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navigation, search United States Federal Civil Procedure Doctrines Justiciability Advisory opinions Standing Ripeness Mootness Political questions Jurisdiction Subject-matter jurisdiction: Federal question jurisdiction Diversity jurisdiction Supplemental jurisdiction Removal jurisdiction Amount in controversy Class Action Fairness Act of 2005 Personal jurisdiction: In personam In rem jurisdiction Quasi in rem jurisdiction Federalism Erie doctrine Abstention Sovereign immunity Abrogation Rooker-Feldman doctrine Adequate and independent state ground edit this template In the law of the United States, diversity jurisdiction is a form of subject-matter jurisdiction in civil procedure in which a United States district court (the trial courts of general jurisdiction in the federal judiciary) has the power to hear a civil case where the persons that are parties are "diverse" in citizenship, which generally indicates that they are citizens of different states or non-U.S. citizens. (Corporations, as legal persons, may also be included). Diversity jurisdiction and federal-question jurisdiction (jurisdiction over issues arising under federal law) constitute the two primary categories of subject matter jurisdiction in U.S. federal courts. The United States Constitution, in Article III, 2, gives the Congress the power to permit federal courts to hear diversity cases through legislation authorizing such jurisdiction. The provision was included because the Framers of the Constitution were concerned that when a case is filed in one state, and it involves parties from that state and another state, the state court might be biased toward the party from that state.[1] Congress first exercised that power and granted federal trial circuit courts diversity jurisdiction in the Judiciary Act of 1789. Diversity jurisdiction is presently codified at 28 U.S.C. 1332. Contents [hide] 1 Diversity of parties 1.1 Diversity is determined at the time that the action is filed 1.2 Corporate citizenship based on principal place of business 2 Amount in controversy 3 Removal and remand 4 Law applied

5 See also 6 References 7 External links [edit] Diversity of parties Mostly, in order for diversity jurisdiction to apply, complete diversity is required, where none of the plaintiffs can be from the same state as any of the defendants.[2] A corporation is treated as a citizen of the state in which it is incorporated and the state in which its principal place of business is located.[3] A partnership or limited liability company is considered to have the citizenship of all of its constituent partners/members.[4] Thus, an LLC or partnership with one member or partner sharing citizenship with an opposing party will destroy 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 domiciled, which is the last state in which they resided and had an intent to remain.[5] An alien (foreign national) who has been granted the status of permanent resident status is treated as a citizen of the state where the alien is domiciled. A national bank chartered under the National Bank Act is treated solely as a citizen of the state which it designates as the location of its home office in its articles of association.[6] The diversity jurisdiction statute also allows federal courts to hear cases in which: Citizens of a U.S. state are parties on one side of the case, with nonresident alien(s) as adverse parties; Complete diversity exists as to the U.S. parties, and nonresident aliens are additional parties; A foreign state (i.e. country) is the plaintiff, and the defendants are citizens of one or more U.S. states; or Under the Class Action Fairness Act of 2005, a class action can usually be brought in a federal court when there is just minimal diversity, such that any plaintiff is a citizen of a different state from any 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. 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 respect to other parties in the case. 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 court following the guidelines set forth in Rule 19 of the Federal Rules of Civil Procedure. [edit] Diversity is determined at the time that the action is filed Diversity is determined at the time that the action is filed, and on the basis of the residency of the parties at that time. A change in domicile by a party before or after that date is irrelevant.[7] [edit] Corporate citizenship based on principal place of business Congress never defined exactly what 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 American economy 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 circuit split developed in which some judges held that the latter states could also 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. On February 23, 2010, the United States Supreme Court unanimously held in Hertz Corp. v. Friend that a corporation's principal place of business is presumed to be the place of the corporations "nerve center" from where its officers conduct the corporations important business. [edit] Amount in controversy The United States Congress has placed an additional barrier to diversity jurisdiction, the amount in controversy requirement. This is a minimum amount of money which the parties must be contesting is owed to them. As of mid 2007, under 28 U.S.C. 1332(a), a claim for relief must exceed the sum or value of $75,000, exclusive of interests and costs and without considering counterclaims. A 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 arises out of the same facts as the main claim. See the article on federal supplemental subject matter jurisdiction here: supplemental jurisdiction. The amount specified has been regularly increased over the past two centuries. Courts will use the legal certainty test to decide whether the dispute is over $75,000. Under the legal certainty test, the court will accept the pleaded amount unless it is legally certain that the pleading party cannot recover more than $75,000. For example, if the dispute is solely over the breach of a contract by which the defendant had agreed to pay the plaintiff $10,000, a federal court will dismiss the case for lack of subject matter jurisdiction, or remand the case to state court if it arrived via removal. [edit] Removal and remand Main article: Removal jurisdiction If a case is originally filed in a state court, and the requirements for federal jurisdiction (diversity and amount in controversy are met, the case involves a federal question, or a supplemental jurisdiction exists), the defendant (and only the defendant) may remove the case to a federal court. A case cannot be removed to a state court. To remove to a federal court, the defendant must file a notice of removal 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 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. A party s citizenship at the time of the filing of the action is considered as 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 where the action is first filed, diversity does not exist. 28 U.S.C. 1441(b). If a plaintiff or a co-defendant opposes removal, he may request a remand, 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. [edit] Law applied Main article: Erie doctrine The United States Supreme Court determined in Erie Railroad (1938) that the law to be applied in a diversity case would whatever state in which the action was filed. This decision precedents that had held that federal courts could create a common law, instead of applying the law of the forum state.

Co. v. Tompkins be the law of overturned general federal This decision was an

interpretation of the word "laws" in 28 U.S.C. 1652, known as the Rules of Decision Act. 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. The Court interpreted "laws" to include the states judicial decisions, or "common law." Thus, it is an overstatement to state that Erie represents the notion that there is no federal common law. Federal courts do adjudicate "common law" of federal statutes and regulations. 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 courts. Thus, it is not Erie, but the REA, which created the distinction between substantive and procedural law. 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 Gasperini v. Center for Humanities. 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. [edit] See also Strawbridge v. Curtiss Class Action Fairness Act of 2005 Federal question jurisdiction Federalist No. 80 Supplemental jurisdiction [edit] References ^ Guaranty Trust Co. v. York, 326 U.S. 99 (1945). In this decision, Justice Felix Frankfurter 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 indulgence the possible fears and apprehensions of such suitors.

[Citation.] And so Congress afforded out-of-State litigants another tribunal, not another body of law." ^ Lincoln Property Co. v. Roche, 546 U.S. 81 (2005). ^ Danjaq, S.A. v. Pathe Comm ns Corp., 979 F.2d 772 (9th Cir. 1992). ^ Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894 (9th Cir. 2006). ^ Sun Printing & Publishing Association v. Edwards, 194 U.S. 377 (1904). ^ Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303 (2006). ^ LeBlanc v. Cleveland, 248 F.3d 95 (2nd Cir. 1999) [edit] External links 28 U.S.C 1332. Diversity of Citizenship

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