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The subject of federal jurisdiction bedevils many a judge and lawyer. This is not a new problem, and for decades the American Law Institute has taken on for itself the job of trying to convince Congress to simplify and clarify the statutes governing federal jurisdiction and venue. Back in 1969, the ALI published its “Study of the Division of Jurisdiction Between State and Federal Courts.” While the 1969 study had some impact over the years in terms of statutory changes, many of its recommendations became more the subject of academic commentary than legislative change. During the late 1980s and 1990s, however, Congress enacted numerous amendments, generally inconsistent with the recommendations of the 1969 study, to Title 28 of the United States Code bearing on federal jurisdiction and venue. Many of these changes, unfortunately, did little to clarify the law and did much to confuse it. In a recent publication, originally conceived as a 25th anniversary project of the 1969 study, the ALI tries anew with recommendations for improving removal practice and jurisdiction, venue, and it also calls for an overhaul of the supplemental jurisdiction statute. ALI SEEKS TO CLARIFY AND SIMPLIFY VENUE STATUTES More modest in scope than the 1969 study, perhaps the more targeted approach of the ALI’s new Federal Judicial Code Revision Project will result in some positive amendments to the removal and venue statutes and, at the least, more coherent analysis of supplemental jurisdiction. Additionally, the commentary in the project is recommended reading for anybody trying to deal with the complex removal, venue and supplemental jurisdiction problems confronting the federal district courts today. In future columns, I will discuss the ALI’s removal and supplemental jurisdiction recommendations. In this column, I will discuss the project’s venue recommendations. The ALI’s goal here is to clarify and simplify the general venue and change of venue statutes. It is important to look at the ALI’s proposals in light of the amendments Congress enacted in 1988 and the early 1990s. At that time, Congress tried to fix a number of problems with the general venue statute, 28 U.S.C. 1391. For example, it dealt with the anomaly that plaintiffs in diversity cases had wider venue choices than they had in federal-question cases. Accordingly, it did away with venue based on the plaintiff’s residence and provided three basic options for venue. Curiously, however, it retained the basic structure of the statute that distinguished between diversity-only cases (venue options listed in �1391(a)) and all others (venue options listed in �1391(b)). Option 1, for both subsections (a) and (b), is based on the residence of the defendant, and allows for venue in any district in a state if all of the defendants reside in that state. Option 2, for both subsections, which itself is the basis of another amendment designed to clarify and simply, provides for venue in any district in which a substantial part of the events or omissions give rise to the plaintiffs’ cause of action. Option 3, however, although designed to get at the same type of problem, contains different language-thus apparently creating the need to retain both subsections. The ALI recommends that subsections (a) and (b) be merged into one set of rules for all types of federal cases. For any federal action (except, of course, those that are governed by an exclusive specific venue statute), venue would be appropriate in the district in which all defendants reside or where a substantial part of the events or omissions giving rise to the claim occur-i.e., the same as the options 1 and 2 that are available currently. With respect to option 3, the ALI would use the approach in the current diversity venue statute. Option 3 is a fallback option designed to get at the type of case in which the substantial events giving rise to a claim occur outside of the United States (thereby making venue impossible under option 2) and where not all of the defendants reside in the same state (thereby making venue impossible under option 1). The ALI recommendation is that if venue is not proper under options 1 or 2, in other words, “there is no district in which a civil action may otherwise be brought,” then venue would be proper “in any judicial district in which any defendant is subject to personal jurisdiction.” The ALI takes the “diversity” option 3 approach rather than the other option 3 because that option currently bases venue on where a defendant may be “found” as opposed to where a defendant is subject to “personal jurisdiction.” The concept of “found” is relatively amorphous, and the ALI is wise to pick an approach that is readily understood, or at least less open to confusion. Further recommendations make the above recommendations clearer and simpler. First, in terms of option 1, venue based on a defendant’s residence, the ALI expressly equates residence with domicile. Although most courts did equate residence for venue purposes with domicile, some did not. Such courts could