Federalism

• Pages: 139-170
• Author: Samuel Issacharoff

139

Chapter 6

FEDERALISM

As we have seen, the concept of personal jurisdiction is

historically drawn from the idea of sovereignty. At English common

law, courts we re a proj ection of the power of the crown and derived

their authority from the enforceability of their decrees through the

territorial reach of the sovereign’s might. Whatever the

complications in projecting the narrow vision of territorial

sovereignty onto a mobile population, corporate actors, and a robust

national and international market, at least the idea of a state as a

defined sovereign entity bore some relation to its common law

antecedents.

Not so when we move to a distinct v ariant of jurisdiction called

subject matter jurisdiction. Here we do not refer to the power of a

court to adjudicate a dispute and impose its decre e on a party or on

a contested piece of property. That is the domain of personal

jurisdiction in its in personam, in rem, or quasi in rem forms. With

subject matter jurisdiction, our focus shifts from the power to enforce

decrees concerning particular parties or property to the question of

whether a particular court has the authority to pass on a p articular

issue of law.

The que stion o f sub ject matter juri sdiction is an outgrowth of

our federal system. One of the significant innov ations of the

American Constitution was the expansive use of checks and balances

across the many institutions of government—what Madison referred

to as the checking function by which “ambition must be mad e to

counteract ambition” in efforts at aggrandizement of power.

1

Perhaps

the mo st distinct innovation was the idea of shared power or dual

sovereignty between the federal and state governments. Whereas the

political thought of the day held, per Montesquieu, that power must

ultimately reside in one sovereign, the Framers set upon creating a

system of competing power divided between the states and the

federal government.

Competing claims of sov ereignty between state and federal

courts emerge not with personal jurisdiction, where the two court

systems generally share the reach of the authority of the state in

which they sit, but with the types of cases that each court system

may entertain. Even under the American system of dual sovereignty,

there need not have been rivalrous sources of judicial power. The

original constitutional design entertained the possibility, but not the

1

THE FEDERALIST NO. 51, at 322 (James Madison) (Jacob E. Cooke ed., 1961).

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necessity, of a fe deral co urt system. Ar ticle III o f t he Co nstitution

vests the judicial power of the federal government in one Supreme

Court and “in such inferior Courts as the Congress may from time to

time ordain and establish.” The key actors in the original system of

dual sovereignty were the state courts, who would be called upon not

only to enforce the laws of their home states, but, in the absence of

any system of lower federal courts, would be obligated to enforce

federal law as well. This is the import of the Supremacy Clause

2

of

the Constitution, which provides:

This Constitution, and the Laws of the United States which

shall be made in Pursuance thereof; and all Treaties made,

or which shall be made, under the Authority of the United

States, shall be the supreme Law of the Land; and the

Judges in every State shall be bound thereby, any Thing in

the Constitution or Laws of any State to the Contrary

notwithstanding.

The attempt to administer dual sovereignty through a single

court system was abandoned before it began. The first Congress

passed the Judiciary Act of 1789, which established a system of

federal district and appellate courts. The result was a dual court

system, each part with ultimate right of appeal to the Supreme

Court, and a corresponding need to decide which courts would be

entrusted with which matters. The question of subject matter

jurisdiction is a by-product of this division between state and federal

court systems and of the increasingly overlapping subje ct matters of

state and federal law. In short, the issues of subject matter

jurisdiction are an unintended consequence of the uneasy division of

juridical authority between the states and the federal government.

Even with the es tablishment of a distinct federal court system,

however, the original constitutional design still has bearing on the

relative roles of federal and state courts. The Su premacy Clause

presumes that state courts will be established to hear state law

claims, and that they will entertain claims arising under the

Constitution, treaties, and laws of the United States as well. Because

of the presumption that state courts are able to hear all manner of

legal claims, they are referred to as courts of general subject matter

jurisdiction. The concept of general subject matter jurisdiction refers

to the range of cases that a state court may hear, and should not be

confused with the general jurisdiction of a home state for in personam

personal jurisdiction purp oses. In addition, many states limit the

subject matter jurisdiction of courts by, for example, allowing claims

below a certain dollar amount to be asserted in small claims courts.

There are also some federal statutes—such as bankruptcy, copyright,

2

U.S. CONST. art. VI, § 1, cl. 2.

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FEDERALISM

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and pen sion regulation —that confe r exclusive subject matter

jurisdiction in certain are as on the federal court s. Nonetheless,

broadly speaking, state courts are presume d capable of hearing all

manner of state and federal claims.

By contrast, federal courts are the products of the specific acts

of Congress in creating them and vesting them with the power to

hear specified claims. Federal courts are therefore deemed to be

courts of limited subject matter jurisdiction. Any complaint filed in

federal court must begin with the claimed statutory basis by which

Congress conferred the subject matter jurisdiction of the court.

Similarly, among the Rule 12(b) defenses, the first an d most

privileged defense for actions in federal court is the 12(b)(1) assertion

that the district co urt is without subject matter jurisdiction—a

defense that, when “suggested” by a party or in any other way

presented to the court, may result in the dismissal of a case, even on

appeal. It is the only one of the Rule 12(b) defenses that is ne ver

waived.

Under Article III of the Constitution, federal judicial power

extends to all cases that arise under the Constitution, the laws, and

the treaties of the United States. This is known as federal que stion

subject matter jurisdiction. Also under Article III, the federal judicial

power reaches controversies between citizens of different states. This

is known as diversity subject matter jurisdiction. Here again it must

be emphasized that Article III of the Constitution only authorizes

that the judicial pow er reach both cases arising under federal law

and cases involving diverse parties. The Constitution does not

mandate that lowe r federal courts actually exist or that, if they are

brought into being, they be vested with the full range of

constitutional power. That remains the decision of the Congress.

At the time of the passage of the Judiciary Act of 1789, federal

courts were considered necessary to overcome local prejudice in cases

involving out-of-state de fendants. Congress feared that hometown

sentiment could sway state judges to favor parties to whom they were

politically accountable. Thus, federal courts were initially created to

hear cases arising under the Constitution’s diversity jurisdiction.

Until the period following the Civil War, cases arising directly under

federal law were the province of the state courts, with ultimate

appellate review by the U.S. Supreme Court. As we shall see, the

areas of federal question jurisdiction, now codified as 28 U.S.C.

§ 1331, and diversity jurisdictio n, in turn codified as 28 U.S.C.

§ 1332, remain the primary g rants of authority to federal courts to

adjudicate disputes.

The original structure of the court system reflected the relative

importance of state authority in the early American republic, and the