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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.