Also known as: diversity cases · diversity jurisdiction case · diversity suit
Written by attorneys · grounded in primary & secondary sources — see 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.
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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.
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.
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.
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.
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.
…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:…
…of Mr. Justice Reed Mr. Justice Reed delivered the opinion of the Court. The principal question in this case
…of the immunity created by the State. First. It was decided in Erie R. Co. v. Tompkins that the federal courts in diversity cases
…other point, however, was also clear: the debate addressed only the question whether ratification of the Constitution would, in diversity cases
…U.S. 849, 65 S. Ct. 684, 89 L.Ed. 1409 (1945). Our conclusion is supported by the thrust of recent Fifth Circuit decisions in diversity cases
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.