Also known as: diversity cases · diversity jurisdiction case · diversity suit
Written by attorneys — see sources below.
A federal civil action in which subject-matter jurisdiction rests on the parties' citizenship in different states and an amount in controversy exceeding the statutory threshold. The action requires application of state substantive law under the Erie doctrine while federal procedural rules govern matters of process and practice.
Dominion Capital, a Delaware corporation, sues Duarte Shipping, a Florida corporation, in federal district court in New York for breach of a maritime supply contract. The court must apply New York substantive contract rules and New York's choice-of-law principles to determine which state's law supplies the elements of the claim rather than inventing a uniform federal rule.
David Dawson, a citizen of State A, files a diversity action in federal court against Dillon Energy, a State B corporation, seeking $120,000 for property damage. Danielle Dixon, also a citizen of State A, joins with a $4,000 claim arising from the same incident. The court may exercise supplemental jurisdiction over Danielle's claim because it shares a common nucleus of operative fact with the anchor claim.
Diana Delgado, a citizen of State C, sues Drake Logistics, a State D corporation, in federal court in State C for negligence. A valid Federal Rule of Civil Procedure addresses service of process in a manner that differs from State C's stricter rule. The federal rule governs the timing and method of service even though it produces a different outcome than the state rule would.
Dorothy Daniels, a citizen of State E, brings a tort claim in federal court in State F against a defendant incorporated in State G. The court must consult State F's conflict-of-laws rules to decide whether State E or State F substantive tort law governs the claim.
In 1918, respondent, a New York corporation, transferred its entire business to petitioner, a Delaware corporation. Petitioner contracted to use its best efforts to further the manufacture and sale of patented devices covered by the agreement, and respondent was to have a share of petitioner’s profits. The agreement was executed in New York, the assets were transferred there, and petitioner began performance there although later it moved its operations to other states. Respondent was voluntarily dissolved under New York law in 1919. Ten years later it instituted this action in the United States District Court for the District of Delaware, alleging that petitioner had failed to perform its agreement to use its best efforts. Jurisdiction rested on diversity of citizenship. In 1939 respondent recovered a jury verdict of $100,000, upon which judgment was entered. Respondent then moved to correct the judgment by adding interest at the rate of six percent from June 1, 1929, the date the action had been brought. The basis of the motion was the provision in § 480 of the New York Civil Practice Act directing that in contract actions interest be added to the principal sum whether theretofore liquidated or unliquidated. The District Court granted the motion, taking the view that the rights of the parties were governed by New York law and that under New York law the addition of such interest was mandatory. The Circuit Court of Appeals affirmed, and the Supreme Court granted certiorari, limited to the question whether § 480 of the New York Civil Practice Act is applicable to an action in the federal court in Delaware.
Daphne Doyle, a citizen of State H, sues a State I defendant in federal court in State H for personal injuries. State H law would assign a disputed factual question about employment status to the judge, but the federal interest in preserving the jury's traditional fact-finding role leads the court to submit the issue to the jury.
The petitioner, a resident of North Carolina, sued respondent, a South Carolina corporation, for damages for injuries allegedly caused by the respondent's negligence. He was employed as a lineman in the construction crew of a construction contractor. Respondent Blue Ridge Rural Electrical Cooperative, Inc., a South Carolina corporation in the business of selling electric power, had contracted with R. H. Bouligny, Inc. for $334,300 to build approximately 24 miles of new power lines, reconvert about 88 miles of existing lines to higher capacities, and construct two new substations and a breaker station. The petitioner was injured while connecting power lines to one of the new substations. Byrd first recovered full benefits under the South Carolina Workmen's Compensation Law from his direct employer Bouligny. He then filed a negligence action against Blue Ridge in the United States District Court for the Western District of South Carolina under diversity jurisdiction pursuant to 28 U.S.C. § 1332. At trial Blue Ridge asserted an affirmative defense that Byrd qualified as its statutory employee because the contracted work was part of its trade, business, or occupation. Blue Ridge's manager testified on direct examination that three of its substations had been built by its own construction and maintenance crews. His answers on cross-examination created uncertainty that prompted the trial judge to note he appeared to have changed his testimony. Blue Ridge also introduced evidence that it financed the project with a federal loan, purchased the materials, and maintained an engineering service contract with an independent firm for design and supervision. Its charter under the South Carolina Rural Electric Cooperative Act authorized it to construct generating plants, buildings, and equipment necessary for its operations. After all evidence was presented the district judge struck the affirmative defense, ruling that Blue Ridge could not be a statutory employer because its crews performed work only for its own use rather than for others. The judge then denied Blue Ridge's motion for a directed verdict and submitted the negligence claim to the jury, which returned a verdict for Byrd in the amount of $126,786.80. The Court of Appeals for the Fourth Circuit reversed, resolved uncertainties in the manager's testimony in Blue Ridge's favor, and directed entry of judgment for Blue Ridge without remanding for further proceedings. Byrd petitioned for certiorari, which the Supreme Court granted. The case had previously been dismissed on the ground that Blue Ridge enjoyed tort immunity as a nonprofit corporation, but the Court of Appeals had reversed that dismissal and remanded for trial. On the present appeal the Court of Appeals did not reach other grounds raised by Blue Ridge because its resolution of the statutory employer issue disposed of the case.
