Essay Question from the 2010 CivPro Exam
Short Essay Question from the 2003 CivPro Exam

Two Multiple Choice Questions from the 2008 CivPro Exam

The following two multiple choice questions concern the case of P v. D1 & the D2 Corp. In this case, P (a domiciliary of California) is suing D1 (a domiciliary of South Dakota who works in North Dakota for the D2 Corp. as a low-level broker) and the D2 Corp. (a brokerage company incorporated in the state of California with its principal place of business in North Dakota). P’s suit was filed in the federal district court for District of Minnesota and is for federal securities fraud. P is asking for $100,000 alternatively from either D1 or the D2 Corp., for damages due to misrepresentations concerning securities that D1 made (on behalf of his employer) to P in California.

Question 1. Assume that the following actions are joined to P’s federal securities fraud actions against D1 and the D2 Corp.:

Action 1: A $50,000 California state law fraud action by P against D1 concerning the same misrepresentations that are at issue in the federal securities fraud actions.


Action 2: A North Dakota breach of contract action by D1 against the D2 Corp. concerning failure to pay $100,000 in back wages.


Action 3: An impleader by D1 against I, D1’s insurance company, on the grounds that I is contractually obligated under South Dakota law to compensate D1 for any securities fraud judgments against D1. I is incorporated in South Dakota with its principal place of business in South Dakota.


Action 4:  A $50,000 California state law battery action by D1 against P concerning a brawl that D1 and P got into in California several months before the misrepresentations at issue in the federal securities fraud actions.
  
Which of the following most accurately describes the actions that should be dismissed for lack of subject jurisdiction?

a. Actions 1, 3, and 4.
b. Actions 1 and 3.
c. Action 4.
d. Action 2.
e. None of the actions.

Question 2. Which of the following is the least accurate?

a. Setting aside any problems of personal jurisdiction, subject matter jurisdiction or venue, D1 may join Action 2 (described in Question 1 above) against the D2 Corp., but if D1 had failed to do so, she could have brought it subsequently in a separate suit.
b. Setting aside any problems of personal jurisdiction, subject matter jurisdiction or venue, D1 may join Action 3 (described in Question 1 above) against I, but if D1 had failed to do so, she could have brought it subsequently in a separate suit.
c. Setting aside any problems of personal jurisdiction, subject matter jurisdiction or venue, D1 may join Action 4 (described in Question 1 above) against P, but if D1 had failed to do so, she could have brought it subsequently in a separate suit.
d. There is no venue for P’s suit against D1 and the D2 Corp. in the federal district court for the District of Minnesota.
e. P could not get Action 4 (described in Question 1 above) dismissed for lack of personal jurisdiction.

ANSWER

Question 1.

a. Actions 1, 3, and 4.

Wrong. Action 1 has supplemental jurisdiction, because it is part of the same constitutional case or controversy as P’s federal question action against D1. That is all that is needed under 28 USC 1367.

Action 3 has supplemental jurisdiction, for the same reason as action 1.

But this is right that action 4 does not have federal SMJ. First of all, it does not have supplemental jurisdiction, because it is not part of the same constitutional case or controversy as P’s federal question action against D1. Furthermore, it does not have its own source of subject matter jurisdiction. Although D1 and P are diverse, the jurisdictional minimum is likely not met. (It is true that a person asking for $50,000 could get more than $75,000 – but the fact that he is asking for $50,000 is a strong reason to think that the jurisdictional minimum is not met.) Keep in mind that the amount in controversy of D1’s counterclaim against P cannot be aggregated with the amount in controversy of P’s action against D1 to get above the jurisdictional minimum. (We discussed this in class.)

b. Actions 1 and 3.

Wrong. Actions 1 and 3 have supplemental jurisdiction for the reasons mentioned at a.

c. Action 4.

Correct. Action 4 does not have federal SMJ for the reasons mentioned at a.

d. Action 2.

Wrong. Action 2 has federal SMJ. Although it is not part of the same constitutional case or controversy as P’s federal question actions against D1 and the D2 Corp., it has its own source of federal SMJ. D1 and the D2 Corp. are diverse and the jurisdictional minimum is met.

e. None of the actions.

Wrong. Action 4 has no federal SMJ for the reasons mentioned at a.

Question 2.

a. Setting aside any problems of personal jurisdiction, subject matter jurisdiction or venue, D1 may join Action 2 (described in Question 1 above) against the D2 Corp., but if D1 had failed to do so, she could have brought it subsequently in a separate suit.

Correct. This is the least accurate. Although D1’s action against the D2 Corp. has federal SMJ (for the reasons discussed in the previous question), it is not properly joined, because it is not allowed under FRCP 13(g). In particular, it does not arise out of the same transaction or occurrence as P’s actions against D1 and the D2 Corp.

b. Setting aside any problems of personal jurisdiction, subject matter jurisdiction or venue, D1 may join Action 3 (described in Question 1 above) against I, but if D1 had failed to do so, she could have brought it subsequently in a separate suit.

Wrong. This is not the least accurate. Indeed it is completely accurate. Rule 14(a) impleaders are discretionary, not mandatory.

c. Setting aside any problems of personal jurisdiction, subject matter jurisdiction or venue, D1 may join Action 4 (described in Question 1 above) against P, but if D1 had failed to do so, she could have brought it subsequently in a separate suit.

Wrong. This is not the least accurate. Indeed it is completely accurate. D1’s counterclaim against P is permissive (under 13(b)). It may, but need not, be brought.

d. There is no venue for P’s suit against D1 and the D2 Corp. in the federal district court for the District of Minnesota.

Wrong. This is not the least accurate. Indeed it is completely accurate. There is indeed no venue for the actions. No substantial part of the events or omissions giving rise to the claims arose in the D. Minn. Furthermore, no defendants reside in the D. Minn. Finally, the “fallback” provision of 1391(b)(3) cannot apply, because there is another district where the action may be brought, namely the district in California where the misrepresentations were made.

e. P could not get Action 4 (described in Question 1 above) dismissed for lack of personal jurisdiction.

Wrong. This is not the least accurate. In fact, the majority view is that permissive counterclaims by a defendant against a plaintiff cannot be dismissed by the plaintiff for lack of PJ, even if there would be no PJ if the permissive counterclaim were brought as a separate suit. It is true that the minority view that dismissal would be allowed. But this is still not the least accurate, because a is thoroughly inaccurate.

 

Comments

David N.

Professor,
Why isn't an insurance company a necessary party?
Then, is the insurance company subject to issue preclusion in the second suit because they would have been in privity with P in the first suit?

Michael Green

I've posted an answer in a new post.

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