Chapter 3 Picking the Right Place Venue Selection and Jurisdictional Considerations

• Library: From the Trenches III: Pretrial Strategies for Success (ABA) (2018 Ed.)

Chapter 3 Picking the Right Place Venue Selection and Jurisdictional ConsiderationsTom Waskom

Before bringing an action, a plaintiff must decide two questions: where can I file, and where do I want to file? A defendant, having been sued, faces a similar set of questions: can I move this case to a different forum and, if so, where would I like to litigate? In many ways, the plaintiff's and defendant's considerations regarding forum are mirror images of one another. This chapter addresses where you can litigate your case, where you want to litigate your case, and what you can do to get your case there.

The Rules Prescribing Where You Can Litigate

The most basic questions in picking a forum are these: do I want to be in state or federal court, and which state or district will be most favorable to my claims or defenses? But, it will be the rare case in which a party has every state and every district from which to choose. The options will be limited by the threshold issues familiar to every litigator: personal jurisdiction, subject matter jurisdiction, standing, and venue.

Personal Jurisdiction

In recent years, the scope of personal jurisdiction has been tightening, limiting a plaintiff's choices in selecting a forum. That is true with respect to both specific jurisdiction and general jurisdiction.

A state can exercise specific jurisdiction over an out-of-state entity only with respect to a claim that arises from or relates to the defendant's contacts with the forum.¹Bristol-Myers stands for the proposition that to invoke specific jurisdiction, a court must find that the plaintiff's claims arise from the defendant's contacts with the forum state: "[f]or specific jurisdiction, a defendant's general connections with the forum are not enough."² The 678 Bristol-Myers plaintiffs included 86 California residents and 592 residents of other states. None of the nonresident plaintiffs claimed that they had been injured in California; rather, they claimed that specific personal jurisdiction existed by virtue of BMS's extensive contacts with California, including its nationwide marketing scheme for Plavix.³

The California Supreme Court had held that it could exercise specific jurisdiction over the nonresident plaintiffs' claims, even though they did not claim that they had been injured there, because their claims were substantially similar (if not identical) to those of the California residents who had also brought suit against BMS.⁴ The Supreme Court reversed, finding that "[t]he . . . plaintiffs [were] not California residents and do not claim to have suffered harm in that State. In addition . . . all the conduct giving rise to the nonresidents' claims occurred elsewhere."⁵ Because the case involved nonresident plaintiffs asserting claims against nonresident defendants based on conduct that allegedly occurred entirely elsewhere, the Court held that "[it] follow[ed] that the California courts cannot claim specific jurisdiction."⁶

The Supreme Court has similarly restricted general jurisdiction in recent terms. To be subject to general jurisdiction, a defendant's contacts with the forum must be "so 'continuous and systematic' as to render [it] essentially at home" there.⁷ In most instances, a company is "essentially at home" in the state where it is incorporated and the state where it operates its principal place of business.⁸ Although it is possible that a "corporation's operations in a forum other than its formal place of incorporation or principal place of business may be so substantial and of such a nature as to render the corporation at home in that State," the Supreme Court has noted that such a case would be "exceptional."⁹

Subject Matter Jurisdiction

Subject matter jurisdiction is an issue largely specific to federal courts. Most state courts have plenary jurisdiction, setting aside issues like jurisdictional minimums.¹⁰ Federal courts, on the other hand, only have that subject matter jurisdiction that Congress grants.

The primary bases for subject matter jurisdiction are 28 U.S.C. § 1331 (federal question) and § 1332 (diversity). Section 1331 provides federal district courts "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." Under the well-pleaded complaint rule, the federal question must arise from the plaintiff's complaint—not an anticipated defense.¹¹

Section 1332 creates two forms of diversity jurisdiction—one long-standing, one a creature of the Class Action Fairness Act of 2005 (CAFA). The former creates jurisdiction over actions in which there is complete diversity of citizenship among the parties (i.e., no plaintiff and defendant are citizens of the same state) and the amount in controversy exceeds $75,000.¹² The latter creates jurisdiction over class actions or certain "mass actions" in which there is minimal diversity (i.e., at least one plaintiff and one defendant are citizens of different states) and the amount in controversy exceeds $5 million.¹³

Title 28 also provides a hodgepodge of other forms of subject matter jurisdiction—for instance, admiralty (§ 1333); patents, copyrights, and trademarks (§ 1338); and civil rights (§ 1343).

