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Chapter 3


This Chapter examines “subject matter jurisdiction,” that is, the court’s power to adjudicate the kind of controversy before it. The most important concepts in this Chapter are:

  • Two basic types: In the federal courts, there are two basic kinds of controversies over which the federal judiciary has subject matter jurisdiction: (1) suits between citizens of different states (so-called diversity jurisdiction); and (2) suits involving a “federal question.”
  • Diversity suits: In diversity suits:
    • An amount in excess of $75,000 must be in dispute. This is the “amount in controversy” requirement. (In federal question cases, there is no amount in controversy requirement.)
    • “Complete diversity” is required. That is, it must be the case that no plaintiff is a citizen of the same state as any defendant.
    • A corporation is deemed a citizen of any state where it is incorporated and of the state where it has its principal place of business. In other words, for diversity to exist, no adversary of the corporation may be a citizen of the state in which the corporation is incorporated, or of the state in which it has its principal place of business.
  • Federal question suits: A “federal question” suit is one “arising under the Constitution, laws, or treaties of the United States.” Usually, the reason there is a federal question is that federal law is the source of the plaintiff’s claim.
  • Supplemental jurisdiction: Under the doctrine of “supplemental” jurisdiction, if a basic controversy satisfies federal subject matter jurisdictional requirements, additional claims and additional parties may be brought into the litigation. This is true whether the basic claim is based on federal-question or (with important limits) diversity.
  • Removal: Under the doctrine of “removal”, any action brought in state court which the plaintiff could have brought in federal court may be transferred (“removed”) by the defendant to federal district court. (But in diversity cases, the action may be removed only if no defendant is a citizen of the state in which the action is pending.)


A. Definition of subject matter jurisdiction: Even though a state or federal court has jurisdiction over the parties in an action, it cannot try the case unless it has the power to adjudicate that kind of controversy. The power to adjudicate a certain kind of controversy is known as subject matter jurisdiction or competency over the litigation.

Example: A state court has personal jurisdiction over both parties in a divorce action. But unless the court has been granted (usually by the legislature) the power to decide divorce cases, any divorce decree granted by the court is void for lack of subject matter jurisdiction or competency. Restatement of Judgments, §7, comment 6.

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