A Short Question from the 1998 Civil Procedure Exam
Multiple Choice from the 2007 Exam

A Multiple Choice Question from the 2000 Exam

With updated answers:

1. P (a citizen of New York) files a suit against the D Corp. for fraud under New York law in Wyoming state court.  P is asking for $70,000.  The suit concerns misrepresentations the president of the D Corp. allegedly made to P in New York City (in the Southern District of New York) about the productivity of oil fields that the D Corp. holds in Wyoming.  These misrepresentations induced P to buy a significant amount of D Corp. stock in New York.  The D Corp. is an oil company incorporated in Delaware.  It has extensive oil fields of roughly equal size and value in Wyoming and Southern California.  The president of the D Corp. works in Houston, Texas, and the board of directors meets there.  Most financial decisions are also made in Houston.  The D Corp. removes the Wyoming action to the Federal District Court for the District of Wyoming on the basis of diversity, arguing that the parties are diverse and that the amount in controversy is more than $75,000.  Which of the following statements is most accurate?

 A. After removal, the D Corp. would be able to successfully move to dismiss for lack of personal jurisdiction.  There is no personal jurisdiction because the misrepresentation at issue took place in New York.  The fact that the misrepresentation was about something in Wyoming is insufficient to establish personal jurisdiction.

 B. The district court will remand the case back to state court.  The D Corp. may not successfully remove because it resides within the state of Wyoming.  A diversity case may not be removed if a defendant is an in-state resident.

 C. The district court must remand the case back to state court.  True, the plaintiff and the defendant are diverse.  But the court cannot find that the amount in controversy is above the jurisdictional minimum, because the plaintiff has asked for only $70,000.

D. The D. Corp. could not have successfully removed the action to the Southern District of New York.

 E. The district court will remand the case back to state court, because the case lacks venue.  It is not true that a “substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated,” in Wyoming.  The fact that the misrepresentation was about Wyoming is insufficient to establish venue.

ANSWER

A. After removal, the D Corp. would be able to successfully move to dismiss for lack of personal jurisdiction.  There is no personal jurisdiction because the misrepresentation at issue took place in New York.  The fact that the misrepresentation was about something in Wyoming is insufficient to establish personal jurisdiction.

Wrong.  There would likely be personal jurisdiction over the D Corp. in Wyoming state court and thus in a federal court under R. 4(k)(1)(A), since the D Corp. has extensive oil fields in Wyoming.  This would be probably sufficient for general personal jurisdiction under Goodyear (the D Corp. is probably “at home” in Wyo.), even if the cause of action is unrelated to these oil fields.  [NOTE: This answer is no longer correct in the light of Daimler, which held that a corporation will be subject to general jurisdiction usually only in its principal place of business and state of incorporation.] 

 B. The district court will remand the case back to state court.  The D Corp. may not successfully remove because it resides within the state of Wyoming.  A diversity case may not be removed if a defendant is an in-state resident.

Wrong.  A diversity case may not be removed if the defendant is an in-state citizen, not resident.  The D Corp. is not an in-state citizen, since its principal place of business is surely Texas, not Wyoming (under the nerve center test in Hertz).  Its other state of citizenship is Delaware, where it was incorporated. 

 C. The district court must remand the case back to state court.  True, the plaintiff and the defendant are diverse.  But the court cannot find that the amount in controversy is above the jurisdictional minimum, because the plaintiff has asked for only $70,000.

Wrong.  A court may find that the amount in controversy is more than a plaintiff states in his complaint under § 1446(c)(2) if Wyoming permits recovery of damages in excess of the amount demanded and the district court finds, by the preponderance of the evidence, that the amount in controversy is more than $75,000. 

D. The D. Corp. could not have successfully removed the action to the Southern District of New York.

Correct. It is true that there would have been PJ and venue for the action had it been brought by P in the S.D.N.Y. But a case may be removed only to the federal court in the district embracing the state court where the action was brought. It could, however, be transferred to the S.D.N.Y.

 E. The district court will remand the case back to state court, because the case lacks venue.  It is not true that a “substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated,” in Wyoming.  The fact that the misrepresentation was about Wyoming is insufficient to establish venue.

Wrong. There is venue for this removed action because the District of Wyoming embraces the state court from which the action was removed. Furthermore even if 28 U.S.C. 1391 were used to determine venue (which it shouldn’t), there would still be venue under 1391(b)(1) because the only defendant, the D Corp., resides in the district.

 

Comments

medyum

A. After removal, the D Corp. would be able to successfully move to dismiss for lack of personal jurisdiction. There is no personal jurisdiction because the misrepresentation at issue took place in New York. The fact that the misrepresentation was about something in Wyoming is insufficient to establish personal jurisdiction.

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