Hertz, Appellate Review, and Sneaky Tricks

You will be forgiven if you did not pay attention to the Supreme Court’s decision in Hertz Corp v. Friend last year — indeed unless you are a Civ Pro junkie, paying attention might be the less foregivable act.  The case resolved a piece of perennial low-hanging fruit on Civ Pro exams as to what is the test under diversity subject matter jurisdiction for the citizenship of a corporation, which turns on where it has its principal place of business. The Court resolved that the “Nerve Center” is the test, ending a circuit split where the “corporate activities/operating assets” and “hybrid” tests were also contenders.

What I am more curious about, though, is whether after the decision any attorneys used the following sneaky trick : If they had lost the case in district court, and diversity jurisdiction was proper on one of the other tests that governed in the Circuit pre-Hertz, but not the nerve center test, did they on appeal ask the Circuit court to vacate the decision for lack of subject matter jurisdiction? If not, were Circuit courts making independent subject matter jurisdiction assessments in light of Hertz and dismissing cases with district court decisions in these circumstances? After all, as that old 1804 chestnut Capron v. Van Noorden, 6 U.S. (2 Cranch) 126 (the case that Arthur Miller, who it appears still retains a larger than life grip on his students’ imaginations now that he is at NYU, terrorized us with on Day 1 one of Civ Pro) suggests, Subject Matter Jurisdiction objections can be raised at any time, and the Court has an independent obligation to determine if it has jurisdiction over the case.

Did these post-Hertz dismissals actually materialize? I don’t see why they shouldn’t have.  After all the court did not suggest it was making a new rule for subject matter jurisdiction (it claims this was always the right reading of the statute), nor did it suggest the rule was non-retroactive. I have not seen any discussion of such dismissals, but that just may mean they are off the law professoriate radar, or maybe I am missing something preventing litigators or courts from behaving in the way I suggested? I am curious if others have seen anything like this or have thoughts, I thought this might be a nice way to teach the otherwise somewhat rote rules of diversity jurisdiction to my first-year Civ Pro class this year….

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5 Responses

  1. TJ says:

    I have no insight into the empirical question, but why is the trick “sneaky”? I would have thought that it is the straightforward consequence of the retroactivity of Supreme Court decisions. Moreover, both attorneys and appeals courts are duty-bound to raise the issue of a defect in SMJ (supposedly, even the winning attorney is supposed to disclose this, though none do), so it is hardly fair to deride attorneys for doing so.

  2. Glenn Cohen says:

    Thanks TJ. I should have been clearer in my terminology. As my Civ Pro students well know, “sneaky” is a high compliment from me when it comes to litigating….something like the adjective “resourceful” that precedes Odysseus’ name in the Iliad. I am a firm believer that as long as it does not cross-over into the unethical or end up hurting their clients’ interest (for example, by the judge losing trust in the advocate), advocates should aspire to “sneakiness.”

  3. Howard Wasserman says:

    An interesting related question is whether a losing party might use Hertz to *reopen* an already-final judgment under FRCP 60(b)(4) on the ground that the judgment is void because the court lacked SMJ. This seems weaker than the basic question Glenn asks (absence of jurisdiction alone probably does not render the judgment void), but it reflects an even “sneakier” move.

  4. Glenn Cohen says:

    Thanks Howard. I had wondered about the 60(b)(4) route too, and also about whether there would be attempts at relitigation in state court with claim preclusion being fended off with an argument that the original federal court lacked Subject Matter Jurisdiction? I think there might also be interesting questions relating to removal, in particular as to whether an intervening Supreme Court decision is enough to make this a case that “has become removable,” 28 U.S.C. 1446(b), although the 1 year from commencement limit in the clause may dispose of many of these cases…

  5. Howard Wasserman says:

    The last point is interesting. Much would depend on whether the one-year limit is “jurisdictional” or not, which affects whether it can be subject to some equitable exception.

    By the way, at the end of the day, none of this will work because of the commitment to finality, which is no different for jurisdictional issues as for substantive merits issues.