In a decision that the Seventh Circuit issued on February 7, Chief Judge Easterbrook uses the occasion of a frivolous appeal from a district court’s judgment enforcing an arbitration clause to make a jurisdictional point and a procedural point. The failure of the winning lawyers to understand the first point nearly cost their client its lower court victory, and their failure to understand the second point did cost it an award of costs on appeal. There are lessons to be learned here.
Heinen v. Northrop Grumman Corp. involved a former employee of Northrop Grumman who had signed an agreement to arbitrate all employment-related disputes and who then sued the company in Illinois state court for damages arising from his abortive job move from California to Illinois. The company (whose principal place of business is in California) removed, alleging that Heinen was a “resident” and therefore a “citizen” of Massachusetts. Never was the jurisdictional allegation contested, and the district court dismissed the case because of the arbitration agreement. The problem, of course, is that an individual’s state citizenship depends on domicile, not residence. See Robertson v. Cease, 97 U.S. 646, 650 (1878). Here, for all that appeared from the record, Heinen continued to be domiciled in California because, though he now “resided” in Massachusetts, he may not have formed the intent to live there indefinitely. If this were the case, there would be no diversity of citizenship. The issue was raised at oral argument, and neither lawyer knew that citizenship depended on domicile. Ultimately, in a post-argument filing, Northrop Grumman was able to persuade the court that Heinen had established his domicile in Massachusetts before removal (the key time). He and his family had a home there, and he had registered to vote and obtained a driver’s license there. So jurisdiction was secure. Good thing, because otherwise the company would have lost its lower-court victory because of something that, as the court points out, should have been investigated before removal, not after a favorable judgment in the district court and the adverse party’s appeal.
The arbitration clause was clear, so Heinen’s appeal was frivolous. But Fed. R. App. P. 38 requires “a separately filed motion,” and the company had asked for costs only in its brief. No dice, the court says: ”[T]his court is not inclined to award sanctions in favor of a party that cannot be bothered to follow the rules itself.” Slip op. at 5. It’s hard to believe that the nonchalance shown on jurisdiction did not affect this result, too.
Two lessons to be learned: Always pay attention to the requirements of federal jurisdiction, and read the appellate rules. Or, to use a phrase for which Dean Kearney of Marquette Law School is famous, “win the easy ones.”