisdiction of the offense, unless the U.S. Constitution or an act of Congress gives exclusive jurisdiction to the federal courts. A federal court can obtain jurisdiction over a defendant's nonfederal offense where there exists a joinder of a codefendant who is charged with federal violations. If a constitutionally authorized federal nexus exists, the federal government can prosecute crimes anywhere in the United States.

The same act may constitute a crime under a state statute and violate a municipal ordinance. As a result, the courts of the state as well as of the municipality may have jurisdiction over the offense, assuming that the municipality has authority to enact the ordinance. Where two courts have concurrent jurisdiction over the same subject matter, the court that first obtains jurisdiction retains it until the end of the controversy, to the exclusion of the other courts.

The United States and other states employ a type of conflict-of-laws, which is a formula to determine which country's laws to apply in a specific case, or limit the exercise on jurisdiction to prescribe in criminal matters. Even when they have jurisdictional bases, a nation may not exercise jurisdiction to prescribe law with respect to a person or activity having connections with another state when the exercise of such jurisdiction is unreasonable. A state or court will consider various factors in this determination, such as the link of the activity to the territory of the regulating state, that is, the extent to which the activity occurs within the territory, or has substantial, direct, and foreseeable effect upon or in the territory; the connections, such as nationality, residence, or economic activity, between the regulating state and the person principally responsible for the activity to be regulated, or between that state and those whom the regulation is designed to protect; and the likelihood of conflict with regulation by another state.

Proof of jurisdiction beyond a reasonable doubt is an integral element of the state's burden in a criminal prosecution. The state can fulfill its burden of showing that jurisdiction properly lies in a state court by presenting evidence that any or all of essential elements of the alleged offense took place in the state.

In the future a shrinking world guarantees that criminal jurisdiction between national governments and state and local governments will inevitably overlap. Additional means will be required to resolve conflicting jurisdictional claims and negotiate agreements and mechanisms to cooperate in the investigation, adjudication, and supervision of international crimes and criminals.

Bruce Zagaris

See also Federal Criminal Jurisdiction; International Criminal Courts; International Criminal Law; Venue.

BIBLIOGRAPHY

American Law Institute. "Restatement of the Foreign Relations Law of the United States," § 403. In Restatement of the Law, 3d ed. Washington, D.C.: American Law Institute, 1980.

Andreas, Peter. "The Rise of the American Crimefare State." World Policy Journal 14 (1997): 37, 40.

Bassiouni, M. Cherif, ed. International Criminal Law, 2d ed. Ardsley, N.Y.: Transnational Publishers, Inc., 1999.

Blakesley, Christopher. Terrorism, Drugs, International Law, and the Protection of Human Liberty. Ardsley-on-Hudson, N.Y.: Transnational Publishers, Inc., 1992.

Executive Order No. 12978, 60 Fed. Reg. 54, 579 (1995).

aust, Jordan J.; Bassiouni, M. Cherif; Williams, Sharon A.; Scharf, Michael; GurulÉ, Jimmy; and Zagaris, Bruce. International Criminal Law Cases and Materials. Durham, N.C.: Carolina Academic Press, 1996.

Tornaritis, Criton G. "Individual and Collective Responsibility in International Criminal Law." In International Criminal Law. Edited by Cherif Bassiouni. Springfield, Ill.: Charles C. Thomas, 1973. Pages 119–155. U.S. Department of State. International Narcotics Control Strategy Report. Washington, D.C.: Government Printing Office, 1997.

Zagaris, Bruce. "U.S. International Cooperation Against Transnational Organized Crime." Wayne Law Review 44 (1998): 1402–1464.

CASE

United States v. Yunis, 681 F. Supp. 896 (D.D.C. 1988), rev'd 859 F.2d 953 (D.C. Cir. 1988).

JURISDICTION

The geographic area over which authority extends; legal authority; the authority to hear and determine causes of action.

Exxon Mobil Corp. v. Allapattah Services, Inc.

Congress has placed jurisdictional barriers in front of litigants who wish to file civil lawsuits in federal court. In diversity-jurisdiction cases (i.e., those in which a litigant from one state files a lawsuit against a party from another state, in federal district court ), Congress has sought to prevent a flood of minor disputes by requiring the "amount in controversy" to exceed $75,000. If a plaintiff satisfies this requirement, the federal court is authorized to exercise supplemental jurisdiction over additional claims that are part of same case and controversy. These additional claims often involve claims under state law. Questions have arisen as to whether every plaintiff in a class-action lawsuit must satisfy the $75,000 amount in controversy in order to give the federal court supplemental jurisdiction over state claims. The U.S. Supreme Court, in Exxon Mobil Corp. v. Allapattah Services, Inc., __U.S. __, 125 S.Ct. 2611, __ L.Ed.2d __ (2005), rejected this reading of the federal statute , ruling that as long as one named plaintiff satisfied the amount-in-controversy requirement, the federal court could exercise supplemental jurisdiction over all of the parties and claims.

