Alabama Rules Of Civil Procedure (ARCP) And Constitutional Law Practice Test

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A resident sues a corporation in federal court for a defective automobile under a state contract claim with no diversity. Should the federal court hear the case on its merits?

Yes, because Article III vests jurisdiction over contracts Yes, because the claim affects interstate commerce No, because the claim is not within Article III jurisdiction No, because there is no case or controversy

Correct Answer:

No, because the claim is not within Article III jurisdiction

Explanation:

Federal courts have subject matter jurisdiction only if the case presents a federal question or there is complete diversity between parties with the amount in controversy satisfied. A state-law contract claim, by itself, does not arise under federal law, and the fact that the automobile involved may have moved across state lines does not create federal question jurisdiction. Since there is no federal question and no diversity, the case falls outside Article III jurisdiction, so the federal court cannot reach the merits. In short, purely state-law contracts need a federal question or complete diversity (plus the amount in controversy) to be heard in federal court; without those, the court must dismiss for lack of jurisdiction.

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