Actual controversy is a constitutional requirement for courts to issue a declaratory judgment. The requirement stems from the Declaratory Judgment Act, 28 U.S.C. § 2201, which allows federal courts to issue declaratory judgments in the case of “actual controversy.” This statutory requirement in turn stems from the fact that Article III of the U.S. Constitution only provides for the judiciary to adjudicate “cases” and “controversies.” This requirement prevents the judiciary from ruling on moot disputes or issuing advisory opinions.
The U.S. Supreme Court in Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270 (1941), endorsed a totality of the circumstances test for determining whether a party seeking relief under the Declaratory Judgment Act has demonstrated that a justiciable “controversy” exists. The Court explained that “[b]asically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” In adopting this test, the Supreme Court recognized that “[t]he difference between an abstract question and a ‘controversy’ contemplated by the Declaratory Judgment Act is necessarily one of degree, and it would be difficult, if it would be possible, to fashion a precise test for determining in every case whether there is such a controversy.”
In Maryland Casualty, the U.S. Supreme Court found that a liability insurer's complaint for a declaratory judgment that it was not liable on the policy nor obligated to defend an automobile collision case pending in the state court against the insured presented an “actual controversy,” not only with the insured, but also with the injured person. On the other hand, in Preiser v. Newkirk, 422 U.S. 395 (1975), the U.S. Supreme Court found there was no actual controversy where a prisoner sought judgment to be returned to a medium-security prisoner after being transferred to a maximum-security prisoner because he had already been returned by the time the case reached the Supreme Court, making the case moot.
[Last updated in November of 2021 by the Wex Definitions Team]