System of U.S. Civil Procedure. Cases and Materials - Selection of Classic Cases for Reading in the U.S.

Author: Li Xiang
Publisher:
Publish Date: 2006-06-01
Features: Section II on the Jurisdiction of Subject Matter—Is Alien Jurisdiction Innately Good or Evil? In China, this issue has remained a debate at the verbal level, but the Americans, lacking the depth of our five-thousand-year culture, simply assume that everyone is inherently biased toward their own state. Therefore, when a state's court hears a case, there is always a possibility of favoring residents of that state while discriminating against residents of other states. In such situations, it is necessary to give parties the option to transfer the case to a federal court for trial. This is how the system of alien jurisdiction was established.
Alien jurisdiction, as its name suggests, generally refers to the judicial power of federal courts in the United States being extended to disputes between residents of different states, as mentioned in Article III, Section 2 of the U.S. Constitution. However, Congress further refined this principle in 28 U.S.C. §1332, establishing two main conditions for cases to satisfy alien jurisdiction: ① complete diversity among all parties involved; ② the amount in controversy must exceed $75,000. Let us now examine how to meet these two conditions in detail.
### I. The Issue of Complete Diversity Among Parties
Question 1: How can complete diversity be established?
Complete diversity means that no plaintiff or defendant in the case can be a resident of the same state. Even if only one plaintiff and one defendant share the same state of residence, the diversity of parties in the case is already compromised. However, multiple plaintiffs or defendants can be from the same state.
For example, in a case where one plaintiff sues one defendant, if the plaintiff is a resident of Washington State and the defendant is a resident of New York State, they are unquestionably completely diverse. In a case with two plaintiffs and two defendants, if plaintiff A and B are residents of Washington State and defendant C and D are residents of New York State, they are also considered completely diverse. In a case with three plaintiffs and three defendants, if plaintiff A and B are residents of Washington State, but plaintiff C is a resident of Utah, and defendant D and E are residents of New York State, but defendant F is a resident of Utah, there is no complete diversity because plaintiff C and defendant F are residents of the same state.
In real-life cases, it is not uncommon for dozens of plaintiffs to sue dozens of defendants, but the method for determining diversity remains the same regardless of the number of parties.
Question 2: How can one's state citizenship be determined?
First, it must be clarified that state citizenship here does not require the specificity of a particular province or city, as is often required when filling out forms in China. It only needs to be precise at the state level.
Second, it is important to note that not only natural persons but also corporate or association entities have their own state citizenship. The term "persons" here includes legally created entities.
Lastly, it should be emphasized that the discussion on state citizenship here is solely for the purpose of determining federal alien jurisdiction, and I cannot guarantee whether the same method is used to determine state citizenship in other legal disputes.
Chinese students should be familiar with the term "state citizenship," which refers to a person's place of residence where they intend to settle permanently. We typically use two standards to assess state citizenship: ① the state is the person's domicile, not just their residence. For example, if a person settles in Washington State and is temporarily assigned to work in a branch in New York for a year, their residence and state citizenship remain Washington State during that time. ② their own intention. For instance, if a person owns a house in both California and Nevada and spends almost equal time in both places throughout the year, their state citizenship is determined by their subjective intention.
Of course, during actual litigation, courts can still infer a person's intentions based on their behavior and actions. Just as a person can move freely, their state citizenship can also change or be self-chosen.
However, this raises a new question—when should state citizenship be determined? The court's answer is that it should be based on the person's state citizenship at the time the action is commenced. For example, if A's state citizenship was California before 2004, but due to work, they moved to Texas in January 2004 and re-established Texas as their state citizenship, if A becomes involved in a lawsuit in May 2004, their state citizenship at that time should be Texas, even though they have only lived there for a short time.
Another example: plaintiff A is from California and is suing defendant B, who is from Texas. After six months of litigation, plaintiff A moves to Texas and changes their state citizenship to Texas. At this point, the diversity between plaintiff A and defendant B still exists.
It is also worth noting that a person's state citizenship can even change specifically to meet the requirements of alien jurisdiction. For example, someone can deliberately create diversity by moving to a neighboring state and settling there, but such a change must occur before the lawsuit is commenced.
The above discussion pertains to the state citizenship of natural persons. But how is the state citizenship of a corporation determined? Congress addressed this specifically in 28 U.S.C. §1332(c): "A corporation shall be deemed the resident of the state in which it is incorporated." However, courts interpret this provision more strictly, generally meaning that the opposing party in a lawsuit cannot be a resident of the state where the corporation was incorporated or the state where its principal place of business is located.
For example, many companies in the U.S. are registered in Nevada, but their principal place of business is in California. In such cases, if the company wants to bring a lawsuit in federal court based on alien jurisdiction, the defendant cannot be a resident of either California or Nevada.
Additionally, different courts have different standards for determining a corporation's principal place of business. Some courts consider the administrative headquarters as the principal place of business, while others believe the place where the company primarily conducts business is its principal place of business.
We must also recognize that, in addition to corporations, there are many other non-corporate entities, such as associations, unions, and sports leagues, whose methods for determining state citizenship are entirely different from those of corporations.
Take a typical fishing enthusiast association, for example. The state citizenship of the association is the state citizenship of all its members. If all the members of the association are concentrated in California and Florida, the association has state citizenship in both California and Florida. If the association is national and its members are spread across all states in the U.S., the association has state citizenship in all states.
Question 3: How is the state citizenship of a foreigner calculated?
First, we must consider two special cases:
One is a foreigner with permanent resident status in the U.S. 28 U.S.C. §1332(a) treats them as residents of the state where they reside. For example, if a Chinese person immigrates to the U.S. and settles in California, they are considered to have California state citizenship when determining alien jurisdiction.
The other is a U.S. citizen residing abroad. At this point, they are no longer a resident of any state and cannot bring an alien jurisdiction lawsuit. For example, if a U.S. citizen marries a British citizen and settles in the U.K. after the marriage, and later returns to the U.S. for a short vacation and becomes involved in a lawsuit, they cannot sue others in federal court based on alien jurisdiction or be sued in federal court, as they do not have state citizenship in any U.S. state.
Now, let's consider a case where a U.S. citizen and a foreigner are suing each other. In this case, alien jurisdiction always exists, and we also refer to this as alienage jurisdiction.
What if two foreigners sue each other in the U.S.? If there are no other factors that could trigger federal jurisdiction, they would likely have to go to state court, as there can be no diversity between two foreigners.
Let's make the scenario more complex. Suppose a French person and a California-state-citizen U.S. citizen are plaintiffs, while another French person and a Texas-state-citizen U.S. citizen are defendants. Are they completely diverse? The answer is yes, but the reason is that 28 U.S.C. §1332(a)(3) simply states this.
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