Civil Procedure Outline - Diversity Jurisdiction

    **Abridged Diversity Jurisdiction**

  1. Diversity Jurisdiction is derived from Article III §2 of the Constitution (requires "minimal diversity", State Farm) and 28 USC 1332 (requires "complete diversity", Strawbridge)
    • Every P must be diverse from every D.
      • Domicile…
        • For individuals is the most recent state where they resided with the intent to remain indefinitely. (Lundquist, Gordon)
        • For corporations is the state of their incorporation and the state of its principal place of business ("nerve center" or "place of activity" test, Tubbs)
        • Calculated on the date the action was filed.
    • The amount in controversy must be greater than $75k, exclusive of interest and costs.
      • Courts are liberal, allow claims to fulfill requirement as long as there is the possibility that the claim could support recovery > $75k. (St. Paul Mercury)
      • P may aggregate claims against a single D but must meet the requirement against every D without aggregation unless undivided interest claim. 

**Full Diversity Jurisdiction**

  1. Domicile test
    1. Citizen of one state can sue a citizen of another state in federal court, even if the claim arises under state law, if the claim is for more than $75K.
    2. Residence is established as the most recent state where he/she has:
      1. Resided, with the
      2. Intent to remain indefinitely- stay must be open-ended with no plans to leave after a certain date or event
    1. Until the two criteria above are met in a new state, residence remains in the old domicile, even with no plans to return
    2. **Intent is the test- evidence of practical affairs can help support/demonstrate intent, but do not automatically prove it**
      1. There can be good reasons why a person has a bank account, job, or health insurance in a different state than they are domiciled.
      2. Domicile is determined at the time the complaint is filed.
  2. Strawbridge rule of complete diversity
    1. Federal courts have jurisdiction over “diverse” cases under Article III §2 of the Constitution.
    2. Marshall court ruled in Strawbridge v. Curtiss, 7 U.S. 267 (1806) that the federal diversity jurisdiction only applied when all plaintiffs are citizens of different states than all defendants.
      1. Intent is to prevent state courts from being biased in favor their own citizens.
    1. Corporations are considered state “citizens” but cannot have “intent” like a person. Therefore, under 28 U.S.C. §1332(c)(1), a corporation is considered a residents of:
      1. The state in which it is incorporated, AND
      2. The state in which it has its principal place of business
        1. From Tubbs v. Southwestern Bell, the primary test a court should use to determine the state of citizenship for a business or corporation is the "total activity" test, an amalgam of the…
          • The "nerve center" test - the state in which the corporation has its nerve center or "brain," is its principal place of business.
            • Applied when the corporation is engaged in far-flung and varied activities which are carried on in different states.
          • The "place of activity" test - the state in which the corporation carries out its operations is its principal place of business.
            • Applied when the corporation has a collection of "nerve cells serving the common function of making the corporate enterprise go.
  3. Foreign citizens
    1. Article III, §2 says that federal courts have jurisdiction over cases between U.S. citizens and foreign nationals/aliens.
      1. Federal jurisdiction remains if suit is between two U.S. citizens with an alien added as an additional plaintiff or defendant. [28 U.S.C. §1332(a)(3)]
    1. This is true even if the foreigner is domiciled in a U.S. state- you first must be a citizen of the U.S. before you can be considered a citizen of a particular state.
      1. Permanent residents are exceptions- they are considered state citizens.
    1. It is possible to be a U.S. citizen but not a resident of any state if domicile is established abroad 20th Century Fox Film-Corp v. Taylor, 239 F. Supp. 913 (D.C.N.Y. 1965)- no fed court jurisdiction b/c defendant not domiciled in or a citizen of any state.


  4. Statutory diversity jurisdiction and constitutional grant
    1. Strawbridge was ruled in State Farm Fire & Casualty Co. v. Tashire 386 U.S. 523 (1967) to have been interpreting the diversity statute in U.S.C. 28 §1332, not Article III §2 of the Constitution.
      1. State Farm v. Tashire ruled that to be diverse under Article III, one defendant had to be diverse from one plaintiff (“minimal diversity”), not all of them, as Strawbridge’s interpretation held.
      2. Therefore, Congress could amend U.S.C. 28 §1332 to mean “minimal diversity” if it wanted to, but it never has.
      3. Since jurisdiction under the Constitution must be executed by Congress, Congress can limit or expand (up until Constitutional bounds) the jurisdictions of lower courts because, according to Article III §1, Congress has the power to create federal courts if it wants.


  5. Amount-in-controversy requirement
    1. A diversity case cannot be heard in federal court unless the amount in controversy is $75,000.01, exclusive of interest and costs.
    2. The amount-in-controversy requirement is another area where the statutory grant is narrower than the constitutional authority available since Article III §2 contains no monetary restriction on diversity cases.
    3. Under the St. Paul Mercury rule, the court will find the amount requirement met as long as it is possible that the P's claim would support a recovery of more than $75k.
      1. This approach gives the P the benefit of the doubt; claims can only be thrown out if verdicts over $75k would be irrational or legally impossible.


  6. Aggregation of damages in diversity cases
    1. A P may add up the amounts for all her claims against the D, whether they are related or not. However, P cannot aggregate claims against different Ds.
    2. In the case of multiple Ps…
      1. Before 28 USC 1367, courts held that all Ps must be able to assert a claim of $75k+.
      2. Now, some courts read 28 USC 1367 to say that as long as one P can assert a $75k+ claim, other Ps with smaller claims can join (still divided).