In 1991, approximately 10,000 Exxon gasoline dealers filed a class-action lawsuit against Exxon Corporation in a Florida federal district court. The dealers claimed that Exxon had employed a scheme to overcharge the dealers for their fuel purchases. The plaintiffs exercised diversity jurisdiction under 28 U.S.C.A. §1332(a) to gain access to the federal court. A jury ruled in favor of the plaintiffs, but the district court asked the U.S. Court of Appeals for the Eleventh Circuit whether it had properly invoked supplemental jurisdiction over the claims of class members who had not met the $75,000 threshold. The Eleventh Circuit concluded that the district court had properly allowed supplemental jurisdiction because at least one of the class representatives had met the amount-in-controversy requirement.

The Supreme Court, in a 5-4 decision, upheld the Eleventh Circuit's interpretation of the diversity-jurisdiction requirement. Justice Anthony Kennedy, in his majority opinion, noted that the Court had endorsed supplemental jurisdiction in Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). Although the Court's "expansive interpretative approach" could have been used to extend diversity jurisdiction, Justice Kennedy pointed out that the Court had mandated that there must be complete diversity-the presence of a single plaintiff from the same state as single defendant deprives the federal district court of diversity jurisdiction over the entire case. The purpose of diversity jurisdiction is to provide a "federal forum for important disputes where state courts might favor, or be perceived as favoring, home-litigants." Therefore, incomplete diversity "destroys original jurisdiction with respect to all claims, so there is nothing to which supplemental jurisdiction can adhere."

Justice Kennedy acknowledged that Congress had enacted an amendment to the federal jurisdiction statutes in 1990. The text of 28 U.S.C.A. §1367(a) stated that in any civil action in which the federal courts have original jurisdiction, "the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III" of the Constitution. This was, in Kennedy's view, a "broad grant of supplemental jurisdiction." The key question in the present case was whether the failure of some plaintiffs to meet the amount-in-controversy requirement deprived the federal court of original jurisdiction under §1367(a) and supplemental jurisdiction over the additional claims. Justice Kennedy concluded that the federal court retained original and supplemental jurisdiction as long as the "well-pleaded complaint contains at least one claim that satisfies the amount-in-controversy requirement." This interpretation was consistent with the "broad jurisdictional grant" language of §1367(a). It made no sense to grant jurisdiction only when a court had "original jurisdiction over every claim in the complaint." Such an "indivisibility theory" was too radical an approach to apply to supplemental jurisdiction because the courts had the authority to correct jurisdictional effects by "dismissing the offending parties rather than dismissing the entire action."

Justice Kennedy also rejected the argument that Congress had not intended to overrule previous Court precedent that limited supplemental jurisdiction when it enacted §1367(a). There was no need to consult legislative history because the statute's text was the authoritative statement; even if the Court wished to consult legislative history, there was little in the record to give "significant weight" to the idea that Congress had sought to preserve significant limitations on supplemental jurisdiction.

Justice Ruth Bader Ginsberg, in a dissenting opinion joined by Justices John Paul Stevens, Sandra Day O'Connor, and Stephen Breyer, contended that Congress had not overruled prior cases that mandated that each plaintiff in a class action meet the amount-in-controversy requirement or else be dismissed from the case.

Exxon Mobil Corp. v. Saudi Basic Industries Corporation

In the U.S. judicial system, state and federal courts entertain lawsuits that are permitted based on constitutional and statutory jurisdiction. Federal courts pay deference to state jurisdiction and, when appropriate, rule that a federal lawsuit is precluded from proceeding because of an existing state court judgment. In rare instances, a loser in state court seeks to appeal the decision in federal district court . However, under what is known as the Rooker-Feldman doctrine, the U.S. Supreme Court has ruled that such appeals must be dismissed for lack of subject-matter jurisdiction. Only the U.S. Supreme Court has appellate jurisdiction to review state court judgments. Despite the limited reach of this doctrine, occasionally a federal court misapplies it, leading to Supreme Court review. Such was the case in Exxon Mobil Corp. v. Saudi Basic Industries Corporation, __U.S. __, 125 S.Ct. 1517, __ L.Ed.2d __ (2005). In that case, the Court ruled that a federal appeals court had erred in dismissing a federal lawsuit brought by a winning party in a concurrent state court case.