Daniel Diaz, a citizen of State J, files a diversity action in federal court against the State of State K seeking damages for breach of a commercial contract. The Eleventh Amendment prevents the court from exercising jurisdiction over the state even though the parties are diverse and the amount in controversy is satisfied.
In 1988 Congress enacted the Indian Gaming Regulatory Act to provide a statutory basis for the operation of gaming by Indian tribes. The Act divides gaming on Indian lands into three classes. Class III gaming includes slot machines, casino games, banking card games, dog racing, and lotteries. Such gaming is lawful only when conducted in conformance with a Tribal-State compact entered into by the Indian tribe and the State. The Act imposes upon the States a duty to negotiate in good faith with an Indian tribe toward the formation of such a compact. It authorizes a tribe to bring suit in federal court against a State in order to compel performance of that duty. The Seminole Tribe of Florida requested that the State of Florida enter into negotiations for a compact governing class III gaming on the Tribe's lands. When the State refused to negotiate, the Tribe filed suit in September 1991 in the United States District Court for the Northern District of Florida against the State and its Governor, Lawton Chiles. The Tribe invoked jurisdiction under 25 U.S.C. § 2710(d)(7)(A), as well as 28 U.S.C. §§ 1331 and 1362. It alleged that respondents had refused to enter into any negotiation for inclusion of certain gaming activities in a tribal-state compact, thereby violating the requirement of good faith negotiation contained in § 2710(d)(3). The State moved to dismiss the complaint, arguing that the suit violated the State's sovereign immunity from suit in federal court. The District Court denied the motion. On interlocutory appeal, the Court of Appeals for the Eleventh Circuit reversed. It held that the Eleventh Amendment barred the Tribe's suit against the State and that the doctrine of Ex parte Young did not permit a suit against the Governor to enforce the statutory duty. The Eleventh Circuit remanded with directions to dismiss the suit. The Supreme Court granted certiorari in 1995 to consider whether the Eleventh Amendment prevents Congress from authorizing suits by Indian tribes against States for prospective injunctive relief to enforce legislation enacted pursuant to the Indian Commerce Clause and whether the Ex parte Young doctrine permits suits against a State's Governor for such relief.
The court must apply the substantive law of the state in which it sits, including that state's conflict-of-laws rules. Federal courts may not create general federal common law to govern state-law claims.
…in 1938. Erie R. Co. v. Tompkins , 304 U. S. 64, overruling Swift v. Tyson , 16 Pet. 1, held that federal courts sitting in diversity cases, when deciding questions of "substantive" law, are bound by state court decisions as well as state statutes. The broad command of Erie was therefore identical to that of the Enabling Act:…
…110 F. 2d 754, 759-62, reaches the same conclusion, as does an opinion of the Third Circuit handed down subsequent to the case at bar, Waggaman v. General Finance Co. , 116 F. 2d 254, 257. See also Goodrich, Conflict of Laws, § 12.
…of the immunity created by the State. First. It was decided in Erie R. Co. v. Tompkins that the federal courts in diversity cases must respect the definition of state-created rights and obligations by the state courts. We must, therefore, first examine the rule in Adams v. Davison-Paxon Co. to determine whether it…
…other point, however, was also clear: the debate addressed only the question whether ratification of the Constitution would, in diversity cases and without more, abrogate the state sovereign immunity or allow it to have some application. We have no record that anyone argued for the third option mentioned above, that the…
…id. at 631-632. : Monarch noted the split in authority that application of this rule to privilege questions in diversity cases has produced. Id. at 408-409 n. 15. For example, Massachusetts Mut. Life Ins. Co. v. Brei, 311 F.2d 463, 466 (2d Cir. 1962), points out that rules of privilege have substantive as well as…
Supplemental jurisdiction is available when at least one plaintiff's claim satisfies the amount requirement, complete diversity exists among the anchor parties, and the additional claims share a common nucleus of operative fact, provided the exercise does not destroy complete diversity.
The federal rule controls if it is arguably procedural and valid under the Rules Enabling Act. State law yields even if the outcome differs.
The federal court must follow the conflict-of-laws rules of the state in which it sits.
The court weighs the state's interest in its rule against the federal system's interest in uniform procedural practice and the right to jury trial, often favoring the federal interest in preserving jury functions.