Civil Procedure Class Notes 10/15/03


We spent yesterday with Mas.  We learned that, at least in certain circumstances, the statute (28 U.S.C. § 1332) provides for diversity jurisdiction, while in others, it provides some roadblocks.


The case of Jean-Paul v. Peeper was simple.  But if we add Judy, and she comes from Louisiana like Peeper, then the Rule of Complete Diversity would be violated.


Note that this rule is not constitutional.  It is purely statutory and thus can be adjusted by other statutes.  For example, the Federal Interpleader Act requires only minimum diversity of the parties in order for federal courts to have jurisdiction.




Dude from Mexico v. Guy from Japan – Let’s say the amount-in-controversy requirement is satisfied.  Let’s take a look at § 1332 and see if one foreigner can sue another foreigner in United States federal court.  There is no diversity jurisdiction for this lawsuit, because it doesn’t fit into any of the four “prongs” enumerated in sub-section (a).


Guy from Ohio v. Dudes from Japan and Mexico – Under what section could the federal courts have diversity jurisdiction?  It’s not the first prong, § 1332(a)(1), because we don’t have “citizens of different States”.  It is the second prong, § 1332(a)(2), because we have a “citizen of a State” and some foreign dudes.


Dudes from Ohio and from Mexico v. Guys from New York and Japan – This would work under § 1332(a)(3).


Dudes from Ohio and from Mexico v. Guy from Japan – Is there a place for this situation in the statute?  Do we have “different states” involved here?  Is there a policy consideration here?  We want to make sure that two foreign defendants can’t storm into our court just by joining a single solitary party in our country.  But if it falls anywhere, it must come under § 1332(a)(2).  So what do we do here?  It turns out that the Mexico dude and the Japan guy are non-diverse parties.  In a sense, we treat “everybody else” as one big foreign state.  Aliens is aliens is aliens.  The exception is the previous case, which falls under § 1332(a)(3).  That sub-section explicitly allows all the foreign dudes you want on both sides so far as you have citizens from different states on each side as well.


Saadeh v. Farouki


This case seems to have more than its fair share of complexities.  It involves not just § 1332, but interpretation of that statute and splits between Circuits in such interpretation.


What’s happening in this case?  Farouki’s a businessman who borrowed money from Saadeh and defaulted on his loan.  When the suit was filed, Saadeh was Greek and Farouki was a permanent resident of the United States residing in Maryland.  Farouki is still a Jordanian citizen, though.  Farouki later becomes a United States citizen, but the court will say that it doesn’t matter.


Saadeh sues Farouki in federal district court in D.C.  The theory is that the federal courts will have diversity jurisdiction.  However, look back at the hypothetical we did earlier.  Isn’t it true that we don’t allow an alien to sue another alien in our federal courts?  What’s different here?  Farouki is a permanent resident.


Saadeh relies upon the plain meaning of the last sentence of § 1332(a), which says:


“For purposes of this section…an alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which the alien is domiciled.”


So we end up with a citizen of Greece versus (we think) a citizen of Maryland.  Isn’t this what the statute says?


Farouki, however, argues that there is no jurisdiction.  The district court denied his motion, and Saadeh won on the merits.  Farouki appeals on the merits of the case.


The court itself (sua sponte) raises the jurisdictional question and asked for briefs on the issue of subject matter jurisdiction.  The court ultimately concludes that there is no subject matter jurisdiction based on diversity.  There is something fishy about that last sentence: it seemed to apply, but now something is amiss.


If Saadeh’s case is dismissed, what can he do?  He could refile in federal court because Farouki is now a United States citizen!  This is why Farouki doesn’t bother to argue jurisdiction.  If he wins, he loses!


What does the court examine in rejecting the plain language of § 1332(a)?  What is it about this section that troubles the D.C. Circuit?  If we just sort of read it, it seems pretty clear.  The D.C. Circuit is going to tell us that it doesn’t mean what we think it means.


Are there other doctrines that the D.C. Circuit is concerned about?  The court claims that there is a “formidable constitutional difficulty”.  What is it?  The court is concerned that the Constitution does not allow suits between two foreign litigants.


What is illustrated in this case is a clear, modern example of the textualist v. pragmatist debate.  Textualists say you should use the plain language of the statute and only use what the statute says.  Pragmatists say that you should weigh the result of the statute as well as the legislative history and intent.


The court looks at the intent of the sentence in question and finds that the purpose was to “pour people out of court”.  Therefore, the court says that we should only apply the plain language of the sentence if it will work to limit the scope of diversity jurisdiction.


Guy from Ohio v. French citizen who is a permanent resident alien of the United States residing in Ohio – Federal courts won’t have diversity jurisdiction here!  This is what that little sentence was really for!


What Judge Rogers does is sort of add an interpretive caveat: the sentence applies exactly when it will limit diversity jurisdiction.


Different circuits have taken different positions on the interpretation of this statute.  The Supreme Court doesn’t care much, because the situation of Saadeh doesn’t happen much.


“The joy of getting cases reversed is that you get another bite at the apple.”


Maybe it wasn’t as complicated as we initially thought it was!


At the end of the case, Yeazell gives us a note on amount in controversy.  All the stuff in § 1332 is predicated by the requirement that the amount in controversy must exceed $75,000.  This amount has changed over time to (somewhat) keep pace with inflation.  It started out at $500 and was most recently raised from $50,000 to $75,000 in 1997.  What is the purpose of increasing the amount in controversy?  This will limit the federal caseload.


The court is pretty liberal towards plaintiffs in checking their pleading for a sufficient amount in controversy.


There are two issues here:


1.     Injunctions

2.     Aggregation


Tomorrow: a bit more on amount in controversy, followed by supplemental jurisdiction and Gibbs.


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