39:
562:) but set up their headquarters in another state. During the 20th century, the traditional rule came to be seen as extremely unfair in that corporate defendants actually headquartered in a state but incorporated elsewhere could remove diversity cases against them from state courts to federal courts, while individual and unincorporated defendants physically based in that same state (e.g., partnerships) could not. Therefore, during the 1950s, various proposals were introduced to broaden the citizenship of corporations in order to reduce their access to federal courts.
693:
the laws of the United States." The court concluded "that the domestic relations exception ... divests the federal courts of power to issue divorce, alimony, and child custody decrees." In explaining this exception, the high court noted that domestic cases frequently required the issuing court to retain jurisdiction over recurring disputes in interpreting and enforcing those decrees. State courts have developed expertise in dealing with these matters, and the interest of
522:(1996), the Supreme Court also held that federal jurisdiction predicated on diversity of citizenship can be sustained even if there did not exist complete diversity at the time of removal to federal court, so long as complete diversity exists at the time the district court enters judgment. The court in Caterpillar sustained diversity as an issue of "fairness" and economy, given a lower court's original mistake that allowed removal.
726:
383:(2) citizens of a State and citizens or subjects of a foreign state, except that the district courts shall not have original jurisdiction under this subsection of an action between citizens of a State and citizens or subjects of a foreign state who are lawfully admitted for permanent residence in the United States and are domiciled in the same State;
812:, asking the federal court to send the case back to the state court. A remand is rarely granted if the diversity and amount in controversy requirements are met. A remand may be granted, however, if a non-diverse party joins the action, or if the parties settle some claims among them, leaving the amount in controversy below the requisite amount.
865:(1996). The REA, 28 U.S.C. 2072(b), provides that the Rules will not affect the substantive rights of the parties. Therefore, a federal court may still apply the "procedural" rules of the state of the initial filing, if the federal law would "abridge, enlarge, or modify" a substantive right provided for under the law of the state.
629:
without considering counterclaims. In other words, the amount in controversy must be equal to or more than $ 75,000.01, and (in a case which has been removed from a state court to the federal court) a federal court must remand a case back to state court if the amount in controversy is exactly $ 75,000.00.
944:
explained: "Diversity jurisdiction is founded on assurance to non-resident litigants of courts free from susceptibility to potential local bias. The
Framers of the Constitution . . . entertained 'apprehensions' lest distant suitors be subjected to local bias in State courts, or, at least, viewed with
692:
cases, even if there is diversity of citizenship between the parties and the amount of money in controversy meets the jurisdictional limit. As the
Supreme Court has stated, "he whole subject of the domestic relations of husband and wife, parent and child, belongs to the laws of the states, and not to
628:
requirement. This is a minimum amount of money which the parties must be contesting is owed to them. Since the enactment of the
Federal Courts Improvement Act of 1996, 28 U.S.C. §1332(a) has provided that a claim for relief must exceed the sum or value of $ 75,000, exclusive of interest and costs and
502:
If the case requires the presence of a party who is from the same state as an opposing party, or a party who is a U.S. citizen domiciled outside the country, the case must be dismissed, the absent party being deemed "indispensable". The determination of whether a party is indispensable is made by the
498:
A U.S. citizen who is domiciled outside the U.S. is not considered to be a citizen of any U.S. state, and cannot be considered an alien. The presence of such a person as a party completely destroys diversity jurisdiction, except for a class action or mass action in which minimal diversity exists with
444:
is treated as a citizen of the state in which it is "located". In 2006, the
Supreme Court rejected an approach that would have interpreted the term "located" to mean that a national bank is a citizen of every state in which it maintains a branch. The Supreme Court concluded that "a national bank ...
