Multiple Choice from the 2007 Exam
Tricky Service Multiple Choice from 2005 Exam

Multiple Choice from 2004 CivPro Exam

With updated answers:
Question 9.

P (a citizen of New York) sues D (a citizen of Delaware) in the federal district court for the District of Delaware for violation of federal securities law that occurred in New York. Federal securities law actions have exclusive federal subject matter jurisdiction. D fails to answer, and P receives a default judgment of $80,000. P then files a suit against D on the default judgment in state court in Alaska. In his complaint, P asks the Alaska court to attach some stock D owns in an Alaska corporation. That is D’s only connection with the state. Under Alaska law, the situs of all stock in an Alaska corporation is taken to be Alaska. D removes the action to federal court. Which of the following statements about the removed action is most accurate?


a. In the light of Shaffer v. Heitner, D should be able to get the action dismissed for lack of personal jurisdiction. In addition, D should be able to get the action dismissed for improper venue.

b. Had D not removed the action, then, in the light of Shaffer v. Heitner, he should have been able to get it dismissed for lack of personal jurisdiction. But D waived his right to dismiss the action for lack of personal jurisdiction by willingly removing the action to federal court.

c. D should not be able to get the removed action dismissed for lack of personal jurisdiction. Furthermore, D should not be able to get his action dismissed for improper venue.

d. D should not be able to get the removed action dismissed for lack of personal jurisdiction, because the personal jurisdictional scope of federal courts is limited by the Fifth, not the Fourteenth, Amendment. Furthermore, D should not be able to get his action dismissed for improper venue.

e. Had D not removed the action to federal court, the state court would have had to dismiss it anyway. P’s action has exclusive federal subject matter jurisdiction.

Answers

a. In the light of Shaffer v. Heitner, D should be able to get the action dismissed for lack of personal jurisdiction. In addition, D should be able to get the action dismissed for improper venue.

Wrong. First PJ. The most important thing to see is that Shaffer v. Heitner is irrelevant to this action (except in a minor way, which I will deal with below). Shaffer involved a quasi-in-rem action, where stock (which was considered by law to be in Delaware) was attached by a Delaware court to create personal jurisdiction for a cause of action unrelated to the property. Our question here would be a quasi-in-rem action like Shaffer if P had sued D in Alaska under federal securities laws, using the Alaska stock as the source of PJ. But P sued under federal securities law in Delaware (where there was in personam jurisdiction), got a judgment, and then brought a separate action on the judgment in Alaska. An action on a judgment is a state-law action to collect a debt, where the debt was created by an earlier judgment. In other words, P is suing D in Alaska to get the $80,000 (or its equivalent). So he must be attaching the Alaska stock because it will satisfy the debt. That means the Alaska property that is the source of PJ is related to the cause of action. The cause of action is to get that very property. So this is not like Shaffer at all. It is an action concerning property, where the source of PJ is the property.

Shaffer, you will remember, said that quasi-in-rem actions must be examined in the light of Int'l Shoe. This was a problem in the Shaffer case because the cause of action was unrelated to the property. But there is not the same problem in this question, since the cause of action concerns the very property that is the source of PJ. To be sure, there are still some worries about whether there is PJ, because there could be some concerns about whether the property really is located in Alaska. After all, it is only considered to be located there by law. Furthermore, this problem is somewhat related to Shaffer, because the similar problem of the stock being located in Delaware by law was likely a factor in the Shaffer court's conclusion that there was no PJ. But even if the Shaffer court had concluded that the stock clearly was in Delaware, there would still be the much larger issue of whether this contact with Delaware could create PJ under Int'l Shoe, given that the cause of action was unrelated to the stock. This second, far more important, problem in Shaffer is simply not an issue in our question. That there is no PJ in our question does not follow obviously from Shaffer. It is very questionable.

Now venue. D would not be able to get his action dismissed for improper venue. There is always venue in a district to which an action was removed.


b. Had D not removed the action, then, in the light of Shaffer v. Heitner, he should have been able to get it dismissed for lack of personal jurisdiction. But D waived his right to dismiss the action for lack of personal jurisdiction by willingly removing the action to federal court.

Wrong. A defendant's removal of an action to federal court does not mean that the defendant has waived the right to get the action dismissed for lack of PJ. (We discussed this in class.)


c. D should not be able to get the removed action dismissed for lack of personal jurisdiction. Furthermore, D should not be able to get his action dismissed for improper venue.

Correct. D should not be able to get the removed action dismissed for lack of PJ (see the answer to a above). Furthermore, D would not be able to get his action dismissed for improper venue. There is always venue in a district to which an action was removed.


d. D should not be able to get the removed action dismissed for lack of personal jurisdiction, because the personal jurisdictional scope of federal courts is limited by the Fifth, not the Fourteenth, Amendment. Furthermore, D should not be able to get his action dismissed for improper venue.

Wrong. It is true that, as a constitutional matter, Fifth Amendment due process is all that matters when determining PJ over D in federal court.

Furthermore, it is also true that the Fifth Amendment is clearly satisfied, because D has copious Int'l Shoe contacts with the United States. BUT FRCP 4(k) (with exceptions not relevant here) requires a federal court in Alaska to assert PJ over D only if a state court in Alaska would be able to assert PJ over D as well. So the Fourteenth Amendment is relevant.

It is true, however, that D would not be able to get his action dismissed for lack of venue. (On the venue issue, see my discussion of answer c.)


e. Had D not removed the action to federal court, the state court would have had to dismiss it anyway. P’s action has exclusive federal subject matter jurisdiction.

Wrong. It is true that P’s action under federal securities law in federal court in Delaware had exclusive federal subject matter jurisdiction. But P is not suing under federal securities law. P is suing to collect the federal judgment, and that is a state law action (we discussed this in class) that could be brought in state court.

 

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