Two subsidiaries of Exxon Mobil Corp. (Exxon) had formed joint ventures in 1980 with Saudi Basic Industries Corporation (SABIC) to produce polyethylene in Saudi Arabia. By 2000, Exxon and SABIC had become embroiled in a dispute over royalties that SABIC had charged to Exxon for sublicenses to use the manufacturing method. In July 2000, SABIC filed suit against Exxon in Delaware state court, asking for a declaratory judgment that it had charged the proper royalties. Two weeks later, Exxon countersued SABIC in a New Jersey federal district court, alleging that SABIC had overcharged for the sublicenses. Exxon invoked federal subject-matter jurisdiction using a federal law that permits federal district courts to adjudicate actions against foreign states.

In January 2002, Exxon answered SABIC's state-court complaint and made counterclaims that it had made in the New Jersey federal district court. In March 2003, the Delaware action went to trial, with Exxon receiving a $400 million jury verdict in its favor. Before the trial, SABIC had asked the New Jersey court to dismiss the federal action, arguing that it had foreign sovereign immunity . After the district court denied the motion, SABIC appealed to the federal U.S. Court of Appeals for the Third Circuit. In December 2003, the appeals court heard arguments and, on its own initiative, examined whether under the Rooker-Feldman doctrine the federal action should be dismissed because Exxon had prevailed in Delaware state court. It concluded that the federal district court had subject-matter jurisdiction at the inception of the case but that federal jurisdiction ended when the state court entered judgment for Exxon. To rule otherwise risked "encouraging parties to maintain federal actions as 'insurance policies' while their state court claims were pending." Therefore, under Rooker-Feldman, a federal court was precluded from proceeding.

The U.S. Supreme Court, in a unanimous decision, reversed the Third Circuit's ruling. Justice Ruth Bader Ginsburg, writing for the Court, noted that the doctrine at issue derived from Supreme Court rulings in two cases (one from 1923, another from 1983). In both cases, the losing party in a state matter filed suit in federal district court to overturn the state court's decision, and in both cases the suits were dismissed for lack of federal jurisdiction. Justice Ginsburg found that "When there is parallel state and federal litigation, Rooker-Feldman is not triggered simply by the entry of judgment in state court." The doctrine did not support "the notion that properly invoked concurrent jurisdiction vanishes if a state court reaches the same or related question" while the federal case is pending.

Federal lawsuits may be dismissed once a state court case is adjudicated, but Justice Ginsburg ruled that these dismissals are governed by preclusion law. Under the Full Faith and Credit Act, 28 U.S.C.A. §1738, federal courts must give "the same preclusive effect to a state-court judgment as another court of that State would give." However, preclusion is not a jurisdictional issue, and federal jurisdiction "does not terminate automatically on the entry of judgment in state court." In addition, the federal lawsuit may proceed if it is based on an independent claim that "denies a legal conclusion that a state court has reached." In this case, Exxon was the winner, not the losing party, and had filed a motion in federal court not to undo a Delaware court judgment but to "protect itself in the event it lost in state court on grounds (such as the state statute of limitations ) that might not preclude relief in the federal venue."

Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing

American government is built on the concept of federalism, by which the states and the federal government have separate spheres of authority. In the judicial system, the concept of federalism has led the U.S. Supreme Court to develop principles for determining when state court actions may be removed to federal court. These jurisdictional principles are based on the Constitution, federal laws, and the practical impact on the federal courts , which are referred to as "prudential" jurisdictional concerns. Under the "federal question" statute , 28 U.S.C.A. §1331, a defendant may remove a state court action to federal court if the plaintiff could have filed the lawsuit in federal court originally as a civil action "arising under" the laws of the United States. Federal-question jurisdiction is usually invoked when a plaintiff files a cause of action based on a federal law. However, there are times when a defendant can remove a case to federal court when the cause of action is based on a state law. In order to do so, the defendant must show that a substantial federal issue is to be contested and that permitting federal jurisdiction will not open the floodgates to other similar lawsuits. The Supreme Court revisited these issues in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, __U.S. __, 125 S.Ct. 2363, __ L.Ed.2d __ 2005 WL 1383604 (2005) and ruled that a state real estate action could be heard in federal court because the outcome of the case would be based on the interpretation of a federal tax law.