798:
with both the state court where the case was filed and the federal court to which it will be transferred. The notice of removal must be filed within 30 days of the first removable document. For example, if there is no diversity of citizenship initially, but the non-diverse defendant is subsequently
632:
A single plaintiff may add different claims against the same defendant to meet the amount. Two plaintiffs, however, may not join their claims together to meet the amount, but if one plaintiff meets the amount standing alone, the second plaintiff can piggyback as long as the second plaintiff's claim
515:
Diversity is determined at the time that federal court jurisdiction is invoked (at time of filing, if directly filed in U.S. district court, or at time of removal, if removed from state court), and on the basis of the state citizenships of the parties at that time. A change in domicile by a natural
428:
the state in which its principal place of business is located. A partnership or limited liability company is considered to have the citizenship of all of its constituent partners/members. Thus, an LLC or partnership with one member or partner sharing citizenship with an opposing party will destroy
847:
Under the Rules of
Decision Act, the laws of the several states, except where the constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply.
802:
A party's citizenship at the time of the filing of the action is considered the citizenship of the party. If a defendant later moves to the same state as the plaintiff while the action is pending, the federal court will still have jurisdiction. However, if any defendant is a citizen of the state
851:
Because the RDA provides for exceptions and modifications by
Congress, it is important to note the effect of the Rules Enabling Act (REA), 28 U.S.C. 2072. The REA delegates the legislative authority to the Supreme Court to ratify rules of practice and procedure and rules of evidence for federal
705:
and decedent's estate litigation, which continues to hold for the primary cases; diversity jurisdiction does not exist to probate wills or administer decedent's estates directly. Diversity jurisdiction is allowed for some litigation that arises under trusts and other estate planning documents,
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diversity of jurisdiction. Cities and towns (incorporated municipalities) are also treated as citizens of the states in which they are located, but states themselves are not considered citizens for the purpose of diversity. U.S. citizens are citizens of the state in which they are
675:
are worth, compensation for injuries may exceed $ 75,000 such that the "legal certainty" test will not bar federal court jurisdiction. Many plaintiffs' lawyers seek to avoid federal courts because of the perception that they are more hostile to plaintiffs than most state courts.
589:, and prevailed in 1958 with the passage of a relatively narrow bill which deemed corporations to be citizens of both their states of incorporation and principal place of business. The two proposals, respectively, promised to reduce the federal civil caseload by 25% versus 2%.
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came under the control of large national corporations. Although these corporations usually had a headquarters in one state, the majority of their employees, assets, and revenue were often physically located at retail sites in the states with the largest populations, and hence a
671:, as is required by the pleading rules of many states, the defendant may sometimes be able to remove the case to federal court unless the plaintiff's lawyer files a document expressly disclaiming damages in excess of the jurisdictional requirement. Because juries decide what
844:, instead of applying the law of the forum state. This decision was an interpretation of the word "laws" in 28 U.S.C. 1652, known as the Rules of Decision Act, to mean not just statutes enacted by the legislature but also the common law created by state courts.
786:
If a case is originally filed in a state court, and the requirements for federal jurisdiction are met (diversity and amount in controversy, the case involves a federal question, or a supplemental jurisdiction exists), the defendant (and only the defendant) may
530:
Before 1958, a corporation for the purpose of diversity jurisdiction was deemed to be a citizen only of the state in which it had been formally incorporated. This was originally not a problem when a corporation could be chartered only by the enacting of a
449:
be a citizen of the state in which it has its principal place of business, thus putting it on an equal footing with a state-formed corporation. This remains an open question, with some lower courts holding that a national bank is a citizen of
317:" must be more than $ 75,000. If a lawsuit does not meet these two conditions, federal courts will normally lack the jurisdiction to hear it unless it involves a federal question, and the lawsuit would need to be heard in state court instead.
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be treated as the corporation's principal place of business. The rationale was that those states were where the business was actually occurring or being transacted. This issue was finally resolved by a unanimous
Supreme Court in
309:. For a federal court to have diversity jurisdiction over a lawsuit, two conditions must be met. First, there must be "diversity of citizenship" between the parties, meaning the plaintiffs must be citizens of different
697:
required keeping that litigation in the courts most experienced to handle it. However, federal courts are not limited in their ability to hear tort cases arising out of domestic situations by the doctrine.
612:(2010), which held that a corporation's principal place of business is presumed to be the place of the corporation's "nerve center" from where its officers conduct the corporation's important business.
