As the Supreme Court noted in Pennoyer, subject matter jurisdiction is a creature of both constitutional and statutory authorization. In the federal system, Article III, §2 of the U.S. Constitution mandates the creation of a Supreme Court and authorizes the establishment of “such inferior Courts as the Congress may from time to time ordain and establish.” Pursuant to that constitutional delegation of authority, the very first Congress immediately passed the Judiciary Act of 1789, which established a system of lower federal courts. Over time, a series of statutory amendments restructured the federal judiciary, ultimately resulting in its current three-tiered configuration.
Beyond authorizing the formation of a federal judiciary, Article III, in defining the “judicial power of the United States,” sets forth the boundaries of the federal courts’ subject matter jurisdiction and empowers Congress to assign jurisdiction over some or all of these types of disputes to the federal courts. In this chapter, we will examine the important, and often vexing problems associated with the allocation of limited subject matter jurisdiction to the federal courts. While it certainly would be worthwhile to explore the issues surrounding the assignment of subject matter to the courts of any particular state or group of states, choosing one or more specific state systems might not be representative of the problems faced by courts in all fifty jurisdictions. Instead, we have chosen to focus on the allocation of adjudicative authority between the federal and state judiciaries