by Jay A. Yagoda
The case you spent years successfully litigating was firmly planted in federal court. At the time, you had no reason to think otherwise. Whether your case began in federal district court or was channeled there by virtue of the removal process, the court’s authority to both hear and rule upon your cause was never questioned. The party adverse to your favorable judgment then timely appealed to the U.S. Court of Appeals for the 11th Circuit. A briefing schedule was set, you eventually received the other side’s opening brief, and, as a matter of course, you started preparing to defend the merits of your hard-fought, district court victory.
But just days into your preparation, the case came to an abrupt — and entirely unexpected — stop. Why? The clerk of the 11th Circuit advised you, via letter, that a potentially fatal defect in your case affects the appellate court’s ability to proceed. The letter reads: “After review of the district court docket entries, order and/or judgment appealed from, and the notice of appeal, it appears that this court may lack jurisdiction over this appeal. If it is determined that this court is without jurisdiction, this appeal will be dismissed.”1
The 11th Circuit refers to the document that accompanies this letter as a “jurisdictional question,” the answer to which theoretically could undo the federal court judgment you expended considerable time and effort (and money) to secure.2 Most often, jurisdictional questions require practitioners to go all the way back to their case-instituting papers, asking them whether the pleadings or notice of removal filed in federal court adequately alleged the parties’ citizenship in order to invoke the district court’s subject-matter jurisdiction on diversity grounds.
Now, for the first time on appeal, you could be forced to confront a deficiency in the jurisdictional allegations that either you or perhaps another attorney drafted years before. As a consequence, you might “struggle to find jurisdiction that could have been established with the stroke of a pen,” or, in an extreme scenario, “the inattention leads to calamity” due to the risk of dismissal of your case “for want of complete diversity although it had been tried to conclusion.”3
In responding to jurisdictional questions issued by the 11th Circuit, it does not always have to be a struggle, however. Aside from the additional, unforeseen legwork, if you can confirm the parties’ citizenship and the existence of complete diversity without dispute, the solution might be a simple one that avoids the needless expenditure of judicial resources. If, on the other hand, a party contests the jurisdictional facts or those facts reveal diversity of citizenship did not exist at the time the case was filed in or removed to federal court, it could lead to a severe penalty: re-litigating a case you already won in the alternative forum of a state court. In the end, the (sometimes difficult) lesson to learn from any path you choose in attempting to cure jurisdictional defects discovered on appeal is to avoid overlooking questions of subject-matter jurisdiction the moment you take your first step through the federal courthouse doors.
The 11th Circuit’s Practice of Issuing Jurisdictional Questions
The 11th Circuit’s decision to issue jurisdictional questions while an appeal is pending is not an arbitrary screening method. Rather, the court’s longstanding practice arises out of its “obligat[ion] to raise concerns about the district court’s subject-matter jurisdiction sua sponte.”4 The 11th Circuit scrutinizes jurisdictional allegations made at the district court level, even when those allegations have absolutely no bearing on the merits of an appeal, for one very basic and legitimate reason: “the inferior federal courts are courts of limited jurisdiction,” and the appellate court, in turn, “is without power to do anything in the case” unless and until it can be assured subject-matter jurisdiction exists.5 In other words, “jurisdiction takes precedence over the merits.”6 This means that in the absence of allegations that sufficiently demonstrate a basis for federal subject-matter jurisdiction, the 11th Circuit ultimately is “obligated by the restrictions [of] Article III [of the U.S. Constitution]…to vacate a judgment without any examination of its correctness,” no matter how much the parties have spent and no matter how late in the proceedings the defect comes to light.7
Typically, the 11th Circuit’s jurisdictional questions revolve around whether the complaint or notice of removal filed in federal district court properly alleges citizenship of the parties to an action.8 Under 28 U.S.C. §1332, the federal district courts have original jurisdiction over all civil actions between parties of diverse citizenship, when the amount in controversy exceeds $75,000.9 For over 200 years, §1332 has been construed as requiring opposing parties to be completely diverse; every plaintiff must be diverse from every defendant.10 If an action originally filed in state court could have been brought in federal court pursuant to diversity jurisdiction, then 28 U.S.C. §1441 grants defendants the option to remove that action to federal district court as well.11 Regardless of which avenue litigants pursue in bringing actions to federal court (whether through the direct filing of a complaint or through removal), an adequate basis for the district court’s subject-matter jurisdiction must be pleaded or alleged.12 When those allegations are premised upon diversity jurisdiction under §1332, they “must include the citizenship of each party, so that the court is satisfied that no plaintiff is a citizen of the same state as any defendant.”13
Although most rules of citizenship are well established, with increasing frequency, practitioners overlook the specific requirements for pleading citizenship when drafting their complaints or removal notices.14 For its part, the 11th Circuit has urged district courts to “inquire into whether [they have] subject-matter jurisdiction at the earliest possible stage in the proceedings.”15 This judicious recommendation notwithstanding, inadvertent mistakes or omissions in allegations of party citizenship continue to go unnoticed, unchallenged, and uncorrected in the district court, giving rise to the multitude of jurisdictional questions that the 11th Circuit issues while cases are pending before it on appeal.
