Behrman Capital IV, L.P., et al. v. Thomas E. Reynolds, Trustee

The derivative jurisdiction doctrine precludes federal courts from exercising jurisdiction in removed cases where the state court lacked jurisdiction. As this Court explained nearly a century ago, “[t]he jurisdiction of the federal court on removal is, in a limited sense, a derivative jurisdiction. If the state court lacks jurisdiction of the subject-matter or of the parties, the federal court acquires none, although it might in a like suit originally brought there have had jurisdiction.” Lambert Run Coal Co. v. Baltimore & O.R. Co., 258 U.S. 377, 382 (1922). The court of appeals held, in conflict with Lambert Run and its progeny and decisions of four other circuits, that the derivative jurisdiction doctrine only applies to issues of subject matter jurisdiction, and does not mandate dismissal following removal from a state court that lacked personal jurisdiction over the defendants. The question presented is: Whether the derivative jurisdiction doctrine precludes federal courts from exercising personal jurisdiction following removal from state courts that lacked personal jurisdiction “of the parties.” Ibid. (I)