Standing

Closely related to subject matter jurisdiction is the concept of standing. Only those plaintiffs with Article III standing may bring an action in federal court. To establish standing, a plaintiff must show it has suffered a concrete and particularized injury that is either actual or imminent, that the injury is fairly traceable to the defendant, and that a favorable decision will likely redress that injury.¹⁴

Recent Supreme Court precedent on standing has narrowed plaintiffs' forum selections (or, at least offered defendants new arguments to challenge that selection). As with personal jurisdiction, the Supreme Court recently narrowed the scope of standing.¹⁵ In Spokeo, Inc. v. Robins,¹⁶ the Supreme Court rejected the proposition that a statutory violation, without more, is sufficient to confer Article III standing so long as the plaintiff alleges that his statutory rights were violated, thus making his or her interest in the suit individualized and not collective.¹⁷ Even where the alleged harm is particularized to the individual plaintiff, the harm still must be concrete.

The Court explained that Article III is not "automatically satisfie[d] . . . whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right."¹⁸ While Congress plays an important role in identifying "intangible" harms that should be actionable, the harm identified must be a concrete injury in fact. Thus, a plaintiff "could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III."¹⁹ "[D]eprivation of a procedural right without some concrete interest that is affected by the deprivation . . . is insufficient to create Article III standing."²⁰

In contrast, many states have virtually no standing requirement. For instance, the California Supreme Court has noted that while "Article III of the federal Constitution imposes a 'case-or-controversy' limitation on federal jurisdiction . . . [t]here is no similar requirement in our state Constitution."²¹ To sue in California, a plaintiff need only be a real party in interest—there is no "injury-in-fact" requirement.²²

Similarly, in Massachusetts, a plaintiff need not have suffered a concrete injury to recover statutory damages under some consumer protection statutes. For instance, to recover under Massachusetts General Law Chapter 93A, which proscribes deceptive trade practices, a plaintiff need not actually incur a loss—"if he or she is ready, willing, and able to purchase the product or service at a price consistent with the relevant statute," that is typically injury enough.²³ Chapter 93 a entitles plaintiffs to recover statutory damages even in the absence of proof of actual damages (in addition to equitable relief, attorney's fees, and other remedies).²⁴

Spokeo raises the specter of a new form of strategic pleading to avoid federal jurisdiction in consumer class actions in a way that the data breach cases do not. Plaintiffs now have a clear roadmap for avoiding CAFA removal: find a named plaintiff who has not suffered concrete harm, but who can state a claim under state law. The resulting putative class action is non-removable even where all CAFA requirements are satisfied—and arguably, even if absent class members have concrete injuries and would themselves have Article III standing.

Moreover, Spokeo might not merely roll back CAFA jurisdiction over class actions seeking recovery under state consumer protection statutes. There is a real possibility that it could limit federal question jurisdiction in unintended ways. Spokeo itself, after all, addressed FCRA violations. Robins likely could have filed suit in California state court seeking recovery for the same statutory violation. Post-Spokeo, a defendant could not remove such a case, even on federal question grounds. The same is true for other federal statutes for which Congress has created concurrent federal and state jurisdiction, like the Truth in Lending Act or the Telephone Consumer Protection Act. After Spokeo, if a plaintiff can allege only a technical violation of these statutes without concrete injury, state courts will essentially have exclusive jurisdiction over a class of federal actions.

So, for instance, a plaintiff could file a putative class action in California state court seeking recovery under the Song-Beverly Credit Card Act,²⁵ alleging that a store wrongfully asked for his or her zip code during a credit card transaction. Without more, is there a concrete injury? Maybe not. After all, it's a fact pattern closely parallel to Judge Alito's example in Spokeo of what would not suffice as a concrete injury for Article III purposes: zip code missteps. But it is also a fact pattern in...