Introduction

Subject-matter jurisdiction concerns a court’s authority to hear a particular category of dispute. In the federal system, subject-matter jurisdiction is fundamental because federal courts are courts of limited jurisdiction. They may hear only those cases authorized by the Constitution and federal law .

Subject-matter jurisdiction is distinct from personal jurisdiction and venue. Personal jurisdiction concerns the court’s authority over a particular defendant. Venue concerns the proper geographic location for the litigation. A federal court may possess personal jurisdiction over all parties and provide a proper venue while still lacking subject-matter jurisdiction over the claims .

The parties generally cannot create federal subject-matter jurisdiction by agreement, consent, waiver, or failure to object. A federal court has an independent obligation to confirm that jurisdiction exists. If the court determines that subject-matter jurisdiction is absent, it must ordinarily dismiss the action or, if the case was removed from state court, remand it .

The principal bases of original federal subject-matter jurisdiction are federal-question jurisdiction and diversity jurisdiction. Supplemental jurisdiction may permit a federal court to hear additional claims that lack an independent basis of jurisdiction but are closely related to claims properly before the court. Removal allows certain state-court actions to be transferred to federal court, while remand returns improperly removed cases to state court .

A strong jurisdictional analysis proceeds in layers. First, determine whether any claim falls within original federal jurisdiction. Second, determine whether additional claims may enter through supplemental jurisdiction. Third, if the action began in state court, determine whether removal was authorized and procedurally proper .

Doctrinal Framework

Federal subject-matter jurisdiction should be analyzed through the following sequence :

This sequence prevents a common exam error: declaring that a “federal issue” or “diverse parties” exists without completing the statutory analysis .

Federal-Question Jurisdiction

Federal-question jurisdiction generally exists over civil actions arising under the Constitution, laws, or treaties of the United States. The most direct federal-question case is one in which federal law creates the plaintiff’s cause of action .

For example, if a federal statute gives an employee a right to sue an employer for unlawful conduct, an action brought under that statute arises under federal law. Similarly, a claim alleging violation of a federal constitutional right ordinarily presents a federal question when the plaintiff has a recognized cause of action .

The presence of a federal issue somewhere in the dispute is not always sufficient. The federal question must ordinarily appear in the plaintiff’s properly pleaded complaint .

The Well-Pleaded Complaint Rule

Under the well-pleaded complaint rule, federal-question jurisdiction must ordinarily be determined from the face of the plaintiff’s complaint. The plaintiff’s own claim must arise under federal law .

A federal defense does not create federal-question jurisdiction. This remains true even when the parties agree that the federal defense will be central to the litigation. A defendant’s anticipated reliance on federal preemption, federal immunity, or a federal statute ordinarily does not convert a state-law claim into a federal-question case .

Suppose a plaintiff files a state-law breach-of-contract action. The defendant plans to argue that federal law makes the contract unenforceable. The federal issue appears only as a defense. The plaintiff’s complaint still asserts a state-law claim, so ordinary federal-question jurisdiction does not exist .

A plaintiff also cannot manufacture jurisdiction by mentioning an anticipated federal defense in the complaint. The court looks to the elements of the plaintiff’s own claim, not unnecessary allegations designed to predict the defendant’s response .

Federal Issues Embedded in State-Law Claims

A limited category of state-law claims may support federal-question jurisdiction when they necessarily raise a substantial and disputed federal issue that a federal court may resolve without disrupting the congressionally approved balance between federal and state judicial responsibilities .

This category is narrow. The fact that federal law is relevant, persuasive, or likely to be discussed is not enough .

If any part of this test is missing, the state-law claim ordinarily remains outside federal-question jurisdiction .

A federal issue is “necessarily raised” only when the plaintiff must establish it to prevail. If the plaintiff can win on an alternative state-law theory that does not depend on federal law, the federal issue may not be necessary .

Substantiality is also demanding. A federal issue may be important to the parties without being substantial to the federal system. A fact-specific dispute about whether one party complied with a federal standard may not justify federal jurisdiction if it lacks broader importance .

Declaratory-Judgment Actions

Declaratory relief requires special attention. A party may ask a court to declare rights before the opposing party brings a traditional coercive action. In determining federal-question jurisdiction, the court generally looks to the underlying coercive dispute .

If the anticipated coercive action would arise under federal law, federal-question jurisdiction may exist. If federal law would appear only as a defense to a state-law action, requesting a federal declaration ordinarily does not create jurisdiction .

The declaratory form cannot be used to reverse the well-pleaded complaint rule .

Diversity Jurisdiction

Diversity jurisdiction ordinarily requires complete diversity of citizenship and an amount in controversy exceeding the statutory threshold .

Complete diversity means that no plaintiff may be a citizen of the same state as any defendant. The court compares all plaintiffs with all defendants .

Diversity is generally determined when the action is filed. Later changes in citizenship ordinarily do not destroy jurisdiction that properly existed at filing. Conversely, a party ordinarily cannot create jurisdiction by moving to another state after filing .

Citizenship of Individuals

An individual is a citizen of the state in which the individual is domiciled. Domicile requires physical presence in a state combined with intent to remain there indefinitely .

