Jurisdictional Strategy

by Howard M. Wasserman

(Editor's Note: Howard M. Wasserman is currently serving as a Visiting Associate Professor of Law at the St. Louis University School of Law for the 2007-2008 academic year. He has also served as an Associate Professor of Law at the Florida International University College of Law since 2003.)

The Rodriguez case illustrates important issues about the interplay between jurisdictional and substantive merits issues and how parties can dictate jurisdiction by how they frame the merits of a case.

West Virginia University initially brought this case in December 2007, seeking a declaratory judgment for a determination of rights and obligations under a contract; it wanted a judgment that it had complied in all ways with its obligations under the contract and therefore the $ 4 million penalty was enforceable. But WVU did not include a claim for breach of contract, because at that point Rodriguez had not breached the contract. The first payment of one-third of the penalty was not due until 30 days after Rodriguez resigned, sometime in late January; thus there was no breach of that provision of the contract until Rodriguez failed to pay 1/3 by the appointed date. The first claim for breach of contract appeared in the Amended Complaint filed on January 20, after the 30 days lapsed.

So why did WVU bring an anticipatory action in December, before it knew that Rodriguez would breach the contract by not paying the penalty? One answer might be to ensure that the case remained in state court, something my Saint Louis University colleague Sam Jordan suggested in preparing to teach the removal issue. Suing less than two weeks after Rodriguez resigned made it less likely that he could change his domicile in time to be deemed a Michigan citizen for purposes of diversity jurisdiction (citizenship is determined at the time the action is filed), meaning the case could not be removed to district court. Ultimately, this was mooted by the finding that WVU is an arm of the state and not a citizen for jurisdiction purposes, so diversity removal to the district court was not allowed, regardless of Rodriguez’s.

But had its arm-of-the-state argument been rejected (and the court deemed it a citizen of West Virginia), WVU’s strategy put it in a better position against removal efforts. Had it waited until late January, when Rodriguez’s non-payment finally breached the contract, to initiate the lawsuit as a straightforward breach-of-contract case, the argument that he had changed his domicile to Michigan would have been stronger, simply given the passage of time, making the case removable. The use of an anticipatory declaratory judgment claim allowed WVU to file sooner, thus keeping Rodriguez from “moving” to Michigan in time and ensuring that the case would stay in state court in West Virginia.