Diversity jurisdiction allows federal courts to hear cases between citizens of different states, ensuring fair resolution of interstate disputes. It stems from the Constitution and aims to protect out-of-state parties from potential bias in state courts.

To qualify for diversity jurisdiction, cases must meet specific requirements. These include complete diversity between parties and a minimum amount in controversy. Special rules determine citizenship for individuals and businesses in these cases.

Diversity Jurisdiction: Purpose and Basis

Constitutional Foundation and Objectives

• Article III, Section 2 of the U.S. Constitution extends federal judicial power to controversies between citizens of different states
• Diversity jurisdiction allows federal courts to hear cases between citizens of different states promotes impartial resolution of interstate disputes
• Protects out-of-state litigants from potential bias in state courts ensures fair adjudication of disputes across state lines
• Reflects the Framers' intent to provide a neutral federal forum for resolving interstate conflicts promotes national unity
• Complements federal question jurisdiction expands federal court authority beyond cases involving federal law to include certain state law disputes

Historical Context and Evolution

• Concept of diversity jurisdiction dates back to the Judiciary Act of 1789
• Initially implemented to address concerns about state court bias against out-of-state parties
• Evolved over time through judicial interpretation and statutory amendments
• Supreme Court has repeatedly affirmed the importance of diversity jurisdiction (Bank of the United States v. Deveaux, 1809)
• Modern debates focus on the continued necessity and scope of diversity jurisdiction in the federal court system

Diversity Jurisdiction: Statutory Requirements

28 U.S.C. § 1332 Provisions

• Codifies statutory requirements for diversity jurisdiction expands on constitutional foundation
• Mandates complete diversity no plaintiff can be a citizen of the same state as any defendant (Strawbridge v. Curtiss, 1806)
• Sets amount in controversy threshold dispute value must exceed $75,000, exclusive of interest and costs
• Applies to cases between citizens of different states, citizens of a state and foreign citizens, and citizens of different states with foreign citizens as additional parties
• Provides for diversity jurisdiction in cases between citizens of a state and foreign states or their citizens

Supplemental Jurisdiction and Exceptions

• 28 U.S.C. § 1367 allows federal courts to hear related claims that do not independently meet diversity requirements
• Supplemental jurisdiction extends to claims forming part of the same case or controversy
• Exceptions to supplemental jurisdiction exist for certain types of claims and parties (28 U.S.C. § 1367(b))
• Class Action Fairness Act of 2005 (CAFA) modified diversity requirements for certain class actions
• Some statutory exceptions limit diversity jurisdiction (28 U.S.C. § 1359 prohibits improper or collusive joinder to create diversity)

Citizenship for Diversity Jurisdiction

Individual Citizenship Determination

• Citizenship for individuals determined by domicile requires physical presence in a state and intent to remain indefinitely
• Domicile factors include voter registration, driver's license, tax filings, and location of personal property
• U.S. citizens domiciled abroad cannot invoke diversity jurisdiction (Newman-Green, Inc. v. Alfonzo-Larrain, 1989)
• Permanent resident aliens deemed citizens of their state of domicile for diversity purposes
• Non-resident aliens considered citizens of their home countries in diversity cases
• Special rules apply to determining citizenship of estates (citizenship of decedent), infants (citizenship of parents), and incompetents (citizenship of legal representative)

Business Entity Citizenship Rules

• Corporations deemed citizens of both their state of incorporation and principal place of business
• "Nerve center" test determines principal place of business (Hertz Corp. v. Friend, 2010)
• Unincorporated associations (partnerships, LLCs) take on citizenship of each member
• Citizenship of trusts depends on classification as traditional or business trust
• Traditional trusts consider citizenship of trustees, while business trusts treated like corporations
• Class actions under CAFA consider only citizenship of named representatives for diversity purposes

Amount in Controversy: Rules and Application

Determining the Jurisdictional Amount

• Amount in controversy based on plaintiff's good faith claim at time of filing not amount ultimately recovered
• Legal certainty test allows dismissal only if it appears to a legal certainty that claim is below jurisdictional amount
• Punitive damages and attorney's fees may be included if available under applicable law
• Future damages can be considered if they are not speculative
• Value of injunctive relief determined by either cost to defendant or value to plaintiff

Aggregation and Non-Aggregation Principles

• Single plaintiff suing single defendant on multiple claims may aggregate claims to meet amount in controversy
• Non-aggregation principle prohibits multiple plaintiffs from combining separate and distinct claims to reach threshold
• Exception to non-aggregation when multiple plaintiffs assert a "common and undivided interest" in a single claim
• Class actions under CAFA allow aggregation of class members' claims if total exceeds $5 million
• Counterclaims and cross-claims generally do not count towards amount in controversy
• Compulsory counterclaims may be considered in determining amount in controversy (some circuits)
• Supplemental claims related to the main action do not need to independently satisfy the amount in controversy requirement