A very interesting exchange between Seventh Circuit Judges Posner and Easterbrook in the majority, and Judge Evans in the dissent, about what courts should do about certain kinds of procedural errors by lawyers. Beyond the obvious schadenfreude appeal of such things, and the case’s utility as a reminder to lawyers to be careful, there’s an important question here about what courts should do in such situations; fortunately, both opinions are thoughtful and eminently readable.
POSNER, Circuit Judge [joined by EASTERBROOK, Circuit Judge]…. Before [reaching the merits], we remark the confusion
in the parties’ briefs concerning the elements of the diversity
jurisdiction. The jurisdictional statement in the appellants’
brief states that the federal district court’s jurisdiction was
based on diversity of citizenship “and the jurisdictional
amount of $75,000.” In fact diversity jurisdiction depends on
the jurisdictional amount’s exceeding $75,000, exclusive of
interest and costs. 28 U.S.C. § 1332(a).The jurisdictional
statement goes on to recite that the plaintiffs are citizens of
Wisconsin (a proper jurisdictional allegation since the
plaintiffs are natural persons) and that defendant Mazda “is
a foreign corporation incorporated under the laws of the
State of California.” A corporation, however, has two places
of citizenship: where it is incorporated, and where it has its
principal place of business. 28 U.S.C. § 1332(c)(1). If Mazda’s
principal place of business is in Wisconsin, diversity is
destroyed.To ensure that litigants in diversity cases attend carefully
to the dual citizenship of corporations, our Circuit Rule
28(a)(1) requires the jurisdictional statement in a diversity
case to specify both the state (or other jurisdiction) in which
a corporate party is incorporated and the state in which its
principal place of business is located. The appellants’
jurisdictional statement violates our rule but more remarkably
it does not so much as mention the second defendant,
the Tokio Marine & Fire Insurance Company.The appellees’ jurisdictional statement begins promisingly
by stating that the appellants’ jurisdictional statement “is
neither complete [n]or correct.” But neither, it turns out, is
the appellees’. It does not mention the amount in controversy,
erroneously alleged in the appellants’ statement; and
concerning citizenship it violates Rule 28(a)(1) by stating
that the appellees are “citizens of a different state” from the
appellants, without indicating what state they are citizens
of. It turns out that the insurance company is actually a
citizen of a foreign country, so that the relevant provision of
the diversity statute, unmentioned in either jurisdictional
statement, is 28 U.S.C. § 1332(a)(2).We asked the parties to submit supplemental jurisdictional
statements. The appellants’ supplemental statement
corrects the omission of Mazda’s principal place of
business (also California), but blunders with respect to the
insurance company by stating that it is “a corporation
organized under the laws of Japan with a United States branch
domiciled in the State of New York with its principal place of
business located at 230 Park Ave, New York, NY 10169”
(emphasis added). The location of a branch office
is irrelevant to diversity jurisdiction. But reference to
“domicile” and “principal place of business” naturally
raises the question, unaddressed in the statement, whether
this branch might be a corporation having its principal
place of business in New York but incorporated elsewhere,
such as Wisconsin.We might have expected the
blunder to be corrected by the major Chicago law firm
representing the appellees. No such luck. Its supplemental
jurisdictional statement repeats that the insurance
company “is a foreign corporation organized under the laws
of Japan with a U.S. Branch. The principal place of business
of the U.S. Branch is New York, New York.” The fact that
“Branch” is capitalized and its principal place of business
alleged suggests that it might be a corporation, but at
argument the appellees’ lawyer said no, it’s just a branch.
When asked by one of the judges why then it was mentioned
in the jurisdictional statement, the lawyer replied
inconsequently that “with a U.S. Branch” is Japanese
corporate lingo.The appellees’ supplemental jurisdictional statement
contains two further errors. It says that the amount in
controversy “allegedly” exceeds $75,000. Actually, as we
know, the amount in controversy in the appellants’ jurisdictional statement is $75,000, not $75,000 plus.In addition, the
use of the words “alleged” or “allegedly” in this connection
is erroneous. The amount in controversy in a diversity case
is the stakes that the plaintiff or defendant alleges, and
provided the allegation is not false to a “legal certainty” the
amount is taken as true for purposes of jurisdiction. E.g., Mt.
