B. Dismissal: No matter when a deficiency in the subject matter jurisdiction of a federal court is noticed, the suit must be stopped, and dismissed for lack of jurisdiction.
1. Objection: Rule 12(h)(3) of the Federal Rules provides that the parties or the court on its own initiative can always object to the court’s lack of subject matter jurisdiction: “If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”
2. Appeals: Even at the appellate level, the suit already tried may be dismissed for lack of subject matter jurisdiction. Cf. American Fire & Casualty Co. v. Finn, 341 U.S. 6 (1951).
Example: In Louisville & Nashville Railroad v. Mottley, 211 U.S. 149 (1908), the controversy reached the Supreme Court before it was dismissed for lack of subject matter jurisdiction. Neither party had raised the jurisdictional issue, but the Court found that the federal question jurisdiction alleged by the plaintiff did not exist.
a. Relief from judgment: Similarly, after a judgment has been entered and any appellate proceedings concluded, a party may be entitled to have the judgment voided on the grounds that it was issued in a proceeding as to which the court had no subject matter jurisdiction. FRCP 60(b) allows a court to grant relief from a final judgment for a variety of reasons. Among these are that the judgment is “void” (60(b)(4)) or for “any other reason that justifies relief.” (60(b)(6)).
3. Distinction: Federal subject matter jurisdiction must be distinguished from jurisdiction over the parties; the latter is a waivable defect, which must be asserted by the party who would take advantage of it. (See Rule 12(h)(1)). Subject matter jurisdiction, on the other hand, is never waived, and may be made by the court on its own motion, as in Louisville & Nashville, supra.
4. Collateral attack on subject matter jurisdiction: The rules allowing collateral attack on the decision of the court of another jurisdiction are generally the same for both subject matter and personal jurisdiction. That is, it is only where a party to the first action had a default judgment entered against him that he may claim, when he is sued on the judgment in a second court, that the first court lacked subject matter jurisdiction. See Chicot County Drainage District v. Baxter State Bank, 308 U.S. 371 (1940), discussed infra, p. 444.
Example: A party who appeared in a state action against him, and who did not raise any objection to lack of subject matter jurisdiction, may not generally collaterally attack the state court’s judgment when it is sued upon for enforcement in federal court. Nor would he be able usually to collaterally attack if he had made the jurisdictional objection in the state court, and lost.
a. Exception: This policy limiting collateral attack is not followed when there are very strong policy considerations weighing in the opposite direction.
Example: When a federal statute has given exclusive jurisdiction over a particular type of action to the federal courts, for instance bankruptcy, patent, and copyright actions, the finding by a state court, even in a non-default situation, that it has jurisdiction over such a case will not bar collateral attack on the state court’s judgment, when it is sued on for enforcement in either a federal or state court. Wr., 95.