Common examples of jurisdictional defects on citizenship cited by the 11th Circuit include pleadings or removal notices that: 1) allege only the residence of a natural person; 2) omit a corporation’s principal place of business; or 3) fail to identify the citizenship of the members of an unincorporated business entity, such as a partnership or limited liability company.16 Black-letter law in the 11th Circuit, however, requires a litigant to allege the citizenship or domicile of a natural person (not merely his or her residence), the state of incorporation and principal place of business of a corporation, and the citizenship of each and every member of an unincorporated entity.17 Because noncorporate entities are treated as citizens of every jurisdiction in which their members are citizens, the diversity jurisdiction analysis may require tracing through several layers of constituent entities that are themselves unincorporated entities of one kind or another.18
It is important to keep in mind that errors in alleging the citizenship of an unincorporated entity also are compounded by the lack of publicly available information about them. The lack of information possibly necessitates some level of factual investigation prior to filing a pleading or removal notice that fully complies with 11th Circuit precedent.19 It is prudent to undertake this investigation as protective measure and to confirm the facts you do have — even in the absence of a jurisdictional challenge.
Methods of Curing Jurisdictional Defects on Appeal
Over the years, the 11th Circuit has made clear that it takes the advice it issues in connection with pleading federal subject-matter jurisdiction seriously. After an appeal is filed, the 11th Circuit undertakes the process of reviewing the relevant district court docket entries in the case to assure itself of authority to proceed. If the 11th Circuit’s assessment of the district court docket reveals a potential jurisdictional deficiency on the face of your allegations, the appellate court will issue a question noting that potential deficiency and affording the parties an opportunity to respond with “their position regarding the jurisdictional question(s)” within 14 days.20
More often than not, the 11th Circuit is correct: whether or not diversity existed in fact, the complaint or notice of removal failed to properly allege the parties’ citizenship sufficient to invoke the district court’s diversity jurisdiction. Jurisdiction never having been previously questioned, your initial reaction might be to panic. You are no longer in the district court, the record on appeal already is fixed, and your jurisdictional allegations are fatally flawed. Is it too late to cure the defect? For most practitioners, fortunately, the answer is no.
The failure to initially plead or allege the elements necessary to make out a showing of diversity does not in and of itself deprive the appellate court of jurisdiction.21 Under 28 U.S.C. §1653, “[d]efective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts.”22 Congress enacted §1653 “to broadly permit amendment to avoid dismissal on technical grounds,” and the 11th Circuit construes this provision as “liberally” permitting a party who has made defective diversity allegations to amend the pleadings even as late as on appeal to remedy incorrect statements about extant jurisdiction.23 The allowance of liberal amendments on appeal pursuant to §1653 avoids the needless expenditure of judicial resources in instances in which a court can instead permit the action to be maintained if it is at all possible to determine that jurisdiction does indeed exist.24
Mere consent or stipulation of the parties to the federal courts’ subject-matter jurisdiction, in the absence of proper and supportable allegations, will not satisfy the jurisdictional requirements.25 Thus, depending on the information available at present, and whether all parties agree to the relief sought, amendments to cure jurisdictional defects on appeal can be accomplished in several other ways, together with a motion for leave to amend:26
• Record Evidence — The first method is perhaps the easiest. If any evidence developed in the record below establishes the parties’ citizenship beyond what is alleged in the complaint or notice of removal, the 11th Circuit permits curing any technical defect by allowing an amendment using such evidence.27 This approach only requires knowledge of the record and directing the court to relevant, established facts, with the best practice being to attach those portions of the record to your motion.
