When Does Multiplicity Constitute Diversity?

INTRODUCTION

A major premise underlying our Constitution is that the states function quite well in most respects and that federal interference should be confined to those areas where there is a special need for national policy. For example, in 1787, when the Constitution was drafted, every state already had its own system of courts. The framers of the Constitution saw no need to abolish those courts in favor of federal courts administered by the national government. Instead, they authorized the creation of a separate federal court system (see U.S. Const. Art. III, §1), but only authorized those courts to hear limited categories of cases that, for one reason or another, involved a particular national interest. U.S. Const. Art. III, §2. Jurisdiction of all other cases was left to the courts of the states.

One of the major categories of cases that the framers authorized federal courts to hear is the so-called diversity jurisdiction, described in Article III, §2, as cases “between citizens of different states.” In diversity cases, as in some others enumerated in Article III, §2, the subject matter jurisdiction of the federal courts is defined by who the parties to the suit are, rather than the subject matter of the underlying dispute.[1] The plaintiff in a diversity case may seek recovery on a battery theory, a fraud claim, a right created by state statute, or any other state law cause of action. So long as he sues a diverse defendant and the claim is for more than $75,000, the federal court will have subject matter jurisdiction on the basis of diversity.

The framers’ apparent reason for singling out diversity cases for federal jurisdiction was a fear that out-of-state citizens would suffer prejudice if they were forced to litigate against local citizens in the local state courts. That rationale has long been disputed by the scholars,[2] and repeated efforts have been made to abolish diversity jurisdiction. For example, the 1990 report of the Federal Courts Study Committee recommended abolishing diversity jurisdiction in all but a few unusual types of cases. Report of the Federal Courts Study Committee (April 2, 1990) pp. 38-42. However, reports of its death, in the words of Sam Clemens, have been greatly exaggerated; in 2010, more than a third of the civil cases filed in the federal courts were based on diversity.