Also known as: diversity jurisdiction
Written by attorneys — see sources below.
A form of federal subject-matter jurisdiction that permits district courts to adjudicate civil actions between citizens of different states when the amount in controversy exceeds seventy-five thousand dollars. Complete diversity must exist so that no plaintiff shares citizenship with any defendant. Unincorporated associations take the citizenship of every member rather than a single state of formation.
Dustin Donovan, a citizen of State A, filed suit in federal court against Delta Dynamics, a general partnership whose partners include several citizens of State A. The complaint sought damages exceeding seventy-five thousand dollars for breach of a supply contract. Because the partnership shares citizenship with Donovan through its members, the district court dismissed the action for lack of subject-matter jurisdiction.
Deborah Dunn, a citizen of State B, sued Drake Logistics, a State C corporation, in federal court under diversity jurisdiction for negligence arising from a warehouse accident. The court applied State B tort rules to the duty and causation elements rather than any independent federal standard. The choice of law produced the same outcome that a State B court would have reached.
Tompkins, a citizen of Pennsylvania, was injured on a dark night by a passing freight train of the Erie Railroad Company while walking along its right of way at Hughestown in that State. He claimed that the accident occurred through negligence in the operation or maintenance of the train. He asserted that he was rightfully on the premises as a licensee because he was on a commonly used beaten footpath which ran for a short distance alongside the tracks. He further alleged that he was struck by something which looked like a door projecting from one of the moving cars. To enforce that claim he brought an action in the federal court for southern New York, which had jurisdiction because the company is a corporation of that State. The Erie insisted that its duty to Tompkins was no greater than that owed to a trespasser. It contended, among other things, that its duty to Tompkins, and hence its liability, should be determined in accordance with the Pennsylvania law; that under the law of Pennsylvania, as declared by its highest court, persons who use pathways along the railroad right of way are to be deemed trespassers; and that the railroad is not liable for injuries to undiscovered trespassers resulting from its negligence, unless it be wanton or wilful. Tompkins denied that any such rule had been established by the decisions of the Pennsylvania courts. He contended that, since there was no statute of the State on the subject, the railroad's duty and liability is to be determined in federal courts as a matter of general law. The trial judge refused to rule that the Pennsylvania law precluded recovery. The jury brought in a verdict of $30,000. The judgment entered thereon was affirmed by the Circuit Court of Appeals, which held that it was unnecessary to consider whether the law of Pennsylvania was as contended, because the question was one not of local, but of general, law and that upon questions of general law the federal courts are free, in the absence of a local statute, to exercise their independent judgment as to what the law is. Because of the importance of the question whether the federal court was free to disregard the alleged rule of the Pennsylvania common law, the Supreme Court granted certiorari.
View caseDamian Decker, a citizen of State D, brought a contract claim against Dillon Energy, a State E corporation, in federal court asserting diversity jurisdiction. The court looked to State D decisions on contract interpretation to decide whether an oral modification was enforceable. That choice avoided the forum-shopping problem that would have arisen under a different substantive rule.
Harry Tompkins, a citizen of Pennsylvania, was injured on a dark night by a passing freight train of the Erie Railroad Company while walking along its right of way at Hughestown in that State. He claimed that the accident occurred through negligence in the operation or maintenance of the train. He also claimed that he was rightfully on the premises as a licensee because he was on a commonly used beaten footpath which ran for a short distance alongside the tracks. To enforce that claim he brought an action in the federal court for southern New York, which had jurisdiction because the company is a corporation of that State. The Erie Railroad Company denied liability, and the case was tried by a jury. The railroad insisted that its duty to Tompkins was no greater than that owed to a trespasser. It contended that under the law of Pennsylvania, as declared by its highest court, persons who use pathways along the railroad right of way are to be deemed trespassers. The railroad further contended that it is not liable for injuries to undiscovered trespassers resulting from its negligence unless the conduct is wanton or wilful. Tompkins denied that any such rule had been established by the decisions of the Pennsylvania courts. He contended that since there was no statute of the State on the subject, the railroad's duty and liability is to be determined in federal courts as a matter of general law. The trial judge refused to rule that Pennsylvania law precluded recovery. The jury brought in a verdict of $30,000, and the judgment entered thereon was affirmed by the Circuit Court of Appeals. The Erie had contended that application of the Pennsylvania rule was required by section 34 of the Federal Judiciary Act of September 24, 1789. Because of the importance of the question whether the federal court was free to disregard the alleged rule of the Pennsylvania common law, the Supreme Court granted certiorari.
View caseDorothy Daniels, a citizen of State F, sued Dynamic Solutions, a State G corporation, for more than seventy-five thousand dollars under diversity jurisdiction. After the defendant impleaded a third-party supplier, Daniels added her own state-law indemnity claim against that supplier. The court exercised supplemental jurisdiction over the indemnity claim because it arose from the same transaction as the original diversity action.
