Diversity Jurisdiction in the United States

A federal civil case with a plaintiff and a defendant from different states. Diversity jurisdiction deals with the problem of diversity of citizenship. The description of federal court jurisdiction in Article III of the Constitution provides that “federal judicial power shall extend to cases between citizens of different states” or between citizens and aliens. Since the Constitution did not establish inferior federal courts, and since only Congress is permitted to confer such jurisdiction, diversity jurisdiction lies wholly within the control of Congress. Diversity jurisdiction was first conferred upon lower federal courts in the Judiciary (Judicial Organization) Act of 1789, but a $50 controversy had to exist before federal courts could enforce their jurisdiction. The amount in CONTROVERSY, 6; ORIGINALJURISDICTION, 62; UNITED STATES DISTRICT COURT, 75.

Analysis and Relevance

Diversity jurisdiction is periodically debated in Congress among those who would abolish it altogether, those who would reduce it dramatically, and those who would retain it as is. Proponents of abolition point to the cost to federal taxpayers, the intervention of federal courts in state law matters, and the redundancy and uncertainty that exist when a dual system of courts addresses the same issues. Opponents of change argue the possibility of home party bias against nonresidents, the value of two-system interaction, and the multiplicity of civil actions the federal courts, for procedural reasons, are better equipped to handle. Diversity jurisdiction exists where there is a diversity of citizenship or where there is an interstate aspect to a legal action. Suits below the dollar threshold that involve no substantial federal issue are conveyed to state courts. Diversity of citizenship cases constitute about 30 percent of the current civil caseload of the U.S. district courts. The potential substantive conflict between federal and state law litigated in federal courts under diversity jurisdiction was minimized by the Supreme Court’s decision in Erie Railroad Company v. Tompkins (304 U.S. 64: 1938). The Court held that state statutory or common law is always to be applied in diversity cases decided in federal courts and that no general federal common law exists. [1]

Diversity Jurisdiction

United States Constitution

According to the Encyclopedia of the American Constitution, under Article III of the Constitution, the judicial power of the united states extends to “Controversies between Citizens of different States and between the Citizens [of a State] and foreign Citizens or Subjects.” This power is called diversity jurisdiction.

Diversity Jurisdiction: When Does Multiplicity Constitute Diversity?

There is some information in the United States Procedure Law section of this American Legal Encyclopedia about Diversity Jurisdiction: When Does Multiplicity Constitute Diversity?. For a wide overview, read about Choosing a Propert Court

Diversity Jurisdiction (Jurisdiction)

This section introduces, discusses and describes the basics of diversity jurisdiction. Then, cross references and a brief overview about Jurisdiction is provided. Finally, the subject of Civil Procedure in relation with diversity jurisdiction is examined. Note that a list of cross references, bibliography and other resources appears at the end of this entry.

In Moore’s Federal Practice, the authors state: “We believe it should continue to do so. Litigants are entitled to the best remedies available, for the best is never too good. And diversity jurisdiction often affords litigants a better remedy in the federal court than is available in the state court. This should suffice as a continuing support of diversity, irrespective of whether the
reason – possible discrimination by a state court against a nonresident citizen – has validity today.” (1, p. 4)

Although taking the position that since normally only questions of state law are involved in diversity cases, and “it will not do for the federal courts to dismiss diversity actions merely because the question of state law is difficult of ascertainment,” (1A, p. 2120) the authors nevertheless plead for “some play in the joints,” feeling that at times state law may be so confused or uncertain or the subject matter concerned so important that the parties should
be remitted to state court for an authoritative determination of state law. But this should not be taken as an endorsement of indiscriminate use of equitable abstention. Noting the interminable
course of the Spector Motor litigation -Spector Motor Service, Inc. v. McLaughlin, 323 U.S. 101 (1944) and 340 U.S. 602 (1951)-, the authors recognize the evils inherent in a Brobdingnagian approach of permitting two lawsuits to grow from one sprout. (1A, p. 2114)

Notes and References

1. Definition of Diversity Jurisdiction from the American Law Dictionary, 1991, California