Can Federal Courts Bring Up Claim Preclusion Sua Sponte?
Multiple Choice Question from the 2008 CivPro Exam

Hard Multiple Choice from the 2005 CivPro Exam

1. P (a citizen of New Jersey) is suing Officer D (a citizen of New Jersey) in the Federal District Court for the Southern District of New York under 42 U.S.C. § 1983 for violations of his constitutional rights. P alleges that D violated his Fourth Amendment rights in connection with a search of his car while he was in New York City. D answers, denying that the search was a violation of P’s Fourth Amendment rights. In his answer, D joins a setoff against P, alleging that P has failed to pay D under a contract the two entered into a year earlier. In the contract, P bought D’s Oldsmobile Cutlass. D is asking for a setoff of $5000.

A setoff is a counterclaim brought by a defendant against a plaintiff, alleging that if the defendant is liable to the plaintiff, this liability is to be reduced by the amount that the plaintiff is liable to the defendant. A setoff asks only that the defendant’s liability be reduced by the amount of the setoff, not that the defendant receive affirmative relief from the plaintiff if the defendant is not found to be liable to the plaintiff.

What is the most plausible argument that there is subject matter jurisdiction for D’s setoff?

a. D’s setoff has supplemental jurisdiction because compulsory counterclaims have supplemental jurisdiction and D’s setoff is a compulsory counterclaim. A defendant is obligated to join against a plaintiff all debts that the plaintiff owes the defendant at the time of the suit.

b. D’s setoff has supplemental jurisdiction because it is not an action brought by a plaintiff. Section 1367(b) of the supplemental jurisdiction statute excludes from supplemental jurisdiction “claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure, or … claims by persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules.”

c. D’s setoff has supplemental jurisdiction, because, although it is a permissive counterclaim, it is part of the same constitutional case or controversy as P’s action against D. A condition for D’s setoff against P is the success of P’s claim against D.

d. D’s setoff has supplemental jurisdiction because P’s action against D is a federal question action. Section 1367(b) of the supplemental jurisdiction statute excludes from supplemental jurisdiction certain actions joined to a diversity action.

e. Although the language of the supplemental jurisdiction statute would not provide D’s setoff with supplemental jurisdiction, it would have supplemental jurisdiction if a court took congressional intent into account when interpreting the statute.

ANSWER

a. D’s setoff has supplemental jurisdiction because compulsory counterclaims have supplemental jurisdiction and D’s setoff is a compulsory counterclaim. A defendant is obligated to join against a plaintiff all debts that the plaintiff owes the defendant at the time of the suit.

Wrong. It is true that if D’s setoff were a compulsory counterclaim it would have supplemental jurisdiction. But under the compulsory counterclaim rule (FRCP 13(a)) a defendant is obligated to bring against the plaintiff only all causes of action that he has concerning the same transaction or occurrence that is the subject matter of the plaintiff’s suit against the defendant. The defendant is not obligated to demand debts unrelated to that transaction or occurrence. D’s setoff is unrelated and so is not a compulsory counterclaim. 

b. D’s setoff has supplemental jurisdiction because it is not an action brought by a plaintiff. Section 1367(b) of the supplemental jurisdiction statute excludes from supplemental jurisdiction “claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure, or … claims by persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules.”

Wrong. 1367(b) is irrelevant to whether D’s setoff has supplemental jurisdiction. 1367(b) would apply only if the district court had “original jurisdiction founded solely on section 1332 of this title” (that is, only if P’s suit against D were a diversity case). P’s suit against D is a federal question action, not a diversity action. The reason to think that D’s setoff doesn’t have supplemental jurisdiction is 1367(a), which allows such jurisdiction only for “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 United States Constitution.” Given that D’s setoff is a permissive counterclaim that concerns an unrelated event, it is hard to see how it is part of the same constitutional case or controversy as P’s action against D. This answer does nothing to address that problem.

c. D’s setoff has supplemental jurisdiction, because, although it is a permissive counterclaim, it is part of the same constitutional case or controversy as P’s action against D. A condition for D’s setoff against P is the success of P’s claim against D.

Correct. As noted in above, the problem with supplemental jurisdiction for D’s setoff is that it is that it concerns a completely different event as P’s action against D, which makes it hard to see how it is part of the same constitutional case or controversy as P’s action against D. This answer explains why it can be considered part of the same constitutional case or controversy – a condition for D’s setoff is the success of P’s action against D. D’s setoff is part of the same constitutional case or controversy as P’s action against D in the same sense in which D’s impleader of his insurance company would be part of the same constitutional case or controversy: Although D’s action against his insurer would concern a different event (namely their signing a contract of insurance), the success of D’s action against his insurer would be predicated upon the success of P’s action against D. Some of you may have read in commercial outlines that permissive counterclaims do not have supplemental jurisdiction. That is not always true. D’s setoff is an example of a permissive counterclaim that has supplemental jurisdiction. 

d. D’s setoff has supplemental jurisdiction because P’s action against D is a federal question action. Section 1367(b) of the supplemental jurisdiction statute excludes from supplemental jurisdiction certain actions joined to a diversity action.

Wrong. It is true that 1367(b) is not a reason that D’s setoff does not have supplemental jurisdiction, but 1367(a) is. As noted in above, the problem with supplemental jurisdiction for D’s setoff is that it concerns a completely different event as P’s action against D, which makes it hard to see how it is part of the same constitutional case or controversy. This answer gives us no reason to believe that the two actions are part of the same constitutional case or controversy, so it is not the most accurate answer. 

e. Although the language of the supplemental jurisdiction statute would not provide D’s setoff with supplemental jurisdiction, it would have supplemental jurisdiction if a court took congressional intent into account when interpreting the statute.

Wrong. Whether one looks to congressional intent or the plain language of the statute is solely an issue with respect to interpreting 1367(b), which, as we have seen, is irrelevant to this question. As noted above, the problem with supplemental jurisdiction for D’s setoff is that it is that it concerns a completely different event as P’s action against D, which makes it hard to see how it is part of the same constitutional case or controversy. This worry concerns 1367(a). We never spoke about 1367(a) being improperly drafted – in the sense that it did not capture congressional intent – and in fact there is no evidence that it was improperly drafted. Congress wanted supplemental jurisdiction only for causes of action that concerned the same constitutional case or controversy as the action having original jurisdiction, and that is exactly what 1367(a) says. Indeed, congressional intent is doubly irrelevant. Even if Congress wanted to expand supplemental jurisdiction beyond the language of 1367(a), it could not so – the requirement that the cause of action with supplemental jurisdiction concern that same constitutional case or controversy as the action with original jurisdiction is required by the Constitution. 

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