Sample Questions

1. The Supreme Court of State G decided that the U.S. Constitution requires professors to warn students of their right to remain silent before questioning the students about cheating on exams.  The ruling directly conflicts with a decision of the Federal Court of Appeals for the circuit that includes State G.  Please explain your answers to the following two questions:

a. Must the Federal Circuit Court of Appeals withdraw its ruling?

b. Must the Supreme Court of State G withdraw its ruling?

2. Mariana Deutsch worked as a knitwear mender and attended a school for beauticians. The sink in her apartment collapsed on her foot, fracturing her big toe and making it painful for her to stand.  She claims that as a consequence of the injury she was compelled to abandon her plans to become a beautician because that job requires long periods of standing. She also asserts that she was unable to work at her current job for a month.  She filed a law suit against Hewes Street Realty for negligence in failing properly to maintain the sink.  She brought the suit in federal district court, claiming damages of $85,000.  Her medical expenses and actual loss of salary were less than $7,500; the rest of her alleged damages were for loss of future earnings as a beautician.  Hewes Street moved to dismiss the suit on the basis that Deutsch’s claim fell short of the jurisdictional requirement and therefore the federal court lacked subject matter jurisdiction over her claim.  The district court dismissed the suit, and Deutsch appealed.  Does the federal court have jurisdiction?  Please explain.

3. Sam Simpleton, a resident of Kansas, and Nellie Naïve, a resident of Missouri, each bought $85,000 worth of stocks at local offices in their home states from Evil Stockbrokers, Inc.  Evil Stockbroker, Inc  is incorporated in Delaware with its principal place of business in Kansas.  Both Simpleton and Naive believe that they were cheated by Evil and would like to sue it for fraud.  Assuming that no federal question is at issue, assess (explain) the accuracy of the following statements:

a. Simpleton can sue Evil in a Kansas state trial court.  Please explain.

b. Simpleton can sue Evil in a federal district court in Kansas.  Please explain.

c. Naïve can sue Evil in a federal district court in Missouri.  Please explain.

ANSWERS:

Question 1

This question deals with a situation where a state supreme court and a U.S. court of appeals issued conflicting decisions in a case where the facts were very similar.  What should happen in this situation?  Should one of the courts defer to the other by withdrawing its decision? 

In examining this problem, it should be apparent that federal (U.S. Constitution) and state (state law) issues are involved.   In cases such as this (cases with a federal question) both the state and federal courts have jurisdiction to hear this case.  The solution to this problem depends upon how the concept of precedent is applied in a situation where we have two separate court systems.  When must one court defer to the decision of another court?  Having isolated this point, it is easy enough to look for the answer in the textbook.

Problem 1a.  The U.S. Court of Appeals does not have to withdraw its ruling.  This is because the decision of this court act as a precedent only upon the federal district courts within the same circuit as this particular court of appeals.  The decision of this court does not act as precedent upon any state court.  The state and federal court systems are separate and there may be good reasons why the different courts responded in different ways.    

Problem 1b.  For precisely the reason stated in problem 1a.  The decision of the supreme court of state G stands. This court is not bound by the decision of the U.S. court of appeals.   

Question 2.

This question deals with a simple personal injury case.  The case does not involve any federal law or raise any federal issues.  For this reason, this case deals with state issues only.  When a party wishes to litigate a case involving just state issues before a federal court, the twin requirements for diversity jurisdiction must be met.  The first requirement is that the litigants must be from different states.  The fact situation does not indicate the home state of Mariana Deutsch or Hewes Street Realty.  For the purpose of answering this question, I am going to assume that their home states are different.  If their home states are the same, this case could not be heard before a federal court.

The second requirement is that the issues in the case must be more than $75,000.  Mariana Deutsch is alleging $85,000 in damages, but she can only document approximately $7,500 of the amount she is claiming.  The remainder is made up of loss of future income in a job she is currently not qualified to work.  Since most of the damages she is claiming is speculative, does it satisfy the requirement that her damages must be in excess of $75,000?  The standard a federal court will use to determine whether she has met this claim is to see whether the claim was made in good faith.  The claim would not have been made in good faith if it is clear to a legal certainty that the amount of the damages could not have been more than $75,000. 

There is nothing in the facts to indicate that Ms. Deutsch’s claim was not in good faith.  She was a student who was taking classes in a beauty school and was training to become a beautician.  The injury she suffered, in her opinion, prevented her from pursuing her career in this field.  This was the basis for her claim of future income losses.  The federal court would allow this case to proceed.

Question 3.

This question deals with sales transactions that took place in two different states.  The fact situation tells us there is no federal issue.  This means that state sales law would govern in each case.  Three statements regarding the case were listed, and the students were asked to assess the accuracy of each statement.

Question 3a.  Can Singleton sue Evil in a Kansas state trial court?  The answer is yes.  The sale of the stocks took place in Kansas, the sale was made pursuant to Kansas state law, the parties to the transaction are both present within the state, and all the evidence and witnesses are seemingly present in Kansas.  For these reasons, the Kansas state court is absolutely the appropriate forum to hear this case. 

As a minimum, I think it was critical to point out the fact that the sale of stocks involved only state issues, that it took place within Kansas, and that the parties to the sale are present within the state.  This gives the Kansas state court both subject matter and personal jurisdiction.

Question 3b.  Can Simpleton sue in a federal district court in Kansas?  Since this case involves state issues only, in order for a federal court to hear this case, the two requirements for diversity jurisdiction must be met.  Since $85,000 in stocks was sold, the issue in this case is in excess of $75,000, and this requirement has been met.  The second requirement is that the litigants must be from different states.  We know that Simpleton is a resident of Kansas.  Evil Inc., on the other hand, is a corporation, and corporations could have two “home” states for purposes of federal diversity jurisdiction.  One home  state is the state in which the corporation was incorporated (Delaware in this case) and the second home state is the state in which the corporation’s main business is located.  The fact situation tells us that Evil’s main or principal place of business is located in Kansas.  For this reason, Kansas is one of Evil Inc.’s home state.  We have in this situation, a resident of Kansas suing another resident of Kansas.  For this reason, this lawsuit cannot take place in federal court.

Question 3c.  Can Naïve sue Evil Inc in a Missouri federal court?  The answer is yes.  The two requirements for diversity jurisdiction have been met in this case.  The issue in dispute is more than $75,000 since $85,000 in stocks were sold.  Naïve is a resident of Missouri and Evil Inc is a resident of Delaware and Kansas as described in the answer to question 3b.  A resident of Missouri is suing a non-resident, and this satisfies the second requirement.