12. Is the proposed legislation constitutional?

To hear a case, a federal court must have both personal and subject-matter jurisdiction. Personal jurisdiction refers to the ability of a court to exercise power over a particular defendant or item of property.

Subject-matter jurisdiction means the court has the power to adjudicate a certain kind of controversy. In the federal courts, there are two basic kinds: suits between citizens of different states (diversity), and suits involving a federal question. The party seeking to invoke the jurisdiction of a federal court must affirmatively show that the case is within the jurisdiction of that court. 28 U.S.C. § 1331. When a case does not raise any federal question, meaning there is no cause of action stemming from the U.S. Constitution, a federal treaty, or an act of Congress, it must be a diversity case.

Under Article III, Section 2, the constitutional grant of jurisdiction based on diversity of citizenship (codified in 28 U.S.C. § 1332) extends to «Controversies. .. between Citizens of different states. .. and between a State, or Citizens thereof, and foreign States, Citizens or Subjects.» Diversity is only required when there is no other basis for federal jurisdiction, such as when there is no federal question or when the U.S. is not a party. In order to invoke diversity, generally there must be «complete diversity» in that no plaintiff is a citizen of the same state as any defendant.

28 U.S.C. § 1331 grants federal courts original jurisdiction over federal question cases. This extends to all civil actions arising in the U.S. Constitution, laws, or treaties of the U.S. The federal question must appear as part of the plaintiff's cause of action as set out in a well-pleaded complaint.

The defendant's answer or defense is irrelevant to giving rise to a federal question. A complaint may also not create federal question jurisdiction if it simply alleges federal issues in anticipation of some defense.

C is correct. Subject-matter jurisdiction is the court's power to hear certain causes of action. Under Article III of the U.S. Constitution, federal courts have subject-matter jurisdiction over cases that do not involve cases arising under federal laws IF there is complete diversity among the opposing parties. Complete diversity requires that no plaintiff is from the same state as any defendant.

Here, the legislation would be unconstitutional because it would grant federal courts jurisdiction over cases involving no federal question and without diversity between the parties. The language of the statute would permit citizens of the same state to sue each other in federal court in that state based solely on a state law claim. In the absence of a federal question, Article III requires diversity among opposing parties, typically defined as «complete diversity,» meaning no plaintiff is a citizen of the same state as any defendant. But at a minimum, at least two of the opposing parties must be from different states. This legislation would bypass even the minimum diversity requirement and thus be unconstitutional.

A is incorrect. Although this is a true statement of law, it is irrelevant to determining the constitutionality of this proposed legislation. The unconstitutionality of this legislation rests on the ability of plaintiffs to bring state law claims without diversity in federal court, which is impermissible under Article III.

B is incorrect. This is a misstatement of the law. Article III, Section 2 lays out the maximum scope of federal judicial power, and although this power is broad, Congress may not simply grant federal courts power beyond those limitations. As such, passing legislation that would extend federal jurisdiction to state claims that do not have diverse parties would grant federal courts power beyond what is permitted under Article III.

D is incorrect. This answer reaches the correct answer with the wrong reasoning. Although the legislation would be unconstitutional, it is not because it fails to extend federal jurisdiction to defendants who invoke state products liability as a defense. In fact, any defense (by the defendant or anticipated by the plaintiff) is entirely irrelevant to whether federal question jurisdiction exists.

Federal courts do not have jurisdiction over claims arising under federal law only via a defense. The federal question must be contained in the cause of action under the well-pleaded complaint. Therefore, there is nothing unconstitutional about the failure of this legislation to extend federal question jurisdiction in this way.