• Actual Amendments — When record evidence of citizenship may be lacking, a party has the alternative option of moving to amend the complaint or notice of removal to include the jurisdictional facts omitted from the original filings, yet necessary to invoke the district court’s diversity jurisdiction. The 11th Circuit has urged parties using this approach “to agree both upon the grant of leave to file such amendment and upon the truth of the allegations of such amendment unless there is a bona fide dispute about . . . citizenship.”28 If the parties are in agreement, they merely list the corrected jurisdictional information in their motion and ask the 11th Circuit to accept the allegations as effective amendments to what was originally alleged.29 Because this approach requires alleging new facts for the first time on appeal, the best practice is to attach proof of their validity via affidavit or declaration to supplement the record, in addition to simply stating those facts and asking the court to accept them as true.30
• Limited Remand — If the parties dispute the jurisdictional facts or the 11th Circuit discovers a serious question regarding the factual predicate for subject-matter jurisdiction, a limited remand to the district court for fact-finding may be appropriate.31 This approach to amending jurisdictional allegations obviously is a method of last resort, naturally brings more uncertainty to the outcome, and generally will give rise to additional, unforeseen legal work and expense. Nevertheless, practitioners moving to amend jurisdictional allegations on appeal may be able to bypass remand if the party opposing the motion does not contradict evidence presented that shows citizenship.32
The cautious practitioner will be mindful that the 14-day time limit set by the 11th Circuit for responding to jurisdictional questions makes it necessary to evaluate the jurisdictional defects the court has identified expeditiously and then decide which of these approaches works best for resolving the issue to allow the appeal to proceed as intended. In addition, if you are the appellant, this process might coincide with the work you must undertake to prepare your opening brief, because the 11th Circuit’s issuance of jurisdictional questions does not automatically stay the due date for that filing.33 Appellees, on the other hand, enjoy a temporary stay of the deadline for filing their responsive brief, by operation of local rule, “until the court determines that the appeal shall proceed or directs counsel…to address the jurisdictional question(s) in their briefs on the merits.”34 Whether an appellant or appellee, however, resolving the jurisdictional question as timely as possible will benefit both the parties and the court.
To avoid the hassle and stress associated with curing defects in your jurisdictional pleadings on appeal (which could lead to an unpredictable — and sometimes, disastrous — outcome), review the citizenship allegations in your complaint or notice of removal with a fine-tooth comb in advance of filing. If you ensure yourself of proper diversity jurisdiction at the outset of your case, the likelihood of the 11th Circuit issuing a jurisdictional question on the appeal of your lower-court victory should either plummet or disappear entirely. In the event you find yourself on the receiving end of a jurisdictional question, various options are at your disposal to help you keep your case in federal court so that the 11th Circuit can resolve the merits once and for all.
1 E.g., Clerk’s Letter at 1, Trinity Aviation Servs., Ltd. v. Lopez, No. 15-12431 (11th Cir. June 25, 2015); Clerk’s Letter at 1, Purchasing Power, LLC v. Bluestem Brands, Inc., No. 14-12502 (11th Cir. June 27, 2014); Clerk’s Letter at 1, Auto Owners Ins. Co. v. Sw. Nut Co., No. 13-11672 (11th Cir. May 29, 2013); Clerk’s Letter at 1, Coleman v. Constitution State Servs., LLC, No. 12-13703 (11th Cir. Aug. 27, 2012).
2 See, e.g., Travaglio v. Am. Express Co., 735 F.3d 1266, 1267-68 (11th Cir. 2013); Morales v. Zenith Ins. Co., 714 F.3d 1220, 1226 n.12 (11th Cir. 2013); McNab v. J & J Marine, Inc., 240 F.3d 1326, 1327 (11th Cir. 2001).
3 Stockman v. LaCroix, 790 F.2d 584, 585 (7th Cir. 1986).
4 Mallory v. Evans Contractors & Eng’rs, LLC v. Tuskegee Univ., 663 F.3d 1304, 1304 (11th Cir. 2011). Indeed, “[a]n appellate federal court must satisfy itself not only of its own jurisdiction, but also of that of the lower courts in a cause under review.” Univ. of S. Alabama v. Am. Tobacco Co., 168 F.3d 405, 410 (11th Cir. 1999) (citations omitted) (alteration in original); accord Rolling Greens MHP, L.P. v. Comcast SCH Holdings L.L.C., 374 F.3d 1020, 1021 (11th Cir. 2004); Firemen’s Ins. Co. of Newark, N.J. v. Robbins Coal Co., 288 F.2d 349, 350 (5th Cir. 1961).
5 Travaglio, 735 F.3d at 1269; Am. Tobacco Co., 168 F.3d at 409.
6 Alvarez v. U.S. Immigration & Customs Enf’t, 818 F.3d 1194, 1200 (11th Cir. 2016).
7 Travaglio, 735 F.3d at 1269; Am. Tobacco Co., 168 F.3d at 409-10; see also RTP LLC v. ORIX Real Estate Capital, Inc., 827 F.3d 689, 693 (7th Cir. 2016) (“[I]n the federal system a defect in subject-matter jurisdiction requires a suit’s dismissal, no matter how much the parties have spent and no matter how late in the proceedings the defect comes to light.”).