find that a defendant’s nonprimary residence in a state other than that of the defendant’s domicile was a residence for venue purposes. Although such an interpretation of a venue statute may be warranted, given that the court will need to determine the party’s domicile in any event in order to assure itself that it has subject-matter jurisdiction, the ALI’s proposal will eliminate the need for any further court consideration on the venue question. Similarly, the ALI would expressly equate residence with amenity to service of process for all defendant entities, not just corporations. The current version of the general venue statute, pursuant to amendments in 1988 and 1990, state that a corporation shall be deemed to reside in any district in which it is subject to personal jurisdiction. Most courts had ruled that the provision applied to non-corporate entities, such as partnerships, trusts, etc., as well. The ALI, in an attempt to clarify the law on the subject, would expressly apply the concept to all entity defendants. Further, it recommends deleting the confusing provision for venue over entities in multidistrict states. Currently, the venue analysis for an entity defendant in a multidistrict state requires each district to be treated as if it were a single state. While the goal of finding the more convenient forum may be served by this provision, it is confusing, and, again, the ALI is wise to suggest that it be deleted. The ALI also recommends amendments to �1390 to clarify the cases to which the general venue statute, �1391, apply and does not apply. Accordingly, it suggests that �1390 be amended to clarify that �1391 does not apply in admiralty cases. It also recommends that cases that have been removed under 28 U.S.C. 1441 are not governed by the general venue provisions, but rather by �1441 itself, which provides that a case be removed to the federal district in which the state court sits. Although it has always been a losing argument for a party to object that venue in a removed case or an admiralty case is improper because it could not have been brought there in the first place, the ALI’s proposal would render any such argument totally frivolous. However, the ALI would make it express that the general transfer of venue provisions are applicable in removed cases and admiralty cases. The ALI further recommends the repeal of �1400 for patent and copyright cases, and suggests a good pruning of other special venue statutes and provides a list of such statutes. IMPROVING THE TRANSFER OF VENUE STATUTES As discussed above, the ALI would amend �1404, the convenience transfer statute, to provide the district courts with a bit more discretion to transfer than they currently have. First, �1404(a) would allow for transfer for the convenience of the parties and witnesses or in the interests of justice. Currently, the language uses the conjunctive. Additionally, the ALI proposes a new subsection that would permit the court, solely in its discretion, to transfer a case from one district to another district in the same state. This provision in essence replaces the venue provision for entity defendants in multidistrict states that the ALI proposes deleting. Instead of using a mandatory provision, the ALI envisions venue as proper in any district in a state in which the defendant is subject to personal jurisdiction. But to avoid inconvenience where appropriate, the addition to �1401 would give the court the flexibility to decide whether it is appropriate to transfer the case to a more convenient district within the state. The ALI also proposes amendments to �1406. First, it would require a motion to transfer under �1406. A court would no longer be able to transfer a case sua sponte. This makes sense because objections to venue are waivable. Along the same lines, the proposal would limit standing to challenge improper venue only to those for whom venue is arguably improper. Second, the proposed amendment expressly makes transfer, rather than dismissal, the preferred remedy. Similarly, it would provide that transfer, as opposed to remand, be the remedy if a case is removed to the wrong district. Although this is the usual practice in such cases, it is sensible to codify these approaches. As many lawyers know from painful experience, the law in the area of contract forum selection is somewhat of a mess. Depending on how the issue arises, the court may resolve the issue differently. To eliminate the confusion in the law in the area, the ALI would expressly provide that venue rights may either be conferred or waived by conduct or contract. A number of the ALI’s changes would require congressional action. They are not controversial and would eliminate some wasteful motion practice. But, even without any action by Congress, lawyers can learn by reading Part II of the project. It is a veritable restatement of the law of venue and transfer of venue. Georgene M. Vairo is a professor of law and William M. Rains Fellow at Loyola Law School, Los Angeles. She can be reached at [email protected].

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