Federal versus State Judicial Power: Subject Matter Jurisdiction

Louisville & Nashville Railroad v. Mottley 211 U.S. 149 (1908) pg. 179
• Mottley’s received lifetime pass from railroad, Congress passed bill outlawing them
○ Railroad refused to honor pass citing new legislation
• Mottley’s believed that:
○ Bill was never intended to void their valid contract
○ Honoring the contract would violate 5th Amendment (take away property)
• Court held that Circuit Court did not have jurisdiction
○ D’s defense included a constitutional question, but it was not raised in the
complaint
○ Because it wasn’t, the federal courts did not have jurisdiction
• Case remanded and dismissed

Redner v. Sanders 2000 WL 1161080 (S.D.N.Y. 2000) pg. 190

• P was resident of France but citizen of U.S.
○ Attempted to invoke 28 U.S.C. §1332 (a)(2) where federal courts have original
jurisdiction between citizens of a Sate and citizens of a foreign state
• Court held that while P was resident of France, he was still citizen of U.S.
○ He did not claim residence in another state, thus federal court did not have diversity
jurisdiction

Saadeh v. Farouki 107 F.3d 52 (D.C. Cir. 1997) pg. 197

Facts
• Farouki (D) defaulted on a loan he had received from Saadeh (P).
○ Saadeh filed a diversity action in federal district court to recover the unpaid funds.
○ When the suit was filed, Farouki was a citizen of Jordan but also had permanent
resident status and was a citizen of Maryland.
○ Saadeh was a citizen of Greece.
• The trial court entered judgment in favor of P and D appealed on the grounds that there
was no diversity of citizenship among the parties.
Issue
Does diversity of citizenship exist between an alien and an alien who has permanent resident
status in the US?
Holding and Rule
• No. Diversity of citizenship does not exist between an alien and an alien who has
permanent resident status in the US.
• The court noted that Congress amended the diversity statute in 1988; an alien admitted to
the United States for permanent residence shall be deemed a citizen of the State in which
such alien is domiciled.
○ The court held that despite the plain language of the amendment it appeared to
have been intended only to eliminate diversity in suits between a citizen and an
alien with permanent resident status living in the same state.
○ The court held that the amendment was not intended to create diversity jurisdiction
for suits between an alien and another alien with permanent resident status.

http://lawschool.mikeshecket.com/civpro/10-15-03.htm
Catepillar, Inc. v. Lewis 519 U.S. 61 (1996)
Facts:
• Lewis, a Kentucky resident, commenced this civil action in Kentucky state court after
sustaining personal injuries while operating a bulldozer.
○ Asserting state-law claims, Lewis named as defendants both the manufacturer of
the bulldozer--petitioner Caterpillar Inc., a Delaware corporation with its principal
place of business in Illinois--and the company that serviced the bulldozer--Whayne
Supply Company, a Kentucky corporation with its principal place of business in
Kentucky.
• Liberty Mutual, a MA corporation, intervened later as an additional Pl, asserting
subrogation claims against Whayne and Caterpillar.
○ Lewis entered into a settlement agreement w/ Whayne, which allowed Whayne to
be dismissed as a Df.
○ With 1 day to spare the statutory req. Caterpillar filed a notice of removal to Fed D.
CT in Kentucky, based on complete diversity after Whayne exited the case post-
settlement.
Issue:
• Whether a district court's error in failing to remand a case improperly removed is fatal to
the ensuing adjudication if federal jurisdictional requirements are met at the time
judgment is entered?
Procedure:
• Lewis objected to removal and moved to remand to state ct. (Liberty had not settled its
subrogation w/ Whanye yet).
○ D Ct denied that motion without addressing argument.
○ 3 yrs later Liberty and Whayne settled.
○ Jury trial followed, verdict for Caterpillar.
• Sixth Circuit vacated the judgment, concluding that, absent complete diversity at the time
of removal, the District Court lacked subject- matter jurisdiction.
• Court holds that 6th erred in resting its decision on the absence of subject matter
jurisdiction. Reversed and remanded.
Reasoning
• At the time of trial there was complete diversity and federal subject matter jurisdiction.
○ Caterpillar failed to meet the 1441 req that the case be fit for federal adjudication at
the time the removal petition is filed.
○ Lewis timely filed motion for remand and did all that was req to preserve his
objection to removal.
• No jurisdictional defect lingered through judgment in the District Court.
○ The procedural requirements for removal remain enforceable by the federal trial
court judges to whom those requirements are directly addressed.
○ The well advised Df will foresee the likely outcome of an unwarranted removal = a
swift and nonreviewable remand order attended by the displeasure of a district
court whose authority has been improperly invoked.