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1. Should the court grant the entrepreneur's motion?
A company incorporated in State B and headquartered in State C sued the entrepreneur in federal court in State C. The complaint sought $50,000 in damages and alleged that the entrepreneur's use of the name «Best Hot Sauce» infringed the company's federal trademark. The entrepreneur filed an answer denying the allegations, and the parties began discovery. Six months later, the entrepreneur moved to dismiss for lack of subject-matter jurisdiction.
An entrepreneur from State A decided to sell hot sauce to the public, labeling it «Best Hot Sauce.»
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B is incorrect. Under Federal Rule 12(h)(3), subject-matter jurisdiction cannot be waived and the court can determine at any time that it lacks subject-matter jurisdiction. Therefore, the fact that the entrepreneur delayed six months before raising the lack of subject-matter jurisdiction is immaterial, and the court will not deny his motion on that basis.
C is incorrect. There is no amount-in-controversy requirement for actions that arise under federal law.
D is incorrect. Although diversity jurisdiction requires an amount in controversy in excess of $75,000, when diverse parties are litigating a federal claim, the action is treated for jurisdictional purposes as a federal-question action, not a diversity action. The claim here asserts federal trademark infringement, and therefore it arises under federal law. The fact that the action does not meet all the requirements for diversity jurisdiction is irrelevant.