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defendant. Class actions that do not meet the requirement of the Class Action
Fairness Act must have complete diversity between class representatives (those named in the lawsuit) and the defendants.
376:(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $ 75,000, exclusive of interest and costs, and is between—
859:
Thus, while state substantive law is applied, the
Federal Rules of Civil Procedure and the Federal Rules of Evidence still govern the "procedural" matters in a diversity action, as clarified in
592:
However, Congress never defined what exactly is a "principal place of business". The question of what that phrase meant became hotly disputed during the late 20th century as many areas of the
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is a citizen of the State in which its main office, as set forth in its articles of association, is located". The
Supreme Court, however, left open the possibility that a national bank may
585:, introduced a bill to limit diversity jurisdiction to natural citizens. Liberals in Congress recognized this was actually a form of retaliation by conservative Southerners against the
1301:
1099:, 747 F.3d 707 (9th Cir. 2014) (citing cases on each side of circuit split and joining majority rule that national bank is only citizen of state in which main office is located).
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975:
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explained in a 587-page analysis of the subject that diversity is the "most controversial" type of federal jurisdiction, because it "lays bare fundamental issues regarding the
667:, plaintiffs will sometimes claim amounts "not to exceed $ 75,000" in their complaint to avoid removal of the case to federal court. If the amount is left unspecified in the
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945:'indulgence the possible fears and apprehensions' of such suitors. And so Congress afforded out-of-State litigants another tribunal, not another body of law."
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dismissed, the remaining diverse defendant(s) may remove to a federal court. However, no removal is available after one year of the filing of the complaint.
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the power to permit federal courts to hear diversity cases through legislation authorizing such jurisdiction. The provision was included because the
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1216:: "The amount in controversy in this declaratory judgment action is exactly one penny short of the jurisdictional minimum of the federal courts."
836:(1938) that the law to be applied in a diversity case would be the law of whatever state in which the action was filed. This decision overturned
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or over his veto). Thus, corporations were normally headquartered in the same state where they were incorporated, since their
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might be biased toward the party from that state. Congress first exercised that power and granted federal trial
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arises out of the same facts as the main claim. More detailed information may be obtained from the article on
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had to be quite well-known and well-connected in that state in order to obtain passage of a private bill.
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to decide whether the dispute is over $ 75,000. Under this test, the court will accept the
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Litigation and Inequality: Federal Diversity Jurisdiction in Industrial America, 1870-1958
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to attract out-of-state corporations, and corporations began to incorporate in one state (
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the state in which its main office is located, and others holding that a national bank is
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A longstanding judge-made rule holds that federal courts have no jurisdiction over
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but the REA which created the distinction between substantive and procedural law.
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where the action is first filed, diversity does not exist. 28 U.S.C. §1441(b).
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U.S. court jurisdiction over persons of different states or nationalities
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a citizen of the state in which it has its principal place of business.
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Study of the Division of Jurisdiction between State and Federal Courts
1176:(2nd ed.). Frederick, Maryland: Aspen Publishing. p. 38.
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If a plaintiff or a co-defendant opposes removal, he may request a
1139:. New York and Oxford: Oxford University Press. pp. 239–242.
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developed in which some judges held that the latter states could
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has placed an additional barrier to diversity jurisdiction: the
660:, or remand the case to state court if it arrived via removal.
719:
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can usually be brought in a federal court when there is just
656:$ 10,000, a federal court will dismiss the case for lack of
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person before or after that date is irrelevant. However, in
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Diversity is determined at the time that the action is filed
503:
court following the guidelines set forth in Rule 19 of the
526:
Corporate citizenship based on principal place of business
840:
that had held that federal courts could create a general
961:. Washington, D.C.: American Law Institute. p. 1.
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Mostly, in order for diversity jurisdiction to apply,
1165:
1163:
1036:
Sun Printing & Publishing Association v. Edwards
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greatly reducing the power of the federal judiciary
348:. Diversity jurisdiction is currently codified at
1170:Counseller, W. Jeremy; Porterfield, Eric (2020).