In 1991, about 10,000 Exxon dealers filed a class-action suit against the Exxon Corporation in the United States District Court for the Northern District of Florida. They alleged an intentional and systematic scheme by which they were overcharged for fuel purchased from Exxon. The plaintiffs invoked the District Court's diversity jurisdiction under 28 U.S.C. § 1332(a). Each dealer's claim was for slightly less than the $75,000 jurisdictional minimum. After a unanimous jury verdict in favor of the plaintiffs, the District Court certified the case for interlocutory review on the question of supplemental jurisdiction over class members who did not meet the jurisdictional minimum. In a separate action, a 9-year-old girl sued Star-Kist in a diversity action in the United States District Court for the District of Puerto Rico. She sought damages for unusually severe injuries she received when she sliced her finger on a tuna can. Her family joined in the suit seeking damages for emotional distress and medical expenses. The District Court granted summary judgment to Star-Kist, finding that none of the plaintiffs met the minimum amount-in-controversy requirement. The Court of Appeals for the Eleventh Circuit upheld the District Court's extension of supplemental jurisdiction to the class members who did not meet the amount requirement. The Court of Appeals for the First Circuit ruled that the injured girl, but not her family members, had made allegations of damages in the requisite amount. It further held that section 1367 authorizes supplemental jurisdiction only when the district court has original jurisdiction over the action. In a diversity case, original jurisdiction is lacking if one plaintiff fails to satisfy the amount-in-controversy requirement. The Supreme Court granted certiorari to resolve the conflict among the Courts of Appeals. The cases were consolidated before the Supreme Court.
View caseDarius Dixon, a citizen of State H, sued Delta Dynamics in federal court under diversity jurisdiction seeking an injunction to enforce a restrictive covenant. The court applied the State H rule that treats the requested relief as substantive and therefore governed by state law. The injunction issued only because State H precedent permitted it under the facts alleged.
In May 1930 the Van Sweringen Corporation issued $30,000,000 in notes under an indenture naming Guaranty Trust Co. of New York as trustee with power to enforce noteholders' rights. In October 1930 Guaranty and other banks advanced large sums to companies affiliated with the Corporation and controlled by the Van Sweringens. When the Corporation could not meet its obligations, Guaranty participated in an exchange plan under which noteholders could surrender their notes for cash equal to 50 percent of face value plus twenty shares of Van Sweringen stock per $1,000 note; the offer remained open until December 15, 1931. In 1934 respondent York received $6,000 of the notes as a gift from a donor who had not accepted the exchange offer. In April 1940 three accepting noteholders filed the Hackner suit in federal court charging Guaranty with fraud and misrepresentation in connection with the exchange. York's motion to intervene was denied, and summary judgment for Guaranty was affirmed on appeal. On January 22, 1942, after her exclusion from the Hackner litigation, York filed the present class action in the United States District Court for the Southern District of New York on behalf of non-accepting noteholders. The complaint, resting exclusively on diversity of citizenship, alleged that Guaranty had breached its trust by failing to protect noteholders' interests when it assented to the exchange offer and by failing to disclose its own self-interest. The district court granted Guaranty's motion for summary judgment on the authority of the Hackner decision. The Circuit Court of Appeals reversed, holding that a federal court sitting in equity is not required to apply the New York statute of limitations that would govern an identical suit in the New York state courts. The Supreme Court granted certiorari.
View caseDaniel Diaz, a citizen of State I, sued Drake Logistics in federal court under diversity jurisdiction after a delivery accident. Drake moved to strike the jury demand under a State I statute that bars juries in certain commercial cases. The court denied the motion because the federal rules on jury trials controlled over the conflicting state practice.
Respondents brought this tort action in Alabama state court to recover damages for injuries sustained in a motorcycle accident. Petitioner removed the case to a Federal District Court having diversity jurisdiction. A jury trial resulted in a judgment of $800,000 for respondent Alan Woods and $5,000 for respondent Cara Woods. Petitioner posted bond to stay the judgment pending appeal, and the Court of Appeals affirmed without modification. 768 F.2d 1287 (CA11 1985). Respondents then moved in the Court of Appeals, pursuant to Ala. Code § 12-22-72 (1986), for imposition of that State’s mandatory affirmance penalty of 10% of the amount of judgment. Petitioner challenged the application of this statute as violative of the equal protection and due process guarantees of the Fourteenth Amendment and as “a procedural rule . . . inapplicable in federal court under the doctrine of Erie Railroad Co. v. Tompkins, 304 U. S. 64 (1938) and its progeny.” The Court of Appeals summarily granted respondents’ motion to assess the penalty and subsequently denied a petition for rehearing. The parties have stipulated that the final judgment has been paid, except for the $30,500 statutory affirmance penalty, which petitioner has withheld pending proceedings in this Court. The Supreme Court granted certiorari to consider the equal protection and due process challenges as well as the Erie claim. 475 U. S. 1080 (1986).
View caseAn unincorporated association such as a partnership or LLC takes the citizenship of every one of its members. If any member shares citizenship with an opposing party, complete diversity is destroyed and the federal court lacks subject-matter jurisdiction.
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Complete diversity must exist at the time the complaint is filed. Each plaintiff must be a citizen of a different state from every defendant. Later changes in citizenship do not cure an initial defect.
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Yes. The plaintiff must allege in good faith that the amount in controversy exceeds seventy-five thousand dollars exclusive of interest and costs. A legal certainty that the claim cannot reach that threshold defeats jurisdiction even if the parties are diverse.
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Yes. When a federal rule directly addresses the matter in dispute, it governs even if a contrary state rule would produce a different outcome. The federal rule must be valid under the Rules Enabling Act and the Constitution.
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…developed a new well of uncertainties. On the other hand, the mischievous results of the doctrine had become apparent. Diversity of citizenship jurisdiction was conferred in order to prevent apprehended discrimination in state courts against those not citizens of the State. Swift v. Tyson introduced grave discrimination by non-citizens…