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ArtIII.S2.C1.18.1 Overview of Diversity Jurisdiction

Article III, Section 2, Clause 1:

The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority;—to all Cases affecting Ambassadors, other public Ministers and Consuls;—to all Cases of admiralty and maritime Jurisdiction; to Controversies to which the United States shall be a Party;—to Controversies between two or more States; between a State and Citizens of another State, between Citizens of different States,—between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.

Article III, Section 2, Clause 1, as interpreted by the Supreme Court, authorizes Congress to grant federal courts subject matter jurisdiction over controversies between citizens of different states—commonly known as “diversity jurisdiction.” 1 Although Justice Story concluded in the early case Martin v. Hunter’s Lessee that “the language of [Article III]. . . . is manifestly designed to be mandatory upon the legislature,” such that “Congress could not, without a violation of its duty, have refused to carry it into operation,” 2 numerous subsequent Supreme Court decisions repudiated this stance, recognizing instead that Article III’s grant of subject matter jurisdiction is permissive and subject to congressional discretion.3

Congress has invoked this authority and enacted legislation granting federal courts diversity jurisdiction since the Judiciary Act of 1789.4 That statute conferred diversity jurisdiction only when a suit was between a citizen of the state in which the suit was brought and a citizen of another state.5 The Judiciary Act of 1789 further limited diversity jurisdiction to cases where the amount in controversy—that is, the value of the relief sought—was at least $5,000.6 The Judiciary Act of 1875 eliminated the requirement that one of the parties be a citizen of the forum state, requiring only diverse citizenship and a minimum jurisdictional amount in controversy.7 The current diversity jurisdiction provision is codified at 28 U.S.C. § 1332, and grants federal court jurisdiction in all civil actions between citizens of different states and between a citizen of a state and a subject of a foreign state if the amount in controversy exceeds $75,000.

Although the broad strokes of these requirements have remained the same since 1875, the statute has grown increasingly complex over the years. For instance, Congress amended the statutory provision via the Class Action Fairness Act of 2005 (CAFA).8 Among other changes, CAFA expanded federal courts’ jurisdiction over class actions by substituting in these cases a minimal diversity-of-citizenship requirement in place of the usual complete diversity requirement, which requires each plaintiff be a citizen of a different state from each defendant. Under the minimal diversity requirement, federal courts possess diversity jurisdiction over a class action when any one of the plaintiffs is a citizen of a different state from any defendant.9 CAFA also imposed an amount-in-controversy threshold of $5,000,000 in class actions, and allowed plaintiffs to aggregate their monetary claims to calculate the statutory amount in controversy.10

The following essays do not cover the extensive case law interpreting the various statutory requirements for diversity jurisdiction.11 They instead provide an overview of the constitutional parameters of diversity jurisdiction, including a historical perspective on the purpose of diversity jurisdiction; the Supreme Court’s interpretations of the meaning of “citizens of different states” under Article III; and related federalism principles implicated by diversity jurisdiction.

See Kline v. Burke Constr. Co., 260 U.S. 226, 233–34 (1922); Mayor v. Cooper, 6 Wall. 247, 252 (U.S. 1968). For more information about Congress’s power to establish Article III courts and their jurisdiction, see ArtIII.S1.8.1 Overview of Establishment of Article III Courts. back
14 U.S. 304, 328 (1816). back
See supra note 1; see also, e.g., Hertz Corp. v. Friend, 559 U.S. 77, 82–83 (2010); Kentucky v. Powers, 201 U.S. 1, 24–25 (1906); Stevenson v. Fain, 195 U.S. 165, 167 (1902); Holmes v. Goldsmith, 147 U.S. 150, 157–59 (1893); In re Sewing Mach. Co. 85 U.S. 553, 563 (1873); Sheldon v. Sill, 49 U.S. 441, 449 (1850). back
See Act of Sept. 24, 1789, § 11, 1 Stat. 73. The statute also granted federal courts jurisdiction over suits between a citizen of a state and an alien. See id. back
See id. back
See id. back
Act of Mar. 3, 1875, § 1, 18 Stat. 470. back
Pub. L. No. 109–2, § 4(a), 119 Stat. 9 (2005). back
See 28 U.S.C. § 1332(d). back
id. back
See, e.g., Hertz Corp. v. Friend, 559 U.S. 77, 91 (2010) (interpreting the meaning of “principal place of business” under 28 U.S.C. § 1332(c)(2)). back