The Three Rings Reconsidered

INTRODUCTION

A major purpose of this book is to introduce procedural concepts, such as personal jurisdiction, subject matter jurisdiction, and venue, and to illustrate their operation through a variety of examples. However, an equally important goal is to help you to see the interrelatedness of things, to explore how these procedural doctrines interact to form a rather elegant system for adjudication of law suits. This chapter reconsiders the three rings analyzed in earlier chapters in order to emphasize how these separate constraints operate together to circumscribe the plaintiff’s choice of a proper forum.

As a preliminary matter it is important to reemphasize that all three of these prerequisites must be satisfied in order to bring suit in a particular forum. It is no answer to an objection to personal jurisdiction that diversity (or some other basis for subject matter jurisdiction) is present or that the venue provisions of 28 U.S.C. §1391 are satisfied. Each of the three doctrines has a different legal source, serves a distinct purpose, and employs a different standard. The limits on federal subject matter jurisdiction are found in Article III, §2 of the Constitution, which authorizes federal jurisdiction over certain limited types of cases, and federal jurisdictional statutes. Personal jurisdiction, on the other hand, arises from due process limitations in the Fourteenth Amendment and limits the power of states to require out-of-state defendants to defend suits in their courts. The third ring, venue, does not have a constitutional source: It is a statutory limit that imposes separate constraints on the place of trial to protect parties from inconvenient litigation.

While the three rings are distinct, the potential for confusing them is great because the standards that govern personal jurisdiction, subject matter jurisdiction, and venue are closely related. For example, the concept of domicile may be relevant to analysis of all three rings. Courts use domicile to determine the state citizenship of individuals (that is, natural persons) under 28 U.S.C. §1332(a)(1), the basic diversity provision. Domicile in the forum state is also a proper basis for exercising personal jurisdiction over an individual defendant. Milliken v. Meyer, 311 U.S. 457 (1940). Finally, domicile is relevant (with a twist) to venue because 28 U.S.C. §1391(c)(1) provides that an individual “resides” under the venue statute in the judicial district where he is domiciled. (The “twist” is that venue focuses on the particular district within the state in which the individual has his domicile, not in the entire state.)

The concept of domicile, in the traditional common law sense of a place of residence where one intends to remain indefinitely, does not apply to corporations because they cannot have intent in the same sense that individuals do. However, the analogous doctrines of corporate citizenship or presence within the state are also relevant to all three rings. For the purpose of establishing subject matter jurisdiction on the basis of diversity, a corporation is deemed to be a “citizen” of the state of its principal place of business, as well as the state where it is incorporated. 28 U.S.C. §1332(c)(1). To establish personal jurisdiction over corporations, however, the courts invoke the separate but confusingly similar concept of general in personam jurisdiction. Under general in personam jurisdiction analysis, a corporation is subject to personal jurisdiction in states in which it conducts substantial and continuous business activities. See Chapter 1, pp. 5-7.