490:plaintiff is a citizen of a different state from
550:The traditional rule only became a problem when
1302:Article Three of the United States Constitution
1208:, 632 F.3d 250, 252-253 (6th Cir. 2011). Judge
374:
652:by which the defendant had agreed to pay the
266:
8:
1024:Johnson v. Columbia Properties Anchorage, LP
701:A similar exception has been recognized for
313:than the defendants. Second, the lawsuit's "
754:. Unsourced material may be challenged and
273:
259:
110:
33:
1272:28 U.S.C § 1332. Diversity of Citizenship
1205:Freeland v. Liberty Mutual Fire. Ins. Co.
774:Learn how and when to remove this message
680:Domestic relations and probate exceptions
420:can be from the same state as any of the
365:nature and operation of our federal union
1085:, 546 U.S. 303, 315 n.8, 317 n.9 (2006).
554:around 1896, state legislatures began a
552:general incorporation laws were invented
940: (1945). In this decision, Justice
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499:respect to other parties in the case.
245:Adequate and independent state ground
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752:adding citations to reliable sources
1012:Danjaq, S.A. v. Pathe Comm'ns Corp.
862:Gasperini v. Center for Humanities
25:
875:Class Action Fairness Act of 2005
635:federal supplemental jurisdiction
476:Class Action Fairness Act of 2005
380:(1) citizens of different States;
150:Class Action Fairness Act of 2005
724:
539:(either with the consent of the
505:Federal Rules of Civil Procedure
37:
1297:Diversity jurisdiction case law
1230:, 136 U.S. 586, 593-594 (1890).
1096:Rouse v. Wachovia Mortgage, FSB
1026:, 437 F.3d 894 (9th Cir. 2006).
1014:, 979 F.2d 772 (9th Cir. 1992).
955:American Law Institute (1969).
416:is required, where none of the
1244:, 504 U.S. 689, 694–695 (1992)
1083:Wachovia Bank, N.A. v. Schmidt
1071:Wachovia Bank, N.A. v. Schmidt
791:the case to a federal court.
344:diversity jurisdiction in the
1:
1287:United States civil procedure
972:Lincoln Property Co. v. Roche
880:Federal question jurisdiction
833:Erie Railroad Co. v. Tompkins
299:United States federal courts
1073:, 546 U.S. 303, 307 (2006).
828:United States Supreme Court
658:subject matter jurisdiction
334:Framers of the Constitution
295:subject-matter jurisdiction
1323:
1307:American legal terminology
926:Guaranty Trust Co. v. York
819:
713:
519:Caterpillar, Inc. v. Lewis
322:United States Constitution
906:Supplemental jurisdiction
1173:Civil Procedure in Focus
852:courts. Thus, it is not
287:law of the United States
94:Constitutional avoidance
18:Diversity of citizenship
1241:Ankenbrandt v. Richards
1258:, 547 U.S. 293 (2006).
1131:Purcell Jr., Edward A.
988:Strawbridge v. Curtiss
899:Strawbridge v. Curtiss
622:United States Congress
565:In 1957, conservative
405:
361:American Law Institute
326:Article III, Section 2
305:that do not involve a
291:diversity jurisdiction
665:personal injury cases
626:amount in controversy
616:Amount in controversy
609:Hertz Corp. v. Friend
346:Judiciary Act of 1789
315:amount in controversy
134:Amount in controversy
47:United States federal
1255:Marshall v. Marshall
1109:LeBlanc v. Cleveland
748:improve this section
716:Removal jurisdiction
650:breach of a contract
642:legal certainty test
440:chartered under the
408:Diversity of parties
571:their larger agenda
221:Anti-Injunction Act
89:Political questions
842:federal common law
710:Removal and remand
690:domestic relations
575:racial segregation
567:Southern Democrats
556:race to the bottom
414:complete diversity
301:the power to hear
226:Sovereign immunity
1058:28 U.S.C. § 1348.
942:Felix Frankfurter
891:Saadeh v. Farouki
885:Federalist No. 80
796:notice of removal
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673:personal injuries
537:state legislature
484:minimal diversity
442:National Bank Act
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