Civil Procedure

Fact pattern

State A licenses private schools to educate children from kindergarten through high school. S is a fifth-grade student at a licensed private school. C, a corporation, owns and operates the school. One day, S is playing on the school playground, climbing a bar. The bar collapses; S falls to the ground and suffers a broken arm, a broken ankle, and a mild concussion. S’s teacher, T, was supervising the children when the accident occurred.

S and T are citizens of State A. C is a citizen of State B. 

In a State A court of general jurisdiction, S sues C, along with T in her personal capacity. S alleges that C was negligent in installing and maintaining the playground equipment, and that T was negligent in supervising S’s use of the equipment. S seeks damages of $100,000, jointly and severally, against both C and T. Assume that the state court has personal jurisdiction over both C and T. 

C immediately removes the case, with T’s consent, to the appropriate division of the U.S. District Court for the District of State A. S moves to remand, arguing that the federal court lacks subject-matter jurisdiction, because complete diversity of citizenship is lacking. C opposes the motion. T wants to save money on attorney’s fees, and therefore does not participate in the dispute over remand.

 In opposing remand, C relies on a State A statute that reads as follows: 

Immunity of Teachers in Private Schools: A teacher in a licensed private school shall be immune from liability for injuries sustained by any student, unless the teacher acted intentionally to cause the injury.

C argues that because of this statute, the judge should ignore T’s citizenship in assessing federal jurisdiction. The judge agrees, and denies S’s motion to remand. Shortly thereafter, S voluntarily dismisses T from the suit. C files a timely answer, which does not include any defenses based on subject-matter jurisdiction. 

At trial, the jury returns a verdict in favor of S, and awards damages of $50,000. Before the judge enters judgment on the verdict, C moves to dismiss the case for lack of subject-matter jurisdiction. S objects to the motion, arguing that it is too late for C to raise a jurisdictional challenge. The judge overrules S’s objection, but denies C’s motion.  Next, S asks the judge for an award of costs as the prevailing party under Fed. R. Civ. P. (Rule) 54(d)(1). The judge denies this request, entering judgment on the verdict for $50,000, without awarding costs to S.

Questions

1. Was the judge correct to deny the motion to remand? Explain, limiting your analysis to the question of diversity of citizenship.
2. Was the judge correct to hear, and then deny, C’s motion to dismiss? Explain.
3. Was the judge correct to decline to award costs to S as the prevailing party? Explain.