Why do sophisticated parties litigate under clouds of (easily resolvable) jurisdictional uncertainty?
In our recent essay available here, we argue that some sophisticated litigants do not raise obvious jurisdictional defects so that they can use jurisdictional uncertainty as a litigation strategy. Our paper examines, in particular, federal statutory interpleader disputes involving securitized financial instruments (SFIs).
In a federal statutory interpleader action, a custodian of money or property can bring multiple parties into federal court to sort out competing claims. In order for federal courts to have subject matter jurisdiction over these actions, parties must deposit the disputed amount with … Read more