8 This article is not meant to be illustrative, nor exhaustive. Other examples of when jurisdictional questions issue include questions of finality, consent to have magistrates issue dispositive rulings, and direct-actions against insurers.
9 28 U.S.C. §1332(a)(1) (2016).
10 Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005); Iraola & CIA, S.A. v. Kimberly-Clark Corp., 232 F.3d 854, 857-58 (11th Cir. 2000).
11 28 U.S.C. §1441(a) (2016).
12 If a plaintiff sues in federal court, the plaintiff must include in the complaint “a short and plain statement of the grounds for the court’s jurisdiction.” Fed. R. Civ. P. 8(a)(1); see also Travaglio, 735 F.3d at 1268 (“When a plaintiff files suit in federal court, she must allege facts that, if true, show federal subject-matter jurisdiction over her case exists.”). A notice of removal must include “a short and plain statement of the grounds for removal.” 28 U.S.C. §1446(a) (2016).
13 Travaglio, 735 F.3d at 1268.
14 E.g., Hedge Capital Invs. Ltd. v. Sustainable Growth Grp. Holdings LLC, 593 F. App’x 937, 941 (11th Cir. 2014) (unpublished) (“Because the diversity of the parties was not raised in the district court, there was no specific factfinding about the identity or citizenship of [the LLC’s] members.”); Stockman, 790 F.2d at 585 (“With depressing frequency lawyers and judges overlook questions of subject-matter jurisdiction.”).
15 Am. Tobacco Co., 168 F.3d at 410.
16 E.g., Jurisdictional Question, Trinity Aviation Servs., Ltd. v. Lopez, No. 15-12431 (11th Cir. June 25, 2015); Jurisdictional Question, Auto Owners Ins. Co. v. Sw. Nut Co., No. 13-11672 (11th Cir. May 29, 2013); Jurisdictional Question, Coleman v. Constitution State Servs., LLC, No. 12-13703 (11th Cir. Feb. 1, 2013); Jurisdictional Question, Travaglio v. Am. Express Co., No. 11-15292 (11th Cir. Oct. 31, 2012).
17 Am. Motorists Ins. Co. v. Am. Emp. Ins. Co., 600 F.2d 15, 16 n.1 (5th Cir. 1979); Molinos Valle Del Cibao, C. por A. v. Lama, 633 F.3d 1330, 1342 n.12 (11th Cir. 2011); Mallory & Evans Contractors, 663 F.3d at 1305; Rolling Greens MHP, L.P., 374 F.3d at 1021-22.
18 E.g., BouMatic, LLC v. Idento Operations, BV, 759 F.3d 790, 791 (7th Cir. 2014); Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412, 420 (3d Cir. 2010).
19 See Lincoln Benefit Life Co. v. AEI Life, LLC, 800 F.3d 99, 102, 107-09, n.39 (3d Cir. 2015) (noting that “[a] plaintiff who files suit in federal court may face significant difficulties when jurisdiction is premised on diversity and the defendant is an unincorporated association,” because the association’s “members may be unknown to the plaintiff even after a diligent pre-filing investigation”; inquiring into citizenship of unincorporated entity “entail[s] a difficult factual investigation prior to filing,” and “many cases note the absence of publicly available information regarding the membership of LLCs”); Carolina Cas. Ins. Co. v. Team Equip., Inc., 741 F.3d 1082, 1087 (9th Cir. 2014) (“The novel issue presented by this case is how a plaintiff may allege diversity jurisdiction [of two LLCs] where the facts supporting jurisdiction are not reasonably ascertainable by the plaintiff.”).
20 See Lincoln Benefit Life Co., 800 F.3d at 99, n.1.
21 Kaufman v. W. Union Tel. Co., 224 F.2d 723, 725 (5th Cir. 1955) (“[I]f jurisdiction actually existed from the facts at the time when the complaint was filed, even though not properly pleaded,…the formal defect in the pleadings did not deprive the [c]ourt of jurisdiction at the time when the action was filed, if such defect was later corrected.”).
22 28 U.S.C. §1653 (2016).