In 1994, the Internal Revenue Service (IRS) seized real property owned by Grable & Sons Metal Products (Grable), a Michigan company, to satisfy a federal tax delinquency. Grable received actual notice of the seizure from the IRS by certified mail. The IRS then sold the property to Darue Engineering & Manufacturing and, at the appropriate time, delivered a quitclaim deed to Darue, giving it legal title to the real estate. In 1999, Grable filed a quiet-title action in Michigan state court, contending that the IRS had failed to notify it of the seizure as required by the federal law. Under such an action, Grable sought recovery of legal title to the property. The law stated that the IRS notice must either be given to the owner of the property or left at his or her usual place of business. Grable argued that this provision meant that the IRS should have personally served the notice rather than sending it by certified mail.

Darue removed the case to federal district court as containing a federal question : The claim of title depended on the interpretation of the notice provision of the federal tax law. The district court rejected Grable's request that the case be sent back to state court, ruling that Grable's lack of a federal cause of action did not bar federal jurisdiction. The court then ruled in favor of Darue. It found that, although the law required personal service , substantial compliance with the law was sufficient. The U.S. Court of Appeals for the Sixth Circuit upheld both the jurisdictional and substantive rulings. The U.S. Supreme Court agreed to hear Grable's appeal on only the jurisdictional issue to resolve a conflict within the courts of appeals.

The Court, in a unanimous decision, upheld the Sixth Circuit ruling. Justice David Souter, writing for the Court, noted that most cases removed to federal courts under the federal question provision are based on causes of action created by federal law; the federal civil rights tort law , 42 U.S.C.A. §1983 is a good example of such a law. However, there are less-frequent cases win which federal-question jurisdiction is properly invoked to address state-law claims that "implicate significant federal issues." Justice Souter reviewed case law that reached back more than 100 years to demonstrate that the Court had developed a doctrine that "captures the commonsense notion that a federal court ought to be able to hear claims recognized under state law that nonetheless turn on substantial questions of federal law."

Justice Souter took pains to clarify that no bright-line rules existed in this area of the law; each case had to be evaluated individually according to a list of factors. In order to remove a case to federal court when a federal cause of action is not present, a court must determine that the contested federal issue is substantial and that it indicates "a serious federal intent in claiming the advantages thought to be inherent in a federal forum." However, even if there is a substantial interest, a court must find that a federal forum may entertain the action "without disturbing any congressionally approved balance of federal and state responsibilities." In other words, the Court sought to preserve the concept of federalism and not to subject the court to a flood of litigation that should remain under state jurisdiction.

In this case, the Court believed that the interpretation of the notice provision of the federal tax law raised a matter of substantial interest. More importantly, Justice Souter concluded that federal jurisdiction "over actions like Grable's would not materially affect, or threaten to affect, the normal currents of litigation." Therefore, the case had been properly heard in the federal courts.

JURISDICTION

Jurisdiction is a magical and protean term. In American law it refers to the power of legislatures, the competence of courts to deal with certain types of cases, the allocation of cases between state and federal courts, the power of both state and federal courts over defendants who have only peripheral attachments to the locale of the court, and the territory in which a unit of government exercises its power. Not surprisingly the word shifts its meanings as it moves among these quite different tasks.

The term's confusing spread of meanings has its roots in the English medieval experience. What modern observers would think of as political power accompanied the grant of property; the landlord was lord of more than land; he exercised powers of justice over the people who tilled that soil. Yet that jurisdiction also had limits: above it stood the powers of the monarch, who at least in theory had the power and responsibility to see that the lords rendered justice. Thus the word emerged from the Middle Ages carrying several meanings: the power to make law, the power to adjudicate cases, and, loosely, the territory within which that power was exercised.

We use all three senses today. We speak, for example, of legislative jurisdiction, meaning legislative power, generally allocated by state and federal constitutions. Thus the earliest opinion of the Supreme Court applying the limits of substantive due process to state economic regulation, in Allegeyer v. Louisiana (1897), said that the state had exceeded its territorial jurisdiction. Territorial considerations aside, any decision holding a law unconstitutional can be described as a holding that the legislative body has transgressed the limits of its jurisdiction—its lawful authority. The courts have employed this rhetoric especially in defining a state's jurisdiction to tax.

We use the extended, territorial sense of the term when we write of a fugitive's having fled a jurisdiction, or when lawyers ask about which jurisdiction's law applies. Article IV, section 3, of the Constitution uses the term in this sense when it prohibits creation of a new state within the jurisdiction of an existing state without the latter's consent.

