Diversity Jurisdiction

Question 1

What is diversity jurisdiction?

Answer 1

Diversity jurisdiction allows federal courts to hear cases involving parties who are citizens of different states when the amount in controversy exceeds a statutory minimum (currently $75,000).

Question 2

What is the requirement for complete diversity?

Answer 2

All plaintiffs must be citizens of different states from all defendants at the time the lawsuit is filed.

This requirement is based on the Supreme Court’s interpretation of the diversity statute in Strawbridge v. Curtis (1806).

Question 3

What is the amount in controversy for diversity jurisdiction?

Answer 3

The plaintiff’s claim must exceed $75,000, excluding interest and costs.

Question 4

How is the amount in controversy determined?

Answer 4

The amount is determined by the plaintiff’s good-faith claim, not the ultimate recovery, unless it is legally certain that the claim is for less.

Factual allegations in the complaint must support the claimed damages, and there must be a legal basis for the claim.

Question 5

Can a single plaintiff aggregate claims to meet the amount in controversy?

Answer 5

Yes, a single plaintiff can combine separate claims against a single defendant to reach the $75,000 threshold.

Question 6

Can co-plaintiffs aggregate their claims to meet the amount in controversy?

Answer 6

No, co-plaintiffs cannot add their claims together or combine amounts demanded from different defendants to meet the amount requirement.

Question 7

What is the exception for supplemental jurisdiction?

Answer 7

In cases involving a single dispute, a second plaintiff (P2) can ‘tag along’ even if their claimed damages are below the statutory minimum, as long as the first plaintiff (P1) is suing for a jurisdictional amount.

This is based on 28 U.S.C. § 1367 and the Supreme Court’s decision in Exxon Mobil Corp. v. Allapattah Servs., Inc. (2005).

Question 8

Can counterclaims be aggregated with the plaintiff’s claim?

Answer 8

No, counterclaims cannot be aggregated with the plaintiff’s claim to satisfy the amount in controversy requirement.

Question 9

What happens if complete diversity is lacking?

Answer 9

If complete diversity is lacking, courts can drop a party to achieve diversity.

This approach is illustrated in Caterpillar Inc. v. Lewis (1996) and Newman-Green, Inc. v. Alfonso-Larrain (1989).

Question 10

What is the Federal Interpleader Act?

Answer 10

It allows federal district courts to hear cases involving multiple claimants to the same property, requiring diversity between at least two claimants.

This is based on the Supreme Court’s decision in State Farm Fire & Casualty Co. v. Tashire (1967).

Question 11

What does the Class Action Fairness Act permit?

Answer 11

It permits nationwide class actions in federal court if any plaintiff class member is diverse from any defendant and the total amount in controversy for the class exceeds $5 million.

Question 12

How is state citizenship determined for individuals?

Answer 12

An individual is a citizen of a state if they are a U.S. citizen or a lawful permanent resident and domiciled in that state.

Question 13

What is domicile?

Answer 13

Domicile is the state where a person has established residence with the intent to reside indefinitely.

Question 14

What is required to establish domicile?

Answer 14

Establishing domicile requires both the intent to make the new state home and physical presence in the state.

Question 15

How does an individual retain their domicile?

Answer 15

A person retains their current domicile until acquiring a new one.

Question 16

What test determines domicile?

Answer 16

The ‘intent-to-remain-indefinitely’ test determines domicile by assessing whether the individual’s intent to reside in the current state is ‘open-ended’ or not.

This is demonstrated in Gordon v. Steele (W.D. Pa. 1974).

Question 17

How is state citizenship determined for corporations?

Answer 17

A corporation is a citizen of every state and foreign state where it is incorporated and the state or foreign state where it has its principal place of business.

Question 18

What is the ‘nerve center’ test?

Answer 18

The ‘nerve center’ test determines a corporation’s principal place of business, referring to the location where the corporation’s officers direct, control, and coordinate its activities.

This was adopted by the Supreme Court in Hertz Corp. v. Friend (2010).

Question 19

How are partnerships and unincorporated associations treated for diversity jurisdiction?

Answer 19

Partnerships and unincorporated associations are treated as groups of individual litigants, requiring complete diversity among all partners and members.

Question 20

What does the 2022 amendment to Federal Rule 7.1 require?

Answer 20

It requires parties in diversity cases to disclose the citizenship of all partners early in the case, addressing the complexity of the Carden rule.

This approach stems from the Supreme Court’s decision in Carden v. Arkoma Associates (1990).