23 McArthur v. Kerzner Int’l Bahamas Ltd., 607 F. App’x 845, 846 n.1 (11th Cir. 2015) (unpublished) (“[W]hen the pleadings’ allegations of citizenship and jurisdiction are insufficient, a party may amend them in this court.”); Molinos Valle del Cibao, 633 F.3d at 1342, n.12 (construing §1653 liberally); Snell v. Cleveland, Inc., 316 F.3d 822, 828 (9th Cir. 2002) (“The primary purpose of §1653 is to permit correction of incorrect statements about extant jurisdiction.”); Harkless v. Sweeny Independent Sch. Dist. of Sweeny, Tex., 554 F.2d 1353, 1359 (5th Cir. 1977) (same); McGovern v. Am. Airlines, Inc., 511 F.2d 653, 654 (5th Cir. 1975) (same); Brennan v. Univ. of Kan., 451 F.2d 1287, 1289 (10th Cir. 1971) (discussing purpose of §1653).
24 NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 613 (9th Cir. 2016).
25 United States v. DiFalco, 837 F.3d 1207, 1215 (11th Cir. 2016); Am. Tobacco Co., 168 F.3d at 410.
26 See Mallory & Evans Contractors, 663 F.3d at 1305; Eklund v. Mora, 410 F.2d 731, 732 (5th Cir. 1969).
27 Hedge Capital Invs. Ltd., 593 F. App’x at 940-41 (“If the evidence in the record were clear [regarding citizenship], we could cure the technical defect by allowing an amendment, 28 U.S.C. §1653….”); Travaglio, 735 F.3d at 1268 (“[W]e need not vacate a decision on the merits if the evidence submitted during the course of the proceedings cures any jurisdictional pleading deficiency by convincing us of the parties’ citizenship.”); Molinos Valle del Cibao, 633 F.3d at 1342, n.12 (same); Williams v. Best Buy Co., 269 F.3d 1316, 1320 (11th Cir. 2001) (“Where the pleadings are inadequate, we may review the record to find evidence that diversity jurisdiction exists.”).
28 Mallory & Evans Contractors, 663 F.3d at 1305.
29 See also District of Columbia ex rel. Am. Combustion, Inc. v. Transam. Ins. Co., 797 F.2d 1041, 1044 (D.C. Cir. 1986) (“If the amended allegations are not contested, and nothing appears to the appellate court that would bar jurisdiction, jurisdiction is deemed proper, despite the plaintiff’s usual burden of alleging and proving jurisdiction.”).
30 E.g., Supplemental Jurisdictional Question, Trinity Aviation Servs., Ltd. v. Lopez, No. 15-12431 (11th Cir. Aug. 5, 2015) (inviting parties to amend pleadings through supplementation of the record with evidence); Hedge Cap. Invs. Ltd., 593 F. App’x at 941, n.5 (indicating authority for considering affidavits attached to response to jurisdictional question); Morales v. Zenith Ins. Co., 714 F.3d 1220, 1226 n.12 (11th Cir. 2013) (accepting “supplemental materials…submitted” with response to jurisdictional question treated as amending pleadings because they “demonstrate diversity of citizenship”). Although the 11th Circuit does accept amendments without additional supplementation of the record on appeal, attaching evidence that conclusively establishes new jurisdictional facts might be the preferable practice given the fact that unsworn statements in briefing generally is insufficient to demonstrate a party’s citizenship for purposes of establishing diversity jurisdiction. Travaglio, 735 F.3d at 1269-70.
31 United States v. Iguaran, 821 F.3d 1335, 1338 (11th Cir. 2016); Payroll Mgmt., Inc. v. Lexington Ins. Co., 566 F. App’x 796, 803 (11th Cir. 2014) (unpublished); Belleri v. United States, 712 F.3d 543, 548 (11th Cir. 2013); Limited Remand Order at 2-3, Mallory & Evans Contractors & Eng’rs, LLC v. Tuskegee Univ., No. 11-10940 (11th Cir. Jan. 20, 2012); Rolling Greens MHP, LP, 374 F.3d at 1020-21.
32 Fidelity & Guar. Life Ins. Co. v. Thomas, 559 F. App’x 803, 805, n.5 (11th Cir. 2014) (unpublished).
33 11th Cir. R. 31-1(d) (“The issuance of a jurisdictional question does not stay the time for filing appellant’s brief otherwise provided by this rule.”).
Jay A. Yagoda is an attorney in the Miami office of Stroock & Stroock & Lavan LLP, where he handles commercial disputes from the onset of litigation to appeal, in both state and federal trial and appellate courts. He served from 2010 to 2012 as a staff attorney for Justice Barbara J. Pariente at the Florida Supreme Court.
This column is submitted on behalf of the Appellate Practice Section, Kristin A. Norse, chair, and Brandon Christian and Thomas Seider, editors.