The most distinctively legal, though not exclusively constitutional, sense of the term refers to the authority of a court to decide a matter or to issue an order—its subject matter jurisdiction. Some state courts are courts of so-called general jurisdiction, competent to decide all cases within the ordinary bounds of the law. Other state courts are courts of limited jurisdiction, empowered only to decide specified types of cases or to grant only specified forms of relief. A municipal court, for example, may have jurisdiction to award damages only up to a limited dollar amount and may have no jurisdiction at all to grant an injunction.

In constitutional law jurisdiction has two special meanings, both involving civil cases. One flows from the limitation of the subject matter jurisdiction of the federal constitutional courts in Article III of the Constitution; the other grows from the due process clauses of the Fifth and fourteenth amendments.

Fundamental to the constitutional scheme is the proposition that each branch of the federal government must share powers and observe limits not only in regard to the other two branches of government but also in regard to the states. Article III and many statutes thus limit the subject matter jurisdiction of the federal courts to certain types of cases; that article, for example, ordinarily would prohibit a federal court from deciding a case between two citizens of the same state in which no question of federal or maritime law was involved. Because the limitations of Article III describe a fundamental division of authority between state and federal governments, the federal courts have been scrupulous, some would say zealous, not to overstep those subject matter boundaries. Thus even though no party to a lawsuit evinces the least concern about it, a federal court has an independent duty to investigate the basis for its subject matter jurisdiction and to dismiss the suit if jurisdiction is lacking. Such dismissals, like the jurisdictional rules that require them, protect the interests of the state court systems, to which the litigation must go if the federal courts cannot hear it.

The Constitution also limits the powers of the federal government and the states over individual citizens. State courts, for example, must observe a limitation that flows from the Fourteenth Amendment's due process clause. Since Pennoyer v. Neff (1878) the Supreme Court has insisted that, regardless of the kind of case involved, the defendant have some connection with the state in which the suit occurs. Over the past century the Court has re-molded the basis and expanded the range of personal jurisdiction—changes that, some have suggested, have come in response to an increasingly mobile population and an economy increasingly national in scope. The Court has sometimes based the requirement of personal jurisdiction on the state's lack of power over persons not within its borders—thus harking back to the territorial sense of the term; more recently it has tended to speak less of territorial power and more of unfair inconvenience to a defendant forced to litigate in a distant forum. Whether it has grounded the requirements in federalism or in fairness to the defendant, however, the Court has insisted that such connections exist in order for a judgment of a court to be entitled to full faith and credit.

Whether similar constitutional restrictions on personal jurisdiction apply to federal courts is a more obscure matter. Because the federal government is sovereign throughout the United States, notions of geographical territoriality play no role, and only the inconvenience to the defendant would be at issue in such a case. In a number of instances involving the national economy, such as federal securities law cases, Congress has provided for nationwide personal jurisdiction in the federal courts, and such grants of power have been upheld, presumably because any harm to the defendant is outweighed by the need for a nationally available system of courts supervising the national economy. The outer limits of congressional power have not been tested, for in most cases either venue statutes (controlling the districts in which civil suits may be brought) or the federal rules of civil procedure limit federal courts to essentially the same reach of personal jurisdiction that a state court would have.

Unlike subject matter jurisdiction, personal jurisdiction can be waived by those entitled to its protection: the Supreme Court has repeatedly held that either by prior agreement or by the simple failure to raise the issue at an early stage of litigation defendants may lose their opportunity to challenge the court's power to decide the case. collateral attack on a judgment on the ground that the court lacked personal jurisdiction is available only to a defendant who did not appear in the original suit.

Article III's limits on the subject matter jurisdiction of federal courts allocate cases as between state and federal courts; the due process limitations in personal jurisdiction allocate cases between a court, either state or federal, in a particular place and courts in other places more convenient to the defendant. Though both doctrines in their more technical aspects are quintessential lawyer's law, their roots lie in the Constitution's allocations of governmental power and in a tradition of individualism. The same origins underlie the idea of jurisdiction as the limitations on the power of various branches of government. Ultimately all the uses of "jurisdiction" derive from the medieval Western tradition that distinguished between power and justice, making the ability to dispense the latter a function of allocations of the former.

Stephen C. Yeazell
(1986)

Bibliography

Bator, Paul M. et al. 1973 Hart and Wechsler's The Federal Courts and the Federal System. Mineoloa, N.Y.: Foundation Press.

Hazard, Geoffrey C. 1965 A General Theory of State-Court Jurisdiction. Supreme Court Review 1965:241–289.

Mechren, Arthur T. Von, and Trautman, Donald 1966 Jurisdiction to Adjudicate: A Suggested Analysis. Harvard Law Review 79:1121–1179.