Jurisdiction Is a Thing, Again litigators rarely challenge subject matter jurisdiction when defending business cases. First, absent federal jurisdiction, contract cases appropriately are decided in state courts of general jurisdiction, where plaintiffs usually file. Second, since a lack of subject matter jurisdiction can be raised by either party or the court, the right to challenge survives a delayed lightbulb click. So, there's little "speak now or forever hold your peace" worry. But, a number of recent cases remind us that applying the pressure defense of this old school gem can shake the rafters of the old school gym. Seemingly, subject matter jurisdiction is making a comeback to be posed by jurists: How might we get rid of this case? From law school classes, lawyers remember that there are a couple of ways to challenge subject matter jurisdiction. One is whether the court can decide the type of case; the other is whether the court can decide a case when this litigant cannot assert the claims. Calling foul when litigants fail on this second play, state and federal courts have ejected plaintiffs and reminded us to reconsider asserting good ole Rule 12(b)(1). How might a plaintiff fail to qualify? A party must have standing to assert the claims made in the complaint. Lacking a plaintiff with standing, the court cannot properly exercise subject matter jurisdiction. "If a party does not have standing to bring a claim, a court has no subject matter jurisdiction to hear the claim." Wilson v. Pershing, No. COA16- 803, filed 16 May 2017, 2017 N.C. App. LEXIS 388, quoting Estate of Apple v. Commercial Courier Express Inc., 168 N.C. App. 175, 177, 607 S.E.2d 14, 16 (2005). Sounds reasonable, but you may think "how might this help me?" A typical inter-company dispute provides an easy example. Derivative actions require that an owner first make demand on the business to take action against another shareholder or member. If the demand is not given, or is insufficient, the complaining owner has no right to assert derivative claims. Hence, the court has no subject matter jurisdiction. See Petty v. Morris, N.C. Super. Ct. Dec. 16, 2014, Order of Hon. James L. Gale, Chief Special Superior Court Judge for Complex 7591073 (recognizing standing requirement but denying dismissal where demand made). [If you find this scenario riveting, take a look at the 7 in which the appellate court upholds the district court's dismissal of a derivative suit, but notes that the shareholder-standing rule is not technically a subject matter jurisdiction argument under U.S. Const. art. III., but rather is addressed as prudential jurisdiction. Still works.] A second example of a challenge to standing was the basis of the 2016 U.S. Supreme Court decision, Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016). Mr. Robins alleged a violation of the Fair Credit Reporting Act (FCRA) when Spokeo, alleged to be a consumer reporting agency, published inaccurate information about him. A federal question existed. However, the district court dismissed the case for lack of subject matter jurisdiction. The Ninth Circuit disagreed. Considering Robins' assertion of a "bare procedural violation," the Supreme Court remanded the case to the Ninth Circuit to determine whether Robins suffered a "concrete and particularized" injury, required to give him standing to bring his claim. A plaintiff who failed to exhaust administrative remedies provides a third example where subject matter jurisdiction blocks the shot. This played out recently in the Fourth Circuit, which upheld the district court's grant of a motion to dismiss mortgagors' claims against J.P. Morgan, which acquired the Washington Mutual mortgage through an FDIC receivership. Under the Financial Institutions Reform, rights specialist with decades of experience in state and federal courts. She represents mostly businesses, both large and small, in a variety of matters, including contract drafting and disputes, and issues pertaining to labor and employment laws in North Carolina. 4601 Six Forks Road, Suite 400 Raleigh, North Carolina 27609 smithdebnamlaw.com |