Residence and citizenship are not identical. A person may reside temporarily in a state without becoming domiciled there. A complaint alleging only that a party “resides” in a state may therefore be insufficient to establish diversity citizenship .

A person retains an existing domicile until acquiring a new one. To establish a new domicile, the person must be physically present in the new state and intend to make it a home for an indefinite period .

Courts may consider where the person lives, works, votes, pays taxes, holds a driver’s license, registers vehicles, owns property, maintains family connections, and plans to remain. No single fact is always controlling .

Citizenship of Corporations

A corporation is ordinarily a citizen of every state in which it is incorporated and the state where it has its principal place of business .

The principal place of business is generally the corporation’s nerve center—the location from which high-level officers direct, control, and coordinate the corporation’s activities. It is often the corporate headquarters, provided that the headquarters is the actual center of direction and control rather than merely a nominal office .

A corporation can therefore have dual citizenship. If it is incorporated in State A and has its principal place of business in State B, it is a citizen of both states. This matters because complete diversity fails if any opposing party shares either citizenship .

Citizenship of Unincorporated Associations

Unincorporated associations, including partnerships and limited liability companies, generally take the citizenship of each of their members .

An LLC is not treated like a corporation merely because it has a separate legal identity or uses “LLC” in its name. To determine an LLC’s citizenship, identify every member and determine each member’s citizenship .

If an LLC has another LLC as a member, the analysis continues through each ownership layer until the citizenship of all underlying members has been identified. Partnerships are treated similarly. A partnership is generally a citizen of every state in which any partner is a citizen .

Citizenship of Other Parties

A decedent’s legal representative generally takes the citizenship of the decedent. A representative of an infant or incompetent person generally takes the citizenship of the represented person .

Amount in Controversy

Diversity jurisdiction ordinarily requires an amount in controversy exceeding $75,000, exclusive of interest and costs .

The amount claimed by the plaintiff ordinarily controls if made in good faith. Jurisdiction is defeated only when it appears to a legal certainty that the plaintiff cannot recover more than the threshold. The plaintiff does not need to prove in advance that the plaintiff will recover more than $75,000. The question is whether the amount was genuinely in controversy when the action began .

A later recovery below the threshold ordinarily does not destroy jurisdiction. However, an inflated claim made solely to manufacture federal jurisdiction will not suffice .

Aggregation

A single plaintiff may generally aggregate multiple claims against a single defendant, even when the claims are unrelated. For example, a plaintiff with a $45,000 contract claim and a separate $40,000 tort claim against the same defendant may combine them to exceed $75,000 .

Multiple plaintiffs generally may not aggregate separate and distinct claims to reach the threshold. If one plaintiff claims $40,000 and another claims $50,000 against the same defendant, their claims ordinarily cannot be combined merely because they joined in one action .

Multiple plaintiffs may aggregate when they seek to enforce a single title or right in which they have a common and undivided interest. This exception is narrow .

Supplemental Jurisdiction

Supplemental jurisdiction permits a federal court to hear certain claims that do not independently satisfy federal-question or diversity jurisdiction .

The starting question is whether the additional claim forms part of the same constitutional case or controversy as a claim within original federal jurisdiction. This usually requires a common nucleus of operative fact .

Supplemental Jurisdiction in Diversity Cases

When original jurisdiction is based solely on diversity, statutory limitations restrict certain claims by plaintiffs. The restrictions are designed to prevent plaintiffs from using supplemental jurisdiction to evade complete diversity or other requirements of diversity jurisdiction .

A plaintiff generally cannot assert certain claims against joined parties when exercising supplemental jurisdiction would be inconsistent with diversity requirements .

When at least one plaintiff satisfies the diversity amount requirement, another diverse plaintiff with a related claim below the threshold may sometimes rely on supplemental jurisdiction, provided complete diversity remains intact and no statutory restriction bars the claim. Supplemental jurisdiction cannot ordinarily cure a lack of complete diversity .

Discretion to Decline

Even when supplemental jurisdiction is authorized, a federal court may decline to exercise it in recognized circumstances. The court may decline when the state-law claim raises a novel or complex issue of state law, the state claim substantially predominates, all original claims have been dismissed, or in exceptional circumstances .

Removal and Remand

Removal permits a defendant to transfer certain actions from state court to federal court. A case is generally removable only if the federal court would have had original subject-matter jurisdiction over it .

Only defendants may ordinarily remove. A plaintiff who filed in state court cannot remove merely because the defendant asserts a federal counterclaim .

Removal Based on Diversity (Forum-Defendant Rule)

A diversity case may ordinarily be removed only if complete diversity and the amount in controversy requirements are satisfied .

An additional limitation is the forum-defendant rule. An action otherwise removable solely on diversity grounds generally cannot be removed if any properly joined and served defendant is a citizen of the state in which the action was filed .

The forum-defendant rule is a removal restriction, not a limitation on original diversity jurisdiction .

Remand

Remand returns a removed case to state court. A motion to remand based on a procedural removal defect must ordinarily be made within the statutory period after removal .

A defect in subject-matter jurisdiction is different. It may be raised later, and the federal court must remand if it determines before final judgment that subject-matter jurisdiction is absent .

This distinction is highly testable: Procedural removal defects may be waived if not raised promptly. Subject-matter jurisdiction defects generally cannot be waived .