Healthy City School District Board of Education v. Doyle, 429
U.S. 274, 276-77 (1977). In other words, “When the complaint
includes a number, it controls unless [the plaintiff’s]
recovering that amount [in the litigation] would be legally
impossible.” Rising-Moore v. Red Roof Inns, Inc., 435 F.3d 813,
815-16 (7th Cir. 2006). The appellees’ use of “allegedly”
suggests an inclination to question whether the amount in
controversy exceeds the jurisdictional minimum, but they
do not pursue the point.We are satisfied that the parties’ errors in regard to the
amount in controversy are harmless, given the severity
of the injuries alleged. [Details omitted. -EV]But the lawyers have wasted our time as well as their own
and (depending on the fee arrangements) their clients’
money. We have been plagued by the carelessness of a
number of the lawyers practicing before the courts of this
circuit with regard to the required contents of jurisdictional statements in diversity cases. See, e.g., BondPro
Corp. v. Siemens Power Generation, Inc., No. 05-3077, 2006 WL
2972108, at *1 (7th Cir. Oct. 19, 2006) (per curiam), and cases
cited there; Hicklin Engineering, L.C. v. Bartell, 439 F.3d 346,
348 (7th Cir. 2006); Wild v. Subscription Plus, Inc., 292 F.3d
526, 528 (7th Cir. 2002). It is time, as we noted in BondPro,
that this malpractice stopped. We direct the parties to show
cause within 10 days why counsel should not be sanctioned
for violating Rule 28(a)(1) and mistaking the requirements
of diversity jurisdiction. We ask them to consider specifically
the appropriateness, as a sanction, of their being
compelled to attend a continuing legal education class in
federal jurisdiction. E.g., In re Maurice, 69 F.3d 830, 832, 834
(7th Cir. 1995); DiPaolo v. Moran, 407 F.3d 140, 144, 146 (3d
Cir. 2005); In re Dragoo, 186 F.3d 614, 615-16 (5th Cir. 1999).Are we being fusspots and nitpickers in trying (so far with
limited success) to enforce rules designed to ensure that
federal courts do not exceed the limits that the Constitution
and federal statutes impose on their jurisdiction? Does it
really matter if federal courts decide on the merits cases that
they are not actually authorized to decide?The sky will not
fall if federal courts occasionally stray outside the proper
bounds. But the fact that limits on subject-matter jurisdiction
are not waivable or forfeitable—that federal courts are
required to police their jurisdiction—imposes a duty of care
that we are not at liberty to shirk. And since we are not
investigative bodies, we need and must assure compliance
with procedures designed to compel parties to federal
litigation to assist us in keeping within bounds.Hence Rule
28 and hence the responsibility of lawyers who practice in
the federal courts, even if only occasionally, to familiarize
themselves with the principles of federal jurisdiction. It
would be delightful, but irresponsible in the extreme, for us
to ignore the limits on our jurisdiction, forget the rules
intended to prevent us from ignoring those limits, direct the
Clerk of the court to tear out the parties’ jurisdictional
statements before distributing the briefs to us, and jump
directly to the merits of any case that the parties would like
to litigate in federal court…. [Merits discussion omitted. -EV]EVANS, Circuit Judge, concurring. I join the court’s
opinion [as to the merits question]. But I decline to join
the court’s stinging criticism of the attorneys regarding their
less-than-perfect jurisdictional statements. Sure, the plaintiffs
should have said the amount in controversy exceeds$75,000, not that it is $75,000. And sure, both sides stumbled
on their declarations regarding the dual citizenship of the
corporate defendants. But, at best, these are low misdemeanors;
yet the court treats them like felonies. I would not
label these minor flaws as “blunders,” nor would I come
close to saying this is “malpractice” which must be stopped.
Also I would not issue an order to show cause, and
I certainly would not suggest that an appropriate sanction
might be to compel the lawyers’ attendance at “a
continuing legal education class on federal jurisdiction.”What happened in this case is not particularly unusual.
The plaintiffs, represented by what appears to be a
small law firm, filed this suit almost five years ago in
state court where jurisdictional requirements are easily
satisfied and rarely questioned. The defendants, represented
by a “national law firm with lawyers in 27 offices coast-to-coast”
(according to the firm’s Web site) removed the case
to federal court.That there is diversity jurisdiction has never
been questioned by anyone, including at least two district
court judges who issued written decisions as the case poked
along for four years through discovery and several in-court
proceedings. The plaintiffs then lose their case on summary
judgment and file an appeal raising the issue that cuts to the
very heart of their suit. Given this situation, when all eyes
are really on the guts of the case, I think we should be more
tolerant of the jurisdictional statement hiccups that have
occurred here.(Hide.)
On a completely unrelated note, let me remark the unusual use of the term “remark” in the first sentence quoted above. It’s quite legitimate, even to a prescriptivist, but I don’t recall ever having seen it.